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

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

|X|

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

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: 0-30507

Primecore Mortgage Trust, Inc.
(Exact name of registrant as specified in its charter)

Maryland 94-3324992
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

99 El Camino Real
Menlo Park, CA 94025
(Address of principal offices) (zip code)

(650) 328-3060
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)

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

The number of shares of convertible preferred stock outstanding as of March
31, 2001 was 21,037,719. The number of shares of common stock outstanding as of
March 31, 2001 was 100.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.............................................. 4

Balance Sheets as of March 31, 2001 (unaudited) and
December 31, 2000.......................... 5

Statements of Operations for the Three Months Ended
March 31, 2001 and 2000 (unaudited)........ 6

Statement of Shareholders' Equity for the Three Months Ended
March 31, 2001 (unaudited)................. 7

Statements of Cash Flows for the Three Months
Ended March 31, 2001 and 2000 (unaudited).. 8

Notes to the Financial Statements (unaudited)..................... 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................. 16

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....... 20

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS................................................ 21

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS........................ 21

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................. 21

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............. 21

ITEM 5. OTHER INFORMATION................................................ 21

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................. 22

(a) Exhibits..................................................... 22

(b) Reports on Form 8-K.......................................... 22

SIGNATURES....................................................... 23

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Attached are the following unaudited financial statements of Primecore
Mortgage Trust, Inc. (the "Company"):

(1) Balance Sheets as of March 31, 2001 (unaudited), and December 31, 2000

(2) Statements of Operations for the Three Months ended March 31, 2001
and 2000 (unaudited)

(3) Statement of Shareholders' Equity for the Three Months ended
March 31, 2001 (unaudited)

(4) Statements of Cash Flows for the Three Months ended March 31, 2001
and 2000 (unaudited)

(5) Notes to Financial Statements (unaudited)

The financial statements referred to above should be read in conjunction
with the Company's audited financial statements for the year ended December 31,
2000 as filed with the Securities and Exchange Commission in our Annual Report
on Form 10-K filed March 30, 2001.

PRIMECORE MORTGAGE TRUST, INC.

BALANCE SHEETS
As of March 31, 2001 (unaudited) and December 31, 2000

March 31, 2001 December 31, 2000
(unaudited)
--------------------- --------------------

ASSETS:
Investments in real estate under development............................ $ 178,659,634 $ 174,362,219
Investments in real estate under development by affiliates.............. 39,476,226 42,050,737
Cash and cash equivalents............................................... 73,220 --
Other assets, net....................................................... 79,353 132,135
--------------------- --------------------

Total assets....................................................... $ 218,288,433 $ 216,545,091
===================== ====================

LIABILITIES AND SHAREHOLDERS' EQUITY:
Notes payable (including $7,596,480 and $7,622,535 to affiliates at
March 31,2001, and December 31, 2000, respectively).................. $ 31,875,983 $ 38,787,264
Secured line of credit.................................................. 8,592,537 6,644,692
Accrued expenses and other.............................................. 776,228 723,512
Bank overdraft.......................................................... 1,656,957 3,086,941
Preferred stock dividends payable....................................... 2,015,087 1,901,863
Payable to affiliate.................................................... 2,434,447 236,972
--------------------- --------------------

Total liabilities.................................................. 47,351,239 51,381,244
--------------------- --------------------

SHAREHOLDERS' EQUITY:
Preferred stock: par value $0.01, 40,000,000 shares authorized;
21,037,719 and 19,946,445 shares issued and outstanding at
March 31,2001, and December 31, 2000, respectively; entitled to $10
per share in liquidation before any distributions to common
liquidation before any distributions to common....................... 210,198,601 199,285,861
Common stock: par value $0.01, 10,000,000 shares authorized; 100
shares issued and outstanding at March 31, 2001, and December 31,
2000, respectively 1 1
Retained deficit........................................................ (39,261,408) (34,122,015)
--------------------- --------------------

Total shareholders' equity......................................... 170,937,194 165,163,847
--------------------- --------------------

Total liabilities and shareholders' equity......................... $ 218,288,433 $ 216,545,091
===================== ====================

The accompanying notes are an integral part of these statements.

PRIMECORE MORTGAGE TRUST, INC.

STATEMENTS OF OPERATIONS
For the three months ended March 31, 2001 and 2000
(unaudited)

Three Months Three Months
Ended Ended
March 31,2001 March 31,2000
----------------- -------------------

REVENUES:
Income from completed real estate development (including
$0 and $526,610 from affiliates for the three months
ended March 31, 2001 and 2000, respectively)..... $ 3,978,796 $ 2,666,240

Other .............................................. 81 32
----------------- -----------------
Total revenues................................... 3,978,877 2,666,272
----------------- -----------------

EXPENSES:
Management fees paid to an affiliate.................. 3,122,154 2,465,052
General, administrative and other..................... 44,658 199,952
----------------- -----------------
Total expenses................................... 3,166,812 2,665,004
----------------- -----------------

Net income....................................... 812,065 1,268
Preferred stock dividends........................ (5,951,458) (5,366,223)
----------------- -----------------
Net loss allocable to common..................... $ (5,139,393) $ (5,364,955)
================= =================

Basic and diluted net loss per common share........... $ (51,394) $ (53,650)
================= =================

Basic and diluted weighted-average shares outstanding. 100 100
================= =================

The accompanying notes are an integral part of these statements.

PRIMECORE MORTGAGE TRUST, INC.

