U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(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, 1997

                                       OR

|_|   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 33-95758


                  INVESTMENT INCOME PROPERTIES OF AMERICA, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its Charter)

            Delaware                                     65-0544042
-------------------------------             -----------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

  950 North Federal Highway, Suite 219 Pompano Beach, Florida         33062
---------------------------------------------------------------  ---------------
          (Address of principal executive offices)                 (Zip Code)

        Registrant's telephone number, including area code: 954-783-2004


________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by check 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 XX      No |_|

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

               127,925 shares of outstanding as of March 31, 1997
<PAGE>

                  INVESTMENT INCOME PROPERTIES OF AMERICA, INC.

                                      INDEX

Part I           FINANCIAL INFORMATION                                     Page
                                                                           ----
        Item 1   Financial Statements

                 Balance Sheets as of March 31, 1997
                     (Unaudited) and
                     December 31, 1996.....................................

                 Statements of Operations for the three
                     months ended March 31, 1997
                     and 1996 (Unaudited)..................................

                 Statements of Cash Flows for the three
                     months ended March 31, 1997 and 1996
                     (Unaudited)...........................................

                 Notes to Financial Statements(Unaudited)..................

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

Part II          OTHER INFORMATION

        Item 6   Exhibits Index and Reports................................

        Signatures.........................................................


                                        2
<PAGE>

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

      This Form 10-Q contains forward-looking statements including, without
limitation, statements relating to development activities of the Company within
the meaning of Section 27A of the Securities Act of 1933 an Section 21E of the
Securities Exchange Act of 1934. Although the Company believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, the Company's actual results and performance of
Apartment Communities could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause such a difference
include general economic conditions, local real estate conditions, construction
delays due to unavailability of materials, weather conditions or other delays.

Overview

      The following discussion should be read in conjunction with the Financial
Statements of the Company and the Notes thereto appearing elsewhere herein.

      As of March 31, 1997, there were 127,925 outstanding shares, of which
115,425 or 90.23% were owned by the investors and 12,500 or 9.77% were owned by
other stockholders (including certain officers and directors of the Company).

      The Company entered into an agreement on April 18, 1995 to purchase the
Northwood Terrace Apartments in Oakland Park, Florida. The original purchase
price was $3,350,000 and was subsequently amended to $3,400,000 with a closing
of May 15, 1996. The Company had paid $75,000 in deposits under the agreement.
Subsequent to May 15, 1996, the contract was terminated because the Company was
not able to raise the necessary funds to purchase the Northwood Apartments. The
$75,000 deposit was retained by the seller and expensed by the Company.

      The Company entered into an agreement on October 2, 1996 to purchase the
Kendale Gardens Apartments in Miami, Florida. The purchase price was $7,135,000
with a closing date of November 15, 1996. A deposit of $10,000 was required at
the time the agreement was signed. On December 17, 1996, the agreement to
purchase Kendale Gardens Apartments dated October 2, 1996 was amended. The
amended agreement reduces the purchase price to $6,925,000 if purchased by
February 28, 1997. A deposit of $15,000 was required upon the execution of the
amended agreement. As of December 31, 1996, the Company has $25,000 in deposits
towards the purchase. On February 28, 1997, the agreement to purchase Kendale
Gardens Apartments dated December 17, 1996 was amended. The amended agreement
increases the purchase price to $6,975,000 if purchased by April 30, 1997. A
deposit of $25,000 was required upon the execution of this agreement. The
apartment building purchase will be financed by a private placement or a public
offering of the Company's stock.

      The Company entered into an agreement on December 20, 1996 to purchase the
Spring House Apartments in Tamarac, Florida. The purchase price was $16,490,000
with a closing date of February 28, 1997. A deposit of $25,000 was required and
paid in January 1997. The apartment building purchase will be financed by a
private placement or a public offering of the Company's stock. On January 21,
1997, the agreement to purchase Spring House Apartments dated December 20, 1996
was amended. The agreement extends the closing date to March 28, 1997. A deposit
of $100,000 was required upon the execution of the amended agreement. On March
25, 1997, the agreement to purchase Spring House Apartments dated 


                                       1
<PAGE>

January 21, 1997 was amended. The agreement extends the closing date to May 5,
1997. A deposit of $25,000 was required upon the execution of the amended
agreement. As of June 5, 1997, the Company has not closed on the property and
has $175,000 in nonrefundable deposits towards the purchase.

