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 September 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 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)


      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 November 12, 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

                                    September 30, 1999


                                     C O N T E N T S


PART I.  FINANCIAL INFORMATION                                           Page

Item 1.       Financial Statements

Consolidated Balance Sheets September 30, 1999 (unaudited) and
December 31, 1998                                                            3

Consolidated Statements of Operations(unaudited) for the three months and
nine  Months ended September 30, 1999 and 1998                               4

Consolidated Statements of Stockholders' Equity(unaudited)September 30 1999  5
and the year ended December 31,1998


Consolidated Statements of Cash Flows (unaudited) for the nine months
ended September 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                                               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                                   21

SIGNATURES                                                                  22

<PAGE>
<TABLE>
<CAPTION>



CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
-------------------------------------------------------------------------------

<S>                                               <C>              <C>
                                              30-Sept-99        31-Dec-98
                                              -------------     ------------
ASSETS
CASH AND CASH EQUIVALENTS                       $ 6,759,656      $ 5,119,906
RESTRICTED CASH                                   1,298,446        1,103,446

NOTES RECEIVABLE:
    Principal                                    200,490,538      158,730,622
    Joint venture participation                      (60,210)        (301,990)
    Purchase discount                            (19,163,138)     (20,435,067)
    Allowance for loan losses                    (21,457,446)     (22,168,345)
                                                -------------     ------------
      Net notes receivable ...................    159,809,744      115,825,220

LOANS HELD FOR SALE ..........................      2,750,504        5,699,577
ACCRUED INTEREST RECEIVABLE ..................      2,397,843        1,924,601
OTHER REAL ESTATE OWNED ......................      9,360,854       10,357,181
OTHER RECEIVABLES ...........................       1,403,184        1,231,667
DEFERRED TAX ASSET ...........................      1,842,932        1,842,932
OTHER ASSETS .................................      1,189,763        1,453,158
BUILDING, FURNITURE AND FIXTURES- Net ........        900,805          751,512
DEFERRED FINANCING COSTS .....................      1,968,924        1,582,227
                                                  -----------      -----------

TOTAL ASSETS                                       $189,682,655   $ 146,891,427
                                                   =============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
 ACCOUNTS PAYABLE AND ACCRUED EXPENSES              2,645,600        2,946,071
 LINES OF CREDIT                                    2,896,933        6,197,803
 NOTES PAYABLE                                    178,538,689      132,227,257
 203(K) REHABILITATION ESCROWS PAYABLE                 44,001           72,386
 SUBORDINATED DEBENTURES                              399,315          598,050
 NOTES PAYABLE, AFFILIATES AND STOCKHOLDERS           154,706          181,129
 DEFERRED TAX LIABILITY                             1,922,991        1,922,991
                                                 -------------     ------------
TOTAL LIABILITIES                                 186,602,235      144,145,687
                                                 -------------     ------------



STOCKHOLDERS' EQUITY
    Common  stock, $.01  par  value, 10,000,000
    authorized
    shares;  issued  and  outstanding  1999  and
    1998: 5,916,527                                     59,167           59,167
    Additional paid-in capital                       6,985,968        6,985,968
    Accumulated deficit                             (3,964,715)      (4,299,395)
                                                 -------------     ------------
      Total stockholders' equity                     3,080,420        2,745,740
                                                 -------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $189,682,655 $    146,891,427
                                                   =============   ============
<FN>

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


CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
-------------------------------------------------------------------------------
                             Three Months Ended          Nine Months Ended
                           30-Sept-99    30-Sept-98    30-Sept-99    30-Sept-98
                           -----------   -----------   -----------    ---------
<S>                             <C>          <C>            <C>           <C>

-
REVENUES: Int Income        3,932,298     2,435,470    10,695,291     5,726,498
 Purchase discount earned   1,201,767     1,025,767     3,452,259     3,373,408
 Gain on sale of portfolios    20,609       815,503       649,630       815,503
 Gain on sale of originated    32,220       161,417       130,148       709,699
 loans
 Gain on sale of other real    46,884       154,897       189,014         5,222
 estate owned
 Rental Income                150,960       172,698       611,505       583,062
 Other                        305,514       218,123       503,765       636,787
                           -----------   ----------   -----------   -----------
                           5,690,252     4,983,875    16,231,612     11,850,179
                          -----------   -----------   -----------    ----------

