==========================================================================
     
                          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 SEPTEMBER 30, 1996

                            COMMISSION FILE NUMBER 0-27190


                           PARAMOUNT FINANCIAL CORPORATION
                (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                   DELAWARE                                     11-3072768
        (STATE OR OTHER JURISDICTION OF                      (I.R.S. EMPLOYER
        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 NOVEMBER 12, 1996:


             7,990,000 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE.

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


<PAGE> 


                           PARAMOUNT FINANCIAL CORPORATION

                       INDEX TO FORM 10-Q FOR THE QUARTER ENDED
                                  September 30, 1996


                                                                        Page No.
                                                                        --------


     PART I - FINANCIAL INFORMATION

          Item 1 - Financial Statements

                    Balance Sheets
                    September 30, 1996 and December 31, 1995 . . . . . . . .  1

                    Statements of Operations
                    Three Months Ended and Nine Months Ended
                    September 30, 1996 and 1995  . . . . . . . . . . . . . .  2

                    Statement of Changes in Stockholders' Equity
                    Nine Months Ended September 30, 1996 . . . . . . . . . .  3

                    Statements of Cash Flows
                    Nine Months Ended September 30, 1996 and 1995  . . . . .  4

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

          Item 2 - Management's Discussion and Analysis of
                   Financial Condition and Results of Operations . . . . . 6-10


     PART II - Other Information . . . . . . . . . . . . . . . . . . . . . . 11


     SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12



<PAGE> 


                            PART I:  FINANCIAL INFORMATION

     ITEM 1.  FINANCIAL STATEMENTS

                           PARAMOUNT FINANCIAL CORPORATION
                           --------------------------------

                                    BALANCE SHEETS
                                    --------------

                                                 December 31,   Sepember 30,
                                                     1995           1996
                                                 ------------   ------------
                                                                 (Unaudited)

                       ASSETS
                       ------
      Cash and cash equivalents . . . . . . .    $ 1,153,476    $ 3,498,747

      Marketable securities available for sale             -      3,090,349

      Accounts receivable . . . . . . . . . .        106,794        954,756
      Net investment in direct finance and
        sales-type leases . . . . . . . . . .      6,446,063     19,924,404

      Assets held under operating leases, net
        of accumulated depreciation . . . . .      3,976,209      9,068,202

                                                     696,043        397,454
      Other assets  . . . . . . . . . . . . .    -----------    -----------
                                                 $12,378,585    $36,933,912
      Total assets  . . . . . . . . . . . . .   ============   ============

        LIABILITIES AND STOCKHOLDERS' EQUITY
        ------------------------------------
      Notes payable . . . . . . . . . . . . .    $ 1,611,697    $    18,938

      Accounts payable  . . . . . . . . . . .        419,624        311,397

      Accounts payable - leases . . . . . . .        126,990      4,624,308
      Accrued expenses  . . . . . . . . . . .        313,673        248,131

      Obligations for financed equipment-non-
      recourse  . . . . . . . . . . . . . . .      9,337,883     22,745,611
                                                                    419,819
      Deferred tax liabililty . . . . . . . .    -----------    -----------

                                                  11,809,867     28,368,204
      Total liabilities . . . . . . . . . . .    -----------    -----------

      Stockholders' equity:
      Preferred stock, $.01 par value;
        5,000,000 shares authorized, none
        outstanding . . . . . . . . . . . . .                              

      Common stock, $.01 par value; 35,000,000
        shares authorized, 3,500,000 and
        7,990,000 shares issued and
        outstanding, respectively . . . . . .         35,000         79,900
      Additional paid-in capital  . . . . . .      5,282,049     13,650,880

                                                  (4,748,331)    (5,165,072)
      Accumulated deficit . . . . . . . . . .    -----------    -----------

                                                     568,718      8,565,708
      Total stockholders' equity  . . . . . .    -----------    -----------
      Total liabilities and stockholders'        
        equity . . . . . . . . . .  . .. .   .    $12,378,585    $36,933,912
                                                 ===========    ===========


                   See accompanying notes to financial statements.