STATEMENT OF SHAREHOLDERS' EQUITY
For the three months ended March 31, 2001
(unaudited)

Retained
Preferred Stock Common Stock Deficit Total
--------------- ------------ ------- -----

Shares Amount Shares Amount
------ ------ ------ ------

Shareholders' equity at
December 31, 2000................. 19,946,445 $199,285,861 100 $ 1 $(34,122,015) $165,163,847
Issuance of preferred stock.......... 1,124,152 11,241,520 -- -- -- 11,241,520
Issuance of preferred stock under
dividend reinvestment plan........ 170,830 1,708,300 -- -- -- 1,708,300
Redemption of preferred stock........ (203,708) (2,037,080) -- -- -- (2,037,080)
Dividends to preferred
shareholders...................... -- -- -- -- (5,951,458) (5,951,458)
Net income........................... 812,065 812,065
-- -- -- --
-------------------------------------------------------------------------------------
Shareholders' equity at
March 31, 2001.................... 21,037,719 $210,198,601 100 $ 1 $(39,261,408) $170,937,194
=====================================================================================

The accompanying notes are an integral part of these statements.

PRIMECORE MORTGAGE TRUST, INC.

STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2001 and 2000
(unaudited)

Three Months Three Months
Ended Ended
March 31,2001 March 31,2000
----------------------- ------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................................... $ 812,065 $ 1,268
(Decrease) increase in accrued expenses, bank overdraft and other.... (1,377,268) 836,093
Increase (decrease) in payable to affiliate.......................... 2,197,475 (125,282)
Decrease in other assets, net........................................ 52,784 49,398
----------------------- -----------------
Net cash provided by operating activities....................... 1,685,056 761,477
----------------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate under development...................... (24,407,892) (52,534,972)
Investments in real estate under development by affiliates........ (2,313,483) (9,599,699)
Return of investments in real estate under development............ 20,110,477 37,163,576
Return of investments in real estate under development by
affiliates........ 4,887,993 14,246,802
Decrease in receivable from affiliate............................. -- 900,000
----------------------- -----------------
Net cash used in investing activities........................... (1,722,905) (9,824,293)
----------------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemptions of preferred stock.................................... (2,037,080) (2,982,350)
Proceeds from sales of preferred stock, net of offering costs..... 11,241,520 --
Issuance of notes payable......................................... 5,564,700 14,543,471
Additions to notes payable from reinvested interest 278,237 --
Repayment of notes payable........................................ (12,754,219) --
Borrowings on secured line of credit.............................. 1,947,845 775,000
Payment of preferred stock dividends.............................. (4,129,934) (3,948,833)
----------------------- -----------------
Net cash used in financing activities.......................... 111,069 8,387,288
----------------------- -----------------
Net increase (decrease) in cash and cash equivalents............ 73,220 (675,528)
Beginning cash and cash equivalents....................................... -- 675,528
----------------------- -----------------

Ending cash and cash equivalents.......................................... $ 73,220 $ --
======================= =================

Cash paid for interest, net of amounts capitalized of $1,278,450
and $427,226, for the three months ended March 31, 2001, and 2000,
respectively $ -- $ --
======================= =================

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Investments in real estate under development received in exchange for
unsecured notes........................................................ $ -- $ 395,000
Investments in real estate under development by affiliates received in
exchange for unsecured notes........................................... -- 170,000
Reinvested Preferred Stock dividends 1,708,300 1,430,290

The accompanying notes are an integral part of these statements.

PRIMECORE MORTGAGE TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2001
(unaudited)

1. ORGANIZATION AND BUSINESS:

Organization

Primecore Mortgage Trust, Inc., a Maryland corporation, was formed on March 18,
1999 (inception) and commenced operations effective May 1, 1999 as a real estate
investment trust (REIT). We are engaged in the business of funding and holding
short-term construction mortgage loans secured by single-family and multi-unit
residential real property, as well as land acquisition and development loans
secured by undeveloped real property, located in the greater San Francisco Bay
Area. We are managed by Primecore Funding Group, Inc., a California corporation
located in Menlo Park, California. Our manager is responsible for origination
and servicing of the construction mortgage loans we invest in, and receives a
contractually-set monthly management fee.

Capitalization

We have authorized 50,000,000 shares of capital stock with a $0.01 par value;
40,000,000 shares are designated Class A Convertible Preferred (Preferred
Stock), and 10,000,000 shares are designated as common.

At March 31, 2001, there were 100 shares of common stock outstanding, all held
by William Whitlow, Susan Fox and Michael Rider, who are employees and officers
of our manager. Ms. Fox owns all of the stock of our manager.

The 21,037,719 and 19,946,445 shares of Preferred Stock outstanding as of March
31, 2001 and December 31, 2000, respectively, rank senior to our common stock as
to dividends and liquidation rights. The shares are convertible into, and have
voting rights equal to, the same number of shares of our common stock. We will
not pay any dividends to the holders of the common stock so long as any
Preferred Stock is outstanding.

Preferred stock dividends are paid monthly in arrears and were $0.29 per share
(based on weighted average preferred shares outstanding of 20,698,831) for the
three months ended March 31, 2001, compared with $0.28 per share (based on
weighted average preferred shares outstanding of 18,993,468) for the three
months ended March 31, 2001. The terms of our dividend reinvestment plan permit
our shareholders to reinvest dividends in additional shares of Preferred Stock,
currently at $10 per share.

Holders of our Preferred Stock do not have a right to redeem their shares. Our
Board of Directors, however, currently has a stock redemption policy for
shareholders who wish to sell their shares to us. The policy may be modified or
terminated at the Board's discretion at any time. Currently, we will repurchase
shares at $10.00 per share if we have cash available for redemption. Cash
available for redemption is determined at the Board of Director's sole
discretion, and is net of current expenses, anticipated expenses, dividends,
debt obligations and reserves for operating funds. We will not sell or otherwise
liquidate any portion of our mortgage loan portfolio or other assets to fund a
redemption request. We also reserve the right to limit the number and frequency
of stock redemptions by any shareholder.

