UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended JUNE 30, 1998
                                                 -------------

Commission File Number: 0-18201
                        -------

                             EQUIVEST FINANCE, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

Florida                                                               59-2346270
-------                                                               ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or organization)

2 CLINTON SQUARE, SYRACUSE, NEW YORK                                       13202
------------------------------------                                       -----
(Address of principal executive offices)                              (Zip code)

Registrant's telephone number, including area code: (315) 422-9088

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the Company (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 Company was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|

As of July 31, 1998, 21,905,706 shares of common stock of Equivest Finance, Inc.
were outstanding.

Transitional Small Business Disclosure Format Yes |_| No |X|


                                       1
<PAGE>

                     EQUIVEST FINANCE, INC. AND SUBSIDIARIES
                                   FORM 10-QSB

                           QUARTER ENDED JUNE 30, 1998

                                      INDEX

PART I    FINANCIAL INFORMATION                                            PAGE
                                                                            ----
                                                                                
 Item 1.  Financial Statements                                                 3
            Consolidated Financial Information:
              Consolidated Balance Sheets - June 30, 1998(unaudited) and
              December 31, 1997                                                3
              Unaudited Consolidated Income Statements - Three Months Ended
              June 30, 1998 and 1997                                           4
              Unaudited Consolidated Income Statements - Six Months Ended
              June 30, 1998 and 1997                                           5
              Unaudited Consolidated Statement of Equity Accounts              6
              Unaudited Consolidated Statements of Cash Flows - Six Months
              Ended June 30, 1998 and 1997                                     7
              Notes to Interim Consolidated Financial Information              8

 Item 2.  Management's Discussion and Analysis of Financial                   12
          Condition and Results of Operations                                   
                                                                                
PART II   OTHER INFORMATION                                                   17
                                                                                
 Item 1.  Legal Proceedings                                                   17
                                                                                
 Item 2.  Changes in Securities                                               17
                                                                                
 Item 3.  Defaults Upon Senior Securities                                     17
                                                                                
 Item 4.  Submission of Matters to a Vote of Security Holders                 17
                                                                                
 Item 5.  Other Information                                                   17
                                                                                
 Item 6.  Exhibits and Reports on Form 8-K                                      


SIGNATURES                                                                    19


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

                     EQUIVEST FINANCE, INC. and SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               June 30, 1998     December 31,
                                                                (Unaudited)          1997
                                                               -------------     ------------
<S>                                                            <C>              <C>          
ASSETS
Cash                                                           $   1,172,185    $   4,620,479
                                                               -------------    -------------
Receivables:
        Accounts receivable                                        1,327,426        1,437,928
        Notes and advance receivable                             134,289,565      119,210,250
        Less allowance for doubtful receivables                   (2,893,538)      (2,442,244)
                                                               -------------    -------------
                                                                 132,723,453      118,205,934
                                                               -------------    -------------
        Accounts receivable - related parties                         10,952              -0-
        Notes receivable - related party                           1,941,372        4,023,431
                                                               -------------    -------------
        Total Receivables                                        134,675,777      122,229,365
                                                               -------------    -------------

Deferred financing costs, net                                      3,762,785        4,125,972

Cash - restricted                                                    966,229          855,138

Accrued interest receivable                                          672,360          341,107

Deferred taxes                                                     1,221,536        1,141,536

Other Assets                                                         234,461          170,370
                                                               -------------    -------------
                                                               $ 142,705,333    $ 133,483,967
                                                               =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Liabilities:
    Accounts Payable and Other Liabilities:
        Accounts payable                                       $   1,079,542    $     434,072
        Accounts payable - related parties                               -0-           11,235
        Accrued expenses and other liabilities                     2,294,540          519,109
                                                               -------------    -------------
         Total Accounts Payable and Other Liabilities              3,374,082          964,416
                                                               -------------    -------------
    Notes payable                                                104,114,442       99,961,357
                                                               -------------    -------------
                                                                 107,488,524      100,925,773
                                                               -------------    -------------

12.5% REDEEMABLE CONVERTIBLE PREFERRED STOCK
    $3 par value; 1,000,000 shares authorized, -0- shares
    outstanding in 1998 and 9,915 shares outstanding in 1997             -0-           29,745

PREFERRED AND COMMON STOCK AND OTHER CAPITAL
    Cumulative Redeemable Preferred Stock--Series 2 Class A,
        $3 par value;  15,000 shares authorized, 10,000
        shares issued and outstanding                                 30,000           30,000
        Common Stock, $.05 par value; 50,000,000 shares 
        authorized, 21,905,706 shares outstanding in 
        1998 and 21,834,443 outstanding in 1997                    1,095,286        1,091,723
    Additional paid-in capital                                    32,401,421       32,078,721
    Retained earnings (deficit)                                    1,690,102         (671,995)
                                                               -------------    -------------
                                                                  35,216,809       32,528,449
                                                               -------------    -------------
                                                               $ 142,705,333    $ 133,483,967
                                                               =============    =============
</TABLE>

          See Accompanying Notes To Consolidated Financial Statements.


