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 OF 1934
                  For the quarterly period ended June 30, 2000

[ ]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 incorporation or organization)       (I.R.S. Employer identification No.)


                               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, 2000 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, 2000

                                 C O N T E N T S

PART I. FINANCIAL INFORMATION                                           Page
                                                                        ----

Item 1. Financial Statements

 Consolidated Balance Sheets June 30, 2000 (unaudited)                   3
 and December 31, 1999

 Consolidated Statements of Income (unaudited) for the
 three months and six months ended June 30, 2000 and 1999                4

 Consolidated Statements of Stockholders' Equity                         5
 June 30, 2000 (unaudited)

 Consolidated Statements of Cash Flows (unaudited) for the six
 months ended June 30, 2000 and 1999                                     6

 Notes to consolidated Financial Statements                           7-10


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                   11-18

PART II.     OTHER INFORMATION

Item 1.  Legal Proceedings                                           19-20

Item 2.  Changes in Securities                                          21

Item 3.  Defaults Upon Senior Securities                                21

Item 4.  Submission of Matters to a Vote of Security Holders            21

Item 5.  Other Information                                              21

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

SIGNATURES                                                              23

<PAGE>   3

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999

------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                     30-Jun-00                 31-Dec-99
                                 --------------------       ------------------
ASSETS
<S>                                    <C>                      <C>

CASH AND CASH EQUIVALENTS             $   6,075,006                6,015,567
RESTRICTED CASH                           1,225,319                  387,972

NOTES RECEIVABLE:
     Principal                          207,327,192              206,262,651
     Purchase discount                 ( 17,908,594)             (18,449,141)
     Allowance for loan losses         ( 22,471,201)             (22,185,945)
                                 --------------------       ------------------
         Net notes receivable          166,947,397              165,627,565

LOANS HELD FOR SALE                      4,697,520                3,288,568
ACCRUED INTEREST RECEIVABLE              2,366,038                2,425,358
OTHER REAL ESTATE OWNED                  6,360,875                7,699,468
OTHER RECEIVABLES                        1,119,098                2,827,301
DEFERRED TAX ASSET                       3,408,903                3,408,903
OTHER ASSETS                             1,339,795                1,155,097
BUILDING, FURNITURE AND FIXTURES- Net      832,416                  884,903
DEFERRED FINANCING COSTS                 1,979,577                2,016,394
                               --------------------       ------------------

TOTAL ASSETS                          $196,351,944           $  195,737,096
                               ====================       ==================

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

ACCOUNTS PAYABLE AND ACCRUED EXP         2,529,270                3,098,648
FINANCING AGREEMENTS                       828,899                  791,075
NOTES PAYABLE                          186,545,433              185,019,806
203(K)REHABILITATION ESCROWS PAY            18,691                   18,691
SUBORDINATED DEBENTURES                     97,048                  332,976
NOTES PAYABLE,AFFILIATES AND STOCKHLDERS    62,948                  109,350
DEFERRED TAX LIABILITY                   3,488,962                3,488,962
                               --------------------       ------------------
TOTAL LIABILITIES                      193,571,251              192,859,508
                               --------------------       ------------------



STOCKHOLDERS' EQUITY

  Common Stock,$.01 par value
  10,000,000 authorized  shares;  issued and
  outstanding 2000 and 1999:
   5,916,527 ,5,916,527                   59,167                   59,167
   Additional paid-in capital          6,985,968                6,985,968
   Accumulated deficit                (4,264,442)              (4,167,547)
                             --------------------       ------------------
      Total stockholders' equity       2,780,693                2,877,588
                             --------------------       ------------------

TOTAL LIABI STKHLDERS'EQUITY        $196,351,944           $  195,737,096
                             ====================       ==================
</TABLE>

See notes to consolidated financial statements.


<PAGE>  4

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                 Three Months Ended        Six Months Ended
                                 30-Jun-00  30-Jun-99   30-Jun-00    30-Jun-99
                               ----------   ---------- -----------   ----------
<S>                             <C>            <C>        <C>        <C>

REVENUES:

