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, 1998

                                       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)


                                66 Powerhouse Rd.
                           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 7, 1998: 3,750,000 shares.


<PAGE>


                         Part I - FINANCIAL INFORMATION

     Item 1. Financial Statements

<TABLE>
<CAPTION>

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

                                                                                   Three Months Ended March 31,
                                                                                   1998                      1997
<S>                                                                             <C>                      <C>
Revenues:
Sales of residential rehabilitation properties                                  $8,212,677               $4,224,400
Gains on sale of mortgage loans, net                                             3,085,390                1,780,264
Interest earned                                                                    859,824                  115,830
                                                                                ----------               ----------
                                                                                12,157,891                6,120,494
                                                                                ----------               ----------
Expenses:
Costs of sales, residential rehabilitation properties                            7,589,176                3,987,962
Compensation and benefits                                                        2,189,078                1,281,412
Interest expense                                                                   900,525                  213,162
Other general and administrative                                                   720,313                  453,356
                                                                                ----------               ----------
                                                                                11,399,092                5,935,892


Income before income tax expense                                                   758,799                  184,602
Income tax expense                                                               1,128,000                    3,250
                                                                                ----------               ----------
         Net (Loss) Income                                                       $(369,201)                $181,352
                                                                                ==========               ==========

Pro forma information:
Historical income before income tax                                               $758,799                 $184,602
Adjustment to compensation expense for contractual
    increase in officers' salary                                                        --                  (20,200)
Pro forma income before income tax expense                                         758,799                  164,402
Provision for pro forma income taxes                                              (311,000)                 (67,000)
                                                                                ----------               ----------
Pro forma net income                                                              $447,799                  $97,402
                                                                                ==========               ==========

Pro forma net income per share of common stock-basic                                 $0.15                    $0.04
                                                                                ==========               ==========
Pro forma net income per share of common stock-diluted                               $0.14                    $0.04
                                                                                ==========               ==========
Pro forma weighted average number of shares and
  share equivalents outstanding-basic                                            3,083,333                2,500,000
                                                                                ==========               ==========
Pro forma weighted average number of shares and
  share equivalents outstanding-diluted                                          3,176,668                2,500,000
                                                                                ==========               ==========


     See  accompanying  notes  to  unaudited  condensed  consolidated  financial
statements.

</TABLE>

<PAGE>


<TABLE>
<CAPTION>

                                  PMCC FINANCIAL CORP. AND SUBSIDIARIES
                         Condensed Consolidated Statements of Financial Condition
                                               (Unaudited)

                                                            March 31,                         December 31,
                                                             1998                                 1997
<S>                                                         <C>                                <C>

Assets
Cash and cash equivalents                                   $1,655,493                         $1,713,405
Receivable from sales of loans                              24,786,319                         35,130,857
Mortgage loans held for sale, net                           39,276,064                         18,609,569
Accrued interest receivable                                    483,782                            312,772
Other receivables, net                                         457,637                            398,444
Residential rehabilitation properties                       12,959,113                         11,584,273
Furniture & equipment, net                                     318,115                            286,713
Prepaid expenses and other assets                              505,207                            391,299
                                                            ----------                         ----------
Total assets                                               $80,441,730                        $68,427,332
                                                            ==========                         ==========

Liabilities and shareholders' equity Liabilities:
 Notes payable-principally warehouse lines of credit       $62,771,438                        $59,116,509
 Notes payable-shareholder                                          --                            293,163
 Due to affiliates                                           3,303,850                          3,084,503
 Accrued expenses and other liabilities                      1,582,100                          1,123,948
 Distribution payable                                          752,000                                 --
 Deferred  taxes                                             1,081,000                                 --
                                                            ----------                         ----------
Total liabilities                                           69,490,388                         63,618,123
                                                            ==========                         ==========
Shareholders' equity
Common stock                                                    37,500                              6,250
Additional paid-in capital                                  10,846,043                            711,775
Retained earnings                                               67,799                          4,091,184
                                                            ----------                         ----------
Total  shareholders' equity                                 10,951,342                          4,809,209
                                                            ----------                         ----------
Total liabilities and shareholders' equity                 $80,441,730                        $68,427,332
                                                            ==========                         ==========
</TABLE>

