FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES


             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 March 31, 2000

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

       For the transition period from _____________ to _____________

                      Commission file number 0-17771



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


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


                         Six Harrison Street
                       New York, New York 10013
                           (212) 925-8745

(Address of principal executive offices,including zip code,and telephone number
                                  including area code)




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

   Check whether the registrant  filed all documents and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes X No .

    As of May 12, 2000 the issuer had 5,916,527 of shares of Common  Stock,  par
value $0.01 per share, outstanding.
<PAGE>

                     FRANKLIN CREDIT MANAGEMENT CORPORATION


                                   FORM 10-QSB

                                 March 31, 2000


                                 C O N T E N T S


PART I.  FINANCIAL INFORMATION                                           Page

Item 1.  Financial Statements

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


         Consolidated Statements of Income (unaudited) for the three
         months ended March 31, 2000 and March 31, 1999                     4

         Consolidated Statements of Stockholders Equity (unaudited)
         for the three Months ended March 31, 2000 and 1999                 5

         Consolidated Statements of Cash Flows (unaudited) for the
         three months ended March 31, 2000 and March 31, 1999               6

         Notes to Consolidated Financial Statements                      7-10


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                      11-17

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                              18-19

Item 2.  Changes in Securities                                             20

Item 3.  Defaults Upon Senior Securities                                   20

Item 4.  Submission of Matters to a Vote of Security Holders               20

Item 5.  Other Information                                                 20

Item 6.  Exhibits and Reports on Form 8-K                                  20

SIGNATURES                                                                 21







<PAGE>   3

 FRANKLIN CREDIT MANAGEMENT CORPORATION
 CONSOLIDATED BALANCE SHEETS
 MARCH 31, 2000 AND DECEMBER 31, 1999
 ------------------------------------------------------------------------------
<TABLE>
<CAPTION>

 ASSETS                                            3/31/00      12/31/99
<S>                                               <C>          <C>


 CASH AND CASH EQUIVALENTS                       $   7,855,688 $   6,015,567
 RESTRICTED CASH                                     1,204,380       387,972

 NOTES RECEIVABLE:
   Principal                                        213,028,50   206,262,651
   Purchase discount                               (18,804,755   (18,449,141)
   Allowance for loan losses                       (22,960,150)  (22,185,945)
                                                  ------------   -----------
            NET NOTES RECEIVABLE                   171,263,599   165,627,565


 LOANS HELD FOR SALE                                 3,883,019     3,288,568

 ACCRUED INTEREST RECEIVABLE                         2,419,308     2,425,358


 OTHER REAL ESTATE OWNED                             5,832,768     7,699,468

 OTHER RECEIVABLES                                   1,918,377     2,827,301

 DEFERRED TAX ASSET                                  3,408,903     3,408,903

 OTHER ASSETS                                        1,644,212     1,155,097


 BUILDING, FURNITURE AND FIXTURES - Net                864,641       884,903


 DEFERRED FINANCING COSTS- Net                       2,073,503     2,016,394
                                                  ------------   -----------

 TOTAL ASSETS                                    $ 202,368,398 $ 195,737,096
                                                  ===========   ============

 LIABILITIES AND STOCKHOLDERS EQUITY

 LIABILITIES:
   Accounts payable and accrued expenses         $   3,002,489  $  3,098,648
   Financing agreements                                949,270       791,075
   Notes payable                                   191,754,823   185,019,806
   203(k) rehabilitation escrows payable                18,690        18,691
   Subordinated debentures                             310,776       332,976
   Notes payable, affiliates and stockholders           86,620       109,350
   Deferred tax liability                            3,488,962     3,488,962
                                                  ------------    ----------
             TOTAL LIABILITIES                     199,611,630   192,859,508
                                                 -------------    ----------


 STOCKHOLDERS EQUITY
   Common stock, $.01 par value, 10,000,000 authorized
     and outstanding: 5,916,527 and 5,916,527           59,167        59,167
   Additional paid-in capital                        6,985,968     6,985,968
   Accumulated deficit                              (4,288,367)   (4,167,547)
                                                    ----------   -----------
            TOTAL STOCKHOLDERS' EQUITY               2,756,768     2,877,588
                                                     ----------   ----------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 202,368,398  $195,737,096
                                                 ============= =============
 </TABLE>

See notes to consolidated financial statements.