We completed two private placements of our Preferred Stock in 1999 at $10 per
share. The first placement sold a total of 18,048,772 shares between March 31,
1999 and August 31, 1999. The second placement sold an additional 1,147,743
shares of Preferred Stock between September 10, 1999 and October 29, 1999. Our
manager expects that all future placements will be for cash, which will then be
used primarily to fund additional loans. In connection with the private
placements completed in 1999, our manager paid placement costs of $187,829 on
our behalf.

PRIMECORE MORTGAGE TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2001
(unaudited)

Preferred Stock as of March 31, 2001, for net proceeds of $39,652,140. This
placement was undertaken to purchase and fund additional and existing
construction mortgage loans and for working capital purposes. This placement is
ongoing, and is presently scheduled to close on or before August 31, 2001.

Risk Factors

General Economic Conditions in Silicon Valley and the San Francisco Bay Area.
Properties securing repayment of the mortgage loans are located in the San
Francisco Bay Area and primarily in Silicon Valley. Since the properties secured
by the mortgage loans are located in a limited geographical region, these
mortgage loans may be subject to a greater risk of delinquency or default if the
industries concentrated there suffer adverse economic or business developments.

Other. In addition, we are subject to other significant business and financial
risks, including but not limited to liquidity, the prevailing market for
residential real estate, interest rates, dependence on our manager, timely
completion of projects, lack of borrower diversification, and potential
environmental matters relating to properties on which we have made loans. For
additional information see Risk Factors set forth in our Form 10-K dated March
30, 2001.

Retained Deficit

We had a retained deficit as of March 31, 2001 and December 31, 2000 because we
pay dividends to the holders of our Preferred Stock based on our taxable income,
in accordance with REIT requirements. Our taxable income differs from income
measured in accordance with generally accepted accounting principles due to
timing differences in the recognition of income from our investments in real
estate. See Income Taxes in Note 2 below. These dividend distributions are
expected to be matched by revenues from completed real estate projects in future
periods, as described in Note 2.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

The accompanying unaudited financial statements present the financial position
of the Company as of March 31, 2001, and December 31, 2000, and the results of
operations and cash flows of the Company for the three months ended March 31,
2001 and 2000. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal
accruals) necessary to present fairly the financial position and results of
operations of the Company as of March 31, 2001 and for the period then ended.

Use of Estimates

These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States using the accrual method of
accounting. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

PRIMECORE MORTGAGE TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2001
(unaudited)

Investments in Real Estate under Development
and Investments in Real Estate under Development by Affiliates

All of our loans are classified for financial reporting purposes as investments
in real estate under development or investments in real estate under development
by affiliates (Notes 3 and 4). Such investments include capitalized interest and
are stated at the lower of cost or net realizable value. Management conducts a
review for impairment on an investment-by-investment basis whenever events or
changes in circumstances indicate that the carrying amount of an investment may
not be recoverable. An impairment is recognized when estimated expected future
cash flows (undiscounted and without interest charges), typically from the sale
of a completed property, are less than the carrying amount of the investment.
The estimation of expected future net cash flows is inherently uncertain and
relies to a considerable extent on assumptions regarding current and future
economic and market conditions. If, in future periods, there are changes in the
estimates or assumptions incorporated into the impairment review analysis, the
changes could result in an adjustment to the carrying amount of the investments.
To the extent an impairment has occurred, the excess of the carrying amount of
the investment over its estimated fair value, less estimated disposition costs,
will be charged to income.

As of March 31, 2001, we believe there were no impairments of the carrying
values of our investments.

Cash and Cash Equivalents

Cash and cash equivalents include cash held in financial institutions and other
highly liquid short-term investments with original maturities of three months or
less.

Income from Completed Real Estate Development

Our investment objective is to make construction mortgage loans on projects we
believe are likely to ultimately sell for an amount sufficient to repay the
principal plus interest of those loans at the agreed upon rate. We do not intend
to own or develop property and do not participate in the profit realized by the
borrower, including affiliated borrowers, upon sale of the property.

We recognize income from our investments in real estate under development upon
the sale or refinancing of the completed real estate to or by a third party.
Income is deferred, along with related points, until the property is sold or
refinanced. We compute income as cash received (which includes amounts funded,
accrued interest and points) less the carrying value of the investments at the
date of repayment (which includes amounts funded and capitalized interest
costs).

Income Taxes

To continue to qualify as a REIT, we must currently distribute at least 90
percent of our taxable income. As a REIT, we generally will not be subject to
corporate-level federal income tax on net income we distribute currently to our
shareholders. As such, no provision for federal income taxes is included in our
financial statements. Such taxes are the responsibility of the individual
shareholders. If we fail to qualify as a REIT in any taxable year, we will be
subject to federal income taxes at regular corporate rates (including any
applicable alternative minimum tax) and may not be able to qualify as a REIT for
four subsequent taxable years. Even if we qualify for taxation as a REIT, we may
be subject to certain state and local taxes on our income and property and to
federal income and excise taxes on our undistributed taxable income.

