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


                       SECURITIES AND EXCHANGE COMMISSION


                             WASHINGTON, D.C. 20549


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


                                   FORM 10-Q


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


                       FOR THE QUARTER ENDED JUNE 30, 1999


                         COMMISSION FILE NUMBER 0-27190


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


                DELAWARE                               11-3072768
      (STATE OR OTHER JURISDICTION         (I.R.S. EMPLOYER IDENTIFICATION NO.)
    OF INCORPORATION OR ORGANIZATION)


          ONE JERICHO PLAZA, JERICHO, NEW YORK              11753
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)          (ZIP CODE)


                                 (516) 938-3400
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES  X   NO
                                              ---     ---


                NUMBER OF SHARES OUTSTANDING AT AUGUST 11, 1999:

          2,160,004 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE.


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


<PAGE>


                         PARAMOUNT FINANCIAL CORPORATION

                    INDEX TO FORM 10-Q FOR THE QUARTER ENDED

                                  JUNE 30, 1999





                                                                       Page No.
                                                                       --------

PART I - FINANCIAL INFORMATION

       Item 1 - Financial Statements

                Consolidated Balance Sheets
                June 30, 1999 and December 31, 1998........................1

                Consolidated Statements of Operations for the Three
                Months Ended and Six Months Ended June 30, 1998 and
                1999.......................................................2

                Consolidated Statements of Cash Flows for the Six
                Months Ended June 30, 1998 and 1999........................3

                Notes to Unaudited Consolidated Financial Statements.....4-5

     Item 2 -  Management's Discussion and Analysis of Financial
               Condition and Results of Operations......................6-11

PART II - Other Information...............................................12

SIGNATURES................................................................13


<PAGE>


                          PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                                   DECEMBER 31,       JUNE 30,
                             ASSETS                    1998            1999
                             ------                ------------      -----------
                                                                     (UNAUDITED)

Cash and cash equivalents.................         $ 1,495,082      $   972,125

Investments available for sale............             613,188          630,984

Accounts receivable.......................           2,632,258        3,255,164

Net investment in direct finance and                30,059,378       22,828,016
  sales-type leases.......................

Assets held under operating leases, net of           7,263,181        5,416,816
  accumulated depreciation................

Other assets..............................           3,183,523        2,666,285
                                                   -----------      -----------

Total assets..............................         $45,246,610      $35,769,390
                                                   ===========      ===========

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

Notes payable.............................         $ 4,313,189      $ 4,078,110

Accounts payable..........................             942,431        1,081,402

Accounts payable - leases.................             100,000               --

Accrued expenses..........................             658,392          674,268

Obligations for financed equipment --
  non-recourse............                          33,435,459       24,237,447
                                                   -----------      -----------
Total liabilities.........................          39,449,471       30,071,227
                                                   -----------      -----------

Shareholders' equity:

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

Common stock, $.04 par value;
  17,500,000 shares authorized, and
  2,160,004 shares issued and
  outstanding.............................              86,400           86,400

Additional paid-in capital................          14,456,728       14,456,728

Stock subscription receivable.............            (812,500)        (812,500)

Accumulated deficit.......................          (7,882,884)      (7,981,860)

Treasury stock, 24,500 shares at cost.....             (50,605)         (50,605)
                                                   -----------      -----------

Total shareholders' equity................           5,797,139        5,698,163
                                                   -----------      -----------

Total liabilities and shareholders'
  equity..................................         $45,246,610      $35,769,390
                                                   ===========      ===========

                 See accompanying notes to financial statements.


