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 September 30, 2000

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

            For the transition period from _____________ to _____________

                         Commission file number 0-17771

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


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


                               Six Harrison Street

                            New York, New York 10013

                                 (212) 925-8745

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




      Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
 Yes X No___ .

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

As of November 14, 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

                               September 30, 2000

                                 C O N T E N T S

PART I.  FINANCIAL INFORMATION                                           Page
                                                                         ----

Item 1.       Financial Statements

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

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

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

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

 Notes to consolidated Financial Statements                              7-9


Item 2.
 Management's Discussion and Analysis of Financial Condition
 and Results of Operations                                              10-15

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                 16

Item 2.  Changes in Securities                                             17

Item 3.  Defaults Upon Senior Securities                                   17

Item 4.  Submission of Matters to a Vote of Security Holders               17

Item 5.  Other Information                                                 17

Item 6.  Exhibits and Reports on Form 8-K                                  17

SIGNATURES                                                                 18

<PAGE>3
FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999

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

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

CASH AND CASH EQUIVALENTS                     $     7,047,178        6,015,567
RESTRICTED CASH                                       991,319          387,972

NOTES RECEIVABLE:
    Principal                                     242,407,861      206,262,651
    Purchase discount                             (21,451,210)     (18,449,141)
    Allowance for loan losses                     (24,056,037)     (22,185,945)
                                                 -------------     ------------
      Net notes receivable                        196,900,614      165,627,565

LOANS HELD FOR SALE                                 6,848,849        3,288,568
ACCRUED INTEREST RECEIVABLE                         3,383,006        2,425,358
OTHER REAL ESTATE OWNED                             6,340,536        7,699,468
OTHER RECEIVABLES                                   1,489,192        2,827,301
DEFERRED TAX ASSET                                  3,408,903        3,408,903
OTHER ASSETS                                        1,397,022        1,155,097
BUILDING, FURNITURE AND FIXTURES- Net                 847,224          884,903
DEFERRED FINANCING COSTS                            2,302,282        2,016,394
                                                 -------------     ------------

TOTAL ASSETS                                     $230,956,125     $195,737,096

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

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

ACCOUNTS PAYABLE AND ACCRUED EXPENSES               2,653,960        3,098,648
FINANCING AGREEMENTS                                2,292,911          791,075
NOTES PAYABLE                                     220,022,134      185,019,806
203(K) REHABILITATION ESCROWS PAYABLE                   2,186           18,691
SUBORDINATED DEBENTURES                                84,917          332,976
NOTES PAYABLE, AFFILIATES AND STOCKHOLDERS             34,721          109,350
DEFERRED TAX LIABILITY                              3,488,962        3,488,962
                                                 -------------    ------------
TOTAL LIABILITIES                                 228,579,791      192,859,508
                                                 -------------    ------------



STOCKHOLDERS' EQUITY

  Common Stock, $.01  par  value,
  10,000,000 authorized Shares; issued and
  outstanding 2000 and 1999
  5,916,527,   5,916,527                               59,167           59,167
  Additional paid-in capital                        6,985,968        6,985,968
  Accumulated deficit                              (4,668,801)      (4,167,547)
                                                 -------------     ------------
    Total stockholders' equity                      2,376,334        2,877,588
                                                 -------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $
                                                 $230,956,125      195,737,096
                                                 =============     ============
</TABLE>

See notes to consolidated financial statements.


<PAGE>4

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                Three Months Ended          Nine Months Ended
                          30-Sept-00    30-Sept-99    30-Sept-00     30-Sept-99
                          -----------   -----------   -----------    ----------
<S>                          <C>           <C>           <C>            <C>

REVENUES:

Interest Inccome          5,142,778     3,932,298     14,776,326     10,695,291
Pur dis earned              909,735     1,201,767      2,795,343      3,452,259
Gain on sale of portfolios        0        20,609        575,755        649,630
Gain on sale of originated   92,523        32,220        193,643        130,148
Gain on sale of other real  174,175        46,884        348,970        189,014
Rental Income               156,793       150,960        512,574        611,505
Other                       231,974       305,514        673,581        503,765
                         -----------   ----------    -----------    -----------
                          6,707,978     5,690,252     19,876,192     16,231,612
                         -----------  -----------    -----------    -----------

OPERATING EXPENSES:
 Interest expense         4,739,756     3,755,322     13,527,550      9,673,214
 Collection, general
 and administrative       2,072,169     1,866,335      6,031,234      5,701,784