PRIMECORE MORTGAGE TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2001
(unaudited)

Net income for financial reporting purposes also differs from net income for tax
reporting primarily due to differences in the method of revenue recognition for
arrangements classified as loans for income tax purposes and equity-method
investments in real estate under development for financial reporting purposes.
The following table outlines the primary differences between financial reporting
income and taxable income for the three months ended March 31, 2001 and 2000:

Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
--------------------- -------------------

Net income, as reported...................................... $ 812,065 $ 1,268
Less: Income from completed real estate development (3,978,796) (2,666,240)
Capitalized interest.............................. (1,278,450) (427,226)
Add: Accrued interest income on loans and related points
earned............................................. 10,468,781 8,228,271
Other 56,250 --
--------------------- -------------------

Taxable income................................................ $ 6,079,850 $ 5,136,073
==================== ===================

Preferred stock dividends..................................... $ 5,951,458 $ 5,366,223
===================== ===================

Net Income Per Share of Common Stock

Per share amounts for our common stock are computed using the weighted average
common shares outstanding during the period. Net income used in the calculation
is reduced by dividends owed to preferred shareholders. The diluted weighted
average common shares outstanding include the dilutive effect of stock options
and other common stock equivalents. There are currently no stock options or
other dilutive common stock equivalents, and as a result, the basic and diluted
weighted average common shares outstanding for the three months ended March 31,
2001 and 2000, are the same and are 100 shares.

3. INVESTMENTS IN REAL ESTATE UNDER DEVELOPMENT:

We make loans with maturity dates generally ranging from 12 to 18 months. For
financial reporting purposes, we apply the equity method of accounting for our
investments. Investments in real estate under development represent funds
advanced in cash plus capitalized interest on arrangements in effect at any
particular time. Since real estate under development generates no operating
income, we do not accrue any income for financial reporting purposes until the
sale or refinancing of a property. The income that we ultimately realize is
based upon the terms of the construction mortgage loan. During the three months
ended March 31, 2001, interest rates on loans outstanding ranged from 11 percent
to 18 percent. In addition, we charged points, which were typically 4 percent of
the borrowed amount during that same period.

PRIMECORE MORTGAGE TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2001
(unaudited)

The following table summarizes our portfolio of investments in real estate under development at March 31, 2001:

Interest Maturity Dates Commitment Carrying
Location - County Rates Amount Amount
- -------------------------------------------------------- ------------------------------------ --------------------

Alameda 11.00-11.50% 04/01-10/01 21,095,000 5,451,042
Contra Costa 11.00% 11/01 14,500,000 3,336,811
Marin 11.00-18.00% 03/01-02/02 56,295,000 31,842,402
Monterey 11.50% 04/01-05/02 35,200,000 16,676,839
San Francisco 11.25-11.50% 07/01-10/01 24,065,000 14,036,483
San Mateo 11.00-13.00% 04/01-06/02 82,785,230 41,969,087
Santa Clara 11.00-13.00% 04/01-04/02 86,895,000 54,655,631
Other 11.00-11.25% 05/01-06/01 17,665,000 10,691,339
--------------------- --------------------

$ 338,500,230 $178,659,634
===================== ====================

Earned but unrecognized interest and points on loans outstanding at March 31,
2001 totaled $34,372,093. These amounts will be recognized as income from
completed real estate development upon the sale or refinancing of the underlying
property.

We will fund unfunded commitments on existing loans from the repayment of other
loans, borrowings on our line of credit (Note 6), issuance of short-term notes
payable or issuance of additional Preferred Stock. We believe we will have
adequate sources of capital to fund these commitments when and as they become
due.

As of March 31, 2001, we had one loan which had not been paid by its stated
maturity date. The loan is bearing interest at the default rate and the borrower
has been making principal paydowns under an agreed upon payment schedule which
provides for full payment by May 31, 2001.

During the three months ended March 31, 2001, we capitalized $1,035,898 of
interest expense to investments in real estate under development .

4. INVESTMENTS IN REAL ESTATE UNDER DEVELOPMENT BY AFFILIATES:

We have also made loans to affiliates of our manager acting as the developer.
These arrangements are accounted for in a manner identical to that described in
Note 3 above. The following table summarizes our portfolio of investments in
real estate under development by affiliates at March 31, 2001:

Interest Maturity Commitment Carrying
Location - County Rates Dates Amount Amount
- -------------------------------------------------------- ------------------ -------------------- --------------------

San Mateo 11.25% 10/01-12/01 12,100,000 6,701,532
Santa Clara 11.00-11.50% 04/01-04/02 57,750,000 32,774,694
-------------------- --------------------

$ 69,850,000 $ 39,476,226
==================== ====================

Earned but unrecognized interest and points on loans outstanding at March 31,
2001 totaled $9,297,550. Such amounts will be recognized as income from
completed real estate development upon the sale or refinancing of the underlying
property.

PRIMECORE MORTGAGE TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2001
(unaudited)

During the three months ended March 31, 2001, we capitalized $242,552 of
interest expense to investments in real estate under development by affiliates.

5. NOTES PAYABLE:

We had unsecured borrowings of $31,875,983 at March 31, 2001 compared with
$38,787,264 at December 31, 2000 on notes issued to accredited investors through
private placements. These notes have varying maturities of up to one year from
the date of issuance. The notes bear interest at rates between 10 and 13 percent
with interest payable monthly in arrears. Notes issued prior to September 29,
2000 are callable at the option of the note holder upon 60 day written notice,
subject to availability of funds. Notes issued by us after September 29, 2000
may be redeemed at our option before their stated maturity. At March 31, 2001,
$7,626,480 of our unsecured notes payable was due to our officers, directors or
employees of our manager compared with $7,622,535 at December 31, 2000.