OPERATING EXPENSES:
Interest expense           3,755,322     2,647,779     9,673,214     7,207,323
Collection, general and    1,866,335     2,009,105     5,701,784     5,401,818
administrative
Provision for loan losses     25,137        23,436        25,137        54,827
Amortization of deferred     120,843        85,779       378,304       223,541
financing costs
Depreciation                  49,114        29,960       118,493        78,758
                         -----------   -----------   -----------    ----------
                           5,816,751     4,796,059    15,896,932     12,966,267
                         -----------   -----------   -----------    ----------

   (LOSS) INCOME          (126,499)       187,815       334,680     (1,116,088)
                         -----------   -----------   -----------    ----------


NET  ( LOSS) INCOME       (126,499)       187,815       334,680     (1,116,088)
                        ===========   ===========   ===========    ==========

 Basic                     (0.02)          0.03          0.06        (0.20)
 Dilutive                  (0.02)          0.03          0.06        (0.20)
                        ===========   ===========   ===========    ==========

WEIGHTED AVERAGE NUMBER OF SHARES

 OUTSTANDING              5,916,527     5,540,637     5,916,527     5,540,637
                        ===========   ===========   ===========    ==========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>


<PAGE>
<TABLE>


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Nine months ended SEPTEMBER 30, 1999 and December 31, 1998
------------------------------------------------------------------------------
                                       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, Dece 31, 1998    5,916,527  59,167     6,985,968   (4,299,395) $2,745,740
                     ---------------------------------------------------------

Net Income                                                 334,680     334,680

                      --------------------------------------------------------
Bal, Sept 30, 1999    5,916,527  59,167     6,985,968   (3,964,715)  3,080,420

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


<PAGE>
<TABLE>


CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
-------------------------------------------------------------------------------
                                          30-Sept-99      30-Sept-98
<S>                                           <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                          334,680      (1,116,088)
  Adjustments   to  reconcile   net
income (loss) to
  Net   cash   used  in   operating
  activities:
   Depreciation                              118,493        78,758
   Amortization                              378,304       223,541
   Purchase discount earned               (3,452,259)   (3,373,408)
   Gain on sale of OREO                     (189,014)     (820,503)
   Provision for loan loss                    25,137        54,827
  (Increase) decrease in:
   Accrued interest receivable             (473,242)      (833,176)
   Foreclosures on real estate            (3,192,465)   (3,715,252)
   Loans held for sale                     2,949,073      (856,459)
   Other receivables                       (171,517)    (6,414,526)
   Other current assets                      263,395      (826,344)
  Increase(decrease) in:
   Accounts   payable  and  accrued        (300,471)       474,259
   expenses
   203(k) rehabilitation escrow             (28,385)    (2,726,954)
   Notes  payable,  affiliates  and         (26,423)       102,710
   stockholders
                                          -----------     ---------
  Net   cash   used  in   operating       (3,764,694)  (19,748,837)
  activities                              -----------     ---------

CASH    FLOWS    FROM     INVESTING
ACTIVITIES
   Additional capital contributed                  0       500,000
   Acquisition and loan fees               (762,942)      (692,472)
   Acquisition of notes receivable        (72,584,546  (54,512,186)
   Acquisition of REO                              0      (271,879)
   Proceeds from sale of REO               4,913,878    12,415,936
   Foreclosures on real estate               999,232       469,018
   Reclassification     of    notes        3,571,690     2,452,472
   receivable for foreclosures
   Loans originated                       (1,068,675)     (575,223)
   Acquisition   of   furniture   &        (233,337)      (43,705)
   equipment
   Participation interest                  (262,824)      (36,951)
   Principal  collection  on  notes       28,315,141    14,441,481
   receivable
  Increase in restricted cash              (195,000)      (59,424)
                                          -----------     ---------
  Net  cash   used)  in   investing       (37,407,383)  (25,912,933)
  activities                              -----------     ---------

