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 March 31, 2000

                                       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 May 8, 2000: 3,707,000 shares.


<PAGE>


                              PMCC FINANCIAL CORP.

                                    FORM 10-Q

                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>

                                                                                     Page No
                                                                                     -------
<S>                                                                                     <C>

Part I - Financial Information

Item 1.  Financial Statements:

          Consolidated Statements of Operations (Unaudited)                             3
                  Three Months Ended March 31, 2000 and 1999

          Consolidated Statements of Financial Condition (Unaudited)                    4
                  March 31, 2000 and December 31, 1999

          Consolidated Statements of Cash Flows (Unaudited)                             5
                  Three Months Ended March 31, 2000 and 1999

         Notes to  Consolidated Financial Statements (Unaudited)                        6-9


Item 2.  Management's Discussion and Analysis of Financial Condition                   10-18
         and Results of Operations

Part II -  Other Information                                                           19-20

Signatures                                                                              21
</TABLE>



                                       2

<PAGE>


                         Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements


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

                                                                      Three Months Ended March 31,
                                                                      ----------------------------
                                                                          2000              1999
                                                                          ----------------------
<S>                                                                     <C>             <C>
Revenues:
Sales of residential rehabilitation properties                          $9,922,201      $8,544,978
Gains on sale of mortgage loans, net                                     1,048,985       3,807,903
Interest earned                                                            570,886       1,319,435
                                                                        ----------       ---------
                                                                        11,542,072      13,672,316
Expenses:
Costs of sales, residential rehabilitation properties                    9,472,931       7,804,194
Compensation and benefits                                                1,891,804       2,730,631
Interest expense                                                           693,854       1,179,956
Expenses resulting from Investigation (Note 7)                           1,145,256            -
Other general and administrative                                         1,035,058       1,155,644
                                                                        ----------      ----------
                                                                        14,238,903      12,870,425


(Loss) income before income tax (benefit) expense                       (2,696,831)        801,891
Income tax (benefit) expense                                            (1,109,247)        329,000
                                                                        -----------        -------
         Net  (loss) income                                            $(1,587,584)       $472,891
                                                                       ============       ========


Net (loss) income per share of common stock-basic                           $(0.43)          $0.13
                                                                            ======           =====

Net (loss) income per share of common stock-diluted                         $(0.43)          $0.13
                                                                            =======          =====

Weighted average number of shares and
   share equivalents outstanding-basic                                   3,707,000       3,724,800
                                                                         =========       =========

Weighted average number of shares and
   share equivalents outstanding-diluted                                 3,707,000       3,756,571
                                                                         =========       =========

</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>


                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                 Consolidated Statements of Financial Condition

<TABLE>
<CAPTION>

                                                                          Unaudited       Audited
                                                                          March 31,     December 31,
                                                                             2000           1999
                                                                             ----           ----
<S>                                                                        <C>             <C>
Assets
Cash and cash equivalents                                                  $549,105        $214,957
Restricted cash                                                             500,000         500,000
Receivable from sales of loans                                                  -         4,300,279
Mortgage loans held for sale, net                                        14,798,335      36,666,397
Mortgage loans held for investment, net                                   3,323,879       3,112,179
Accrued interest receivable                                                 125,000         125,000
Other receivables, net                                                    1,920,417       1,396,756
Residential rehabilitation properties, net                                7,414,997      15,189,753
Furniture, fixtures & equipment, net                                      1,104,886       1,169,327
Prepaid expenses and other assets                                         1,206,847         870,875
                                                                          ---------      ----------

Total assets                                                            $30,943,466     $63,545,523
                                                                        ===========     ===========


Liabilities and shareholders' equity Liabilities:
Notes payable-principally warehouse lines of credit                     $20,332,379     $50,584,370
Deferred income taxes                                                         -             333,000
Accrued expenses and other liabilities                                    1,084,079       1,531,374
                                                                          ---------       ---------

Total liabilities                                                        21,416,458      52,448,744
                                                                         ----------      ----------

Shareholders' equity
Common stock                                                                 37,500          37,500
Additional paid-in capital                                               10,935,096      10,917,283
Retained (deficit) earnings                                             (1,191,117)         396,467
Treasury stock                                                            (254,471)       (254,471)
                                                                          ---------       ---------
Total  shareholders' equity                                               9,527,008      11,096,779
                                                                          ---------      ----------

Total liabilities and shareholders' equity                              $30,943,466     $63,545,523
                                                                        ===========     ===========
</TABLE>