6. LINES OF CREDIT:

We have a $10,000,000 line of credit with a commercial bank. The amount borrowed
under the line of credit at March 31, 2001, was $8,592,937, compared with
$6,644,692 at December 31, 2000. Repayment is secured by our assets and is
guaranteed by our manager and another affiliate. The line of credit carries
interest at prime plus 1.25 percent (9.25 percent at March 31, 2001) and matures
in September 2001. The terms of the line of credit require, among other
provisions, that we maintain total equity of no less than $150,000,000, a debt
to equity ratio of less than 1.5 to 1.0 and quarterly net income from operations
of at least $500,000. We were in compliance with all covenants at March 31,
2001.

7. TRANSACTIONS WITH AFFILIATES:

Management Fees

A management agreement dated March 30, 1999 and amended on October 1, 2000
between us and our manager provides for a monthly fee payable in arrears equal
to 0.25 percent of the total commitment amount of the loans in our investments
in real estate under development and in our investments in real estate under
development by affiliates.

For the three months ended March 31, 2001, the portfolio management fees earned
by our manager were $3,122,154, compared with $2,465,052 for the three months
ended March 31, 2000.

Payable to Affiliate

The $2,434,447 and $236,972 payable to affiliate at March 31, 2001 and December
31, 2000, respectively, represents short-term advances to us by our manager to
facilitate our cash management. Our manager charges us an interest rate of 11
percent per annum on the outstanding balance which amounted to $14,119 for the
three months ended March 31, 2001 compared with $1,997 for the three months
ended March 31, 2000. This amount has been capitalized to investment in real
estate under development and investment in real estate under development by
affiliates.

PRIMECORE MORTGAGE TRUST, INC.

NOTES TO THE FINANCIAL STATEMENTS
For the three months ended March 31, 2001
(unaudited)

8. COMMITMENTS AND CONTINGENCIES:

Litigation

We are involved in legal actions relating to our investments in real estate
under development arising in the normal course of our business. We believe the
liabilities, if any, which may ultimately result from such legal actions, will
not have a material adverse effect on our financial position, results of
operations, or cash flows.

General Uninsured Losses

We require that our borrowers carry comprehensive liability, fire, flood,
extended coverage, and rental loss insurance with policy specifications, limits,
and deductibles customarily carried for similar properties. We also carry
stop-gap insurance to cover losses in case a borrower's policy lapses. There
are, however, certain types of extraordinary losses that may be either
uninsurable or not economically insurable. Further, all of the investments are
located in areas that are subject to earthquake activity. Should an investment
sustain damage as a result of an earthquake, we may incur losses due to
insurance deductibles, co-payments on insured losses, or uninsured losses.
Should an uninsured loss occur, we could lose our investment in, and anticipated
profits and cash flows from an investment.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

General

Our material financial transactions have been purchasing and holding a portfolio
of construction mortgage loans.

Statements contained in this Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and elsewhere in this Form 10-Q,
which are not historical facts, may be forward-looking statements. Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. Investors are cautioned not
to attribute undue certainty to these forward-looking statements, which speak
only as of the date of this Form 10-Q filing. We undertake no obligation to
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date of this registration statement or to
reflect the occurrence of unanticipated events, other than as required by law.

Overview

Subject to the direction and oversight of our Board of Directors, our day-to-day
operations are managed by our manager. We have no employees.

We began operations on May 1, 1999, concurrent with the first interim closing of
a private offering of 14,575,664 shares of our Class A Convertible Preferred
stock at $10 per share primarily in exchange for beneficial interests in trust
deeds on real property securing loans and accrued interest totaling
$145,756,640. Purchasers of our shares were primarily investors in trust deeds
managed by Primecore Funding Group, Inc. who invested in those trust deeds
before our formation and exchanged their interests for our stock at $10 per
share on a dollar for dollar basis. A third and final closing was completed as
of August 31, 1999. A total of 18,048,772 shares were sold.

We completed a second private placement on October 29, 1999, resulting in the
issuance of 1,147,743 shares of Class A Convertible Preferred stock. All real
property securing the trust deeds received in these transactions was either
under development or held for development. We undertook these placements to
provide for our initial capitalization and to convert the trust deed interests
of Primecore Funding Group, Inc. clients into shares of our Class A Convertible
Preferred stock.

We began a new equity private placement offering of an additional 20,000,000
shares of Class A Convertible Preferred Stock at $10.00 per share in August
2000, through which we have issued 3,965,214 shares of Class A Convertible
Preferred Stock as of March 31, 2001, for net proceeds of $39,652,140. This
placement was undertaken to purchase and fund additional and existing
construction mortgage loans and for working capital purposes. This placement is
ongoing, and is presently scheduled to close on or before August 31, 2001.

We have elected to be taxed as a REIT under the Internal Revenue Code of 1986,
as amended (the "Code"), and as such, are required to distribute at least 90
percent of our taxable income annually, subject to adjustments. Our manager
expects that the cash for such distributions will be generated from our
day-to-day operations, although we may also borrow funds to make distributions.

We may experience high volatility in financial reporting net income and tax
basis income from quarter to quarter and year to year, primarily as a result of
fluctuations in timing of completion of our investments in real estate under
development, interest rates, and general economic conditions in the greater San
Francisco Bay Area. Our operating results will depend, in part, upon our ability
to manage our interest rate and credit risks while maintaining our REIT status.

Results of Operations

Earnings per share are computed using the weighted average common shares during
the three months ended March 31, 2001. During the three months ended March 31,
2001, after reducing net income by dividends of $5,951,458 paid to preferred
shareholders, net loss allocable to common shareholders was $5,139,393, or a
loss of $51,394 per weighted average common share, compared with a net loss
allocable to common shareholders for three months ended March 31, 2000 of
$5,364,955, or $53,650 per weighted average common share.

