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


                          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 MARCH 31, 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 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 MAY 12, 1998:

             7,914,000 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE.



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


     <PAGE>


                           PARAMOUNT FINANCIAL CORPORATION

                       INDEX TO FORM 10-Q FOR THE QUARTER ENDED

                                    MARCH 31, 1998





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

            Item 1 - Financial Statements

                   Consolidated Balance Sheets
                   December 31, 1997 and March 31, 1998   . . . . . .   1

                   Consolidated Statements of Operations
                   Three Months Ended March 31, 1997 and 1998   . . .   2

                   Consolidated Statement of Changes in Stockholders' 
                   Equity Three Months Ended March 31, 1998   . . . .   3

                   Consolidated Statements of Cash Flows
                   Three Months Ended March 31, 1997 and 1998   . . .   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,      MARCH 31,
                      ASSETS                1997              1998   
                      ------             ------------      ----------
                                                          (UNAUDITED)

           Cash and cash equivalents .   $ 2,209,649     $ 5,282,603

           Investments available for
             sale  . . . . . . . . . .     3,524,456              --
           
           Accounts receivable . . . .     1,138,479       1,495,844

           Net investment in direct
             finance and sales-
             type leases . . . . . . .    39,941,764      37,784,043
           
           Assets held under operating
             leases, net of accumulated
             depreciation  . . . . . .     5,459,895       9,074,108
             
           Other assets  . . . . . . .       788,218       1,336,999
                                        ------------    ------------

           Total assets  . . . . . . .   $53,062,461     $54,973,597
                                        ============    ============


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

           Notes payable . . . . . . .   $ 2,656,365     $ 2,892,558

           Accounts payable  . . . . .     1,307,496         705,502

           Accounts payable - leases .       708,568         964,863

           Accrued expenses  . . . . .       383,097         351,530

           Obligations for financed
            equipment - non-recourse .    40,287,404      42,388,533

           Deferred income taxes . . .        73,848          73,848
                                        ------------    ------------

           Total liabilities . . . . .    45,416,778      47,376,834
                                        ------------    ------------
           Shareholders' equity:

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

           Common stock, $.01 par
               value; 35,000,000 shares
               authorized, 7,990,000
               shares issued and
               outstanding,
               respectively  . . . . .        79,900          79,900

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

           Accumulated deficit . . . .    (6,049,080)     (6,082,414)

           Treasury stock, 50,000 and
               76,000 shares at cost,
               respectively  . . . . .       (29,365)        (44,951)
                                        ------------    ------------

           Total shareholders' equity      7,645,683       7,596,763
                                        ------------    ------------
           Total liabilities and                    
           shareholders' equity  . . .   $53,062,461     $54,973,597
                                        ============    ============


                   See accompanying notes to financial statements.


                                      -1-
     <PAGE>

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

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

                         FOR THE THREE MONTHS ENDED MARCH 31,
                         ------------------------------------

                                      UNAUDITED
                                      ---------



                                                1997          1998
                                            ------------   ----------

           REVENUES:

           Sales . . . . . . . . . . . . .  $  936,239    $14,481,462

           Lease revenue . . . . . . . . .   2,609,347      1,506,328

           Fee, interest and other income      500,875        219,927
                                             ---------     ----------

                  Total revenues . . . . .  $4,046,461    $16,207,717
                                             ---------     ----------


           COSTS AND EXPENSES:

           Cost of sales . . . . . . . . .     775,144     13,788,191

           Lease expense . . . . . . . . .   2,449,082      1,443,175

           Selling, general and
            administrative expenses  . . .     702,636      1,031,907
                                             ---------     ----------

                  Total costs and expenses   3,926,862     16,263,273
                                             ---------     ----------

           Income (loss) before provision
            for (benefit from) income taxes    119,599        (55,556)

           PROVISION FOR (BENEFIT FROM)
            INCOME TAXES . . . . . . . . .      47,839        (22,222)
                                             ---------     ----------

                  Net income (loss)  . . .    $ 71,760       ($33,334)
                                             =========     ==========

                  Basic income per common        $0.01             --
                   share . . . . . . . . .   =========     ==========

                  Diluted income per common      $0.01             --
                   share . . . . . . . . .   =========     ==========

           Shares used in computing net
            income per share:

                  Basic  . . . . . . . . .   7,990,000      7,919,733
                                             =========     ==========

                  Diluted  . . . . . . . .   7,990,000      7,919,733
                                             =========     ==========

                   See accompanying notes to financial statements.