                                       3
<PAGE>

                     EQUIVEST FINANCE, INC. AND SUBSIDIARIES
                                   (UNAUDITED)
                        CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                                   3 Months Ended June 30,
                                                                   -----------------------
                                                                  1998                1997
                                                                  ----                ----
<S>                                                            <C>              <C>          
Revenues:
        Interest                                               $   4,913,987    $   3,637,126
        Other Income                                                 281,558          295,997
                                                               -------------    -------------
                                                                   5,195,545        3,933,123
                                                               -------------    -------------

Costs and Expenses:

        Provision for doubtful receivables                           225,000              -0-
        Interest                                                   1,718,602        2,112,993
        Debt related costs including amortization of 
          financing costs                                            369,264          246,213
        Selling, general and administrative                          874,429          602,376
                                                               -------------    -------------
                                                                   3,187,295        2,961,582
                                                               -------------    -------------
Income Before Provision for Income Taxes                           2,008,250          971,541

Provision for Income Taxes
        Current                                                      865,000           96,000
        Deferred credit                                              (80,000)             -0-
                                                               -------------    -------------
           Total Provision for Income Taxes                          785,000           96,000
                                                               -------------    -------------
Net Income                                                     $   1,223,250    $     875,541
                                                               =============    =============
  Basic earnings per common share                              $        0.05    $        0.07
                                                               =============    =============
  Diluted earnings per common share                            $        0.05    $        0.04
                                                               =============    =============
</TABLE>

          See Accompanying Notes To Consolidated Financial Statements.


                                       4
<PAGE>

                     EQUIVEST FINANCE, INC. AND SUBSIDIARIES
                                   (UNAUDITED)
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                   6 Months Ended June 30,
                                                                   -----------------------
                                                                  1998                1997
                                                                  ----                ----
<S>                                                              <C>              <C>       
Revenues:

        Interest                                                 $9,663,685       $7,314,229
        Gains on Sales of Contracts                                     -0-           29,689
        Other Income                                                614,798          306,233
                                                               ------------     ------------
                                                                 10,278,483        7,650,151
                                                               ------------     ------------

Costs and Expenses:

        Provision for doubtful receivables                          450,000               --
        Interest                                                  3,371,830        4,277,092
        Debt related costs including amortization of 
          financing costs                                           710,367          498,411
        Selling, general and administrative                       1,631,037        1,094,120
                                                               ------------     ------------
                                                                  6,163,234        5,869,623
                                                               ------------     ------------

Income Before Provision for Income Taxes                          4,115,249        1,780,528

Provision for Income Taxes
        Current                                                   1,520,000          180,000
        Deferred credit                                             (80,000)             -0-
                                                               ------------     ------------
           Total Provision for Income Taxes                       1,440,000          180,000
                                                               ------------     ------------
Net Income                                                       $2,675,249       $1,600,528
                                                               ============     ============
  Basic earnings per  common share                                    $0.11            $0.13
                                                               ============     ============
  Diluted earnings per common share                                   $0.11            $0.08
                                                               ============     ============
</TABLE>

          See Accompanying Notes To Consolidated Financial Statements.


                                       5
<PAGE>

                     EQUIVEST FINANCE, INC. AND SUBSIDIARIES
                                   (UNAUDITED)
                    CONSOLIDATED STATEMENT OF EQUITY ACCOUNTS


<TABLE>
<CAPTION>
                                                                                                 Redeemable     
                                                                                   Additional    Preferred        Retained
                                                     Common          Stock          Paid in     Stock-Series      Earnings
                                    Total            Shares          Amount         Capital      2 Class A        (Deficit)
                                ------------       ----------    ------------    ------------   ------------    ------------
<S>                             <C>                <C>           <C>             <C>             <C>            <C>          
Balances at December 31, 1997   $ 32,528,449       21,834,443    $  1,091,723    $ 32,078,721    $    30,000    $   (671,995)

Dividends on 12.5%
Redeemable Convertible
Preferred Stock                       (8,819)                                                                         (8,819)

Convert 12.5% Redeemable
Convertible Preferred
Stock to Common Stock                 21,930           20,541           1,027          20,903                            

Dividends on Series 2
Class A Preferred Stock
paid in Common Stock                     -0-           50,722           2,536         301,797                       (304,333)

Net Income                         2,675,249                                                                       2,675,249
                                ------------     ------------    ------------    ------------    -----------    ------------
Balances at June 30, 1998       $ 35,216,809       21,905,706    $  1,095,286    $ 32,401,421    $    30,000    $  1,690,102
                                ============     ============    ============    ============    ===========    ============
</TABLE>

          See Accompanying Notes To Consolidated Financial Statements.