     See  accompanying  notes  to  unaudited  condensed  consolidated  financial
statements



<PAGE>


<TABLE>
<CAPTION>

                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                                                         Three months ended March 31,
                                                                                       1998                        1997
<S>                                                                             <C>                              <C>
Cash flows from operating activities:
Net  (loss) income                                                                $(369,201)                     $181,352
      Adjustments to reconcile net (loss) income to net cash
          used in operating activities:
         Residential rehabilitation  properties (exclusive of cash
               paid directly to/by independent contractors):
                    Contractual fees received                                      (623,501)                     (236,438)
                    Proceeds from sales of properties                             8,212,677                     4,224,400
              Costs of properties acquired                                       (8,964,016)                   (6,544,763)
         Depreciation and amortization                                               15,500                        15,530
         (Increase)/decrease in accrued interest receivable                        (171,010)                        3,214
         Net increase in mortgage loans held for sale                           (20,666,495)                   (6,075,287)
         Decrease in receivable from sales of loans                              10,344,538                     1,108,432
         Increase in other receivables                                              (59,193)                     (225,258)
         (Increase) decrease in prepaid expenses and 
            other assets                                                           (113,908)                       41,909
         Increase in deferred taxes                                               1,081,000                            --
         Increase in due to affiliates                                              219,347                       532,724
         Increase in accrued expenses and other liabilities                         458,152                       103,126
                                                                                -----------                   -----------
Net cash used in operating activities                                           (10,636,110)                   (6,901,059)
                                                                                -----------                   -----------
Cash flows from investing activities:
      Purchase of furniture and equipment                                           (46,902)                      (45,211)
      Principal repayments of mortgage loans held for
          investment                                                                     --                        24,519
                                                                                -----------                   -----------
Net cash used in investing activities                                               (46,902)                      (20,692)
                                                                                -----------                   -----------
Cash flows from financing activities:
      Distributions to S corporation shareholders, net
        of distribution payable                                                  (1,919,991)                      (48,911)
      Net proceeds from sale of common stock                                      9,183,325                            --
      Net decrease in notes payable-shareholder                                    (293,163)                           --
      Net increase in notes payable-warehouse lines of credit                     3,654,929                     7,057,051
                                                                                -----------                   -----------
Net cash provided by financing activities                                        10,625,100                     7,008,140
                                                                                -----------                   -----------
Net (decrease)/increase in cash and cash equivalents                                (57,912)                       86,389
Cash and cash equivalents at beginning of year                                    1,713,405                       409,788
                                                                                -----------                   -----------
Cash and cash equivalents at end of year                                         $1,655,493                      $496,177
                                                                                ===========                   ===========
Supplemental  disclosures  of cash flow  information:  Cash paid
      during the year for:
         Interest                                                                  $483,248                      $169,115
                                                                                ===========                   ===========
         Income taxes                                                               $13,651                        $4,188
                                                                                ===========                   ===========
</TABLE>

     See  accompanying  notes  to  unaudited  condensed  consolidated  financial
statements.



<PAGE>



                      PMCC FINANCIAL CORP. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1998
                                   (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 the Company's 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  months  ended March 31, 1998 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,
1997.

     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  shares of common stock for 2,500,000 shares
of the Company. Following this exchange, the Company completed an initial public
offering of 1,250,000 new shares of common stock at a price of $9 per share. The
Company received gross proceeds of $11,250,000 and net proceeds of $9,183,000.

     In addition,  upon the exchange,  Premier  declared a  distribution  to its
existing  shareholders  in an amount equal to its  undistributed  S  corporation
earnings that resulted in Premier's  shareholders'  equity equaling $1.7 million
at  the  date  of  the  initial  public  offering.   This  distribution  totaled
approximately  $2.7 million.  Approximately  $1.9 million of this  distribution,
including $1 million from the proceeds of the initial public offering,  was paid
during  the  quarter  ended  March 31,  1998.  The  remaining  $752,000  of this
distribution is payable in a promissory note bearing  interest at 10% per annum,
payable in four equal quarterly installments.  The final payment is due February
18, 1999. The remaining  undistributed S corporation  earnings 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 three
months ended March 31, 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 three months ended
March 31,  1998 and 1997  include pro forma  income  taxes as if the Company had
been taxed as a C corporation throughout the periods.

