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

                                    FORM 10-Q

(Mark One)
     X          Quarterly Report Pursuant to Section 13 or 15(d)
    ---              of the Securities Exchange Act of 1934


                For the Quarterly Period Ended September 30, 1998

                                       or

                  For the Transition period from _____ to _____

                Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                        Commission File Number: 01-13532


                       EQUIPMENT ASSET RECOVERY FUND, L.P.
              Exact Name of Registrant as Specified in its Charter


            TEXAS                                        11-2661586
State or Other Jurisdiction of               I.R.S. Employer Identification No.
Incorporation or Organization 


3 World Financial Center, 29th Floor,
New York, NY    Attn.:  Andre Anderson                      10285
Address of Principal Executive Offices                    Zip Code

                                 (212) 526-3183
               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 ____


<PAGE>
                                       2

<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                             At September 30,   At December 31,
                                                        1998              1997
                                             ---------------    --------------
<S>                                               <C>               <C>
Assets
Cash and cash equivalents                         $1,661,983        $1,909,899
                                                  ----------        ----------
      Total Assets                                $1,661,983        $1,909,899
                                                  ==========        ==========
Liabilities and Partners' Capital
Liabilities:
  Accounts payable and accrued expenses           $1,597,550        $1,605,246
                                                  ----------        ----------
      Total Liabilities                            1,597,550         1,605,246
                                                  ----------        ----------
Partners' Capital:
  General Partners                                     2,577            12,186
  Limited Partners                                    61,212           289,421
  Special Limited Partner                                644             3,046
                                                  ----------        ----------
      Total Partners' Capital                         64,433           304,653
                                                  ----------        ----------
      Total Liabilities and Partners' Capital     $1,661,983        $1,909,899
                                                  ==========        ==========
</TABLE>


<TABLE>
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
For the nine months ended September 30, 1998
<CAPTION>
                                                          Special
                                  General      Limited    Limited
                                 Partners     Partners    Partner        Total
                                  -------    ---------    -------    --------- 
<S>                               <C>        <C>          <C>        <C>
Balance at December 31, 1997      $12,186    $ 289,421    $ 3,046    $ 304,653
Net Loss                           (9,609)    (228,209)    (2,402)    (240,220)
                                  -------    ---------    -------    --------- 
Balance at September 30, 1998     $ 2,577    $  61,212    $   644    $  64,433
                                  =======    =========    =======    =========
</TABLE>


<PAGE>
                                       3

<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                  Three months ended         Nine months ended
                                        September 30,             September 30,
                                    1998        1997         1998         1997
                                --------    --------    ---------    --------- 
<S>                             <C>         <C>         <C>          <C>
Income
Interest                        $ 23,826    $ 25,377    $ 128,508    $ 186,679
Other                                 --          15           --        5,647
                                --------    --------    ---------    --------- 
      Total Income                23,826      25,392      128,508      192,326
                                --------    --------    ---------    --------- 
Expenses
General and administrative       101,845      81,512      368,728      702,883
                                --------    --------    ---------    --------- 
      Total Expenses             101,845      81,512      368,728      702,883
                                --------    --------    ---------    --------- 
Loss from Operations             (78,019)    (56,120)    (240,220)    (510,557)
                                --------    --------    ---------    --------- 
Net Loss before Minority
  Interest and Benefit
  for Income Taxes               (78,019)    (56,120)    (240,220)    (510,557)
Minority Interest                     --     (17,590)          --      (84,609)
                                --------    --------    ---------    --------- 
Loss before Benefit for
  Income Taxes                   (78,019)    (73,710)    (240,220)    (595,166)
Benefit for Income Taxes              --      40,422           --      379,481
                                --------    --------    ---------    --------- 
      Net Loss                  $(78,019)   $(33,288)   $(240,220)   $(215,685)
                                ========    ========    =========    ========= 
Net Loss Allocated:
To the General Partners         $ (3,121)   $ (1,331)   $  (9,609)   $  (8,627)
To the Limited Partners          (74,118)    (31,624)    (228,209)    (204,901)
To the Special Limited
  Partner                           (780)       (333)      (2,402)      (2,157)
                                --------    --------    ---------    --------- 
                                $(78,019)   $(33,288)   $(240,220)   $(215,685)
                                ========    ========    =========    ========= 
Per limited partnership unit
(32,722 outstanding)             $ (2.27)     $ (.97)     $ (6.97)     $ (6.26)
                                 -------      ------      -------      -------
</TABLE>