CASH  FLOWS FROM FINANCING
ACTIVITIES:
   Payments  on  debenture  notes          (198,735)      (198,788)
   payable
   Payments on line of credit             (4,973,279)     (749,078)
   Proceeds from line of credit            1,672,409      4,365,046
   Proceeds from notes payable            74,398,071     56,010,353
   Payments on notes payable              (28,086,639)  (12,580,528)
                                          -----------     ---------
  Net cash  provided  by  financing       42,811,827     46,847,005
  activities                             -----------     ---------

NET INCREASE IN CASH                       1,639,750      1,185,235

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

CASH AND CASH EQUIVALENTS, ENDED           6,759,656      3,969,155
                                          ===========     =========
See notes to consolidated financial statements
</TABLE>

<PAGE>





                                         Page 25

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 - he 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 the Companywill be unable to collect
allcontractual 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's 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 discountis 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 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 month 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 the face of the income statement for all entities with
complex capital structures and the restatement 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.

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 Receivables
        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 notes  receivable portfolio is
        estimated  by  discounting  the  uture  cash flows  using the  interest
        method.  The carrying amounts of the notes receivable  approximate fair
        value.

    c.  Short-Term  Borrowings - The carrying  amounts of the line ofcredit 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.The 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 busines  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 othe  comprehensive  income during the three months ended September
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 ofderivatives 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 material 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 elsewhere in this Form10-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 status of relations between the Company and its Senior
Debt Lender, the status of relations between the Company and its sources for
loan purchases, the success of the Company in purchasing additional appropriate
loans, unanticipated difficulties in collections under loans in the Company's
portfolio 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 nine months ended  September 30,
1999, the Company purchased 2,130 loans, in twenty portfolio's consisting
primarily of first and second mortgages, with an aggregate face value of $78.8
million, at an aggregate purchase price of $72.6 million or 92% of the face
value, and no OREO properties. During the nine months ended September 30, 1998,
the Company purchased 3,325 loans and OREO properties in nine portfolios with a
aggregate face value of $63.2 million at an aggregate purchase price of $54.2
million or 85% of aggregate face value, and $235,000 in 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. In March 1999, the Company changed its
strategy and has since 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 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, 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 the remainder of 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 to 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 Company's database.
Tribeca is currently licensed as a mortgage banker in Connecticut, District of
Columbia, Florida, Georgia, Kentucky, Maryland, Missouri, New York, 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.

     During the nine months  ended  September  30, 1999 Tribeca  originated  13
loans with an aggregateface value of $1.1 million in mortgages, compared to 235
loans and $19.7 million in mortgages during the nine months ended September 30,
1998. During the nine months ended September 30, 1999, Tribeca incurred an
operating loss of $400,000 compared with an operating loss of $900,000
during the nine months ended September 30, 1998. This decrease in loss and
originations reflected a restructuring period during which management changed
strategies to focus Tribeca on refinancing the Company's existing customer base.
As of September 30, 1999, Tribeca had approximately $2.8 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 September 30,1999 and September 30,
1998 were 8.9% and 9.5%, respectively.As of September 30, 1999, the Company had
sixty-eight loans outstanding with an aggregate principal balance of $178.2
million. Additionally the Company has lines of credit with the Senior Debt
Lender, which had an outstanding balance of $2.8 million at September 30, 1999.
The increase in the prime rate from 7.75% to 8.00%, on July 8, 1999 and on
August 26, 1999 from 8.00% to 8.25% increased the benchmark rate for the
interest on Senior Debt used to fund loan portfolio acquisitions,which resulted
in decreased net income during the current period.

         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, 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 September 30, 1999 and 1998 was immaterial.

Year 2000 Compliance.

     The Company believes it has identified all of its significant applications
which required modification to ensure Year 2000 compliance. All of the Company's
applications  are provided by outside vendors who have provided the Company with
appropriate  certification  that they have modified and tested their  respective
applications  and they are Year 2000  compliant.  Additionally  the Company has
engaged the services of an outside vendor to test the Company's systems for both
hardware  and  software  Year 2000  compliance.  This vendor has  completed  the
testing, corrected any  deficiencies, and has certified the compliance of the
Company, as well as reviewed the compliance statements of the Company's outside
application vendors. In addition, the Company has prepared contingency plans to
deal with any unforeseen  occurrences related to Year 2000. It is the Company's
expectation  that it will  make the  transition  to the Year  2000  without any
significant impact.