<PAGE>

     4. Earnings Per Share of Common Stock

     Effective  December 31, 1997, the Company  adopted SFAS No. 128,  "Earnings
Per Share".  This statement  establishes  standards for computing and presenting
EPS for entities with  publicly held common stock and common stock  equivalents.
This statement requires a reconciliation of the numerator and denominator of the
EPS calculation presented.

     Basic EPS is  determined by dividing pro forma 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 pro forma  diluted EPS arising  from  issued  stock  options was
93,335 shares and 0 shares,  respectively,  for the three months ended March 31,
1998 and 1997.

     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 period  February 18, 1998 to March 31, 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  time  period  and the  impact  of the
recognition  of a deferred tax  liability in  connection  with the change in tax
status.

     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>

                                                                          Quarter Ended March 31,
                                                                      1998                       1997
<S>                                                                   <C>                     <C>

         Revenues:
            Residential rehabilitation properties                     $8,213                    $4,224
            Mortgage banking                                           3,945                     1,896
                                                                      ------                   -------
                                                                     $12,158                    $6,120
                                                                      ======                   =======
         Less: (1)
            Expenses allocable to residential rehabil-
              itation properties (cost of sales, interest
              expense and compensation and benefits)                   7,918                     4,085
            Expenses allocable to mortgage banking
               (all other)                                             3,481                     1,851
                                                                      ------                   -------
                                                                     $11,399                    $5,936
                                                                      ======                   =======

         Operating Profit:
              Residential rehabilitation properties                      295                       139
              Mortgage banking                                           464                        45
                                                                      ------                   -------
                                                                        $759                      $184
                                                                      ======                   =======

         Identifiable   Assets  (at  March  31,  1998  and
           December  31,  1997, respectively):
              Residential rehabilitation properties                  $12,959                   $11,584
              Mortgage banking                                        67,483                    56,843
                                                                      ------                   -------
                                                                     $80,442                   $68,427
                                                                      ======                   =======
</TABLE>

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

<PAGE>

   6.  Common Stock

     The authorized  common stock of the Company consists of 1 million shares of
preferred  stock,  par value $.01,  none of which is  presently  issued,  and 40
million shares of common stock,  par value $.01, of which  3,750,000  shares are
issued and outstanding at March 31, 1998. Prior to the February 18, 1998 initial
public offering, Premier had 2,500 authorized shares of Class A common stock, of
which 100 shares were issued and  outstanding  at December 31,  1997,  and 1,000
authorized  shares of Class B common  stock,  of which 25 shares were issued and
outstanding  at December  31,  1997.  In  conjunction  with the  initial  public
offering,  both  classes  of  Premier's  common  stock were  exchanged  by their
shareholders' for shares of the Company.

     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 Company's management of rapid growth and expansion.

     Results of Operations

     Quarter Ended March 31, 1998 Compared to Quarter Ended March 31, 1997

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

<TABLE>
<CAPTION>
                                                                       Quarters Ended  March 31,
                                                                  1998                           1997
<S>                                                            <C>                           <C>


Sales of residential rehabilitation properties                 $8,212,677                    $4,224,400
Gains of sales of mortgage loans, net                           3,085,390                     1,780,264
Interest earned                                                   859,824                       115,830
                                                               ----------                     ---------
Total revenues                                                $12,157,891                    $6,120,494
                                                               ==========                     =========
</TABLE>

     Revenues from the sale of residential  rehabilitation  properties increased
$4.0 million,  or 94%, to $8.2 million for the quarter ended March 31, 1998 from
$4.2 million for the quarter  ended March 31, 1997.  This increase was primarily
the  result  of  the  increase  in  the  number  of  residential  rehabilitation
properties  sold to 53 for the  quarter  ended  March  31,  1998 from 28 for the
quarter ended March 31, 1997.