<PAGE> 


                           PARAMOUNT FINANCIAL CORPORATION
                           -------------------------------

                               STATEMENT OF OPERATIONS
                               -----------------------

                                      UNAUDITED
                                      ---------

                            THREE MONTHS ENDED           NINE MONTHS ENDED
                              SEPTEMBER 30,                SEPTEMBER 30,
                            ------------------           -----------------
                            1995          1996           1995          1996
                            ----          ----           ----          ----

     REVENUES:
     Sales . . . . .    $ 5,906,174   $   528,544    $28,627,147   $22,612,437
     Lease revenue .        409,977       986,678      1,477,156     2,433,049

     Fee and other           13,192       174,059         95,802       187,325
       income  . . .    -----------   -----------    -----------   -----------

       Total revenues     6,329,343     1,689,281     30,200,105    25,232,811
                        -----------   -----------    -----------   -----------
     DIRECT COSTS:
     Cost of sales .      5,302,529       407,067     26,924,308    21,489,156

                            315,261       882,027      1,199,632     2,234,239
     Lease expense .    -----------   -----------    -----------   -----------

       Total direct       5,617,790     1,289,094     28,123,940    23,723,395
       costs . . . .    -----------   -----------    -----------   -----------
                            711,553       400,187      2,076,165     1,509,416
       Gross profit     -----------   -----------    -----------   -----------


     SELLING, GENERAL
       AND
       ADMINISTRATIVE       459,177       588,119      1,342,441     1,733,030
       EXPENSES  . .    -----------   -----------    -----------   -----------
       Income (loss)
         from
         operations         252,376      (187,932)       733,724      (223,614)

     INTEREST
       (EXPENSE)         (2,632,738)       78,572     (2,606,542)      228,577
       INCOME, NET .    -----------   -----------    -----------   -----------
       (Loss) income
       before
       provision for
       income taxes      (2,380,362)     (109,360)    (1,872,818)        4,963


     PROVISION FOR            4,218       375,974         14,512       421,704
       INCOME TAXES     -----------   -----------    -----------   -----------
       Net loss  . .    ($2,384,580)    ($485,334)   ($1,887,330)    ($416,741)
                        ===========   ===========    ===========    ==========
     Loss per share  
                                           ($0.06)                      ($0.05)
                                      ===========                   ==========
      Weighted average
       common shares
       outstanding .
                                        7,990,000                    7,749,927
                                       ==========                   ==========



                   See accompanying notes to financial statements.

<PAGE> 


                           PARAMOUNT FINANCIAL CORPORATION
                           -------------------------------

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

                               AS OF SEPTEMBER 30, 1996
                               ------------------------

                                      UNAUDITED
                                      ---------


                                            COMMON STOCK
                                            ------------
                                         SHARES       AMOUNT
                                         ------       ------

      BALANCE, DECEMBER 31, 1995  .   3,500,000      $35,000
      Issuance of common stock in
        the initial public offering,
        net of offering costs of
        approximately $2,051,000  .   2,990,000       29,900

      Issuance of common stock to
        bridge lenders  . . . . . .   1,500,000       15,000

                                              -            -
      Net income  . . . . . . . . .   ---------      -------
                                      7,990,000      $79,900
      BALANCE, SEPTEMBER 30, 1996 .  ==========    =========


                                                       RETAINED
                                       ADDITIONAL      EARNINGS
                                        PAID-IN-     ACCUMULATED
                                        CAPITAL       (DEFICIT)        TOTAL
                                      -----------    -----------       -----
      BALANCE, DECEMBER 31, 1995  .    $5,282,049   ($4,748,331)  $   568,718

      Issuance of common stock in
        the initial public
        offering, net of offering
        costs of approximately
        $2,051,000  . . . . . . . .     8,383,831                   8,413,731
      Issuance of common stock to
        bridge lenders  . . . . . .       (15,000)            -

                                                -      (416,741)     (416,741)
      Net income  . . . . . . . . .   -----------   -----------    ----------
                                      $13,650,880
                                     ============   ($5,165,072)   $8,565,708
      BALANCE, SEPTEMBER 30, 1996 .                 ===========    ==========




                   See accompanying notes to financial statements.