See accompanying notes to unaudited consolidated financial statements

                                       4
<PAGE>


                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                               Three months ended March 31,
                                                                               ----------------------------
                                                                                  2000               1999
                                                                                  -----------------------
<S>                                                                             <C>                   <C>
Cash flows from operating activities:
Net  (loss) income                                                              $(1,587,584)          $472,891
    Adjustments to reconcile net (loss) income to net cash provided by
    operating activities:
         Residential  rehabilitation properties (exclusive of cash paid
         directly to/by independent contractors):
           Contractual fees received                                               (449,270)         (740,784)
           Proceeds from sales of properties                                       9,922,201         8,544,978
           Costs of properties acquired                                          (1,698,175)       (9,278,538)
         Depreciation and amortization                                                90,611            61,032
         (Increase) decrease in interest and other receivables                     (523,661)            81,477
         Decrease in mortgage loans held for sale and investment, net             21,656,362        14,580,818
         Decrease in receivable from sales of loans                                4,300,279        16,257,489
         Increase in prepaid expenses and other assets                             (335,972)          (72,884)
         Decrease in deferred taxes payable                                        (333,000)         (213,000)
         (Decrease) increase in accrued expenses and other liabilities             (447,295)           143,344
                                                                                   ---------           -------
         Net cash provided by operating activities                                30,594,496        29,836,823
                                                                                  ----------        ----------

Cash flows from investing activities:
         Purchase of furniture and equipment                                         (8,357)          (32,788)
                                                                                     -------          --------
Net cash used in investing activities                                                (8,357)          (32,788)
                                                                                     -------          --------
Cash flows from financing activities:
         Net decrease in notes payable-warehouse lines of credit                (30,251,991)      (30,348,848)
               Net decrease in due to affiliates                                          --       (1,187,998)
               Distributions to S corporation shareholders                                --         (277,700)
                                                                                 -----------       ---------

Net cash used in financing activities                                           (30,251,991)      (31,814,546)
                                                                                ------------      ------------

Net increase (decrease) in cash and cash equivalents                                 334,148       (2,010,511)

Cash and cash equivalents at beginning of period                                     214,957         3,596,002
                                                                                   ---------         ---------

Cash and cash equivalents at end of period                                          $549,105        $1,585,491
                                                                                    ========        ==========

Supplemental disclosures of cash flow  information:
         Cash paid during the period for:
           Interest                                                                 $970,048        $1,297,371
                                                                                    ========        ==========
           Income taxes                                                              $11,190           $55,000
                                                                                     =======           =======
                 Loans transferred from mortgage loans held for sale to
                    held for Investment, net                                        $322,100           $29,649
                                                                                    ========           =======


</TABLE>


See accompanying notes to unaudited  consolidated financial statements

                                       5
<PAGE>


                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000
                                   (Unaudited)

1.   Basis of Presentation

     The unaudited consolidated financial statements included herein reflect all
adjustments,  which are,  in the  opinion  of  management  necessary  for a fair
presentation of the Company's  financial condition as of the dates indicated and
the results of operations for the periods shown.  All such  adjustments are of a
normal recurring  nature. In preparing the accompanying  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
consolidated  statements  of financial  condition and of income and expenses for
the periods presented in the consolidated statements of operations.  The results
of  operations  for the three  months  ended March 31, 2000 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  omitted  pursuant  to rules and  regulations  of the  Securities  and
Exchange Commission.

     These  unaudited  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, 1999.


2.   Initial Public Offering

     On February 18, 1998 the shareholders of Premier Mortgage Corp. ("Premier")
exchanged all of their outstanding shares of common stock for 2.5 million shares
of the Company. Following this exchange, the Company completed an initial public
offering of 1.25  million 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.

     At the time of the exchange, the Company agreed to make a cash distribution
to its existing shareholders of $2.7 million which was equal to a portion of the
Company's  undistributed S corporation  earnings.  Approximately $1.9 million of
this  distribution  was paid during the quarter ended March 31, 1999 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.

                                       6
<PAGE>
3.   Income Taxes

     The  Company  accounts  for  income  taxes  under the  liability  method as
required by SFAS No. 109.

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 and warrants was 0
shares and 93,335  shares,  respectively,  for the three  months ended March 31,
2000 and 1999.

5.   Notes Payable

At March 31, 2000 and 1999,  substantially  all of the  mortgage  loans held for
sale and  investment,  receivable  from sales of loans and  certain  residential
rehabilitation  properties  were pledged to secure notes payable under warehouse
lines of credit  agreements.  The notes are repaid as the related mortgage loans
or residential rehabilitation properties are sold or collected.

On February 28, 2000,  the Company  entered into a Master  Repurchase  Agreement
that provides the Company with a warehouse  facility (the "IMPAC Line")  through
IMPAC  Warehouse  Lending Group  ("IMPAC").  The IMPAC Line provides a committed
warehouse line of credit of $20 million for the Company's mortgage  originations
only.  The IMPAC Line is secured by the mortgage  loans funded with the proceeds
of such  borrowings.  Interest  payable is  variable  based on the Prime Rate as
posted  by Bank of  America,  N.A.  plus  0.50%.  The  IMPAC  Line has no stated
expiration  date but is  terminable  by either  party upon  written  notice.  To
supplement  the IMPAC Line, in March 2000,  the Company  applied for  additional
warehouse  lines  of  credit  totaling  $15  million  with two  other  financial
institutions.

