=================================================================

                          SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C. 20549

                                 --------------------

                                      FORM 10-Q


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934


                         FOR THE QUARTER ENDED JUNE 30, 1998

                            COMMISSION FILE NUMBER 0-27190


                           PARAMOUNT FINANCIAL CORPORATION
                (Exact name of Registrant as specified in its charter)


                       DELAWARE                            11-3072768
             (State or other jurisdiction               (I.R.S. Employer
          of incorporation or organization)           Identification No.)


                 ONE JERICHO PLAZA, JERICHO, NEW YORK         11753 
               (Address of principal executive offices)     (zip code)


                                    (516) 938-3400
                 (Registrant's telephone number, including area code)


          Indicate by check mark whether the Registrant: (1) has filed all
          reports required to be filed by Section 13 or 15(d) of the
          Securities Exchange Act of 1934 during the preceding 12 months
          (or for such shorter period that the Registrant was required to
          file such reports), and (2) has been subject to such filing
          requirements for the past 90 days.                 Yes  X   No   
                                                                 ---    ---


                   NUMBER OF SHARES OUTSTANDING AT AUGUST 11, 1998:

             1,997,500 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE.

          =================================================================


          <PAGE>


                           PARAMOUNT FINANCIAL CORPORATION

                       INDEX TO FORM 10-Q FOR THE QUARTER ENDED

                                    JUNE 30, 1998



          PART I - FINANCIAL INFORMATION                         Page No.
                                                                 --------  

               Item 1 - Financial Statements

                       Consolidated Balance Sheets
                       June 30, 1998 and December 31, 1997  . .       1

                       Consolidated Statements of Operations
                       Three Months Ended and Six Months Ended
                       June 30, 1998 and 1997 . . . . . . . . .       2

                       Consolidated Statement of Changes in
                       Stockholders' Equity Six Months Ended
                       June 30, 1998  . . . . . . . . . . . . .       3

                       Consolidated Statements of Cash Flows
                       Six Months Ended June 30, 1998 and 1997        4

                       Notes to Unaudited Consolidated
                       Financial Statements . . . . . . . . . .       5

            Item 2 - Management's Discussion and Analysis
                    of Financial Condition and Results of
                    Operations  . . . . . . . . . . . . . . . .    6-9


          PART II - Other Information . . . . . . . . . . . . .       10


          SIGNATURES  . . . . . . . . . . . . . . . . . . . . .       11


          <PAGE>


                            PART I:  FINANCIAL INFORMATION

          Item 1.   FINANCIAL STATEMENTS

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                             CONSOLIDATED BALANCE SHEETS
                             ---------------------------


                                             DECEMBER 31,      JUNE 30,
                       ASSETS                    1997            1998
                       ------                ------------      --------
                                                             (UNAUDITED)

           Cash and cash equivalents . .    $ 2,209,649     $ 4,356,884
           Investments available for
              sale . . . . . . . . . . .      3,524,456              --

           Accounts receivable . . . . .      1,138,479       1,424,288

           Net investment in direct
              finance and sales-type
              leases . . . . . . . . . .     39,941,764      34,045,111
           Assets held under operating
              leases, net of accumulated
              depreciation . . . . . . .      5,459,895       8,294,465

           Other assets  . . . . . . . .        788,218       1,506,641
                                            -----------     -----------
           Total assets  . . . . . . . .    $53,062,461     $49,627,389
                                            ===========     ===========


            LIABILITIES AND SHAREHOLDERS'
                       EQUITY
            -----------------------------

           Notes payable . . . . . . . .    $ 2,656,365     $ 3,409,731
           Accounts payable  . . . . . .      1,307,496         878,176

           Accounts payable --
              leases . . . . . . . . . .        708,568         382,753
           Accrued expenses  . . . . . .        383,097         250,609

           Obligations for financed
              equipment -- non-recourse      40,287,404      37,338,900

           Deferred income taxes . . . .         73,848              --
                                            -----------     -----------
           Total liabilities . . . . . .     45,416,778      42,260,169
                                            -----------     -----------

           Shareholders' equity:

           Preferred stock, $.01 par
              value; 5,000,000 shares
              authorized, none
              outstanding  . . . . . . .             --              --

           Common stock, $.04 par value;
              4,375,000 shares
              authorized, and 1,997,500
              shares issued and
              outstanding  . . . . . . .         79,900          79,900

           Additional paid-in
              capital  . . . . . . . . .     13,644,228      13,664,228

           Accumulated deficit . . . . .     (6,049,080)     (6,311,957)

           Treasury stock, 12,500 and
              19,000 shares at cost,            (29,365)        (44,951)
              respectively . . . . . . .    -----------     -----------

           Total shareholders' equity  .      7,645,683       7,367,220
                                            -----------     -----------
           Total liabilities and            $53,062,461     $49,627,389
              shareholders' equity . . .    ===========     ===========

                   See accompanying notes to financial statements.