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

      Total revenue,  which is comprised of interest income, purchase  discount
earned,  gain on sale of portfolios,  gain on sale of originated loans, gain on
sale of OREO, rental income and other income, increased by $706,377 or 14%,
to $5,690,252 during the three months ended  September  30, 1999,  from
$4,983,875  during  the three  months  ended  September 30, 1998.Total  revenue
(excluding  gain on sales of loans,  OREO and originated  loans)  for the three
months ended  September 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 3.1% and 3.6%, respectively.  This  decrease  reflected
acquisitions of notes receivable during the later part of the three months
ended September 30, 1999, which only began to realize income in subsequent
periods.

     Interest income on notes receivable increased $1,496,828 or 61%, to
$3,932,298 during the three months ended September 30, 1999 from $ 2,435,470
during the three months ended September 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. his increase resulted from the acquisition
of $137.0 million of performing loans with a weighted average interest rate of
12% between July 1998 and September 1999, which was partially offset by loan
sales, pre-payments and principal collections during the same period.

      Purchase discount earned increased $176,244 or 17%,to $1,201,767 during
the three months ended September 30, 1999 from $1,025,523 during the three
months ended September 30, 1998. This increase reflected the growth in the
Company's portfolio.

      Gain on sale of portfolios  decreased $794,894 to an  immaterial  amount
during the three months ended September 30, 1999 from $815,503 during the three
months ended September 30, 1998. The Company did not consummate bulk sales of
notes during this period.

     Gain on sale of notes originated by Tribeca  decreased  $129,197 or 80% to
$32,220 during the three months ended September 30, 1999 from $ 161,417 during
the three months ended September 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 decreased $108,013 or 70% to $46,884 during the three
months ended September 30, 1999 from $154,897 during the three months ended
September 30, 1998. This decrease resulted primarily from the sale of certain
lower quality properties at a loss during the three months ended September 30,
1999 as compared to those sold during the three months ended September 30, 1998.
The Company sold 32 and 23 OREO properties during the three months ended
September 30, 1999 and September 30, 1998.

     Rental  income  decreased  $ 21,738 or 13% to  $150,960  during  the three
months ended September 30,1999 from $172,698 compared to the three months ended
September 30, 1998. This decrease reflected a decrease in the number of
properties rented during the three months ended September 30, 1999, as compared
to the three months ended September 30, 1998, and the write-off of accrued
rental income as a result of the eviction of certain tenants.
 .
     Other income increased $87,147 or 40%, to $305,514 during the three months
ended September 30, 1999 from $218,000  during the three months ended September
30, 1998. This  increase  resulted  primarily  from the  retirement of the last
remaining joint venture participation of other parties with the Company.

     Total  operating  expenses  increased  $1,020,691 or 21% to $5,816,751
during the three months ended September 30, 1999 from $4,796,060 during the
three months ended September 30, 1998. Total operating expenses is comprised of
interest expense, collection, general and administrative expenses, provisions
for loan losses, amortization of deferred financing costs and depreciation
expense.

     Interest expense increased $1,107,543 or 42%, to $3,755,322 during the
three months ended September 30, 999, from $2,647,779 during the three months
ended September 30, 1998. This increase resulted primarily from the increase in
Senior Debt reflecting the acquisition of notes receivables and the increase in
the prime rate. Total debt increased by $42.8 million or 31%, to $182.0 million
as of September 30, 1999 from $139.2 million as of September 30, 1998. Total
debt consists principally of Senior Debt, and also includes debentures, and
lines of credit and loans from affiliates.

      Collection, general and administrative expenses decreased $142,771 or 7%
to $1,866,335 during the three  months ended  September  30, 1999 from
$2,009,106 during the three months ended September 30, 1998.Collection, general
and administrative  expense consists primarily of personnel expense,  and other
collection, general and administrative expenses including, REO related expense,
litigation expense, and miscellaneous collection expense.