The  expiration  dates for the  Company's  warehouse  lines of credit  with Bank
United and GMAC/RFC have been extended to May 31, 2000. The expiration dates for
the  Company's  warehouse  line of credit  with  Chase  Bank of Texas,  National
Association  ("Chase") and PNC Bank ("PNC") is in the process of being  extended
to June 15, 2000. The Company  anticipates  paying down the entire facilities or
renewing the  extensions  under similar terms and  conditions as the  extensions
which have previously been granted.  The total outstanding on these lines at May
11, 2000 is approximately $5.4 million.


                                       7
<PAGE>
6.   Related-Party Transactions

A relative of Ronald  Friedman,  the Company's  President and CEO currently on a
leave of absence,  has an economic  interest in a rehab partner for the purchase
and sale of  rehabilitation  properties  with a subsidiary of PMCC. At March 31,
2000,  the  subsidiary  owned  $1.338  million of  properties  with  outstanding
borrowings  on the  Company's  warehouse  lines of  $822,000  relating  to these
properties.

7.   Litigation

The  U.S.  Attorney's  Office  for  the  Eastern  District  of New  York  ("U.S.
Attorney")  is  conducting  an  investigation  (the  "Investigation")  into  the
allegations asserted in a criminal complaint against Ronald Friedman, the former
Chairman of the Board, President and Chief Executive Officer of the Company, and
a loan officer formerly employed by the Company. On December 21, 1999, agents of
the Office of the Inspector  General for the United States Department of Housing
and Urban Development  ("HUD") executed search and arrest warrants at the Roslyn
offices  of the  Company.  The  warrants  were  issued on the basis of a federal
criminal  complaint  ("Complaint"),  which charged that Ronald  Friedman and the
loan officer  knowingly  and  intentionally  made,  uttered or  published  false
statements in connection with loans to be insured by HUD.

In  response to the  allegations  against the loan  officer  and  Friedman,  the
Company  engaged  the  legal  services  of Dorsey & Whitney  LLP to  conduct  an
internal  investigation  into the  alleged  misconduct  and to  prepare a report
discussing the findings of the internal investigation.  As part of this internal
investigation,  the Company worked  closely and in cooperation  with HUD and the
U.S.  Attorney.  In addition,  key  employees,  including  loan  officers,  loan
processors,  underwriters  and  managers,  were  interviewed.  An audit also was
conducted of over one-third of all 1999 FHA loans in order to assess whether the
files comported with the HUD guidelines for FHA loans.

A preliminary report detailing Dorsey & Whitney's investigation and findings was
presented  to the  Company's  Board of  Directors  on April 12,  2000. A written
report  was issued on April 14,  2000.  The report  concludes  that while  there
appears to be support for the  allegations  leveled at the former loan  officer,
there is no evidence that the  misconduct  alleged in the complaint was systemic
at the Company.  Rather,  the findings  support the conclusion  that the alleged
misconduct  was an  isolated  occurrence,  not an  institutional  practice.  The
available  evidence  did not  permit  Dorsey &  Whitney  to  reach a  definitive
conclusion   concerning  the  charges  pending  against  Ronald  Friedman.   The
investigation,  comprised of  interviews  with PMCC  employees  and an extensive
review of mortgage  loan  files,  revealed no  independent  evidence  tending to
support the allegations against Friedman contained in the criminal complaint.

While  the  Company  believes  that  it has not  committed  any  wrongdoing,  it
continues to cooperate fully with the U.S.  Attorney's  Office and HUD. However,
it cannot


                                       8
<PAGE>
predict the duration of the Investigation or its potential outcome. Although the
Company does not anticipate being charged in connection with this investigation,
in the event that the Company was charged,  it intends to vigorously  defend its
position.  While the Company does not  anticipate its  occurrence,  in the event
that it was to lose its ability to originate and sell FHA loans as result of the
Investigation,  the Company  does not believe that the  financial  effect on the
Company would be material.  The Company  originates  less than 7% of its current
loan volume through FHA products.

As a result of this investigation, the Company incurred $1.145 million of direct
expenses for the three months ended March 31, 2000. These expenses include legal
and professional fees incurred in connection with the internal  investigation of
the Company,  criminal defense  attorneys and negotiations of warehouse lines of
credit  amendments.  Also  included in these  expenses are bank fees relating to
granting  amendments  to the Bank United line of credit and bonuses  paid to the
Company's officers and employees.


8.   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):


                                                       (Unaudited)
                                                  Quarter Ended March 31,
                                                  -----------------------
                                                      2000        1999
                                                      ----        ----
Revenues:
   Residential rehabilitation properties           $  9,922    $  8,545
   Mortgage banking                                   1,620       5,127
                                                   --------    --------
                                                   $ 11,542    $ 13,672
                                                   ========    ========
Less: (1)
   Expenses allocable to residential rehabil-
     itation properties (cost of sales, interest
     expense and compensation and benefits)          10,119       8,265
   Expenses allocable to mortgage banking
      (all other)                                     4,120       4,605
                                                   --------    --------
                                                   $ 14,239    $ 12,870
                                                   ========    ========

Operating (Loss) Profit:
     Residential rehabilitation properties             (197)        280
     Mortgage banking                                (2,500)        522
                                                   --------    --------
                                                   $ (2,697)   $    802
                                                   ========    ========