                                      -1-

          <PAGE>


                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        -------------------------------------

                                      UNAUDITED
                                      ---------



                               THREE MONTHS ENDED          SIX MONTHS ENDED
                                    JUNE 30,                   JUNE 30,
                               ------------------          ----------------
                               1997           1998        1997         1998
                               ----           ----        ----         ----

      REVENUES:

      Sales . . . . . .   $ 5,814,632    $2,012,115   $ 6,750,871 $16,493,577
      Lease revenue . .     2,814,018     2,140,011     5,423,365   3,646,339

      Fee, interest and
       other income . .       280,089       239,698       780,964     459,625
                           ----------     ---------    ----------   ---------
            Total
             revenues .     8,908,739     4,391,824    12,955,200  20,599,541
                           ----------     ---------    ----------   ---------


      COSTS AND EXPENSES:

      Cost of sales . .     5,258,167     1,609,139     6,033,311  15,397,330

      Lease expense . .     2,741,598     2,022,490     5,190,680   3,465,665

      Selling, general
       and
       administrative
       expenses . . . .       784,906     1,142,767     1,487,542   2,174,674
                           ----------     ---------    ----------   ---------
            Total costs
             and expenses   8,784,671     4,774,396    12,711,533  21,037,669
                           ----------     ---------   -----------  ----------
     
      Income (loss)
       before provision       
       (benefit) for
       income taxes . .       124,068      (382,572)      243,667    (438,128)

      PROVISION
       (BENEFIT) FOR
       INCOME TAXES . .        49,870      (153,029)       97,709    (175,251)
                           ----------     ---------      --------   ---------

            Net income
             (loss) . .       $74,198     $(229,543)     $145,958   $(262,877)
                           ==========     =========     =========   =========

            Basic income
             (loss) per
             common
             share  . .         $0.04        $(0.12)        $0.07      $(0.13)
                           ==========     =========      ========    ========
            Diluted
             income
             (loss) per
             common             $0.04        $(0.12)        $0.07      $(0.13)
             share         ==========     =========      ========    ========

      Shares used in
       computing net
       income (loss) per
       share:
            Basic . . .     1,995,577     1,978,500     1,996,533   1,979,213
                           ==========     =========     =========   =========

            Diluted . .     1,995,577     1,978,500     1,996,533   1,979,213
                           ==========    ==========     =========   =========

                   See accompanying notes to financial statements.

                                      -2-

     <PAGE>


                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

              CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
              ---------------------------------------------------------

                        FOR THE SIX MONTHS ENDED JUNE 30, 1998
                        --------------------------------------

                                      UNAUDITED
                                      ---------

                  COMMON STOCK
                  ------------
                                   ADDITIONAL
                                    PAID-IN-  ACCUMULATED  TREASURY
                SHARES    AMOUNT     CAPITAL   (DEFICIT)     STOCK      TOTAL
                ------    ------    --------   ---------     -----      -----


     BALANCE,
     DECEMBER
      31,
      1997 .  1,997,500   $79,900 $13,644,228 ($6,049,080)  $(29,365)$7,645,683

     Net loss       --        --          --     (262,877)       --    (262,877)

     Purchase
      of
     treasury
      stock         --         --         --          --     (15,586)   (15,586)
              --------- ---------  ----------  ----------  --------- ----------

     BALANCE,
     JUNE  30,
     1998  .  1,997,500   $79,900 $13,664,228 ($6,311,957)  ($44,951)$7,367,220
              ========= ========= =========== ===========  ========= ==========



                   See accompanying notes to financial statements.