 Interest Income               4,737,847    3,521,575  9,633,548    6,762,993

 Purchase discount earned        904,095    1,290,014  1,885,608    2,250,492
 Gain on sale of portfolios      500,000       142,82    575,756      629,021
 Gain on sale of originated loan  44,874       22,815    101,119       97,928
 Gain on sale of REO              87,608       61,754    174,795      142,130
 Rental Income                   168,001      223,073    355,781      460,545
 Other                           227,331      123,121    441,607      198,251
                              ----------    --------- -----------   ---------
                               6,669,756    5,385,172 13,168,214   10,541,360
                              ----------   ---------- ----------   ----------
OPERATING EXPENSES:
Interest expense              4,366,994    3,106,398   8,787,794    5,917,892
Collection, g &a              1,931,040    1,852,191   3,959,064    3,835,449
Provision for loan losses       156,556            0     171,706            0
Amortization of deferred
financing costs                 159,558      138,440     282,693      257,461
Depreciation                     31,683       44,804      63,852       69,379
                         --------------- ----------- ----------- ------------
                              6,645,831    5,141,833  13,265,109   10,080,181
                         --------------- ----------- ----------- ------------

OPERATING INCOME (LOSS)          23,925     243,339     ( 96,895)     461,179
                         --------------- ----------- -----------   ----------

GAIN (LOSS) INCOME BEFORE
PROVISION FOR INCOME TAXES       23,925     243,339     ( 96,895)     461,179
                        ---------------  ----------  ----------    ----------

BENEFIT (PROVISION)
 FOR INCOME TAXES                    0           0            0             0
                        ---------------  ----------   ---------    ----------

NET INCOME (LOSS)               23,925     243,339     ( 96,895)      461,179
                       ===============    =========   =========    ==========
NETINCOME (LOSS) PER COMMON SHARE:

    Basic                        0.00        0.04        (0.02)          0.08
    Dilutive                     0.00        0.04        (0.02)          0.08
                      ===============     ========    =========       =======
WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING               5,916,527    5,916,527    5,916,527      5,916,527
                      ===============  ===========   ==========    ==========

</TABLE>


<PAGE>    5

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000
------------------------------------------------------------------------------
<TABLE>
<CAPTION>



                           Common Stock      Additional    Retained
                         ----------------     Paid-In      Earnings
                         Shares    Amount     Capital     (Deficit)    Total
-------------------------------------------------------------------------------
<S>                         <C>    <C>       <C>           <C>          <C>

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


     Net Income                                            131,848      131,848

-------------------------------------------------------------------------------
Bal,December 31, 1999  5,916,527 59,167     6,985,968   (4,167,547)  $2,877,588
===============================================================================

Net (Loss)                                                 (96,895)    (96,895)

 ------------------------------------------------------------------------------
Bal, June 30, 2000    5,916,527  59,167    6,985,968    (4,264,442)  2,780,693

===============================================================================
</TABLE>

See notes to consolidated financial statements.


<PAGE>   6

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999

-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                               30-Jun00              30-Jun-99
<S>                                          <C>                     <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                           (96,895)                461,179
  Adjustments to reconcile net(loss)income
  to
   Net cash provided(used)by operating
    Depreciation                                63,852                  69,379
    Amortization                               282,693                 257,461
    Purchase discount earned               ( 1,885,608)            ( 2,250,492)
    Gain on Sale of REO                      ( 174,795)              ( 142,130)
    Provision for loan loss                    171,706                       0
    Deferred tax provision                           0                       0
   (Increase) decrease in:
    Accrued interest receivable                 59,320              (  203,227)
    Foreclosures on real estate                      0              (2,592,856)
    Assets held for sale                    (1,408,952)              2,732,455
    Other receivables                        1,708,203                 242,346
    Other current assets                      (184,698)             (1,170,930)
   Increase (decrease) in:
    Accounts payable and accrued expenses     (569,378)                 70,488
    203(k) rehabilitation escrow                    (0)                 (6,960)
    Due to affiliates                          (46,402)                (11,882)
                                           -------------          -------------
   Net cash(used)by operating
   activities                               (2,080,954)             (2,545,169)
                                           -------------          -------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Distributions                                    0                      0
    Additional capital contributed                   0                      0
    Acquisition and loan fees                 (325,038)              (518,839)
    Acquisition of notes receivable        (23,104,622)           (48,872,731)
    Acquisition of REO                               0                      0
    Proceeds from sale of REO                3,367,479              2,919,112
    Foreclosures on real estate                384,581                267,858
    Reclassification of notes receivable
    for foreclosure                          2,434,312              3,497,480
    Loans originated                        (2,639,466)              (568,825)
    Acquisition of furniture & equipmen        (11,366)              (230,029)
    Prin collection on notes receivable     21,544,337             18,101,810
   (Increase) decrease in restricted cash     (837,347)               (15,000)
                                           -------------          -------------
   Net cash provided (used) by
    investing activities                       812,870            (25,419,164)
                                           -------------          -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payments on debenture notes payable      (235,928)              (132,473)
    Payments on financing agreements       (2,974,751)            (4,196,359)
    Proceeds from financing agreements      3,012,575              1,726,300
    Proceeds from notes payable            23,287,331             49,994,608
    Payments on notes payable             (21,761,704)           (18,639,704)
                                         -------------          -------------
   Net cash provided (used) by
   financing activities                     1,327,523             28,752,372
                                         -------------          -------------