                                  -1-
<PAGE>



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

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

                                    UNAUDITED
                                    ---------

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED         SIX MONTHS ENDED
                                               JUNE 30,                   JUNE 30,
                                        ----------------------   ----------------------
                                         1998        1999           1998          1999
                                         ----        ----           ----          ----
<S>                                     <C>        <C>           <C>            <C>

REVENUES:

Sales.................................  $2,012,115 $ 4,292,450   $16,493,577    $9,985,534

Lease revenue.........................   2,140,011   1,648,460     3,646,339     3,318,346

Fee, interest and other income........     239,698     239,342       459,625       457,907
                                        ---------- -----------   -----------    ----------

       Total revenues.................   4,391,824   6,180,252    20,599,541    13,761,787
                                        ---------- -----------   -----------    ----------

COSTS AND EXPENSES:

Cost of sales.........................   1,609,139   3,198,188    15,397,330     7,609,816

Lease expense.........................   2,022,490   1,519,232     3,465,665     3,169,392

Selling, general and
  administrative expenses.............   1,142,767   1,447,287     2,174,674     3,079,988
                                        ---------- -----------   -----------    ----------

       Total costs and expenses.......   4,774,396   6,164,707    21,037,669    13,859,196
                                        ---------- -----------   -----------    ----------

(Loss) income before (benefit)
   provision for income taxes.........   (382,572)      15,545     (438,128)      (97,409)
                                        ---------- -----------   -----------    ----------

(Benefit) provision for income taxes .   (153,029)         742     (175,251)         1,567
                                        ---------- -----------   -----------    ----------

       Net (loss) income .............  $(229,543)    $ 14,803    $(262,877)     $(98,976)
                                        ========== ===========   ===========    ==========

       Basic (loss) income  per
         common share.................     $(0.12)       $0.01       $(0.13)       $(0.05)
                                        ========== ===========   ===========    ==========

       Diluted (loss) income per
         common share.................     $(0.12)       $0.01       $(0.13)       $(0.05)
                                        ========== ===========   ===========    ==========

Shares used in computing net (loss)
  income per share:

       Basic..........................   1,978,500   2,067,397     1,979,213     2,067,397
                                        ========== ===========   ===========    ==========

       Diluted........................   1,978,500   2,198,297     1,979,213     2,067,397
                                        ========== ===========   ===========    ==========
</TABLE>

                  See accompanying notes to financial statements.

                                     -2-

<PAGE>


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

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

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

                                    UNAUDITED
                                    ---------

<TABLE>
<CAPTION>

                                                                1998           1999
                                                                ----           ----
<S>                                                        <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)                                           $ (262,877)      $ (98,976)

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


     Deferred income taxes                                     (73,848)             --

     Depreciation and amortization                           2,198,152       2,306,768

     Amortization of discounts on investments                  (26,953)             --

     Changes in operating assets and liabilities:

        Accounts receivable                                      4,707        (622,906)

        Other assets                                           (50,073)        346,586

        Accounts payable                                      (429,320)        138,971

        Accrued expenses                                      (204,555)         15,875
                                                           ------------    -----------

Net cash provided by operating activities                    1,155,233       2,086,318
                                                           ------------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Accounts payable - leases                                (325,815)       (100,000)

     Purchase of equipment for direct finance leases and    (5,928,241)     (2,554,459)
       sales-type leases

     Termination of direct finance leases                    3,159,587       1,601,234
     Proceeds applied to direct finance leases
       and sales-type leases                                 8,602,308       8,184,590
     Purchase of equipment for operating leases             (5,719,445)       (320,806)
     Termination of operating leases                            57,000          95,885
     Residual value sharing arrangements                       713,587              --
     Payment for acquisitions, net of cash acquired           (231,774)        (64,832)
     Purchases of investments                               (3,084,593)        (17,796)
     Proceeds from sale/maturity of investments              6,636,003              --
                                                           ------------    -----------
Net cash provided by investing activities                    3,878,617       6,823,816
                                                           ------------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Repurchase of common stock                                (15,586)             --
     Proceeds from notes payable                             1,413,587         874,509
     Repayment of notes payable                             (1,336,112)     (1,109,588)
     Increase in non-recourse lease financing               10,492,359       1,981,531
     Termination of non-recourse lease financing            (2,864,076)     (1,138,707)
Repayments and interest amortization applied to
  non-recourse lease financing                             (10,576,788)    (10,040,836)
                                                           ------------    -----------

Net cash used in financing activities                       (2,886,616)     (9,433,091)
                                                           ------------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         2,147,234        (522,957)
                                                           ------------    -----------

CASH AND CASH EQUIVALENTS, beginning of period               2,209,649       1,495,082
                                                           ------------    -----------

CASH AND CASH EQUIVALENTS, end of period                    $4,356,883     $   972,125
                                                           ===========     ===========

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes                                 $    45,428     $    59,367
                                                           ===========     ===========
Cash paid for interest                                      $1,334,385      $1,169,113
                                                           ===========     ===========
</TABLE>

                  See accompanying notes to financial statements.