                                      -3-

     <PAGE>

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                        -------------------------------------

                          FOR THE SIX MONTHS ENDED JUNE 30,
                          ---------------------------------

                                      UNAUDITED
                                      ---------
                                                      1997         1998
                                                    --------     --------
          CASH FLOWS FROM OPERATING ACTIVITIES:
          Net income (loss)                        $  145,958   $ (262,877)

          Adjustments to reconcile net income
           (loss) to net cash provided by
           operating activities:                                               
           Deferred income taxes                          --       (73,848)
           Depreciation                             3,790,698    2,177,287
           Amortization of discounts on
            investments                               (97,183)     (26,953)
           Amortization of goodwill                       --        20,865
           Changes in operating assets and
            liabilities:                                                       
                    Accounts receivable            (2,068,633)       4,707
                    Other assets                      (72,092)     (50,073)
                    Accounts payable                 (592,571)    (429,320)
                    Accrued expenses                   42,846     (204,555)
                                                    ---------    ---------

          Net cash provided by operating
           activities                               1,149,023    1,155,233
                                                    ---------    ---------


          CASH FLOWS FROM INVESTING ACTIVITIES:

             Purchase of equipment for direct
              finance leases and sales-type
                leases                            (25,381,098)  (5,928,241)
              Termination of direct finance leases  4,236,465    3,159,587
              Proceeds applied to direct finance
               leases and sales-type leases         5,012,761    8,602,308

              Purchase of equipment for operating
               leases                                 (41,333)  (5,719,445)
              Termination of operating leases             --        57,000
              Residual value sharing arrangements   4,628,698      713,587
              Payment for acquisition of
               Deltaforce, net of cash acquired           --      (231,774)
              Purchases of investments            (10,156,296)  (3,084,593)    
              Proceeds from sale/maturity of        8,940,000    6,636,003
               investments                         ----------   ----------

          Net cash (used in) provided by 
           investing activities                   (12,760,803)   4,204,432
                                                   ----------   ----------

          CASH FLOWS FROM FINANCING ACTIVITIES:
             Repurchase of common stock               (18,574)     (15,586)
             Proceeds from notes payable            3,578,697    1,413,587
             Repayment of notes payable                (1,110)  (1,336,112)
             Decrease in amounts due on purchases
              of equipment for leases             (17,448,765)    (325,815)
             Increase in non-recourse lease
              financing                            32,192,094   10,492,359
             Termination of non-recourse lease
              financing                              (885,700)  (2,864,076)
             Repayments and interest amortization
              applied to non-recourse lease        (8,616,519) (10,576,788)
              financing                             ---------   ----------

          Net cash provided by (used in) financing
           activities                               8,800,123   (3,212,431)
                                                    ---------   ----------



                                      -4-

     <PAGE>
                                                      1997         1998
                                                    --------     --------

          Net increase (decrease) in cash and cash
           equivalents                             (2,811,657)   2,147,234


          CASH AND CASH EQUIVALENTS, beginning of
           period                                   3,700,774    2,209,649
                                                   ----------    ---------

          CASH AND CASH EQUIVALENTS, end of period $  889,117   $4,356,883
                                                    =========    =========

          SUPPLEMENTAL CASH FLOW INFORMATION:
             Cash paid for income taxes            $   28,210   $   45,428
                                                    =========    =========
             Cash paid for interest                $1,328,337   $1,334,385
                                                    =========    =========


                   See accompanying notes to financial statements.

                                      -5-

     <PAGE>

                   PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                   ------------------------------------------------

                 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                 ----------------------------------------------------


          1.   The accompanying unaudited consolidated financial statements
               have been prepared in accordance with the instructions for
               Form 10-Q and Regulation S-X related to interim period
               financial statements and, therefore, do not include all
               information and footnotes required by generally accepted
               accounting principles.  However, in the opinion of
               management, all adjustments (consisting of normal recurring
               adjustments and accruals) considered necessary for a fair
               presentation of the financial position of Paramount
               Financial Corporation and subsidiaries (the "Company") at
               June 30, 1998 and its results of operations and cash flows
               for the three and six months ended June 30, 1997 and 1998,
               respectively, have been included.  The results of operations
               for the interim periods are not necessarily indicative of
               the results that may be expected for the entire year. 
               Reference should be made to the annual financial statements,
               including footnotes thereto, included in the Company's Form
               10-K for the fiscal year ended December 31, 1997.

          2.   The financial statements for the three and six months ended
               June 30, 1998 are consolidated to include the results of the
               Company's two wholly owned subsidiaries, Paratech Resources,
               Inc. and Deltaforce Personnel Services, Inc ("Deltaforce"). 
               All material intercompany balances and transactions have
               been eliminated.

          3.   On January 9, 1998, the Company acquired 100% of the
               outstanding shares of Deltaforce, a privately held New York
               City-based staffing company, for approximately $723,000,
               which included $325,000 of notes payable.  The acquisition
               was accounted for as a purchase and accordingly the
               operating results of Deltaforce have been included in the
               Company's consolidated statements since the date of the
               acquisition.  The excess of the aggregate purchase price
               over the fair market value of the net assets acquired of
               approximately $626,000 has been recorded as goodwill and is
               being amortized over 15 years.