<PAGE> 4

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                      31-Mar-00      31-Mar-99
<S>                                                 <C>            <C>

REVENUES:
  Interest income                                    $ 4,895,700   $ 3,241,418
  Purchase discount earned                               981,513       960,478
  Gain on sale of notes receivable                        75,756       486,201
  Gain on sale of notes originated                        56,245        75,113
  Gain on sale of other real estate owned                 87,187        80,376
  Rental income                                          187,780       237,472
  Other                                                  214,277        75,130
                                                      -----------   ----------

                                                      6,498,458      5,156,188
                                                      -----------   ----------
OPERATING EXPENSES:
  Interest expense                                     4,420,800     2,811,494
  Collection, general and administrative               2,028,024     1,983,258
  Provision for loan losses                               15,150          -
  Amortization of deferred financing costs               123,135       119,021
  Depreciation                                            32,169        24,575
                                                     -----------    ----------
                                                       6,619,278     4,938,348
                                                     -----------    ----------


NET (LOSS) INCOME                                     $(120,820)     $ 217,840
                                                     ===========    ==========
NET (LOSS) INCOME PER COMMON SHARE:
  Basic

                                                        $ (.02)       $  0.04
                                                     ===========   ===========
  Dilutive

                                                        $ (.02)        $ 0.04
                                                     ===========   ===========

WEIGHTED AVERAGE NUMBER OF SHARES
  OUTSTANDING

                                                      5,916,527     5,816,528
                                                     ===========   ==========
</TABLE>

See notes to consolidated financial statements.

<PAGE> 5

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
THREE MONTHS ENDED MARCH 31, 2000 AND DECEMBER 31,1999
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                               Common Stock      Additional
                              ----------------    Paid-in   Accumulated

                               Shares    Amount   Capital    Deficit     Total
                             --------   -------  ---------   ---------   ------
<S>                       <C>         <C>       <C>        <C>        <C>

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


  Net gain                                                   131,848    131,848


BAL, DECEMBER 31, 1999   $ 5,916,527 $ 59,167 $ 6,985,968 (4,167,547) 2,877,588


  Net loss                                                  (120,820) (120,820)

BALANCE, MARCH 31, 2000  $ 5,916,527   59,167 $ 6,985,968 (4,288,367) 2,756,768
                          ==========   ======  ==========  ========== =========


</TABLE>

See notes to consolidated financial statements.

<PAGE> 6

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
MARCH 31, 2000 AND MARCH 31, 1999
----------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                    31-Mar-00   31-Mar-99
<S>                                                 <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income (Loss)                                 $(120,820)  $ 217,840
  Adjustments to reconcile income (loss) to net
    operating activities:
    Gain on sale of notes receivable                  (75,756)    (80,376)
    Gain on sale of other real estate owned           (87,187)     24,575
    Depreciation                                       32,169      24,575
    Amortization of deferred financing costs          123,135     119,021
    Purchase discount earned                         (981,513)   (960,478)
    Provision for loan losses                          15,150        -
    Changes in assets and liabilities:
       Decrease in accrued interest receivable          6,050     132,184
      (Increase) in other receivables                 908,924  (1,185,963)
      Increase in other assets                       (489,115)   (937,017)
      (Increase)/Decrease in loans held for sale     (594,451)  2,496,042
      Decrease in accounts payable and accrued       ( 96,159)    (78,926)
     (Decrease) in notes payable, affiliates and     ( 22,730)     29,885
                                                    ----------   ----------
           Net cash used in operating activities   (1,382,303)   (223,213)
                                                    ----------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Decrese /(Increase) in restricted cash             (816,408)      -
  Purchase of notes receivable                    (17,101,605) (7,049,038)
  Principal collections on notes receivable        11,803,786   5,844,437
  Joint venture participation                                      (5,179)
  Acquisition and loan fees                          (243,775)    (72,259)
  Foreclosures on real estate                         517,055   2,065,465
  Proceeds from sale of other real estate owned     2,110,270   2,288,975
  Proceeds from sale of notes receivable               83,750        -
  Purchase of building, furniture and fixtures        (11,908)   (237,109)
                                                    ----------  -----------
           Net cash used in provided by investing  (3,658,835)  2,835,292
                                                   -----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes payable                      17,717,506   7,225,936
  Principal payments of notes payable             (10,972,242) (8,370,760)
  Proceeds from financing agreements                1,595,582     504,940
  Payments on financing agreements                 (1,437,387) (2,739,515)
  Principal payments of subordinated debentures       (22,200)    (66,210)
                                                  -----------  ------------
           Net cash provided by (used in)           6,881,259  (3,445,609)
                                                  -----------  ------------
NET INCREASE (DECREASE) IN CASH                     1,840,121    (833,530)


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

CASH, END OF PERIOD
                                                    7,855,688   4,286,376
                                                   =========== ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash payments for interest                      $ 4,269,476 $ 2,679,585
                                                   =========== ===========
  Cash payments(receipts) for taxes               $      _      $     _
                                                  ============ ===========
</TABLE>

See notes to consolidated financial statements.

<PAGE>

1. NATURE OF BUSINESS AND  SIGNIFICANT  ACCOUNTING  POLICIES Nature of Business-
Franklin Credit Management  Corporation (the "Company"),  incorporated under the
laws of the State of Delaware, acquires performing,  nonperforming,nonconforming
and   subperforming   notes  receivable  and  promissory  notes  from  financial
institutions,  and  mortgage  and finance  companies.  The Company  services and
collects such notes receivable through  enforcement of the terms of the original
note, modification of the original note terms and, if necessary,  liquidation of
the underlying collateral.

