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

                                 FORM 10-QSB/A



(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                       

( )  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:   333-2856                                         

                    American Equities Income Fund, Inc.                       
             (Exact name of registrant as specified in its charter)

         Delaware                                                      22-3429295                   
(State of incorporation)                               (I.R.S. Employer Identification No.) 
          
        East 80 Route 4, Suite 202, Paramus, New Jersey                   07652   
           (Address of principal executive offices)                     (Zip Code) 

                               (201) 368-5900                                 
             (Registrant's telephone number, including area code)

                                                                                                       
(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  

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by
Sections 12, 13 or 15(d) of the Securities Exchange act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.              Yes       No  
        
                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:  As of September 30, 1998, the Company had 1,000 shares of common stock, $1.00 par
value, issued and outstanding.

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                    AMERICAN EQUITIES INCOME FUND, INC.


                                   INDEX


                                                                                     Page(s)

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements:

          Balance Sheet as at September 30, 1998                                       3

          Statement of Cash Flows as at September 30, 1998                             4

          Statement of Operations as at September 30, 1998                             5

          Statement of Stockholders' Equity as at September 30, 1998                   6

          Notes to Financial Statements                                              7 - 8
          
Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations                                        9

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                                            10

Item 2.   Changes in Securities                                                        10 
          
Item 3.   Defaults upon Senior Securities.                                             10

Item 4.   Submission of Matters to a Vote of Security Holders                          10

Item 5.   Other Information.                                                           10

Item 6.   Exhibits and Reports on Form 8-K.                                            10







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                    AMERICAN EQUITIES INCOME FUND, INC.
                               BALANCE SHEET
                                (Unaudited)
   
                                                        As of September 30
    
                                                      1998            1997
Assets

Current Assets:                              
  Cash in banks                                   $1,081,007       $1,992,314
  Financed receivables - Net                       9,711,739        4,024,151
  Other current assets                             1,249,833          495,077
                    Total current assets         $12,042,579       $6,511,542

Deferred Costs:
  Deferred organizational costs                   $  766,915       $  925,629
  Deferred note costs                                869,715          232,785
    Less accumulated amortization                   (427,567)         (20,150)
                    Total other assets            $1,209,063       $1,138,264

                    Total Assets                 $13,251,642       $7,649,806

Liabilities and Stockholders' Equity

Current Liabilities:
  Accounts Payable and accrued expenses            $  37,119      $    14,035
  Interest Payable                                   122,825            2,907
  Other current liabilities                          605,708           77,684
                    Total current liabilities      $ 765,652      $    94,626   

Other liabilities:
  Notes payable                                  $12,644,000       $6,864,000
  Escrow payable                                           0          723,200
  Other Long term liabilities                        169,207                0
                    Total long-term liabilities  $12,813,207       $7,587,200

                         Total liabilities       $13,578,859       $7,681,826

Stockholders' Equity:
  Common Stock, $1 par value,
  1,000 shares authorized, 1,000 shares
  issued and outstanding                       $       1,000      $     1,000
  Additional paid-in capital                          39,000           39,000
  Accumulated profit (loss)                         (367,217)         (72,020)
                    Total Stockholders' Equity  $   (327,217)      $  (32,020)

    Total Liabilities and Stockholders' Equity  $ 13,251,642       $7,649,806

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                    AMERICAN EQUITIES INCOME FUND, INC.
                          STATEMENT OF CASH FLOWS

   
                                                              As of September 30,
 
                                                              1998           1997

Net Income (loss)                                         ($ 104,518)        $  (58,435)

   Adjustments to reconcile Net Income to Net Cash
    from Operating Activities:
    Depreciation and amortization                         $  304,329         $        0
   Increase in financed receivables                       (3,445,656)        (3,444,177)
   Increase in other current assets                         (603,713)          (495,077)
   Increase in accrued expenses                               27,473                 35
   Increase in other current liabilities                     498,215             20,008
     Total Adjustments                                   ($3,127,909)       ($3,919,211)

     Net cash flows from (used in) operating activities  ($3,323,870)       ($3,977,646)

Cash Flows from (used in) Investing Activities:     
    Payment of organizational costs                         (352,765)          (814,779) 
     
     Net cash flows from (used in) Investing Activities    ($352,765)          ($814,779)

Cash Flows from (used in) Financing Activities:
   Decrease in Escrow payables                             $(411,000)           $507,200
   Increase in interest payable                              174,350              (1,333)
   Proceeds from notes payable                             4,361,000           4,647,000

     Net cash flows from financing activities             $4,124,350          $5,152,867

Net Increase in Cash                                       $ 447,715          $  360,442

Cash at beginning of period                               $  633,292          $1,631,872 

Cash at end of period                                     $1,081,007          $1,992,314

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                          AMERICAN EQUITIES INCOME FUND, INC.
  