<PAGE> 


                           PARAMOUNT FINANCIAL CORPORATION
                           -------------------------------
                               STATEMENTS OF CASH FLOWS
                               ------------------------
                       FOR THE NINE MONTHS ENDED SEPTEMBER 30,
                       ---------------------------------------
                                      UNAUDITED
                                      ---------

                                                          1995         1996
                                                          ----         ----
     CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss  . . . . . . . . . . . . . . . . . . .  ($1,887,330) ($  416,741)
     Adjustments to reconcile net loss to net cash
       provided by (used in) operating activities:
       Amortization of deferred financing costs  . .    2,625,000            -
       Deferred tax liability  . . . . . . . . . . .            -      419,819

       Depreciation  . . . . . . . . . . . . . . . .      443,761    1,280,277
       Amortization of discounts on marketable
         securities  . . . . . . . . . . . . . . . .            -     (118,285)
       Amortization of unearned operating lease
         revenue from sublease transactions  . . . .      (78,053)     (19,928)
       Amortization of prepaid operating lease
         expense from sublease transactions  . . . .       69,282       25,067
       Purchase of equipment for direct finance
         leases and sales type leases  . . . . . . .   (2,489,090) (18,236,564)
       Termination of direct finance leases  . . . .      721,376      974,152
       Proceeds applied to direct finance leases and
         sales type leases . . . . . . . . . . . . .    1,461,157    3,784,071

       Purchase of equipment for operating leases  .   (3,950,717) (19,121,819)
       Termination of operating leases . . . . . . .       30,200   12,749,549
       Increase in non-recourse lease financing  . .    6,401,772   34,895,847
       Termination of non-recourse lease financing .     (734,658) (16,291,873)
       Repayments and interest amortization applied
         to non-resource lease financing . . . . . .   (1,834,767)  (5,196,245)
       Changes in operating assets and liabilities:
          Accounts receivable  . . . . . . . . . . .   (2,240,852)    (847,962)

          Other assets . . . . . . . . . . . . . . .     (145,015)     273,521
          Unearned sales revenue . . . . . . . . . .     (825,000)           -
          Accounts payable . . . . . . . . . . . . .    1,814,839     (108,227)
          Accounts payable - leases  . . . . . . . .            -    4,497,318
          Accrued expenses . . . . . . . . . . . . .      (69,342)     (45,614)
                                                      -----------  -----------
     Net cash used in operating activities . . . . .     (687,437)  (1,503,637)
                                                      -----------  -----------

     CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of marketable securities  . . . . .            -  (16,980,988)
       Proceeds from sale/maturity of marketable
         securities  . . . . . . . . . . . . . . . .            -   14,008,924
                                                      -----------  -----------
     Net cash used in investing activities . . . . .            -   (2,972,064)
                                                      -----------  -----------
     CASH FLOWS FROM FINANCING ACTIVITIES:
       Net proceeds from sale of common stock in an
         initial public offering . . . . . . . . . .            -   10,465,000
       Repayment of fees in connection with initial
         public offering . . . . . . . . . . . . . .            -   (2,051,269)

       Distributions to shareholders in cash . . . .     (383,067)           -
       Proceeds from notes payable . . . . . . . . .    1,020,371            -
       Repayment of notes payable  . . . . . . . . .            -   (1,592,829)
                                                      -----------  -----------
     Net cash provided by financing activities . . .      637,304    6,820,972
                                                      -----------  -----------
     Net (decrease) increase in cash and cash
       equivalents . . . . . . . . . . . . . . . . .      (50,133)   2,345,271
     CASH AND CASH EQUIVALENTS, beginning of period     1,286,601    1,153,476
                                                      -----------  -----------

