<PAGE>   1

                    U. S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549
                                  FORM 10-QSB

[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934.
    For the quarterly period ended March 31, 1998.


[ ] Transition  report  pursuant to Section 13 or 15 (d) of the  Securities
    Exchange Act of 1934.

    For the transition period from              to


                  Commission File Number: 0-7693


                       INTERNATIONAL MERCANTILE CORPORATION
    --------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)


            MISSOURI                                  43-0970243
       -------------------------------------------------------------------
       (State or other jurisdiction                  (I.R.S. Employer
       incorporation or organization)                Identification No.)


                     7979 Old Georgetown Road, Bethesda MD
                 -------------------------------------------
                    (Address of principal executive offices)


                                 301-654-1980
                          ---------------------------
                          (Issuer's telephone number)



                                (Not Applicable)
          --------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


     Check whether the issuer

(1) filed all reports required to be filed by Section 13 or 15(d) of the
    Exchange Act during the past 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 [ ]    No [x]

     State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:

     3,457,583 Common Shares as of March 31, 1998

    Transitional Small Business Disclosure Format Yes [  ]  No [X]
<PAGE>   2

                                     PART I
                             FINANCIAL INFORMATION

     Item 1. Financial Statements

     The condensed financial statements for the period ended March 31, 1998
included herein have been prepared by International Mercantile Corporation,
(the "Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). In the opinion of
management, the statements include all adjustments necessary to present fairly
the financial position of the Company as of March 31, 1998, and the results of
operations and cash flows for the three month periods ended March 31, 1997 and
1998.


                                       2
<PAGE>   3
                      INTERNATIONAL MERCANTILE CORPORATION
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                                                  March 31,
                                                                              December 31,          1998
                                                                                 1997             Unaudited
                                                                                 ----             ---------
                             ASSETS
<S>                                                                          <C>                <C>
Current assets
  Cash and cash equivalents                                                  $   290,951        $   252,640
  Mortgages  receivable                                                          687,500            112,400
                                                                                 -------            -------
  Current assets                                                                 978,451            365,040

Capital assets-net                                                                14,323             15,982

Other assets
  Excess of purchase price over assets acquired                                2,120,186          2,120,186
  Notes receivable-affiliated parties                                            316,850            383,517
  Securities-available for sale                                                  367,000            367,000
  Intangible assets                                                               49,209             49,209
                                                                                  ------             ------             
  Total other assets                                                           2,853,245          2,919,912
                                                                               ---------          ---------
Total assets                                                                 $ 3,846,019        $ 3,300,934
                                                                             ===========        ===========

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Accounts payable and accrued expenses                                      $   487,699        $   500,949
  Loan payable                                                                   606,494            527,494
  Warehouse loan payable                                                         654,805            106,780
  Loan payable-related parties                                                   180,263            180,263
  Deferred income                                                                 32,695              5,620
  Corporate income tax payable                                                    12,495
                                                                                  ------          ---------     
Total current liabilities                                                      1,974,451          1,321,106


Capital stock
  Common stock-authorized 5,000,000 common shares, par value $1.00 each, at
December 31, 1997 the number of shares outstanding was 3,177,583 and
3,457,583 respectively                                                         3,177,583          3,457,583
  Additional paid in capital                                                   8,978,462          8,978,462
  Retained earnings                                                           (9,470,294)        (9,642,034)
                                                                              ----------         ----------
Total stockholders' equity                                                     2,685,751          2,794,011
Less treasury stock                                                             (814,183)          (814,183)
                                                                                ---------          ---------
Total stockholders equity                                                      1,871,568          1,979,828
                                                                               ---------          ---------
Total liabilities and stockholders' equity                                   $ 3,846,019        $ 3,300,934
                                                                             ===========        ===========
</TABLE>


               See accompanying notes to financial statements.

                                       3



<PAGE>   4
                      INTERNATIONAL MERCANTILE CORPORATION
                          (A DEVELOPMENT STAGE COMPANY)
                PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                 For the three             For the three 
                                 months ended              months ended 
                                   March 31,                 March 31,
                                     1997                      1998
                                   Unaudited                 Unaudited
                                   ---------                 ---------
<S>                                  <C>                        <C>     
Revenue                              $-0-                       $232,886
                                                           
Mortgage related expenses             -0-                        136,653
                                      ---                        -------
                                                           
Gross profit                          -0-                         96,233
                                                           
Operations:                                                
  General and                                              
administrative                        -0-                        266,297
  Depreciation and                                         
amortization                          -0-                            841
  Total expense                       -0-                        267,138
                                                           
Income from operations                -0-                       (170,905)
                                                           
