<PAGE>
FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES


==============================================================================




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


                                    FORM 10-Q


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2004

                         Commission file number 0-17771


                     FRANKLIN CREDIT MANAGEMENT CORPORATION
             (Exact name of Registrant as specified in its charter)


                                    Delaware
         (State or other jurisdiction of incorporation or organization)

                                   75-2243266
                      (I.R.S. Employer identification No.)


                               Six Harrison Street
                            New York, New York 10013
                                 (212) 925-8745
                    (Address of principal executive offices)



        Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .

As of March 31, 2004 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-Q

                                      INDEX

                                 C O N T E N T S


PART I. FINANCIAL INFORMATION                                     Page
Item 1. Interim Financial Statements (unaudited)

        Consolidated Balance Sheets at March 31, 2004
        and December 31,2003                                         3

        Consolidated Statements of Income for the three
        months ended March 31, 2004 and March 31, 2003               4

        Consolidated Statements of Changes in Stockholders'
        Equity for the three months ended March 31, 2004             5

        Consolidated Statement of Cash Flows for the three
        months ended March 31, 2004                6

        Notes to Consolidated Financial Statements                 7-13

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                       14-21

Item 3. Quantitative and Qualitative Disclosure about
        Market Risk                                                  22

Item 4. Controls and Procedures                                      22

PART II.OTHER INFORMATION

Item 1. Legal Proceedings                                            23

Item 2. Changes in Securities and Use of Proceeds                    23

Item 3. Defaults Upon Senior Securities                              23

Item 4. Submission of Matters to a Vote of Security Holders          23

Item 5. Other Information                                            23

Item 6. Exhibits and Reports on Form 8-K                             24

SIGNATURES                                                           25

CERFTIFICATIONS                                                   26-29


<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (Unaudited)
------------------------------------------------------------------------------

<S>     <C>                                        <C>                 <C>
 Assets                                     March 31,2004     December 31,2003

CASH AND CASH EQUIVALENTS                   $ 15,328,894          $ 14,418,876

RESTRICTED CASH                                  428,927              413,443

NOTES RECEIVABLE:
 Principal                                   459,382,163          465,553,870
 Purchase discount                           (26,291,095)         (25,678,165)
 Allowance for loan losses                   (50,789,815)         (46,247,230)
                                            -------------        -------------
  Net notes receivable                       382,301,253          393,628,475

ORIGINATED LOANS HELD FOR SALE                40,271,957           27,372,779

ORIGINATED LOANS HELD FOR INVESTMENT           6,238,882            9,536,669

ACCRUED INTEREST RECEIVABLE                    4,251,059            4,332,419

OTHER REAL ESTATE OWNED                       13,293,284           13,981,665

OTHER RECEIVABLES                              2,827,073            2,893,735

MARKETABLE SECURITIES                            202,071              202,071

DEFERRED TAX ASSET                               482,569              681,398

OTHER ASSETS                                   3,997,414            3,720,163

BUILDING, FURNITURE AND FIXTURES - Net         1,212,811            1,252,711

DEFERRED FINANCING COSTS- Net                  4,185,813            4,298,942
                                           -------------        -------------
TOTAL ASSETS                               $ 475,022,007        $ 476,733,346
                                           =============        =============
LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
 Accounts payable and accrued expenses      $ 4,677,179          $ 4,979,806
 Financing agreements                        29,685,759           23,315,301
 Notes payable                              416,824,117          427,447,844
 Income tax liability:
   Current                                      265,565               -
   Deferred                                   1,856,732            1,311,089
                                            -----------          -----------
      TOTAL LIABILITIES                     453,309,352          457,054,040
                                            -----------          -----------
COMMITMENTS AND CONTENGENCIES

STOCKHOLDERS' EQUITY
 Common stock,$.01 par value, 10,000,000
 authorized shares; issued and
 outstanding: 5,916,527 shares                   59,167               59,167
 Additional paid-in capital                   6,985,968            6,985,968
 Retained earnings                           14,667,520           12,634,171
                                             ----------           ----------
      TOTAL STOCKHOLDERS' EQUITY             21,712,655           19,679,306
                                             ----------           ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY                                    $ 475,022,007        $ 476,733,346
                                          =============        =============

See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
------------------------------------------------------------------------------
<S>                                            <C>                        <C>
                                                Three months ended March 31,
                                                 2004             2003
REVENUES:
 Interest income                           $10,636,341        $ 10,561,251
 Purchase discount earned                    1,341,397             902,903
 Gain on sale of notes receivable              844,902             596,114
 Gain on sale of originated loans
 held for sale                                 892,955             678,390
 Gain on sale of other real estate owned       231,246             303,795
 Rental income                                  12,075              50,461
 Prepayment penalties and other income       1,100,849             846,313
                                            ----------          ----------
                                            15,059,765          13,939,227
                                            ----------          ----------
OPERATING EXPENSES:
 Interest expense                            5,313,075           5,037,121
 Collection, general and administrative      4,446,182           4,107,556
 Provision for loan losses                     895,876             849,594
 Amortization of deferred financing costs      592,901             423,313
 Depreciation                                  113,382             100,298
                                            ----------          -----------
                                            11,361,416          10,517,882
                                            ----------          ----------

INCOME BEFORE PROVISION FOR INCOME TAXES     3,698,349           3,421,345

PROVISION FOR INCOME TAXES                   1,665,000           1,573,800
                                           -----------         -----------

NET INCOME                                 $ 2,033,349         $ 1,847,545
                                           ===========         ===========

NET INCOME PER COMMON SHARE:
  Basic                                         $ 0.34             $ 0.31
                                                ======             ======
  Diluted                                       $ 0.30             $ 0.30
                                                ======             =======
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
Basic                                        5,916,527          5,916,527
                                             =========          =========
Diluted                                      6,690,627          6,243,953
                                             =========          =========

See notes to consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
MARCH 31, 2004 (Unaudited)
------------------------------------------------------------------------------
<S>                 <C>         <C>    <C>          <C>           <C>
                                       Additional
                       Common Stock      Paid-In   Retained
                    -----------------
                    Shares     Amount   Capital    Earnings        Total

------------------------------------------------------------------------------
January 1, 2004   5,916,527   $59,167  $6,985,968  $12,634,171    $19,679,306