 Provision for loan losses  164,342        25,137        336,047         25,137
 Amortization of deferred    93,893       120,843        376,586        378,304
 Depreciation                42,177        49,114        106,029        118,493
                         -----------   -----------   -----------     ----------
                          7,112,337     5,816,751    20,377,446      15,896,932
                          ----------   -----------   -----------     ----------

OPERATING (LOSS) INCOME    (404,359)     (126,499)     (501,254)        334,680
                          -----------   -----------   -----------    ----------




(LOSS)GAIN INCOME BEFORE
PROVISION FOR INCOME TAXES (404,359)     (126,499)     (501,254)        334,680
                         -----------   -----------   -----------     ----------

BENEFIT (PROVISION)
FOR INCOME TAXES                  0             0             0               0


                         -----------   -----------   -----------     ----------

NET INCOME (LOSS)           (404,359)     (126,499)     (501,254)       334,680
                          ===========   ===========   ===========    ==========

NET INCOME(LOSS)PER COMMON
SHARE:

Basic                          (0.07)        (0.02)        (0.08)          0.06
Dilutive                       (0.07)        (0.02)        (0.08)          0.06
                          ===========   ===========   ===========    ==========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING                5,916,527     5,916,527      5,916,527     5,916,527
                          ===========   ===========    ===========   ==========


</TABLE>


<PAGE>5

FRANKLIN CREDIT MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SEPTEMBER 30, 2000

-------------------------------------------------------------------------------

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

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


    Net Income                                             131,848      131,848

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

    Net (Loss)                                            (501,254)    (501,254)

-------------------------------------------------------------------------------
Bal,September 30,2000 5,916,527  59,167     6,985,968   (4,668,801)   2,376,334

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

See notes to consolidated financial statements.


<PAGE>6

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

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

                                       30-Sept-00      30-Sept-99

    <S>                                   <C>               <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                       (501,254)        334,680
  Adjustments to reconcile net
  Net cash  provided (used) by
   Depreciation                            106,029         118,493
   Amortization                            376,586         378,304
   Purchase discount earned             (2,795,343)     (3,452,259)
   Gain on Sale of REO                    (348,970)       (189,014)
   Provision for loan loss                 336,047          25,137
   Deferred tax provision                        0               0
  (Increase) decrease in:
   Accrued interest receivable            (957,648)       (473,242)
   Foreclosures on real estate                   0      (3,192,465)
   Assets held for sale                 (3,560,281)      2,949,073
   Other receivables                     1,338,109        (171,517)
   Other current assets                   (241,925)        263,395
  Increase (decrease) in:
   Accounts   payable  and  accrued       (444,688)       (300,471)
   203(k) rehabilitation escrow            (16,505)        (28,385)
   Due to affiliates                       (74,629)        (26,423)
                                          ---------       ---------
  Net cash (used)  by  operating        (6,784,472)     (3,764,694)
  activities

                                          ---------      ---------

CASH FLOWS FROM INVESTING
ACTIVITIES

  Distributions                                  0               0
  Additional capital contributed                 0               0
  Acquisition and loan fees               (935,840)       (762,942)
  Acquisition of notes receivable      (71,487,021)    (72,584,546)
  Acquisition of REO                             0               0
  Proceeds from sale of REO/Loan         6,528,549       4,913,878
  Foreclosures on real estate            3,943,543         999,232
  Reclassification of notes              4,253,236       3,471,690
  Loans originated                      (4,988,586)     (1,068,675)
  Acquisition of furniture & equipment     (68,351)       (233,337)
  Participation interest                         0        (262,824)
  Principal collection on notes         32,854,573      28,315,141
  (Increase) decrease in restricted       (603,347)       (195,000)
                                       ------------     ------------
  Net cash provided(used) by           (30,503,244)    (37,407,383)
  investing activities
                                       -------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments  on debenture  notes           (248,059)       (198,735)
  payable
  Payments on financing agreements      (3,911,820)     (4,973,279)
  Proceeds from financing                5,413,656       1,672,409
  Proceeds from notes payable           73,736,141      74,398,071
  Payments on notes payable            (38,733,813)    (28,086,639)
                                       ------------    ------------
  Net cash provided (used) by            6,256,105      42,811,827
  financing activities
                                       ------------     -----------

NET INCREASE IN CASH                     1,031,611       1,639,750

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

CASH, ENDED                              7,047,178       6,759,656
                                        ===========     ===========


</TABLE>


<PAGE>7



1.  NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>8

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

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

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

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

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

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

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

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

      Income Taxes - The Company recognizes income taxes under an asset and
liability method. Under this method, deferred tax assets are recognized for
deductible temporary differences and operating loss or tax credit carryforwards
and deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the financial statement
carrying amounts of existing assets and liabilities and their respective basis.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable 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 - Statement of Financial Accounting
Standards No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet for which it is practicable to
estimate that value. In cases where quoted market prices are not available,
fair values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates cannot be substantiated by comparison
to independent markets and, in many cases, could not be realized in immediate
settlement of the instruments. Statement No. 107 excludes certain financial
instruments and all nonfinancial assets and liabilities from its disclosure
requirements. Accordingly, the aggregate fair value amounts do not represent
the underlying value of the Company.