          4.   In April 1998, the Company entered into a term loan with a
               bank collateralized by $600,000 in cash maintained in an
               investment account. Principal payments of approximately
               $41,600  and interest are due on a quarterly basis through
               April 20, 2001.

          5.   Effective May 19, 1998, the Board of Directors authorized a
               one-for-four reverse stock split of the Company's common
               stock.  The par value of the common stock was increased from
               $.01 to $.04 per share.  In connection with the reverse
               stock split, the Board of Directors approved the reduction
               of authorized number of shares of common stock from
               8,750,000 shares to 4,375,000 (such numbers give effect to
               the reverse stock split).  Accordingly, all references in
               the financial statements and notes to common share data have
               been adjusted to reflect the reverse stock split.  Preferred
               stock remained unchanged. 

          6.   On August 3, 1998, the Company acquired the business of RBW
               Staffing Services, Inc. (d/b/a "WordSmiths Staffing
               Services"), a privately held, New York City-based staffing
               company.  The acquisition will be accounted for as a
               purchase; accordingly, the purchase price will be allocated
               to the underlying assets purchased based on their respective
               estimated fair market values at the date of acquisition.


                                      -6-
     <PAGE>


                         MANAGEMENT'S DISCUSSION AND ANALYSIS
                   OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


             The following discussion and analysis should be read in
          conjunction with, and is qualified in its entirety by, the
          unaudited financial statements, including the notes thereto,
          appearing elsewhere in this 10-Q.

          GENERAL

             Paramount Financial Corporation and subsidiaries ("Paramount"
          or the "Company") is a comprehensive asset management and
          business solution provider, offering customers a wide range of
          integrated services, including lease finance, information
          technology ("IT") consulting, network design and implementation
          and staffing services.  The Company includes two wholly owned
          subsidiaries, Paratech Resources, Inc. ("Paratech") and, as of
          January 1998, Deltaforce Personnel Services, Inc. ("Deltaforce").

             The first six months of 1998 were significant for several
          reasons.  In January, the Company completed the acquisition of
          Deltaforce, a privately held New York City based staffing
          company.  This acquisition further enhances the Company's product
          offerings by including staffing services to its expanding list of
          integrated services, and is a continuation of the Company's
          strategic diversification plans.  In addition to the Deltaforce
          acquisition, the Company continued to invest in the expansion of
          its systems integration subsidiary, Paratech, which is moving
          ahead with its growth plans in both personnel and product
          offerings.  Both of these companies are an important part of the
          evolution of Paramount from a lease finance company to a
          diversified business solution provider.  When comparing the first
          six months of 1998 with the first six months of 1997, it is
          important to note that Deltaforce was not part of the Company
          until January 1998 and Paratech was a relatively insignificant
          part of the Company for the first quarter of 1997.

             The Company remains committed to the growth of its lease
          portfolio and continued to expand this activity during the six
          months ended June 30, 1998.  The Company believes that continued
          expansion of the portfolio of IT equipment on lease will create
          financial benefits over a continuum of time, since, unlike other
          equipment, IT equipment is frequently upgraded and/or enhanced
          during the term of its lease, resulting in opportunities to lease
          new equipment and re-market displaced equipment.  Further, as an
          integrated lessor and business solution provider, the Company
          believes that it is well positioned to meet the ever-changing
          needs of its customers.


          FLUCTUATIONS IN QUARTERLY RESULTS

             The operating results of Paramount are subject to quarterly
          fluctuations resulting from a variety of factors, including the
          volume of new leases written, product announcements by
          manufacturers, economic conditions, interest rate fluctuations
          and variations in the mix of leases written.  In addition, the
          Company's revenue can fluctuate significantly from quarter to
          quarter based on the closing date and nature of each particular
          lease and/or sales transaction.  The mix of leases written in a
          quarter is a result of a combination of factors, including
          changes in customer demands and/or requirements, new product
          announcements, price changes, changes in delivery dates, changes
          in maintenance policies and pricing policies of equipment
          manufacturers and price competition from other lessors.

             Leasing transactions (other than sales type leases), in
          general, do not provide for significant earnings in the month of
          lease origination.  Instead, revenue, expense and profit from
          lease transactions are recorded over the life of the asset and
          the lease.  Lease revenue and lease expense recognition is
          dependent upon a number of factors, including the term of the
          lease, the accounting classification of the lease (i.e., 
                                                             ----
          operating, direct finance or sales type) and the commencement
          date of the lease and the lease financing within a particular
          period.  See "Lease Accounting."