                                     -3-

<PAGE>



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

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


1.   The  accompanying  unaudited  consolidated  financial  statements  have
     been prepared in accordance  with the instructions for Form 10-Q and
     Regulation S-X related to interim period financial  statements and,
     therefore, do not include all information and footnotes required by
     generally accepted  accounting  principles.  However, in the opinion of
     management,  all  adjustments  (consisting  of normal  recurring
     adjustments  and accruals) considered  necessary for a fair  presentation
     of the financial  position of Paramount  Financial  Corporation and
     subsidiaries  (the "Company") at June 30, 1999 and its results of
     operations and cash flows for the three and six months  ended June 30, 1998
     and 1999,  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, 1998.

     The  financial  statements  for the three and six months ended June 30,
     1999 are  consolidated  to include the results of the Company's two wholly
     owned subsidiaries,  Paratech Resources,  Inc. ("Paratech") and Deltaforce
     Personnel  Services,  Inc.  ("DeltaGroup").  All material  intercompany
     balances and  transactions  have been eliminated.

2.   Business Acquisitions
     ---------------------

     On March 3, 1999, Paratech acquired certain assets of Web Business Systems,
     Inc., a privately held New York based web hosting and development company,
     for a total purchase price of $80,000. The acquisition will be accounted
     for as a purchase; accordingly, the purchase price will be allocated to the
     underlying assets and liabilities based on their respective estimated fair
     market values at the date of acquisition. The excess of the acquisition
     costs over the fair value of the identifiable net assets will be amortized
     on a straight-line basis over 15 years. The results of operations of Web
     Business Systems, Inc. have been included in the consolidated financial
     statements commencing with the acquisition date; pro forma information has
     not been included as it is immaterial.

3.   Segment Information
     -------------------

     The following represents selected financial information for the Company's
     segments for the three and six months ended June 30, 1998 and 1999:
<TABLE>
<CAPTION>

       THREE MONTHS ENDED
       JUNE 30, 1998            Paramount      Paratech    DeltaGroup       Total
       -------------            ---------      --------    ----------       -----
       <S>                    <C>            <C>           <C>          <C>

       Revenues                $2,528,837    $1,112,676    $  750,311    $4,391,824
       Cost of sales and
         lease expense          2,249,203       907,813       474,613     3,631,629
       Net loss                    87,664       128,459        13,420       229,543
       Assets                  48,079,518       942,062       605,809    49,627,389

       THREE MONTHS ENDED
       JUNE 30, 1999                                                       Total
       -------------                                                       -----

       Revenues                $2,051,292    $2,338,613    $1,790,347    $6,180,252
       Cost of sales and
         lease expense          1,620,617     1,771,263     1,325,540     4,717,420
       Net income (loss)          270,793       (76,623)     (179,367)       14,803
       Assets                  30,398,961     3,338,027     2,032,402    35,769,390

                                           -4-

<PAGE>
       SIX MONTHS ENDED
       JUNE 30, 1998           Paramount      Paratech     DeltaGroup       Total
       -------------           ---------      --------     ----------       -----

       Revenues               $16,843,951    $2,489,899    $1,265,691   $20,599,541
       Cost of sales and
         lease expense         16,017,204     2,058,659       787,132    18,862,995
       Net loss                    15,186       242,009         5,682       262,877
       Assets                  48,079,518       942,062       605,809    49,627,389

       SIX MONTHS ENDED
       JUNE 30, 1999                                                       Total
       -------------                                                       -----
       Revenues                $5,628,287     $4,748,882   $3,384,618   $13,761,787
       Cost of sales and
         lease expense          4,751,681      3,677,996    2,349,531    10,779,208
       Net income (loss)          474,482       (204,881)    (368,577)      (98,976)
       Assets                  30,398,961      3,338,027    2,032,402    35,769,390
</TABLE>

                                     -5-
<PAGE>



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


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

RECENT DEVELOPMENTS

         Paramount Financial Corporation and subsidiaries ("Paramount" or the
"Company") is a comprehensive business solution provider, offering customers a
wide range of integrated services, including information technology ("IT")
consulting, e-commerce, Internet design, network design and implementation,
staffing services and lease financing. The Company includes two wholly owned
subsidiaries, Paratech Resources, Inc. ("Paratech") and Deltaforce Personnel
Services, Inc. ("DeltaGroup").