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

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

    b.  Notes Receivable - Fair value of the net note receivable portfolio is
        estimated by discounting the future 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 agreement
        and other short-term borrowings approximate their fair value.

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

    Business Segments -Statement of Financial Accounting Standards No. 131
    ("FAS 131"), Related Information, replaced the "industry segment" approach
     with the "management" approach. The management approach designates the
    internal reporting that is used by management for making operating
    decisions and assessing performance as the source of the Company's
    reportable segments. FAS 131 also requires disclosures about products and
    services, geographic areas and major customers. The adoption of FAS 131 did
    not affect results of operations or the financial position of the Company
    but did affect the Company's footnote disclosures (Note 12).

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

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

    Recent Pronouncements- The FASB recently issued Statement No. 137,
    Accounting for Derivative Instruments and Hedging Activities-Deferral of
    Effective Date of FASB Statement No. 133. The Statement defers for one year
    the effective date of FASB Statement No. 133 (`SFAS No. 133"), Accounting
    for Derivative Instruments and Hedging Activities. The rule now will apply
    to all fiscal quarters of all fiscal years beginning after June 15, 2000.
    The Statement permits early adoption as of the beginning of any fiscal
    quarter after its issuance. SFAS No. 133 will require the Company to
    recognize all derivatives on the statement of assets, liabilities and
    member's equity at fair value. Derivatives that are not hedges must be
    adjusted to fair value through income. If the derivative is a hedge,
    depending on the nature of the hedge, changes in the fair value of
    derivatives will either be offset against the change in fair value of the
    hedged assets, liabilities, or firm commitments through earnings or
    recognized in other comprehensive income until the hedged item is
    recognized in earnings. The ineffective portion of a derivative's change in
    fair value will be immediately recognized in earnings. The Company has not
    yet determined if it will early adopt and what the effect of SFAS No. 133
    will be on the earnings and financial position of the Company.

<PAGE>10

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

General

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

      Loan and OREO Acquisitions. During the nine months ended September 30,
2000, the Company purchased 2,245 loans in twenty-four portfolios consisting
primarily of first and second mortgages, with an aggregate face value of $83.4
million at an aggregate purchase price of $73.2 million or 88% of the face
value and no OREO properties, compared with the purchase during the nine months
ended September 30, 1999 of 2,130 loans with an aggregate face value of $78.8
million at an aggregate purchase price of $72.6 million or 92% 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 increases in the level of interest income during future periods.
Payments streams are generated once the loans are incorporated into the
Company's loan tracking system.

      Management intends to continue to expand the Company's earning asset base
through the acquisition of additional portfolios including performing first and
second mortgages at a positive interest rate spread based upon the Company's
cost of funds. The Company believes that its current infrastructure is adequate
to service additional loans without any material increases in collection,
general and administrative expenses excluding personnel expenses. There can be
no assurance the Company will be able to acquire any additional loans on
favorable terms or at all.

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

      During the nine months ending September 30, 2000 Tribeca originated 80
mortgages with an aggregate initial principal amount of $5.0 million, compared
to 13 mortgages with an aggregate initial principal amount of $1.1 million in
mortgages during the nine months ending September 30, 1999. During the nine
months ending September 30, 2000, Tribeca incurred an operating loss of $0.1
million compared to an operating loss of $0.4 million during the nine months
ended September 30, 1999. This decrease in loss reflected reduced
core-operating expenses within Tribeca and successful efforts to increase loan
originations and loan sales, which increased fee income during the nine months
ending September 30, 2000. As of September 30, 2000, Tribeca had approximately
$6.8 million face value of loans held for sale. Revenues and expenses related
to such loans, other than periodic interest payments, and fee income are
expected to be realized upon sale of such loans.

      Cost of Funds. The 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 September 30, 2000 and
September 30, 1999 were 9.2% and 8.9%, respectively. As of September 30, 2000,
the Company had ninety-three loans outstanding with an aggregate principal
balance of $219.8 million. Additionally the Company with Tribeca has financing
agreements with the Senior Debt Lender, which had an outstanding balance of
$2.0 million at September 30, 2000.