       Personnel  expenses  decreased  $220,191 or 22% to  $767,253  during the
three months ended September 30, 1999 from $987,444 during the three months
ended September 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 $ 77,420 or 7.6% to
$1,099,082 during the three months ended September 30, 1999 from $1,021,662
during the three months ended September 30, 1998, principally due to the growth
of the portfolio.

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

     Amortization  of deferred  financing  costs increased by $35,064 or 41% to
$120,843 during the three months ended September 30, 1999, from $85,779 during
the three months ended September 30, 1998. This increase resulted from the
increase in the portfolio, and increased prepayments during the three months
ended September 30, 1999,which accelerated the amortization of loan origination
fees. On September 30,1999 and September 30, 1998 deferred financing costs as a
percentage of Senior Debt outstanding was 1.10% and 1.17%, respectively.

      Depreciation expense increased $19,154 or 64%,to $49,114 during the three
months  ended  September  30, 1999, from $29,960  during the three months ended
September  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 decreased  $ 314,314 to a loss of  $126,499 during the
three months ended  September 30,1999 from a gain of $187,815  during the three
months ended September 30, 1998.

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

      Net income  decreased by $314,314 to a loss of $126,499  during the three
months ended  September 30,1999 from a gain of $187,815 during the three months
ended September 30, 1998.


Nine months ended September30, 1999compared to Nine months ended
September 30, 1998.

      Total revenue, increased $4,381,433 or 37%, to $16,231,612 during the
nine months ended September 30, 1999, from $11,850,179 during the nine months
ended September 30, 1998. Total revenue (excluding gain on sales of loans, OREO
and originated loans) for the three months ended September 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 8.5% and 8.1%,
respectively.

     Interest  income on notes  receivable  increased  $4,968,793 or 87%, to
$10,695,291 during the nine months ended September 30, 1999 from $5,726,498
during the nine months ended September 30, 1998.This increase resulted from the
acquisition of $137.0 million of performing loans with a weighted average
interest rate of 12%, between July 1998 and September 1999 which was only
partially offset by loan sales, pre-payments and principal collections.

     Purchase  discount earned increased  $78,851 or 2%, to $3,452,259 during
the nine months ended September 30, 1999, from $3,373,408 during the nine
months ended September 30, 1998. This increase reflected the growth in the
Company's portfolio.



      Gain on sale of portfolios decreased $ 165,873 or 20% to $ 649,630 during
the nine months ended September 30, 1999, from $ 815,503 during the nine months
ended 1998. This decrease reflected bulk sales of $4.4 million of notes
receivable during the nine months ended September 30,1999 compared to bulksales
of $6.3 million during the nine months ended September 30, 1998.

     Gain on sale of notes originated by Tribeca  decreased  $579,551 or 82% to
$130,148 during the nine months ended September 30, 1999, from $709,699 during
the nine months ended September 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 $183,792 to $189,014 during the nine months
ended September 30,1999, from $5,222 during the nine months ended
September 30, 1998. This increase reflected an increase in the quality of OREO
properties sold during the period at a profit as compared to the nine months
ended September 30, 1998.The Company sold 79 and 104 OREO properties during the
nine months ended September 30, 1999 and September 30, 1998, respectively.

      Rental income increased  $28,443 or 5% to $611,505 during the nine months
ended September 30, 1999,compared to $ 583,062 during the nine months ended
September 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 nine months ended September 30, 1999, as compared to the nine months ended
September 30, 1998.

     Other  income  decreased  $ 133,022 or 21%,  to  $503,765  during the nine
months ended September 30, 1999 from $ 636,787 during the nine months ended
September 30, 1998. This decrease resulted from the realization of settlement
income from one unusually large note during the nine months ended September 30,
1998, and from a decrease in various loan fees arising from the decrease in
Tribeca's originations,which was partially offset by the retirement of the last
remaining joint venture participation of other parties with the Company during
the nine ended September 30,1999.