                                       9
<PAGE>



         Identifiable   Assets  (at  March  31,  2000  and
            December  31,  1999, respectively):
              Residential rehabilitation properties           $  7,415 $  15,190
              Mortgage banking                                  23,528    48,356
                                                              -------- ---------
                                                               $30,943 $  63,546

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


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.  These  forward-looking
statements reflect the Company's current views with respect to future events and
financial performance.  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  among others,  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;  (6) the
Company's  management  of cash  flow and  efforts  to modify  its  prior  growth
strategy;  (7) the  outcome  of  governmental  investigations  and  the  effects
thereof;  (8) the Company's efforts to improve quality control;  and other risks
and  uncertainties  described in the Company's Annual Report on Form 10-K and in
PMCC   Financial   Corp.'s  other  filings  with  the  Securities  and  Exchange
Commission.  Should one or more of these risks or uncertainties materialize,  or
should underlying  assumptions  prove incorrect,  actual outcomes and events may
vary materially from those indicated.


                                       10
<PAGE>
Results of Operations

Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999

General

Due to recent developments regarding the Investigation referred to in "Part II -
Item 1. Legal  Proceedings"  (which recent  developments  were described in more
detail in the Company's Form 10-K for the year ended  December 31, 1999),  along
with a significant reduction in the mortgage origination market (particularly in
the  Northeast)  caused by increasing  interest rates and a fall-off in mortgage
refinancing,  many of the Company's growth  initiatives were suspended or closed
down completely in the quarter ended March 31, 2000. The following  actions were
taken:

o    staffing at the Company's Roslyn retail office and  administrative  offices
     was reduced from 86 employees to 45. In  conjunction  such  reduction,  the
     Company is currently  negotiating to significantly  reduce its office space
     in  Roslyn  by  subleasing  at  least  half  its  current  premises.  These
     reductions,  while costing an estimated  $300,000 in termination costs, are
     expected to result in annualized cost savings of almost $1.6 million;

o    all retail branches opened during 1998 and 1999 were closed, along with one
     wholesale office acquired from Prime,  resulting in a staff reduction of 36
     employees.  This included  retail  branches in potential  high growth areas
     such as Las Vegas,  Phoenix  and  Deerfield  Beach  which were in  start-up
     situations  and were  incurring  high expenses in relation to their current
     origination  volume.  It is  expected  that these  actions  will  result in
     annualized  cost savings to the Company of  approximately  $800,000,  while
     closing these branches  resulted in estimated closing and termination costs
     of $75,000;

o    staffing  at the  Company's  New Jersey  and  remaining  Florida  wholesale
     locations  was reduced from 61  employees to 38, and the Florida  locations
     have moved to more  cost-efficient  office locations.  These reductions are
     expected to result to result in annualized cost savings of almost $600,000;

o    the Company's  web-site was temporary  closed down as was the Internet call
     center in Houston.  As a start-up  operation,  this area was incurring high
     expenses in relation to the current origination volume. It is expected that
     this action will result in annualized savings of over $300,000;

o    the   Company   temporarily   halted   the   acquisition   of   residential
     rehabilitation  properties  and began an  initiative  to sell the completed
     properties  on  hand  as  quickly  as  practicable.   Assuming   successful
     completion  of proposed  sales,  this process is expected to bring into the
     Company  a total of  approximately  $6  million  in cash by the end of June
     2000.


                                       11
<PAGE>

     At the same  time the  above  actions  are  being  taken,  PMCC's  business
strategy is to stabilize and  strengthen  its remaining  areas of business.  The
Company plans to add new account  executives in both New Jersey and Florida.  It
is  anticipated  that more than 80% of mortgage loan  applications  taken by the
Company in 2000 will be as a result of its  wholesale  operations.  The  Company
also  expects to reopen and expand its  web-site to allow  borrowers to directly
match  their  credit  profile  to  specific  products  and rates  offered by the
Company.

     The  Company  also  expects  to  resume  its   residential   rehabilitation
activities when condition are favorable and is exploring new financing sources.

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

                                                  Quarters Ended March 31,
                                                  ------------------------
                                                     2000          1999
                                                     ------------------

Sales of residential rehabilitation properties   $ 9,922,201   $ 8,544,978
Gains of sales of mortgage loans, net              1,048,985     3,807,903
Interest earned                                      570,886     1,319,435
                                                 -----------   -----------
Total revenues                                   $11,542,072   $13,672,316
                                                 ===========   ===========

     Revenues from the sale of residential  rehabilitation  properties increased
$1.4 million,  or 16%, to $9.9 million for the quarter ended March 31, 2000 from
$8.5  million for the quarter  ended March 31, 1999.  The number of  residential
rehabilitation  properties  sold was 75 for the  quarter  ended  March 31,  2000
compared to 52 for the quarter ended March 31, 1999.  This increase was a result
of the Company's  initiative to sell completed  properties on hand as quickly as
practicable to enhance cash flow.