The loans we make are considered real estate acquisition, development and
construction ("ADC") investments for financial reporting purposes. As of March
31, 2001, our ADC investments totaled approximately $218,136,000, compared with
approximately $216,413,000 at December 31, 2000. Funding commitments on these
loans totaled approximately $408,350,000 at March 31, 2001 and $436,383,000 at
December 31, 2000. For a discussion of these loan arrangements, see the notes to
the financial statements.

We realized substantially all of our revenue from repayment of loans on
completed real estate developments, comprised of interest income earned at
accrual rates ranging from 11 to 13 percent over the life of the loan
investments and loan points of 4 percent of the loan commitment amounts, less
capitalized interest. Income from completed real estate developments totaled
approximately $3,979,000 for the three months ended March 31, 2001 compared with
approximately $2,666,000 for the three months ended March 31, 2000.

As investments in real estate under development for financial reporting
purposes, our loans are stated at the lower of cost or estimated fair value in
our financial statements. We do not carry a reserve for loan losses. We will
write-down the carrying value of an impaired loan to net realizable value if we
learn of deterioration in economic or market conditions or other events that
have adversely affected the value of the loan before it is repaid. If we incur a
loss upon repayment of a loan, the loss will be charged to income. Any
write-down or loss will have a direct, adverse effect upon our earnings. As of
March 31, 2001, there were no impairments of the carrying values of our
investments. See note 2 to our financial statements.

The following table summarizes the differences between net income under GAAP,
and taxable income:

Three months ended Three months ended
March 31, 2001 March 31, 2000
---------------------- ----------------------

Net income (loss) as reported.................... $ 812,065 $ 1,268

Net effect of GAAP tax timing
differences due to ADC accounting........ 5,211,535 5,134,805
Other differences........................... 56,250 --
---------------------- ----------------------

Taxable income...................................... $ 6,079,850 $ 5,136,073
---------------------- ----------------------

Preferred stock dividends.......................... $ 5,951,458 $ 5,366,223
====================== ======================

We incurred expenses of $3,166,812 during the three months ended March 31, 2001,
compared with $2,665,004 during the three months ended March 31, 2000.

Management fees were $3,122,154 for the three months ended March 31, 2001
compared with $2,465,052 for the three months ended March 31, 2000. The increase
in management fees is attributable primarily to the increase in the management
fee from .22% per month to .25% per month of the total loan commitment amount.

Interest cost associated with our notes payable and secured line of credit was
$1,278,450 for the three months ended March 31, 2001, compared with $427,226 for
the three months ended March 31, 2000. Our interest expense during the three
months ended March 31, 2001 was higher than in the three months ended March 31,
2000 due to the increase in the amount of unsecured notes payable resulting from
our inability to issue shares of preferred stock as we processed our Form 10/A
registration with the Securities and Exchange Commission. All interest incurred
in 2001 and 2000 has been capitalized.

General administrative and other expenses were $44,658 for the three months
ended March 31, 2001, compared with $199,952 for the three months ended March
31, 2000. We have no employees, and our general and administrative and other
expenses consist primarily of professional fees. The decrease in professional
fees is attributable to first time costs related to becoming an SEC registrant
in June 2000.

Liquidity and Capital Resources

Liquidity means the need for, access to and uses of cash. Our principal demands
for liquidity are cash for operations, including funds that are required to
satisfy obligations under existing loan commitments, interest expense associated
with our indebtedness, debt repayments and distributions to shareholders. As of
March 31, 2001, we had a bank overdraft of $1,656,957 because all our cash is
automatically used to pay down our line of credit. In the near term, our
principal sources of liquidity are the funds available from issuance of
unsecured notes payable, sales of preferred stock under this private placement
and repayments of our real estate investments.

We had unsecured borrowings of $31,875,983 at March 31, 2001 on our Series A and
Series B notes compared with $38,787,264 at December 31, 2000, issued to
accredited investors through private placements. The notes have varying
maturities of up to one year from the date of issuance and bear interest at
rates between 10 and 13 percent with interest payable monthly in arrears. We
expect that proceeds generated from completed real estate developments and
additional equity placements and note issuances will be sufficient to fully
repay notes on or before their scheduled maturity dates.

We have a $10,000,000 line of credit with a commercial bank. Repayment is
secured by our assets, is guaranteed by our manager and another affiliate,
carries interest at prime plus 1.25 percent (9.25 percent at March 31, 2001) and
matures in September 2001. Outstanding borrowings under the line of credit as of
March 31, 2001 were $8,592,937.

Affiliates and Significant Borrowers.

Loans assumed by, or made to, our affiliates represent a material portion of our
investment portfolio. As of March 31, 2001, loans assumed by or made to our
affiliates represented 17% of our loan commitments and 18% of the funded portion
of those commitments. As of December 31, 2000, loans assumed by or made to our
affiliates represented 17% of our loan commitments and 19% of the funded portion
of those commitments. In contrast, no unaffiliated borrower had loans exceeding
10% of our total loans outstanding as of March 31, 2001 or December 31, 2000.

Our affiliates are entities with whom we share common control through
common management. For example, Primecore Funding Group, Inc. is our affiliate
because Susan Fox owns 100% of its stock and is its sole director. She is also
an executive officer of Primecore Funding Group, Inc., as is Mr. Rider. To the
extent that Ms. Fox is the director of Primecore Funding Group, Inc. and is one
of our directors, her position in management is common to both Primecore Funding
Group, Inc. and us.

