SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                   Quarterly Report Under Section 13 or 15(d)

                     of the Securities Exchange Act of 1934

        For Quarter Ended March 31, 1998.....Commission File Number 1-155

                            FIRST MEDICAL GROUP, INC.

             (Exact name of Registrant as specified in its charter)


Delaware                                                      13-1920670
--------------------------------------------------------------------------------
(State or other jurisdiction of                         (I.R.S. Employer
Incorporation or Organization)                          Identification No.)


1055 Washington Boulevard, Stamford, CT                                 06901
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(Address of principal executive offices)                              (Zip Code)


Registrant's telephone number, including area code                (203) 327-0900
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
              Former name, former address and former fiscal year,
                          if changed since last report

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  and  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 / /

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

       Class                                Outstanding at May 6, 1998
       -----                                --------------------------
Common Stock, par value                               9,397,292
     $.001 per share

<PAGE>
                        FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES

                                      INDEX

                                                                           Page
                                                                          Number
                                                                          ------

PART I.                FINANCIAL INFORMATION

  Item 1.  Financial Statements

           Consolidated Statements of Operations -
           Three Months Ended March 31, 1998 and 1997..........................1

           Consolidated Balance Sheets -
           March 31, 1998 and December 31, 1997................................2

           Consolidated Statement of Changes in
           Shareholder's Equity (Deficit)
           Three Months Ended March 31, 1998 and 1997..........................3

           Condensed Consolidated Statements of Cash Flows -
           Three Months Ended March 31, 1998 and 1997..........................4

           Notes to Consolidated Financial Statements........................5-6

  Item 2.  Management's Discussion and Analysis of
           Financial Condition and Results of Operations.....................7-8

PART II.   OTHER INFORMATION

  Item 1.  Legal Proceedings...................................................9

  Item 3.  Defaults upon Senior Securities.....................................9

  Item 6.  Exhibits and Reports on Form 8-K....................................9


<PAGE>
PART 1 - FINANCIAL INFORMATION
FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

                                              THREE MONTHS ENDED MARCH 31,

                                           1998                   1997
                                           ----                   ----

Revenue:
  Fee for service and related revenue   $ 2,764,238            $ 2,014,117
                                        -----------            -----------

      Total revenue                       2,764,238             2,014,117

Medical expenses                          2,137,708             1,623,768
                                        -----------            -----------

      Gross profit                          626,530               390,349

Operating expenses:
  Salaries and related benefits             331,820                98,226
  General and administrative                239,998               166,523
  Depreciation and amortization               7,020                31,138
                                        -----------            -----------
      Total operating expenses              578,838               295,887
                                        -----------            -----------

Operating income                             47,692                94,462

  Impairment loss on intangible assets   (2,014,169)                    -

Interest expense, net                       (68,628)              (14,300)
                                        -----------            -----------
(Loss) income before taxes and
   discontinued operations               (2,035,105)               80,162

Provision for income taxes                  162,094                45,000
                                        -----------            -----------
Net (loss) income before
   discontinued operations               (2,197,199)               35,162

Discontinued operations:
     (Loss) income from discontinued
        operations                       (1,001,987)               57,178
     Loss on sale of discontinued
        operation                          (590,953)                    -
                                        ------------           -----------
Total (loss) income from discontinued
        operations                       (1,592,940)               57,178
                                        ------------           -----------

     Net (loss) income                  $(3,790,139)             $ 92,340
                                        ============           ===========

(Loss) earnings per share before
   discontinued operations              $     (0.23)             $      -
(Loss) earnings per share from
   discontinued operations              $     (0.17)             $   0.01
(Loss) earnings  per share              $     (0.40)             $   0.01
                                        ============           ===========

Weighted average number of common
    shares outstanding                    9,397,292             9,021,400
                                        ============           ===========



See accompanying notes to consolidated financial statements.
<PAGE>
FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>

                                                                   MARCH 31,             DECEMBER 31,
                                                                      1998                  1997
                                                                      ----                  ----
                                          ASSETS

Current assets:

<S>                                                               <C>                    <C>       
  Cash and cash equivalents                                       $  570,087             $1,421,250
  Other receivables                                                  206,069                 98,332
  Due from related parties                                         1,231,845              1,139,760
  Inventories                                                         10,629                      -
  Prepaid expenses and other current assets                           39,290                 50,406
                                                                  ----------             ----------

     Total current assets                                          2,057,920              2,709,748

Property and equipment, net                                          162,126                170,281
Intangible assets,net                                                      -              2,014,169
Other assets                                                         242,136                248,386
                                                                  ----------             ----------
     Total                                                        $2,462,182             $5,142,584
                                                                  ==========             ==========
</TABLE>

<TABLE>
<CAPTION>

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
<S>                                                               <C>                      <C>     
  Accounts payable                                                $  282,952               $278,497
  Accrued expenses                                                 1,143,594              1,164,093
  Corporate deposits                                                 645,198                731,372
  Loans payable to banks                                           3,252,000              3,217,812
  Net liabilities pertaining to discontinued operations            1,982,298                804,531
                                                                  -----------            ----------
     Total current liabilities                                     7,306,042              6,196,305

Commitments and contingencies


Shareholders' deficit:

  Capital stock, par value $.001; authorized shares 100,000,000         9,397                 9,397
  Additional paid in capital                                        8,083,488             8,083,488
  Retained deficit                                                (12,936,745)           (9,146,606)
                                                                   ----------            ----------
     Total shareholders' deficit                                   (4,843,860)           (1,053,721)
                                                                   ----------            ----------

                                                                   ----------            ----------
     Total                                                         $2,462,182            $5,142,584
                                                                   ==========            ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                        2
<PAGE>
FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES OF SHAREHOLDERS' (DEFICIT) EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>

                                                    ADDITIONAL             RETAINED                TOTAL
                                 COMMON              PAID-IN               EARNINGS             SHAREHOLDERS'
                                 STOCK               CAPITAL               (DEFICIT)            (DEFICIT)EQUITY
                                 ------              -------               ---------            ---------------

<S>                              <C>                <C>                   <C>                   <C>          
Balance, January 1, 1997           $100               $379,685               $323,712              $703,497

Net income                            -                      -                 92,340                92,340
                                -------            -----------           --------------        -------------

Balance, March 31, 1997            $100               $379,685               $416,052              $795,837
                                =======            ===========           ==============        =============



Balance, January 1, 1998         $9,397             $8,083,488            $ (9,146,606)         $ (1,053,721)

Net loss                              -                      -              (3,790,139)           (3,790,139)
                                -------            -----------           --------------        -------------

Balance, March 31, 1998          $9,397             $8,083,488            $ (12,936,745)        $ (4,843,860)
                                =======            ===========           ===============       ==============
</TABLE>



See accompanying notes to consolidated financial statements.

                                                  3
<PAGE>

FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
        (UNAUDITED)

<TABLE>
<CAPTION>

                                                            1998                   1997
                                                            ----                   ----

<S>                                                    <C>                    <C>       
Net (loss) income                                      $ (3,790,139)          $   92,340

Add:  Depreciation and amortization                           7,020               31,138

         Loss on impairment of intangibles                2,014,169                    -

         Proceeds from loan payable to banks                 34,188            1,189,733

         Increase in net liabilities relating
             to discontinued operations                   1,177,767                    -

Less: Investment in Lehigh                                        -             (839,733)

         Other changes in assets and liabilities           (294,168)            (486,313)
                                                         -----------          -----------

Decrease in cash and cash equivalents                      (851,163)             (12,835)
Cash and cash equivalents, beginning of the year          1,421,250                63,014
                                                         -----------          -----------
Cash and cash equivalents, end of the period             $  570,087           $    50,179
                                                         ===========          ===========
</TABLE>



See accompanying notes to consolidated financial statements.



                                                  4

<PAGE>
FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF PRESENTATION

The financial  information for the three months ended March 31, 1998 and 1997 is
unaudited.  The balance  sheet as of December 31, 1997 and the income  statement
for the three months ended March 31, 1997 has been  reclassified  to reflect the
managed care and HallMark Electrical Supplies Corp.  ("HallMark")  operations as
discontinued  operations.  However,  the  information  reflects all  adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary for the fair statement of results for the interim periods.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted.  These consolidated  financial statements should
be read in conjunction  with the consolidated  financial  statements and related
notes included in First Medical Group,  Inc.'s ("the Company") December 31, 1997
Report on Form-10K.

