UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                               FORM 10-QSB


[X]QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF1934

            For the quarterly period ended June 30, 1999

[   ] TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934
            For the transition period from _____________ to _____________

                      Commission file number 0-17771



                   FRANKLIN CREDIT MANAGEMENT CORPORATION
        (Exact name of small business issuer as specified in its charter)


  Delaware                                               75-2243266
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

                                Six Harrison Street
                              New York, New York 10013
                                   (212) 925-8745
(Address of principal executive offices, including zip code, and telephone
  number,including area code)




 Check  whether  the issuer (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act of 1934  during the past 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___.

      Check whether the registrant  filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange  Act after the distribution
of securities under a plan confirmed by a court. Yes X No___.

As of August 11, 1999 the issuer had  5,916,527 of shares of Common  Stock,
par value $0.01 per share, outstanding.


<PAGE>


                    FRANKLIN CREDIT MANAGEMENT CORPORATION


                                FORM 10-QSB

                              June 30, 1999


                             C O N T E N T S


PART I.  FINANCIAL INFORMATION                                             Page

Item 1.  Financial Statements

         Consolidated Balance Sheets June30,1999(unaudited)and December 31
         ,1998                                                                3

         Consolidated Statements of Income (unaudited) for the three months
         and six Months ended June 30, 1999 and 1998                          4

         Consolidated Statements of Stockholders'Equity June 30,199
         (unaudited)                                                          5

         Consolidated Statements of Cash Flows (unaudited) for the six months
         ended June 30, 1999 and 1998                                         6

         Notes to consolidated Financial Statements                        7-10


Item 2.  Management's Discussion and Analysis of Financial Condition and
              Results of Operations                                       11-19

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                20-21

Item 2.  Changes in Securities                                               22

Item 3.  Defaults Upon Senior Securities                                     22

Item 4.  Submission of Matters to a Vote of Security Holders                 22

Item 5.  Other Information                                                   22

Item 6.  Exhibits and Reports on Form 8-K                                 22-23

SIGNATURES                                                                   24

<PAGE>
<TABLE>
<CAPTION>

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
-------------------------------------------------------------------------------

                                                    30-Jun-99       31-Dec-98
<S>                                                    <C>            <C>
                                                   -------------   ------------
ASSETS
CASH AND CASH EQUIVALENTS
                                                   $  5,907,945   $   5,119,906
RESTRICTED CASH                                       1,118,446       1,103,446

NOTES RECEIVABLE:
    Principal                                       188,383,061     158,730,622
    Joint venture participation                       (301,990)        (301,990)
    Purchase discount                              (20,727,840)     (20,435,067)
    Allowance for loan losses                      (21,851,630)     (22,168,345)
                                                   -------------    ------------
      Net notes receivable                          145,501,601     115,825,220

LOANS HELD FOR SALE                                   2,967,122      5,699,577
ACCRUED INTEREST RECEIVABLE                           2,127,828      1,924,601
OTHER REAL ESTATE OWNED                              10,318,266     10,357,181
OTHER RECEIVABLES                                       989,321      1,231,667
DEFERRED TAX ASSET                                    1,842,932      1,842,932
OTHER ASSETS                                          2,624,088      1,453,158
BUILDING, FURNITURE AND FIXTURES- Net                   915,470        751,512
DEFERRED FINANCING COSTS                              1,843,605      1,582,227
                                                  -------------   ------------

TOTAL ASSETS                                      $176,156,624     $146,891,427
                                                  =============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES               3,016,559        2,946,071
 LINES OF CREDIT                                     3,727,744        6,197,803
 NOTES PAYABLE                                     163,582,161      132,227,257
 203(K) REHABILITATION ESCROWS PAYABLE                  65,426           72,386
 SUBORDINATED DEBENTURES                               465,577          598,050
 NOTES PAYABLE, AFFILIATES AND STOCKHOLDERS            169,247          181,129
 DEFERRED TAX LIABILITY                              1,922,991        1,922,991
                                                 -------------     ------------
TOTAL LIABILITIES                                  172,949,705      144,145,687
                                                 -------------     ------------


STOCKHOLDERS' EQUITY
    Common  Stock,  $.01  par  value,   10,000,000
    authorized shares;issued and outstanding 1999and
    1998:
      5,916,527 , 5,916,527                            59,167           59,167
    Additional paid-in capital                      6,985,968        6,985,968
    Accumulated deficit                            (3,838,216)      (4,299,395)
                                                 -------------     ------------
      Total stockholders' equity                    3,206,919        2,745,740
                                                 -------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $176,156,624      146,891,427
                                                 =============     ============

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>



<PAGE>
<TABLE>

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
-------------------------------------------------------------------------------

                                 Three Months Ended           Six Months Ended
                          30-Jun-99     30-Jun-98     30-Jun-99      30-Jun-98
                          -----------   -----------   -----------    ----------
<S>                           <C>            <C>          <C>            <C>

REVENUES:Interest Income   3,521,575     1,949,251     6,762,993     3,291,028
Purchase discount earned   1,290,014     1,321,521     2,250,492     2,347,885
Gain on sale of portfolios   142,820             0       629,021             0
Gain on sale of originated    22,815       425,853        97,928       548,282
loans
Gain or(Loss) on sale of      61,754      (45,370)       142,130     (149,675)
other real estate owned
Rental Income                223,073       249,813       460,545       410,364
Other                        123,121       355,732       198,251       418,420
                           ----------   -----------   -----------    ----------
 Total Income              5,385,172     4,256,800    10,541,360     6,866,304
                            ---------   -----------   -----------    ----------


OPERATING EXPENSES:
 Interest expense         3,106,398     2,508,586     5,917,892     4,559,544
 Collection, general and  1,852,191     1,890,721     3,835,449     3,392,713
 administrative
 Provision for loan losses        0       (1,439)             0        31,391
 Amortization of deferred   138,440        84,976       257,461       137,762
 financing costs
 Depreciation                44,804        18,412        69,379        48,798
                         -----------   -----------   -----------    ----------
                          5,141,833     4,501,256    10,080,181     8,170,208
                         -----------   -----------   -----------    ----------

OPERATING INCOME (LOSS)     243,339     (244,456)       461,179     (1,303,904)
                         -----------   -----------   -----------    ----------



INCOME (LOSS)BEFORE PROVISION
FOR INCOME TAXES            243,339     (244,456)       461,179     (1,303,904)
                         -----------   -----------   -----------    ----------


NET INCOME( LOSS)           243,339     (244,456)       461,179     (1,303,904)
                         ===========   ===========   ===========    ==========

NET INCOME (LOSS) PER COMMON
SHARE:
   Basic                       0.04        (0.04)          0.08        (0.24)
   Dilutive                    0.04        (0.04)          0.08        (0.24)
                         ===========   ===========   ===========    ==========
WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING              5,916,527     5,516,527     5,916,527     5,516,527
                         ===========   ===========   ===========    ==========

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>


<PAGE>
<TABLE>

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
JUNE 30, 1999
--------------------------------------------------------------------------

                                       Additional
                         Common  Stock   Paid-In   Accumulated
                        Shares   Amount  Capital   (Deficit)   Total

<S>                        <C>      <C>     <C>        <C>         <C>

---------------------------------------------------------------------------
Bal, Dec 31, 1997      5,516,527  55,167 6,489,968 (3,008,013)  3,537,122

   Private Placement     400,000  $4,000  $496,000              $ 500,000


    Net Loss                                       (1,291,382) (1,291,382)

                   ---------------------------------------------------------
Bal, Dec 31, 1998      5,916,527  59,167 6,985,968 (4,299,395) $2,745,740
                   =========================================================

    Net Income                                        461,179     461,179

                   =========================================================
Bal, June 30, 1999    5,916,527   59,167 6,985,968 (3,838,216)  3,206,919
                   =========================================================
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>