                                       6
<PAGE>

                     EQUIVEST FINANCE, INC. AND SUBSIDIARIES
                                   (UNAUDITED)
                      CONSOLIDATED STATEMENTS OF CASH FLOW


<TABLE>
<CAPTION>
                                                                    6 Months Ended June 30,
                                                                    -----------------------
                                                                   1998              1997
                                                               --------------   --------------
<S>                                                            <C>              <C>          
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
  Net Income                                                   $   2,675,249    $   1,600,528
  Adjustments to reconcile net income to net cash
   used in operating activities:
    Depreciation and amortization                                    708,283          483,187
    Provision for doubtful receivables                               450,000              -0-
    Provision for deferred taxes                                      80,000              -0-
    Gains on sales of contracts                                          -0-          (29,689)
    Changes in assets and liabilities:
      Increase in other assets                                      (686,128)        (634,932)
      Increase in accounts receivable - related parties              (10,952)        (301,479)
      Increase in restricted cash                                   (111,091)      (2,656,636)
      Increase (Decrease) in accounts payable and
       accrued expenses                                            2,420,901         (291,184)
      Decrease in accounts payable--related parties                  (11,235)          (2,682)
                                                               -------------    -------------
               NET CASH USED IN OPERATING ACTIVITIES               5,515,027       (1,832,887)

CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES
  (Increase) decrease in receivables, net                        (15,554,442)         909,395
                                                               -------------    -------------
            NET CASH (USED IN) PROVIDED BY INVESTING
                                          ACTIVITIES             (15,554,442)         909,395

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
  Payments on notes receivable - related party                     2,438,035          775,970
  Proceeds on loans payable - related party                              -0-          821,597
  Proceeds from recourse notes payable                            18,678,331        6,633,749
  Payments on recourse notes payable                             (13,364,013)      (7,148,870)
  Proceeds from non-recourse notes payable                         1,224,572        8,809,829
  Payments on non-recourse notes payable                          (2,385,804)     (10,703,048)
                                                               -------------    -------------
           NET CASH PROVIDED BY (USED IN)
           FINANCING ACTIVITIES                                    6,591,121         (810,773)
                                                               -------------    -------------
                         INCREASE (DECREASE) IN CASH              (3,448,294)      (1,734,265)
                                                               -------------    -------------

Cash at beginning of period                                        4,620,479        4,037,201
                                                                                -------------
                                                               -------------    -------------
                               CASH AT END OF PERIOD           $   1,172,185    $   2,302,936
                                                               =============    =============
</TABLE>

          See Accompanying Notes To Consolidated Financial Statements.


                                       7
<PAGE>

                             EQUIVEST FINANCE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. Basis of Presentation

      The accompanying consolidated interim financial statements as of June 30,
1998 and 1997 and for the three-month and six-month period ended June 30, 1998
and 1997 have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal accruals) considered necessary for fair
presentation have been included. Operating results for the three-month and
six-month periods ended June 30, 1998 and 1997 are not necessarily indicative of
the results expected for the year ended December 31, 1998. For further
information, please refer to the consolidated financial statements and footnotes
thereto included in Equivest Finance, Inc.'s (the "Company") Form 10-KSB for the
year ended December 31, 1997.

      Principals of Consolidation

      The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries, Equivest Capital Funding, Inc. (inactive), and
Resort Funding, Inc. ("Resort Funding") and its subsidiary, BFICP Corporation.
All significant intercompany balances and transactions have been eliminated in
consolidation.

B. Summary of Significant Accounting Policies

      Use of Estimates

      The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and costs and expenses during
the reporting period. Actual results could differ from the Company's estimates.

      Interest Income

      The Company recognizes interest income on consumer financing contracts
using the interest method over the term of the contract. The Company recognizes
interest income on outstanding resort acquisition and development loans when
earned, based on the terms of the loan agreements. The accrual of interest on an
impaired loan is discontinued when accrued and unpaid interest, together with
the loan principal outstanding, exceeds the loan's projected cash flow or the
loan's net collateral value.