The results of  operations  for the three month  period ended March 31, 1998 are
not necessarily indicative of the results to be expected for the full year.

Earnings  (loss) per common share is calculated by dividing net income (loss) by
weighted average number of common shares and share equivalents outstanding.  For
the periods  presented,  there were no common stock equivalents  included in the
calculation, since they would be anti-dilutive.

2.      DISCONTINUED OPERATIONS

On April  14 and 15,  1998 the  Company  through  certain  of its  wholly  owned
subsidiaries  completed  the sale of its Florida  managed care  operations.  The
total  sales price was  approximately  $6.75  million for certain  assets of the
Company.  The Company is also  divesting  its Texas and  Mid-West  managed  care
operation.  As a result of these  transactions,  the Company has  reflected  its
managed care  operation  as  discontinued  operations  for  financial  statement
purposes.

On April 17, 1998, the Company sold HallMark which was a wholly owned subsidiary
of the  Company to a certain  member of  management  of the  Company and certain
members of management  of HallMark for a total sales price of $1.9 million.  The
purchase  price of $1.9 million  represented  a cash payment of $750,000 and the
assumption of $1.15 million of liabilities  and a covenant not to compete by the
member of the management of the Company.

                                             5
<PAGE>
CONDENSED FINANCIAL STATEMENTS-DISCONTINUED OPERATIONS
(IN THOUSANDS):

<TABLE>
<CAPTION>

CONDENSED INCOME STATEMENTS

                              MANAGED CARE           HALLMARK                TOTAL
                              ------------           --------                -----

<S>                           <C>                     <C>                 <C>     
Revenues                      $  15,442               $ 4,090             $ 19,532

Medical Cost/Cost
        of Sales                 14,978                 2,850               17,828
                                 ------                 -----               ------

Gross Profit                        464                 1,240                1,704

Income (loss) from
discontinued operations       $  (1,061)              $    59             $  (1002)
</TABLE>

<TABLE>
<CAPTION>

CONDENSED BALANCE SHEETS

                              MANAGED CARE            HALLMARK               TOTAL
                              ------------            --------               -----

<S>                           <C>                     <C>                 <C>
Current assets                $ 10,355                $  8,901            $19,256
Other assets                     3,228                     139              3,367
                                 -----              ----------              -----
  Total                         13,583                   9,040             22,623

Current liabilities             15,914                   3,015             18,929
Other liabilities                  443                   5,233              5,676
                                ------              ----------            -------

Net liabilities pertaining
to discontinued operations    $ (2,774)               $    792            $(1,982)
</TABLE>


3.      SUPPLEMENTARY SCHEDULE

                                         1998           1997
                                              (IN THOUSANDS)

 Cash paid during the three months for:
 Interest                                $  69         $ 27
 Income taxes                              162            -



                                         6
<PAGE>
 ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATION

 RESULTS OF OPERATIONS
 FIRST QUARTER OF 1998 IN COMPARISON
 WITH FIRST QUARTER OF 1997

       REVENUE.  Total  revenue of the Company for the three  months ended March
 31, 1998 and 1997 was $2.8 million and $2.0 million,  respectively, an increase
 of 40%, due mainly to the opening of two new clinics in Eastern  Europe as well
 as increased patient visits in existing facilities.

       MEDICAL  EXPENSE.  Medical  expense for the three  months ended March 31,
 1998 and 1997 was $2.1 million and $1.6 million, respectively.  Medical expense
 as a  percentage  of revenue,  was 77% and 81% for the three months ended March
 31, 1998 and 1997, respectively.

       OPERATING  EXPENSES.  Operating  expenses for the Company were $2,593,000
 during the three  months  ended March 31, 1998 as compared to $296,000 in 1997.
 Operating  expenses in 1998 includes a loss on the impairment of intangibles of
 $2,014,000.  Operating  expenses  for the three  months  ended March 31,  1998,
 excluding the loss on impairment of intangibles  was $579,000 or 21% of revenue
 as compared to 15% in 1997.