<PAGE>
<TABLE>

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
-------------------------------------------------------------------------------
                                          30-Jun-99       30-Jun-98
<S>                                          <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                    $   461,179    $ (1,303,904)
  Adjustments to reconcile net
   income (loss) to
  Net cash used in operating
  activities:
   Depreciation                             69,379          48,798
   Amortization                            257,461         137,762
   Purchase discount earned             (2,250,492)     (2,347,885)
   Gain on Sale of REO                    (142,130)        149,675
   Provision for loan loss                       0          15,303
  (Increase) decrease in:
   Accrued interest receivable            (203,227)       (192,779)
   Foreclosures on real estate          (2,592,856)     (2,034,957)
   Loans held for sale                   2,732,455         602,696
   Other receivables                       242,346         (82,458)
   Other current assets                 (1,170,930)     (1,237,610)
  Increase(decrease) in:
   Accounts   payable  and  accrued         70,488         259,009
   expenses
   203(k) rehabilitation escrow             (6,960)     (2,674,391)
   Notes  payable,  affiliates  and        (11,882)         59,230
   stockholders
                                          ---------       ---------
  Net   cash   used  in   operating     (2,545,169)     (8,601,511)
  activities                              ---------       ---------

CASH    FLOWS    FROM     INVESTING
ACTIVITIES
   Additional capital contributed                0         500,000
   Acquisition and loan fees              (518,839)       (220,924)
   Acquisition of notes receivable      48,872,731)    (20,127,336)
   Acquisition of REO                            0        (235,182)
   Proceeds from sale of REO              2,919,112      4,779,470
   Foreclosures on real estate              271,166         90,272
   Reclassification of notes
   receivable for foreclosures            3,497,480      1,653,838
   Loans originated                       (568,825)      (550,000)
   Acquisition of Furniture
   equipment                               (233,337)       (15,080)
   Participation interest                        0         (20,130)
   Advances to subsidiaries                      0         312,302
   Principal  collection  on  notes
   receivable                            18,101,810      8,488,783
  Increase in restricted cash              (15,000)        (44,424)
                                          ---------       ---------
  Net cash used in investing            (25,419,164)    (5,388,411)
  activitie                             ------------    -----------


CASH FLOWS FROM FINANCING
ACTIVITIES:
   Payments on debenture notes          (  132,473)       (132,525)
   payable
   Payments on line of credit           (4,196,359)      (419,991)
   Proceeds from line of credit          1,726,300       2,688,834
   Proceeds from notes payable          49,994,608      20,889,503
   Payments on notes payable           (18,639,704)    (7,935,766)
                                        ---------       ---------
  Net cash  provided  by  financing     28,752,372      15,090,055
  activities
                                        ---------       ---------

NET INCREASE IN CASH                     788,039        1,100,133

CASH,AND CASH EQUIVALENTS,              5,119,906       2,783,920
BEGINING OF PERIOD                      ----------      ---------

CASH AND CASH EQUIVALENTS, ENDED        5,907,945       3,884,053
                                        =========       =========



</TABLE>

<PAGE>





                                          Page 23

1.    NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - Franklin Credit Management  Corporation (together with its
subsidiaries  the  "Company"), incorporated  under  the  laws of the  State  of
Delaware, acquires performing, nonconforming and subperforming notes receivable
and  promissory  notes from financial  institutions,  and  mortgage and finance
companies.  The Company services and  collects  such notes  receivable  through
enforcement of terms of original note, modification of original note terms and,
if necessary, liquidation of the underlying collateral.

In January 1997, a wholly owned subsidiary was formed,to originate or purchase,
sub prime  residential  mortgage  loans to individuals whose credit  histories,
income and other factors cause them to be classified as nonconforming borrowers.

A summary of the Company's significant accounting policies follows.

Basis of  Consolidation  - The consolidated  financial statements  include the
accounts of the  Company  and its  wholly-owned  subsidiaries. All  significant
inter-company accounts and transactions have been eliminated in consolidation.

Estimates -The preparation of 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
disclosure of  contingent assets and  liabilities  at the date of the financial
statements and the reported  amounts of revenue and expenses during the period.
Actual results could differ from those estimates.

Cash and Cash Equivalents- Cash and cash equivalents include all cash accounts,
with the  exception of  restricted  cash,  and money market  funds. The Company
maintains  amounts due from banks, which at times may exceed federally  insured
limits. The Company has not experienced any losses from such concentrations.

Notes  Receivable  and  Income  Recognition - The  notes  receivable  portfolio
consists  primarily  of  secured  real  estate  mortgage  loans  purchased from
financial  institutions,  and  mortgage  and  finance  companies.   Such  notes
receivable are generally performing or  underperforming at the time of purchase
and are usually purchased at a discount from the principal balance remaining.

Notes  receivable  are  stated at the  amount of unpaid  principal, reduced  by
purchase  discount and an allowance for loan losses. The Company  generally has
the ability and intent to hold its notes until  maturity, payoff or liquidation
of  collateral. Impaired  notes  are  measured  based on the  present value of
expected future cash flows discounted at the note's effective  interest rate or,
as a practical expedient, at the observable market price of the note receivable
or the fair value of the collateral if the note is collateral dependent. A note
receivable is impaired when it is probable theCompany will be unable to collect
all contractual principal and interest payments due in accordance with the
terms of the note agreement.

In general, interest on the notes receivable is calculated based on contractual
interest rates applied to daily  balances of the  collectible principal  amount
outstanding using the simple-interest method.

Accrual of interest on notes receivable, including impaired notes receivable,is
discontinued when management  believes, after considering economic and business
conditions and collection  efforts,  that the borrowers' financial condition is
such  that  collection  of  interest  is doubtful.  When  interest accrual  is
discontinued, all unpaid accrued interest is reversed.Subsequent recognition of
income  occurs only to the extent  payment is received subject to  management's
assessment of the  collectibility of the remaining  interest and  principal. A
nonaccrual note is restored to an accrual status when it is no longer
delinquent and  collectibility of interest and principal is no longer in doubt
and past due interest is recognized at that time.
<PAGE>


Loan purchase discount is amortized to income using the interest method over
the period to  maturity. The Interest method  recognizes income by applying the
effective  yield on the net investment in the loans to the projected cash flows
of the loans. Discounts are amortized if the projected payments are probable of
collection  and the timing of such  collections  is reasonably  estimable. The
projection of cash flows for purposes of amortizing purchase loan discount is a
material estimate, which could change significantly in the near-term.Changes in
the  projected  payments are  accounted  for as a change  in  estimate and the
periodic  amortization is prospectively adjusted over the remaining life of the
loans. Should projected payments not exceed the carrying value of the loan, the
periodic amortization  is  suspended  and either the loan is written down or an
allowance for uncollectibility is recognized.

Allowance for Loan Losses -The allowance for loan losses, a material  estimate
which could change significantly in the near-term, is initially established by
an allocation of the purchase loan discount based on management's assessment of
the  portion of  purchase  discount  that  represents  uncollectable  principal.
Subsequently, increases to the  allowance are made through a provision for loan
losses  charged to expense  and the  allowance  is  maintained  at a level that
management considers adequate to absorb potential losses in the loan portfolio.

Management's judgment in determining  the adequacy of the allowance is based on
the evaluation of individual loans within the portfolios,the known and inherent
risk characteristics and size of the note receivable  portfolio, the assessment
of current economic and real estate market conditions, estimates of the current
value of underlying  collateral,  past loan loss  experience and other relevant
factors. Notes receivable,  including  impaired notes  receivable,  are charged
against the  allowance  for  loan  losses  when  management  believes  that the
collectibility of principal is unlikely  based on a  note-by-note  review.  Any
subsequent  recoveries  are  credited  to the  allowance for loan  losses  when
received.In connection with the determination of the allowance for loan losses,
management obtains  independent  appraisals for  significant  properties,  when
considered necessary.