NET INCREASE IN CASH                           59,439                788,039

CASH, BEGINNING OF PERIOD                   6,015,567              5,119,906

CASH, ENDED                                 6,075,006              5,907,945
                                        =============          =============


</TABLE>


<PAGE>   7



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,nonperforming, 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
intercompany 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  no  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 under performing 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 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 the Company will be unable t collect
all contractual principaland 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.

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 the
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  with  a concentration  in the
Northeast.  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 lower of 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.

         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'  pretax  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  incom  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.

         Fair Value of Financial Instruments -Statement of Financial Accounting
Standards  No.  107,  Disclosures About  Fair Value of  Financial  Instruments,
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.  Statement No. 107 excludes certain  financial
instruments  and all  nonfinancial  assets and  liabilities from its disclosure
requirements.Accordingly, the aggregate fair value amounts do not represent the
underlying value of the Company.

         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 cashflows using the interest
            method.  The carrying  amounts of the notes receivable  approximate
            fair value.

      c.    Short-Term Borrowings -The carrying amounts of the financing agree
            ment 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  -Statement of Financial Accounting  Standards No. 131
      ("FAS 131"), Related Information,replaced 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. FAS 131 also requires disclosures about products and
      services,  geographic areas and major  customers. The adoption of FAS 131
      did not affect  results of  operations or the  financial  position of the
      Company but did affect the Company's footnote disclosures (Note 12).

      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 in 2000 and 1999; therefore net income (loss was the
      same as its comprehensive income (loss).

      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 ("FAS 133").
      The Company is required to implement FAS 133 on January 1, 2001.  FAS 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 this  standard
      will have any effecton its results of operations and financial position.

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 purchase of additional loans and the
quality of such 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's portflio 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, 2000,
the Company purchased 1,115 loans in eleven portfolios consisting  primarily of
first and second mortgages, with an aggregate face value of $27.6 million at an
aggregate  purchase price of $23.1 million or 86% of the face value and no OREO
properties, compared with the purchase during the six months ended June 30,1999
of 1,494 loans with an  aggregate face value of $53.3 million at an  aggregate
purchase price of $48.9 million or 92% of aggregate face value.  Acquisition of
these portfolios was fullyfunded 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 increases in the level of interest income during future periods.
Payments  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 rate 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, general and administrative  expenses excluding personnel expenses.
There can be no  assurance  the  Company  will be able to  acquire  any
additional  loans on favorable terms or at all.

         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  to  be   classified  as
non-conforming   borrowers.  Management  believes  that  lower  credit  quality
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 company's
database.  Tribeca  is currently  licensed  as a  mortgage  banker in  Alabama,
California,  Colorado, Connecticut,  District of  Columbia,  Florida,  Georgia,
Kentucky,  Illinois, Maryland,  Massachusetts,  Missouri, New York, New Jersey,
North Carolina,  Oklahoma,South Carolina, and Virginia,  Washington State, West
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.

         During  the six months  ending  June 30, 2000  Tribeca  originated  47
mortgages with an aggregate initial principal amount of $2,639,466, compared to
7 mortgages with an aggregate initial principal amount of $568,825 in mortgages
during the six months ending June 30 1999.During the six months ending June 30,
2000,  Tribeca  incurred an operating loss of $104,290 compared to an operating
loss of $259,671  during the six months  ended June 30, 1999. This  decrease in
loss  reflected  successful  efforts to reduce  core-operating  expenses within
Tribeca during the six months ending June 30, 2000. As of June 30, 2000,Tribeca
had approximately  $4.7 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 increases in the prime rate during 2000, from 8.5%
to 8.75% and 9.0% in February and March  respectively, increased  the benchmark
rate  for the  cost of  funds  on  Senior  Debt  used  to  fund  loan portfolio
acquisitions  directly decreasing net income.The weighted average interest rate
on borrowed funds for the Senior Debt based on the balances as of June 30, 2000
and June 30, 1999 were 9.3% and 8.3%, respectively.  As of June 30,  2000,  the
Company had eighty-eight  loans outstanding with an aggregate principal balance
of  $186.2  million.   Additionally  the Company  with  Tribeca  has  financing
agreements  with the Senior Debt  Lender, which had an  outstanding  balance of
$828,899 at June 30, 2000.