       LOSS/INCOME  FROM  DISCONTINUED  OPERATIONS.  The loss from  discontinued
operations for the three months ended March 31,1998 was $1.6 million as compared
to income of $57,000 for the first three months ended March 31, 1997.

       NET (LOSS) INCOME. Net loss for the three months ended March 31, 1998 was
$3,790,000 as compared to net income of $ 92,000 in the first quarter of 1997.

LIQUIDITY AND CAPITAL RESOURCES

       At March 31,  1998,  the Company had cash of $570,000 as compared to $1.4
million at December 31, 1997.

       As of March 31, 1998,  the Company had a credit  facility of $2.5 million
bearing interest at 1/2% above prime, of which $500,000 is guaranteed by certain
current and former  members of the Company.  At March 31, 1998,  the Company had
drawn down $2.325  million on this facility.  The  expiration  date for the $2.5
million is July 31, 1998.  The Company also borrowed an  additional  $537,000 to
purchase Lehigh stock in


                                         7
<PAGE>

connection  with the merger.  The expiration  date for the $537,000  facility is
October,  1998.  Proceeds from the sale of the managed care  operation in April,
1998 were used to repay these facilities.

       The  Company  is in default in the  payment  of  interest  (approximately
$829,000  interest was past due as of March 31, 1998) on the $390,000  aggregate
principal amount of its 13 1/2% Senior  Subordinated Notes due May 15, 1998 ("13
1/2% Notes") and 14 7/8% Subordinated  Debentures due October 15, 1995 ("14 7/8%
Debentures") that remain  outstanding and were not surrendered to the Company in
connection with its financial restructuring consummated in 1991. The Company has
been  unable to locate the  holders of the 13 1/2% Notes and 14 7/8%  Debentures
(with the  exception  oF certain of the 14 7/8%  Debentures,  which were retired
during 1996).

                                         8
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company is  involved in minor  litigation,  none of which is  considered  by
management  to be material to its business or, if  adversely  determined,  would
have a material adverse effect on the Company's financial condition.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

The Company continues to be in default in the payment of interest (approximately
$829,000.00  interest is past due as of March 31,  1998) on  $390,000  principal
amount of 13 1/2% Notes and 14 7/8% Debentures.

ITEM 5.  OTHER INFORMATION

As  reported  on a Form 8-K filed on April 29,  1998,  on April 14 and 15,  1998
First  Medical  Group Inc.,  through  certain of its wholly  owned  subsidiaries
completed the sale of its Florida  operations  which amounted to the sale of all
of the assets of its nine outpatient  centers and its management  agreements for
the South Florida  multi-specialty  practices.  The total sales price determined
through  arms -  length  negotiations,  was  approximately  $6.75  million,  the
proceeds of which were used to pay off an existing loan with First Union Bank in
the amount of  $2,827,812,  money owed to Humana Inc.,  in the sum of $1,227,045
and various  accounts  payable and other  accrued  liabilities  in the amount of
$1,483,541. The balance of the proceeds will be used for general working capital
requirements.

On April 17, 1998 First Medical Group,  Inc.,  ("FMG") sold HallMark  Electrical
Supplies  Corp.,  ("HallMark")  which was a wholly  owned  subsidiary  of FMG to
Salvatore  J. Zizza and the  existing  management  of HallMark for a total sales
price of $1,900,000.00.  The purchase price of $1,900,000.00  represented a cash
payment of $750,000.00 and the assumption of $1,150,000.00 worth of debt and Mr.
Zizza's agreement not to compete.

Simultaneously  with the sale of HallMark,  Mr. Zizza resigned as Executive Vice
President,  Chief Financial  Officer and Treasurer of FMG and its  subsidiaries.
Mr. Zizza continues to serve as a director of FMG.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

A Form 8-K was filed on April 29, 1998 (see item 5).


                                        9

<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.

                                           FIRST MEDICAL GROUP, INC.



                                           By: /s/ Dennis A. Sokol
                                               -----------------------
                                               Dennis A. Sokol
                                               Chief Executive Officer
                                               and President

Dated:  June 19, 1998