3

                           Form 10-Q Quarterly Report

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

     [x] QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
     OF 1934

                For the quarterly period ended September 30, 1999

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
     OF 1934

                         Commission File Number: 1-7614
                          -----------------------------

                              PMCC FINANCIAL CORP.
             (Exact Name of Registrant as Specified in its Charter)


                  Delaware                                11-3404072
        (State or other Jurisdiction of               (I.R.S. Employer
        Incorporation or Organization)              Identification Number)


                               3 Expressway Plaza
                           Roslyn Heights, N.Y. 11577
              (Address of Principal Executive Offices and Zip Code)

                                 (516) 625-3000
              (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 of the issuer's  Common Stock,  par value $.01 per
share, as of November 10, 1999: 3,724,800 shares.


<PAGE>


                              PMCC FINANCIAL CORP.

                                    FORM 10-Q

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                              Page No

<S>                                                                                           <C>
Part I - Financial Information

Item 1.  Unaudited Financial Statements:

         Condensed Consolidated Statements of Operations (Unaudited)
                  Three Months Ended September 30, 1999 and 1998                                  3
                  Nine months Ended September 30, 1999 and 1998                                   4

         Condensed Consolidated Statements of Financial Condition (Unaudited)
                  September 30, 1999 and December 31, 1998                                        5

         Condensed Consolidated Statements of Cash Flows (Unaudited)
                  Nine months Ended September 30, 1999 and 1998                                   6

         Notes to Condensed Consolidated Financial Statements (Unaudited)                         7


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

Item 3. Quantitative and Qualitative Disclosure about Market Risk                                17

Part II - Other Information                                                                      18

Signatures                                                                                       19

Exhibits                                                                                         20

</TABLE>


<PAGE>


                         Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                      PMCC FINANCIAL CORP. and SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                           Three months ended
                                                                               September 30,
                                                                          1999              1998
                                                                          ----              ----
Revenues:
<S>                                                                    <C>               <C>
Sales of residential rehabilitation properties                         $10,743,477       $8,805,765
Gains on sale of mortgage loans, net                                     3,730,304        5,408,552
Interest earned                                                          1,301,292        1,633,472
                                                                         ---------        ---------
                                                                        15,775,073       15,847,789
                                                                         ---------        ---------

Expenses:
Costs of sales, residential rehabilitation properties                    9,610,539        8,084,440
Compensation and benefits                                                3,419,097        3,217,256
Interest expense                                                         1,291,761        1,743,598
Other general and administrative                                         1,439,622        1,192,740
                                                                         ---------        ---------
                                                                        15,761,019       14,238,034
                                                                         ---------        ---------

Income before income tax expense                                            14,054        1,609,755
Income tax expense                                                           6,000          660,000
                                                                             -----          -------
         Net  Income                                                        $8,054         $949,755
                                                                            ======         ========


Net income per share of common stock-basic                                  $0.002           $ 0.25
                                                                            ======           ======

Net income per share of common stock-diluted                                $0.002           $ 0.25
                                                                            ======           ======

Weighted average number of shares and
  share equivalents outstanding-basic                                    3,724,800        3,747,307
                                                                         =========        =========

Weighted average number of shares and
  share equivalents outstanding-diluted                                  3,795,046        3,781,797
                                                                         =========        =========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>




                      PMCC FINANCIAL CORP. and SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                            Nine months ended
                                                                              September 30,
                                                                          1999              1998
                                                                          ----              ----
Revenues:
<S>                                                                    <C>              <C>
Sales of residential rehabilitation properties                         $29,325,884      $25,564,935
Gains on sale of mortgage loans, net                                    11,617,022       12,170,359
Interest earned                                                          3,657,636        3,942,966
                                                                         ---------        ---------
                                                                        44,600,542       41,678,260
                                                                         ---------        ---------
Expenses:
Costs of sales, residential rehabilitation properties                   26,565,987       23,503,098
Compensation and benefits                                                9,023,859        7,687,956
Interest expense                                                         3,490,676        4,117,172
Other general and administrative                                         3,803,102        2,861,285
                                                                         ---------        ---------
                                                                        42,883,624       38,169,511
                                                                         ---------        ---------

Income before income tax expense                                         1,716,918        3,508,749
Income tax expense                                                         704,000        2,255,000
                                                                           -------        ---------
         Net  Income                                                    $1,012,918       $1,253,749
                                                                        ==========       ==========

Pro forma information:                                                                   $3,508,749
Provision for pro forma income taxes                                                    (1,439,000)
                                                                                        -----------
Pro forma net income                                                                     $2,069,749
                                                                                         ==========

Net income/pro forma net income per share of common stock-basic
                                                                             $0.27            $0.59
                                                                             =====            =====