       The majority of the loans purchased by the Company bear interest at a
fixed rate, Senior Financing is at a variable rate adjusted with the prime rate.
Consequently, changes in market interest rate conditions have caused direct
corresponding changes in interest income. Management and its Senior Debt Lender
have agreed to a fixed base rate on Senior Debt of 8.75%, for the 12-month
period April 1, 2000 thru March 31, 2001. Any increases, during this period in
the prime rate will not negatively impact the net income of the Company.

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



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

      Total revenue, which is comprised of interest income, purchase discount
earned, gains on bulk sale of notes, gain on sale of notes receivable
originated, gain on sale of OREO, rental income and other income, increased by
$1,017,726 or 18%, to $6,707,978 during the three months ended September 30,
2000, from $5,690,252 during the three months ended September 30, 1999.

      Interest income on notes receivable increased by $1,210,480 or 31%, to
$5,142,778 during the three months ended September 30, 2000 from $3,932,298
during the three months ended September 30, 1999. The Company recognizes
interest income on notes included in its portfolio based upon three factors:(i)
interest on performing notes, (ii) interest received or committed with
settlement payments on non-performing notes and (iii) the balance of
settlements in excess of the carried face value. This increase resulted
primarily from a 21% increase in the size of the portfolio to $ 242.4 million
at September 30, 2000,from $200.5 million at September 30, 1999.

      Purchase discount earned decreased by $292,032 or 24%, to $909,735 during
the three months ended September 30, 2000 from $1,201,767 during the three
months ended September 30, 1999. This decrease reflected the growing proportion
of the Company's portfolio comprised of performing loans purchased at smaller
discounts than the non-performing high-discount loans historically purchased by
the Company, which results in income being realized as interest rather than
purchase discount, and increases in the reserves on older portfolio's held by
the Company.

      Gain on bulk sale of notes receivable decreased by $20,690. There were no
bulk loan sales during the three months ended September 30, 2000. The Company
may consummate bulk sales of notes from time to time as may be economically
advantageous.

      Gain on sale of notes originated by Tribeca increased by $60,303 or 187%
to $92,523 during the three months ended September 30, 2000 from $32,220 during
the three months ended September 30, 1999. This increase reflected an increase
in note originated and sold by Tribeca during the three months ended September
30, 2000, compared to the three months ended September 30, 1999.

      Gain on sale of OREO increased by $127,291 or 272% to $174,175 during the
three months ended September 30, 2000 from $46,884 during the three months
ended September 30, 1999. This increase resulted primarily from new REO
properties with higher value sold during the three months ended September 30,
2000 as compared to the three months ended September 30, 1999. The Company sold
27 and 32 OREO properties respectively, during the three-month period ended
September 30, 2000 and September 30, 1999.

      Rental income increased by $5,833 or 4% to $156,793 during the three
months ended September 30, 2000, from $150,960 during the three months ended
September 30, 1999. This increase primarily reflected the improved collection
on past due rent, and increases in the annual rent charged during the three
months ended September 30, 2000 as compared to the three months ended June 30,
1999. The Company had 59 and 79 properties held for rent during the three-month
period ended September 30, 2000 and September 30, 1999 respectively.

      Other income decreased by $73,540 or 24%, to $231,974 during the three
months ended September 30, 2000 from $305,514 during the three months ended
September 30, 1999. This decrease reflected decreases in prepayment penalties
resulting from the decrease in prepayments during the three months ended
September 30, 2000 as compared to the three months ended September 30, 1999.

      Total operating expenses increased by $1,295,586 or 22% to $7,112,337
during the three months ended September 30, 2000 from $5,816,751 during the
three months ended September 30, 1999. Total operating expenses includes
interest expense, collection, general and administrative expenses, provisions
for loan losses, amortization of deferred financing costs and depreciation
expense.

      Interest expense increased by $984,434 or 26%, to $4,739,756 during the
three months ended September 30, 2000, from $3,755,322 during the three months
ended September 30, 1999. This increase resulted primarily from the increase in
Senior Debt reflecting the acquisition of notes receivables. Total debt
increased by $43.8 million or 25%, to $222.4 million as of September 30, 2000,
from $178.5 million as of September 30, 1999. Total debt consists principally
of Senior Debt, and also includes debentures, and financing agreements and
loans from affiliates.

      Collection, general and administrative expenses increased by $205,834 or
11% to $2,072,169 during the three months ended September 30, 2000 from
$1,866,335 during the three months ended September 30, 1999. Collection,
general and administrative expense consists primarily of personnel expense, and
all other collection expenses including OREO related expense, litigation
expense, and miscellaneous collection expense.