 Net income                                          2,033,349      2,033,349

                 -------------------------------------------------------------
March 31, 2004    5,916,527   $59,167  $6,985,968  $14,667,520    $21,712,655

                 =============================================================
                 =============================================================


See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
------------------------------------------------------------------------------
<S>                                               <C>            <C>
                                               Three Months Ended March 31,
                                                   2004             2003

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net Income                                      $ 2,033,349     $ 1,847,545
  Adjustments to reconcile net income to
  net cash (used in) provided by
   Operating activities:
   Gain on sale of notes receivable                  (844,902)       (596,114)
   Gain on sale of other real estate owned           (231,246)       (303,795)
   Depreciation                                         3,382         100,298
   Amortization of deferred financing costs           592,901         423,313
   Origination of mortgage loans held for sale    (33,358,278)    (17,294,052)
   Proceeds from the sale of and principal
   collections on loans held for sale-net of gain  19,746,182      16,663,800
   Purchase discount earned                        (1,341,397)       (902,903)
   Provision for loan losses                          895,876         849,594
   Changes in operating assets and liabilities:
   Accrued interest receivable                         81,360         136,748
   Other receivables                                   66,662         268,160
   Deferred tax asset                                 198,829        (119,674)
   Other assets                                      (277,251)       (322,098)
   Current tax liability                              265,565            -
   Deferred tax liability                             545,643         627,489
   Accounts payable and accrued expenses             (302,627)        243,074
 Net cash (used in) provided by operating         ------------      ----------
 activities                                       (11,815,952)      1,621,385
                                                  ------------      ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  (Increase) decrease in restricted cash              (15,484)        131,218
  Purchase of notes receivable                    (38,432,630)    (56,060,446)
  Principal collections on notes receivable
  and loans held for investment                     44,438,122     29,685,913
  Acquisition and loan fees                           (449,595)      (660,974)
  Proceeds from sale of other real estate owned      4,955,454      4,090,227
  Proceeds from sale of notes receivable             6,556,853      2,835,696
  Purchase of building, furniture and fixtures         (73,481)       (93,044)
 Net cash provided by (used in) investing          ------------   ------------
 activities                                         16,979,239    (20,071,410)
                                                   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes payable                       49,771,473      59,378,948
  Principal payments of notes payable              (60,395,200)    (41,104,207)
  Proceeds from financing agreements                34,052,232      19,405,920
  Payments on financing agreements                 (27,681,774)    (20,890,627)
 Net cash (used in) provided by financing          ------------    ------------
 activities                                         (4,253,269)     16,790,034
                                                   ------------    ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS.               910,018      (1,659,991)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD      14,418,876      10,576,610
                                                  ------------     -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD          $ 15,328,894     $ 8,916,619
                                                  ============     ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash payments for interest                        $ 5,436,345      $ 4,884,683
                                                  ===========      ===========
Cash payments for taxes                             $ 636,800      $ 1,065,985
                                                  ===========      ===========


</TABLE>



<PAGE>

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
------------------------------------------------------------------------------

1. ORGANIZATION AND BUSINESS

   Nature of Business - Franklin Credit Management  Corporation  ("FCMC",  and
   together with its wholly-owned  subsidiaries, the "Company") is a specialty
   consumer finance and asset management company primarily  engaged in the
   acquisition,  origination, servicing and resolution of performing,
   sub-performing  and  non-performing  residential  mortgage loans and
   residential real estate.  The Company  acquires  these  mortgages  from a
   variety of  mortgage  bankers,  banks,  and other  specialty  finance
   companies.  These loans are generally purchased in pools at discounts from
   their aggregate contractual balances,from sellers in the financial services
   industry.  Real estate is acquired  in  foreclosure or otherwise and is
   usually cquired at a discount  relative to the appraised value of the asset.
   The Company  conducts its business from its executive and main office in New
   York City and through its website www.franklincredit.com.

   The Company's wholly-owned  subsidiary, Tribeca Lending Corp.("Tribeca"),
   originates primarily 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.  The majority of first and second mortgages
   originated are on a retail basis through marketing efforts, utilization of
   the FCMC database and the Internet.  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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Basis of Presentation  - The accompanying consolidated financial statements
   are unaudited.  In the opinion of management, all adjustments (which include
   only normal recurring adjustments) necessary to present fairly the financial
   position,  results of operations  and changes in cash flows have been made.
   Certain  information  and  footnote  disclosures  normally  included in
   consolidated  financial  statements prepared in accordance with accounting
   principles generally accepted in the United States of America have been
   condensed or omitted.  These condensed  consolidated  financial statements
   should be read in conjunction with the  consolidated  financial  statements
   and notes thereto  included in the Company's  annual report on Form 10-K
   for the year ended December 31, 2003.  The results of operations for the
   three month period ended March 31, 2004 are not necessarily indicative of
   the operating results for the full year.

   Principles 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.

   The preparation of financial statements in conformity with accounting
   principles  generally accepted in the United States of America  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 revenues and expenses during the reporting  period.  Actual results could
   differ from those estimates.  The most significant estimates of the Company
   are allowance  for loan  losses.  The  Company's estimates  and  assumptions
   primarily  arise from risks and uncertainties  associated with interest rate
   volatility and credit exposure.  Although  management is not currently aware
   of any factors that would  significantly  change its estimates and
   assumptions in the near term,  future changes in market trends and
   conditions may occur which could cause actual results to differ materially.

   Reclassification- Certain prior year quarterly amounts have been
   reclassified to conform with the current year presentation.

   Operating Segments- Statement of Financial  Accounting  Standards ("SFAS")
   No. 131 Disclosures about Segments of an Enterprise and Related Information
   requires companies to report financial and descriptive  information about
   their reportable  operating segments,  including  segment profit or loss,
   certain specific revenue and expense items,and segment assets. The Company
   is currently operating in two business segments: (i) portfolio asset
   acquisition; and (ii) mortgage banking.
<PAGE>

   Earnings per share- Basic  earnings per share is  calculated by dividing net
   income by the weighted average number of shares outstanding  during the year.
   Diluted earnings per share is calculated by dividing net income by the
   weighted average number of shares  outstanding,  including the dilutive
   effect,  if any, of stock options  outstanding,  calculated under the
   treasury stock method.