The Company's real estate notes  receivable are  collateralized  by real estate
located throughout the United States. Accordingly,  the collateral  value of a
substantial  portion of the Company's  real estate  notes  receivable  and real
estate  acquired through  foreclosure  is  susceptible  to  changes  in  market
conditions.

Management  believes  that the  allowance  for loan  losses is adequate.  While
management uses available information to recognize losses on notes  receivable,
future  additions to the allowance  or  write-downs  may be necessary  based on
changes in economic conditions.

Other Real  Estate  Owned - Other real estate owned  consisting  of  properties
acquired through, or in lieu of,  foreclosure or other proceedings are held for
sale and are carried at the lowerof cost or fair value less estimated  costs
of disposal. Any write-down  to fair  value, less  cost to sell, at the time of
acquisition is charged to the allowance for loan losses. Subsequent write-downs
are charged to operations based upon management's continuing  assessment of the
fair value of the  underlying  collateral. Property is  evaluated  regularly to
ensure  that the  recorded  amount is supported  by  current  fair  values  and
valuation allowances are recorded as necessary to reduce the carrying amount to
fair value  less  estimated  cost to dispose.  Revenue  and  expenses  from the
operation of other real estate owned and changes in the valuation allowance are
included in operations.Costs relating to the development and improvement of the
property are capitalized, subject to the limit of fair value of the collateral,
while costs  relating to holding the property are expensed. Gains or losses are
included in operations upon disposal.
<PAGE>


Building,  Furniture and Fixtures- Building,furniture and fixtures are recorded
at cost net of  accumulated  depreciation. Depreciation  is computed  using the
straight-line method over the estimated useful lives of the assets, which range
from 3 to 40  years.  Gains and  losses  on  dispositions are  recognized  upon
realization. Maintenance and repairs are expensed as incurred.

Deferred  Financing Costs -Debt financing costs, which include loan origination
fees  incurred  by the  Company in  connection with  obtaining  financing,  are
deferred and are amortized based on the principal reduction of the related loan.

Mortgage Servicing Rights -The Company allocates the total cost of the mortgage
loans purchased or originated, proportionately,to the mortgage servicing rights
and the loans based on the relative fair value.The servicing rights capitalized
are amortized in  proportion to and over the period of, estimated net servicing
income including  prepayment assumptions based upon the  characteristics of the
underlying  loans. Capitalized  servicing rights are periodically  assessed for
impairment based on the fair value of the rights with any impairment recognized
through a valuation allowance.

Pension  Plan - The  Company has a defined  contribution  retirement  plan (the
"Plan")covering all full-time employees who have completed one year of service.
Contributions to the Plan are made in the form of payroll  reductions  based on
employees'  pre-tax  wages. Currently,  the  Company  does not offer a matching
provision for the Plan.

Income Taxes - The Company recognizes income taxes under an asset and liability
method.  Under this method, deferred tax assets are  recognized  for deductible
temporary  differences and  operating  loss  or tax  credit  carryforwards  and
deferred tax  liabilities  are recognized  for taxable  temporary  differences.
Temporary  differences  are the differences  between  the  financial  statement
carrying amounts of existing assets and liabilities and their respective  basis.
Deferred tax  assets and  liabilities  are  measured  using  enacted  tax rates
expected  to apply to  taxable income  in the  years in which  those  temporary
differences  are expected to be recovered  or settled.  Deferred tax assets are
reduced by a valuation  allowance when  management  determines  that it is more
likely than not that,some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and  liabilities  are adjusted for the effects of
changes in tax laws and rates on the date of the enactment.

Earnings Per Common Share - Statement of Financial Accounting Standards No.128,
Earnings Per Share (SFAS No. 128), requires dual presentation of Basic EPS and
Diluted EPS on theface of the income statement for all entities with complex
capital structures and there statement of all prior period earnings per share
data presented.  SFAS No. 128 also requires a reconciliation of the numerator
and denominator of Basic EPS and Diluted EPS computation.

Fair  Value  of  Financial  Instruments -  Statement  of  Financial  Accounting
Standards No. 107, Disclosures About Fair Value of Financial  Instruments (SFAS
No.  107), requires  disclosure  of  fair  value  information  about  financial
instruments, whether or not  recognized  in the  balance  sheet for which it is
practicable to estimate that value. In cases where quoted market prices are not
available, fair  values are based on  estimates  using  present  value or other
valuation techniques.  Those  techniques  are  significantly  affected  by  the
assumptions  used, including  the  discount  rate and  estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases,  could not be realized
in  immediate  settlement of the  instruments.  SFAS No. 107  excludes  certain
financial instruments and all  non-financial  assets and  liabilities  from its
disclosure requirements.  Accordingly,  the aggregate fair value amounts do not
represent the underlying value of the Company.
<PAGE>


The following methods and assumptions were used by the Company in estimating
the fair value of its financial instruments:

    a.  Cash, Restricted Cash, Accrued Interest Receivable,Other Receivable and
        Accrued  Interest Payable -The carrying values reported in the balance
        sheet are a reasonable estimate of fair value.

    b.  Notes  Receivable - Fair value of the net note receivable  portfolio is
        estimated  by  discounting  the  future cash flows  using the  interest
        method. The carrying amounts of the notes  receivable  approximate fair
        value.

    c.  Short-Term  Borrowings - he carrying  amounts of the line of credit and
        other short-term borrowings approximate their fair value.

d.      Long-Term Debt - Fair value of the Company's long-term debt (including
        notes payable, subordinated debentures and notes payable, affiliate) is
        estimated  using  discounted cash flow analysis  based on the Company's
        current  incremental  borrowing rates for  similar  types of  borrowing
        arrangements.  The  carrying  amounts reported  in  the  balance  sheet
        approximate their fair value.

Business  Segments - During  1998, the Company  adopted  Statement of Financial
Accounting  Standards No. 131 ("SFAS  131"), Disclosures  about  Segments of an
Enterprise  and Related  Information.  SFAS 131 supersedes  SFAS 14,  Financial
Reporting  for  Segments  of a  Business  Enterprise, replacing  the  "industry
segment"  approach  with the  "management" approach.  The  management  approach
designates  the  internal  reporting  that  is used by  management  for  making
operating  decisions  and assessing  performance as the source of the Company's
reportable  segments.  SFAS 131 also  require disclosures  about  products  and
services, geographic areas and major customers. he adoption of SFAS 131 did not
affect results of operations or the financial position of the Company.

Comprehensive  Income - SFAS No. 130,  Reporting  Comprehensive Income  defines
comprehensive  income as the change in equity of a business enterprise during a
period from  transactions  and other events and  circumstances, excluding those
resulting from investments by and distributions to stockholders.The Company had
no items of other  comprehensive  income  during the three months ended June 30,
1999.

Recent  Pronouncements - In June 1998, the Financial Accounting Standards Board
issued  Statement of Financial  Accounting  Standards  No. 133, Accounting  for
Derivative  Instruments  and Hedging  Activities ("SFAS  133"). The Company is
required to implement  SFAS 133 on January 1, 2000. SFAS 133 requires that all
derivative  instruments be recorded on the balance sheet at fair value.Changes
in the fair value of derivatives are recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is designated as
part of a hedge transaction and the type of hedge transaction. The ineffective
portion of all hedges will be  recognized  in  earnings.  The Company  does not
believe  that  SFAS133  will have any effect on its  results of operations  and
financial position.