Corporate income taxes                -0-                  
Other income                                               
  Interest income                                                  1,598
  Unrealized loss on                                       
valuation of property and                                  
equipment                                                  
  Gain on sale of asset                                              250
  Interest expense                                                (2,683)
                                                                 -------
  Total other income and                                   
expense                               -0-                           (835)
                                                           
Net Profit (Loss)                    $-0-                     $ (171,740)
                                     ====                     ==========
                                                           
Net income (loss)  per                                     
share - basic                        $0.00                       $ (0.05)
                                     ========                    =======
Number of shares                                           
outstanding                          101,083                   3,457,583
                                     ========                 ==========
                                                           
Net income (loss) per                                      
share - diluted                         $0.00                    $ (0.05)
                                                                 =======
Number of shares                                           
outstanding                           101,083                  3,457,583
                                      =======                  =========
</TABLE>                                                   






                 See accompanying note to financial statements.

                                       4




<PAGE>   5
                      INTERNATIONAL MERCANTILE CORPORATION
                      CONSOLIDATED STATEMENT OF CASH FLOWS




<TABLE>
<CAPTION>
                                                              For the three   For the three
                                                              months ended     months ended
                                                                March 31,       March 31,
                                                                  1997             1998
                                                                Unaudited       Unaudited
                                                                ---------       ---------
<S>                                                          <C>              <C>
  Net income                                                      $-0-              $(171,740)
  Depreciation                                                     -0-                    841
  Gain on sale of asset
  Non-cash transactions
Adjustments
  Accounts receivable
  Interest receivable
  Employee advances
  Due to affiliate
  Accounts payable and accrued expenses                                                13,250
  Income taxes payable                                                                (12,495)
                                                                                      -------
TOTAL CASH FLOWS FROM OPERATIONS                                   -0-               (170,144)
CASH FLOWS FROM INVESTING ACTIVITIES
  Mortgages receivable                                                                575,100
  Securities-available for sale
  Capital assets                                                                       (2,500)
  Notes receivable                                                                    (66,667)
                                                                                      -------
  Deposits
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES                         -0-                505,933
CASH FLOWS FROM FINANCING ACTIVITIES
  Sale of capital  stock                                                              280,000
  Additional paid in capital
  Warehouse loan payable                                                             (548,025)
  Loan  payable
  Line of Credit
  Deferred income                                                                     (27,075)
                                                                                     -------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES                         -0-               (374,100)
NET INCREASE (DECREASE) IN CASH                                    -0-                (38,311)
CASH BALANCE BEGINNING OF PERIOD                                   -0-                290,951
                                                                   ---                -------
CASH BALANCE END OF PERIOD                                        $-0-               $252,640
                                                                  ====               ========
</TABLE>

                 See accompanying notes to financial statements

                                       5
<PAGE>   6
                      INTERNATIONAL MERCANTILE CORPORATION
                  CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY

<TABLE>
<CAPTION>                                               Additional
                         Common         Common           paid in       Treasury        Retained
Date                     Stock           Stock           capital         Stock         Earnings          Total
----                     -----           -----          ----------       -----         --------          -----
<C>                   <C>             <C>              <C>              <C>          <C>                <C>       
12-31-1995              3,133,151      $3,133,151       $5,326,395      $(814,183)    $(7,958,757)       $ (313,395)
12-31-1996               Net loss                                                        -0-                  -0-
                         --------      ----------      -----------      ---------        --------         ---------
12-31-1996              3,133,151       3,133,151        5,326,395      $(814,183)    $(7,958,757)       $ (313,395)

06-01-1997(1)             101,083         101,083        8,358,463       (814,183)     (7,958,757)         (313,395)
12-31-1997(2)             946,500         946,500           10,000                                          956,500
12-31-1997(3)           1,500,000       1,500,000                                                         1,500,000
12-31-1997(4)             100,000         100,000          400,000                                          500,000
12-31-1997(5)             135,000         135,000                                                           135,000
12-31-1997(6)             175,000         175,000          210,000                                          385,000
12-31-1997(7)             220,000         220,000                                                           220,000
12-31-1997               Net loss                                                      (1,511,538)       (1,511,546)
                                       ----------       ----------      ---------      ----------       -----------
                        3,177,583       3,177,583        8,978,463       (814,183)     (9,470,295)        1,871,568



    Unaudited
03-31-1998(7)             280,000         280,000                                                           280,000
03-31-1998               Net loss                                                        (171,740)         (171,740)
                         --------      ----------       ----------      ---------        --------         ---------
03-31-1998              3,457,583      $3,457,583       $8,978,463      $(814,183)    $(9,642,035)      $ 1,979,828
                        =========      ==========       ==========      ==========    ============      ===========
</TABLE>



                See accompanying notes to financial statements.

