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

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

                                    FORM 10-Q/A

(Mark One)

         (X)                        Quarterly  Report Under  Section 13 or 15(d)
                                    of the  Securities  Exchange Act of 1934 For
                                    the quarterly period ended March 31, 1998

                        Commission File Number: 333-11625

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

                       CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                     94-3240473
          --------                                     ----------
(State or other Jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

         50 California Street
         Suite 2020
         San Francisco, California                   94111
         -------------------------                   -----
      (Address of principal executive office)        (zip code)

                                 (415) 288-9575
                                 --------------
              (Registrant's telephone number, including area code)

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 ___       

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

As of April 30, 1998, the aggregate market value of the  registrant's  shares of
Common  Stock,  $.01 par value,  held by non  affiliates of the  registrant  was
approximtely  $7,949,393.  At that date  993,674  shares of  common  stock  were
outstanding  outstanding.  The shares are  approved  for listing on the American
Stock  Exchange upon notice of issuance,  but will not trade  publicly until the
conclusion of the Registrant's current "best efforts" public offering.

<PAGE>
                       CAPITAL ALLIANCE INCOME TRUST LTD.,
                         A REAL ESTATE INVESTMENT TRUST

                          Notes to Financial Statements
               For the three months ended March 31, 1998 and 1997
                                   (Unaudited)


     If the Trust fails to qualify for  taxation as a REIT in any taxable  year,
     and the relief provisions do not apply, the Trust will be subject to tax on
     its  taxable  income  at  regular   corporate   rates.   Distributions   to
     stockholders  in any year in which the Trust  fails to qualify  will not be
     deductible  by the  Trust  nor will  they be  required  to be made.  Unless
     entitled to relief under specific statutory provisions, the Trust will also
     be  disqualified  from  taxation  as a REIT  for  the  four  taxable  years
     following the year during which qualification was lost.

     Based on the Trust's belief that it has operated in a manner so as to allow
     it to elect to be taxed as a REIT since inception, no provision for federal
     income taxes has been made in the financial statements.

*    For the  three-month  period ended March 31, 1997,  the  distributions  per
*    preferred share are allocated 90% as ordinary income and 10% as a return of
*    capital for tax purposes.  For the 3-month period ended March 31, 1998, the
*    distributions  per preferred  share are allocated 100% ordinary  income and
*    the common share  distribution  is allocated 88 % ordinary income and a 12%
*    return of capital for tax purposes.

     Fair value of financial  instruments.  For cash and cash  equivalents,  the
     carrying amount is a reasonable  estimate of fair value.  For mortgage note
     receivables,  fair value is estimated by discounting  the future cash flows
     using the current  interest  rates at which  similar loans would be made to
     borrowers   with  similar   credit  ratings  and  for  the  same  remaining
     maturities.  It was  determined  that the  difference  between the carrying
     amount and the fair value of the mortgage notes receivable is immaterial.

     Organizational costs. Organization costs are capitalized and amortized on a
     straight-line basis over five years.

     Deferred  offering  costs.  Deferred  offering  costs  relate to an initial
     public  offering of common  stock.  While the offering is  underway,  these
     costs will be offset  pro-rata  against the  proceeds  from the issuance of
     common stock and as a reduction of stockholder's equity.

     Real estate owned.  Real estate owned results from foreclosure of loans and
     at time of foreclosure is recorded at the lower of carrying  amount or fair
     value of the property  minus  estimated  costs to sell. At this time senior
     debt to which  the  asset is  subject  is  reported  as  mortgage  payable.
     Subsequent  to  foreclosure,  the  foreclosed  asset value is  periodically
     reviewed  and is adjusted to fair value.  No  depreciation  is taken on the
     real estate held for sale. Income and expenses related to real estate owned
     are  recorded  as  interest  income,   interest  expense  and  general  and
     administrative expenses on the Statements of Operations.

     Earnings  per share.  The  Preferred  Shares  receive  an annual  preferred
     allocation  of income  and  distributions.  Prior to the  December  4, 1997
     issuance  of Common  Shares,  the  Preferred  Shares  received  100% of the
     Trust's  net income.  After  completion  of the current  offering of common
     shares and after meeting such  preference,  at least 95% of any  additional
     income  earned  will  be  distributed  to  the  Common  Shares,  until  the
     distribution on the Common Shares matches that of the Preferred Shares (see
     Note 9).

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<PAGE>



                                   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.


                                    CAPITAL ALLIANCE INCOME TRUST LTD.,
                                    A Real Estate Investment Trust



Dated:   May 14, 1998          By:  /s/ Richard J. Wrensen
                                    ----------------------
                                    Richard J. Wrensen, Chief Financial Officer




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