<PAGE>






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

General

      Forward-Looking  Statements. When used in this report, press releases and
elsewhere by the Company from time to time, the words "believes","anticipates",
and "expects" and similar  expressions are intended to identify forward-looking
statements that involve certain risks and uncertainties. Additionally,  certain
statements  contained  in this  discussion  and the Form 10-QSB  may be  deemed
forward-looking  statements that  involve a number of risks and  uncertainties.
Among the factors that could cause actual results to differ  materially are the
following:  unanticipated  changes in the U.S. economy, business conditions and
interest rates and the level of growth in the finance and housing  markets, the
availability for purchases of additional loans, the status of relations between
the Company  and its Senior Debt  Lender, the status of  relations  between the
Company  and its  sources  for loan  purchases, unanticipated  difficulties  in
collections under loans in the Company'sportfolio and other risks detailed from
time to time in the  Company's  SEC reports. Readers are cautioned not to place
undue reliance on these forward-looking  statements, which speak only as of the
date thereof.  The Company  undertakes no obligation to release  publicly the
results on any events or  circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

      Loan and OREO Acquisitions.During the six months ended June 30, 1999, the
Company  purchased 1,494 loans in sixteen  portfolio's consisting  primarily of
first and second mortgages, with an aggregate face value of $53.3 million at an
aggregate  purchase price of $48.9 million or 92% of the face value and no OREO
properties,compared with the purchase during the six months ended June 30, 1998
of 1,302 loans with an  aggregate  face value of $24.3 million at an  aggregate
purchase  price of $20.4  million or 83% of aggregate face value,  and $235,182
OREO properties.Acquisition of these portfolios was fully funded through Senior
Debt in the amount equal to the purchase price plus a 1% loan origination fee.

     The Company believes these acquisitions of high yielding coupon loans will
result in  substantial increases  in the level of interest  income and purchase
discount income during future periods. The Company has changed its strategy and
has focused on acquiring performing and high equity nonperforming loans.Payment
streams are generated once the loans are  incorporated  into the Company's loan
tracking system.

      Management intends to continue to expand the Company's earning asset base
through the acquisition of additional portfolios including performing first and
second  mortgages at a positive  interest  ate spread based upon the  Company's
cost of funds. The Company believes that its current infrastructure is adequate
to service  additional loans without any material increases in collection,  and
general  and  administrative  expenses  excluding personnel.  There  can  be no
assurance the Company will be able to acquire any additional loans on favorable
terms or at all. While  management  believes that the acquisition of additional
loan  portfolios  would be beneficial, management does not believe that current
operations  would be materially impacted if no additional  loan portfolios were
acquired during 1999.


      Single-Family  Residential  Lending. In January 1997,the Company formed a
wholly-owned  subsidiary,   Tribeca  Lending  Corp. ("Tribeca"),  to  originate
primarily subprime  residential mortgage loans made to individuals whose credit
histories,   income  and  other  factors   cause  them  o  be   classified  as
non-conforming  borrowers. Management  believes that credit impaired  borrowers
present an  opportunity for the Company to earn superior  returns for the risks
assumed.  Tribeca  provides first and second  mortgages, originated on a retail
basis through  marketing  efforts  including  utilization of the FCMC database.
Tribeca is currently licensed as a mortgage banker in Connecticut,  District of
Columbia, Florida, Georgia, Kentucky,  Maryland,  Massachusetts, Missouri, New
York, New Jersey, North Carolina, Oklahoma, South Carolina, and Virginia,and is
a Department of Housing and Urban Development FHA Title I and Title II approved
lender.  Tribeca  originated  loans are  typically  expected  to be sold in the
secondary  market  through   whole-loan,  servicing-released   sales.   Tribeca
anticipates  holding certain of its mortgages in its portfolio when it believes
that the return from holding the mortgage, on a risk-adjusted basis,  outweighs
the return from selling the mortgage in the secondary market.
<PAGE>

      During the six months ended June 30, 1999 Tribeca originated  seven loans
with an aggregate face value of $568,825 in mortgages,compared to 165 loans and
$14.6 million in mortgages during the six months ended June 30,1998. During the
six months ended June 30, 1999,  Tribeca incurred an operating loss of $259,671
compares with operating  losses of $475,782 during the six months ended June 30,
1998. This decrease in loss and  originations reflected a restructuring  period
during which management changed strategies to focus on refinancing selected
loans from the existing customer base from the Company.  As of June 30,1999,
Tribeca had approximately $2.9 million face value of loans held for sale.
Revenues and expenses related to such loans, other than periodic interest
 payments, and fee income are expected to be realized upon sale of such loans.

      Cost of Funds. The weighted  average  interest rate on borrowed funds for
the Senior Debt based on the balances as of June 30,1999 and June 30, 1998 were
8.3% and 9.5%,  respectively.  As of June 30, 1999, the Company had  sixty-five
loans  outstanding  with  an  aggregate   principal balance  of  $163  million.
Additionally the Company has lines of credit with the Senior Debt Lender, which
had an outstanding balance of $3.6 million at June30, 1999. The increase in the
prime rate from 7.75% to 8.00%, on July 8,1999 increased the benchmark rate for
the interest on Senior Debt used to fund loan portfolio  acquisitions, which is
expected by management to decrease net income during future periods.

          The majority of the loans purchased by the Company bear interest at a
fixed rate; Senior Financing is at a variable rate adjusted with the prime rate.
Consequently,  changes  in  market  interest  rate  conditions  cause  directly
corresponding changes in interest income. Management  believes that any future
increases in the prime rate will negatively impact the net income of the
Company while decreases may be expected to positively impact such net income.

      Inflation.  The  impact of  inflation  on the  Company's  operations
 during the three months ended June 30, 1999 and 1998 was immaterial.



Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998.

      Total revenue, which is comprised of interest income,  purchase  discount
earned,  gains on bulk sale of notes, gain on sale of originated loans, gain on
sale of OREO, rental income and other income,increased by $1,128,372 or 27%, to
$5,385,172  during the three months ended June 30,1999, from $4,256,800  during
the three months ended June 30, 1998. Total revenue (excluding gain on sales of
loans, OREO and originated  loans) for the three months ended June 30, 1999 and
1998, as a percentage of notes receivable, net of allowance for loan losses and
joint venture  participation  as of the last day of each period  was 12.5% and
15.3%,  respectively. This decrease reflected  acquisitions of notes receivable
during the three months ended June 30, 1999.

      Interest income on notes  receivable  increased by  $1,572,324 or 81%, to
$3,521,575  during the three months ended June 30, 1999 from $1,949,251  during
the three months ended June 30, 1998. The Company recognizes interest income on
notes  included  in its  portfolio  based upon three  factors: (i)  interest on
performing notes,  (ii) interest received or committed with settlement payments
on  non-performing notes and (iii) the balance of  settlements in excess of the
carried face value. This increase resulted from the acquisition of $112 million
of performing  loans with a weighted  average interest rate of 12% between July
1998 and June 1999, which was only partially offset by loan sales,  payoffs and
principal collections during the same period.
<PAGE>


      Purchase discount earned decreased by $31,507 or 2%, to $1,290,014 during
the three  months ended June 30, 1999 from  $1,321,521  during the three months
ended June 30, 1998.This decrease reflected  the growing  proportion  of the
Companys portfolio comprised of performing loans purchased at smaller discounts
than  the non-performing  high-discount loans  historically  purchased  by the
Company,which results in income being realized as interest rather than purchase
discount,and the increase in bulk sales during the three months ended June 30,
1999 which results in income being realized as gain on sale rather than
 purchase discount.

      Gain on bulk sale of notes receivable increased  to $142,820  during the
three  months ended June 30,1999 from $0 during the three months ended June 30,
1998.The Company may consummate bulk sales of notes from time to time as may be
economically advantageous.

      Gain on sale of notes originated by Tribeca  decreased by $403,038 or 95%
to $22,815 or during the three months ended June 30, 1999from $ 425,853  during
the three  months ended June 30, 1998.  This  decrease reflected a reduction in
note originations by Tribeca in connection with its new focus described above.