                                       6
<PAGE>   7

                      INTERNATIONAL MERCANTILE CORPORATION
                          (A development stage company)
                         NOTES TO FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED MARCH 31, 1998

1. BASIS OF PRESENTATION

     The accompanying unaudited financial statements of International
Mercantile Corporation, (the "Company"), reflect all adjustments which are, in
the opinion of management, necessary to a fair statement of the results of the
interim periods presented. All such adjustments are of a normal recurring
nature. The financial statements should be read in conjunction with the notes
to financial statements contained in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996.


2. NET INCOME PER SHARE

     In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE
("Statement No. 128"). Statement No. 128 applies to entities with publicly
held common stock or potential common stock and is effective for financial
statements issued for periods ending after December 15, 1997. Statement No. 128
replaces APB Opinion 15, Earnings per Share ("EPS"). Statement No. 128 requires
dual presentation of basic and diluted earnings per share by entities with
complex capital structures. Basic EPS includes no dilution and is computed by
dividing net income by the total number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution of securities that could
dilute the shares in computing the earnings of the Company such as common stock
which may be issuable upon exercise of outstanding common stock options or the
conversion of debt into common stock. Pursuant to the requirements of the
Securities and Exchange Commission, the calculation of the shares used in
computing basic and diluted EPS include the shares of common stock issued for
the acquisition of HAMC and UMI.

Shares used in calculating basic and diluted net income per share were as
follows:

<TABLE>
<CAPTION>
                                                                 For the three    For the three
                                      Year ended   Year ended     months ended    months ended 
                                     December 31,  December 31,     March 31,      March 31,   
                                         1996          1997           1997           1998      
                                         ----          ----           ----           ----          
 <S>                                   <C>          <C>            <C>             <C>         
 Total number common                                                                           
    shares outstanding                 101,083(1)   3,177,583      101,083(1)      3,457,583   
                                       =======      =========      =======         =========
</TABLE>

(1) Pre split shares were 3,133,151


4. ACCOUNTING FOR INCOME TAXES

     The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires an asset and liability
approach of accounting for income taxes. Deferred tax assets and liabilities
are computed annually for differences between financial statement basis and tax
basis of assets, liabilities and available general business tax credit
carry-forwards. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.

                                      7
<PAGE>   8

5. MARKETABLE SECURITIES

     The Company adopted Financial Accounting Standards Board ("FASB")
Statement No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", which requires that investments in equity securities that have
readily determinable fair values and investments in debt securities be
classified in three categories: held-to-maturity, trading and
available-for-sale. Based on the nature of the assets held by the Company and
Management's investment strategy, the Company's investments have been
classified as available-for-sale. Management determines the appropriate
classification of debt securities at the time of purchase and reevaluates such
designation as of each balance sheet date.  Securities classified as
available-for-sale are carried at estimated fair value, as determined by quoted
market prices, with unrealized gains and losses, net of tax, reported in a
separate component of stockholders' equity. At December 31, 1997, the Company
had no investments that were classified as trading or held-to-maturity as
defined by the Statement.


     The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at December 31, 1997: Estimated
Gross Gross Fair Unrealized Unrealized Market Cost Gains Losses Value

<TABLE>
<CAPTION>
                                                                            Estimated
                                                  Gross       Gross            Fair
                                               Unrealized   Unrealized         Market
                                        Cost      Gains      Losses            Value
                                        -----     -----      ------            -----
<S>                                 <C>           <C>      <C>             <C>
Cash                                $   290,951    $-0-      $   -0-         $ 290,951
                                        -------    ----      -------         ---------
Total cash and cash
   equivalents                      $   290,951   $-0-      $    -0-         $ 290,951

Securities-available for
     sale                           $   580,000             $213,000        $  367,000
                                       --------              -------           -------
Total cash, cash
  equivalents and
  securities available
  for sale                          $   870,951             $213,000         $ 657,951
                                        =======              =======           =======
</TABLE>

     The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at March 31, 1998:

<TABLE>
<CAPTION>
                                                                   Estimated
                                        Gross       Gross            Fair
                                     Unrealized   Unrealized         Market
                               Cost     Gains      Losses            Value
                               ----     -----      ------            -----
<S>                       <C>           <C>      <C>             <C>
Cash                      $   252,640    $-0-      $   -0-        $ 252,640
                              -------    ----      -------        ---------
Total cash and cash
   equivalents            $   252,640   $-0-      $    -0-        $ 252,640

Securities-available for
     sale                 $   580,000             $213,000       $  367,000
                             --------              -------          -------
Total cash, cash
  equivalents and
  securities available
  for sale                $   832,649             $213,000        $ 619,640
                              =======              =======          =======
</TABLE>


                                       8
<PAGE>   9


3. Commitments and Contingencies

    a. Employment Agreement with Mr. Walter Deronde

     On January 1, 1997, the Company entered into an employment agreement with
Mr. Walter Deronde as Treasure and Vice President for an annual salary of
$120,000. In addition Mr. Deronde is responsible for evaluating merger and
acquisition candidates in the mortgage banking industry.