<PAGE>
                                       4

<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30,
<CAPTION>
                                                          1998            1997
                                                    ----------    ------------ 
<S>                                                 <C>           <C>
Cash Flows From Operating Activities
Net Loss                                            $ (240,220)   $   (215,685)
Adjustments to reconcile net income to net cash
used for operating activities:
  Minority interest                                         --          84,609
  Increase (decrease) in cash arising from
  changes in operating assets and liabilities:
    Accounts receivable, net                                --         173,415
    Other assets                                            --         193,397
    Accounts payable and accrued expenses               (7,696)       (449,370)
    Management fee payable                                  --      (1,445,685)
    Income taxes payable                                    --        (624,065)
                                                    ----------    ------------ 
Net cash used for operating activities                (247,916)     (2,283,384)
                                                    ----------    ------------ 
Cash Flows From Financing Activities
  Distributions paid to minority interest                   --        (631,181)
  Distributions paid to partners                            --     (10,333,264)
                                                    ----------    ------------ 
Net cash used for financing activities                      --     (10,964,445)
                                                    ----------    ------------ 
Net decrease in cash and cash equivalents             (247,916)    (13,247,829)

Cash and cash equivalents, beginning of period       1,909,899      15,217,595
                                                    ----------    ------------ 
Cash and cash equivalents, end of period            $1,661,983    $  1,969,766
                                                    ==========    ============ 
</TABLE>


<PAGE>
                                       5


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The unaudited consolidated financial statements should be read in conjunction
with the Partnership's 1997 annual audited consolidated financial statements
within Form 10-K.

The unaudited consolidated financial statements include all normal and
reoccurring adjustments which are, in the opinion of management, necessary to
present a fair statement of financial position as of September 30, 1998 and the
results of operations for the three and nine months ended September 30, 1998 and
1997, cash flows for the nine months ended September 30, 1998 and 1997 and the
statement of changes in partners' capital for the nine months ended September
30, 1998. Results of operations for the period are not necessarily indicative of
the results to be expected for the full year.

No significant events have occurred subsequent to fiscal year 1997, and no
material contingencies exist which would require disclosure in this interim
report per Regulation S-X, Rule 10-01, Paragraph (a)(5).


<PAGE>
                                       6


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

Liquidity and Capital Resources

On November 27, 1996, the Partnership, DSC Venture ("DSC") and SFN Corporation
("SFN") executed a sale (the "Liquidating Sale") of their crane fleets, related
equipment and existing customer crane rental agreements to Western Crane Supply,
Inc. ("Western"), a Kennewick, Washington-based operator of construction cranes
and an affiliate of Neil F. Lampson, Inc., for a total consideration of $15.9
million in cash. Reference is made to the Partnership's 1996 annual report on
Form 10-K for a discussion of the terms and conditions of the Liquidating Sale.
As a result of the Liquidating Sale, the General Partners are in the process of
dissolving the Partnership. However, the Partnership will not be dissolved prior
to the resolution of the pending class action suit. A detailed discussion of
this litigation is contained in Part II, Item 1 contained herein.

At September 30, 1998, the Partnership's cash and cash equivalents balance
totaled $1,661,983 compared to $1,909,899 at December 31, 1997. The decrease
primarily is due to the payment of legal expenses associated with the litigation
discussed above, continuing general and administrative expenses for 1998 and the
absence of cash flow from operations due to the Liquidating Sale. The
Partnership's remaining cash reserves will first be used to provide for the
Partnership's remaining liabilities and obligations, including any associated
with the litigation, following which any remaining cash will be distributed to
the partners upon liquidation.

Accounts payable and accrued expenses decreased from $1,605,246 at December 31,
1997 to $1,597,550 at September 30, 1998. The change is due to differences in
the timing of payments, primarily for administrative, audit and legal expenses.