     Gains on sales of mortgage loans  decreased  $2.8 million,  or 74%, to $1.0
million for the quarter  ended March 31, 2000 from $3.8  million for the quarter
ended March 31, 1999. This decrease was due to a number of significant  factors.
Mortgage  loan  originations  were  $59.5  million  and $133.9  million  for the
quarters  ended March 31, 2000 and 1999,  respectively.  This 56%  decrease  was
primarily  the  result of a  decline  in retail  originations  arising  from the
decrease  in the  number of  retail  loan  officers,  along  with a  significant
reduction in the mortgage  origination  market  (particularly  in the Northeast)
caused by increasing interest rates and a fall-off in mortgage refinancing.  For
the quarter ended March 31, 2000,  approximately  42% of the Company's  mortgage
originations were derived from its retail mortgage  operations and approximately
58% from its wholesale operations.  Additionally, 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 three-months ended March 31, 2000 compared to the
three-months ended March 31, 1999.


                                       12
<PAGE>



     The following  table  summarizes the Company's  mortgage  originations  (in
millions):
             Quarters Ended March 31,
             ------------------------
                   2000       1999
                   ---------------

Conventional   $ 48,118   $ 88,734
FHA/VA           11,373     38,832
Subprime           --        6,334
               --------   --------
Total          $ 59,491   $133,900
               ========   ========

     Although there can be no assurance  thereof,  the Company expects  mortgage
originations  to increase and therefore  believes its gains on sales of mortgage
loans will increase.

     Interest  earned  decreased  $749,000,  or 57%, to $571,000 for the quarter
ended March 31, 2000 from $1.3  million  for the quarter  ended March 31,  1999.
This  decrease was  primarily  due to decreased  mortgage  originations  for the
quarter ended March 31, 2000 as compared to the quarter ended March 31, 1999 and
sub prime mortgage originations which generally are at higher rates and are held
for sale longer than conventional mortgage originations.

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

                                                          Quarters Ended March 31,
                                                          ------------------------
                                                            2000          1999
                                                            ----          ----

<S>                                                     <C>           <C>
Cost of sales - residential rehabilitation properties   $ 9,472,931   $ 7,804,194
Compensation and benefits                                 1,891,804     2,730,631
Interest expense                                            693,854     1,179,956
Expenses resulting from Investigation                     1,145,256          --
Other general and administrative                          1,035,058     1,155,644
                                                        -----------   -----------
Total expenses                                          $14,238,903   $12,870,425
                                                        ===========   ===========
</TABLE>


     Cost of  sales  -  residential  rehabilitation  properties  increased  $1.7
million,  or 22%, to $9.5 million for the quarter ended March 31, 2000 from $7.8
million for the quarter  ended March 31, 1999.  This  increase was the result of
the  increase in the number of  properties  sold in the quarter  ended March 31,
2000 compared to the quarter ended March 31, 1999.

     Compensation and benefits decreased  $839,000,  or 31%, to $1.9 million for
the quarter  ended March 31, 2000 from $2.7 million for the quarter  ended March
31,1999.  This  decrease  was  primarily  due to  decreased  sales  salaries and
commission, which are based substantially on mortgage loan originations, and the
reductions in staff at the  Company's  Roslyn and New Jersey  locations,  partly
offset by the  personnel  added in Florida as part of the Prime  Mortgage  Corp.
acquisition in July 1999. Total personnel decreased to 86 employees at March 31,
2000 from 155 at March 31, 1999.

     Interest expense  decreased  $486,000,  or 41%, to $694,000 for the quarter
ended March 31, 2000 from $1.2  million  for the quarter  ended March 31,  1999.
This   decrease  was

                                       13

<PAGE>
primarily attributable to the decrease in mortgage originations and the decrease
in the amount of sub-prime mortgage  originations that generally are held on the
warehouse lines longer than conventional  mortgage  originations  along with the
decrease in residential  rehabilitation  properties funded through the Company's
warehouse facility.

     As a result of the  Investigation,  the Company incurred direct expenses of
$1.1 million in the  three-month  period ended March 31,  2000.  These  expenses
include legal and  professional  fees  incurred in connection  with the internal
investigation  of the Company,  criminal  defense  attorneys and negotiations of
warehouse lines of credit  amendments.  Also included in these expenses are bank
fees  relating  to  granting  amendments  to the Bank  United line of credit and
bonuses paid to the Company's officers and employees.

     Other general and  administrative  expense decreased  $121,000,  or 10%, to
$1.0  million  for the quarter  ended  March 31, 2000 from $1.2  million for the
quarter  ended March 31,  1999.  This  decrease was  primarily  due to decreased
expenses in connection  with the  contraction  in the operations of the Company,
partly offset by increases  incurred in connection with the expansion in Florida
from the Prime acquisition, including rent and facilities expense, telephone and
marketing.

     Although there can be no assurance thereof, the Company believes that, as a
result of certain cost cutting initiatives and contraction of business expansion
in the first quarter of 2000,  expenses will decrease.  However,  such decreases
are expected to continue to be partially  offset by professional  fees and other
expenses as a result of the Investigation and related events.