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

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

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

Estimates -The preparation of financial  statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported  amounts of revenue and expenses  during the period.
Actual results could differ from those estimates.

Cash and Cash Equivalents -Cash and cash equivalents  include all cash accounts,
with the  exception of  restricted  cash,  and money market  funds.  The Company
maintains  amounts due from banks,  which at times may exceed federally  insured
limits. The Company has 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  nonperforming  or  underperforming  at the  time  of
purchase  and,  accordingly,  are  usually  purchased  at a  discount  from  the
principal balance remaining.

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

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

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

Loan purchase discount is amortized to income using the interest method over the
period to  maturity.  The  interest  method  recognizes  income by applying  the
effective  yield on the net  investment in the loans to the projected cash flows
of the loans.  Discounts are amortized if the projected payments are probable of
collection  and the  timing  of such  collections  is  reasonably  estimable.The
projection of cash flows for purposes of amortizing  purchase loan discount is a
material estimate,  which could change significantly,  in the near term. Changes
in the  projected  paymentsare  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.

<PAGE>

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
ofcurrent economic and real estate market  conditions,  estimates of the current
value of underlying  collateral,  past loan loss  experience  and other relevant
factors.  Notes receivable,  including  impaired notes  receivable,  are charged
against  the  allowance  for  loan  losses  when  management  believes  that the
collectibility  of principal is unlikely  based on a  note-by-note  review.  Any
subsequent  recoveries  are  credited  to the  allowance  for loan  losses  when
received. In connection with the determination of the allowance for loan losses,
management  obtains  independent  appraisals for  significant  properties,  when
considered necessary.

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

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

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

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

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

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

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

Income Taxes-The  Company  recognizes  income taxes under an asset and liability
method.Under  this method,  deferred tax assets are  recognized  for  deductible
temporary  differences  and  operating  loss  or tax  credit  carryforwards  and
deferred tax  liabilities  are  recognized  for taxable  temporary  differences.
Temporary  differences  are the  differences  between  the  financial  statement
carrying amounts of existing assets and liabilities and their respective  basis.
Deferred  tax  assets and  liabilities  are  measured  using  enacted  tax rates
expected  to apply to  taxable  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.

<PAGE>

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

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

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

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

c. Short-Term  Borrowings- The carrying amounts of the financing  agreements and
   other short-term borrowings approximate their fair value.

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

Business  Segments  -Statement  of Financial  Accounting  Standards No. 131
("FAS 131"), Related Information,  replaced the "industry segment" approach
 with the "management" approach. The management approach designates the internal
 reporting  that  is used by  management  for  making  operating  decisions  and
 assessing  performance as the source of the Company's reportable segments.  FAS
 131 also requires disclosures about products and services, geographic areas and
 major  customers.  The adoption of FAS 131 did not affect results of operations
 or the financial  position of the Company but did affect the Company's footnote
 disclosures.

 Comprehensive  Income - SFAS No. 130,  Reporting  Comprehensive  Income defines
 comprehensive  income as the change in equity of a business enterprise during a
 period from  transactions and other events and  circumstances,  excluding those
 resulting from investments by and  distributions  to stockholders.  The Company
 had no items of other  comprehensive  income  in 2000 and 1999,  therefore  net
 income (loss) was the same as its comprehensive income (loss).

Recent  Pronouncements - In June 1998, the Financial  Accounting Standards Board
issued  Statement of Financial  Accounting  Standards  No. 133,  Accounting  for
Derivative  Instruments  and  Hedging  Activities  ("FAS  133").  The Company is
required to  implement  FAS 133 on January 1, 2001.  FAS 133  requires  that all
derivative  instruments be recorded on the balance sheet at fair value.  Changes
in the fair value of derivatives are recorded each period in current  earningsor
other  comprehensive  income,  depending on whether aderivative is designated as
part of a hedge transaction and the type of hedge  transaction.  The ineffective
portion of all hedges will be  recognized  in  earnings.  The  Company  does not
believe that this standard will have any effect on its results of operations and
financial position.

Comparative  Balance-  Certain prior balances have been  reclassified to conform
with current period presentation.