          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  have caused direct
corresponding changes in interest income. Management and its Senior Debt Lender
have  agreed  to a fixed  base rate on Senior Debt of 8.75%,  for the  12-month
period April 1, 2000 thru March 31, 2001. Any  increases, during this period in
the prime rate will not negatively impact the net income of the Company.

         Inflation.  The impact of inflation on the  Company's  operations
during the three months ended June 30, 2000 and 1999 was immaterial.



Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999.

         Total revenue, which is comprised of interest income,purchase discount
earned,  gains  on  bulk  sale of  notes,  gain  on  sale  of  notes receivable
originated,  gain on sale of OREO, rental income and other income, increased by
$1,284,584  or 24%, to $6,669,756  during the three months ended June 30, 2000,
from $5,385,172 during the three months ended June 30, 1999.

         Interest income on notes receivable increased by $1,216,272 or 35%, to
$4,737,847  during the three months ended June 30, 2000 from $3,521,575  during
the three months ended June 30, 1999.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  primarily from the $70.7 million in
high yielding performing notes acquired by the Company during July 1999 through
June 2000, which was only partially offset by collections, prepayments,and loan
sales.

         Purchase  discount earned  decreased  by  $385,919 or 29%, to $904,095
during the three  months  ended June 30, 2000 from $1,290,014  during the three
months ended June 30, 1999. 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 increases in the reserves on older  portfolio's held by
the Company.

         Gain on bulk sale of notes receivable increased by $357,180 or 250% to
$500,000  during the three months ended June 30, 2000 from $ 142,820 during the
three months ended June 30, 1999.  This increase is due primarily from the sale
of one large loan during the three months ending June 30, 2000. 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 increased by $22,059 or 97%
to $44,874  during the three months ended June 30, 2000 from $22,815 during the
three months ended June 30, 1999. This  increase  reflected an increase in note
originations  by Tribeca  during the three  months  ended June 30,  2000, which
created more inventory availablefor sale during the three months ended June 30,
2000 compared to the three months ended June 30, 1999.

         Gain on sale of OREO increased by $25,854 or 42% to $87,608 during the
three months ended June 30,2000 from $61,754 during the three months ended June
30, 1999.  This increase  resulted  primarily  from an increase in value of the
properties  sold, and an increase in the number of OREO's sold during the three
months  ended June 30,2000 as compared to the three months ended June 30, 1999.
The Company  sold 34 and 15 OREO properties  during the three months ended June
30, 2000 and June 30, 1999.

         Rental income decreased by $55,072 or 25% to $168,001 during the three
months ended June 30, 2000,from $223,073 during the three months ended June 30,
1999.  This  decrease  primarily reflected  a decrease  in the number of rental
properties during the three months ended June 30, 2000 as compared to the three
months ended June 30,1999. The Company had 80 and 107 rental  properties during
the three months ended June 30, 2000 and June 30, 1999.

         Other income increased by $104,210 or 85%,to $227,331 during the three
months ended June 30, 2000 from $123,121 during the three months ended June 30,
1999. This increase reflected increases in prepayment penalties,  late charges,
and  modification fees  resulting  from the  increase in size of the  Company's
portfolio and loan fees associated with Tribeca loans sold.

         Total operating  expenses increased by $1,503,998 or 29% to $6,645,831
during the three  months  ended June 30, 2000 from $5,141,833  during the three
months ended June 30, 1999.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 $1,260,596 or 41%, to $4,366,994 during
the three months ended June 30, 2000, from  $3,106,398  during the three months
ended June 30,  1999.  This  increase resulted  primarily  from the increase in
Senior Debt reflecting the acquisition of $70 million in notes  receivables and
increases in our costs of funds due to three increases in the prime rate. Costs
of funds were 9.29% and 8.3%  during the three  months  ended June 30, 2000 and
June 30, 1999. Total debt increased by $19,468,485 or 12%,to $187,534,327 as of
June 30,  2000  from  $168,065,842  as of June 30,  1999. Total  debt  consists
principally  of  Senior  Debt,  and  also  includes  debentures, and  financing
agreements and loans from affiliates.

         Collection,general and administrative expenses increased by $78,849 or
4% to  $1,931,040  during the three months ended June 30, 2000 from  $1,852,191
during  the  three  months  ended  June  30,  1999.  Collection,   general  and
administrative  expense consists primarily of personnel  expense, and all other
collection  expenses  including OREO related expense,  litigation expense,  and
miscellaneous collection expense.