                                      -7-

     <PAGE>

             The Company is aggressively working to maximize the returns on
          the residual value investments made on its lease portfolio.  Such
          efforts, which are an ordinary but not a predictable part of the
          Company's business, often result in equipment originally leased
          under an operating lease, and accounted for as described below,
          being upgraded or otherwise enhanced and extended at the original
          account or leased to a different end-user.  The resulting lease
          may qualify under FAS 13 (as defined below) as a sales type
          lease, in which the Company can record as sales revenue the fair
          market value of the equipment and recognize as income the
          difference between this amount and the equipment's cost or net
          book value.  Since a sales type lease is a form of direct finance
          lease, the new lease is recorded over its remaining term as a
          direct finance lease resulting in a reduction of lease rental
          income and lease expense compared to the original operating lease
          accounting.

             Marketing efforts may also result in the sale of the leased
          asset to the customer which will result in an increase in
          revenue, and to the extent the sales proceeds exceed the net book
          value, net income, in the quarter in which the sale occurs.  Any
          such sale will also result in a reduction of revenue, expense and
          profit expected in subsequent quarters since the equipment was
          sold.

             Given the possibility of such fluctuations as described above,
          the Company believes that comparisons of the results of its
          operations for preceding quarters are not necessarily meaningful
          and that such results for one quarter should not be relied upon
          as an indication of future performance.


          LEASE ACCOUNTING

             In accordance with Statement of Financial Accounting Standard
          No. 13, "Accounting for Leases" ("FAS 13"), the Company
          classifies its leases as either operating leases or direct
          finance leases.  The allocation of income among accounting
          periods within a lease term will vary depending upon the lease
          classification, as described below.

             Direct Finance Leases:  Direct finance leases transfer
          substantially all benefits and risks of equipment ownership to
          the lessee.  A lease is a direct finance lease if it meets one of
          the following criteria: (1) the lease transfers ownership of the
          equipment to the lessee by the end of the lease term; (2) the
          lease contains a bargain purchase option; (3) the lease term at
          inception is at least 75% of the estimated economic life of the
          leased equipment; or (4) the present value of the minimum lease
          payments is at least 90% of the fair value of the leased
          equipment at lease inception. 

             At lease inception, the cost of equipment under a direct
          finance lease is recorded as "Net investment in direct finance
          leases". The difference between the gross lease payments
          receivable, plus the estimated residual value of the equipment,
          and the equipment cost is recognized as income over the life of
          the lease using the effective interest method.

             A lease transaction which meets all of the above criteria, and
          in which the Company has made a dealer's profit, is recorded as a
          sales type lease.  A sales type lease is a type of direct finance
          lease, but one in which the Company recognizes, at lease
          inception, revenue and profit which arises from the difference
          between the fair market value of the leased equipment and its
          acquisition cost.

             Operating Leases:  All lease contracts which do not meet the
          criteria of direct finance leases are accounted for as operating
          leases.  Monthly lease payments are recorded as operating lease
          revenue.  Leased equipment is recorded at the Company's cost and
          depreciated on a straight-line basis over the lease term to the
          estimated residual value at the expiration of the lease term.

             The Company's portfolio of equipment on lease is further
          divided into equipment owned by Paramount and equipment managed
          by Paramount.  As of June 30, 1998, the portfolio of equipment on
          lease owned by Paramount had a combined net book value on the
          balance sheet of $42.3 million and had an original cost basis of

                                      -8-

     <PAGE>

          $70.8 million.  Equipment managed by Paramount is equipment on
          lease to customers of Paramount which was subsequently sold to
          investors, but with respect to which Paramount remains the lessor
          and remarketing agent.  The portfolio of equipment managed by
          Paramount had an original cost of $23.2 million.  Thus, as of
          June 30, 1998, the portfolio of equipment on lease owned and
          managed by Paramount had an original acquisition cost of $94.0
          million.


          RESULTS OF OPERATIONS

          THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED
          JUNE 30, 1997

             Net loss for the three months ended June 30, 1998 was
          $230,000, after a benefit from incomes taxes of $153,000, as
          compared with net income of $74,000 after a provision for income
          taxes $50,000.

             For the three months ended June 30, 1998, the Company recorded
          sales revenue of $2.0 million, a $3.8 million decrease over the
          $5.8 million recorded during the three months ended June 30,
          1997.  The decrease is a result of the transactional nature of
          the Company's leasing business and the resulting quarterly
          fluctuations.  See "General" and "Fluctuations in Quarterly
          Results."  The decrease in sales was partially offset by the
          revenue generated from the newly acquired Deltaforce as well as a
          21% increase in Paratech's revenue.