   Cash and Cash Equivalents - Cash and cash  equivalents  includes cash and
   short-term  investments with original  maturities of three months or less,
   with the exception of restricted  cash.  The Company  maintains  accounts at
   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  performing, nonperforming 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 allowance for loan  losses.
   The  Company  has the  ability  and  intent to hold  these  notes  until
   maturity,  payoff or liquidation of collateral.  Impaired notes  receivable
   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.  The Company
   periodically  evaluates the collectability of both  interest and  principal
   of its notes  receivable  to  determine  whether they are  impaired.  A note
   receivable is considered  impaired  when it is  probable the Company will be
   unable to collect  all  contractual  principal  and  interest payments due
   in accordance with the terms of the note agreement.

   In general,  interest on the notes receivable is calculated  based on
   contractual  interest rates applied to daily balances of the collectible
   principal amount  outstanding using the accrual 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 borrower's 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 collectability of the remaining interest
   and principal.  A non-accrual note is restored to an accrual status when it
   is no longer delinquent and collectability of interest and principal is no
   longer in doubt and past due interest is recognized at that time.

   Loan purchase  discounts are amortized into 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.

   In the event  projected  payments do 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.  Impaired  notes  receivable
   are charged  against the allowance for loan losses when management believes
   that the  collectability of principal is unlikely based on a note-by-note
   review. In connection with the determination of the allowance for loan
   losses,  management obtains independent  appraisals for the underlying
   collateral when considered necessary.
<PAGE>

   The Company's notes receivable are collateralized by residential real estate
   located throughout the United States with a concentration in California,
   New York, Georgia, and Florida.  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 certain
   specific 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.  An
   allowance of $50,789,815 and $46,247,230 is included in notes  receivable at
   March 31, 2004 and December 31, 2003, respectively.

   Originated  Loans Held for Sale - The loans held for sale consist primarily
   of residential loans orginated by the company secured by first and second
   mortgages where the company intends to sell the loan within one year.  Such
   loans  held  for sale are  performing  and are  carried  at lower of
   cost or  market.  The gain or loss  on sale is recorded as the  difference
   between the  carrying  amount of the loan and the  proceeds  from sale on a
   loan-by-loan basis.  The Company records a sale when the title transfers to
   the seller.

   Originated Loans Held for Investment - Such loans consist primarily of
   residential loans originated by the company secured  by first and second
   mortgages where the company has the intent and financial ability to hold it
   to maturity   Such loans held for investment are performing and are carried
   at amortized cost of the loan.

   Other Real  Estate  Owned - Other  real estate owned  ("OREO") consists of
   properties  acquired  through,  or in lieu of, foreclosure or other
   proceedings  and are held for sale and carried at the lower of cost or fair
   value less  estimated  costs to sell.  Any  write-down  to fair value,  less
   estimated  cost to sell,  at the time of  acquisition  is charged to
   purchase discount.  Subsequent  write-downs are charged to operations based
   upon management's  continuing  assessment of the fair value of the
   underlying  collateral.  Property is evaluated  periodically 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 sell.  Revenue  and  expenses  from the
   operation  of OREO and changes in the  valuation  allowance  are  included
   in operations.  Direct costs relating to the development and  improvement of
   the property are  capitalized, subject to the limit of fair value of the
   collateral, while costs related to holding the property are expensed.  OREO
   is not depreciated.  Gains or losses are included in operations upon
   disposal.

   Building,  Furniture and Equipment - Building,  furniture and equipment is
   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.  Maintenance and repairs are expensed as
   incurred.

   Deferred  Financing  Costs - Costs  incurred in connection  with obtaining
   financing are deferred and are amortized over the term of the related loan.

   Retirement Plan - The Company has a defined  contribution  retirement plan
   covering all full-time employees who have completed one  month of  service.
   Contributions to the plan are made in the form of payroll  deductions  based
   on  employees'  pretax wages.  Currently, the Company offers a matching
   contribution of 50% of the first 3% of the employees' contribution.

   Income Taxes - Income taxes are  accounted  for under SFAS No. 109,
   Accounting  for Income Taxes which  requires an asset and liability approach
   in accounting for income taxes.  This method provides for deferred income
   tax assets or liabilities  based on the  temporary  difference  between  the
   income  tax basis of assets  and  liabilities  and their  carrying  amount
   in the consolidated financial statements.  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.

   Fair  Value of  Financial  Instruments  - SFAS No.  107,  Disclosures  About
   Fair Value of  Financial  Instruments,  requires disclosure of fair value
   information of financial  instruments,  whether or not recognized in the
   balance sheets, 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 non-financial assets and liabilities from its disclosure
   requirements. Accordingly, the aggregate fair value amounts do not represent
   the underlying value of the Company.
<PAGE>

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

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

   b.   Notes  Receivable - Fair value of the net note  receivable portfolio is
        estimated by  discounting  the future cash flows using the interest
        method.  The fair value of notes  receivable at March 31, 2004 and
        December 31, 2003 was $382,301,253 and $393,628,475, respectively.

   c.   Short-Term  Borrowings - The interest rates on financing agreements and
        other short-term  borrowings  reset on a monthly basis therefore,  the
        carrying amounts of these  liabilities  approximate  their fair value.

   d.   Long-Term  Debt - The interest is at a variable rate that resets
        monthly therefore,  the amount reported in the balance sheet
        approximates fair value.

    Comprehensive Income - SFAS No. 130, Reporting Comprehensive Income defines
    comprehensive income as the change in equity of a business enterprise
    during a period from transactions and other events and  circumstances,
    excluding those resulting from investments by and  distributions to
    stockholders.  The Company had no items of other  comprehensive  income
    during the three months ended March 31, 2004 and March 31, 2003, therefore,
    net income was the same as comprehensive income.

    Accounting for Stock Options- The incentive stock option plan is accounted
    for under the  recognition  and  measurement principles of Accounting
    Principles  Board Opinion  25,  Accounting  for Stock  Issued  to
    Employees  and  related interpretations.  No  stock-based  employee
    compensation cost is reflected in net income for stock options, because all
    options granted under these plans had an exercise price equal to the market
    value of the underlying common stock on the date of grant.