                                          STATEMENT OF OPERATIONS

                                                 Nine months ended September 30,
                                                        1998            1997

Revenues:
Fee income                                           $1,152,685       $287,183
Other income                                             17,445         57,265
                              Total Revenues         $1,170,130       $344,448


Operating Expenses:
General & administrative expenses                    $   5,548      $  42,011
Interest expense                                       964,771        360,872
                              Total expenses          $970,319       $402,883

Net Income
before depreciation, amortization, 
and provision for income taxes                        $199,811      $(58,435)

Net Income
after depreciation, amortization, 
and provision for income taxes                       ($104,518)     ($58,435)<PAGE>

                             AMERICAN EQUITIES INCOME FUND, INC.

                               STATEMENT OF STOCKHOLDER' EQUITY
  
                                                   Additional
                               Number               Paid in      Net
                              of shares   Value     Capital      Loss   Total

Date of incorporation                0       $0          $0      $0        $0
  (March 11, 1996)

Shares issued for cash on        1,000    $1,000    $39,000      $0      $40,000
  March 22, 1996

Accumulated loss as of                                      (367,217)   (367,217)
  9/30/98

Total Stockholders' Equity       1,000    $1,000    $39,000 ($367,217)  ($327,217)


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                    AMERICAN EQUITIES INCOME FUND, INC.
 
                               NOTES TO FINANCIAL STATEMENTS

NOTE A - FORMATION AND OPERATION OF THE COMPANY

American Equities Income Fund, Inc. (the "Company") was incorporated under the laws of the
State of Delaware on March 11, 1996.  

The Company is in the business of factoring accounts receivable (the "Receivables") and
providing other financial services to client companies.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

Accounting records of the Company and financial statements are maintained and prepared on the
accrual basis.

Year End

The Company's year end for financial reporting tax purposes is December 31.

Cash Equivalents

For financial statement purposes, with respect to the Statement of Cash Flows, cash equivalents
include time deposits and all highly liquid investments with original maturities of three months
or less.  The amount included on the Company's Statement of Cash Flows is comprised of
exclusively of cash.

NOTE C - STOCKHOLDERS' EQUITY

The Company is authorized to issue 1,000 shares of common stock at $1.00 par value.  On June
30, 1998, there were 1,000 shares of common stock issued and outstanding.

The holders of the common stock are entitled to one vote per share on all matters to be voted
on by shareholders.

NOTE D - SECURED NOTE OFFERING

On August 26, 1996, the Company commenced offering subscriptions for up to $15,000,000
aggregate principal amount of its 12% Notes in denominations of $1,000 each, or any integral
multiple thereof.  The Notes bear simple interest at 12% per annum, payable interest only
monthly, annually or upon maturity, at the option of the investor, with all principal and accrued
interest, if any, due on September 30, 2006.  Accrued but unpaid interest will be compounded
monthly at the rate of 12% per annum.  The Notes may be accelerated by the Note Holders on
the first day of the fifth, sixth, seventh eighth and ninth years upon six months written notice
to the Company.  The Notes will be secured by the Receivables acquired with the proceeds of
the offering or funds obtained from the repayment of such Receivables or any after acquired
Receivables.  The Notes are prepayable in whole or in part at any time without premium or
penalty.

The offering terminated on August 26, 1998.  An aggregate of $12,928,208 principal amount
of Notes were issued as of September 30, 1998.

NOTE E - RELATED PARTY TRANSACTIONS
     
The Company and American Equities Group, Inc. will share the fees charged, 50% to the
Company and 50% to American Equities Group, Inc.  American Equities Group, Inc. will pay
all overhead, expenses and salaries of the Company from its portion of the fees as relates to the
ongoing business of the Company, except for legal, accounting, filing fees, taxes and other
administrative expenses related to the Company.