        Personnel expenses increased by $271,696 or 35% to $1,038,949 during
the three months ended September 30, 2000 from $767,253 during the three months
ended September 30, 1999. This increase resulted largely from increases in
staffing and the experience level of personnel in the Company's core business.
All other collection expenses decreased by $65,862 to $1,033,220 during the
three months ended September 30, 2000 from $1,099,082 during the three months
ended September 30, 1999. This decrease reflected decreases in core operating
expenses associated with reductions in corporate legal, office, computer
consulting and supplies, and collection expenses primarily from decreased OREO
activity, negotiated fixed litigation expenses and the growth of the Company's
performing portfolio, which reduces collection expenses.

      Provisions for loan loss increased by $139,205 or 554% to $164,342 due
primarily to an excess of losses associated with three portfolios over the
estimated reserve for the three months ended September 30, 2000.

      Amortization of deferred financing costs decreased by $26,950 or 22% to
$93,893 during the three months ended September 30, 2000, from $120,843 during
the three months ended September 30, 1999. This decrease resulted from
decreased prepayment collections, which lowered repayment of the senior debt
during the three months ended September 30, 2000 as compared to the three
months ended September 30, 1999.

      Depreciation expense decreased by $6,937 or 14%, to $42,177 during the
three months ended September 30, 2000, from $49,114 during the three months
ended September 30, 1999.

      Operating loss increased by $277,859 to $404,358 during the three months
ended September 30, 2000 from $126,499 during the three months ended September
30, 1999.

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

      Net loss increased by $277,859 to a net loss of $404,358 during the three
months ended September 30, 2000 from a net loss of $126,499 during the three
months ended September 30, 1999.

Nine Months Ended September 30, 2000 Compared to Nine Months Ended
September 30, 1999.

      Total revenue, increased by $3,644,580 or 22%, to $19,876,192 during the
nine months ended September 30, 2000, from $16,231,612 during the nine months
ended September 30, 1999.

      Interest income on notes receivable increased by $4,081,035 or 38%, to
$14,776,326 during the nine months ended September 30, 2000 from $10,695,291
during the nine months ended September 30, 1999. This increase resulted
primarily from the growth in size of the portfolio due to the purchase of $91.7
million in high yielding performing notes acquired by the Company between
October 1999 and September 2000,which was only partially offset by collections,
prepayments, and loan sales.

      Purchase discount earned decreased by $656,916 or 19%, to $2,795,343
during the nine months ended September 30, 2000 from $3,452,259 during the nine
months ended September 30, 1999. This decrease reflected the growing proportion
of the Company's portfolio comprised of performing loans purchased at smaller
discounts than the non-performing high-discount loans historically purchased by
the Company, which results in income being realized as interest rather than
purchase discount, and increases in reserves in maturing portfolios, which
lower discount available to be earned during the nine months ended September
30, 2000.

      Gain on bulk sale of notes receivable decreased by $73,874 to $575,756 or
11% during the nine months ended September 30, 2000, from $649,630 during the
nine months ended 1999. This decrease reflected a decrease in aggregate bulk
sales during the nine months ended September 30, 2000, which was only partially
offset by the greater proportional gain realization on the properties held
during the nine months ended September 30, 2000. The Company sold $1.4 million
of notes in sales during the nine months ended September 30, 2000 as compared
$5.6 million during the nine months ended September 30, 1999.

      Gain on sale of notes originated by Tribeca increased by $63,495 or 49%
to $193,643 during the nine months ending September 30, 2000 from $130,148
during the nine months ended September 30, 1999. This increase in note
originated and sold by Tribeca during the nine months ended September 30, 2000
compared to the nine months ended September 30, 1999.

      Gain on sale of OREO increased by $159,956 or 85% to $348,970 during the
nine months ended September 30, 2000, from $189,014 during the nine months
ended September 30, 1999. The Company sold 54 OREO properties during the nine
months ended September 30, 2000 and 79 OREO properties during the nine months
ended September 30, 1999. This increase resulted primarily from new REO
properties with higher value sold and the decision to sale certain rental
properties where it was more advantageous to do so during the nine months ended
September 30, 2000 as compared to the nine months ended September 30, 1999.

       Rental income decreased by $98,931 or 16% to $512,574 during the nine
months ended September 30, 2000, from $611,505 during the nine months ended
September 30, 1999. This decrease reflected an increase in the number of rental
properties sold where is was more advantageous to sale than to rent during the
nine months ended September 30, 2000 as compared to the nine months ended
September 30,1999. The Company had 59 and 79 properties held for rent during
the nine months ended September 30, 2000 and September 30, 1999 respectively.