         The second quarter of 1999 is significant in that the Company has
generated a profit and recorded record sales for Paratech and DeltaGroup. The
sales growth has been achieved by the Company's continued commitment to its
subsidiaries and de-emphasis on its lease portfolio. The Company has made a
conscious effort to aggressively expand Paratech's services through acquisitions
and start-up divisions and to expand its client base by partnering with hardware
and software vendors, as well as expanding its salesforce and aggressively
seeking new customers.

         On March 3, 1999, Paratech acquired certain assets of Web Business
Systems, Inc., a privately held New York based web hosting and development
company, for a total purchase price of $80,000. This acquisition has expanded
Paratech's offering of services and transformed Paratech into a complete IT
solution provider. Paratech now offers IT consulting, network design and
implementation, Internet development and hosting, and accounting and salesforce
automation solutions. Paratech intends to be its customer's sole source for all
IT matters.

         Paratech has also started an IT temporary and permanent placement
division, which will offer its customers long- and short-term temporary IT
personnel. This division will also assist customers in their search for
permanent IT personnel. This new division has borrowed a great deal of
operational and technological knowledge from the DeltaGroup, which has numerous
years of experience in this area. The Company believes that this new division
opens many new opportunities for Paratech and strengthens the relationships and
synergies between the Company's two subsidiaries.

         DeltaGroup continued to expand its operations and penetrate the
temporary staffing industry during the three months ended June 30, 1999. The
Company believes that its success at attaining increased revenue and market
share is directly attributable to the fact that DeltaGroup can consistently
match well-trained and professional candidates with customer's orders.
DeltaGroup continues to offer temporary and permanent legal support staff and
paralegal placements.

         The Company maintains its lease portfolio and continued to selectively
engage in leasing transactions during the three months ended June 30, 1999. The
Company believes that by acting as an integrated lessor and business solution
provider it is well positioned to meet the ever-changing needs of its customers.

FLUCTUATIONS IN QUARTERLY RESULTS

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


                                 -6-
<PAGE>


         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."

         The Company is aggressively working to maximize the returns on the
residual value investments made on its lease portfolio. Such efforts, which are
an ordinary but not a predictable part of the Company's business, often result
in equipment originally leased under an operating lease, and accounted for as
described below, being upgraded or otherwise enhanced and extended at the
original account or leased to a different end-user. The resulting lease may
qualify under Statement of Financial Accounting Standard No. 13, "Accounting for
Leases" ("FAS 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.

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

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

LEASE ACCOUNTING

         In accordance with FAS 13, the Company classifies its leases as either
operating leases or direct finance leases. The allocation of income among
accounting periods within a lease term will vary depending upon the lease
classification, as described below.

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

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

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

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


                                   -7-

<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998

         For the three months ended June 30, 1999, the Company recorded sales
revenue of $6.2 million, a $1.8 million increase over the $4.4 million recorded
during the three months ended June 30, 1998. The increase is primarily a result
of the Company's emphasis and growth of its two subsidiaries. Paratech's revenue
for the three months ended June 30, 1999 increased by 109% to $2.3 million as
compared to $1.1 million recorded in 1998. The increase in sales at Paratech is
a result of the Company's aggressive sales and marketing focus as well as the
growth of its Internet division. DeltaGroup, which was purchased in January
1998, contributed $1.8 million in revenue during the three months ended June 30,
1999, a $1.0 million increase over the $750,000 recorded in 1998. The Company
believes that this increase was due to DeltaGroup's ability to consistently
provide its customers with well-trained temporary personnel on a timely basis
and the expansion of its customer base.