Net income/pro forma net income per share of common
stock-diluted                                                                $0.27            $0.58
                                                                             =====            =====

Weighted average number of shares and
  share equivalents outstanding-basic                                    3,724,800        3,530,220
                                                                         =========        =========

Weighted average number of shares and
  share equivalents outstanding-diluted                                  3,764,450        3,583,633
                                                                         =========        =========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>


                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
            Condensed Consolidated Statements of Financial Condition
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                        September 30,    December 31,
                                                                            1999             1998
                                                                            ----             ----
Assets
<S>                                                                         <C>            <C>
Cash and cash equivalents                                                   $650,363       $3,596,002
Receivable from sales of loans                                             7,679,374       20,789,470
Mortgage loans held for sale, net                                         53,492,347       67,676,679
Mortgage loans held for investment, net                                    4,539,990        1,717,228
Interest and other receivables, net                                        2,550,337        1,208,454
Residential rehabilitation properties                                     14,720,931       16,491,514
Furniture & equipment, net                                                 1,155,270          828,226
Prepaid expenses and other assets                                            765,727          501,587
                                                                             -------          -------

Total assets                                                             $85,554,339     $112,809,160
                                                                         ===========     ============


Liabilities and shareholders' equity Liabilities:
 Notes payable-principally warehouse lines of credit                     $67,460,345      $94,673,739
 Due to affiliates                                                                 -        1,187,998
 Distribution payable                                                              -          277,700
 Accrued expenses and other liabilities                                    4,000,502        3,637,149
                                                                           ---------        ---------
Total liabilities                                                         71,460,847       99,776,586
                                                                          ----------       ----------


Shareholders' equity
  Common stock, $.01 par value: 10,000,000 shares authorized;
             3,750,000 issued                                                 37,500           37,500
  Additional paid-in capital                                              10,894,033       10,846,033
  Retained earnings                                                        3,323,605        2,310,687
  Treasury stock, at cost (25,000 shares)                                  (161,646)        (161,646)
                                                                           ---------        ---------
Total  shareholders' equity                                               14,093,492       13,032,574
                                                                          ----------       ----------

Total liabilities and shareholders' equity                               $85,554,339     $112,809,160
                                                                         ===========     ============
</TABLE>


See accompanying notes to unaudited condensed consolidated financial statements


<PAGE>


                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                       Nine months ended
                                                                                         September 30,
                                                                                     1999              1998
                                                                                     ----              ----
Cash flows from operating activities:
<S>                                                                                <C>             <C>
Net income .....................................................................   $  1,012,918    $  1,253,749
    Adjustments to reconcile net income to net cash used in operating
    activities:
         Residential  rehabilitation properties (exclusive of cash paid directly
         to/by independent contractors):
           Contractual fees received ...........................................     (2,759,897)     (2,061,837)
           Proceeds from sales of properties ...................................     29,325,884      25,564,935
           Costs of properties acquired ........................................    (24,795,404)    (27,729,375)
         Depreciation and amortization .........................................        196,894          77,194
         Increase in interest and other  receivables ...........................     (1,341,883)       (937,619)
         Decrease (increase) in mortgage loans held for sale ...................     11,361,570     (45,732,625)
         Decrease in receivable from sales of loans ............................     13,110,096      20,140,959
         Increase in prepaid expenses and other assets .........................       (264,140)        (73,174)
         Decrease in due to affiliates .........................................     (1,187,998)       (881,284)
         Increase in accrued expenses and other liabilities ....................        363,353       2,934,450
                                                                                   ------------    ------------

         Net cash provided by (used in) operating activities ...................     25,021,393     (27,444,627)
                                                                                   ------------    ------------

Cash flows from investing activities:
               Acquisition of assets of Prime Mortgage Corp. ...................       (250,000)           --
         Purchase of furniture and equipment ...................................       (225,938)       (530,456)
                                                                                   ------------    ------------

Net cash used in investing activities ..........................................       (475,938)       (530,456)
                                                                                   ------------    ------------

Cash flows from financing activities:
         Distributions to S corporation shareholders, net of
         distribution payable ..................................................       (277,700)     (2,134,971)
         Net proceeds from sale of common stock ................................           --         9,183,325
         Net decrease in notes payable-shareholder .............................           --          (293,163)
         Net borrowing installment loan ........................................           --           243,476
         Purchases of treasury stock ...........................................           --           (89,367)
         Net (decrease) increase in notes payable-warehouse lines of credit.....    (27,213,394)     22,683,803
                                                                                   ------------    ------------

Net cash (used in) provided by financing activities ............................    (27,491,094)     29,593,103
                                                                                   ------------    ------------