     For the three months ended March 31, 1998, the Company has accrued $30,000
in salary.

     d. Employment Agreement with Mr. Max Apple

     On May 1, 1995, the Company entered into an employment agreement for an
annual salary of $120,000 per annum and reimbursement of all "out-of-pocket
expenses.

For the three months ended March 31, 1998, the Company has accrued $30,000 in
salary.

     e. Financial Consulting Agreement

     On May 1, 1995, the Company entered into a financial consulting agreement
with Frederic Richardson for a monthly fee of $10,000 per month and
reimbursement of all "out-of-pocket expenses". The term of this agreement is 10
years and is renewable. For the three months ended March 31, 1998, the Company
has accrued $30,000.

                                      9

<PAGE>   10



Item 2. Management's Discussion and Analysis or Plan of Operation

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
               for the three months ended March 31, 1997 and 1998

     Except for the description of historical facts contained herein, this Form
10Q-SB contains certain forward looking statements that involve risks and
uncertainties as detailed herein and from time to time in the Company's filings
with the Securities and Exchange Commission and elsewhere. Such statements are
based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. These factors include,
among others, the Company's fluctuations in sales and operating results, risks
associated with international operations and regulatory, competitive and
contractual risks and product development.

     Results of operations for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997.
- ------------------------------------------------------------------------------

     Revenues were $232,886 for the three months ended March 31, 1998 as
compared to $-0- for the three months ended March, 1997. Mortgages and related
expenses for the three months ended March 31, 1998, were $136,653 as compared
to $0 for the three months ended March 31, 1997 representing a cost of
mortgages related expenses of 0% for the three months ended March 31, 1997 as
compared to 58.7% for the three months ended March 31, 1998.

     General and administrative costs for the three months ended March 31, 1998
were $-0-, an increase of 100.0% over expenses of $266,297 for the three months
ended March 31, 1997.

     Liquidity and capital resources as of the end of the three months ended
March 31, 1998.
- ------------------------------------------------------------------------------

     The Company's cash balance was $252,640 and working capital was a negative
$956,066 as at March 31, 1998.

     The Company's primary short-term needs for capital, which are subject to
change, are for the search for acquisitions, operation of the Company's
mortgage business payment of the day to day operating expenses.

                                       10
<PAGE>   11



     Income tax: As of March 31, 1998, the Company has a tax loss carry-forward
of $9,642,462. The Company's ability to utilize its tax credit carry-forwards
in future years will be subject to an annual limitation pursuant to the "Change
in Ownership Rules" under Section 382 of the Internal Revenue Code of 1986, as
amended. However, any annual limitation is not expected to have a material
adverse effect on the Company's ability to utilize its tax credit
carry-forwards.

     The Company currently plans to continue to accept funds from or accrue
expenses incurred officers, directors and other related parties to continue the
Company's existence and seek new business opportunities.

     The Company expects its capital requirements to increase over the next
several years as it commences new search and development efforts, undertakes
new product development, increases sales and administration infrastructure and
embarks on developing in-house business capabilities and facilities. The
Company's future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which the Company's present
management can fund the continued capital requirements, the timing of
regulatory actions regarding the Company's potential acqusitions, the costs and
timing of expansion of sales, marketing activities, facilities expansion needs,
and competition in the mortgage business entered into.

     The Company believes that its available cash and cash from management
contributions will be sufficient to satisfy its funding needs for the day to
day mortgage banking activities for at least the next 12 months. Thereafter, if
cash generated from any newly acquired or developed business operations is
insufficient to satisfy the Company's working capital and capital expenditure
requirements, the Company may be required to sell additional equity or debt
securities or obtain additional credit facilities. There can be no assurance
that such financing, if required, will be available on satisfactory terms, if
at all.

                                      11
<PAGE>   12


                                    PART II
                               OTHER INFORMATION

Item 1. Legal Proceedings.

     No legal proceedings were brought, are pending or are threatened during
the quarter.


Item 2. Changes in Securities

     None.

Item 3. Defaults upon Senior Securities

     None.

Item 4. Submission of Matters to a Vote of Security-Holders

     None.


                                       12
<PAGE>   13

                                   SIGNATURES



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




                                   INTERNATIONAL MERCANTILE CORPORATION
                                      (Registrant)

                                    By: /s/ MAX APPLE
                                       ------------------
                                       MAX APPLE
                                       PRESIDENT


 Dated: MAY 29, 1998





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