     Gain on sale of OREO increased by $107,124 to a gain of $61,754 during the
three months ended June 30,1999 from a loss of $45,370  during the three months
ended June 30, 1998. This increase  resulted  primarily  from the  liquidation,
during the three  months ended June 30, 1998,  of 40 of the  longest-held  OREO
properties in the Company's portfolio,  which management believes were of lower
quality  than  those sold during the three  months  ended June 30,  1999.  As a
result the Company believed that the disposition of such properties, while at a
loss, was beneficial to the Company's long-term profitability. The Company sold
15 and 40 OREO properties  during the three months ended June 30, 1999 and June
30, 1998.

      Rental  income  decreased by $26,740 or 11% to $223,073 or 11% during the
three months ended June 30, 1999, from  $249,813  during the three months ended
June 30, 1998.  This  decrease reflected a decrease in the number of properties
rented  during the three months  ended June 30,  1999, as compared to the three
months  ended June  30,1998, because of the  eviction  of certain  tenants  and
reversal of accrued rental income for those tenants.

      Other income decreased  by $232,611 or 65%, to $123,121  during the three
months ended June 30, 1999 from $355,732 during the three months ended June 30,
1998. This decrease resulted from the realization of settlement income from one
unusually large note during the three months ended June 30, 1998,  and from the
various  loan fees,  such as credit  report,  appraisal  and  application  fees
resulting from the reduction in Tribeca's originations  during the three months
ended June 30, 1999.

      Total operating expenses increased by $640,577 or 14% to$5,141,833 during
the three  months  ended June 30, 1999 from $4,501,256  during the three months
ended  June 30,  1998. Total operating expenses includes  interest  expense,
collection, general and administrative expenses, provisions for loan losses,
amortization of deferred financing costs and depreciation expense.

      Interest expense increased by $597,812 or 24%, to $3,106,398  during the
three months ended June 30,1999, from $2,508,586 during the three months ended
June 30, 1998.This increase resulted primarily from the increase in Senior Debt
reflecting  the  acquisition  of notes receivables.  Total  debt  increased  by
$66,596,236 or 66%, to $167,944,729 as of June 30,1999 from  $101,348,493 as of
June 30, 1998.Total debt consists principally of Senior Debt, and also includes
debentures, and lines of credit and loans from affiliates.
<PAGE>

      Collection,general and administrative expenses decreased by $38,531 or 2%
to $1,852,190 during the three months ended June 30,1999 from $1,890,721 during
the three months ended June 30, 1998. Collection, general and  administrative
expense consists primarily of personnel expense, and other collection,  general
and administrative expenses including,OREO related expense, litigation expense,
and miscellaneous collection expense.

        Personnel  expenses  decreased by $43,107 or 6% to $674,311  during the
three  months  ended June 30, 1999 from $717,418  during the three months ended
June 30, 1998 This decrease resulted primarily from staff reductions at Tribeca
related to its refocused and reduced originations. All other collection general
and administrative  expenses increased by $4,576 to $1,177,879 during the three
months  ended June 30, 1999 from $1,173,303 during the three months ended June
30, 1998.

      Provisions  for loan loss were immaterial  during the three  months ended
June 30, 1999 and June 30, 1998.

      Amortization  of deferred financing  costs increased by $53,464 or 63% to
$138,440  during the three months ended June 30, 1999, from $84,976  during the
three months ended June 30, 1998. This increase  resulted from the bulk sale of
notes receivable, and increased  prepayments during the three months ended June
30,1999, which accelerated the amortization of loan origination fees associated
with the loans sold or  collected. On June 30, 1999 and June 30, 1998  deferred
financing costs as a percentage of Senior Debt outstanding was 1.12% and 1.31%,
respectively.

      Depreciation  expense increased by $26,392 or 143%, to $44,804 during the
three  months ended June 30, 1999,  from $18,412  during the three months ended
June 30, 1998.This increase resulted from the purchase of computer equipment, a
new accounting software  package, and  renovations of the Company's  corporate
headquarters.

      Operating  income  increased by $487,795 to a gain of $243,339 during the
three months ended June 30,1999 from a loss of $244,456 during the three months
ended June 30, 1998.

      During the three months ended June 30, 1999, there was no provision  for
income tax due to a loss carry-forward.

      Net income increased  by $487,795 to a gain of $243,339  during the three
months ended June 30,1999 from a loss of $244,456 during the three months ended
June 30, 1998.


Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998.

      Total revenue, increased by $3,675,056 or 54%, to $10,541,360  during the
six months ended June 30,1999, from $6,866,304 during the six months ended June
30, 1998. Total revenue (excluding gain on sales of loans,  OREO and originated
loans) for the three months  ended June 30,  1999 and 1998 as a  percentage  of
notes   receivable,  net  of  allowance  for  loan  losses  and  joint  venture
participation as  of  the  last  day  of  each  period  was  12.4%  and  12.8%,
respectively.

      Interest income on notes receivable increased by $3,471,965 or 105%, to
$6,762,993 during the six months ended June 30, 1999 from $3,291,028 during the
six months ended June 30, 1998. This  increase  resulted  from the  acquisition
activity of $112 million of performing and a weighted  average interest rate of
12%, between  July 1998 and June 1999 which was only  partially offset by loan
sales, pre-payments and principal collections.

      Purchase discount earned decreased by $97,393 or 4%, to $2,250,492 during
the six months ended June 30, 1999, and from  $2,347,885  during the six months
ended June 30, 1998.  This decrease  reflected  the growing  proportion  of the
Company's portfolio comprised of performing loans purchased at smaller
discounts than  the  non-performing  high-discount loans  historically
purchased  by the Company,which results in income being realized as interest
rather than purchase discount, and the  increase in bulk sales  during the six
months ended June 30, 1999 which results in income being realized as gain on
sale rather than purchase discount.
<PAGE>

     Gain on bulk sale of notes receivable increased by $629,021 during the six
months  ended June 30,  1999,  from $0 during the six months  ended  1998. This
increased reflected the timing off our bulk sales of notes during the six
months ended June 30, 1999.

      Gain on sale of notes  originated by Tribeca decreased by $450,354 or 82%
to $97,928 during the six months ended June 30, 1999, from $548,282  during the
six months  ended June  30,1998.  This  decrease reflected a reduction  in note
originations by Tribeca in connection with its new focus as described above.

      Gain on sale of OREO  increased by $291,805 to a gain of $142,130  during
the six  months  ended June 30,  1999, from a loss of  $149,675  during the six
months  ended  June  30,  1998. This  increase  resulted   primarily  from  the
liquidation,  during  the  six  months ended  June  30,  1998,  of  81  of  the
longest-held  OREO  properties  in the Company's  portfolio,  which  management
believes were of lower quality than those sold during the six months ended June
30,  1999. As a result,  the  Company  believed  that its  disposition  of such
properties, while  at  a  loss,  was  beneficial  to  the  Company's  long-term
profitability.  he Company sold 47 OREO properties  during the six months ended
June 30,1999, and 81 OREO properties during the six months ended June 30, 1998.

       Rental  income increased  by $50,181 or 12% to  $460,545  during the six
months ended June 30, 999,  from $410,364  during the six months ended June 30,
1998.  This  increase reflected an increase in the number of  properties in the
Company's  portfolio that were held as rental  property  during  the six months
ended June 30, 1999, as compared to the six months ended June 30, 1998.

      Other  income  decreased  by $220,169 or 53%, to $198,251  during the six
months  ended June 30, 1999 from  $418,420 during the six months ended June 30,
1998. This decrease resulted from the realization of settlement income from one
unusually  large note  during the six month  ended June 30,  1998, and from the
decrease  in  various  loan  fees,  such as credit  report,  and appraisal  and
application  fees  resulting  from the reduction  with  Tribeca's origination's
during the six months ended June 30, 1999.