Net (decrease) increase in cash and cash equivalents ...........................     (2,945,639)      1,618,020

Cash and cash equivalents at beginning of period ...............................      3,596,002       1,713,405
                                                                                   ------------    ------------

Cash and cash equivalents at end of period .....................................   $    650,363    $  3,331,425
                                                                                   ============    ============

Supplemental  disclosures  of cash flow  information:  Cash paid during the year
         for:
           Interest ............................................................   $  3,487,515    $  3,895,446
                                                                                   ============    ============
           Income taxes ........................................................   $    504,647    $    551,640
                                                                                   ============    ============

           Loans transferred from held for sale to held for investment .........   $  2,822,762    $       --
                                                                                   ============    ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements


<PAGE>


                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999
                                   (Unaudited)

     1. Basis of Presentation

     The unaudited condensed  consolidated  financial statements included herein
     reflect all adjustments,  which are, in the opinion of management necessary
     for a fair  presentation of PMCC Financial  Corporation's  and subsidiaries
     ("the  Company")  financial  condition  as of the dates  indicated  and the
     results of operations for the periods shown. In preparing the  accompanying
     condensed consolidated financial statements, management is required to make
     estimates and assumptions  that reflect the reported  amounts of assets and
     liabilities  as of the date of the  condensed  consolidated  statements  of
     financial condition and of income and expenses for the periods presented in
     the  condensed  consolidated  statements  of  operations.  The  results  of
     operations  for the three and nine months ended  September 30, 1999 are not
     necessarily  indicative of the results of operations to be expected for the
     remainder of the year.  Certain  information and note disclosures  normally
     included in financial  statements  prepared in  accordance  with  generally
     accepted  accounting  principles have been condensed or omitted pursuant to
     rules and regulations of the Securities and Exchange Commission.

     These unaudited condensed  consolidated financial statements should be read
     in conjunction with the audited consolidated financial statements and notes
     thereto included in the Company's Form 10-K for the year ended December 31,
     1998.

     Certain  reclassifications  have been made to  conform  the prior  period's
     presentation to the current presentation.

     2. Initial Public Offering

     On February 18, 1998 the shareholders of Premier Mortgage Corp. ("Premier")
     exchanged all of their outstanding common shares of Premier for 2.5 million
     common  shares  of  the  Company.  Following  this  exchange,  the  Company
     completed an initial  public  offering of 1.25 million  common  shares at a
     price of $9 per  share.  The  Company  received  gross  proceeds  of $11.25
     million and net proceeds of approximately $9.2 million.

     At the time of the exchange, the Company agreed to make a cash distribution
     to existing  shareholders  of $2.7 million  which was equal to a portion of
     the   Company's   undistributed    subchapter   S   corporation   earnings.
     Approximately  $1.9 million of the distribution was paid during the quarter
     ended  March 31,  1998,  of which $1 million  was from the  proceeds of the
     initial  public  offering.  The  balance  of the  distribution  was paid in
     installments  including  interest on the  undistributed  balance at 10% per
     annum through February 18, 1999. The remaining  undistributed  subchapter S
     Corporation  earnings of approximately  $1.0 million were reclassified from
     retained earnings to additional paid in capital.

     3. Income Taxes

     Prior to February  18,  1998,  certain of the  Company's  subsidiaries  had
     elected to be treated as S  corporations  for both federal and state income
     tax purposes.  As a result, the income of the subsidiaries through February
     18, 1998 was taxed directly to the individual shareholders. On February 18,
     1998, in  conjunction  with the Company's  initial public  offering,  the S
     corporation elections were terminated and the Company's subsidiaries became
     C  corporations  for federal and state  income tax  purposes  and, as such,
     became  subject to federal and state income taxes on their  taxable  income
     for the periods  after  February 18, 1998.  Therefore,  the  provision  for
     income  taxes for the nine  months  ended  September  30,  1998  includes a
     provision for deferred income taxes of $1,081,000  related to the temporary
     differences existing at the termination of the S corporation elections, and
     pro forma net income for the nine months ended  September  30, 1998 include
     pro forma income taxes as if the Company had been taxed as a C  corporation
     throughout the periods.

     4. Earnings Per Share of Common Stock

     Basic EPS is  determined  by  dividing  net  income  for the  period by the
     weighted  average  number  of common  shares  outstanding  during  the same
     period.  Diluted EPS reflects the  potential  dilution  that could occur if
     securities  or other  contracts  to issue  common  stock were  exercised or
     converted  into common  stock or resulted in the  issuance of common  stock
     which  would then share in the  earnings  of the  Company.  The  additional
     number of shares  included in the  calculation  of diluted EPS arising from
     issued stock options was 39,650 shares and 53,413 shares, respectively, for
     the nine  months  ended  September  30, 1999 and 1998 and 70,246 and 31,797
     shares,  respectively,  for the three months ended  September  30, 1999 and
     1998.