Eprime, Inc. is our affiliate and is a California corporation, incorporated
March 21, 2000. Ms. Fox is the sole shareholder and director. She is the
president and secretary, and Mr. Rider is the chief financial officer. Eprime,
Inc. does not have any employees, does not provide any services to us and does
not receive any compensation from us.

Primecore Properties, Inc. is our affiliate and is a California
corporation, incorporated in 1997. Ms. Fox is its sole shareholder and one of
its directors. Primecore Properties, Inc. is licensed by the California
Department of Real Estate as a real estate corporation. Theresa May Couture is
licensed as an individual real estate broker and is the designated
broker-officer of Primecore Properties, Inc. Primecore Properties, Inc. does not
receive any compensation from us, but does provide services to us for certain
activities that require a California real estate broker license. Those services
are performed for us under the terms of our management agreement with Primecore
Funding Group, Inc. There are currently no arrangements for us to separately
compensate Primecore Properties, Inc. for those services, although we continue
to pay a management fee to Primecore Funding Group, Inc. See "Management Fees."

99 Investors, LLC, a California Limited Liability Company, is our
affiliate. Ms. Fox is its sole member. It does not have any employees, does not
perform any services for us and does not receive any compensation or benefits
from us.

99 El Camino Partners LLC is our affiliate and a California limited liability
company. Ms. Fox is the sole member. The partnership has no employees, does not
provide any services to us and does not receive any compensation or benefits
from us. 99 El Camino Partners owns the property at 99 El Camino Real, Menlo
Park, California, our principal place of business and that of our affiliates.

The following is a summary of loans assumed by our affiliates as of March 31,
2001, categorized by loan number, project name, affiliate, commitment amount,
funded amount and percentage funded. The funded balance represents the total
amount advanced towards a loan. The funded amount may differ from the loan
balance outstanding as a result of payments received from the sales of property
secured by the loan. Also, included in the funded amount are loan fees and
interest charged to the borrower, which are not reported under generally
accepted accounting principles.

Loan Project Name Affiliate Commitment Funded % Funded

Loan 2354 Lot #1 Quarry Estates Eprime, Inc. $ 5,000,000 $ 3,225,857 65%
Loan 2355 Lot #2, Quarry Estates Eprime, Inc. 5,000,000 3,204,569 64%
Loan 2376 104 Second Street Eprime, Inc. 2,450,000 2,485,818 102%
Loan 2447 8 Los Altos Prop.,
7 Los Altos Hills Prop. Eprime, Inc. 13,500,000 11,965,993 87%
------------------------------

Total Eprime loans $ 25,950,000 $ 20,882,237 80%
==============================

Loan 2330 Scotia Pines Subdivision 99 Investors, LLC $ 4,000,000 $ 3,391,410 85%
Loan 2404 7 Lots, Los Altos Nursery 99 Investors, LLC 12,800,000 8,794,657 69%
Loan 2427 Quarry Estates - Lot 13 99 Investors, LLC 5,000,000 2,222,745 44%
Loan 2428 Quarry Estates - Lot 15 99 Investors, LLC 5,000,000 2,670,588 53%
Loan 2429 Quarry Estates - Lot 16 99 Investors, LLC 5,000,000 2,126,267 43%
Loan 2455 91 Fleur Place 99 Investors, LLC 5,000,000 4,521,020 90%
Loan 2469 37 Euclid 99 Investors, LLC 7,100,000 3,077,232 43%
------------------------------

Total 99 Investors $ 43,900,000 $ 26,803,919 61%
==============================

The loans assumed by Eprime, Inc. are secured by the remaining properties in a
series of projects where Windy Hill Associates, a California corporation, was
the original borrower. In November 1999 the sole shareholder of Windy Hill
Associates started proceedings to dissolve the corporation. Before the
dissolution, Susan Fox was the president of Windy Hill Associates, and was
managing its operations to ensure that the loans were kept current. Upon notice
of dissolution of the corporation, Ms. Fox was replaced as president by the sole
shareholder, and the loans went into default. A foreclosure sale was scheduled
for March 22, 2000.

On March 22, 2000, Eprime, Inc., purchased what is currently designated as
our loan no. 2447, for the then existing loan balance of $11,321,061. A blanket,
second deed of trust lien against several parcels secured the loan. Eprime, Inc.
foreclosed on the second deed of trust and took title to all of those parcels,
subject to existing senior liens. Those parcels are encumbered by separate,
senior deeds of trust (our loan nos. 2354, 2355, and 2376). The note purchase
and assumption agreement for all of these loans includes guarantees of repayment
and the pledge of additional security from Primecore Funding Group, Inc., 99
Investors, LLC and the Susan M. Fox 1996 Revocable Trust dated April 26, 1996.
All loans are current, and construction is on schedule.

The loan assumed by 99 Investors, LLC is secured by a junior deed of trust on
property originally to be developed by Windy Hill Associates. Loan no. 2330 was
assumed in September 1999.

Loan no. 2404 was made to 99 Investors, LLC in September 1999. Repayment is
secured by a single junior deed of trust on 7 lots in Los Altos, California. The
loan is for development of 7 single-family residences. Construction is scheduled
for completion in July 2001. The loan is current and construction is on
schedule.

Loan nos. 2427-29 were made to 99 Investors, LLC in March 2000. Repayment is
secured by junior deeds of trust. The developments are single family residences
in Los Altos Hills. Construction is scheduled for completion in September 2001.
The loans are current and construction is on schedule.

Loan nos. 2455 and 2469 were made to 99 Investors, LLC in April and September
2000, respectively. Repayment is secured by junior deeds of trust. The
developments are single family residences in Atherton, California. Construction
is scheduled for completion in October, and December 2001, respectively. The
loans are current and construction is on schedule.