     CASH AND CASH EQUIVALENTS, end of period  . . .  $ 1,236,468 $  3,498,747
                                                      ========================
     SUPPLEMENTAL CASH FLOW INFORMATION:
       Cash paid for income taxes  . . . . . . . . .  $    14,512  $    49,366
                                                     ============  ===========
       Cash paid for interest  . . . . . . . . . . .  $   339,000  $   923,063
                                                      ===========  ===========

                   See accompanying notes to financial statements.


<PAGE> 


                           PARAMOUNT FINANCIAL CORPORATION
                           -------------------------------

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

                                     (UNAUDITED)
                                     -----------

          1.   The accompanying unaudited 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
               (the "Company") at September 30, 1996 and its results of
               operations and cash flows for the three and nine months
               ended September 30, 1995 and 1996, 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, 1995.

          2.   On January 22, 1996, the Company consummated an initial
               public offering ("IPO") of its securities.  In connection
               with the offering, the Company issued a total of 1,495,000
               units, inclusive of the underwriter's over-allotment option
               which was exercised in full, at a price of $7.00 per unit
               generating net proceeds to the Company of approximately $8.4
               million.  Each unit sold in the offering consisted of two
               shares of common stock and two redeemable, detachable class
               A warrants.  Concurrent with the IPO, the Company issued
               750,000 units, identical to those units issued in the IPO,
               and 1,500,000 class B warrants to certain lenders (the
               "Lenders") as additional compensation for making certain
               bridge loans to the Company (the "Bridge Loans"). 
               Concurrent with the IPO, the Company no longer qualified as
               a Subchapter "S" Corporation, and became subject to "C"
               corporation taxation from that point on.

          3.   During the quarter ended September 30, 1996, the Company
               formed a new wholly owned subsidiary, Paratech Resources,
               Inc. ("Paratech"), to offer comprehensive information
               technology solutions, including network design and
               integration, software applications, training and value-added
               support services.  The financial statements for the three
               and nine months ended September 1996 are consolidated to
               include the results of Paratech.  All intercompany balances
               and transactions have been eliminated.  On September 30,
               1996, the Company and Select Systems, Inc. agreed to
               dissolve Continental Medical Exchange Corporation, a joint
               venture 60% owned by the Company.  The majority of the
               investment was written off as of December 31, 1995.

          4.   Marketable securities have been classified as available for
               sale in accordance with Statement of Financial Accounting
               Standards Board No. 115, "Accounting for Certain Investments
               in Debt and Equity Securities".  Marketable securities
               available for sale consist primarily of United States
               government and agency bonds with original maturities of one
               year or less.  The cost basis of these securities
               approximates market value, as such there are no unrealized
               gains or losses at September 30, 1996.  The cost of debt
               securities is adjusted for amortization of premiums and
               accretion of discounts to maturity.  Such amortization,
               interest income, realized gains and losses are included in
               interest income.

          5.   In January 1996, the Company, utilizing a portion of the net
               proceeds from the IPO, repaid the Lenders an aggregate of
               approximately $1,040,000 of indebtedness under the Bridge
               Loans, and in March 1996 the Company repaid $495,000
               outstanding under a secured line of credit.

          6.   The Company accounts for income taxes under Statement of
               Financial Accounting Standards No. 109, "Accounting for
               Income Taxes" ("SFAS 109").  SFAS 109 requires an asset and
               liability approach for financial reporting for income taxes. 
               Under SFAS 109, deferred taxes are provided for temporary
               differences between the carrying values of assets and
               liabilities for financial reporting and tax purposes at the
               enacted rates at which these differences are expected to
               reverse.  As of September 30, 1996, the Company has recorded
               a $420,000 cumulative deferred tax liability which primarily
               results from temporary differences with respect to
               depreciation.