     Actual  earnings per share data for periods prior to February 18, 1998 have
     not been presented in the  accompanying  unaudited  condensed  consolidated
     statement  of  operations  because the  Company  was not a public  company.
     Actual  earnings per share data for the periods  February 18, 1998 to March
     31,  1998  and  February  18,  1998 to  September  30,  1998  have not been
     presented in the accompanying unaudited condensed consolidated statement of
     operations  because  management  believes  that  such  data  would  not  be
     meaningful  given  the  relatively  short  period  and  the  impact  of the
     recognition  of a deferred tax liability in  connection  with the change in
     tax status.  Therefore,  the earnings per share data presented for the nine
     months ended September 30, 1998 is based on proforma net income.





     5. Supplemental Information

     The Company's  operations consist of two principal  activities (a) mortgage
     banking  and  (b)  funding  the  purchase,  rehabilitation  and  resale  of
     residential real estate. The following table sets forth-certain information
     concerning these activities (in thousands):
<TABLE>
<CAPTION>

                                                                         Nine months Ended September 30,
                                                                         -------------------------------
                                                                                    1999     1998
                                                                                    -------------
Revenues:
<S>                                                                               <C>       <C>
   Residential rehabilitation properties ......................................   $29,326   $25,565
   Mortgage banking ...........................................................    15,275    16,113
                                                                                  -------   -------
                                                                                  $44,601   $41,678
                                                                                  =======   =======
Less: (1)
   Expenses allocable to residential rehabil-
     itation properties (cost of sales, interest
     expense and compensation and benefits) ...................................    28,417    24,638
   Expenses allocable to mortgage banking
      (all other) .............................................................    14,467    13,531
                                                                                  -------   -------
                                                                                  $42,884   $38,169
                                                                                  =======   =======

Operating Profit:
     Residential rehabilitation properties ....................................       909       927
     Mortgage banking .........................................................       808     2,582
                                                                                  -------   -------
                                                                                  $ 1,717   $ 3,509
                                                                                  =======   =======

                                                                              September 30, December 31,
                                                                                     1999      1998
                                                                                     --------------
Identifiable Assets:
     Residential rehabilitation properties ....................................  $ 14,721  $ 16,492
     Mortgage banking .........................................................    70,833    96,317
                                                                                  -------   -------
                                                                                 $ 85,554  $112,809
                                                                                 ========  ========

<FN>
(1) In managing its business,  the Company does not allocate  corporate expenses
other than interest and compensation and benefits to its various activities.
</FN>
</TABLE>


<PAGE>




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

Forward-Looking Statements

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for certain  forward-looking  statements.  This Quarterly Report on Form
10-Q may contain forward-looking statements, which reflect the Company's current
views  with  respect  to  future   events  and  financial   performance.   These
forward-looking  statements  are  subject  to certain  risks and  uncertainties,
including  those  identified  below,  which could cause actual results to differ
materially from historical  results or those  anticipated.  The words "believe,"
"expect,"  "anticipate,"  "intend,"  "estimate,"  and  other  expressions  which
indicate future events and trends identify forward-looking  statements.  Readers
are cautioned not to place undue reliance upon these forward-looking statements,
which speak only as of their dates.  The Company  undertakes  no  obligation  to
publicly update or revise any forward-looking statements,  whether as the result
of new  information,  future  events or otherwise.  The following  factors could
cause  actual  results to differ  materially  from  historical  results or those
anticipated:  (1) the level of demand for mortgage credit,  which is affected by
such external  factors as the level of interest  rates,  the strength of various
segments of the economy and demographics of the Company's  lending markets;  (2)
the direction of interest rates; (3) the relationship  between mortgage interest
rates and cost of funds;  (4)  federal  and state  regulation  of the  Company's
mortgage  banking  operations;  (5)  competition  within  the  mortgage  banking
industry  and (6) the  potential  adverse  effects  of Y2K  (year  2000) (7) the
Company's management of rapid growth and expansion.

Results of Operations

Three Months Ended  September 30, 1999 Compared to Three Months Ended  September
30, 1998

General Overview

     In July 1999,  the Company  completed its  acquisition  for $250,000 of the
assets of Prime Mortgage  Investors,  Inc.  ("Prime") and assumed  certain lease
obligations of Prime.  The Company now operates three  primarily  wholesale loan
offices in Florida.  The purchase  price  approximated  the fair value of assets
acquired and has been  entirely  allocated to software,  furniture and equipment
and other  assets.  At the time of the  acquisition,  the Company kept the Prime
branches intact in order to facilitate an orderly transition without any loss of
loan  originations  although the Company felt there was excessive  costs in both
the production and overhead areas. At the end of the quarter ended September 30,
1999, the Company has greatly reduced these costs.