           Personnel  expenses  increased by $266,123 or 39% to $940,434 during
the three months ended June 30, 2000from $674,311 during the three months ended
June 30, 1999.This increase resulted largely from increases in staffing and the
experience  level  of  personnel  in the  Company's  core  business. All  other
collection  expenses  decreased by $187,274 to $990,606 during the three months
ended June 30, 2000 from $1,177,880 during the three months ended June 30,1999.
This decrease  reflected  decreases in core operating  expenses associated with
reductions in legal,  office,  computer consulting and supplies, and collection
expenses  primarily from decreased OREO activity,  negotiated fixed  litigation
expenses and the growth of the  Company's  performing  portfolio, which reduces
collection expenses.

         Provisions for loan loss increased from $0 to$156,556 due primarily to
an excess of losses associated with three portfolios over the estimated reserve
for the three months ended June 30, 2000.

         Amortization of deferred financing costs increased by $21,118 or 15%to
$159,558  during the three months ended June 30, 2000, from $138,440 during the
three months ended June 30, 1999. This  increase  resulted from a payoff of one
senior  debt  note  and  the  realization of the 1%  exit  fee,  and  increased
collections and repayment of the senior debt during the three months ended June
30, 2000 as compared to the three months ended June 30, 1999.

         Depreciation expense decreased by $13,121 or 29%,to $31,683 during the
three  months ended June 30,  2000, from $44,804  during the three months ended
June 30, 1999.

         Operating  income  decreased by $219,414  to $23,925  during the three
months ended June 30, 2000 from $243,339 during the three months ended June 30,
1999.

         During the three months ended June 30, 2000 there was no provision for
income tax due to a loss  carry-forward. During the three months ended June 30,
1999 there was no provision for income taxes due to a loss.

         Net income  decreased  by $219,414 to $23,925  during the three months
ended June 30, 2000 from $243,339 during the three months ended June 30, 1999.

Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999.

         Total revenue,  increased by $2,626,853 or 25%, to $13,168,213  during
the six months ended June 30, 2000,from $10,541,360 during the six months ended
June 30, 1999.

         Interest income on notes receivable  increased by $2,870,555 or 42%,to
$9,633,548 during the six months ended June 30, 2000 from $6,762,993 during the
six months ended June 30, 1999.This increase resulted  primarily from the $70.7
million in high yielding  performing notes  acquired by the Company during July
1999  through  June  2000,  which was only  partially  offset  by  collections,
prepayments, and loan sales.

         Purchase  discount  earned decreased by $364,884 or 16%, to $1,885,608
during the six months ended June 30, 2000 from $2,250,492 during the six months
ended June 30, 1999.  This  decrease  reflected  the growing proportion  of the
Company's portfolio comprised of performing loans purchased atsmaller discounts
than  the  non-performing  high-discount  loans  historically purchased  by the
Company, which results in income being realized as interes rather than purchase
discount, and increases in reserves in maturing portfolios which lower discount
available to be earned during the six months ended June 30, 2000.

         Gain on bulk sale of notes receivable decreased by $53,266 to$ 575,756
or 8% during the six months ended June 30, 2000,  from  $629,021 during the six
months ended 1999.  This decrease reflected a decrease in aggregate  bulk sales
during the six months ended June 30, 2000, which was only  partially  offset by
the greater gain realization on the properties held during the six months ended
June 30,  2000. The Company  sold $1.4  million in sales  during the six months
ended June 30, 2000 and $4.3 million during the six months ended June 30, 1999.

         Gain on sale of notes originated by Tribeca  increased by $3,191 or 3%
to $101,119  during the six from $ 97,928  during the six months ended June 30,
1999.

         Gain on sale of OREO increased  by $32,665 to $174,795  during the six
months ended June 30, 2000,  from $142,130 during the six months ended June 30,
1999.  The  Company  sold 75 OREO properties  during the six months  ended June
30,2000 and 47 OREO  properties during the six months ended June 30, 1999. This
increase  resulted  primarily from an increase in value of the properties sold,
and an increase  in the number of OREO's  sold during the six months ended June
30, 2000 as compared to the six months ended June 30, 1999.

          Rental income decreased by $104,764 or 23% to $355,781 during the six
months ended June 30, 2000, from $460,545  during the six months ended June 30,
1999.  This  decrease  reflected a decrease in the number of rental  properties
during the six months  ended June 30, 2000 as compared to the six months  ended
June 30,1999. The Company had 80 and 107rental properties during the six months
ended June 30, 2000 and June 30, 1999.