      Results of Operations for the Three Months Ended March 31, 1997 and 1996

      For the three months ended March 31, 1997, the Company had a net loss of
$92,336 compared to a net loss of $318,421 for the same period in 1996.

      Interest income decreased $600 to $0 for the three months ended March 31,
1997 compared to $600 for the same period in 1996, primarily due to reduction in
cash in interest bearing accounts as a result of cash flow needs.

      Interest expense increased $6767 to $16,267 for the three months ended
March 1997 compared to $9,500 for the same period in 1996, primarily due to an
increase in loans from related parties.

      General and administrative expenses were $76,069 for the three months
ended March 31, 1997, compared to $309,521 for the same period in 1996.  The
increase is primarily due to the write-off of deferred Offering Costs as a
result of the Company's unsuccessful offer.

Liquidity and Capital Resources

      The Company's outstanding indebtedness at March 31, 1997 totaled
$1,017,678. This amount includes approximately $157,678 to accounts payable and
$860,000 unsecured notes payable to related parties.

      At March 31, 1997, the Company had a working capital deficit of $949,682
as compared to working capital deficit of $777,525 at December 31, 1996. The
increase in the working capital deficit was primarily attributable to an
increase in accounts payable and loans from related parties.

      Net cash used in operating activities was $152,814 for the three months
ended March 31, 1997 as compared to cash used in operating activities of $67,864
for the three months ended March 31, 1996. The increase in cash used in
operating activities is primarily attributable to an increase in other assets as
a result of deposits made on possible apartment building acquisitions. Net cash
provided by financing activities was $182,500 for the three months ended March
31, 1997 as compared to net cash provided by financing activities for the three
months ended March 31, 1996 of $0. The increase in cash provided by financing
activities is primarily attributable to loans from related parties.

      As of January 1997, the Company engaged the law firm of Atlas, Pearlman,
Trop & Borkson, P.A. to do securities and real estate closings for the Company.

      The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company sustained a substantial
loss from operations in 1996 which has resulted in a deterioration in the
Company's financial position.

      The recoverability of a major portion of the recorded asset amounts shown
in the accompanying balance sheet is dependent upon commencement of successful
operations of the Company, which in turn is 


                                       2
<PAGE>

dependent upon the Company's ability to finance its future operations. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets and liability amounts which
might result from the above uncertainties.

      The Company has and will continue to take a number of steps to reduce its
operating losses. The Company will continue to increase its efforts in marketing
their initial public offering of the Company's shares to raise funds. Management
believes that as a result of the action stated above, the Company can continue
in existence for the next twelve months; however, there is no assurance that
such action will be consummated or will eliminate the Company's need for
additional capital.

PART II. OTHER INFORMATION


                                       3
<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.

                                            INVESTMENT INCOME PROPERTIES OF
                                             AMERICA, INC.


_________________________           By:        /s/ Fredric B. Layne
(Date)                                   ---------------------------------------
                                                 Fredric B. Layne
                                                 President and CEO


                                        4
<PAGE>

                  Investment Income Properties of America, Inc.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                          Three Months Ended
                                                               March 31,
                                                          1997           1996
                                                          ----           ----

Revenue
       Interest Income                                  $      --     $     600

Expenses
       Selling, general and administrative                 76,069       309,521
                                                        ---------     ---------

       Loss from operations                               (76,069)     (308,921)

Interest expense                                           16,267         9,500
                                                        ---------     ---------

       Loss before income taxes                           (92,336)     (318,421)

Income taxes                                                   --            --
                                                        ---------     ---------

       Net loss                                         $ (92,336)    $(318,421)
                                                        =========     =========

Weighted average shares outstanding                       103,400        76,000
                                                        =========     =========

Net loss per share                                      $    (.89)    $   (4.19)
                                                        =========     =========