    Had compensation cost been determined upon the fair value of the stock
    options at the grant date consistent with the method of SFAS No.123,  the
    Company's  March 31, 2004 and March 31, 2003 net income and earnings per
    share would have been reduced to the pro forma amounts indicated in the
    table that follows.

<TABLE>
<CAPTION>

                                               2004                2003
<S>                                               <C>                <C>


Net income  - as reported                   $ 2,033,349        $ 1,847,545
Net income  -  pro forma                    $ 2,026,224        $ 1,831,032

Net income  per common share -
basic - as reported                              $ 0.34           $ 0.3134
Net income per common share -
basic - pro forma                                $ 0.34           $ 0.3134
Net income per common share -
diluted - as reported                            $ 0.30           $ 0.3030
Net income per common share -
diluted - pro forma                              $ 0.30           $ 0.3030

</TABLE>

    There were no options granted during the three months ended March 31, 2004.

    Recent Accounting Pronouncements

    In January of 2003,  the Financial  Accounting  Standards  Board  ("FASB")
    issued Interpretation No.46, Consolidation of Variable Interest Entities,
    which was revised in December of 2003 FIN 46(R).  This
    Interpretation clarifies the application of existing accounting
    pronouncements to certain entities in which equity  investors do not have
    the characteristics of a controlling  financial  interest or do not have
    sufficient equity at risk for the entity to finance its activities without
    additional subordinated financial support from other parties.  As it
    applies to the Company,FIN 46(R) will be immediately effective for all
    variable interests in variable interest entities created after December 31,
    2003, and to all variable interest entities on December 31, 2004. The
    adoption of Interpretation  No. 46(R) is expected to have no impact on the
    Company's consolidated financial statements.

                                       1
<PAGE>

 3. BUSINESS SEGMENTS

    The Company has two reportable operating segments: (i) portfolio asset
    acquisition and resolution; and  (ii) mortgage banking. The portfolio asset
    acquisition and resolution segment acquires performing, nonperforming,
    nonconforming and subperforming notes receivable and promissory notes from
    financial institutions, mortgage and finance companies, and services and
    collects such notes receivable through enforcement of terms of the original
    note, modification of original note terms and, if necessary, liquidation of
    the underlying collateral.  The mortgage banking segment originates or
    purchases, sub prime residential mortgage loans from individuals whose
    credit histories, income and other factors cause them to be classified as
    nonconforming borrowers.

    The Company's management evaluates the performance of each segment based on
    profit or loss from operations before unusual and extraordinary items and
    income taxes.  The accounting policies of the segments are the same as
    those described in the summary of significant accounting policies.
<TABLE>
<CAPTION>
                                                 Three Months Ended March 31,
                                                    2004              2003
<S>                                                   <C>             <C>

CONSOLIDATED REVENUE
 Portfolio asset acquisition
 and resolution                                 $ 12,797,836     $ 12,315,747
 Mortgage banking                                  2,261,929        1,623,480
                                                ------------     ------------
Consolidated Revenue                            $ 15,059,765     $ 13,939,227
                                                ============     ============

CONSOLIDATED  INCOME BEFORE INCOME TAXES
  Portfolio asset acquisition and resolution     $ 3,271,347     $ 3,096,557
  Mortgage banking                                   427,002         324,788
                                                 -----------     -----------
Consolidated  Income before income taxes         $ 3,698,349     $ 3,421,345
                                                 ===========     ===========
</TABLE>
<PAGE>

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

 General

    Forward-Looking Statements. Statements contained herein that are not
    historical fact may be forward-looking statements within the meaning of
    Section 27A of the Securities Act of 1933, as amended, and Section 21E
    of the Securities Exchange Act of 1934, as amended, that are subject to
    a variety of risks and uncertainties. There are a number of important
    factors that could cause actual results to differ materially from those
    projected or suggested in forward-looking statements made by the Company.
    These factors include, but are not limited to: (i) unanticipated
    changes in the U.S economy, including changes in business conditions such
    as interest rates, and changes in the level of growth in the finance and
    housing markets; (ii) the status of relations between the Company and
    its sole Senior Debt Lender and the Senior Debt Lender willingness to
    extend additional credit to the Company; (iii) the availability for
    purchases of additional loans; (iv) the status of relations between the
    Company and its sources for loan purchases; (v) unanticipated difficulties
    in collections under loans in the Company's portfolio; and (vi)other risks
    detailed from time to time in the Company's SEC reports. Additional
    factors that would cause actual results to differ materially from those
    projected or suggested or suggested in any forward-looking statements are
    contained in the Company's filings with the Securities and Exchange
    Commission, including, but not limited to, those factors discussed under
    the caption "Real Estate Risk" in the Company's Annual Report on Form
    10-K and Quarterly Reports on Form 10-Q, which the Company urges
    investors to consider. The Company undertakes no obligation to publicly
    release the revisions to such forward-looking statements that may be made
    to reflect events or circumstances after the date hereof or to reflect
    the occurrences of unanticipated events, except as other wise required
    by securities and other applicable laws. 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.

    Critical Accounting Policies. The following management's discussion and
    analysis of financial condition and results of operations is based on the
    amounts reported in the Company's consolidated financial statements. In
    preparing the consolidated financial statements in conformity with
    accounting principles generally accepted in the United States of America
    ("GAAP"), management is required to make estimates and assumptions that
    affect the financial statements and disclosures. These estimates require
    management's most difficult, complex or subjective judgments. The Company's
    critical accounting policies are described in its Form 10-K for the year
    ended December 31, 2003. There have been no significant changes in the
    Company's critical accounting policies since December 31, 2003.

<PAGE>

    Acquisition  Activity.  Acquisitions are funded through Senior Debt in the
    amount equal to the purchase price plus a 1% loan origination fee.  The
    following table sets forth the number of loans,  unpaid principal balance
    at acquisition, purchases price and purchase price percentage of the
    Company's loan acquisitions during the three-month period ended March 31,
    2004 and 2003:

<TABLE>
<CAPTION>
                                                Quarter ended March 31,
<S>                                                <C>               <C>
                                                   2004              2003
Number of Loans                                   1,655              1,041
Unpaid Principal Balance at Acquisition     $47,282,162        $66,096,018
Purchase Price                              $38,432,630        $56,060,446
Purchase Price Percentage                           81%                85%
</TABLE>


    Single-Family  Residential  Lending.  Since commencing operations in 1997,
    Tribeca has originated  approximately  $280 million in loans. The following
    table sets forth the number of loans and original  aggregate  principal
    balance of loan originated during the three months periods ended March 31,
    2004 and March 31, 2003:

<TABLE>
<CAPTION>
                                                 Quarter ended March 31,
                                                   2004              2003
<S>                                                  <C>              <C>

Number of Loans                                     223                89
Original Principal Balance                  $33,358,278       $17,294,052
</TABLE>


    As of March 31, 2004, Tribeca had approximately $40.2 million face value of
    loans held for sale and $6.2 million held for investment.