Results of Operations

For the three and nine-month periods ended September 30, 1998, the Partnership
generated net losses of $78,019 and $240,220, respectively, compared to net
losses of $33,288 and $215,685, respectively, for the corresponding periods in
1997. The change for the three-month period primarily is due to minority
interest expense of $17,590 for the 1997 period. The change for the nine-month
period primarily is due to the benefit for income taxes of $379,481 and minority
interest expense of $84,609 for the 1997 period. Excluding the benefit for
income taxes and minority interest, the Partnership generated losses from
operations of $56,120 and $510,557 for the three and nine-month periods ended
September 30, 1997, respectively. The decreased loss from operations for the
nine-month period primarily is attributable to the absence of operating
activity, and particularly a decrease in general, selling and administrative
expenses for the 1998 period, as a result of the Liquidating Sale.

Interest income for the three and nine-month periods ended September 30, 1998
was $23,826 and $128,508, respectively, compared to $25,377 and $186,679,
respectively, for the corresponding periods in 1997. The changes primarily are
due to the Partnership maintaining lower cash balances for the three-month and
nine-month periods in 1998, due to the payment of a special cash distribution to
partners in March 1997 representing the majority of the proceeds from the
Liquidating Sale, and the pending termination of the Partnership. Other income
was $-0- for the three and nine-month periods ended September 30, 1998 compared
to $15 and $5,647, respectively, for the corresponding periods in 1997, down due
to management fees no longer being earned during the 1998 periods.


<PAGE>
                                       7


General and administrative expenses for the three and nine-month periods ended
September 30, 1998 were $101,845 and $368,728, respectively, compared to $81,512
and $702,883, respectively, for the corresponding periods in 1997. The increase
for the three-month period primarily is due to higher legal expenses relating to
the litigation discussed above. The decrease for the nine-month period primarily
is due to the absence of operating expenses during the 1998 period due to the
Liquidating Sale, partially offset by an increase in legal expenses relating to
the litigation.


Part II     Other Information

            On June 4, 1997, a purported class action suit was commenced by a
            limited partner who acquired its interest in the Partnership through
            a tender offer (the "Plaintiff"), on behalf of, among others, all
            limited partners of the Partnership, in the 151st judicial District
            Court for Harris County, Houston, Texas against Steven A. Webster,
            Equipment Management, Inc. (the general partners of the
            Partnership), DSC Venture (a Texas joint venture in which the
            Partnership owns a 99% interest), Dayton-Scott Equipment Company
            (the former manager of the Partnership's construction crane fleet)
            and SFN Corporation (a corporation which was owned, in part, by the
            Partnership, which, in turn, owned construction cranes which were
            sold with the balance of the Partnership's crane fleet in the fourth
            quarter of 1996) and the Partnership (a Nominal Defendant)
            (collectively, the "Defendants").  The petition purports to bring a
            suit for breach of fiduciary duty and breach of contract with
            respect to the  management and sale of the construction crane fleet
            and related equipment. The Plaintiff has requested that the court
            enter a judgment against the Defendants, jointly and severally, (i)
            declaring a proper class action; (ii) awarding unspecified
            compensatory damages, plus interest, expenses and attorneys fees
            and (iii) awarding punitive and exemplary damages. The Defendants
            believe the allegations in this complaint are without merit and
            intend to defend the action vigorously.

Items 2-5   Not applicable.

Item 6      Exhibits and reports on Form 8-K.

            (a)  Exhibits - None.

                 (27)  Financial Data Schedule

            (b)  Reports on Form 8-K

                 No reports on Form 8-K were filed during the quarter ended
                 September 30, 1998.


<PAGE>
                                       8


                                   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.



                                EQUIPMENT ASSET RECOVERY FUND, L.P.

                           BY:  EQUIPMENT MANAGEMENT INC.
                                General Partner



Date:  November 16, 1998        BY:  /s/Michael T. Marron
                                     --------------------
                                     Michael T. Marron
                                     President, Director and
                                     Chief Financial Officer