<PAGE>

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

General

     Forward-Looking  Statements.  When used in this report,  press releases and
elsewhere by the Company from time to time,the words  "believes",  "anticipates"
and "expects" and similar  expressions are intended to identify  forward-looking
statements that involve certain risks and uncertainties.  Additionally,  certain
statements  contained  in this  discussion  and the Form  10-QSB  may be  deemed
forward-looking  statements  that  involve a number of risks and  uncertainties.
Among the factors that could cause actual  results to differ  materially are the
following:  unanticipated  changes in the U.S. economy,  business conditions and
interest rates and the level of growth in the finance and housing  markets,  the
availability for purchases of additiona  loans, the status of relations  between
the Company  and its Senior Debt  Lender,  the status of  relations  between the
Company  and its  sources  for loan  purchases,  unanticipated  difficulties  in
collections under loans in the Companys  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 three months ended March 31, 2000,
the Company  purchased  810 loans in five  portfolio's  consisting  primarily of
first and second mortgages,  with an aggregate face value of $20.9 million at an
aggregate  purchase  price of $17.7  million or 85% of the face value,  compared
with the purchase  during the three months ended March 31,1999 of 465 loans with
an aggregate  face value of $7.8 million at an aggregate  purchase price of $7.0
million or 90% of aggregate  face value.  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.  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,
general and administrative  expenses excluding personnel expenses.  There can be
no  assurance  the  Company  will be able to  acquire  any  additional  loans on
favorable terms or at all.

     Single-Family  Residential  Lending.  In January 1997, the Company formed a
wholly  owned  subsidiary,  Tribeca  Lending  Corp.  ("Tribeca"),  to  originate
primarily subprime  residential  mortgage loans made to individuals whose credit
histories,   income  and  other   factors   cause  them  to  be   classified  as
non-conforming   borrowers.   Management  believes  that  lower  credit  quality
borrowers  present an opportunity  for the Company to earn superior  returns for
the  risks  assumed.  Tribeca  provides  first  and  second  mortgages  that are
originated on a retail basis through marketing efforts that include  utilization
of the FCMC  database.  Tribeca is  currently  licensed as a mortgage  banker in
Connecticut,   District  of  Columbia,   Florida,  Georgia,  Kentucky,  Alabama,
Maryland, Massachusetts,  Colorado, Indiana, Missouri, New York, North Carolina,
Oklahoma,  South  Carolina,  Washington,  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 three months ending March 31, 2000,  Tribeca originated 24 loans
and  $1,623,197  in  mortgages,  compared to two loans and $198,000 in mortgages
during the three months  ending March 31, 1999.  During the three months  ending
March 31, 2000,  Tribeca  incurred an operating loss of $37,453 as compared to a
loss of $127,000 during the three months ending March 31, 1999.This  decrease in
loss  reflected  successful  efforts to reduce core  operating  expenses  within
Tribeca during the three months ending March  31,2000,  as compared to the three
months  ending March 31, 1999. As of March 31, 2000,  Tribeca had  approximately
$3.9 million face value of loans held for  sale.Revenues and expenses related to
such loans, other than periodic interest  payments,  and fee income are expected
to be realized upon sale of such loans.

     Cost of Funds.  The  increases in the prime rate during 2000,  from 8.5% to
8.75% and 9.0% in February and March respectively,  increased the benchmark rate
for the cost of funds on Senior  Debt used to fund loan  portfolio  acquisitions
directly  decreasing net income.  The weighted average interest rate on borrowed
funds for the Senior  Debt based on the  balances as of March 31, 2000 and March
31, 1999 were 9.5% and 8.3%,  respectively.As of March 31, 2000, the Company had
seventy-seven   loans  outstanding  with  an  aggregate   principal  balance  of
$191,458,609 million.  Additionally the Company has financing agreements,  which
had an outstanding balance of $949,270 at March 31, 2000.

<PAGE>

    The majority of the loans  purchased by the Company bear interest at a fixed
rate while the Senior Debt incurred to finance its purchase  bears interest at a
variable  rate  adjusted  with the prime rate.  Consequently,  changes in market
interest  rate  conditions  cause  directly  corresponding  changes in  interest
income.  Management  believes that any future  increases in the prime rate would
negatively  impact the net income of the Company while decreases may be expected
to  positively  impact such net  income.  The Company and its Senior Debt Lender
have  agreed  to a fixed  base rate on  Senior  Debt of 8.75%,  for the 12 month
period April 1, 2000 thru March 31, 2001.

     Inflation. The impact of inflation on the Company's  operations during the
three months ending March 31, 2000, and 1999 was immaterial.
Results of Operations

     The Three Months  Ending March 31, 2000 Compared to the Three Months Ending
March 31, 1999.

     Total revenue,  comprised of interest  income,  purchase  discount  earned,
gains  recognized on the bulk sale of notes,  gain on sale of notes  originated,
gain on sale of OREO,rental income and other income,  increased by $1,342,270 or
26%, to $6,498,458  during the three months ending March 31 2000 from $5,156,188
during the three months ending March 31, 1999.

     Interest  income  increased by $1,654,282 or 51%, to $4,895,700  during the
three months ending March 31,2000 from $3,241,418  during the three month ending
March 31, 1999. 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  $117.3  million  in high  yielding  performing  notes
acquired by the Company  during April 1999 through the three months ending 2000,
which was only partially offset by collections, prepayments, and loan sales.