         Other income  increased by $243,356 or 123%,to $441,607 during the six
months  ended June 30, 2000 from  $198,251  during thesix months ended June 30,
1999. This increase reflected increases in prepayment penalties,  late charges,
and  modification  fees  resulting  from the  increase in size of the Company's
portfolio and loan fees associated with Tribeca loans sold.

         Total operating expenses increased by $3,184,927 or 32%,to $13,265,108
during  the six months  ended June 30,  2000,  from  $10,080,181 during the six
months ended June 30, 1999.

         Interest expense  increased by $2,869,902 or 48%,to $8,787,794  during
the six months ended June 30, 2000 from  $5,917,89  during the six months ended
June 30, 1999.This increase resulted primarily from the increase in Senior Debt
reflecting the acquisition of $70 million in notes receivables and increases in
costs of funds due to three  increases  in the prime rate.  Costs of funds were
9.29% and 8.3%  during the six months  ended  June 30, 2000 and June 30,  1999.
Total debt increased by $19,468,485 or 12%, to  $187,534,327 as of June 30,2000
from  $168,065,842  as of June  30,  1999.  Total  debt  includes Senior  Debt,
debentures, and financing agreements and loans from affiliates.

         Collection,  general and administrative expenses increased by $123,615
or 3%, to $3,835,449  during the six months ended June 30,2000 from $ 3,959,064
during the six months ended June 30, 1999.

         Personnel  expenses  increased by $378,938 or 26%, to$1,838,889 during
the six months ended June 30, 2000 from  $1,459,951 during the six months ended
June 30, 1999. The increase reflected the staffing and the experience  level of
personnel in the Company's core  business  during the six months ended June 30,
2000. All other collection expenses  decreased by $255,322 or 11% to $2,120,175
during  the six  months ended June 30,  2000 from  $2,375,497  during the three
months ended June 30, 1999.This decrease reflected  decreases in core operating
expenses  associated with reductions in legal, office,  computer consulting and
supplies,  and  collection  expenses  primarily from  decreased  OREO activity,
negotiated fixed litigation expenses and the growth of the Company's performing
portfolio, which reduces collection expenses.

         Provisions for loan losses increased to $171,705 during the six months
ended June 30, 2000 from $0 during the six months ended June 30, 1999. This was
due primarily to an excess of losses  associated with three portfolios over the
estimated reserve during the six months ended June 30, 2000.

         Amortization of deferred financing costs increased by $25,232 or 9%,to
$282,693  during the six months ended June 30,2000 from $257,461 during the six
months ended June 30, 1999. This increase  resulted from a payoff of one senior
debt note and the realization of the 1% exit fee, and increased collections and
repayment  of the  senior  debt  during the six  months  ended June 30, 2000 as
compared to the six months ended June 30, 1999.

         Depreciation  expense decreased by $5,527 or 9%, to $63,852 during six
months  ended June 30, 2000, from $69,379  during the six months ended June 30,
1999.

         Operating  income decreased by $558,074 to a lossof $96,895 during the
six months  ended June 30,  2000 from a gain of  $461,179 during the six months
ended June 30, 1999.

         During the six months ended June 30, 2000 or the six months ended June
30,1999,  there were no provisions for income taxes due to the  operating  loss
carry-forward.

         Net income  decreased  by  $558,074 to loss of $96,895  during the six
months  ended June 30, 2000 from a gain of $461,179 during the six months ended
June 30, 1999.

Liquidity and Capital Resources

          General.  During  the six  months  ended  June 30,  2000 the  Company
purchased 1,115 loans in eleven portfolios with an aggregate face value of$27.6
million at an aggregate purchase price of $23.1 million or 84%of face value and
no OREO  properties.  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
aggregate face value.The Company's portfolio acquisitions have been slower than
anticipated  during the six months ended June 30,2000 due to competitive market
conditions,   with  that  in  mind,  however,  the  pace  of  acquisitions  has
historically increased during the last two-quarters of the year.

         The Company's portfolio of notes receivable at June 30,2000 had a face
value of $207.3 million and  included  net notes  receivable  of  approximately
$166.9 as compared with a face value of $188.3 million and net notes receivable
of  approximately $145.5 million as of June 30, 1999. Net notes  receivable are
stated at the amount of unpaid principal, net of purchase  discount,  allowance
for loan losses. 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 30,2000, the Company used cash in the
amount of$2,080,954 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 provided $812,870 in its investing  activities,
primarily  reflecting purchases of notes receivable which purchases were offset
by principal  collections upon its notes  receivable and proceeds from sales of
OREO.  The amount of cash used in operating and investing activities was funded
by $1,327,523 of net cash provided by financing activities,including primarily,
a net  increase  in Senior  Debt of  $1,525,627  million. The above  activities
resulted in a net  increase in cash at June 30, 2000 over December  31, 1999 of
$59,439.