                                      -2-
     <PAGE>


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

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

                      FOR THE THREE MONTHS ENDED MARCH 31, 1998
                      -----------------------------------------

                                      UNAUDITED
                                      ---------



                                          COMMON STOCK
                                     ----------------------

                                                                ADDITIONAL
                                                                 PAID-IN
                                      SHARES        AMOUNT       CAPITAL
                                   ------------   ----------    ----------
           BALANCE, DECEMBER 31,
            1997 . . . . . . . .    7,990,000       $79,900    $13,644,228

           Net (loss)  . . . . .           --            --             --

           Purchase of treasury
            stock  . . . . . . .           --            --             --
                                  -----------    ----------   ------------

           BALANCE, MARCH 31,
            1998 . . . . . . . .    7,990,000       $79,900    $13,644,228
                                  ===========    ==========   ============





                                    ACCUMULATED      TREASURY
                                     (DEFICIT)        STOCK        TOTAL
                                    -----------    -----------    -------

           BALANCE, DECEMBER 31,
            1997 . . . . . . . .    ($6,049,080)     $(29,365)   $7,645,683

           Net (loss)  . . . . .        (33,334)           --       (33,334)

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

           BALANCE, MARCH 31,
            1998 . . . . . . . .    ($6,082,414)     ($44,951)   $7,596,763
                                   ============     =========   ===========



                   See accompanying notes to financial statements.


                                      -3-
     <PAGE>

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

                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                        -------------------------------------
                         FOR THE THREE MONTHS ENDED MARCH 31,
                         ------------------------------------
                                      UNAUDITED
                                      ---------

                                        1997                  1998   
                                     -----------         ------------ 

           CASH FLOWS FROM
            OPERATING
            ACTIVITIES:

           Net income (loss) . .        $71,760             $(33,334)

           Adjustments to
            reconcile net 
            income (loss) 
            to net cash 
            (used in)
            provided by
            operating
            activities:

             Depreciation  . . .      1,894,449              788,645

             Amortization  
               of discounts
               on investments. .        (48,436)             (26,953)

             Amortization of
               goodwill  . . . .             --               14,778

           Changes in operating
            assets and liabilities:

                Accounts
                  receivable . .      1,213,799              (18,847)

                Other assets . .         14,582               68,582

                Accounts payable        (62,907)            (601,994)

                Accounts payable
                  - leases . . .    (17,554,731)             256,295

                Accrued expenses         11,469             (116,522)
                                  -------------         ------------
           Net cash provided by
            (used in) operating
            activities . . . . .    (14,460,015)             330,650
                                  -------------         ------------

           CASH FLOWS FROM
           INVESTING ACTIVITIES:

             Purchase of
               equipment for
               direct finance
               leases and sales
               -type leases  . .    (10,110,254)          (5,223,675)

             Termination of
               direct finance
               leases  . . . . .        272,922            3,159,587

             Proceeds applied to
               direct finance
               leases and sales
               -type leases  . .      2,156,303            4,158,810

             Purchase of
               equipment for
               operating leases         (41,333)          (5,110,445)

             Termination of
               operating leases              --               57,000

             Residual value
               sharing
               arrangements  . .      3,009,570              713,587

             Payment for
               acquisition of
               Deltaforce, net
               of cash acquired              --             (213,706)

             Purchases of
               investments . . .     (1,879,906)          (3,084,593)

             Proceeds from
               sale/maturity of
               investments . . .      3,195,000            6,636,003
                                   ------------          -----------
           Net cash (used in)
             provided by
             investing
             activities  . . . .     (3,397,698)           1,092,568
                                   ------------          -----------
           CASH FLOWS FROM
            FINANCING
            ACTIVITIES:

             Repurchase of
               common stock  . .             --              (15,586)

             Proceeds from notes
               payable   . . . .      1,959,567              817,427

             Repayment of notes
               payable   . . . .           (555)          (1,253,234)

             Increase in non-
               recourse lease
               financing   . . .     21,036,113            9,795,722

             Termination of non-
               recourse lease
               financing   . . .             --           (2,864,076)

             Repayments and
               interest
               amortization
               applied to non-
               recourse lease
               financing   . . .     (3,748,806)          (4,830,517)
                                   ------------           ----------

           Net cash provided by
            financing activities     19,246,319            1,649,736
                                   ------------           ----------

           Net increase in cash
            and cash equivalents      1,388,606            3,072,954

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

           CASH AND CASH
            EQUIVALENTS, end of
            period . . . . . . .     $5,089,380           $5,282,603
                                   ============          ===========

           SUPPLEMENTAL CASH
            FLOW INFORMATION:

             Cash paid for
               income taxes  . .     $   47,850           $   22,120
                                   ============          ===========

             Cash paid for
               interest  . . . .     $  553,374           $  614,653
                                   ============          ===========

                   See accompanying notes to financial statements.


                                      -4-
     <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
               March 31, 1998 and its results of operations and cash flows
               for the three months ended March 31, 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 months ended March
               31, 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 $688,000,
               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 $591,000 has been recorded as goodwill and is
               being amortized over 15 years.


                                      -5-
     <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 Form 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 operating results of Paramount 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.  See "Lease Accounting."  Given the possibility of such
          fluctuation, 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.

             The first quarter of 1998 was significant for several reasons. 
          In January, the Company completed the acquisition of Deltaforce
          Personnel Services, Inc., 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
          Resources, Inc., which is moving ahead with its growth plans in
          both personnel and product offerings.  Both of these companies


                                      -6-
     <PAGE>


          are an important part of the evolution of Paramount from a lease
          finance company to a diversified business solution provider. 
          When comparing the first quarter of 1998 with the first quarter
          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 as of March 31, 1997.

             The Company remains committed to the growth of its lease
          portfolio and continued to expand this activity during the three
          months ended March 31, 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.

          LEASE ACCOUNTING

             In accordance with Statement of Financial Accounting Standard
          No. 13, "Accounting for Leases" ("SFAS 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 direct finance
          leases 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.


                                      -7-
     <PAGE>


             The Company's portfolio of equipment on lease is further
          divided into equipment owned by Paramount and equipment managed
          by Paramount.  As of March 31, 1998, the portfolio of equipment
          on lease owned by Paramount had a combined net book value on the
          balance sheet of $46.9 million and had an original cost basis of
          $69.7 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
          March 31, 1998, the portfolio of equipment on lease owned and
          managed by Paramount had an original acquisition cost of $92.9
          million.

             The Company is aggressively working to maximize the returns on
          the residual value investments made on its lease portfolio.  Such
          efforts often result in equipment originally leased under an
          operating lease, and accounted for as described above, being
          upgraded or otherwise enhanced and extended at the original
          lessee, or leased to a different end-user.  The resulting lease
          may qualify under SFAS 13 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.


          RESULTS OF OPERATIONS

          THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED
          MARCH 31, 1997

             Net loss for the first quarter of 1998 was $33,300, after a
          benefit from income taxes of $22,200, as compared with net income
          of $71,800, after a provision for income taxes of $47,800.

             For the three months ended March 31, 1998, the Company
          recorded sales revenue of $14.5 million, a $13.5 million increase
          over the $936,200 recorded during the three months ended March
          31, 1997.  The majority of the sales volume in 1998 was a result
          of remarketing activities within the Company's existing lease
          portfolio.  Sales revenue for 1998 includes $12.6 million of
          revenue from sales type leases and sales of equipment off lease. 
          See "Lease Accounting."  There were no such transactions in the
          first quarter of 1997.  Paratech's sales revenue in the first
          quarter of 1998 increased by 151.0% to $1.4 million as compared
          with $567,700 recorded in the first quarter of 1997.  In
          addition, the 1998 acquisition of Deltaforce contributed $515,000
          to sales revenue in the first quarter.  See "General."