     <PAGE> 


          ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS

          The following discussion should be read in conjunction with, and
          is qualified in its entirety by, the unaudited financial
          statements, including the notes thereto, included elsewhere in
          this report.


          GENERAL

               The operating results of Paramount Financial Corporation
          ("Paramount" or the "Company") are subject to quarterly
          fluctuations resulting from a variety of factors, including
          product announcements by manufacturers, economic conditions,
          interest rate fluctuations and variations in the mix of leases
          written.  In addition, the Company's sales volume can fluctuate
          significantly from quarter to quarter based on the closing date
          and nature of each particular 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.

               The results of operations for the first nine months of 1996
          represent a significant change in focus for Paramount as compared
          to the prior year's activity.  The Company has begun to carry out
          its business plan to aggressively expand its end-user lease
          origination business.  Specifically, the Company has increased
          its presence in end-user accounts, put greater emphasis on new
          lease origination and established a greater marketing presence in
          the high-technology community.  In addition, the proceeds of the
          Company's January 1996 initial public offering ("IPO") have
          increased the Company's ability to make residual value
          investments in leased equipment, thus creating new opportunities
          for lease origination.  See "Liquidity and Capital Resources." 
          As a result of this change in focus, the Company measures its
          progress not only in terms of revenue and profit, but also on the
          growth of its lease portfolio, which generates lease revenue
          during the term of the leases and sales or lease revenue at lease
          expiration through subsequent sales or re-leases of the
          equipment.

               During the quarter ended September 30, 1996 the Company
          activated a new wholly owned subsidiary, Paratech Resources, Inc.
          ("Paratech"), to offer comprehensive information technology
          solutions including network design and integration, software
          applications, training and value-added support services such as
          help desk.  The results of operations from Paratech are
          consolidated with those of  Paramount.  All intercompany balances
          and transactions have been eliminated.


          RESULTS OF OPERATIONS

          THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS
          ENDED SEPTEMBER 30, 1995

               The Company recorded a pre-tax loss of  $109,400 for the
          three months ended September 30, 1996 as compared to a pre-tax
          loss of  $2.4 million for the comparable period ended September
          30, 1995.  During the quarter ended September 30, 1995, the
          Company expensed $2.6 million of deferred financing cost related
          to the issuance of 1.5 million shares of Common Stock issuable as
          additional consideration under the certain Bridge Units which
          were originally issued in connection with a Bridge Loan to the
          Company entered into in July and August of 1995.  This amount
          represents one half of the total amount of deferred financing
          cost accrued by the Company (which was based on the estimated
          value of the Company's Common Stock at the consummation of the
          IPO), the balance of which was expensed during the three months
          ended December 31, 1995.  The expense recorded did not affect the
          Company's cash position or net equity as a result of the
          corresponding credit made to additional paid-in capital.  The
          pre-tax loss for the quarter ended September 30, 1996 is largely
          attributable to the increased emphasis on new lease origination
          and the timing of the associated revenue recognition.  See
          "General." 


     <PAGE> 


               In accordance with Statement of Financial Accounting
          Standards No. 109, "Accounting for Income Taxes,"  the Company
          recorded a one time, non-cash adjustment of $419,800 to its
          Provision For Income Taxes during the three months ended
          September 30, 1996.  This adjustment was necessitated by the
          change of the Company's tax status from a  Sub-Chapter S
          Corporation to a C-Corporation in connection with the Company's
          January 1996 IPO. The amount of the adjustment represents the
          cumulative deferred tax liability, which arose primarily from
          temporary tax differences with respect to depreciation, generated
          by the S-Corporation and payable in the future by the C-
          Corporation.  This adjustment does not affect the Company's
          current cash position, as a result of the corresponding credit
          made to a deferred tax liability account, but did cause the
          Company to report an after tax loss of $485,300 for the three
          months ended September 30, 1996 as compared to a loss of $2.4
          million for the comparable period ended September 30, 1995.