         In the ordinary  course of its business, the Company  accelerates and
forecloses upon real estate securing nonperforming notes receivable included in
its portfolio. As a result of such  foreclosures and selective direct purchases
of OREO,  at June 30,  2000 and 1999, the  Company  held OREO  recorded  on the
financial  statements at $6.3 million and $10.3 million, respectively.  OREO is
recorded on the financial statementsof 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, 2000,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  $6.9
million. 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 OREO as rental
property  or sells  such  OREO in the ordinary  course of  business  when it is
economically beneficial to do so.

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 senior debt
facilities, collections on notes  receivable and gain on sale of notes and OREO
properties.

         At June 30, 2000, the Company had unrestricted  cash, cash equivalents
and marketable securities of $6.0 million.

         Management  believes that sufficient  cash 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, 2000,  the Company owed an aggregate of
$186.2  million to the Lender of Senior Debt,  under 88 loans.

        The Senior Debt is collateralized by first liens on the respective loan
portfolios for 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 such  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 between 0%,
and 2.00% 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  of  restricted  cash  in such  accounts  was
$1,225,318 and $1,118,446 on June 30, 2000 and June 30, 1999 respectively.

         Total Senior Debt availability was  approximately $250 million at June
30, 2000, of which  approximately $186.2 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 $4 million of Senior Debt that it had syndicated
to other banks as of such  date as  outstanding  for  purposes  of  determining
availability  under of Senior Debt As a result,  the Company has  approximately
$68 million available to purchase additional portfolios of notes receivable and
OREO.

           The  Company's  Senior Debt  Lender  has  provided  Tribeca  with  a
warehouse financing agreementof $2 million. At June 30,1999,  Tribeca had drawn
down $ 488,030 on the line.

         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, 2000 and December 31, 1999, $97,048 and  $332,176,  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 was due to make a
balloon payment to pay off this debt, however $97,048 was refinanced with a few
of the prior debenture  holders, this debt will be repaid over eighteen months.
The remaining balance to debentures holders was paid off with financing
provided
by the Companys Senior Debt Lender.

         OREO Line of Credit. The  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 financing
agreements as of June 30, 2000 and December 31, 1999,were $210,545 and $615,720
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
financing agreements and accrued interest, as well as surpass the collectible
value of the original  secured  notes  receivable.  Management  has reached an
agreement in principal  with its Senior Debt Lender to increase the
availability  under this credit facility to cover additional  properties
foreclosed upon by the Company, which the Company may be  required  to hold as
rental  property to maximize its return.

                            Part II Other Information

Item 1.  Legal Proceedings

Asset Purchase  Agreement  Dispute. On August 19, 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.  Through the Complaint,  the Company sought rescission of
the  asset  purchase  agreement or  damages  incurred  in  connection  with the
purchase.

             By an order dated  September 22, 1999, the Court  dismissed one of
the Company's  fraud claims against PCC and all of the Company's claims against
the  individual  Defendants.  On  October  22, 1998,  PCC filed an  answer  and
counterclaim  alleging a breach of the purchase agreement and seeking its costs
and fees incurred in connection with the proceeding.

                  Trial in this matter was held on the remaining  claims during
January 2000. At the conclusion of the trial,the Court orally ruled in favor of
the Company and against PCC. On February 10, 2000, he Court entered judgment in
favor of the Company and against PCC in the amount of $1.7million plus interest
from  May 7,  1997.  With  interest, the  amount  due  under  the  judgment  is
approximately  $2 million as of February 10, 2000.  The Company is currently in
the  process of attempting  to collect the amount due under the  judgment.  The
Company does not  presently known if PCC has  sufficient  assets to satisfy the
judgment. The Company has collected $ 55,000 towards this receivable as of July
31, 2000.

         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").
K sought to recover  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 principal of K with consulting
contracts pursuant to the terms of the Letter Agreement.

         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. Prior to trial, the  claims  asserted  by K against  Mr.  Axon were
voluntarily dismissed. 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.  On March 6,  2000,  and June 26, 2000 the Court  entered  an  opinion
directing Tribeca to pay $20,000 to one creditor of K and dismissed all further
claims  against  Tribeca. K Mortgage has requested the Court to reconsider its
prior orders, however,the Company believes that the Court is unlikely to modify
its March 6 and June 26, 2000 Orders.