     Purchase  discount earned increased by $21,035 or 2%,to $981,513 during the
three months ending March  31,2000 from $960,478  during the three months ending
March 31, 1999. This increase  reflected the growth in the Company's  portfolio,
which was partially  offset by increases in the reserve on older portfolios held
by the Company.

     The Company sold one loan during the three months ending March 31,2000, for
a gain of $75,756  as  compared  to three  bulk sales of notes  during the three
months ending March 31, 1999 of $3.2 million with a gain of $486,201.

     Gain on sale of loans  originated  decreased  by  $18,868 or 25% to $56,245
during the three months ending March 31, 2000,as  compared to $75,113 during the
three months ending March 31, 1999.  This  decrease  reflected a decrease in the
number of Tribeca  loans sold during the three months  ending March 31, 2000, as
compared to the three months  ending March 31, 1999.  The Company in addition to
individual  loan sales,  sold a large bulk sales of loans to one investor during
the three months ending March 31,1999.

     Gain on sale of OREO  increased by $6,811 or 8% to $87,187 during the three
months  ending March 31, 2000 from $80,376  during the three months ending March
31, 1999.  This increase  resulted  primarily  from an increased  number of OREO
properties  sold during the three months  ending March 31, 2000 at a profit,  as
compared to the three months  ending March 31, 1999.  The Company sold forty and
thirty-one  OREO  properties  during the three months  ending March 31, 2000 and
March 31, 1999 respectively.

     Rental  income  decreased  by $49,692 or 21% to  $187,780  during the three
months  ending March 31, 2000,  as compared to $237,472  during the three months
ending  March 31,  1999.  This  decrease  reflected  a decrease in the number of
properties  rented, due to the sale of certain OREO properties where the Company
felt it was more  advantageous to sell than rent. The Company had sixty-four and
ninety-five rental properties at March 31,2000, and March 31,1999 respectively.

     Other income  increased by $139,147 or 185%,  to $214,277  during the three
months  ending March 31, 2000 from $75,130  during the three months ending March
31, 1999.  This increase  reflected  increases in income in the  Company's  core
operations which primarily reflected the increase in prepayment penalties,  late
charges,  and  modification  fees  resulting  from the  increase  in size of the
Company's portfolio and loan fees associated with Tribeca loans sold.

     Total  operating  expenses  increased by  $1,680,930  or 34% to  $6,619,278
during the three months ending March 31, 2000,from  $4,938,348  during the three
months  ending  March 31,  1999.  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 $1,609,306 or 58%,to  $4,420,800 during the
three  months  ending March 31, 2000,  from  $2,811,494 during the three months
ending March 31, 1999 as a result of  increases in total debt and  increases in
the Company's  costs of funds resulting from the increased prime rate.Total debt
increased  by  $57,312,974  or 43%,  to  $193,101,489  as of March  31, 2000 as
compared  with  $135,788,515  as of March 31, 1999 debt  includes  Senior  Debt,
debentures, financing agreements and loans from affiliates.

<PAGE>

     Collection,general and administrative expenses increased by $44,766 or 2%,
to  $2,028,024  during the three months  ending  March 31, 2000 from $1,983,258
during  the  three  months  ending  March  31,  1999.  Collection, general  and
administrative  expense consists  primarily of personnel  expense, OREO related
expense, litigation expense, and miscellaneous collection expense.

     Personnel  expenses  increased  by $112,815  or 14% to $898,455 during the
three months ending March 31, 2000 from $785,640  during the three months ending
March 31, 1999.  This increase  resulted  largely from increases in staffing and
the experience  level of personnel in the Company's core business. OREO related
expenses  increased by $87,294 or 29% to $389,756 during the three months ending
March 31, 2000 from $302,462 during the three months ending March 31  1999.This
increase resulted primarily from increases in property taxes on OREO properties.

All other  collection  expenses  decreased  by  $155,343 or 18% during the three
months ending March 31, 2000 to $739,813  from $895,156 during the three months
ending March  31,1999.  This  decrease  reflected  decreases  in core  operating
expenses  associated with reductions in legal, office,  computer consulting and
supplies,  and  collection  expenses  primarily  from  decreased  OREO activity,
negotiated fixed litigation expenses and the growth of the Company's  performing
portfolio, which reduces collection expenses.

     Provisions  for loan losses  increased  by $15,150 during the three months
ending March 31, 2000 from $0 during the three months ending March 31, 1999.

     Amortization  of deferred  financing  costs increased  by $4,114 or 3%, to
$123,13  during the three months ending March 31,2000 from $119,021  during the
three months  ending March 31,  1999. This  increase  resulted  primarily  from
increased  principal collections on the portfolio during the three monthsending
March 31, 2000.

     Depreciation  expense  increased  $7,594 or 30%,to $32,169 during the three
months ending March 31, 2000,  from $24,575 during the three months ending March
31, 1999. This increase  resulted from the purchase of computer  equipment,  and
the renovations of the Company's corporate headquarters.