Because of changes in the scope of construction and general cost increases
during development of projects, additional funds are sometimes needed to
complete a project. We will grant an additional extension of credit if our
management believes repayment of the increased extension of credit is adequately
secured. This is true of any development we invest in, whether the borrower is
affiliated or not.

See Note 4 of our financial statements for further detail on investments in real
estate under development by affiliates as of March 31, 2001. Also see the
discussion under the headings "We have a potential conflict of interest with our
affiliates" and "We have a potential conflict of interest with our investors" in
our registration statement on Form 10-12G/A filed February 14, 2001.

Payable to Affiliate

There is $2,434,447 payable to an affiliate at March 31, 2001 and a $236,972
payable at December 31, 2000, on our financial statements, representing
short-term advances by our manager to us. Our manager typically advances these
funds to us to facilitate cash management and charges us an interest rate of 11
percent per annum on the outstanding balance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

An investment in our stock involves a high degree of risk. Among other things,
some of the principal risks are: the real estate lending business may be
adversely affected by periods of economic slowdown, which may be accompanied by
declining real estate values on properties securing repayment of loans;
construction mortgage loans involve greater risks of repayment than loans
secured by property that has already been improved since completion market
valuation of a given project can be highly speculative and subject to
unanticipated conditions; there is no public market for our securities, and
liquidity is not assured; under our business model, loan commitments will
generally exceed immediately available cash resources, and failure to obtain
repayment of loans in our portfolio, or a failure to maintain sufficient equity
would affect our ability to fund commitments; since we have no employees, if our
manager refused or became unable to continue to serve us, and a proper
replacement were not found, this would materially impact our business.

We make loans at fixed rates of interest. To the extent that prevailing market
interest rates change during the holding period, the value of our loans may be
either adversely or positively affected. When a loan matures, generally within a
12 to 18 month period, it is subject to a new interest rate, determined by us,
based upon current conditions. Since we intend to hold all loans until they are
repaid, we do not believe that changes in market interest rates have a material
impact on the value of the Company.

PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are involved in legal actions relating to our investments in real estate
under development arising in the normal course of our business. We believe the
liabilities, if any, which may ultimately result from such legal actions, will
not have a materially adverse effect on our financial position, results of
operation, or cash flows.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

(a) Not Applicable.

(b) Not Applicable.

Between January 1, 2001 and March 31, 2001, we sold and issued 1,124,152 shares
of our Class A Convertible Preferred stock. Purchasers of such Class A
Convertible Preferred stock paid $10 per share.

Purchasers of our Class A Convertible Preferred stock were accredited investors
as defined in Regulation D, Rule 501 (a) (4), (5) or (6) under the 1933
Securities Act. Each investor signed a subscription agreement which included
representations that the investor had sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of investments generally, and of the investment in our stock and the investor
was able to bear the economic risk of the investment. Each investor further
acknowledged the investor understood the entire investment could be lost.

The sales of stock were exempt from the registration requirements of the
Securities Act of 1933 pursuant to Regulation D, Rule 506. Appropriate legends
were placed on each stock certificate. No underwriters were involved and no
underwriting commissions were paid in any of the transactions.

The terms of conversion of the stock have been previously reported.

(d) Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits

Exhibits included with this Form 10-Q following the signature page, or those
incorporated by reference to other filings are:

3i.1 Articles of Incorporation of the Company are hereby incorporated herein by
reference from Exhibit 3(i) to the Company's Registration Statement on
Form 10-12G, filed on April 28, 2000

3i.2 Articles Supplementary of the Company are hereby incorporated herein by
reference from Exhibit 99.1 to the Company's Registration Statement on
Form 10-12G, filed on April 28, 2000

3ii.1 Bylaws, Amended March 21, 2000 are hereby incorporated herein by reference
from Exhibit 3(ii) to the Company's Registration Statement on Form 10-12G,
filed on April 28, 2000

3ii.2 Bylaws, Amended March 1, 2001 are hereby incorporated herein by reference
from Exhibit 3ii.2 to the Company's Annual Report on Form 10-K, filed on
March 30, 2001

4.1 Specimen Stock Certificate is hereby incorporated herein by reference from
Exhibit 99.2 to the Company's Registration Statement on Form 10-12G, filed
on April 28, 2000

4.2 Registration Rights Agreement is hereby incorporated herein by reference
from Exhibit 4.1 to the Company's Registration Statement on Form 10-12G,
filed on April 28, 2000

4.3 Founder's Registration Rights Agreement is hereby incorporated herein by
reference from Exhibit 4.2 to the Company's Registration Statement on Form
10-12G, filed on April 28, 2000

10.1 Management Agreement dated March 30, 1999 is hereby incorporated herein by
reference from Exhibit 10 to the Company's Registration Statement on Form
10-12G, filed on April 28, 2000

10.2 Management Agreement dated October 1, 2000 is hereby incorporated herein
by reference from Exhibit 10.2 to the Company's Annual Report on Form
10-K, filed on March 30, 2001

11.1 Statement regarding computation of per share earnings

(b) Reports on Form 8-K

Not Applicable.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: May 14, 2001 /s/ SUSAN FOX
-------------
Susan Fox, President

Dated: May 14, 2001 /s/ MICHAEL RIDER
-----------------
Michael Rider, Chief Financial Officer

Dated: May 14, 2001 /s/ WILLIAM E. WHITLOW
----------------------
William E. Whitlow, Chairman of the Board

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT

11.1 Statement regarding computation of per share earnings