     Total operating expenses increased by $2,930,665 or 23%, to $15,896,932
million during the nine months ended September 30, 1999, from $12,966,267
during the nine months ended September 30, 1998.

     Interest expense increased $2,465,891 or 34%, to $9,673,214 during the
nine months ended September 30, 1999 from $7,207,323 during the nine months
ended September 30, 1998. This increase resulted primarily from the increase in
Senior Debt reflecting the acquisition of notes receivable and the increase in
the prime rate. Total debt increased by $42.8 million or 65%, to $182.0 million
as of September 30, 1999 from $139.2 million as of September 30, 1998.

      Collection, general and administrative expenses increased $299,966 or 6%,
to $5,701,784  during the nine  months  ended  September  30,  1999 from
$5,401,818 during the nine months ended September 30, 1998.

   Personnel expenses decreased $150,091 or 6%, to $2,227,204 during the nine
months ended September 30, 1999 from $2,377,295 during the nine months ended
September 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 $ 450,057 this increase reflected
increased litigation expenses in relation to asset recovery,computer consulting
expenses associated with the growth of the portfolio and office expenses due to
 the expansion of the company's corporate office, as well as training expenses
associated with the purchase of a new accounting software package.

      Provisions  for loan losses  decreased $ 29,690 or 54% to $ 25,137 from $
54,827 during the nine months ended September 30,1998 due to a reduction in the
amount of loans written of during the nine months ended September 30, 1999.

      Amortization of deferred  financing  costs  increased $154,763 or 69%, to
$378,304  during the nine months ended  September 30,1999 from $223,541 during
the nine months ended September 30, 1998.This increase resulted from the growth
in the size of the portfolio and, increased  prepayments and collections during
the nine months ended September 30, 1999, hich  accelerated the amortization of
loan origination fees associated with the loans sold or collected.

      Depreciation  expense  increased by $39,735 or 50%,to $118,493 during the
nine months ended  September 30, 1999, rom $78,758 during the nine months ended
September  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 $1,450,768 to a gain of $334,680  during
the nine months ended September 30, 1999 from a loss of $1,116,088 during the
nine months ended September 30, 1998.

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

     Net income increased by $1.4 million to a gain of $334,680 during the nine
months  ended  September 30, 1999 from a loss of $1,116,088  during the nine
months ended September 30, 1998.



Liquidity and Capital Resources

          General. During the nine months ended  September 30, 1999 the Company
purchased 2,130 loans in twenty portfolios with an aggregate face value of$78.7
million at an aggregate purchase price of $72.6 million or 92%of face value and
no OREO properties. During the nine months ended September 30,1998 the Company
purchased eight portfolios with an aggregate face value of $63.2 million at an
aggregate purchase price of $54.2 million or 85% of aggregate face value, and
$235,000 in OREO properties. This increase, measured by purchase price,
reflected the increase in competitiveness of the Company's bids the increase in
bidding opportunities associated with the Company purchasing performing loansas
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 September 30,1999 had a
face value of $200.4 million and included net notes receivable of approximately
$179  million  as  compared  with a face value of $151.1 million  and net notes
receivable of  approximately  $107.7 million as of September 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 nine months ended September 30, 1999, the Company used cash in
the amount of $3.7 million in its operating  activities  primarily for interest
expense, increased infrastructure investment 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 $37.4 million in its
investing activities, primarily reflecting purchases of notes receivable which
purchases were only partially 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 $42.8 million 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
September 30, 1999 over December 31, 1998 of $1.6 million.

     In the  ordinary  course of its  business,  the  Company  accelerates  and
forecloses upon realestate securing non-performing notes receivable included in
its portfolio. As a result of such foreclosures and selective direct purchases
of OREO, at September 30, 1999 and 1998, the Company held OREO recorded on the
financial statements at $9.4 million and $9.3 million, respectively. OREO is
recorded on the financial statements of the Company at the lowerof cost or fair
market value. The Company estimates,based on third party appraisals and broker
price opinions, that the OREO inventory held at September 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 $10.3 million based on market analyses of the individual
properties less the estimated closing costs. There can be no assurance,however,
that such estimate issubstantially 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 itssenior debt
facilities collections on notes receivable and gain on sale of notes and OREO
properties.