      Total  operating  expenses  increased by $1,909,973 or 23%,to $10,080,181
during the six months ended June 30, 1999,from $8,170,208 during the six months
ended June 30, 1998.

      Interest expense  increased by $1,358,348or 30%, to $5,917,892 during the
six months ended June 30, 1999 from $4,559,544 during the six months ended June
30, 1998.  This increase  reflects increases in the Senior Debt associated with
the acquisition of notes receivable.Total debt increased by $66,717,349 or 65%,
to $168,065,842 as of June 30, 1999 from $101,348,493 as of June 30, 1998.

      Collection,  general and administrative expenses increased by $442,736 or
13%, to  $3,835,449  during the six months ended June 30, 1999 from  $3,392,713
during the six months ended June 30, 1998.

             Personnel expenses increased by $70,100 or 5%,to $1,459,951 during
the six months ended June 30, 1999 from  $1,389,851 during the six months ended
June 30, 1998. The increase  reflected the staffing and the experience level of
personnel in the Company's core business during the first quarter. OREO related
expenses  decreased by $38,220 or 5%, to $679,171 from  $717,391 during the six
months  ended June 30,  1998.  This  decrease is primarily due to the sale of
certain OREO properties with high carrying costs.Litigation expenses increased
by $91,185 or 24.1%, to $468,976 during the six months ended June 30,1999, from
$377,791  during the six months ended June 30, 1998. This increase  reflected a
increase in loans entering the legal recovery process,which increases the costs
incurred by the Company to initiate new proceedings which represent the majority
of the legal  expenses  typically  incurred in bringing the loans to resolution.
All other collection expenses increased by $319,670 or35% during the six months
ended June 30,1999 to $1,227,350 from $907,680 during the six months ended June
30, 1998. The increases in other overall collection, general and administrative
expenses was due to increased computer consulting  expenses associated with the
growth of the portfolio and increased  office expenses due the expansion of the
company's  corporate office,  as well as training expenses associated with the
purchase of a new accounting software package.
<PAGE>

      Provisions  for loan losses  decreased  to $0 during the six months ended
June 30, 1999 from $31,391 during the six months ended June 30, 1998.


      Amortization of deferred financing costs increased by $119,699 or 87%, to
$257,461  during the six months ended June 30,1999 from $137,762 during the six
months ended June 30, 1998. This increase  resulted from the bulk sale of notes
receivable, and increased prepayments during the six months ended June 30, 1999,
which accelerated the amortization of loan origination fees associated with the
loans sold or collected.

      Depreciation  expense increased by $20,581 or 42%, to $69,379  during the
six months  ended June 30, 1999,  from $48,798 during the six months ended June
30, 1998. This increase resulted from the purchase of computer equipment, and a
new accounting software package,and renovations of our corporate headquarters.

      Operating income increased by $1,765,083 to a gain of $461,179 during the
six months ended June 30,1999 from a loss of  $1,303,904  during the six months
ended June 30, 1998.

      During the six months  ended June 30,  1999,  there was no provision  for
income taxes due to loss-carryforwards and during the six months ended June 30,
1998, there were no provisions for income taxes due to an operating loss.

      Net income  increased by $1,765,083  to a gain of $461,179 during the six
months ended June 30,1999 from a loss of $1,303,904 during the six months ended
June 30, 1998.

<PAGE>


Liquidity and Capital Resources

          General.  During  the six  months  ended  June 30, 1999  the  Company
purchased  1,494 loans in sixteen  portfolios with an  aggregate  face value of
$53.3  million at an aggregate  purchase  price of $48.8 million or 92% of face
value and no OREO  properties. During  the six months  ended June 30,  1998 the
Company  purchased six portfolios with an aggregate face value of $24.3 million
at an  aggregate  purchase  price of $20.1 or 83%of aggregate  face value,  and
$235,182  in  OREO  properties.  This  increase, measured  by  purchase  price,
reflected the increase in  competitiveness of the Company's bids resulting from
the  reduction in its cost of funds relative to the prime rate and the increase
in bidding opportunities associated with theCompany purchasing performing loans
and well as non-conforming  and sub-performing  loans. The increase in purchase
price  as a  percentage  of face value of the  loans  purchased  reflected  the
increased quality of the loans purchased.

      The  Company's  portfolio of notes  receivable at June 30,1999 had a face
value of $188.3  million and  included  net notes  receivable of  approximately
$145.5 as compared with a face value of $125.9 million and net notes receivable
of  approximately $84.7 million as of June 30, 1998.  Net notes receivable are
stated at the amount of unpaid principal, net of purchase discount,an allowance
for loan losses,  and joint venture  participation. The Company has the ability
and intent to hold its notes until maturity,payoff or liquidation of collateral
or, where deemed to be economically advantageous,sale.

     During the six months ended June 30, 1999, the Company used cash in the
amount of $2,545,169 in its operating activities primarily for interest expense,
and increased infrastructure in the Company's core business, litigation expense
incidental to its ordinary collection activities and for the foreclosure and
improvement of OREO. The Company used $25,419,164 in its investing activities,
primarily reflecting purchases of notes receivable which purchases were only
partially offset by principalcollections upon its notes receivable and proceeds
from sales of OREO. The amount of cash used in operating and investing
activities was funded by $28,752,372 of net cash provided by financing
activities, including principally, a net increase in Senior Debt of $50.0
million. The above activities resulted in a net increase in cash at June 30,
1999 over December 31, 1998 of $788,039.

      In the  ordinary  course of its  business, the Company  accelerates  and
forecloses upon real estate securing non-performing notes receivable included in
its portfolio.  As a result of such foreclosures and selective direct purchases
of OREO,  at June 30, 1999 and 1998, the  Company  held OREO  recorded  on the
financial  statements at $10.3 million and $9.2 million,  respectively. OREO is
recorded on the financial statements of the Company at the lower of cost or fair
market value. The Company estimates,based on third party appraisals and broker
price opinions, that the OREO inventory held at June 30, 1999, in the aggregate,
had a net realizable value (market value less estimated commissions  and legal
expenses  associated with the disposition of the asset) of  approximately $11.5
million based on market analyses of the individual properties less the estimated
closing  costs.  There  can be no  assurance, however, that such  estimate is
substantially correct or that an amount approximating such amount would actually
be realized upon liquidation of such OREO. The Company  generally holds OREOas
rental property or sells such OREO in the ordinary course of business when it
is economically beneficial to do so.

<PAGE>

Cash Flow

      Substantially  all of  the  assets of the  Company  are  invested  in its
portfolios of notes  receivable and OREO. Primary sources of the Company's cash
flow for operating and investing activities are borrowings under its senior debt
facilities collections on notes receivable and gain on sale of notes and OREO
properties.

      At June 30, 1999, the Company had unrestricted  cash, ash equivalents and
marketable securities of $5.9 million.

      Management believes that sufficientcash flow from the collection of notes
receivable  will be available to repay the Company's  secured  obligations, and
that sufficient  additional  cash flows will exist through collections of notes
receivable,  the bulk sale of performing  loan  portfolios, sales and rental of
OREO,  continued   modifications  to  the  secured  debt credit  agreements  or
additional  borrowing, to repay the current liabilities arising from operations
and to repay the long term indebtedness of the Company.

Financing Activities

      Senior Debt. As of June 30, 1999, the Company owed an aggregate of $163.2
 million to the Lender of Senior Debt, under 65 loans.