    Cost of Funds.  As of March 31, 2004, the Company owed an  aggregate of
    $417 million  ("Senior  Debt") to a bank (the "Senior Debt Lender"),  which
    was incurred in connection  with the purchase of, and is secured by, the
    Company's  loan  portfolios and Other Real Estate Owned ("OREO") portfolios.
    From December 31, 2001 until March 2003, the Company's Senior Debt incurred
    after March 1, 2001, accrued interest at the Federal Home Loan Bank of
    Cincinnati ("FHLB")  thirty-day advance rate (the "Index") plus a spread of
    3.25% (the "Spread").  Senior Debt incurred  before  March 1, 2001 accrued
    interest at the prime rate plus a margin of between 0% and 1.75%.  On March
    19, 2003, the Company and its Senior Debt lender agreed that thereafter (i)
    the Spread would be 3.5%, the spread shall  remain at 3.5% unless and until
    the Index exceeds 2.00%,  at which  point it will revert back to 3.25% and
    (ii) the Spread will be reduced to 3.00% from and after such time as the
    Index exceeds 4.75%.  At March 31, 2004,  approximately $31 million of the
    Senior  Debt  incurred  before  March 1, 2001 will  continue  to accrue
    interest at the prime rate plus a margin of between 0% and 1.75%.  At March
    31, 2004, the weighted average interest rate on Senior Debt was 4.76%.

    Inflation.  The impact of inflation on the  Company's  operations during
    the three  months  ended  March 31, 2004, and 2003 was  immaterial.
<PAGE>

    Results of Operations

    Three Months Ended March 31, 2004 Compared to Three Months
    Ended March 31, 2003.

    Total revenue,  comprised of interest income,  purchase discount earned,
    gains recognized on the sale of notes receivable, gain on sale of notes
    originated,  gain on sale of OREO,  rental  income  and  other  income,
    increased  by  $1,120,538  or 8%, to $15,059,765 during the three months
    ended March 31, 2004 from $13,939,227 during the three months ended March
    31, 2003.

    Interest income  increased by $75,090 or 1%, to $10,636,341  during the
    three months ended March 31, 2004 from  $10,561,251 during the three months
    ended March 31, 2003.  The Company  recognizes  interest  income on notes
    included in its  portfolio  based upon three factors:  (i) interest on
    performing notes, (ii) interest received 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 notes acquired
    by the Company between April 1, 2003 and March 31, 2004, which was offset
    by prepayments, collections and loan sales.

    Purchase  discount  earned  increased by $438,494 or 49%, to  $1,341,397
    during the three months ended March 31, 2004 from $902,903  during the
    three months ended March 31, 2003. This increase  reflected an increase in
    prepayments  during the three months ended March 31, 2004 as compared to
    the three months ended March 31, 2003.

    Gain on sale of notes  receivable  increased by $248,788 or 42% to $844,902
    during the three months ended March 31, 2004 from  $596,114  during the
    three  months  ended March  31,2003.  The Company  consummated  an $8.2
    million bulk sale of low yielding performing  loans at a margin of 13%
    during the three  months ended March 31, 2004  compared to $4 million
    bulk sale of  performing and nonperforming loans at a margin of 13% during
    the three months ended March 31, 2003.

    Gain on sale of  originated  loans held for sale  increased  by $214,565 or
    32% to $892,955  during the three  months ended March 31, 2004,  from
    $678,390  during the three months ended March 31, 2003.  This increase
    reflected an increase in the volume of originated loans sold during the
    three months ended March 31, 2004,  as compared to the three months ended
    March 31, 2003.  Tribeca sold $19.3 million and $16.3 million in loans
    respectively during the three months ended March 31,2004 and March 31, 2003.

    Gain on sale of OREO decreased by $72,549 or 24% to $231,246 during the
    three  months ended March 31, 2004 from  $303,795 during the three months
    ended March 31,  2003.  Gain on sale of OREO  decreased  due to the sale of
    lower  valued OREO  properties during the three months ended March 31, 2004
    as compared to the three months ended March 31, 2003.  The Company sold 79
    and 59 OREO during the three months ended March 31, 2004 and March 31, 2003,
    respectively.

    Rental income decreased by $38,386 or 76% to $12,075 during the three months
    ended March 31, 2004, as compared to $50,461 during the three months ended
    March 31,  2003.  This  decrease  reflected a decrease in the number of
    tenants during the three  months  ended March 31, 2004 as compared to the
    three  months  ended March 31,  2003.  The Company had one and seven rental
    properties at March 31, 2004, and March 31, 2003 respectively.
<PAGE>

    Prepayment  penalties and other income increased by $254,536 or 30%, to
    $1,100,849  during the three months ended March 31, 2004 from  $846,313
    during the three  months  ended March 31, 2003.  The  increase  was due
    primarily  to increases in prepayment penalties due to an increase in
    prepayments  during the three months ended March 31, 2004,  late charges
    resulting  primarily from the growth in the size of the portfolio and
    increased loan fees due to an increase in origination volume.

    Total  operating  expenses  increased by $843,534 or 8% to $11,361,416
    during the three months ended March 31, 2004, from $10,517,882  during the
    three months ended March 31, 2003. Total operating expenses includes
    interest expense,  collection, general and administrative expenses,
    provisions for loan losses, amortization of deferred financing cost and
    depreciation expense.

    Interest  expense  increased by $275,954 or 5% to $5,313,075  during the
    three months ended March 31, 2004, from $5,037,121 during the three months
    ended March 31,  2003.  Total debt  increased by $23 million or 5%, to $447
    million as of March 31, 2004 as compared  with $424 million as of March 31,
    2003 as a result of the growth in size of the portfolio.  Total debt
    includes Senior Debt and financing agreements.