     As  previously  reported,  due  to  continuing  adverse  conditions  in the
sub-prime  (BCD)  market,  the  Company  closed its Roslyn,  New York  sub-prime
division  during  the  second  quarter  of 1999 and  transferred  its  remaining
operations to the New Jersey office.  However,  while the Company's conservative
posture on these loans  continued  throughout  the third quarter and has reduced
loss exposure to almost zero,  sub-prime loan  originations have been reduced by
approximately 90% from the prior year.

Revenues.  The  following  table  sets  forth the  components  of the  Company's
revenues for the periods indicated:
<TABLE>
<CAPTION>

                                               Three Months Ended September 30,
                                               --------------------------------
                                                    1999           1998
                                                    -------------------

<S>                                              <C>           <C>
Sales of residential rehabilitation properties   $10,743,477   $ 8,805,765
Gains on sales of mortgage loans, net ........     3,730,304     5,408,552
Interest earned ..............................     1,301,292     1,633,472
                                                 -----------   -----------
Total Revenue ................................   $15,775,073   $15,847,789
                                                 ===========   ===========
</TABLE>


     Revenues from the sale of residential  rehabilitation  properties increased
$1.9 million, or 22.0% to $10.7 million for the three months ended September 30,
1999 from $8.8  million for the three  months ended  September  30,  1998.  This
increase was primarily  the result of the increase in the number of  residential
rehabilitation  properties  sold to 62 for the three months ended  September 30,
1999  from 58 for the  three  months  ended  September  30,  1998 and  increased
interest income.

     Gains on sales of mortgage loans  decreased $ 1.7 million,  or 31.0 %, to $
3.7 million for the three months ended  September 30, 1999 from $5.4 million for
the three months ended  September 30, 1998. This decrease was primarily due to a
90.2% decrease in sub-prime loan originations partly offset by an 11.0% increase
in conventional and FHA/VA loan  originations.  Mortgage loan  originations were
$166.9 million and $170.4 million for the three months ended  September 30, 1999
and 1998, respectively.  In past years, sub-prime loans were generally sold at a
higher per loan margin than  conventional  loans.  Replacing the sub-prime  loan
volume with conventional  loans reduced gains by approximately  $800,000 for the
quarter ended  September  30, 1999  compared to the quarter ended  September 30,
1998.  Additionally,  in the  quarter  ended  September  30,  1999,  the Company
continued  to sell a  substantial  amount of  sub-prime  loans in the  secondary
market at par or slightly  below as opposed to a normal markup of these loans at
between 4 and 6 points above par. The Company estimates that the above inventory
losses  resulted  in losses of  approximate  $180,  000 for the  quarter and are
non-recurring.  For the three months ended September 30, 1999, approximately 53%
of the Company's  mortgage  originations  were derived from its retail  mortgage
operations and  approximately 47% from its wholesale  operations.  The following
table summarizes the Company's mortgage originations (in 000's):

          Three Months Ended September 30,
          --------------------------------
                 1999       1998
                 ---------------

Conventional   $119,129   $107,131
FHA/VA .....     45,598     41,283
BCD ........      2,148     21,980
               --------   --------
Total ......   $166,875   $170,394
               ========   ========

     Although there can be no assurance  thereof,  the Company expects  mortgage
originations  to increase due to the expansion to new  geographic  areas and new
Internet  technology,  which may result in additional gains on sales of mortgage
loans in future periods.

     Interest earned  decreased $0.3 million,  or 20.3%, to $1.3 million for the
three  months  ended  September  30, 1999 from $1.6 million for the three months
ended September 30, 1998. This decrease was primarily due to decreased  subprime
mortgage activity.  Such loans generally have higher interest rates and are held
for sale longer than conventional mortgages.

Expenses.  The following table sets forth the Company's expenses for the periods
indicated:
<TABLE>
<CAPTION>

                                                     Three Months Ended September 30,
                                                     --------------------------------
                                                            1999          1998
                                                            ----          ----

<S>                                                     <C>           <C>
Cost of sales - residential rehabilitation properties   $ 9,610,539   $ 8,084,440
Compensation and benefits ...........................     3,419,097     3,217,256
Interest expense ....................................     1,291,761     1,743,598
Other general and administrative ....................     1,439,622     1,192,740
                                                        -----------   -----------
Total expenses ......................................   $15,761,019   $14,238,034
                                                        ===========   ===========
</TABLE>

     Cost of sales  on  residential  rehabilitation  properties  increased  $1.5
million, or 18.9%, to $9.6 million for the three months ended September 30, 1999
from $8.1 million for the three months ended  September 30, 1998.  This increase
was  primarily  due to the  increase  in the  number  of  properties  purchased,
rehabilitated and sold.