      At September 30, 1999, the Company had unrestricted cash,cash equivalents
and marketable securities of $6.7 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
as well as to repay the long term indebtedness of the Company.

Financing Activities

Senior Debt.As of  September  30,  1999, the Company owed an aggregate of$178.2
million to the lender of Senior Debt, under 68 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 of 0%, .5%,
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 will 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 $1.2
million and $1.0 million on September 30, 1999 and September 30, 1998
respectively.

     Total Senior Debt availability was approximately $200 million at September
30, 1999, of which approximately $178.2 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 $8.5 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 $30.3million 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 September 30,1999, Tribeca had drawn down $ 1.9
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 September 30, 1999 and December 31, 1998,
$44,000 and $176,000 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 $44,000 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.

     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
September 30, 1999 and December 31, 1998, $355,000 and $421,000, 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 $22,000 which payments commenced on September 30, 1997 with the remaining
balloon payment of $333,000 due September 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. The Company has a line of credit with the Senior Debt
Lender permitting it to borrow a maximum of approximately$1.5 million 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 September 30,1999 and December 31, 1998, were $900,000 million and
$600,000, 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. 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 in order 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. 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 debtor 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 to dismisson 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, the Company 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 agreementand
seeking its cost and fees incurred in connection with the proceeding. Trial in
this matter is currently scheduled to commence in January of 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
Distric  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 nd retain three principals
of K as paid consultants and employ a fourth, Jim Ragan ("Ragan").In the suit K
seeks 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.

     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. 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.

             Second Asset Purchase  Agreement  Dispute.  On August 26, 1999 the
Company  commenced a civil action in the United  States District  Court for the
Southern  District of New York against  Homegold, Inc., f/k/a Emergent Mortgage
Corp.  ("Homegold")alleging fraud and breach of contract in connection with the
purchase  by the  Company of $269,000  in face value of notes  receivable  from
Homegold for $216,000. On or about October 14, 1999,  Homegold  filed an Answer
generally denying the allegations of the Complaint and a status  conference was
held with the Court on October 15, 1999.The Company plans to vigorously  pursue
this  action. It is currently  anticipated  that trial in this matter may occur
during the second 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 areseeking quiet title to 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.






















      Item 2.  Changes in Securities
            None
Item 3.  Defaults Upon Senior Securities
            None
Item 4.  Submission of Maters to a Vote of Security Holders
                          None

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, 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.
              Loan and Real Estate  Purchase Agreement dated September 17, 1998
10(f)         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.
              Form of Subscription Agreement and Investor Representation, dated
10(g)         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,. 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. 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.

November 12, 1999             FRANKLIN CREDIT MANAGEMENT
                              CORPORATION

                              By: THOMAS   J.  AXON

                             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     November 12, 1999
---------------
Thomas J. Axon       and Director


PETER SPIELBERGER    Executive Vice President and           November 12, 1999
Peter Spielberger    Chief Financial Officer
(Principal Accounting Officer)


JOSEPH CAIAZZO       Vice President, Chief Operating        November 12, 1999
--------------
Joseph Caiazzo Officer and Director
(Secretary)


<PAGE>


Exhibit 11.

Computation of earnings per share third quarter 1999.


                              No. of Shares   Weight

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

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

   06/31/99 Common stock
                                   5,916,527
                             ----------------
                                                   25%   1,479,132
                                   5,916,527
                                                       ------------

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


                                  23,266,108

            Weighted   average   number   of             5,916,527
            shares

Earnings per Common share:
            Net Income              $334,380              $   0.06



<PAGE>



Exhibit 11.

Computation of earnings per share second quarter 1998.


                              No. of Shares   Weight

   12/31/97 Common stock           5,516,527
                             ----------------
                                                   25%   1,379,132
                                   5,516,527

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

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

   09/30/98 Common stock
                                   5,916,527
                             ----------------
                                              weighted   1,403,241
                                   5,516,527
                                                       ------------



            Weighted   average   number   of             5,540,637
            shares

Earnings per Common share:
            Net Income          $(1,116,089)            $   (0.20)

<PAGE>