      Gains on Sales of Contracts

      Gains on sales of contracts result from periodic non-recourse sales of
consumer receivables. A gain is recorded to the extent the net proceeds exceed
the net investment in the consumer receivables sold.


                                       8
<PAGE>

      Other Income

      Other income primarily represents fees, which are recognized as income
when Resort Funding performs the related service. These services include billing
services for developers and loan commitment, chargeback and collection fees
charged to resorts.

      Allowance for Doubtful Receivables

      Receivables have been reduced by an allowance for doubtful receivables.
The allowance is an amount which management believes will be adequate to absorb
possible losses on existing receivables. The evaluation incorporates past loss
experience, known and inherent risks in the portfolio, adverse conditions that
may affect the borrower's ability to repay, the estimated value of underlying
collateral, and current economic conditions. Receivables are charged against the
allowance when management believes that collectibility is unlikely. Because of
uncertainties in the estimation process, it is at least reasonably possible that
management's estimate of loan losses inherent in the loan portfolio and the
related allowance will change in the near term.

      The Company follows Statement of Financial Accounting Standards No. 114
(SFAS 114) "Accounting by Creditors for Impairment of a Loan". Under SFAS 114,
the allowance for doubtful receivables for loans identified as impaired is
specifically determined using the loan's projected discounted cash flow or its
net collateral value.

      Deferred Financing Costs

      Deferred financing costs represent unamortized expenses associated with
issuing certain debt and fees payable pursuant to certain bank settlement
transactions. Amortization of these costs is computed on a straight-line basis
over the term of the associated debt and does not differ materially from that
computed using the effective interest method.

      Income Taxes

      The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 (SFAS 109). SFAS 109 is an asset and liability
approach to accounting for deferred income taxes. This method requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, the Company
generally considers all expected future events other than enactments of changes
in tax laws or rates. A valuation allowance reduces deferred tax assets when it
is more likely than not that some portion or all of the deferred tax assets will
not be realized.

      Earnings Per Share

      The Company computes earnings per share under Statement of Financial
Accounting Standards No. 128 "Earnings Per Share" (SFAS 128). SFAS 128 requires
the presentation of earnings per share by all entities that have common stock or
potential common stock (such as options, warrants and convertible securities)
outstanding that trade in a public market. Those entities that have only common
stock outstanding present basic earnings per share amounts. All other entities
present basic and diluted per share amounts. Diluted per share amounts assume
the conversion, exercise or issuance of all potential common stock instruments
unless the effect is to reduce a loss or increase the income per common share
from continuing operations.


                                       9
<PAGE>

      Transfers of Assets

      The Company accounts for its transfers and servicing of financial assets
and extinguishment of liabilities under Statement of Financial Accounting
Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities" (SFAS 125). SFAS 125 provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities. Those standards are based on consistent
application of a financial components approach that focuses on control. Under
that approach, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. SFAS 125 provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings.

C. Pending Acquisition of Eastern Resorts Corporation

      On July 17, 1998, the Company announced the execution of a definitive
merger agreement pursuant to which Eastern Resorts Corporation ("ERC") of
Newport, Rhode Island, one of the largest developers of timeshare resorts in New
England, will become a wholly owned subsidiary of the Company. Upon completion
of the merger, all of the outstanding common stock of ERC will be exchanged for
$15 million in cash and 3.2 million shares of the Company's common stock. The
Company has arranged for short-term bridge financing of the cash portion of the
merger through Credit Suisse First Boston Mortgage Capital LLC, which will
receive 180,000 warrants at $8.00 per share of the Company's common stock as
part of its consideration. The Company expects to complete the merger by the end
of August, 1998.

D. Collections and Contingencies

      In July 1997, a Las Vegas, Nevada developer and customer of Resort Funding
filed for bankruptcy court protection. As of July 31, 1998, the developer had
outstanding indebtedness on its acquisition and development loans of
approximately $6,600,000, secured by first and third mortgages on a hotel and
casino located in Las Vegas. This amount owed includes principal, accrued
interest, and certain other fees relating to such loans. On August 5, 1998, the
hotel and casino were sold at auction. Under the terms of the auction, the
Company expects that its loans, together with accrued interest and costs, will
be repaid out of the proceeds of the sale.