             As a result of the Company's ongoing marketing efforts with
          respect to its lease portfolio, certain assets which were
          recorded as operating leases during the first and second quarters
          of 1997 have been upgraded and re-leased, providing the Company
          with a return on its residual value investment.  The resulting
          lease has been accounted for as a sales type lease.  As a result
          of this activity, the effect of accounting for a lease as a
          direct finance lease versus an operating lease, lease revenue and
          lease expense decreased for the three months ended June 30, 1998
          when compared to the three months ended June 30, 1997 by 24.0%
          and 26.2%, respectively.  See "Fluctuations in Quarterly Results"
          and "Lease Accounting."

             During the three months ended June 30, 1998, the Company
          entered into new lease transactions totaling $1.3 million of
          equipment cost as compared with $15.3 million for the three
          months ended June 30, 1997.  Of the total cost of equipment
          leased during the quarter ended June 30, 1998, $704,000 was
          recorded as direct finance leases, and $609,000 was recorded as
          operating leases, compared to $15.3 million in direct finance
          leases only, for the quarter ended June 30, 1997.  During the
          quarter ended June 30, 1998, the Company entered into $696,000 of
          non-recourse lease financing arrangements, as compared with $11.1
          million for the three months ended June 30, 1997.  See "Liquidity
          and Capital Resources." 

             During the three months ended June 30, 1998, the Company
          generated $240,000 in fee, interest and other income, compared to
          $281,000 for the comparable period last year.  Generally, fee
          income is generated as a result of the Company's involvement in
          certain transactions in which it acted as an arranger of
          financing for leases originated by third parties, or otherwise
          assisted these companies in their lease related transactions. 
          These transactions come about as a result of the Company's
          relationship with other lessors and financial institutions.  The
          Company cannot predict with any certainty the timing and nature
          of any future such transactions.  See "General."

             Selling, general and administrative expenses ("SG&A") totaled
          $1.1 million for the three months ended June 30, 1998,
          representing an increase of  45.6% over the $785,000 recorded
          during the three months ended June 30, 1997.  The increase in
          SG&A is a result of the acquisition of Deltaforce as well as the
          continued growth in technical, sales and support staff at the
          Company.

             The tax benefit of $153,000 for the three months ended June
          30, 1998 reflects an effective rate of 40% for federal and state
          taxes.  During the three months ended June 30, 1997, the Company
          recorded a tax provision of $50,000, reflecting the same 40%
          effective tax rate.

                                      -9-

     <PAGE>

          SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE
          30, 1997

             Net loss for the first six months of 1998 was $263,000, after
          a benefit from income taxes of $175,000, as compared with net
          income of $146,000, after a provision for income taxes of
          $98,000.

             For the six months ended June 30, 1998, the Company recorded
          sales revenue of $16.5 million, a $9.7 million increase over the
          $6.8 million recorded during the six months ended June 30, 1997. 
          The majority of the sales volume in 1998 was a result of
          remarketing activities within the Company's existing lease
          portfolio.  In addition, the 70.4% increase in Paratech's sales
          and the revenue generated by Deltaforce, which was acquired in
          January 1998, also contributed to the increase in revenue as
          compared with the six month period in 1997.  See "Fluctuations in
          Quarterly Results."

             As a result of the Company's ongoing marketing efforts with
          respect to its lease portfolio, certain assets which were
          recorded as operating leases during the first quarter of 1997,
          have been upgraded and re-leased, providing the Company with a
          return on its residual value investment.  The resulting lease has
          been accounted for as a sales type lease.  As a result of this
          activity, and the effect of accounting for a lease as a direct
          finance lease versus an operating lease, lease revenue and lease
          expense decreased for the six months ended June 30, 1998 when
          compared to the six months ended June 30, 1997 by 32.8% and 33.2%
          respectively.  See "Lease Accounting."

             During the six months ended June 30, 1998, the Company entered
          into new lease transactions totaling $11.6 million of equipment
          cost as compared with $25.3 million for the six months ended June
          30, 1997.  Of the total cost of equipment leased during the
          quarter ended June 30, 1998, $5.9 million was recorded as direct
          finance leases, and $5.7 million was recorded as operating
          leases, compared to $25.4 million and $41,000 respectively, for
          the quarter ended June 30, 1997.  During the six months ended
          June 30, 1998, the Company entered into $10.5 million of non-
          recourse lease financing arrangements, as compared with $32.2
          million for the six months ended June 30, 1997.  See "Liquidity
          and Capital Resources."  Non-recourse debt entered into during
          the six months ended June 30, 1997 increased at a faster rate
          than new lease origination as a result of the timing of the
          closing of certain large lease transactions.  Of the total amount
          of non-recourse debt, $13.3 million related to leases that
          commenced in December 1996, but for which the Company was not
          required to pay for the equipment until January 1997.