             As a result of the Company's ongoing remarketing 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.  As a result of this


                                      -8-
     <PAGE>


          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 three months ended March 31, 1998 when
          compared to the three months ended March 31, 1997 by 42.3% and
          41.0%, respectively.  See "General" and "Lease Accounting."

             During the three months ended March 31, 1998, the Company
          entered into new lease transactions totaling $10.3 million of
          equipment cost as compared with $10.1 million for the three
          months ended March 31, 1997.  Of the total cost of equipment
          leased during the quarter ended March 31, 1998, $5.2 million was
          recorded as direct finance leases, and $5.1 million was recorded
          as operating leases, compared to $9.4 million and $41,000,
          respectively, for the quarter ended March 31, 1997.  During the
          quarter ended March 31, 1998, the Company entered into $9.8
          million of non-recourse lease financing arrangements, as compared
          with $21.0 million for the three months ended March 31, 1997. 
          See "Liquidity and Capital Resources."  Non-recourse debt entered
          into during the three months ended March 31, 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 three months ended March 31, 1998, the Company
          generated $219,900 in fee, interest and other income, compared to
          $500,900 for the comparable period last year.  In 1997, $416,000
          of this income was attributable to 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 with their lease related transactions. 
          In 1998, no such transactions occurred.  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
          $1.0 million for the three months ended March 31, 1998,
          representing an increase of 46.9% over the $702,600 recorded
          during the three months ended March 31, 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.  See "General."

             The tax benefit of $22,200 for the three months ended March
          31, 1998 reflects an effective rate of 40% for federal and state
          taxes.  During the three months ended March 31, 1997, the Company
          recorded a tax provision of $47,800, reflecting the same 40%
          effective tax rate.

          LIQUIDITY AND CAPITAL RESOURCES

             As of March 31, 1998, the Company had $5.3 million in cash and
          cash equivalents, including $600,000 which was pledged as
          collateral under a Letter of Credit arrangement.  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


                                      -9-
     <PAGE>


          obligations.  Primarily as a result 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 quarter of 1998.

             The Company's leasing business generates cash primarily from
          the remarketing 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 believes that it is close to completing the start-
          up cash investment in Paratech.  Since Deltaforce is an
          established operation, the Company does not anticipate investing
          significant cash in this business.  However, in order to expand
          Paratech's and Deltaforce's operations, which the Company is
          aggressively seeking to accomplish, the Company will need to
          utilize its cash balances to fund follow on acquisitions.  The
          Company is limited to its current cash balances for funding such
          acquisitions, 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 or
          any future acquisitions require the funding of losses or the
          incurrence of capital outlay.

             During the quarter ended March 31, 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 upon 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 quarter ended March 31, 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.


                                      -10-
     <PAGE>


             At March 31, 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 March 31, 1998, the Company did not
          borrow any amounts from these lines, and accordingly had nothing
          outstanding as of March 31, 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 $2.0 million 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 certain financial ratios.  As of March 31, 1998, the
          Company was not in compliance with the debt covenant requiring
          tangible net worth of at least $8 million.  The Company has
          obtained a bank waiver of this covenant.  Borrowings are financed
          at a fixed rate spread over the US Treasury bill at the time of
          funding.  As of March 31, 1998, the Company had $257,000
          outstanding under this line.

             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 March 31, 1998, Deltaforce had $103,800
          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 quarter 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


                                      -11-
     <PAGE>


          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:  May 13, 1998      By:    /s/ Paul Vecker             
                                      ------------------------------------
                                        Paul Vecker, Senior Vice President
                                        and Chief Fiancial Officer




                                      -14-
     <PAGE>
     

                                  EXHIBIT INDEX


          Exhibit          Description
          -------          -----------

            27             Financial Data Schedule