      In September 1997, Resort Funding commenced foreclosure proceedings
against a resort property located in Hilton Head, South Carolina which was
approximately four months delinquent in payment of its obligations to Resort
Funding under an acquisition and development loan agreement. On November 3,
1997, Resort Funding reached an agreement with the developer to settle the
arrears. As part of the agreement, the developer paid Resort Funding all past
due amounts in full and remitted payment in advance for installments due for
October, November and December, 1997. As additional security for future
payments, the developer agreed to grant Resort Funding a deed in lieu of
foreclosure to be held in escrow pending Resort Funding's receipt of all other
payments as they were to become due. However, in January, 1998, the developer
refused to deliver the deed in lieu of foreclosure and terminated the November 3
agreement. On March 17, 1998, the developer filed an answer and counterclaims in
the foreclosure action alleging, among other things, that it was not in default
of the loan agreements. Resort Funding intends to pursue vigorously its claims
and defend the counterclaims. On June 30, 1998, the developer agreed to deposit
all past-due interest amounts into an escrow account accessible only by order of
the court. Additionally, the developer agreed to pay into the escrow account all
future interest payments as they become due, pending the outcome of the
foreclosure action. In the event that any such payments are not timely received,
Resort Funding shall have the right to have a receiver appointed to operate the
resort. As of July 31, 1998, the balance owed to Resort Funding under the
referenced loan was approximately $3,500,000. Resort Funding's acquisition and
development loan agreement provides that principal will be


                                       10
<PAGE>

repaid through release fees on interval units sold. As of July 31, 1998, the
developer had not sold any interval units. There can be no assurance Resort
Funding will receive principal payments relating to this obligation in the short
term, or that it will not incur a loss on this loan.


                                       11
<PAGE>

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


                        THREE MONTHS ENDED JUNE 30, 1998

Results of Operations

      Income before income taxes increased 106.7% to $2,008,300 for the three
months ended June 30, 1998, from $971,500 for the same period in 1997. Net
income increased 39.7% to $1,223,300 for the three months ended June 30, 1998
compared to $875,500 for the same period in 1997. The increase was due primarily
to an increase in interest income as a result of growth in portfolios being held
for investment and lower interest expenses. These increases were partially
reduced by an increased provision for income taxes, higher selling, general and
administrative costs, along with a higher provision for doubtful accounts. The
Company made a provision for incomes taxes of $785,000 for the second quarter of
1998, representing a 717.7% increase over the $96,000 provision for income taxes
provided during the second quarter of 1997. Revenues increased 32.1% to
$5,195,500 for the three months ended June 30, 1998, from $3,933,100 for the
same period in 1997. The increase was due primarily to an increase in interest
income as a result of portfolio growth in both consumer receivables and
acquisition and development loans. Total originations rose 87.0% to $30.1
million for the second quarter of 1998, compared to $16.1 million for the same
period in 1997.

Interest Income

      Interest on loans increased 35.1% to $4,914,000 for the three months ended
June 30, 1998, from $3,637,100 for the same period in 1997, primarily due to
growth in the portfolio held for investment. Interest on consumer notes
increased 32.6% to $3,305,300 for the three months ended June 30, 1998 from
$2,492,900 for the same period in 1997, also as a result of growth in the
portfolio held for investment. Interest on acquisition and development loans
increased 67.8% to $1,497,900 for the three months ended June 30, 1998 from
$892,900 for the same period in 1997, primarily as a result of average higher
outstanding balances. The outstanding balances for acquisition and development
loans during the second quarter of 1998 averaged approximately $48.0 million
(average interest rate of 12.2%) compared with an average balance of
approximately $27.2 million (average interest rate of 12.9%) during the same
period in 1997. The growth in interest income was offset by $106,000 from
interest income on notes receivable from a related party, which had higher
average outstanding balances for the same period in 1997.

Gains on Sales of Contracts

      There were no Gains on Sales of Contracts for the three months ended June
30, 1998, or for the same period in 1997.

Other Income

      Other income decreased by 4.9% to $281,600 for the three months ended June
30, 1998, from $296,000 for the same period in 1997. The slight decrease was
primarily due to a decrease in other contract-related fees.


                                       12
<PAGE>

Provision for Doubtful Receivables

      The provision for doubtful receivables increased 100% to $225,000 for the
three months ended June 30, 1998, from $0 for the same period in 1997, as a
result of increased levels of outstanding receivables.