             During the six months ended June 30, 1998, the Company
          generated $460,000 in fee, interest and other income, compared to
          $781,000 for the comparable period last year. Generally, fee
          income is generated as a result of the Company's involvement in
          certain transactions in which it acted as an arranger of
          financing for leases originated by third parties, or otherwise
          assisted these companies in their lease related transactions. 
          These transactions come about as a result of the Company's
          relationship with other lessors and financial institutions.  The
          Company cannot predict with any certainty the timing and nature
          of any future such transactions.

             SG&A expenses totaled $2.2 million for the six months ended
          June 30, 1998, representing an increase of  46.1% over the $1.5
          million recorded during the six months ended June 30, 1997.  The
          increase in SG&A is a result of the acquisition of Deltaforce as
          well as the continued growth in technical, sales and support
          staff at the Company.

             The tax benefit of $175,000 for the six months ended June 30,
          1998 reflects an effective rate of 40% for federal and state
          taxes.  During the six months ended June 30, 1997, the Company
          recorded a tax provision of $98,000, reflecting the same 40%
          effective tax rate.


          LIQUIDITY AND CAPITAL RESOURCES

             As of June 30, 1998, the Company had $4.4 million in cash and
          cash equivalents.  Substantially all of this amount was invested
          in interest-bearing savings accounts, money market accounts
          established by major commercial banks or in United States
          Government or other AA rated obligations.  Primarily as a result

                                     -10-

     <PAGE>

          of the acquisition of Deltaforce, the continued investment in
          Paratech and the Company's continuing investment in its portfolio
          of IT equipment on lease, the Company experienced a net cash
          reduction during the first two quarters of 1998. 

             The Company's leasing business generates cash primarily from
          the marketing of equipment within its portfolio, and uses cash to
          acquire computer equipment to put on lease.  In addition, the
          Company's leasing business generates cash from fee related
          transactions.   The Company finances substantially all of its
          leases by discounting the payment stream on a non-recourse basis
          through various banks and financial institutions. Thus, the only
          cash required in these lease transactions is the residual value
          investment by the Company.  The Company believes that it
          currently has sufficient resources to make the residual value
          investments required to grow its lease portfolio.  In addition,
          the Company has numerous options available to finance residual
          value investments, including sales of equipment on lease to
          equipment investors, residual value sharing arrangements,
          recourse loans and non-recourse loans.  The Company intends to
          use, on an opportunistic basis, all such available resources in
          order to maximize its portfolio of equipment on lease.

             The Company continues to fund the growth of Paratech.  In
          addition, the Company is seeking to expand Paratech's operations
          through both acquisitions and internal growth.  Since Deltaforce
          is an established operation, the Company does not anticipate
          investing significant cash in this business.  However, in order
          to expand Deltaforce's operations, which the Company is
          aggressively seeking to accomplish, the Company will need to
          utilize its cash balances to fund potential future acquisitions. 
          The Company is limited to its current cash balances for funding
          such add-on acquisitions and internal growth, unless the Company
          is able in the future to raise significant additional financing. 
          There can be no assurance that the Company will be able to raise
          any such financing.  Further, the Company's cash funds for
          acquisitions might be limited to the extent that the Company's
          current operations or the operations of any future acquisitions
          require the funding of losses or the incurrence of capital
          outlay.

             During the six months ended June 30, 1998, the Company entered
          into several residual value sharing and financing arrangements
          with an equipment investor totaling $1.4 million.  This investor
          (i) purchased a portion of the Company's residual value of
          equipment on lease in exchange for the right to share in
          remarketing proceeds generated from the equipment on lease, and
          (ii) provided recourse financing for the remaining portion of the
          Company's residual value investment.  The equipment on lease and
          the related leases serve as collateral for these financings. 
          During the six months ended June 30, 1998, in connection with the
          early extension of leases, the Company repaid  $847,500 of such
          loans using the proceeds of these extensions.  The Company
          expects to repay the balance of these loans through the proceeds
          generated from remarketing the subject equipment in the future. 
          These transactions allow the Company to continue to grow and
          expand its lease portfolio without significantly affecting its
          current cash balances.