               During the three months ended September 30, 1996, the
          Company entered into new lease transactions totaling $5.4 million
          of equipment cost.  Of this amount, $815,500 were classified as
          direct finance leases and $4.6 million were classified as
          operating leases.  For the three months ended September 30, 1995,
          the Company entered into $466,100 of direct finance leases and
          $3.7 million of operating leases.  The increase in new lease
          origination is a direct result of the Company's efforts to expand
          its end-user lease origination business.  See "General." During
          the three months ended September 30, 1996, the Company entered
          into $2.0 million of non-recourse lease financing arrangements,
          net of terminations resulting from lease sales and lease
          extensions, as compared with $3.6 million for the three months
          ended September 30, 1995.   The reduction in the amount of non-
          recourse debt entered into in the quarter, both as compared to
          last year and as compared to the amount of new lease origination
          entered into in the quarter, is a result of the timing of the
          closing of certain large lease transactions.  Of the total amount
          of new lease business in the quarter ended September 30, 1996,
          $4.6 million related to leases for which the Company was not
          required to pay for the equipment until November 1996. The
          Company anticipates entering into non-recourse lease financing
          for these leases at the time of such vendor payment.  This amount
          was recorded as accounts payable-leases on the Company's
          September 30, 1996 balance sheet.       

               Consistent with the growth in new lease origination, lease
          revenue, comprised of rental income from operating leases and
          interest income from direct finance and sales type leases,
          increased by 140.7% to $986,700 for the three months ended
          September 30, 1996 from $410,000 for the comparable period ended
          September 30, 1995.  Lease expense, which includes depreciation
          expense on operating leases, interest expense on lease financing
          and sublease rent expense, increased by 179.8% to $882,000 for
          the three months ended September 30, 1996 from $315,300 for the
          three months ended September 30, 1995.  See  "General."

               Revenue from the sale of equipment for the three months
          ended September 30, 1996 declined by 91.0% to $528,500 from $5.9
          million for the three months ended September 30, 1995.  This
          decrease is a result of the Company's expansion of its leasing
          operation and the increased emphasis on lease origination and
          portfolio development.  During the three months ended September
          30, 1995, the Company entered into a single transaction to sell
          equipment on lease to an equipment investor for a total sale
          price of  $2.4 million.  Subsequent to a sale of this variety,
          the Company generally is a party to a re-marketing agreement
          under which it may earn additional income from the asset's future
          re-lease or sale value.  The Company includes these leases within
          the aggregate value of its active portfolio of owned and managed
          leases. Management believes that as the Company's base of end-
          user lease and sale customers continues to grow and expand, the
          Company should experience a matching growth in sales revenue and
          profits.  See "General."

               During the three months ended September 30, 1996, the
          Company generated $174,100 in fee and other income, compared to
          $13,200 for the comparable period last year.  This revenue is
          principally derived from the Company's involvement in certain
          transactions in which it acts as an arranger of financing for
          transactions originated by third parties.  The Company does not
          recognize as revenue the gross amount of the lease financing
          arranged, but rather records the net profit generated from the
          transaction.  For the three months ended September 30, 1996, the
          Company arranged for lease financing totaling in excess of $4.2
          million.

               Selling, general and administrative expenses ("SG&A")
          totaled $588,100 for the three months ended September 30, 1996,
          representing an increase of  28.1% over the $459,200 recorded
          during the three months ended September 30, 1995.  The increase
          in SG&A is a result of the increased sales and support staff at
          the Company as well as the  increased compliance costs associated
          with being a public company.


     <PAGE> 


               During the three months ended September 30, 1996, the
          Company recorded $78,600 of interest income, an increase of
          $60,100 over the period ended September 30, 1995, excluding the
          $2.6 million charge to interest expense related to the Bridge
          Units as described above.  This increase is due to the investment
          of the IPO proceeds in interest bearing cash accounts, cash
          equivalents and marketable securities during the three months
          ended September 30, 1996.