     Net income  decreased  by $338,660  to a loss of $120,820  during the three
months  ending  March 31, 2000 from a gain of $217,840  during the three  months
ending March 31, 1999 as a result of the factors described above.

Liquidity and Capital Resources

     General.  During  the three  months  ending  March 31,  2000,  the  Company
purchased  810  loans  with an  aggregate  face  value  of $20.9  million  at an
aggregate  purchase price of $17.7 million or 85% of the face value.  During the
three  months  ending  March 31,  1999 the Company  purchased  465 loans with an
aggregate  face value of $7.8  million at an  aggregate  purchase  price of $6.9
million or 88% of aggregate  face value.  The Company's  portfolio  acquisitions
have been slower than anticipated  during the three months ending March 31, 2000
due to market conditions,  however the pace is ahead of historical purchases.The
Company's  pace of  acquisitions  has  historically  increased  during  the last
three-quarters of the year.

     The  Company's  portfolio of notes  receivable at March 31, 000, had a face
value of $213 million and included net notes receivable of approximately  $171.3
million.  The Company's  portfolio of notes  receivable at March 31, 1999, had a
face value of $155.5 million and included net notes  receivable of approximately
$114.1  million.  Net  notes  receivable  are  stated  at the  amount  of unpaid
principal,  reduced by 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  economically
advantageous, sale.

     During the three months ending March 31,2000,  the Company used cash in the
amount of $1,382,303 in its operating  activities primarily for interest expense
overhead,   and  litigation  expense  incidental  to  its  ordinary   collection
activities  and for the  foreclosure  and  improvement of OREO. The Company used
$3,658,835 in its investing  activities,  which  primarily  reflected the use of
$17,101,605  million for the  purchase of notes  receivable  offset by principal
collections  its notes  receivable and proceeds from sales of OREO. he amount of
cash used in operating and investing  activities was offset by $6,881,259 of net
cash  provided by financing  activities  primarily  for the  repayment of Senior
Debt. The above  activities  resulted in a net increase in cash at March 31,2000
over December 31,1999 of $1,840,121.

     In the  ordinary  course  of its  business,  the  Company  accelerates  and
forecloses upon real estate securing  nonperforming notes receivable included in
its portfolio.  As a result of such foreclosures at March 31, 2000 and 1999, the
Company held OREO recorded on the financial  statements at $5.8 million and $9.9
million,  respectively.  OREO is recorded  on the  financial  statements  of the
Company at the lower of cost or fair market value. The Company estimates,  based
on third party  appraisals  and broker price  opinions,  that the OREO inventory
held at March 31, 2000, in the  aggregate,  had a net  realizable  value (market
value  less  estimated  commissions  and  legal  expenses  associated  with  the
disposition of the asset)of  approximately $6.3 million based on market analyses
of the individual  properties less the estimated closing costs.  There can be no
assurance,  however,  that such  estimate  is  substantially  correct or that an
amount  approximating such amount would actually be realized upon liquidation of
such OREO.  The Company  generally  holds OREO as rental  property or sells such
OREO in the ordinary course of business when it is economically beneficial to do
so.

<PAGE>

     Cash Flow From Operating and Investing Activities

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

     At March 31,2000,  the Company had unrestricted  cash,cash  equivalents and
marketable  securities  of $7.8 million.  A portion of the  Company's  available
funds may be applied to fund acquisitions of companies or assets of companies in
complementary  or related fields  Although the Company from time to time engages
in discussions and negotiations,  it currently has no agreements with respect to
any particular acquisition.

     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
notesreceivable,  the bulk sale of performing loan portfolios,  sales and rental
of OREO,  continued  modifications  to the secured  debt credit  agree- ments or
additional  borrowing,  to repay the current liabilities arising from operations
and to repay the long term indebtedness of the Company.

 Cash Flow From Financing Activities

     Senior Debt. As of March 31, 2000, the Company owed an aggregate of $191.5
million to the Senior Debt Lender under 77 loans.

     The Senior Debt is  collateralized  by first liens on the  respective  loan
portfolios  for the purchase of which the debt was incurred and is guaranteed by
the Company.  The monthly payments on the Senior Debt have been, and the Company
intends for such  payments to  continue to be, met by the  collections  from the
respective  loan  portfolios.  The loan  agreements for the Senior Debt call for
minimum  interest and  principal  payments each month and  accelerated  payments
based upon the collection of the notes  receivable  securing the debt during the
preceding  month.  The Senior Debt accrues interest at variable rates between 0%
and 2.00% over the prime rate.The  accelerated  payment provisions of the Senior
Debt are generally of two types:  the first requires that all  collections  from
notes  receivable,other than a fixed monthly allowance for servicing operations,
be applied to reduce the Senior Debt,  and the second  requires a further amount
to be applied toward  additional  principal  reduction from available cash after
scheduled  principal  and interest  payments  have been made. As a result of the
accelerated payment  provisions,  the Company is repaying the amounts due on the
Senior  Debt at a rate faster than the  minimum  scheduled  payments.  While the
Senior Debt remains outstanding,  these accelerated payment provisions may limit
the cash flow which 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
$1,204,380  and $387,972 on March 31, 2000 and December 31, 1999,  respectively.
This  increase in  restricted  cash was due to the return of deposits  placed on
portfolio bids during November 1999.