Interest Expense

      Interest expense decreased 18.7% to $1,718,600 for the three months ended
June 30, 1998, from $2,113,000 for the same period in 1997, primarily due to
lower interest rates. The interest expense on the Company's consumer receivable
facility decreased 1.46% to $876,800 for the second quarter of 1998 from
$889,800 for the second quarter of 1997, due entirely to a decrease in interest
rates. The consumer receivable facility had higher average outstanding balances
of almost $13,000,000 for the second quarter of 1998, compared to the same
period in 1997, but interest rates were approximately 290 basis points lower.
Interest expense on other bank notes increased 18.4% to $773,900 for the three
months ended June 30, 1998, from $653,500 for the same period in 1997, due to
higher average outstanding balances. The average outstanding balance on other
bank notes increased more than $11 million between the second quarter of 1998
and the second quarter in 1997. The average interest rates on other bank notes
decreased to 6.1% for the second quarter of 1998, from 6.5% for the same period
in 1997. The Company had interest costs of approximately $495,000 for the second
quarter of 1997 (and no corresponding costs during the same period in 1998) in
association with approximately $25 million of intercompany debt, which debt was
converted into equity effective October 30, 1997.

Selling, General and Administrative

      Selling, General and Administrative costs increased 45.1% to $874,400 for
the three months ended June 30, 1998, from $602,400 for the same period in 1997.
The increased costs are mainly due to an increase in payroll, servicing, legal,
advertising, and travel costs. The increased payroll-related cost is mainly due
to a reduction in payroll costs allocated to the Debtors for certain of the
Company's employees during the first quarter of 1998, compared to the same
period in 1997. Lower office-related costs slightly offset the increase in other
selling, general and administrative costs.

Debt-Related Costs and Amortization

      Debt-related costs and amortization increased 50.0% to $369,300 for the
three months ended June 30, 1998, from $246,200 for the same period in 1997. The
increase was mainly attributable to the amortization of deferred financing costs
and the discount associated with the issuance of common stock warrants to a
bank. In the fourth quarter of 1997, the Company obtained a credit facility from
the bank. In connection with the transaction, warrants to purchase 250,000
shares of the Company's common stock were granted to the bank. The value of the
warrants is being accounted for as a discount in consideration for making the
loan and will be amortized as interest expense over the term of the agreement.
The increase was also attributable to an increase in the 3% per annum
arrangement fee charged by Bennett Funding Group, Inc. ("BFG") and certain
affiliated companies (collectively, the "Debtors") in the BFG bankruptcy case
(the "Bankruptcy Case"), relating to loans (the "Settlement Loans") made to
Resort Funding. The Settlement Loans resulted from the settlement of claims made
by several lenders (the "Banks") in the Bankruptcy Case, arising out of
lease-financing agreements pursuant to which the Banks made loans to the
Debtors. The settlements, which were approved by the United States Bankruptcy
Court for the Northern District of New York (the "Bankruptcy Court"), required
the Banks to make new, interest-only term loans to Resort Funding at favorable
1/2 to 4% interest rates, ranging in term from 30 to 120 months, with an average
duration of 70 months. Resort Funding is obligated to pay the arrangement fee
based on the unpaid principal balance of the new term loans.


                                       13
<PAGE>

Provision for Income Taxes

      The provision for income taxes for the three months ended June 30, 1998
increased 717.7% to $785,000, from $96,000 for the same period in 1997. The
current portion of the provision relates to currently payable federal and state
income taxes. The provision for income taxes for the three months ended June 30,
1997 also reflects utilization of net operating loss carryforwards and the
deferred tax provision relating to the provision for doubtful receivables.


                         SIX MONTHS ENDED JUNE 30, 1998

Results of Operations

      Income before income taxes increased 131.1% to $4,115,200 for the six
months ended June 30, 1998, from $1,780,500 for the same period in 1997. Net
income increased 67.1% to $2,675,200 for the six months ended June 30, 1998
compared to $1,600,500 for the same period in 1997. The increase was due
primarily to an increase in interest income as a result of portfolio growth, an
increase in commitment fees, and a decrease in interest expenses. These
increases were partially reduced by an increased provision for income taxes,
higher selling, general and administrative costs, a higher provision for
doubtful accounts, and an increase in debt-related costs and amortization. The
Company made a provision for income taxes of $1,440,000 for the first six months
of 1998, a 700.0% increase over the $180,000 provision for income taxes during
the same period in 1997. Revenues increased 34.4% to $10,278,500 for the six
months ended June 30, 1998, from $7,650,200 for the same period in 1997. The
increase was due primarily to an increase in interest income as a result of
portfolio growth in both consumer receivables and acquisition and development
loans, as well as higher fees. Total originations rose 91.8% to $49.5 million
for the first six months of 1998, compared to $25.8 million for the same period
in 1997.