     Compensation and benefits increased $0.2 million,  or 6.3%, to $3.4 million
for the three  months ended  September  30, 1999 from $3.2 million for the three
months ended  September  30,1998.  This  increase was primarily due to increased
salaries due to the geographic expansion, partially offset by a reduction in the
employees in the sub-prime loan area. Total personnel increased to 184 employees
at September 30, 1999 from 127 at September 30, 1998.

     Interest expense decreased $0.4 million,  or 25.9%, to $1.3 million for the
three  months  ended  September  30, 1999 from $1.7 million for the three months
ended  September  30, 1998.  This  decrease was  primarily  attributable  to the
decrease in sub-prime loan originations  funded through the Company's  warehouse
lines of credit.

     Other general and administrative  expense increased $0.2 million, or 20.7%,
to $1.4 million for the three months ended  September 30, 1999 from $1.2 million
for the three months ended  September 30, 1998.  This increase was primarily due
to increased  expenses  incurred in connection with the geographic growth in the
operations of the Company including rent and facilities  expense,  telephone and
marketing.

     Although there can be no assurance  thereof,  the Company believes that the
expected increase in mortgage origination volume and residential  rehabilitation
activities  may result in  increased  expenses.  These  increases  may be partly
offset by increased  efficiency of operations primarily through anticipated cost
reductions and the expected  installation  in the first quarter of 2000 of a new
front-end software system and a laptop loan system.

     Net income  decreased  $942,000  or 99.2%,  to $8,000 for the three  months
ended  September 30, 1999 from $950,000 for the three months ended September 30,
1998.

Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998

Revenues.  The  following  table  sets  forth the  components  of the  Company's
revenues for the periods indicated:

                                               Nine months Ended September 30,
                                               -------------------------------
                                                    1999           1998
                                                    ----           ----

Sales of residential rehabilitation properties   $29,325,884   $25,564,935
Gains on sales of mortgage loans, net ........    11,617,022    12,170,359
Interest earned ..............................     3,657,636     3,942,966
                                                 -----------   -----------
Total Revenue ................................   $44,600,542   $41,678,260
                                                 ===========   ===========


     Revenues from the sale of residential  rehabilitation  properties increased
$3.7 million, or 14.7%, to $29.3 million for the nine months ended September 30,
1999 from $25.6  million for the nine months  ended  September  30,  1998.  This
increase was primarily  the result of the increase in the number of  residential
rehabilitation  properties  sold to 178 for the nine months ended  September 30,
1999 from 167 for the nine months ended September 30, 1998.

     Gains on sales of mortgage loans decreased $0.6 million,  or 4.5%, to $11.6
million for the nine months ended  September 30, 1999 from $12.2 million for the
nine months ended September 30, 1998. This decrease was primarily due to a 78.4%
decrease in sub-prime loan  originations  along with losses  incurred in selling
the remaining  sub-prime  portfolio in a depressed  sub-prime  market  partially
offset by a 23.9% increase in conventional and FHA/VA loans originated. Mortgage
loan  originations  were $449.2  million and $410.5  million for the nine months
ended  September  30, 1999 and 1998,  respectively.  For the nine  months  ended
September 30, 1999,  approximately  56% of the Company's  mortgage  originations
were derived from its retail mortgage  operations and approximately 44% from its
wholesale  operations.  The following  table  summarizes the Company's  mortgage
originations (in 000's):

          Nine months Ended September 30,
          -------------------------------
                 1999       1998
                 ----       ----

Conventional   $300,619   $262,634
FHA/VA .....    136,037     89,686
BCD ........     12,559     58,181
               --------   --------
Total ......   $449,215   $410,501
               ========   ========

     Although there can be no assurance  thereof,  the Company expects  mortgage
originations  to increase due to the expansion to new  geographic  areas and new
Internet  technology,  which may result in additional gains on sales of mortgage
loans in future periods.

     Interest  earned  decreased $0.2 million,  or 7.2%, to $3.7 million for the
nine months ended September 30, 1999 from $3.9 million for the nine months ended
September  30, 1998.  This  decrease was  primarily  due to decreased  sub-prime
mortgage activity.  Such loans generally have higher interest rates and are held
for sale longer than conventional mortgages.