     The net loss of $1.5  million  for the  quarter  ended March 31, 2000 was a
decrease  of $1.0  million  or 211%,  from the net  income of  $473,000  for the
quarter ended March 31, 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 the warehouse
lines of credit at March 31,  2000 was $17.9  million.  The  mortgage  loans and
residential  rehabilitation  properties  funded  with  the  proceeds  from  such
borrowings secure the warehouse lines of credit

     On August  7,  1998,  the  Company  entered  into a Senior  Secured  Credit
Agreement  (the  "Chase  Line") with Chase Bank of Texas,  National  Association
("Chase")  and PNC Bank  ("PNC").  The Chase Line  provided a warehouse  line of
credit of $120  million  ($90  million  committed  at August  11,  1998) for its
mortgage originations and residential  rehabilitation  purchases. The Chase 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.  The


                                       14
<PAGE>

Company  is  required  to  comply  with  certain  financial  covenants  and  the
borrowings for  residential  rehabilitation  properties are guaranteed by Ronald
Friedman and Robert  Friedman.  The Chase Line  originally  was set to expire in
August 1999 but was extended  through  November 8, 1999.  Chase and PNC both had
decided to curtail  their  involvement  in  mortgage  warehouse  lending and had
decided not to renew the facility  for that  reason.  The Chase Line was further
extended to December  24,  1999 on a  declining  basis in order to complete  the
funding of all loans and  properties  on the line on  November  8, 1999.  No new
loans or  properties  were added to this line  subsequent  to  November 8, 1999.
Chase  and PNC have  agreed  to  continue  to  extend  the  line on a  specified
declining  basis through a series of short-term  extensions.  The banks and PMCC
are in the process of extending  the Chase Line through June 15, 2000,  at which
time the Company  anticipates  paying down the entire  facility or renewing  the
extension  under similar terms and  conditions as the  extensions  granted since
December 24, 1999. Interest payable on the Chase Line is variable based on LIBOR
plus 1.25% to 2.25% based upon the underlying collateral. Minimal fees were paid
for the  extensions  and  there  was no  change  in the  method  of  calculating
interest.

     The Company also  maintained a warehouse  line of credit with GMAC/RFC (the
"RFC Line") of $20  million  that was used  primarily  for  sub-prime  loans and
residential rehabilitation properties. The RFC Line was set to expire on January
31, 2000.  RFC had decided not to renew the warehouse line due to low usage as a
result of the Company's exiting the sub-prime  business and RFC's curtailment of
their  involvement  in  residential  rehabilitation  lending.  RFC has agreed to
continue to extend the line on a declining  basis through a series of short term
extensions,  the most recent of which will expire on May 31, 2000, at which time
the  Company  anticipates  paying  down the  entire  facility  or  renewing  the
extension  under similar terms and  conditions as the  extensions  granted since
January 31, 2000.  Interest  payable on the RFC Line is variable  based on LIBOR
plus 1.35% to 2.25% based upon the underlying collateral. Minimal fees were paid
for the  extensions  and  there  was no  change  in the  method  of  calculating
interest.

     To replace the  expiring  Chase Line,  the Company  entered into a one-year
Mortgage  Warehousing Loan and Security  Agreement (the "Bank United Line") with
Bank United, a federally  chartered savings bank, as lending bank and agent. The
Bank  United  Line  provided a  warehouse  line of credit of $120  million  ($40
million of which was committed by Bank United and the remainder of which was not
committed)  for  its  mortgage   originations  and  residential   rehabilitation
purchases. The Bank United 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.  Interest payable on the Bank United Line
was  variable  based on LIBOR  plus  1.50% to 2.50%  based  upon the  underlying
collateral.

     Due to the events relating to the Investigation, on December 22, 1999, Bank
United  declared a default  of the Bank  United  Line  agreement  and  suspended
funding under the  agreement.  Bank United  continued to fund new mortgage loans
only on a  limited  day to day basis and only  with the  personal  guarantee  of
Ronald Friedman and additional collateral in the form a $500,000 cash deposit by
the Company at Bank United. On January 18, 2000, Bank United agreed to a limited
extension of the warehouse  agreement  through January 28,

                                       15

<PAGE>

2000 and to waive the existing default relating to the Investigation.  In return
for this, Bank United required additional  collateral pledged to the bank in the
form  of the  $500,000  cash  deposit  previously  noted  and  $1.5  million  in
marketable  titles to residential  rehabilitation  properties  owned by PMCC, an
additional  3% cash  reduction in the funding  amount of all loans funded on the
Bank United Line,  the continued  personal  guarantee of Ronald  Friedman and an
Amendment Fee of $250,000.  The  Commitment  amount of the line was reduced from
$40 million to $33 million and the  interest  rate was  increased  to LIBOR plus
2.00% to 3.50% based upon the underlying collateral. On February 1, 2000, for an
additional  Amendment  Fee of  $100,000,  Bank United  agreed to an extension on
similar terms through February 28, 2000. On March 1, 2000, Bank United agreed to
an extension  through March 31, 2000 on similar  terms,  with a reduction of the
commitment  from $20 million on March 13 to $13 million on March 31.  Additional
collateral  held was  returned  in  proportion  to the  reduction  in the amount
committed. On April 1, 2000, Bank United agreed to an extension on similar terms
with a reduction of the  commitment  to $7 million  through  April 30, 2000.  On
April 25, 2000,  Bank United agreed to an extension on similar terms through May
15, 2000 and on May 9, 2000,  the bank agreed to a verbal  extension  on similar
terms  through May 31, 2000, at which time the Company  anticipates  paying down
the entire facility or renewing the extension under similar terms and conditions
as the extensions granted since January 2000.