         As a result of the Company's limited activities with respect to its
lease portfolio, certain assets which were recorded as operating leases during
the second quarter of 1999, have been upgraded and re-leased, providing the
Company with a return on its residual value investment. The resulting lease has
been accounted for as a sales type lease. As a result of this activity, the
effect of accounting for a lease as a direct finance lease versus an operating
lease, net of new leases written in the second quarter, lease revenue and lease
expense decreased for the three months ended June 30, 1999 by 23% and 25%,
respectively, when compared to the three months ended June 30, 1998. See
"Fluctuations in Quarterly Results" and "Lease Accounting."

         During the three months ended June 30, 1999, the Company entered into
new lease transactions totaling $957,000 of equipment cost as compared with $1.3
million for the three months ended June 30, 1998. During the quarter ended June
30, 1999, the Company entered into $635,000 of non-recourse lease financing
arrangements, as compared with $696,000 for the three months ended June 30,
1998. See "Liquidity and Capital Resources."

         During the three months ended June 30, 1999, the Company generated
$239,000 in fee, interest and other income, compared to $239,000 for the
comparable period last year. Generally, fee income is generated as a result of
the Company's involvement in certain transactions in which it acted as an
arranger of financing for leases originated by third parties, or otherwise
assisted these companies in their lease related transactions. These transactions
come about as a result of the Company's relationship with other lessors and
financial institutions. The Company cannot predict with any certainty the timing
and nature of any future such transactions.

         Selling, general and administrative expenses totaled $1.4 million for
the three months ended June 30, 1999, representing an increase of 22% over the
$1.1 million recorded during the three months ended June 30, 1998. This increase
is attributable to the continued growth and acquisitions of Paratech, which
contributed $453,000, and DeltaGroup, which contributed $585,000, respectively.

         The tax provision of $1,000 for the three months ended June 30, 1999
reflects the minimum state taxes due. During the three months ended June 30,
1998, the Company recorded a tax benefit of $153,000, reflecting the standard
tax rate for federal and state taxes.

         Net income for the three months ended June 30, 1999 was $15,000, after
a provision for income taxes of $1,000, as compared with a net loss of $230,000,
after a benefit for income taxes of $153,000, for the three months ended June
30, 1998.

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

         Net loss for the first six months of 1999 was $99,000, after a
provision for income taxes of $1,600, as compared with net loss of $263,000,
after a benefit for income taxes of $175,000, for the six months ended June 30,
1998.

                                  -8-

<PAGE>
         For the six months ended June 30, 1999, the Company recorded sales
revenue of $13.8 million, a $6.8 million decrease over the $20.6 million
recorded during the six months ended June 30, 1998. The decrease was primarily
due to the de-emphasis on the Company's leasing segment. In addition, Paratech's
sales volume increased by 90.7%, to $4.7 million, and DeltaGroup contributed
$3.4 million in revenue.

         As a result of the Company's ongoing marketing efforts with respect to
its lease portfolio, certain assets which were recorded as operating leases
during the second quarter of 1999 have been upgraded and re-leased, providing
the Company with a return on its residual value investment. The resulting lease
has been accounted for as a sales type lease. As a result of this activity, and
the effect of accounting for a lease as a direct finance lease versus an
operating lease, lease revenue and lease expense each decreased by 9.0% for the
six months ended June 30, 1999 when compared to the six months ended June 30,
1998. See "Fluctuations in Quarterly Results" and "Lease Accounting."

         During the six months ended June 30, 1999, the Company entered into new
lease transactions totaling $2.9 million of equipment cost as compared with
$11.6 million for the six months ended June 30, 1998. Of the total cost of
equipment leased during the quarter ended June 30, 1999, $2.6 million were
recorded as direct finance leases, and $321,000 was recorded as operating
leases, compared to $5.9 million and $5.7 million respectively, for the quarter
ended June 30, 1998. During the six months ended June 30, 1999, the Company
entered into $2.0 million of non-recourse lease financing arrangements, as
compared with $10.5 million for the six months ended June 30, 1998.