      Other income increased by $169,816 or 34%, to $673,581 during the nine
months ended September 30, 2000 from $503,765 during the nine months ended
September 30, 1999. This increase reflected increases in prepayment penalties,
late charges, and modification fees resulting from the increase in size of the
Company's portfolio and loan fees associated with Tribeca loans sold.

      Total operating expenses increased by $4,480,514 or 28%, to $20,377,446
during the nine months ended September 30, 2000, from $15,896,932 during the
nine months ended September 30, 1999.

      Interest expense increased by $3,854,336 or 40%, to $13,527,550 during
the nine months ended September 30, 2000 from $9,673,214 during the nine months
ended September 30, 1999. This increase resulted primarily from the increase in
Senior Debt reflecting the acquisition of $91 million in notes receivables and
increases in costs of funds due to three increases in the prime rate. Costs of
funds were 9.2% and 8.3% during the nine months ended September 30, 2000 and
September 30, 1999. Total debt increased by $43.8 million or 25%, to $222.4
million as of September 30, 2000 from $178.5 million as of September 30, 1999.
Total debt includes Senior Debt, debentures, and financing agreements and loans
from affiliates.

      Collection, general and administrative expenses increased by $329,450 or
6%, to $6,031,234 during the nine months ended September 30, 2000 from $
5,701,784 during the nine months ended September 30, 1999.

      Personnel expenses increased by $650,634 or 29%, to $2,877,838 during the
nine months ended September 30, 2000 from $2,227,204 during the nine months
ended September 30, 1999. The increase reflected the staffing and the
experience level of personnel in the Company's core business during the nine
months ended September 30, 2000. All other collection expenses decreased by
$321,184 or 9% to $3,153,396 during the nine months ended September 30, 2000
from $3,474,580 during the nine months ended September 30, 1999. This decrease
reflected decreases in core operating expenses associated with reductions in
legal, office, computer consulting and supplies, and collection expenses
primarily from decreased OREO activity, negotiated fixed litigation expenses
and the growth of the Company's performing portfolio, which reduces collection
expenses.

      Provisions for loan losses increased by $310,910 to $336,047 during the
nine months ended September 30, 2000 from $25,137 during the nine months ended
September 30, 1999. This was due primarily to an excess of losses associated
with three portfolios over the estimated reserve during the nine months ended
September 30, 2000.

      Amortization of deferred financing costs increased by $1,718 to $376,586
during the nine months ended September 30, 2000 from $378,304 during the nine
months ended September 30, 1999.

      Depreciation expense decreased by $12,464 or 11%, to $106,029 during nine
months ended September 30, 2000, from $118,493 during the nine months ended
September 30, 1999. This decrease was due to an over-accrual of this expense
during the nine-month ending September 30, 1999, which was subsequently
corrected.

      Operating income decreased by $835,934 to a loss of $501,254 during the
nine months ended September 30, 2000 from a gain of $334,680 during the nine
months ended September 30, 1999.

      During the nine months ended September 30, 2000 and the nine months ended
September 30,1999, there were no provisions for income taxes due to an
operating loss.

      Net income decreased by $835,934 to loss of $501,254 during the nine
months ended September 30, 2000 from a gain of $334,680 during the nine months
ended September 30, 1999.

Liquidity and Capital Resources

          General. During the nine months ended September 30, 2000 the Company
purchased 2,352 loans in twenty-four portfolios with an aggregate face value of
$83.4 million at an aggregate purchase price of $73.2 million or 88% of face
value and no OREO properties. During the nine months ended September 30, 1999
the Company purchased 2,130 loans in twenty portfolios with an aggregate face
value of $78.7 million at an aggregate purchase price of $72.6 million or 92%
of aggregate face value. The Company's portfolio acquisitions have been slower
than anticipated during the nine months ended September 30, 2000 due to
competitive conditions in the acquisition market. Nevertheless, the pace of
acquisitions increased during the third quarter fueled by a large purchase of
$32.3 million of performing and sub-performing loans from one vendor.

      The Company's portfolio of notes receivable at September 30, 2000 had a
face value of $242.4 million and included net notes receivable of approximately
$196.9 as compared with a face value of $200.4 million and net notes receivable
of approximately $159.8 million as of September 30, 1999. Net notes receivable
are stated at the amount of unpaid principal, net of purchase discount,
allowance for loan losses. The Company has the ability and intent to hold its
notes until maturity, payoff or liquidation of collateral or, where deemed to
be economically advantageous, sale assets.