               The tax provision of  $375,900 for the three months ended
          September 30, 1996 represents the cumulative adjustment of
          $419,800, described above, less a benefit of  $43,900, which
          reflects  an effective rate of 40% for federal and state taxes on
          the current period loss.  Prior to 1996, the Company was an S-
          Corporation and not subject to a corporate federal income tax.


          NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS
          ENDED SEPTEMBER 30, 1995

               For the nine months ended September 30, 1996, the Company
          recorded pre-tax income of $5,000 as compared to a pre-tax loss
          of $1.9 million for the comparable period ended September 30,
          1995.  The results for the nine months ended September 30, 1995
          were affected by the Bridge Loan interest expense described
          above. 

               During the nine months ended September 30, 1996, the Company
          entered into new lease transactions totaling $37.4 million of
          equipment cost.  This represents an increase of $31.0 million
          over the cost of equipment leased during the nine months ended
          September 30, 1995.  Of the total cost of equipment leased during
          the nine months ended September 30, 1996, $12.4 million was
          subsequently sold to an equipment investor, and $7.5 million were
          recorded as sales type leases.   Of the balance of new lease
          origination for the nine months ended September 30, 1996, $10.8
          million were recorded as direct finance leases, and $6.7 million
          were recorded as operating leases, compared to $2.5 million and
          $3.9 million respectively, for the nine months ended September
          30, 1995.  During the nine months ended September 30, 1996, the
          Company entered into $18.6 million of non-recourse lease
          financing arrangements, net of terminations resulting from lease
          sales and lease extensions, as compared with $5.7 million for the
          nine months ended September 30, 1995.  See "Liquidity and Capital
          Resources."

               Consistent with the growth in new lease origination, lease
          revenue increased by 64.7% to $2.4 million for the nine months
          ended September 30, 1996 from $1.5 million for the comparable
          1995 period.  Lease expense increased by 86.2% to $2.2 million
          for the nine months ended September 30, 1996 from $1.2 million
          for the nine months ended September 30, 1995. Included in lease
          expense for the nine months ended September 30, 1996 was interest
          expense on the  financing of certain lease transactions which
          were recorded as sales type leases with a portion of the
          associated revenue recorded as sales revenue rather than lease
          revenue.  See "General."  

               For the nine months ended September 30, 1996, the Company
          recorded sales revenue of  $22.6 million.  Of this amount, $8.2
          million was from sales type leases, and $12.5 million was from
          the sale of leased equipment to an equipment investor.  During
          the nine months ended September 30, 1995, the Company recorded
          sales revenue of  $28.6 million which included $16.4 million of
          sales of equipment leases to equipment investors.  

               During the nine months ended September 30, 1996, the Company
          generated $187,300 in fee and other income, compared to $95,800
          for the comparable period last year.  This revenue is principally
          derived from the Company's involvement in certain transactions in
          which it acts as an arranger of financing for transactions
          originated by third parties.  The Company does not recognize as
          revenue the gross amount of the lease financing arranged, but
          rather records the net profit generated from the transaction. 
          For the nine months ended September 30, 1996, the Company
          arranged for lease financing totaling in excess of $4.2 million
          as compared to $3.5 million for the comparable period ended
          September 30, 1995.

               SG&A totaled $1.7 million for the nine months ended
          September 30, 1996, representing an increase of 29.1% over the
          $1.3 million recorded during the nine months ended September 30,
          1995.  The increase in SG&A is as result of the increased sales
          and support staff at the Company as well as the increased
          compliance costs associated with being a public company.

               During the nine months ended September 30, 1996, the Company
          recorded $228,600 of interest income, an increase of $183,900
          over the period ending September 30, 1995, excluding the $2.6
          million charge to interest expense related to the Bridge Units as
          described above.  This increase is due to the investment of the
          IPO proceeds in interest bearing cash accounts, cash equivalents 


     <PAGE> 


          and marketable securities during the nine months ended September
          30, 1996.