      The Senior Debt is  collateralized  by first liens on the respective loan
portfolios  or the purchase of which the debt was incurred and is guaranteed by
the Company.  The monthly payments on the Senior Debt have been,and the Company
intends for sch  payments to continue to be, met by the  collections  from the
respective  loan  portfolios. The loan  agreements for the Senior Debt call for
minimum  interest and  principal payments each month and  accelerated  payments
based upon the collection of the notes receivable  securing the debt during the
preceding  month. The Senior Debt accrues  interest at variable rates of 0%, 1%
and 1.75% over the prime rate.The accelerated  payment provisions of the Senior
Debt are generally of two types:  the first requires that all collections  from
notes receivable,other than a fixed monthly allowance for servicing operations,
be applied to reduce the Senior Debt, and the second  requires a further amount
to be applied toward additional  principal reduction from available cash after
scheduled  principal and interest  payments  have been made. As a result of the
accelerated payment provisions,  the Company is repaying the amounts due on the
Senior  Debt at a rate faster than the  minimum scheduled  payments.  While the
Senior Debt remains outstanding, these accelerated payment provisions may limit
the cash flow that is available to the Company.

      Certain of the Senior Debt credit  agreements  required  establishment of
restricted  cash accounts, funded by an initial deposit at the loan closing and
additional  deposits  based upon monthly  collections  up to a specified dollar
limit.The restricted cash is maintained in an interest bearing account, held by
the Company's Senior Debt Lender. Restricted cash may be accessed by the Senior
Debt Lender only upon the Company's failure to meet the minimum monthly payment
due if collections from notes  receivable securing the loan are insufficient to
satisfy the installment due. Historically,the Company has not called upon these
reserves.  The  aggregate balance  f  restricted  cash  in such  accounts was
$1,118,446 and $1,000,466 on June 30, 1999 and June 30, 1998 respectively.

      Total Senior Debt availability was approximately $200 million at June 30,
1999, of which approximately $163.3 million had been drawn down as of such date.
Additionally  the Senior Debt Lender has  verbally informed the Company that it
will not deem approximately $14.3 million of Senior Debt that it had syndicated
to other  banks as of such  date as  outstanding  or  purposes  of  determining
availability  under of Senior Debt. As a result, the Company has  approximately
$51.0 million  available to purchase  additional portfolios of notes receivable
and OREO.

        The Company's Senior debt Lender has provided  Tribeca with a warehouse
line of credit of $5  million. At June  30,1999,  Tribeca  had drawn down $ 2.7
million on the line.



      12%  Debentures. In connection  with the  acquisition of a loan portfolio
during  1994,  the Company  offered  to  investors   $750,000  of  subordinated
debentures  ("12%  Debentures"). As of June 30,  1999 and  December  31,  1998,
$88,177 and $176,250 respectively,of these debentures were outstanding. The 12%
Debentures bear  interest  at the rate of 12% per annum  payable  in  quarterly
installments.  The principal is to be repaid over four years in sixteen  equal
installments  of $44,062 that commenced  March 31, 1996. The 12% Debentures are
secured by a lien on the Company's interest in certain notes receivable and are
subordinated to the Senior Debt encumbering the loan portfolio.
<PAGE>

      Harrison  First  Corporation  12%  Debentures.  In  connection  with  the
acquisition  of a loan portfolio during 1995, the Company offered to investors
$800,000 of subordinated debentures of which $555,000 were purchased.As of June
30, 1999 and December 31, 1998,  $377,400 and $421,800, respectively,  of these
debentures  were  outstanding. The Harrison 1st 12% Debentures bear interest at
the rate of 12% per annum payable in quarterly installments.The principal is to
be repaid over three years in ten equal quarterly installments of $22,200 which
payments commenced on September 30, 1997 with the remaining  balloon payment of
$333,000 due June 30, 2000.  The Harrison 1st 12%  Debentures  are secured by a
lien on the Company's interest in certain notes receivable and are subordinated
to the  Senior  Debt encumbering  the  loan  portfolio.  The  Company  plans to
refinance this debt before it becomes due.

      OREO Line of Credit. he Company has a line of credit with the Senior Debt
Lender  permitting it to borrow a maximum of approximately $1,500,000 at a rate
equal  to such  lender's  prime  rate  plus two  percent per  annum.  Principal
repayment of the lines is due six months from the date of each cash advance and
interest is payable monthly.  The total amounts outstanding  under the lines of
credit as of June 30, 1999 and December 31, 1998, were  $861,068 and  $645,415,
respectively.Advances made under the line of credit were used to satisfy senior
lien positions and fund capital improvements in connection with foreclosures of
certain  real estate  loans  financed by the  Company. Management believes the
ultimate sale of these properties will satisfy the related outstanding lines of
credit and accrued  interest, as well as surpass the  collectible  value of the
original  secured  notes  receivable.

<PAGE>

                       Part II Other Information

Item 1.  Legal Proceedings

      Asset Purchase Agreement Dispute. On August 9, 1997 the Company commenced
a civil action in the United States District Court for the Southern District of
New York against Preferred Credit  Corporation  ("PCC") and certain individuals
alleging fraud, breach of contract,and unjust enrichment in connection with the
purchase by the Company of $3.7 million in face value of notes receivable  from
PCC for $1.8  million.  The Company is seeking  recession of the asset purchase
agreement or damages incurred concerning the purchase.

      Although the Company  conducted  its own review of each loan file, it has
come to believe since the closing of the acquisition  that certain  information
was  intentionally  omitted  or  removed from  such  files  or kept in  another
repository  of files  which was not made available  to the Company and that PCC
intentionally and materially misrepresented the status and quality of the notes
receivable included in the portfolio. Although its estimate will continue to be
refined as the purchased  portfolio is seasoned, the Company currently believes
that as much as  approximately  90% of the face value of the  portfolio  may be
uncollectable, due to debt or  bankruptcies, in certain  instances prior to the
execution of the Asset Purchase Agreement, or senior credit foreclosures of the
underlying collateral.

    On November 12, 1997 PCC filed a motion to dismiss in the Company's
Amended Complaint and the Company responded to the motion todismiss on December
1997. On May 8, 1998, the United States District Court dismissed the Company's
Amended Complaint, with leave to amend. On September 5, 1998, FCMC filed its
Second Amended Complaint alleging claims based on fraud and breach of contract.
By a ruling dated September 22, 1998, the court dismissed one of the Company's
fraud claims against PCC and all of the Company's claims against the individual
defendants and declined to dismiss the Company's remaining claims against PCC
based on fraud and breach of contract. On October 22, 1998, PCC filed an answer
and counterclaim alleging a breach of the purchase agreement and seeking its
cost and fees incurred in connection with the proceeding. It is currently
anticipated that trial in this matter will occur in the fourth quarter of 1999.

    Letter Agreement Dispute. On November 17, 1997 K Mortgage Corporation
("K") filed a civil action in the United States District Court for the Southern
District Court of New York against the Company, Tribeca, and Thomas J. Axon
alleging breach of contract, fraud, conversion and unjust enrichment in
connection with a May 9, 1997 letter agreement (the "Letter Agreement")pursuant
to which Tribeca was to purchase certain assets of K and retain three
principals of K as paid consultants and employ a fourth, Jim Ragan ("Ragan").
In the suit Kseeks to recover for damages of $10 million for the alleged
failure of the Company to make certain payments to third parties, provide Ragan
with an employment agreement and provide the three other principals of K with
consulting contracts pursuant to the terms of the Letter Agreement.
<PAGE>

     On December 22, 1997, the Company, Tribeca and Mr. Axon filed an answer
and counterclaim vigorously denying the allegations of the complaint. In
addition, Tribeca filed a counterclaim alleging fraud and breach of contract
against K. In the fourth quarter of 1998, K voluntary dismissed all claims
against Mr. Axon personally. During January 1999, the United States District
Court struck Plaintiff's jury demand and dismissed K's claims based on fraud,
unjust enrichment and conversion. Trial on the remaining claims was conducted
in April and May of 1999. Following the conclusion of K's case in chief, the
court dismissed K's claims against the Company leaving open the remaining claims
against Tribeca. The matter is currently under advisement before the Court with
a decision expected in the fourth quarter of 1999.