     To replace a portion of the Bank United Line,  on February  28,  2000,  the
Company  entered into a Master  Repurchase  Agreement  that provides the Company
with a warehouse  facility  (the"IMPAC  Line") through IMPAC  Warehouse  Lending
Group ("IMPAC"). The IMPAC Line provides a committed warehouse line of credit of
$20 million for the  Company's  mortgage  originations  only.  The IMPAC Line is
secured by the  mortgage  loans  funded with the  proceeds  of such  borrowings.
Interest payable on the IMPAC Line is variable based on the Prime Rate as posted
by Bank of America,  N.A.  plus 0.50%.  The IMPAC Line has no stated  expiration
date but is terminable by either party upon written  notice.  To supplement  the
IMPAC Line, in March 2000, the Company applied for additional warehouse lines of
credit totaling $15 million with two other financial institutions.  There can be
no assurance that such applications will be approved.

     The  Company  currently  expects  that  the  existing  IMPAC  Line  will be
sufficient  to fund all  anticipated  loan  originations  for the  current  year
provided all new loans are sold to  investors on a loan by loan basis.  In order
to maximize potential profits through hedging  strategies,  the additional lines
applied for would be required.

     The  Company  supplemented  its  warehouse  facilities  through a gestation
agreement with Prudential  Securities Corp. (the "Gestation  Agreement"),  which
for  financial  reporting  was  characterized  by  the  Company  as a  borrowing
transaction. Due to the events regarding the Investigation, on December 22, 1999
Prudential  suspended  funding  new loans under the  agreement.  As of March 21,
2000, all loans funded under the Gestation Agreement have been sold to the final
investors.  The  Company  believes  that other  financial  institutions  provide
similar  gestation lines of credit,  although there can be no assurance that the
Company will obtain a new gestation line of credit.

                                       16
<PAGE>

     The Company had additional  cash  requirements in the first quarter of 2000
imposed  by  the  increased  capital  requirements  and  Amendment  Fees  for it
warehouse lines, the reduced warehouse  commitments and additional  professional
fees  (legal,  consulting  and  audit)  that  were  incurred  as a result of the
Investigation.  In order to raise cash expediently, the Company sold residential
rehabilitation   properties   in  its  portfolio  at  prices  that  reduced  the
contractual  fees  the  Company  normally  received  from  the  sales  of  those
properties  and in certain  instances at a price less than the cost to PMCC. The
Company also sold at discounted prices delinquent and non-performing  loans that
it would normally  maintain in its portfolio to eventually  work out and recover
its investment through foreclosure procedures or refinancing.  Additionally, the
Company closed new "start-up"  retail branches  opened in 1998 and 1999,  closed
the newly  opened  internet  call center in Houston and reduced  staffing at all
remaining   locations,   resulting  in  estimated  annualized  cost  savings  of
approximately  $3.3 million.  The Company  believes  that a greater  emphasis on
wholesale  lending  presents  the Company  with the ability to continue to offer
consumers  a broad  range of  products  by the most  cost-effective  means.  The
Company's existing capital  resources,  including the funds from its $20 million
committed  warehouse  facility  with  IMPAC  and cash  flow  from its  remaining
operations,  are expected to be sufficient to fund its current  mortgage banking
operation  during 2000.  The Company  believes  that, if such  applications  are
approved,  the additional  $15 million of warehouse  lines for which the Company
has applied  would enable PMCC to hold loans in the  warehouse  longer,  thereby
permitting  the  Company  to sell  loans in bulk and to hedge its  inventory  of
loans, resulting in potentially higher margins on loan sales.

     Net cash  provided by  operations  for the quarter ended March 31, 2000 was
$30.6 million.  The Company  generated  cash from the $29.5 million  decrease in
mortgage  loans held for sale and  receivable  from sales of loans and by a $7.8
million net decrease in residential  rehabilitation properties. The Company used
cash to reduce borrowings under its warehouse lines of credit by $30.3 million.

Impact of New Accounting Standards

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
instruments and Hedging Activities",  effective for fiscal years beginning after
June 15, 1999,  which has been  deferred to June 30, 2000 by the  publishing  of
SFAS No. 137. SFAS No. 133  establishes  accounting and reporting  standards for
derivative  instruments and for hedging  activities.  It requires that an entity
recognizes  all  derivatives as either assets or liabilities in the statement of
financial condition and measures those instruments at fair value. The accounting
for changes in the fair value of a derivative (that is, gain and losses) depends
on the intended use of the  derivative and the resulting  designation.  SFAS No.
133 does not require  restatement  of prior  periods.  Management  is  currently
assessing the impact of SFAS No. 133 on its  financial  condition and results of
operations.