             At June 30, 1998, the Company had three types of credit lines
          available.

             Equipment Bridge Financing Lines:  These lines allow the
          Company to borrow up to $1.25 million in the aggregate and are
          secured by equipment and contracts to sell or lease that
          equipment.  Borrowings under these lines bear interest at 1%
          above the prime rate.  In addition, one of these lines offers the
          Company the ability to borrow up to $100,000 on an unsecured
          basis.  The purpose of these credit lines is to allow the Company
          to pay its suppliers on a timely basis while waiting for the
          customer to pay or for the non-recourse financing to occur. 
          During the quarter ended June 30, 1998, the Company did not
          borrow any amounts from these lines, and accordingly had nothing
          outstanding as of June 30, 1998.  As a result of its cash
          balances, the Company has been able to internally finance its
          equipment purchases.

             Lease Finance Line:  This line allows the Company to borrow up
          to $1 million (which amount had been $2 million but was reduced
          to $1 million in connection with the loan amendment described
          below) to permanently finance, on a recourse basis, the rental
          streams under certain lease transactions pledged as collateral. 
          The facility is secured by the individual leases pledged and the
          associated equipment.   The Company is required to maintain


                                     -11-

     <PAGE>


          certain financial ratios.  As of June 30, 1998, the Company was
          not in compliance with the debt covenant requiring tangible net
          worth of at least $8 million.  The Company has amended this
          facility and, as of August 12, 1998, is in compliance with the
          terms of the facility.  Borrowings are financed at a fixed rate
          spread over the US Treasury bill at the time of funding.  As of
          June 30, 1998, the Company had $179,000 outstanding under this
          line.

             Term Loan:  In April 1998, Paramount entered into a $500,000
          term loan with a bank collateralized by $600,000 in cash
          maintained in an investment account.  Principal payments of
          approximately $41,600 and interest are due on a quarterly basis
          through April 20, 2001.

             Deltaforce Revolving Credit Facility:  Deltaforce has a
          $250,000 revolving line of credit agreement with a bank secured
          by accounts receivable which expires on January 11, 1999. 
          Interest on outstanding borrowings accrues at the bank's prime
          rate plus 1%.  Borrowings are limited to 80% of eligible accounts
          receivable.  As of June 30, 1998, Deltaforce had $200,000
          outstanding under this line.

             During the year ended December 31, 1997, the Board of
          Directors of the Company approved a plan that would allow for the
          repurchase of up to $500,000 worth of Common Stock of the
          Company.  The repurchase program took effect immediately and is
          authorized to continue for a period of two years.  Subject to
          applicable rules, the plan allows the Company to repurchase
          shares at any time during the authorized period in any increments
          it deems appropriate.  During the first two quarters of 1998, the
          Company repurchased 26,000 shares for a purchase price of
          $15,600.


          FORWARD LOOKING STATEMENTS AND ASSOCIATED RISK

             Statements contained in this Form 10-Q which are not
          historical facts are forward-looking statements.  The Forward-
          looking statements in this Form 10-Q are made pursuant to the
          safe harbor provisions of the Private Securities Litigation
          Reform Act of 1995.  Forward-looking statements made herein
          contain a number of risks and uncertainties that could cause
          actual results to differ materially.  These risks and
          uncertainties include, but are not limited to, the specific
          factors impacting the Company's business discussed under the
          caption "General", as well as increased competition; the
          availability of computer equipment; the ability of the Company to
          expand its operations and attract and retain qualified sales
          representatives experienced in the purchase, sale and lease of
          new and used computer equipment; technological obsolescence of
          the Company's portfolio of computer equipment; and general
          economic conditions.

                                     -12-

     <PAGE>


                             PART II:  OTHER INFORMATION



          ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

                 (a)     Exhibits.
                         --------

                         27.  Financial Data Schedule.

                 (b)     Reports on Form 8-K.
                         -------------------

                         None.

                                     -13-

     <PAGE>

                                      SIGNATURES


               Pursuant to the requirements of the Securities Exchange Act
          of 1934, the Registrant has duly caused this report to be signed
          on its behalf by the undersigned thereunto duly authorized.


                                   PARAMOUNT FINANCIAL CORPORATION



          Date:  August 13, 1998   By:    /s/ Paul Vecker                  
                                      -------------------------------------
                                   Paul Vecker, Senior Vice President and
                                   Chief Financial Officer


                              EXHIBIT INDEX

         Exhibit          Description
         -------          -----------
           27             Financial Data Schedule