                                        5
<PAGE>

                  Investment Income Properties of America, Inc.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                            Three Months Ended
                                                                 March 31
                                                                 --------
                                                             1997        1996
                                                             ----        ----

Cash flows from operating activities:
      Net loss                                            $ (92,336)  $(318,421)
      Adjustments to reconcile net loss to net cash
      used in operating activities:
         Depreciation expense                                   797         270
         Amortization expense                                 1,029       1,029
      Stock issued in lieu of rent expense                    5,250          --
      Changes in operating assets and liabilities
         (Increase) decrease in prepaid expenses            (86,100)     13,017
         Decrease in other assets                                --     308,898
         Increase (decrease) in accounts payable and
         accrued expenses                                    18,546     (72,657)
                                                          ---------   ---------

         Net cash used in operating activities             (152,814)    (67,864)

Cash flows used in investing activities:
      Purchase of equipment                                      --          --
                                                          ---------   ---------

         Net cash used in investing activities                   --          --
                                                          ---------   ---------

Cash flows from financing activities:
      Proceeds from notes payable to related parties        182,500          --
                                                          ---------   ---------

         Net cash provided by financing activities          182,500          --
                                                          ---------   ---------

Net increase in cash and cash equivalents                    29,686     (67,864)

Cash and cash equivalents at beginning of period             29,660      80,541
                                                          ---------   ---------

Cash and cash equivalents at end of period                $  59,346   $  12,677
                                                          =========   =========

Supplemental information:
      Cash paid during the year for:
         Interest                                         $      --   $      --
                                                          =========   =========
         Income taxes                                     $      --   $      --
                                                          =========   =========


                                        6
<PAGE>

                  Investment Income Properties of America, Inc.

                                 BALANCE SHEETS
                                   (Unaudited)



                                     ASSETS

<TABLE>
<CAPTION>
                                                        March 31, 1997    Dec. 31, 1996
                                                        --------------    -------------
<S>                                                      <C>                 <C>          
Cash and cash equivalents                                $    59,346         $  29,660    
                                                                            
Property, plant and equipment, net                             8,650             9,447
                                                                            
Other assets                                                                
        Deposit                                              100,000            25,000
        Deferred offering costs                               11,100             5,000
        Deferred loan costs                                    8,086             4,115
                                                         -----------         ---------
                                                                            
        Total assets                                     $   187,182         $  73,222
                                                         ===========         =========
                                                                            
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                            
Accounts payable and accrued expenses                    $   157,678         $ 139,132
                                                                            
Notes payable to related parties                             860,000           677,500
                                                         -----------         ---------
                                                                            
        Total liabilities                                  1,017,678           816,632
                                                                            
Commitments and contingencies                                     --                --
                                                                            
Stockholders' equity                                                        
        Common stock - $.001 par value, 100,000,000                         
           shares authorized, 127,925 and 97,400 shares                     
           issued and outstanding                                  2                 1
        Additional paid-in capital                            27,648            22,399
        Accumulated deficit                                 (858,146)         (765,810)
                                                         -----------         ---------
                                                                            
        Total stockholders' equity                          (830,496)         (743,410)
                                                         -----------         ---------
                                                                            
        Total liabilities and stockholders' equity       $   187,182         $  73,222
                                                         ===========         =========
</TABLE>


                                        7
<PAGE>

                  Investment Income Properties of America, Inc.

                     UNAUDITED NOTES TO FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

      The accompanying unaudited condensed financial statements have been
prepared in accordance with the generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the three months ended March, 31 1997 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1997.

      The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date, but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. For further information, refer to the audited financial
statements and footnotes thereto included in the Form 10-KSB filed by the
Company for the year ended December 31, 1996.

NOTE B - FORMATION AND OPERATIONS OF THE COMPANY

      Investment Income Properties of America, Inc. (the "Company"), is a
Delaware corporation which intends to qualify as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). The
Company has a limited operating history. The Company has been formed to invest
primarily in existing residential and commercial properties in the Southeast and
Southwestern regions of the United States. The Company intends to seek
properties which hold potential for appreciation, including properties which may
be suitable for future conversion into condominium units.


                                        8