         During the six months ended June 30, 1999, the Company generated
$458,000 in fee, interest and other income, compared to $460,000 for the
comparable period last year. Generally, fee income is generated as a result of
the Company's involvement in certain transactions in which it acted as an
arranger of financing for leases originated by third parties, or otherwise
assisted these companies in their lease related transactions. These transactions
come about as a result of the Company's relationship with other lessors and
financial institutions. The Company cannot predict with any certainty the timing
and nature of any future such transactions.

         SG&A expenses totaled $3.1 million for the six months ended June 30,
1999, representing an increase of 41.6% over the $2.2 million recorded during
the six months ended June 30, 1998. The increase in SG&A is a result of the
growth of the Company's two subsidiaries. Paratech contributed $930,000 to SG&A
expenses, while DeltaGroup contributed $1.3 million. See "General."

         The tax  provision  of $1,600 for the six months  ended  June 30,  1999
reflects  the  standard  rate for federal  and state  taxes.  During the six
months  ended  June 30,  1998,  the  Company  recorded a tax  benefit of
$175,000, reflecting the same standard tax rate.

LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 1999, the Company had $1.6 million in cash and cash
equivalents and investments available for sale ($400,000 is restricted, see
"Term Loan"). Substantially this entire amount was invested in interest-bearing
savings accounts, money market accounts established by major commercial banks or
in United States Government, other AA rated obligations and mutual funds.
Primarily as a result of the continued investment in Paratech and DeltaGroup,
its acquisition of Web Business Systems, Inc. and the Company's investment in
its portfolio of IT equipment on lease, the Company experienced a reduction in
net cash and investments available for sale during the second quarter of 1999.

         The Company continues to use its cash balances to fund its operations.
In order to expand its operations, which the Company is aggressively seeking to
accomplish, the Company will need to utilize its cash balances to promote
internal growth and fund potential future acquisitions. However, the Company is
limited to its current cash balances for funding such internal growth and add-on
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 of any future acquisitions require the funding of losses or the
incurrence of capital outlay.

                                  -9-

<PAGE>

         The Company's leasing business generates cash primarily from the
marketing of equipment within its portfolio, and uses cash to acquire computer
equipment to put on lease. In addition, the Company's leasing business generates
cash from fee related transactions. The Company finances substantially all of
its leases by discounting the payment stream on a non-recourse basis through
various banks and financial institutions. Thus, the only cash required in these
lease transactions is the residual value investment by the Company. The Company
believes that it currently has sufficient resources to make the residual value
investments required to maintain 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.

         At June 30, 1999, the Company had three types of credit lines
available:

         Term Loan: In April 1998, Paramount entered into a $500,000 term loan
with a bank collateralized by $600,000 in cash maintained in an investment
account. Principal payments of approximately $41,600 and interest are due on a
quarterly basis through April 20, 2001. As of June 30, 1999, approximately
$333,000 remained outstanding under this loan collateralized by $400,000 in cash
maintained in an investment account.

         DeltaGroup Revolving Credit Facility: DeltaGroup has a $750,000
revolving line of credit agreement with a bank secured by accounts receivable
which expired on June 30, 1999. Interest on outstanding borrowings accrues at
the bank's prime rate plus 1%. Borrowings are limited to 80% of eligible
accounts receivable. As of June 30, 1999, DeltaGroup had $670,000 outstanding
under this line. The Company is presently finalizing negotiations with the
financial institution to extend this credit facility.

         Paratech Equipment Acquisition Credit Facility: Paratech has a
$2,000,000 revolving line of credit agreement with a finance company secured by
accounts receivable and inventory. Interest on outstanding borrowings accrues at
the prime rate plus 1 1/2 %. Borrowings are limited to 85% of eligible accounts
receivable and 99% of eligible inventory. This facility allows the Company to
purchase computer hardware from its vendors with net 30-day terms interest free.
At the expiration of the net 30-day period, the Company has the option of paying
the amount due or, provided the Company has sufficient eligible collateral,
borrowing under the credit facility. As of June 30, 1999, Paratech had $718,000
outstanding under this line.