Interest Income

      Interest on loans increased 32.1% to $9,663,700 for the six months ended
June 30, 1998, from $7,314,200 for the same period in 1997, primarily due to
growth in the portfolio held for investment. Interest on consumer notes
increased 35.0% to $6,594,900 for the six months ended June 30, 1998 from
$4,884,300 for the same period in 1997, as a result of growth in the portfolio
held for investment. Interest on acquisition and development loans increased
50.2% to $2,824,000 for the six months ended June 30, 1998 from $1,879,800 for
the same period in 1997, primarily as a result of average higher outstanding
balances. The outstanding balances for the acquisition and development loans
during the six months ending June 30, 1998 averaged approximately $45.0 million
(average interest rate of 12.3%) compared with an average balance of
approximately $29.2 million (average interest rate of 12.9%) during the same
period in 1997. The reduction in average outstanding balances on notes
receivable from a related party, also caused a reduction of $204,900 in interest
income for the period as compared to the same period during 1997.


                                       14
<PAGE>

Gains on Sale of Contracts

      In 1998, the Company's management made a decision not to sell consumer
contracts. In 1997, gains on sales of the contracts amounted to $29,700.

Other Income

      Other income increased by 100.8% to $614,800 for the six months ended June
30, 1998, from $306,200 for the same period in 1997. The increase was primarily
due to an increase in fee income.

Provision for Doubtful Receivables

      The provision for doubtful receivables increased 100.0% $450,000 for the
six months ended June 30, 1998, compared to $0 for the same period in 1997. The
provision was recorded as the Company increased the allowance for doubtful
receivables in conjunction with the growth of the portfolio.

Interest Expense

      Interest expense decreased 21.2% to $3,371,800 for the six months ended
June 30, 1998, from $4,277,100 for the same period in 1996, primarily due to
lower interest rates. The interest expense on the Company's consumer receivable
facility decreased 3.3% to $1,713,900 for the six months ending June 30, 1998
from $1,772,900 for the same period in 1997, due entirely to a decrease in
interest rates. The consumer receivable facility had higher average outstanding
balances of almost $11,000,000 for the six months ending June 30, 1998, compared
to the same period in 1997, but interest rates were approximately 280 basis
points lower. Interest expense on other bank notes increased 10.1% to $1,523,600
for the six months ended June 30, 1998, from $1,383,400 for the same period in
1997, due to higher average outstanding balances. The average outstanding
balance on other bank notes increased over $9 million between the first six
months ending June 30, 1998 and the same period in 1997. The average interest
rates on other bank notes decreased to 6.1% for the six months ending June 30,
1998, from 6.5% for the same period in 1997. A further reduction of interest
expense is the result of satisfying $25 million of intercompany debt through the
issuance of the Company's common stock on October 30, 1997. For the six months
ended June 30, 1997, approximately $976,000 of interest expense was charged to
operations.

Selling, General and Administrative

      Selling, General and Administrative costs increased 49.1% to $1,631,000
for the six months ended June 30, 1998, from $1,094,100 for the same period in
1997. The increased costs are mainly due to an increase in payroll, servicing,
legal, advertising, and travel costs. The increased payroll-related cost is
mainly due to a reduction in payroll costs allocated to the Debtors for certain
of the Company's employees during the first quarter of 1998, compared to the
same period in 1997.

Debt-Related Costs and Amortization

      Debt-related costs and amortization increased 42.5% to $710,400 for the
six months ended June 30, 1998, from $498,400 for the same period in 1997. The
increase was mainly attributable to the amortization of fees and common stock
warrants associated with a credit facility the Company obtained in the fourth
quarter of 1997. The value of the warrants is being accounted for as a discount
in consideration for making the loan and will be amortized as interest expense
over the term of the agreement. The increase was also attributable to an
increase in the 3% per annum arrangement fee charged in connection with the
Settlement Loans. Resort Funding is obligated to pay the arrangement fee based
on the unpaid principal balance of the new term loans.


                                       15
<PAGE>

Provision for Income Taxes

      The provision for income taxes for the six months ended June 30, 1998
increased 700.0% to $1,440,000, from $180,000 for the same period in 1997. The
current portion of the provision relates to currently payable federal and state
income taxes. The current-period tax provision reflects the benefit of the
availability of net operating loss carryforwards of approximately $675,000 in
1998 which partially shelter the Company's book income from federal taxes. The
provision for income taxes for the six months ended June 30, 1997 also reflects
utilization of $1.4 million the net operating loss carryforwards, and the
deferred tax provision relating to the provision for doubtful receivables.