Expenses.  The following table sets forth the Company's expenses for the periods
indicated:
<TABLE>
<CAPTION>

                                                      Nine months Ended September 30,
                                                      -------------------------------
                                                            1999         1998
                                                            -----------------

<S>                                                     <C>           <C>
Cost of sales - residential rehabilitation properties   $26,565,987   $23,503,098
Compensation and benefits ...........................     9,023,859     7,687,956
Interest expense ....................................     3,490,676     4,117,172
Other general and administrative ....................     3,803,102     2,861,285
                                                        -----------   -----------
Total expenses ......................................   $42,883,624   $38,169,511
                                                        ===========   ===========
</TABLE>

         Cost of sales on residential  rehabilitation  properties increased $3.1
million, or 13.0%, to $26.6 million for the nine months ended September 30, 1999
from $23.5 million for the nine months ended  September 30, 1998.  This increase
     was primarily due to the increase in the number of properties purchased,
rehabilitated and sold.

     Compensation and benefits  increased $1.3 million or 17.4%, to $9.0 million
for the nine months  ended  September  30,  1999 from $7.7  million for the nine
months ended  September  30,1998.  This  increase was primarily due to increased
sales  salaries  and  commission  from  mortgage  loan  originations  as well as
increased salaries for the Company's geographic expansion.

     Interest expense decreased $0.6 million,  or 15.2%, to $3.5 million for the
nine months ended September 30, 1999 from $4.1 million for the nine months ended
September 30, 1998.  This decrease was  attributable to the decrease in subprime
mortgage  originations which are held longer in the Company's warehouse lines of
credit,  partially offset by higher loan origination volume and higher borrowing
rates.

     Other general and administrative  expense increased $0.9 million, or 32.9%,
to $3.8 million for the nine months ended  September  30, 1999 from $2.9 million
for the nine months ended September 30, 1998. This increase was primarily due to
increased  expenses  incurred in connection  with the  geographic  growth in the
operations of the Company including rent and facilities  expense,  telephone and
marketing.

     Although there can be no assurance  thereof,  the Company believes that the
expected increase in mortgage origination volume and residential  rehabilitation
activities  may result in  increased  expenses.  These  increases  may be partly
offset by increased  efficiency of operations primarily through anticipated cost
reductions and the expected  installation  in the first quarter of 2000 of a new
front-end software system and a laptop loan system.

     Net  income  decreased  $0.2  million  or 19.2% to $1.0  million  from $1.2
million for the nine months ended September 30, 1999.

Liquidity and Capital Resources

     The Company's  principal  financing needs consist of funding  mortgage loan
originations and residential rehabilitation properties. To meet these needs, the
Company  currently relies on borrowings under warehouse lines of credit and cash
flow from operations. The amount of outstanding borrowings under warehouse lines
of  credit  at  September  30,  1999 was $58  million.  The  mortgage  loans and
residential  rehabilitation  properties,  funded  with the  proceeds  from  such
borrowings, secure warehouse lines of credit.

     On August  7,  1998,  the  Company  entered  into a Senior  Secured  Credit
Agreement  with  Chase  Bank of Texas,  National  Association  and PNC Bank (the
"Warehouse  Line").  The Warehouse  Line provides a warehouse  line of credit of
$120  million  ($90  million  committed  at August  11,  1998) for its  mortgage
originations  and residential  rehabilitation  purchases.  The Warehouse Line is
secured by the mortgage loans and residential  rehabilitation  purchases  funded
with the proceeds of such borrowings.  The Company has also pledged the stock of
its residential rehabilitation subsidiaries as additional collateral. Borrowings
for  residential  rehabilitation  purchases are  guaranteed  by Ronald  Friedman
(President,  Chief  Executive  Officer and a Director of the Company) and Robert
Friedman (Chairman of the Board of Directors, Chief Operating Officer, Secretary
and Treasurer of the Company).  The interest rate charged for  borrowings  under
the Warehouse  Line is LIBOR plus 1 1/4 % - 2 1/4% depending upon the collateral
type. The Warehouse Line expires on December 24, 1999.

     The  warehouse  lines  of  credit  contains  certain   covenants   limiting
indebtedness,  liens,  mergers,  changes  in  control  and sales of  assets  and
requires the Company to maintain  minimum net worth and other financial  ratios.
The Company  expects to be able to renew or replace the  Warehouse  Line and its
other warehouse line of credit when the current terms expire.

     On February 18, 1998 the Company  completed an initial  public  offering of
new shares of common  stock at a price of $9 per  share.  The  Company  received
gross proceeds of $11.25 million and net proceeds of approximately $9.2 million.
The proceeds from this offering were used for funding mortgage  originations and
residential  rehabilitation  properties,  working  capital and an S  Corporation
distribution.