      During the nine months ended September 30, 2000, the Company used cash in
the amount of $6,784,472 in its operating activities primarily for interest
expense, and increased infrastructure in the Company's core business,
litigation expense incidental to its ordinary collection activities and for the
foreclosure and improvement of OREO. The Company used $30,503,064 in its
investing activities, primarily reflecting purchases of notes receivable which
purchases were offset by principal collections upon its notes receivable and
proceeds from sales of OREO. The amount of cash used in operating and investing
activities was funded by $36,256,105 of net cash provided by financing
activities, including primarily, a net increase in Senior Debt of $73.7 million.
 The above activities resulted in a net increase in cash at September 30, 2000
over December 31, 1999 of $1,031,611.

      In the ordinary course of its business, the Company accelerates and
forecloses upon real estate securing non-performing notes receivable included
in its portfolio. As a result of such foreclosures and selective direct
purchases of OREO, at September 30, 2000 and 1999, the Company held OREO
recorded on the financial statements at $6.3 million and $9.3 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
September 30, 2000, in the aggregate, had a net realizable value (market value
less estimated commissions and legal expenses associated with the disposition
of the asset) of approximately $6.8 million. There can be no assurance,however,
that such estimate is substantially correct or that an amount approximating
such amount would actually be realized upon liquidation of such OREO. The
Company generally holds OREO as rental property or sells such OREO in the
ordinary course of business when it is economically beneficial to do so.

Cash Flow

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

      At September 30, 2000, the Company had unrestricted cash, cash
equivalents and marketable securities of $7.0 million.

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

Financing Activities

      Senior  Debt.  As of  September  30,  2000,  the Company owed an
aggregate of $219.8 million to the Lender of Senior Debt, under 93 loans.

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

      Certain of the Senior Debt credit agreements required establishment of
restricted cash accounts, funded by an initial deposit at the loan closing and
additional deposits based upon monthly collections up to a specified dollar
limit. The restricted cash is maintained in an interest bearing account, held
by the Company's Senior Debt Lender. Restricted cash may be accessed by the
Senior Debt Lender only upon the Company's failure to meet the minimum monthly
payment due if collections from notes receivable securing the loan are
insufficient to satisfy the installment due. Historically, the Company has not
called upon these reserves. The aggregate balance of restricted cash in such
accounts was $991,318 and $1,298,446 on September 30, 2000 and September 30,
1999 respectively.

      Total Senior Debt availability was approximately $250 million at
September 30, 2000, of which approximately $186.2 million had been drawn down
as of such date. Additionally the Senior Debt Lender has verbally informed the
Company that it will not deem approximately $4 million of Senior Debt that it
had syndicated to other banks as of such date as outstanding for purposes of
determining availability under of Senior Debt. As a result, the Company has
approximately $35 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 $2 million. At September 30, 2000, Tribeca had drawn
down $2.0 million 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
September 30, 2000 and December 31, 1999, $84,917 and $332,176, respectively,of
these debentures were outstanding. The Harrison 1st 12% Debentures bear
interest at the rate of 12% per annum payable in quarterly installments. The
principal is to be repaid over three years in ten equal quarterly installments
of $22,200 which payments commenced on September 30, 1997 with the remaining
balloon payment of $333,000 due September 30, 2000. The Harrison 1st 12%
Debentures are secured by a lien on the Company's interest in certain notes
receivable and are subordinated to the Senior Debt encumbering the loan
portfolio. The Company was due to make a balloon payment to pay off this debt,
however $97,048 was refinanced with a few of the prior debenture holders, this
debt will be repaid over eighteen months. The remaining balance to debentures
holders was paid off with financing provided by the Company's Senior Debt
Lender.

      OREO Line of Credit. The Company has a line of credit with the Senior
Debt Lender permitting it to borrow a maximum of approximately $1,500,000 at a
rate equal to such lender's prime rate plus two percent per annum. Principal
repayment of the lines is due six months from the date of each cash advance and
interest is payable monthly. The total amounts outstanding under the financing
agreements as of September 30, 2000 and December 31, 1999, were $168,000 and
$615,720 respectively. Advances made under the line of credit were used to
satisfy senior lien positions and fund capital improvements in connection with
foreclosures of certain real estate loans financed by the Company. Management
believes the ultimate sale of these properties will satisfy the related
outstanding financing agreements and accrued interest, as well as surpass the
collectible value of the original secured notes receivable. Management has
reached an agreement in principal with its Senior Debt Lender to increase the
availability under this credit facility to cover additional properties
foreclosed upon by the Company, which the Company may be required to hold as
rental property to maximize its return.