Year 2000 Compliance

     PMCC had planned for and addressed the Year 2000 ("Y2000")  issue to ensure
it would be able to continue to perform its critical  functions.  The  Company's
information  technology  infrastructure  was evaluated for the Y2000 compliance.
The Company has


                                       17
<PAGE>
contacted  the vendors of its  information  systems and has been  informed  that
these systems were Y2000 compliant.  The Company's  workstations and fileservers
were  substantially  Y2000 compliant and those  workstations that were not Y2000
compliant  were  replaced   during  1999.  The  cost  to  modify  the  Company's
information  technology   infrastructure  was  not  material  to  its  financial
condition  or results of  operations.  The Company  also  relies,  directly  and
indirectly,   on  other  businesses  such  as  third  party  service  providers,
creditors,  financial  institutions and governmental  entities.  Even though the
Company's  computer systems are not materially  adversely  affected by the Y2000
issue,  the  Company's  business  and  operations  could  have  been  materially
adversely affected by disruptions in the operations of other entities with which
the Company interacts.

     Upon the turn of the millennium and subsequent thereto, the Company did not
experience  any  significant  systems  malfunctions  related to the Y2000 issue.
Additionally,  the Company did not  experience  any Y2000  issues with any other
businesses that it relied upon to provide services to the Company.  Although the
Company does not anticipate any future systems malfunctions related to the Y2000
issue,  procedures are in place to continuously  monitor all critical systems to
ensure that any potential  Y2000 issue that arises is corrected  with minimal or
no disruption to the Company's operation.

Item 3. Quantitative And Qualitative Disclosures About Market Risk.

None.

                                     18

<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.

     The U.S.  Attorney's  Office for the  Eastern  District  of New York ("U.S.
Attorney")  is  conducting  an  investigation  (the  "Investigation")  into  the
allegations asserted in a criminal complaint against Ronald Friedman, the former
Chairman of the Board, President and Chief Executive Officer of the Company, and
a loan officer formerly employed by the Company. On December 21, 1999, agents of
the Office of Inspector  General for HUD executed  search and arrest warrants at
the Roslyn  offices of the Company.  The warrants  were issued on the basis of a
federal criminal complaint ("Complaint"), which charged that Ronald Friedman and
the loan officer  knowingly and intentionally  made,  uttered or published false
statements in connection with loans to be insured by HUD.

     In response to the allegations  against the loan officer and Friedman,  the
Company  engaged  the  legal  services  of Dorsey & Whitney  LLP to  conduct  an
internal  investigation  into the  alleged  misconduct  and to  prepare a report
discussing the findings of the internal investigation.  As part of this internal
investigation,  the Company worked  closely and in cooperation  with HUD and the
U.S.  Attorney.  In addition,  key  employees,  including  loan  officers,  loan
processors,  underwriters  and  managers,  were  interviewed.  An audit also was
conducted of over one-third of all 1999 FHA loans in order to assess whether the
files comported with the HUD guidelines for FHA loans.

     A  preliminary  report  detailing  Dorsey  &  Whitney's  investigation  and
findings was presented to the Company's  Board of Directors on April 12, 2000. A
written  report was issued on April 14, 2000.  The report  concludes  that while
there  appears to be support for the  allegations  leveled at the loan  officer,
there is no evidence that the  misconduct  alleged in the complaint was systemic
at the Company.  Rather,  the findings  support the conclusion  that the alleged
misconduct  was an  isolated  occurrence,  not an  institutional  practice.  The
available  evidence  did not  permit  Dorsey &  Whitney  to  reach a  definitive
conclusion   concerning  the  charges  pending  against  Ronald  Friedman.   The
investigation,  comprised of  interviews  with PMCC  employees  and an extensive
review of mortgage  loan  files,  revealed no  independent  evidence  tending to
support the allegations against Friedman contained in the criminal complaint.

     While the Company  believes that it has not committed  any  wrongdoing,  it
continues to cooperate fully with the U.S.  Attorney's  Office and HUD. However,
it cannot predict the duration of the  Investigation  or its potential  outcome.
Although the Company does not anticipate  being charged in connection  with this
investigation,  in the  event  that the  Company  was  charged,  it  intends  to
vigorously  defend its  position.  While the  Company  does not

                                       19
<PAGE>
anticipate  its  occurrence,  in the event  that it was to lose its  ability  to
originate  and sell FHA loans as result of the  Investigation,  the Company does
not believe that the  financial  effect on the Company  would be  material.  The
Company originates less than 7% of its current loan volume through FHA products

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.

Item 5. Other Information

     None.

Item 6. Exhibits and Reports on Form 8-K

(a)      Exhibits
                  27       Financial Data Schedule

(b)      Reports on Form 8-K
                  None.


                                       20
<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/ Andrew Soskin
                                      -----------------
                                   Andrew Soskin
                                   Interim President and Chief Executive Officer


                                   By /s/ Keith Haffner
                                      -----------------
                                   Keith Haffner
                                   Interim Chief Executive Officer


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

Dated: May 12, 2000
  g                                     21