     Net cash  substantially  provided by  operations  for the nine months ended
September 30, 1999 was $25.0 million.  The funds were principally  provided by a
$11.4  million net decrease in mortgage  loans held for sale and a $13.1 million
net decrease in receivable from sales of loans. These funds were used to finance
a decrease in  warehouse  borrowings  of $27.2  million,  decreases  in loans to
affiliates  and  distributions  payable  to  stockholders,  the  Prime  Mortgage
acquisition  and the  purchase of state of the art front end  software  which is
expected to be functional in January 2000.


Impact of New Accounting Standards

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards ("SFAS") No. 133,  "Accounting for
Derivative  Instruments  and  Hedging  Activities."  SFAS No. 133 applies to all
entities and is effective for fiscal  quarters of fiscal years  beginning  after
June 15, 2000. This statement establishes  accounting and auditing standards for
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts and for hedging  activities.  This  statement  requires that an
entity  recognize  all  derivatives  as  either  assets  or  liabilities  in the
statement of financial  position and measure those instruments at fair value. In
July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB  Statement No.
133".  SFAS No. 137 delays the effective date of SFAS No. 133,  "Accounting  for
Derivative  Instruments  and Hedging  Activities  ", for one year, to all fiscal
quarters of all fiscal years beginning after June 15, 2000. The delay applies to
quarterly  and  annual  financial  statements.  SFAS No. 137 is  effective  upon
issuance and does not require  restatement of prior  periods.  Management of the
Company  currently  believes the  implementation of SFAS No. 133 will not have a
material impact on the Company's financial condition or results of operations.

     In  October  1998,   the  FASB  issued  SFAS  No.  134,   "Accounting   for
Mortgage-Backed  Securities  Held for  Sale by a  Mortgage  Banking  Enterprise"
("SFAS  No.134").  SFAS No. 134 conforms the accounting for securities  retained
after securitization of mortgage loans by a mortgage banking enterprise with the
accounting for securities  retained after the  securizitation  of other types of
assets by a non-mortgage  banking enterprise.  SFAS No. 134 is effective for the
first  quarter  beginning  after  December 31, 1998.  Management  of the Company
believes the  implementation  of SFAS No. 134 does not have a material impact on
the Company's financial condition or results of operations.

Year 2000 Compliance

     The  Company is  currently  in the  process  of  updating  its  information
technology  infrastructure for the Year 2000 ("Y2000")  compliance.  The Company
has contacted the venders of its information  systems and has been informed that
these systems are Y2000  compliant.  The  Company's  existing  workstations  and
fileservers are  substantially  Y2000 compliant and those  workstations that are
not Y2000  compliant will be replaced  during 1999. The Company does not believe
that the cost to modify its information technology infrastructure to be material
to its  financial  condition  or  results  of  operations  nor does the  Company
anticipate any material disruption of its operations as a result of a failure by
the Company to be Compliant.  However, there can be no assurance that there will
not be a delay in, or increased costs, associated with the need to address Y2000
issues. The Company also relies, directly and indirectly,  on the business, such
as  third  party  service  providers,   creditors,  financial  institutions  and
government  agencies.  Even if the Company's computer systems are not materially
adversely  affected by Y2000 issues, the Company's business and operations could
me  materially  adversely  affected by  disruptions  in the  operations of other
entities with which the Company interacts.

Item 3. Quantitative and Qualitative Disclosure about Market Risks.

     In  management's  opinion,  there has not been a material  change in market
risk from December 31, 1998.


<PAGE>


PART II-OTHER INFORMATION


Item 1.  Legal Proceedings

         The  Registrant  is a defendant  in certain  litigation  arising in the
normal course of its business.  In the opinion of the Registrant,  any potential
liability  with respect to such legal actions will not,  individually  or in the
aggregate,  be material to the  Registrant's  financial  position,  liquidity or
future results of operations.

 Item 2.  Changes in Securities And Use of Proceeds

         None.

Item 3.  Defaults Upon Senior Securities

         None.

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

         None.

Item 5.  Other Information

         On September 7, 1999, Robert Friedman resigned as Chairman of the Board
of Directors  and was  replaced as Chairman by Ronald  Friedman,  the  Company's
President and Chief Executive Officer.  Keith Haffner,  the Company's  Executive
Vice President, replaced him on the Board of Directors.

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits

    27 - Financial Data Schedules

(b) The  Company  filed a Form 8-K on  September  15, 1999  disclosing  that Mr.
Robert  Friedman  was no  longer an  officer  and  director  of the  Company  as
described above in Item 5.



<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.


                              PMCC FINANCIAL CORP.
                              (Registrant)



                           By /s/ Ronald Friedman
                              -------------------
                              Ronald Friedman
                              Chairman, President and Chief Executive Officer


                           By /s/ Stephen J. Mayer
                              --------------------
                              Stephen J. Mayer
                              Chief Financial Officer
                              (Principal Accounting Officer)


Dated: November 15, 1999