    Collection,  general and  administrative  expenses  increased by $338,626
    or 8% to $4,446,182 during the three months ended March 31, 2004 from
    $4,107,556  during the three  months  ended March 31,  2003.  Collection,
    general and administrative expense consists primarily of personnel expense,
    OREO related expense, litigation expense, and miscellaneous collection
    expense.

    Personnel  expenses  increased  by  $231,859  or 11% to  $2,327,932  during
    the three  months  ended  March 31, 2004 from $2,096,073  during the three
    months ended March 31, 2003.  This  increase  resulted  largely  from the
    expansion of Tribeca sales force, and other staff additions  throughout the
    Company.  All other collection  expenses  increased by $106,767 or 5% to
    $2,118,250 during the three months ended March 31, 2004 from $2,011,483
    during the three months ended March 31, 2003.  This increase  resulted
    primarily from increased  advertising  expenses due to a new advertising
    campaign for Tribeca,  increased  forced placed  insurance policy,
    increased  office  expense  due to the  growth in branch  offices,  and was
    partially offset by a  decrease in legal and collection expenses due to a
    decrease in the volume of cases sent to outside  attorneys during the three
    months ended March 31, 2004.

    Provisions  for loan  losses  increased  by $46,282 or 5% to  $895,876
    during the three  months  ended March 31, 2004 from $849,594  during the
    three  months  ended  March 31,  2003.  This  increase  was  primarily
    due to reserve  increases in specific portfolios.

    Amortization of deferred financing costs increased by $169,588 or 40%, to
    $592,901  during the three months ended March 31, 2004 from $423,313 during
    the three months ended March 31, 2003.  This increase  resulted primarily
    from increased  prepayments and collections due to the growth in size of
    the portfolio.

    Depreciation expense increased $13,084 or 13%, to $113,382 during the three
    months ended March 31, 2004, from $100,298 during the three months ended
    March 31, 2003. This increase resulted from the purchase of office
    equipment.

    The Company's net income increased  by $185,804 or 10% to $ 2,033,349 from
    $1,847,545  during the three months ended March 31, 2004 for the reasons set
    forth above.

    During the three months  ended March 31, 2004 the Company had a provision
    for income  taxes of  $1,665,000  as compared to $1,573,800 during the
    three months ended March 31, 2003.


<PAGE>

    Financial Condition

    Notes  Receivable  Portfolio- As of March 31, 2004, the Company's notes
    receivable  portfolio  included  approximately  10,685 loans with an
    aggregate face value of $459 million.  An allowance for loan losses of
    approximately $51 million has been recorded against this  face  value. The
    following  table provides a breakdown  of the  portfolio as of March 31,
    2004 and December 31, 2003 respectively:

<TABLE>
<S>                                                    <C>                 <C>
                                                    31-Mar-04        31-Dec-03

Performing loans                                  $309,620,865    $322,345,537
Allowance for loan losses                           14,666,990      15,584,769
Total performing loans                            ------------    ------------
Net of allowance for loan losses                  $294,953,875    $306,760,768
                                                  ------------    ------------
Impaired loans                                    $123,614,554    $126,341,722
Allowance for loan losses                           31,689,950      30,111,278
Total impaired loans,                             ------------    ------------
Net of allowance for loan losses                  $ 91,924,604    $ 96,230,444
                                                  ------------    ------------
Not recorded onto servicing system                $ 26,146,744    $ 16,866,611
Allowance for loan losses                            4,432,875         551,183
Not recorded onto servicing system                ------------    ------------
Net of allowance for loan losses                  $ 21,713,869    $ 16,315,428
                                                  ------------    ------------
Notes receivable, net of allowance for
loans losses                                      $408,592,348    $419,306,640
                                                  ============    ============
</TABLE>

    The following table provides a breakdown of the balance of the  Company's
    portfolio of Notes Receivable by coupon type,  net of allowance for loan
    losses and excluding  loans  purchased but not boarded onto the Company's
    servicing  system as of March 31, 2004 and December 31, 2003 of
    $26,146,744 and $16,866,611 respectively:
<TABLE>
<S>                                                      <C>           <C>
                                                  31-Mar-04        31-Dec-03
Total Performing Loans
Total Fixed Rate Performing Loans               $188,979,199      $199,691,299
Total Adjustable Rate Performing Loans          $105,974,676      $107,069,469

Total Impaired Loans
Total Fixed Rate Impaired Loans                 $ 56,076,397      $ 58,752,534
Total Adjustable Rate Impaired Loans            $ 35,848,207      $ 37,477,910


</TABLE>



    Liquidity and Capital Resources


    General-  During the three months  ended March 31,  2004,  the Company
    purchased  1,655 loans with an  aggregate  face value of $47 million at
    an aggregate  purchase  price of $38 million or 81% of the face value.
    During the three months ended March 31, 2003 the Company purchased  1,041
    loans with an aggregate face value of $66 million at an aggregate
    purchase price of $56 million or 85% of the face value. This decrease
    reflected a very competitive acquisition market during the three months
    ended March 31, 2004.

    The Company's  portfolio of notes  receivable at March 31, 2004, had a
    face value of $459 million and included net notes receivable of
    approximately  $382 million.  Net notes receivable are stated at the
    amount of unpaid  principal, reduced by purchase  discount and allowance
    for loan losses.  The Company has the ability and intent to hold its
    notes until  maturity,  payoff or  liquidation of collateral or sale if
    it is economically advantageous to do so.
<PAGE>

    During the three months ended March 31,  2004,  the Company used cash in
    the amount of $12  million in its  operating  activities primarily for
    the origination of mortgage loans, interest expense, overhead,
    litigation expense incidental to its collections and for the foreclosure
    and improvement of OREO, partially offset by proceeds from the sale
    of originated  loans.  The Company genarated $17 million of cash in its
    investing activities,  which  reflected  primarily  the use of $38 million
    for the purchase of notes receivable offset by principal collections of its
    notes receivable of $44 million and proceeds from sales of notes receivable
    of $7 million and OREO of $5 million.  Net cash used by financing
    activities was $4 million primarily from a decrease in Senior Debt of $10
    million partially offset by a $6 million increase in financing agreements.
    The above activities resulted in a net increase in cash at March 31,2004
    over December 31, 2003 of approximately $910,018.