         The Company believes that cash generated from operations, amounts
available under its credit facilities, and/or other third party financing will
be sufficient to fund necessary capital expenditures and to provide adequate
working capital for at least the next 12 months. There can be no assurance,
however, that the Company will not require additional financing prior to such
date to fund its operations, if required, that such financing will be available
on commercially reasonable terms. In addition, the Company may require
additional financing after such date to fund its operations.

IMPACT OF YEAR 2000 ISSUE

         Many existing computer programs use only two digits to identify a year.
These programs were frequently designed and developed without addressing the
impact of the upcoming change in the century. If not corrected, many computer
software applications could fail or create erroneous results before, at or
beyond the Year 2000.

         The Company has developed a Year 2000 Readiness Plan. This plan
addresses three main areas: (a) information technology systems (including the
Company's business systems, both hardware and software related), (b)
non-information technology systems (including embedded technology such as
microcontrollers, typically found in such equipment as telephone systems, fax
systems, elevators, security systems, HVAC, etc.), and (c) supply chain
readiness or third party issues (including customers as well as inventory and
non-inventory suppliers).

         The Company has not identified any material potential deficiencies
related to Year 2000 in its information technology systems. The Company's has
upgraded its business and computing system in 1997 and it is now Year 2000
compliant (according to the Company's software providers). The Company expects

                                 -10-

<PAGE>

to complete remediation, testing and implementation of its internal systems in
the third quarter of 1999. In terms of non-information technology systems, the
Company will be identifying those material items which may require remediation
or replacement. The Company is in the process of addressing those items and
expects to complete remediation or replacement and testing of its
non-information technology systems in the third quarter of 1999. As for third
parties, the Company is in the process of identifying and contacting suppliers,
both inventory and non-inventory, as well as customers. This process includes
the solicitation of written responses to questionnaires and/or meetings with
certain third parties. The Company expects to have a better understanding of the
Year 2000 readiness of these third parties by the end of the third quarter.

         Based upon the Company's current estimates, additional out-of-pocket
costs associated with its Year 2000 compliance are not expected to be material.
These costs are anticipated to be incurred primarily in 1999 and include third
party consultants, remediation or replacement of embedded chips. Such costs do
not include internal management time and the deferral of other projects, the
effects of which are not expected to be material to the Company's results of
operations or financial condition.

         At this point in time, the Company believes that it is difficult to
specifically identify the cause of the most reasonable worst case Year 2000
scenario. As with all businesses, a reasonable worst case scenario would be the
result of failures of third parties (including, without limitation, governmental
entities and entities with which the Company has no direct involvement) that
continue for more than several days in specific industries from which the
Company's inventory and components are sourced or to which the Company's
products are sold. In connection with the purchase of inventory and components,
the Company is considering various contingency plans. Continuing failures in
these specific industries would limit procurement or delivery of product, and
most likely would have a material adverse effect on the Company's results of
operations. The extent of such lost revenue cannot be estimated at this time;
however, the Company is considering contingency plans to limit, to the extent
possible, the effect of such lost revenue on the Company's result of operations.
Any such plans would necessarily be limited to matters over which the Company
can reasonably control.

         The Company's Year 2000 efforts are ongoing and its overall plan, as
well as the consideration of contingency plans, will continue to evolve as new
information becomes available. While the Company anticipates continuity of its
business activities, that continuity will be dependent upon its ability, and the
ability of third parties with whom the Company relies on directly, or
indirectly, to be Year 2000 compliant.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         "Quantitative and Qualitative Disclosure about Market Risk", on page 25
of the Company's Annual Report on Form 10-K is incorporated herein by reference.
No material changes have occurred from the disclosure in Form 10-K through the
six months ended June 30, 1999.

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 captions
"Fluctuations in Quarterly Results" and "Lease Accounting," 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;
the ability of the Company to attract and retain IT professionals skilled in
specific applications; technological obsolescence of the Company's portfolio of
computer equipment; competition in the IT consulting sector and general economic
conditions.

                                  -11-

<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.


                                  -12-

<PAGE>

                                   SIGNATURES



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

                                     PARAMOUNT FINANCIAL CORPORATION


Date:  August 13, 1999               By: /s/ Glenn Nortman
                                         -----------------------
                                         Glenn Nortman, Chief Executive Officer