<PAGE>

     Gains on sales of mortgage loans  increased  $1.3 million,  or 73%, to $3.1
million for the quarter  ended March 31, 1998 from $1.8  million for the quarter
ended March 31, 1997.  This increase was  primarily  due to (a)  increased  loan
originations and loan sales from the Company's existing retail offices,  and (b)
loan  originations  and sales by the Company's B-C-D  division,  which commenced
operations in April 1997.  Mortgage loan  originations  were $100.5  million and
$37.4 million for the quarters ended March 31, 1998 and 1997, respectively.  For
the quarter ended March 31, 1998,  approximately  45% of the Company's  mortgage
originations were derived from its retail mortgage  operations and approximately
55% from its wholesale operations.  The following table summarizes the Company's
mortgage originations (in millions):

                                             Quarters Ended March 31,
                                             1998               1997

     Conventional                          $62,382            $23,431
     FHA/VA                                 21,527             14,012
     BCD                                    16,627                  -
                                            ------             ------
     Total                                $100,536            $37,443
                                            ======             ======

     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  increased  $744,000,  or 642%, to $860,000 for the quarter
ended March 31, 1998 from  $116,000 for the quarter  ended March 31, 1997.  This
increase was primarily due to increased  mortgage  originations  for the quarter
ended March 31,  1998 as  compared  to the  quarter  ended March 31, 1997 and an
increase in the amount of B-C-D mortgage  originations  which generally 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,
                                                                      1998                              1997
<S>                                                              <C>                                <C>


Cost of sales - residential rehabilitation properties            $7,589,176                         $3,987,962
Compensation and benefits                                         2,189,078                          1,281,412
Interest expense                                                    900,525                            213,162
Other general and administrative                                    720,313                            453,356
                                                                 ----------                         ----------
Total expenses                                                  $11,399,092                         $5,935,892
                                                                 ==========                         ==========
</TABLE>

<PAGE>

     Cost of  sales  -  residential  rehabilitation  properties  increased  $3.6
million,  or 90%, to $7.6 million for the quarter ended March 31, 1998 from $4.0
million for the quarter ended March 31, 1997. This increase was primarily due to
the increase in the number of properties purchased, rehabilitated and sold.

     Compensation and benefits increased  $908,000,  or 71%, to $2.2 million for
the quarter  ended March 31, 1998 from $1.3 million for the quarter  ended March
31,1997.  This  increase  was  primarily  due to  increased  sales  salaries and
commission,  which are based substantially on mortgage loan originations.  Total
personnel  increased  to 107  employees  at March 31,  1998 from 64 at March 31,
1997.

     Interest expense  increased  $687,000,  or 322%, for the period ended March
31, 1998 from  $213,000  for the quarter  ended  March 31,  1997.  Approximately
$160,000  of this  increase  was  attributable  to the  funding  of  residential
rehabilitation properties. The remainder of the increase was attributable to the
increase  in  mortgage  originations  funded  through  the  Company's  warehouse
facility.

     Other general and  administrative  expense increased  $267,000,  or 59%, to
$720,000  for the quarter  ended March 31,  1998 from  $453,000  for the quarter
ended March 31, 1997.  This  increase was  primarily  due to increased  expenses
incurred  in  connection  with  the  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 will result in increased expenses.

     Pro forma net income  increased  $350,000,  or 360%,  to  $448,000  for the
quarter  ended March 31, 1998 from $97,000 for the quarter ended March 31, 1997.
Net income  decreased  $550,000 to a net loss of $(369,000) for the three months
ended  March 31,  1998 from net income of $181,000  for the three  months  ended
March 31, 1997.  The quarter ended March 31, 1998 includes  deferred  income tax
expense of  $1,081,000  related  to the  change in tax  status of the  Company's
subsidiaries from S corporations to C corporations.

<PAGE>

     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 a warehouse  line of credit (the
"Warehouse Facility"), borrowings from affiliates and cash flow from operations.
The amount of outstanding  borrowings under the warehouse  facility at March 31,
1998 were $62.8  million.  The  mortgage  loans and  residential  rehabilitation
properties,  funded with the proceeds from such borrowings, secure the Warehouse
Facility. Borrowings from affiliates are secured by mortgages on the residential
rehabilitation properties for which monies were borrowed.

     The interest rate charged for  borrowings  under the Warehouse  Facility is
LIBOR  plus  21/4% on fixed  rate  loans and LIBOR  plus 2% on  adjustable  rate
mortgages.  The Warehouse Facility is funded by two commercial banks and expires
on May 31,  1998.  The  Warehouse  Facility,  as amended,  allows the Company to
borrow $65 million until expiration.  The Company is currently negotiating a new
warehouse line of credit.