    In the ordinary course of its business,  the Company  accelerates its
    foreclosures of real estate securing  non-performing notes receivable
    included in its portfolio.  As a result of such  foreclosures and
    selective direct purchases of OREO, at March 31, 2004 and  December 31,
    2003,  the Company  held OREO  recorded in the  consolidated  financial
    statements at $13 million and $14 million, respectively.  OREO is recorded
    on the consolidated financial statements of the Company at the lower of
    cost or fair market value less  estimated  costs of disposal.  The
    Company  believes that the OREO inventory  held at March 31, 2004 has a
    net realizable  value (market value less estimated commissions and legal
    expenses associated  with the  disposition of the asset) of approximately
    $14 million based on market analyses of the individual properties less
    the estimated closing costs.


    Cash Flow From Operating and Investing Activities

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

    At March 31, 2004, the Company had unrestricted cash, cash equivalents
    and marketable securities of $16 million.

    Cash Flow From Financing Activities

    Senior Debt.  As of March 31, 2004, the Company owed an aggregate of $417
    million to the Lender of Senior Debt, under several 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  based on the Federal Home Loan Bank of
    Cincinnati (FHLB) 30-day advance rate plus an additional  spread of 3.50%.
    Approximately  $31 million of Senior Debt will accrue interest at a rate
    equal to the prime rate plus a margin of  between  0% and 1.75%.  The
    accelerated  payment  provisions  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 weekly additional
    principal  reduction  from cash collected from other than notes receivable,
    if available,  before 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
    contractual scheduled  payments.  While the Senior Debt remains outstanding,
    these accelerated payment provisions may limit the cash flow that is
    available to the Company.
<PAGE>

    In  February  2004, the Company  negotiated  with its Senior Debt  Lender
    a  modification  to the Senior Debt  obligation, pursuant to which the
    Senior Debt Lender has provided the Company with an increase to $550
    million in Senior Debt  availability and monthly cash of $2,075,000 per
    month for the duration of 2004.  Management  believes that this
    modification  will reduce  irregular periods of cash flow shortages
    arising from operations.  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 sale of loans,
    sales and rental of OREO, or additional borrowing, to repay the current
    liabilities arising from operations and to repay the long term
    indebtedness of the Company.

    Certain 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 Company is no longer required to maintain
    these restricted  accounts but has continued to under the prior agreement.
    The Company  typically uses these funds to place  deposits on loan
    portfolio  bids and to refinance  loans in the Company's own  portfolio.
    The restricted cash is maintained in an interest  bearing  account, with
    the Company's  Senior Debt Lender.  The aggregate balance of restricted
    cash in such accounts was $428,927 on March 31, 2004 and $413,443 on
    December 31, 2003.

    Total Senior Debt availability was approximately  $550 million at March
    31, 2004, of which approximately $417 million had been drawn down as of
    such date.  As a result,  the  Company  has approximately  $133  million
    available to purchase additional portfolios of notes receivable and OREO.

    The Company's Senior Debt Lender has provided Tribeca with a warehouse
    financing  agreement of $30 million.  This Senior Debt accrues interest
    based on prime.  At March 31, 2004,  Tribeca had drawn down $30 million
    on the line. The Company is actively seeking other sources of financing
    for Tribeca.

    Financing  Agreements.  The Company  has a financing  agreement with the
    Senior  Debt Lender  permitting  it to borrow a maximum of approximately
    $2,500,000 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 March 31,
    2004 and December 31, 2003, were $590,320 and $569,451  respectively.
    Advances made under the financing  agreement 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 choose to hold as rental property to maximize its return.  The
    Company uses,  when available,  OREO sales proceeds to pay down financing
    agreements to help reduce interest expense

    Additionally, the Company has a financing agreement with Citibank.  The
    agreement provides the Company with the ability to borrow a maximum of
    $150,000 at a rate equal to the bank's prime rate plus one percent per
    annum. As of March 31, 2004 and December 31, 2003 $95,736 and $99,736
    respectively, were outstanding on the financing agreement.

    Financing Activities and Contractual Obligations

    Below is a schedule of the Company's contractual obligations and
    commitments at March 31, 2004.

<TABLE>
<CAPTION>

(Amounts in                        Less than
 thousands)               Total      1 Year   1-3 Years  3-5 Years  Thereafter
------------------------------------------------------------------------------
<S>             <C>           <C>        <C>          <C>         <C>
Contractual Cash
Obligations:
 Notes Payable   $416,824,117 $43,072,521 $121,479,120 $35,460,739 $216,811,737
 Warehouse Line    29,685,759  29,685,759        -          -            -
 Operating Leases   2,188,284     517,196    1,495,229     175,859       -
 Capital Lease        439,613     162,859      276,754
 Employment
 Agreements           220,000     165,000       55,000
                 ------------ ----------- ------------ ----------- ------------
Total Contractual
Cash Obligations $449,357,773 $73,603,335 $123,306,103 $35,636,598 $216,811,737
                 ============ =========== ============ =========== ============
</TABLE>
<PAGE>


 Item 3.  Quantitative and Qualitative Disclosures About Market Risk

    Interest rate fluctuations can adversely  affect the  Company's income and
    value of its common shares in many ways and present a variety of risks,
    including  the risk of mismatch  between asset yields and  borrowing rates,
    variances  in the yield curve and changing prepayment rates.