     Total Senior Debt availability was approximately  $250 million at March 31,
2000, of which  approximately  $191 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 million of Senior Debt that it had syndicated to
other  banks  as of  such  date  as  outstanding  for  purposes  of  determining
availability  under the Senior Debt. As a result,  the Company has approximately
$67 million available to purchase additional  portfolios of notes receivable and
OREO.

     The  Company and its Senior Debt Lender have agreed to a fixed base rate on
Senior Debt of 8.75%, for the 12-month period April 1, 2000 thru March 31, 2001.

     The  Company's  Senior debt Lender has  provided  Tribeca  with a warehouse
financing  agreement of $2 million.  At March 31,  2000,  Tribeca had drawn down
$448,228 on the line.

     Harrison  First   Corporation  12%  Debentures.   In  connection  with  the
acquisition  of a loan portfolio  during 1995, the Company  offered to investors
$800,000 of  subordinated  debentures of which  $555,000 were  purchased.  As of
March 31, 2000 and December 31, 1999,  $310,776 and $332,976,  respectively,  of
these debentures were outstanding.The  Harrison 1st 12% Debentures bear interest
at the rate of 12% per annum payable in quarterly  installments.The principal is
to be repaid over three  years in ten equal  quarterly  installments  of $22,200
which  payments  commenced  on  September  30, 1997 with the  remaining  balloon
payment of $310,776 due June 30,  2000.  The  Harrison  1st 12%  Debentures  are
secured by a lien on the Company's  interest in certain notes receivable and are
subordinated to the Senior Debt  encumbering the loan portfolio.  The Company is
currently seeking to repay the maturity of this debt for over two years.

<PAGE>

     Financing  Agreements.The Company has a financing agreement with the Senior
Debt Lender  permitting it to borrow a maximum of approximately  $1,500,000 at a
rate equal to such  lender's  prime rate plus two percent  per annum.  Principal
repayment  of the lines is due six months from the date of each cash advance and
interest is payable monthly.  The total amounts  outstanding under the financing
agreements  as of March 31,  2000 and  December  31,  1999,  were  $368,394  and
$844,878,  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 be required to hold as
rental property to maximize its return.  The Company uses when  available,  OREO
sales  proceeds to  aggressively  pay down  financing  agreements to help reduce
interest expense.

     Further,  in 1998, the Company opened a financing agreement with a bank.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 2000,  and  December  31,  1999  $132,648  and  $136,134,  respectively,  are
outstanding on the financing agreement.

<PAGE>

                Part II Other Information

Item 1.  Legal Proceedings

    Asset Purchase Agreement Dispute.  On August 19, 1997, the Company commenced
a civil action in the United States District Court for the Southern  District of
New York against Preferred Credit  Corporation  ("PCC") and certain  individuals
alleging fraud,  breach of contract,and unjust enrichment in connection with the
purchase by the Company of $3.7 million in face value of notes  receivable  from
PCC for $1.8 million.  Through the Complaint, the Company sought recision of the
asset purchase agreement or damages incurred in connection with the purchase.

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

     Trial in this matter was held on the remaining  claims during January 2000.
On February 10,  2000,  the Court  entered  judgment in favor of the Company and
against PCC in the amount of $1.7 million plus interest  from May 7, 1997.  With
interest,  the amount due under the judgment is  approximately  $2 million as of
February 10, 2000.  The Company is  currently  in the process of  attempting  to
collect the amount due under the judgment.  The Company does not presently  know
if PCC has sufficient assets to satisfy the judgment.

     Letter  Agreement  Dispute.  On November 17,  1997, K Mortgage  Corporation
("K") filed a civil action in the United States  District Court for the Southern
District  Court of New York  against the  Company,  Tribeca,  and Thomas J. Axon
alleging  breach  of  contract,  fraud,  conversion  and  unjust  enrichment  in
connection with a May 9, 1997 letter agreement(the  "Letter Agreement") pursuant
to which Tribeca was to purchase certain assets of K and retain three principals
of K as paid consultants and employ a fourth,  Jim Ragan ("Ragan").  K sought to
recover 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.
Prior to trial,  the claims  asserted  by K against  Mr.  Axon were  voluntarily
dismissed.Trial  on the remaining claims was conducted in April and May of 1999.
Following the  conclusion of K's case in chief,  the court  dismissed K's claims
against the Company leaving open the remaining claims against Tribeca.  On March
6,  2000,  the  Court  entered  an  opinion  directing  Tribeca  to pay  certain
obligations owed by K Mortgage to third parties,  up to $135,000,  and dismissed
all of the remaining claims asserted by any of the parties.