     Legal Fee Dispute. On October 28, 1997 Rosen, Dainow & Jacobs ("Rosen")
filed a civil action against the Company in the Supreme Court of the State of
New York, County of New York alleging failure by the Company to pay legal fees
allegedly due Rosen. Rosen, now dissolved, had represented the Company in a
federal trademark action, which is no longer pended. Rosen withdrew from
representation of the Company when James Jacobs, the lead attorney for the
Company in the trademark action, joined a firm that was representing the
Company's adversary in other matters. The complaint seeks $145,000 in damages.
Rosen's motion for summary judgement was denied by the court. The Company plans
to continue its vigorous defense of this action. It is currently anticipated
that trial in this matter may occur during the first half of 2000.

    Other Legal Actions. Since July, 1991, the Company has been a plaintiff in
various actions ("Miramar Litigation") and party to settlements,with the former
directors and officers of Miramar Resources, Inc. ("Miramar"), a company which
the Company merged with in 1994, based upon allegations relating to certain
premerger events. Information regarding the Miramar Litigation, as well as
certain settlements (the "Schultz Settlements"), and the legal status of the
Company's collection efforts is incorporated herein by reference to "Item 3.
Legal Proceedings" included in the Company's Form 10-KSB for the year ended
December 31, 1994, filed with the SEC on March 31, 1995 and included in the
Company's10-KSB for the year ended December 31, 1996, filed with the SEC on
March 31, 1997.

     During 1997 the Company initiated efforts to foreclose on its Deed of
Trust on a 4,000-acre ranch owned by the parties to the original Shultz
Settlement. A judicial foreclosure has been placed on the Court's calendar for
hearing in the fourth quarter of 1999. The Company is a defendant in related
matters in which the same parties are seeking quiet titleto the above mentioned
ranch and thereby deny enforceability of the Deed of Trust in favor of the
Company. The Company will vigorously defend its position.



<PAGE>




Item 2.  Changes in Securities
            None

Item 3.  Defaults Upon Senior Securities
            None

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

     On May 26, 1999 at the Company's annual meeting the  shareholders voted to
elect the  following  persons as Directors  to the  Company  expiring  upon the
election and  qualification of their  successors  at the annual  meeting of the
Company in the year 2002,and to ratify the appointment of Deloitte & Touche LLP
as the Company's independent public auditors for the fiscal year ended December
31,1999.

Director            For        Against       Abstain    Not Voting    Total


Michael Bertash   5,454,146      0            10,644      452,737   5,917,527

Allan R. Lyons    5,454,146      0            10,644      452,737   5,917,527

William Sullivan  5,454,146      0            10,644      452,737   5,917,527


Independent Public Auditors   For    Against  Abstain      Not Voting    Total


Deloitte &Touche LLP      5,464,130     10      650         452,737  5,917,527



Item 5.  Other Information
            None

Item 6.  Exhibits and Reports on form 8-K

                         None
                                  EXHIBIT TABLE
     Exhibit
     No.      Description
     3(a)     Restated Certificate of Incorporation. Previously filed with, and
              incorporated  herein by reference to, the Company's 10-KSB, filed
              with the Commission on December 31, 1994.
     (b)      Bylaws of the Company.  Previously  filed with, and  incorporated
              herein by reference  to,the Company's  Registration  Statement on
              Form S-4, No. 33-81948, filed with the Commission on November 24,
              1994.
     4(a)     15% Convertible Subordinate Debentures.Previously filed with, and
              incorporated  herein by reference to, he  Company's  Registration
              Statement on Form S-4, No. 33-81948, filed with the Commission on
              November 24, 1994.
     (b)      Warrants   associated   with   principal  repayment  of  the  15%
              Convertible  Subordinated  Debentures. Previously filed with, the
              Company's Registration Statement on Form S-4, No. 33-81948, filed
              with the Commission on November 24, 1994.

     10(d)    Employment  Agreement dated December 4, 1996, between the Company
              and Joseph Caiazzo.Previously filed with, and incorporated herein
              by  reference  to, the  Company's Form  10K-SB,  filed  with the
              Commission on March 31,1997.
     10(e)    Agreement dated March 29, 1997 between the Company and the
              Citizens Banking Company. Previously filed.
              Loan and Real Estate  Purchase  Agreement dated September 17, 998
     10(f)    by and among Franklin credit Management  Corporation and HomeGold
              Financial  Inc. f/k/a Emergent  Mortgage  Corp. Previously filed
              with, and incorporated herein by reference to, the Company's Form
              8K filed with the Commission on September 30,1998.
     10(g)    Form of Subscription Agreement and Investor Representation, dated
              as  of   September  8,  1998  between  the  Company  and  certain
              subscribers. Previously filed.
     10(h)    Loan  Purchase  Agreement  dated  December 31, 1998  between the
              Company and Thomas Axon,  corporate  General  Partner. Previously
              filed with, and incorporated herein by reference to, theCompany's
              Form 10K-SB, filed with the Commission on April 16,1999.
     10(i)    Promissory  Note  between  Thomas  J. Axon and the Company  dated
              December 31, 1998. Filed with the Commission on December  31,1998.
              Previously  filed with, and incorporated  herein by reference to,
              the  Company's  Form 10K-SB, filed with the  Commission  on April
              16,1999.

     11       Computation of earnings per share. Filed here with.


<PAGE>



                                         SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act,the registrant
caused this report to be signed on its behalf by the undersigned,thereunto duly
authorized.

August 11, 1999                     FRANKLIN CREDIT MANAGEMENT
                                    CORPORATION



                                By:         THOMAS J. AXON
                                Thomas J. Axon
                                President and Chief Executive Officer


      In accordance  with the Exchange Act, this reporthas been signed below by
the following  persons on behalf of the registrant and in the capacities and on
the dates indicated.

Signature               Title                               Date

THOMAS J. AXON          President, Chief Executive Officer  August 11,1999
Thomas J. Axon          and Director
(Principal executive officer)

PETER SPIELBERGER       Executive Vice President and        August 11,1999
Peter Spielberger       Chief Financial Officer
(Principal financial and accounting officer)

JOSEPH CAIAZZO          Vice President, Chief Operating     August 11,1999
Joseph Caiazzo          Officer and Director
(Secretary)


<PAGE>


Exhibit 11.

Computation of earnings per share second quarter 1999.


                              No. of Shares   Weight

   09/30/98 Common stock           5,916,527
                             ----------------   25%
                                   5,916,527             1,479,132

   12/31/98 Common stock
                                   5,916,527
                             ----------------   25%
                                   5,916,527             1,479,132

   03/31/99 Common stock
                                   5,916,527
                             ----------------   25%
                                                         1,479,132
                                   5,916,527

   06/30/99 Common stock
                                   5,916,527
                             ----------------   25%      1,479,132



            Weighted   average   number   of             5,916,527
            shares

Earnings per Common share:
            Net Income              $461,179              $   0.08



<PAGE>


Exhibit 11.

Computation of earnings per share second quarter 1998.


                              No. of Shares   Weight

   09/30/97 Common stock           5,516,527
                             ----------------  25%       1,379,132
                                   5,516,527

   12/31/97 Common stock
                                   5,516,527
                             ----------------  25%

                                   5,516,527             1,379,132

   03/31/98 Common stock
                                   5,516,527
                             ----------------  25%       1,379,132
                                   5,516,527


   06/30/98 Common stock
                                   5,516,527
                             ----------------  25%       1,379,132



            Weighted   average   number   of             5,516,527
            shares

Earnings per Common share:
            Net Income          $(1,303,904)            $   (0.24)

<PAGE>