               The tax provision of  $421,700 for the nine months ended
          September 30, 1996 represents the cumulative adjustment of
          $419,800, described above, plus $1,900 which reflects an
          effective rate of 40% for federal and state taxes on the current
          period income.  Prior to 1996, the Company was an S-Corporation
          and not subject to a corporate federal income tax.

          JOINT VENTURES:

               The Company is a 20% owner of KRh Financial, LLC ("KRh"), a
          company created to lease the Hot Choice Vending Machine, a fully-
          integrated freezer-to-oven vending machine.  During the nine
          months ended September 30, 1996, KRh had successfully leased and
          financed vending machines for an aggregate sale price in excess
          of  $200,000.  KRh is still in the early stages of business and
          the results of its operation are immaterial to the overall
          financial position of Paramount. 

               In September, 1996, the Company and Select Systems, Inc.
          agreed to dissolve Continental Medical Exchange Corporation, a
          joint venture 60% owned by Paramount.  The majority of the
          Company's investment was written off as of December 31, 1995.


          LIQUIDITY AND CAPITAL RESOURCES

               On January 22, 1996, the Company consummated an initial
          public offering of its securities.  In connection with the
          offering, the Company issued a total of 1,495,000 units,
          inclusive of the underwriter's over-allotment option which was
          exercised in full, at a price of $7.00 per unit generating net
          proceeds to the Company of approximately $8.4 million. 
          Concurrent with the IPO, the Company repaid the $1.0 million owed
          to certain bridge lenders plus the related interest accrued that
          was outstanding as of December 31, 1995.

               As of September 30, 1996, the Company had $6.6 million in
          cash, cash equivalents and marketable securities.  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.  Since inception, the Company has been able to cover
          its operating expenses from internally generated cash flow and
          has never had to borrow funds to cover such operating expenses. 
          Although the Company's business is subject to monthly and
          quarterly fluctuations that may require the Company to use its
          cash balances to cover such expenses for short periods of time,
          the Company does not anticipate having to use significant amounts
          of its cash balances to cover such expenses.  

               At September 30, 1996, the Company had three lines of credit
          available.  These credit lines, established with The Bank of New
          York, The Chase Manhattan Bank (formerly Chemical Bank) and PNC
          Bank (formerly Midlantic Bank), allow the Company, subject to the
          satisfaction of certain financial covenants with respect to the
          PNC Bank credit facility, to borrow up to $2,750,000 in the
          aggregate and are secured by equipment and contracts to sell or
          lease that equipment.  Borrowings under these lines bear interest
          at 1% to 1 1/2% 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.  As of December 31, 1995, the Company had borrowed
          $495,000 from one of these bank lenders in connection with the
          acquisition of equipment on lease.  This amount was paid in full
          in March of 1996 and no additional amounts were outstanding as of
          September 30, 1996.  The Company is in the process of reviewing
          all of its existing credit relationships and hopes to modify the
          terms and increase the amounts of these lines in the near future. 

          The Company finances substantially all of its leases by
          discounting the payment streams 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.  See "General."  As a result of the
          Company's IPO, management believes that it has sufficient
          resources to make the residual value investments required to grow
          its lease portfolio.  In addition, the Company has numerous
          options available to it for the financing of residual value
          investments, including sales of equipment on lease to equipment
          investors, recourse loans and non-recourse loans.  The Company 

     <PAGE> 


          intends to use, on an opportunistic basis, all such available 
          resources in order to maximize its portfolio of equipment on
          lease. In June 1996, in connection with an extension and re-
          financing of a lease transaction, the Company repaid $60,500 of a
          residual value loan that was outstanding as of  December 31,
          1995.  As of September 30, 1996, the Company had a total of
          $18,900 of residual value loans outstanding.


          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.



     <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.


     <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:  November 13, 1996           By:    /s/ Paul Vecker        
                                                 --------------------------
                                                    Paul Vecker, Senior
                                                    Vice President and
                                                    Chief Fiancial Officer