     The Court has  directed K Mortgage to submit  certain  additional  evidence
regarding  the  amount of the third  party  obligations,  however,  the  Company
believes  that the  amount  of such  obligations  is less than  $135,000.  It is
currently  anticipated  that the amount of the third  party  obligations,  which
Tribeca will be ordered to pay,  will be  determined  by the Court in the second
quarter of 2000.  Provision  has been made in the financial  statements  for the
ultimate amount the Company  believes Tribeca will be required to pay to satisfy
the judgment.

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

<PAGE>

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

    During 1997 the Company  initiated efforts to foreclose on its Deed of Trust
on a 4,000-acre  ranch owned by the parties to the original  Shultz  Settlement.
Trial in this matter was held in  November  of 1999 and the  Company  obtained a
judgment of $600,000.In  connection with this judgment, the parties entered into
a Settlement  Agreement  pursuant to which  certain  additional  collateral  was
provided to the Company to secure the payment of the judgment amount.

<PAGE>

Item 2.  Changes in Securities
            None

Item 3.  Defaults Upon Senior Securities
            None

Item 4.  Submission of Maters to a Vote of Security Holders
            None
Item 5.  Other Information
            None

Item 6.  Exhibits and Reports on Form 8-K

<TABLE>

(a)                                     EXHIBIT TABLE
     Exhibit
     No.      Description
<S>         <C>
     3(a)   Restated Certificate of Incorporation.  Previously filed with,
            and incorporated herein by reference to, the Company's 10-KSB,
            filed with the Commission on December 31, 1994.
     (b)    Bylaws of the Company.  Previously filed with, and incorporated
     4(a)   15% Convertible Subordinate Debentures.  Previously filed with,
            and incorporated herein by reference to the Companys 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%Convert-
            ible 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 the Company's Form 10ksb
            filed with the Commission on March 31, 1997.

     10(e)  Agreement dated March 29, 1997 between the Company and the
            Citizen Banking Company. Previously filed.

     10(f)  Loan and Real Estate Purchase Agreement dated September 17, 1998
            by and among Franklin Credit Management Corporation and Home Gold
            Financial Inc. f/k/a Emergent Mortgage Corp. Previously filed
            with, and incorporated herein by reference to, the Company's Form
            8K filed with the Commission on September 30,1998.

     10(g)  Form of Subscription Agreement and Investor Representation, dated
            as of September 8,1998 between the Company and certain subscribers
            Previously filed.

     10(h)  Loan  Purchase  Agreement  dated  December  31,  1998  between the
            Company and Thomas Axon,  corparate  General  Partner.  Previously
            filed with the Commission on form 10ksb on April 14,1999.

     10(i)  Promissory  Note  between  Thomas  J. Axon and the  Company  dated
            December  31,1998.Previously  Filed  with the  Commission  on Form
            10ksb on April 16, 1999.

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

     10(k)  Loan Purchase  Agreement  dated March 31, 1999 between the Company
            and Steve Leftkowitz,  board member.Filed with the Commission with
            form 10ksb on March 30, 2000.

     11     Earnings per share. (Filed herewith)
</TABLE>

<PAGE>

                                      SIGNATURES

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

May 12, 2000
                        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        May 12, 2000
Thomas J. Axon         and Director
(Principal executive officer)


PETER SPIELBERGER      Executive Vice President, Treasurer,      May 12, 2000
Peter Spielberger      Chief Financial Officer
(Principal financial and accounting officer)


JOSEPH CAIAZZO         Vice President, Chief Operating           May 12, 2000
Joseph Caiazzo         Officer, Secretary and Director
(Secretary)





<PAGE>

Exhibit 11.

Computation of earnings per share first quarter 2000
<TABLE>
<CAPTION>



                              No. of Shares   Weight

<S>                                <C>                   <C>

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


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


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


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

                                  23,666,108

            Weighted   average   number   of             5,916,527
            shares

Earnings per Common share:
            Net Loss              $(120,820)             $   (.02)

</TABLE>


<PAGE>



<PAGE>

Exhibit 11.

Computation of earnings per share first quarter 1999.

<TABLE>

                              No. of Shares   Weight

<S>                               <C>               <C>

    6/30/98 Common stock           5,516,527
                             ---------------- 25%     1,379,132
                                   5,516,527        ------------

    9/30/98 Common stock          5,916,527
                                  ---------   25%     1,479,132
                                  5,916,527          ----------




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

    3/31/99 Common stock         5,916,527   25%     1,479,132
                             ----------------
                                 5,916,527

            Weighted   average   number   of
            shares                                       5,816,528

Earnings per Common share:
            Net Income                      $217,840     $   0.04

</TABLE>