     On April  17,  1998,  the  Company  entered  into a Senior  Secured  Credit
Agreement  with  Chase  Bank  of  Texas,   National   Association   (the  "Chase
Warehouse"). The Chase Warehouse provides an additional warehouse line of credit
of $20 million for its mortgage originations. This Chase Warehouse is secured by
the mortgage  loans funded with the  proceeds of such  borrowings.  The interest
rate  charged for  borrowings  under the Chase  Warehouse is LIBOR plus 11/4% on
conventional  and FHA/VA  loans an LIBOR  plus 1 5/8% for BCD  loans.  The Chase
Warehouse expires on October 14, 1998.

     The Warehouse  Facility and the Chase Warehouse  contain 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
Facility and the Chase Warehouse when the current terms expire.

     Since  September 1, 1996, the Company has borrowed funds from  corporations
owned 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)  to provide for
funding of residential  rehabilitation  properties and working capital purposes.
At March 31,  1998,  borrowings  from these  affiliates  totaled  $3.3  million.
Interest  on  borrowings  from  affiliates  is 10% per annum and  certain of the
Company's residential rehabilitation properties secure the borrowings.

     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 $11,250,000  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 used in operations  for the quarter ended March 31, 1998 was $10.6
million.  The Company used cash to fund the $20.7  million  increase in mortgage
loans held for sale,  offset,  in part, by the decrease in receivable from sales
of  loans  of $10.3  million  and  $1.4  million  net  increase  in  residential
rehabilitation  properties.  The  increases  in these  assets  were  financed by
increased  borrowings  under the Warehouse  Facility,  and the proceeds from the
initial public offering.

<PAGE>

     In April 1998,  the Company  entered into a $20 million  Mortgage  Loan and
Purchase  Sale  Agreement   (the   "Gestation   Agreement")   with  a  financial
institution.  The Gestation Agreement permits the Company to lower its borrowing
costs and provides additional  liquidity to the Company. The Gestation Agreement
initially  allows the  Company  to fund its  conventional  and  FHA/VA  mortgage
originations.  The Company's  borrowing  costs under this facility is LIBOR plus
1%.  Either party may  terminate  this  agreement  at any time upon notice.  The
Company believes that other institutions provide similar funding programs and in
the event its current  arrangement were to terminate,  the Company believes that
it will be able to enter into similar arrangements.

     Impact of New Accounting Standards

     In June 1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standards No. 130 ("SFAS  130"),  "Reporting
Comprehensive  Income".  SFAS 130 is effective for fiscal years  beginning after
December 15, 1997 and requires the  reclassification of financial statements for
earlier periods  provided for comparative  purposes.  The statement  establishes
standards for reporting and display of comprehensive  income and its components.
This  statement  requires that all items that are to be recognized as components
of comprehensive  income be reported in a financial  statement that is displayed
with the same prominence as other financial statements.  Comprehensive income is
defined as all changes in equity  during a period  except those  resulting  from
investments by owners and  distributions  to owners.  The Company has determined
that the requirements of SFAS 130 will have no impact on its financial condition
or results of operations.

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures about Segments of
an Enterprise and Related  Information".  SFAS 131 is effective for fiscal years
beginning  after  December  15,  1997.  In  the  initial  year  of  application,
comparative  information  for  earlier  years is to be  restated,  unless  it is
impracticable to do so. The statement requires that a public business enterprise
report  financial and  descriptive  information  about its reportable  operating
segments.   As  the  requirements  of  SFAS  131  are  disclosure  related,  its
implementation  will have no  impact on the  Company's  financial  condition  or
results of operations.





<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

     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
                  See accompanying Index to Exhibits.




<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)



                                           /s/ Ronald Friedman
                                           ---------------------
                                           President and Chief Executive Officer


                                           /s/ Timothy J. Mayette
                                           ----------------------
                                           Chief Financial Officer
                                           (Principal Accounting Officer)

     Dated: May 14, 1998



<PAGE>


                                INDEX TO EXHIBITS


Exhibits                                                 Sequential Page Number

Senior Secured Credit Agreement
with Chase Bank of Texas, National Association                   10.21*

Mortgage Loan and Purchase Sale Agreement
with Prudential Securities Realty Funding Corporation            10.22*


     * To be filed as an amendment