<PAGE>16

                            Part II Other Information

Item 1.  Legal Proceedings

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

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

            Trial in this matter was held on the remaining claims during
January 2000. At the conclusion of the trial, the Court orally ruled in favor
of the Company and against PCC. On February 10, 2000, 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 known if PCC has sufficient assets to
satisfy the judgment. The Company has collected $ 60,000 towards this
receivable as of September 30, 2000.

      Letter Agreement Dispute. On November 17, 1997, K Mortgage Corporation
("K") filed a civil action in the United States District Court for the Southern
District Court of New York against the Company, Tribeca, and Thomas J. Axon
alleging breach of contract, fraud, conversion and unjust enrichment in
connection with a May 9, 1997 letter agreement (the "Letter Agreement")
pursuant to which Tribeca was to purchase certain assets of K and retain three
principals of K as paid consultants and employ a fourth, Jim Ragan ("Ragan"). K
sought to recover damages of $10 million for the alleged failure of the Company
to make certain payments to third parties, provide Ragan with an employment
agreement and provide the three other 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, and June 26, 2000 the Court entered decision
directing Tribeca to pay $ 20,000 to one creditor of K and dismissed all
further claims against Tribeca. K Mortgage has requested the Court to
reconsider its prior decision, however, on July 27, 2000 the Court denied the
motion for reconsideration and marked the matter closed.

      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.
Trial in this matter commenced on October 22, 2000. During the course of the
trial, the Company agreed to pay $55,000 to Rosen in full settlement of the
matter and the case was dismissed. Pursuant to the settlement, the payment to
Rosen is due November 24, 2000.

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

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

<PAGE>17

Item 2.  Changes in Securities

            None

Item 3.  Defaults Upon Senior Securities

            None

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


Item 5.  Other Information

            None

Item 6.  Exhibits and Reports on form 8-K

            None

(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.

   4(a)     15% Convertible Subordinate Debentures. Previously filed with, and
            incorporated herein by reference to, the Company's Registration
            Statement on Form S-4, No 33-81948, filed with the Commission on
            November 24, 1994.
    (b)     Warrants associated with principal repayment of the 15% Convertible
            Subordinated Debentures.  Previously filed with, the Company's
            Registration Statement on Form S-4, No 33-81948, filed with the
            Commission on November 24, 1994.

  10(d)     Employment Agreement dated December 4, 1996, between the Company
            and Joseph Caiazzo.  Previously filed with, and incorporated herein
            by reference to, the Company's Form 10K-SB, filed with the
            Commission on March 31, 1997.

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

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

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

  10(h)     Loan Purchase Agreement dated December 31, 1998 between the Company
            and Thomas Axon, corporate General Parter.  Previously filed with,
            and incorporated herein by reference to, the Company's Form 10K-SB,
            filed with the Commission on April 16, 1999.

  10(i)     Promissory Note between Thomas J.Axon and the Company dated
            December 31, 1998.  Filed with the Commission on December 31, 1998.
            Previously filed with, and incorporated herein by reference to, the
            Company's Form 10K-SB, filed with the Commission on April 16, 1999.

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

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

  11        Computation of earnings per share. Filed herewith.


<PAGE>



                                   SIGNATURES

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

November 14, 2000             FRANKLIN CREDIT MANAGEMENT
                                    CORPORATION



                                    By:   THOMAS J.AXON
                                    -----------------------------
                                          Thomas J. Axon
                                          President and 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                  November 14, 2000
----------                                                   -----------------

Seth Cohen
(Principal executive officer)



JOSEPH CAIAZZO      Executive Vice President                 November 14, 2000
--------------                                               -----------------
Joseph Caiazzo      Chief Operating Officer and
                    Director



KIMBERLEY SHAW      Vice President, Chief Financial Officer  November 14, 2000
--------------                                               -----------------

Kimberley Shaw
(Principal Financial Officer)


<PAGE>


Exhibit 11.

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

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

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

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

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

   09/30/00 Common stock         5,916,527
                              --------------    25%
                                 5,916,527               1,479,132




    Weighted average number of                          5,916,527
    shares

Earnings per Common share:
            Net Income             (501,254)             $   (.08)

</TABLE>



<PAGE>


Exhibit 11.

Computation of earnings per share third quarter 1999
<TABLE>
<CAPTION>



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

   12/30/98 Common stock        5,916,527
                             ----------------      25%
                                5,916,527                     1,479,132

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

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

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


   Weighted   average   number   of                           5,916,527
   shares

   Earnings per Common share:
       Net Income                         334,680               $   .06


</TABLE>