         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 that is no longer pending. 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 judgment was denied by the court. The Company plans
to  continue  its  vigorous  defense  of this  action. Trial in this  matter is
currently scheduled for October 22, 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.  Trial in this matter was held in  November of 1999 and the Company
obtained a judgment of $600,000. In connection with this judgment,  the parties
entered  into a  Settlement Agreement  pursuant  to  which  certain  additional
collateral  was  provided to the  Company to secure the payment of the judgment
amount.

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 24, 2000 at the Company's annual meeting the shareholders  voted to
ratify  the  amendment  and   restatement   of  the  Company's  Certificate  of
Incorporation, to elect seven directors to the Company's Board of Directors,and
to ratify the appointment of Deloitte & Touche LLP as the Company's independent
public auditors for the fiscal year ended December 31,2000.

Amendment and Restatement of Certificate of Incorporation
<TABLE>
<CAPTION>

                              For    Against   Abstain     Not Voting    Total
------------------------------------------------------------------------------
<S>                      <C>          <C>        <C>          <C>      <C>

Amendment               4,197,779   223,670     1,495      1,494,583 5,917,527

                              For    Against   Abstain     Not Voting    Total
Election of Directors   4,198,299         0   224,645      1,494,583 5,917,527

Independent Public Auditors  For     Against   Abstain     Not Voting    Total
-----------------------------------------------------------------------------------------------------------------
Deloitte & Touche LLP   4,197,719   224,215     1,010      1,494,583 5,917,527
</TABLE>

<PAGE>


Item 5.  Other Information
                  None

Item 6.  Exhibits and Reports on form 8-K

                  None
<TABLE>


     (a)

 EXHIBIT TABLE

 Exhibit

 No.  Description
<S>     <C>

  3(a)  Restated  Certificate  of Incorporation.  Previously filed with
        and incorporated  herein by reference to, the Companys  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, the 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.

10(f)  Loan and Real Estate  Purchase Agreement dated September 17, 1998 by
       and among Franklin credit  Management Corporation  and Home Gold
       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, the Company'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.

10(j)  Promissory Note between Steve Leftkowitz, board member, and the  Company
       dated  March 31,  1999.  Filed with the  Commission  on March 30,2000.

10(k)  Loan  Purchase  Agreement  dated March 31, 1999 between the
       Company  and Steve  Leftkowitz, board  member.Previously  filed with and
       incorporated  herein by reference to,the Company's Form 10KSB.Filed with
       the  Commission on March 30, 2000.

11     Computation of earnings per share. Filed here with.
</TABLE>


<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, 2000          FRANKLIN CREDIT MANAGEMENT CORPORATION


                                      By: THOMAS J. AXON
                                          President and Chief Executive Officer

      In accordance  with the Exchange Act, this report has 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 11,2000
---------------                                               -----------------
Thomas J. Axon          and Director
(Principal executive officer)

JOSEPH CAIAZZO          Executive Vice President and Acting   August 11,2000
--------------                                                -----------------
Joseph Caiazzo          Chief Financial Officer,
Secretary               Chief Operating Officer and
                        Director
<PAGE>


Exhibit 11.

Computation of earnings per share second quarter 2000.
<TABLE>
<CAPTION>


                                      No. of Shares    Weight
<S>                                     <C>                         <C>

   09/30/99 Common stock              5,916,527
                               -----------------------   25%         1,479,132
                                      5,916,527

  12/31/99  Common stock              5,916,527
                                -----------------------  25%         1,479,132
                                      5,916,527



 03/31/00 Common stock                5,916,527
                                -----------------------  25%         1,479,132
                                      5,916,527



 06/30/00 Common stock                5,916,527

                                ----------------------  25%          1,479,132
                                      5,916,527



                                     23,266,108

                 Weighted average number of shares                  5,916,527

Earnings per Common share:
                 Net Income             (96,895)                    $   (.02)


</TABLE>


<PAGE>

<TABLE>

Exhibit 11.

Computation of earnings per share second quarter 1999



                                No. of Shares          Weight

<S>                                   <C>                         <C>

        09/30/99 Common stock         5,916,527
                                   --------------
                                      5,916,527         25%          1,479,132


        12/31/99 Common stock         5,916,527         25%          1,479,132
                                   --------------
                                      5,916,527

        03/31/00 Common stock         5,916,527         25%          1,479,132
                                  ----------------
                                      5,916,527


        06/30/00 Common stock         5,916,527         25%          1,479,132
                                    -------------
                                      5,916,527

                                     23,266,108
                 Weighted average number of shares                   5,916,527

Earnings per Common share:
                 Net Income            $461,179                       $   .08

</TABLE>