Pending Acquisition of Eastern Resorts Corporation

      On July 17, 1998, the Company announced the execution of a definitive
merger agreement pursuant to which Eastern Resorts Corporation ("ERC") of
Newport, Rhode Island, one of the largest developers of timeshare resorts in New
England, will become a wholly owned subsidiary of the Company. Upon completion
of the merger, all of the outstanding common stock of ERC will be exchanged for
$15 million in cash and 3.2 million shares of the Company's common stock. The
Company has arranged for short-term bridge financing of the cash portion of the
merger through Credit Suisse First Boston Mortgage Capital LLC, which will
receive 180,000 warrants at $8.00 per share of the Company's common stock as
part of its consideration. Consummation of the merger is not subject to
Hart-Scott-Rodino clearance or shareholder approval, but is subject to other
customary conditions. The Company expects to complete the merger by the end of
August, 1998.


                                       16
<PAGE>

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

      On July 29, 1998, Resort Funding filed a motion (the "Motion") in the
Bankruptcy Court for the Northern District of New York to obtain court approval
for certain corrections to the terms of a November 1997 order of the Bankruptcy
Court. Under that order, Resort Funding satisfied all of its outstanding debt
under certain notes to BFG through an exchange of debt for common stock of the
Company. Under the terms of the Motion, BFG would be authorized to accept an
additional 67,113 shares of the Company's common stock at the price of the
original issuance ($5.375 per share) to correct an error in the computation of
the amount of the outstanding intercompany debt at the time the debt-equity swap
was approved in November 1997. Additionally, the Debtors would provide
appropriate legal documentation to Resort Funding confirming Resort Funding's
title in approximately $27 million in receivables and development loans which
are currently recorded in the name of BFG-related entities which acted as
nominees, even though such loans were either paid for or advanced directly by
Resort Funding. Both the BFG bankruptcy trustee and the Official Committee of
Unsecured Creditors of the BFG bankruptcy estate have supported the Motion.
However, several parties, including banks litigating with BFG, have filed
objections to the motion. The Bankruptcy Court has scheduled an evidentiary
hearing on the Motion for September 2, 1998. There can be no assurance as to the
outcome of the Motion.

      For other information regarding certain litigation involving the Company,
its subsidiaries and affiliates, reference is made to the Company's Form 10-KSB
for the year-ended December 31, 1997, which is incorporated herein by reference.

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

      On July 10, 1998, the trustee in the BFG Bankruptcy Case filed a motion on
behalf of BFG and other debtors in the Bankruptcy Case (the "Estate") in the
Bankruptcy Court for the Northern District of New York seeking (i) to sell all
of the Estate's shares of common stock in the Company to a syndicate of
underwriters, of which Credit Suisse First Boston Corporation will be the lead
or co-lead manager, in connection with a public offering of such common stock
and (ii) to exchange all of the Estate's Series 2 Preferred Stock in the Company
for 1,860,465 shares of the Company's common stock. A hearing on the motion is
currently scheduled for September 2 or 3, 1998.

Item 6. (a) Exhibits

        The following exhibits are filed herewith:


                                       17
<PAGE>

        10.1    Agreement and Plan of Merger dated July 17, 1998 by and among
                Equivest Finance, Inc., ERC Acquisition Corp. and Eastern
                Resorts Corporation.

        11.1    Statement re: computation of earnings per share

        (b) Reports on Form 8-K.

            (i) On July 14, 1998, the Company filed a Report on Form 8-K
            announcing that Richard C. Breeden, as trustee in bankruptcy for The
            Bennett Funding Group, Inc., Bennett Management and Development
            Corporation and certain other related debtors (the "Estate"), filed
            a motion in the United States Bankruptcy Court for the Northern
            District of New York on July 10, 1998 seeking (i) to sell all of the
            Estate's shares of common stock in the Company in connection with a
            public offering of such common stock and (ii) to exchange all of the
            Estate's Series 2 Preferred Stock in the Company for 1,860,465
            shares of the Company's common stock.

            (ii) On July 22, 1998, the Company filed a Report on Form 8-K
            announcing the execution of a definitive merger agreement pursuant
            to which Eastern Resorts Corporation will become a wholly-owned
            subsidiary of the Company.

            (iii) On August 12, 1998, the Company filed a Report on form 8-K
            announcing the filing of a Motion by Resort Funding in the
            Bankruptcy Court for the Northern District of New York to correct
            certain mistakes incorporated into a November 24, 1997 order of the
            Bankruptcy Court.


                                       18
<PAGE>

SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this Report to be signed on its
behalf by the undersigned, there unto duly authorized.

EQUIVEST FINANCE, INC.

BY: /s/ Gerald L. Klaben, Jr.
    ----------------------------------------------------
    Gerald L. Klaben, Jr.
    Executive Vice President and Chief Financial Officer

Dated: August 14, 1998