    The Company's  operating results will depend in large part on differences
    between the income from its assets (net of credit losses) and its borrowing
    costs. Most of the Company's  assets,  consisting  primarily of mortgage
    notes receivable,  generate fixed returns and have terms in excess of five
    years.  The  Company  funds the  origination  and  acquisition  of a
    significant  portion of these assets  with  borrowings, which have interest
    rates that are based on the monthly  Federal  Home Loan Bank of  Cincinnati
    30-day advance rate ("FHLB").  In most cases, the income from assets will
    respond more slowly to interest rate  fluctuations  than the cost of
    borrowings,  creating a mismatch  between  yields and borrowing  rates.
    Consequently changes in interest  rates,  particularly short-term rates may
    influence the Company's net income.  The Company's borrowing under
    agreements with its Senior Debt Lender bear interest at rates that
    fluctuate with the FHLB rate of Cincinnati and the prime rate.  Based on
    approximately $386 million and $31 million of borrowings outstanding under
    this facility at March 31, 2004, a 1% increase in FHLB and prime rate,
    would decrease the Company's  quarterly  net income and net cash flows by
    approximately  $572,000, absent any other  changes.  The Company also has a
    warehouse  line of credit  with its  Senior  Debt  lender  that funds the
    origination  of loans  held for sale  these  assets with borrowings, which
    have  interest  rates  that are based on the prime  rate.  Based on
    approximately  $30  million  of  borrowings outstanding under this facility
    at March 31, 2004, a 1% increase in prime rate, would further decrease the
    Company's quarterly net income and net cash flows by approximately  $41,000.
    Increases in these rates will decrease the net income and market value of
    the Company's  net assets.  Interest  rate  fluctuations  that result in
    interest  expense  exceeding  interest  income  would result in operating
    losses.

    The value of the Company's  assets may be affected by prepayment rates on
    investments.  Prepayments  rates are influenced by changes in current
    interest rates and a variety of economic,  geographic and other factors
    beyond the Company's  control,  and consequently, such  prepayment  rates
    cannot be predicted with  certainty.  When the Company  originates and
    purchases  mortgage loans, it expects that such  mortgage  loans  will have
    a measure  of  protection  from  prepayment  in the form of  prepayment
    lockout periods or prepayment  penalties.  In periods of declining mortgage
    interest rates,  prepayments on mortgages  generally  increase.  If general
    interest rates decline as well,  the proceeds of such  prepayments received
    during such periods are likely to be reinvested by the Company in assets
    yielding  less than the yields on the  investments  that were  prepaid.  In
    addition the market value of mortgage investments may, because the risk of
    prepayment,  benefit less from  declining  interest rates than from other
    fixed-income securities.  Conversely,  in periods of rising  interest rates,
    prepayments on mortgage loans, generally decrease, in which case the
    Company would not have the prepayment proceeds available to invest in
    assets with higher yields.  Under certain  interest rate and prepayment
    scenarios the Company may fail to recoup fully its cost of acquisition of
    certain investments.

    Real Estate Risk
    Multi-family  and residential  property  values and net operating  income
    derived from such properties are subject to volatility and may be affected
    adversely by number of factors,  including,  but not limited to, national,
    regional and local economic conditions (which may be adversely affected by
    industry slowdowns and other factors); local real estate conditions (such
    as the over supply of housing).  In the event net operating income
    decreases, a borrower may have difficulty  paying the Company's  mortgage
    loan, which could result in losses to the Company.  In addition, decreases
    in property  values reduce the value of the collateral and the potential
    proceeds  available to a borrower to repay the  Company's  mortgage  loans,
    which could also cause the Company to suffer losses.
<PAGE>


 Item 4.  Controls and Procedures.

    As of the end of the period covered by this Quarterly Report on Form 10-Q,
    the Company carried out an evaluation, under the supervision and with the
    participation of senior management, including the Company's Chief Executive
    Officer and Chief Financial Officer, of the effectiveness of the design and
    operation of its disclosure controls and procedures. Based upon that
    evaluation, the Company's, Chief Executive Officer and Chief Financial
    Officer concluded that the Company's disclosure controls and procedures
    are effective for gathering, analyzing and disclosing the information that
    the Company is required to disclose in reports filed under the Securities
    Exchange Act of 1934.

    There have been no significant changes in the Company's internal controls
    over financial reporting or in other factors during the fiscal quarter
    ended March 31, 2004 that materially affected, or are reasonably likely to
    materially affect, the Company's internal control over financial reporting
    subsequent to the date the Company carried out its most recent evaluation.


<PAGE>

                            Part II Other Information

     Item 1.  Legal Proceedings
                       None.

     Item 2.  Changes in Securities
                       None


     Item 3.  Defaults Upon Senior Securities
                       None

     Item 4.  Submission of Matters to a Vote of Security Holders
                       None

     Item 5.  Other Information
                       None


<PAGE>

    Item 6.  Exhibits and Reports on Form 8-K

                               (a) 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.
      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 10-KSB,filed with the
                   Commission on April 14, 1999.
      10(j)        Promissory Note between Steve Leftkowitz, board member, and
                   the Company dated March 31,1999. Previously filed with, and
                   incorporated herein by reference to, the Company's  10-KSB,
                   filed with the Commission on March 30, 2000.
      10(l)        Employment Agreement dated July 17, 2000 between the Company
                   and Seth Cohen.  Previously filed with, and incorporated
                   herein by reference to, the Company's 10-KSB, filed with the
                   Commission on March 31, 2001.
      31.1         Chief Executive Officer Certification required by Rules
                   13a-14 and 15d-14 under the Securities Exchange Act of 1934,
                   as amended.
      31.2         Chief Financial Officer  Certification  required by Rules
                   13a-14 and 15d-14 under the Securities Exchange Act of 1934,
                   as amended.
      32.1         Certification of Chief Executive Officer pursuant to 18
                   U.S.C.section 1350, as adopted pursuant to section 906 of
                   the Sarbanes-Oxley Act of 2002.

      32.2         Certification  of Chief  Financial  Officer  pursuant  to 18
                   U.S.C. section 1350, as adopted pursuant to section 906 of
                   the Sarbanes-Oxley Act of 2002.

<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.

     May 14, 2004

                                    FRANKLIN CREDIT MANAGEMENT CORPORATION



                                        By:      THOMAS J. AXON
                                                 ---------------
                                                 Thomas J. Axon
                                             Chairman of the Board


         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

 SETH COHEN                 Chief Executive Officer             May 14, 2004
 ----------                                                     ------------
 Seth Cohen
 (Principal executive officer)


 JOSEPH CAIAZZO             Senior Vice President,
 --------------             Chief Operating Officer,             May 14, 2004
 Joseph Caiazzo             Secretary and Director               ------------
 (Secretary)


 ALAN JOSEPH                Executive Vice President,
 -----------                Chief Financial Officer              May 14, 2004
 Alan Joseph                and Director                         ------------
 (Principal financial officer)