NOTE F - ACCOUNTS RECEIVABLE

The Company's policy is to record the accounts receivable it purchases from borrowers at the
face amount, less the portion held back by the Company as a loss reserve.

At September 30, 1998, the financed receivables are as follows:

                                   September 30, 1998

                         Face Amount         $32,068,451
                         Less Reserve        (22,356,712)
                         Net                 $ 9,711,739 


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

         The following discussion and analysis should be read in conjunction with the Financial
Statements and Notes thereto appearing elsewhere in this Form 10-QSB.

         This management's discussion and analysis of financial conditions and results of
operations contains certain "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995.  Such statements relating to future events and financial
performance are forward-looking statements that involve risks and uncertainties, detailed from
time to time in the Company's various Securities and Exchange Commission filings.  No
assurance can be given that any such matters will be realized.

         Nine months ended September 30, 1998 compared to the nine months ended September
30, 1997.

         Gross revenues increased to $1,170,130 or 240% for the nine months ended September
30, 1998 from $344,448 for the nine months ended September 30, 1997, primarily because of
the increase in funds available through the Company's initial public offering which enabled the
Company to purchase more accounts receivable and therefore generate more fee income.

         Net income before depreciation, amortization, and provision for income taxes increased
by $258,246 to $199,811, or 17.1% of gross revenues, for the nine months ended September
30, 1998 from $(58,435) or (.17)% of gross revenues for the nine months ended September 30,
1997.  This increase was primarily due to the increase in funds available through the Company's
public offering of notes which enabled the Company to purchase more accounts receivable and
therefore generate more fee income.

         Operating expenses decreased by $36,463, to $5,548, or .5% of gross revenues, for the
nine months ended September 30, 1998, from $42,011 for the nine months ended September 30,
1997.  This decrease was primarily due to decreased legal and accounting expenses, as well as
the absence of securities filing fees, related to the Company's public offering of promissory
notes.

         Interest expense increased $603,899 to $964,771 or 82.4% of gross revenues, for the
nine months ended September 30, 1998, compared to $360,872, for the nine months ended
September 30, 1997.  This increase was primarily due to the increase in investors notes
outstanding.

Liquidity and Capital Resources

         The Company's principal sources of liquidity have been internally generated funds and
through the public offering of its 12% Notes.  It is anticipated that funds from operations and
the receipt of the net proceeds of such offering will provide the Company with sufficient
liquidity to meet its debt service and operating requirements for at least the next 12 months. 

         The ability of the Company to meet operating forecasts included in its expansion plans
will depend in part upon the successful completion of this offering and its ability to develop and
implement new or additional financial services.
   
Year 2000 Compliance

         American Equities Income Fund, Inc. is a wholly owned subsidiary of American Equities
Group, Inc. ("AEG") which has established an overall plan to address the Year 2000 
compliance issue ("Y2K") within the operations of the organization. The Y2K Compliance Plan
(the "Plan") focuses on several strategic concerns related to Y2K compliance:  the ability to
deliver services to customers and investors, the corporate legal abilities, and concerns related
to computer or mechanical systems failure within the organization.  Appropriate resources have
been applied to the Plan including the allocation of staff time and the hiring of an outside
systems consultant.  Progress is reported regularly to the senior management of the company.

         AEG uses computerized technology to process information throughout the company.  The
company uses computerized record-keeping of accounts receivable invoices; client account
reporting and collections; financing delivered through an on-line banking system interface;
investor distributions generated from a computerized system; and general office and accounting
systems.  In addition to an overall strategic focus, AEG has implemented the Plan with the goal
to assure uninterrupted service delivery to AEG'S clients and investors.

         The Plan is being managed within the AEG's Technology Task Force.  This Task Force
is staffed with members from all AEG areas and includes the Manager of Information
Technology and the company's General Counsel.  Two additional members have joined the Y2K
Project:  the Chief Financial Officer of AEG and an outside systems consultant who is familiar
with both AEG systems and Y2K compliance issues.  The committee meets regularly, at least
monthly, with interim written communication, to assess and limit the impact of potential Y2K
failures and to prepare for the consequences of the internal and external failures that could
occur. 

         The Plan recognizes that verification of compliance must be addressed on several levels: 
the readiness of computer hardware systems, software systems and equipment containing
embedded chips, the impact of third-parties related to vendors  and clients, the legal issues, the
company's financial exposure and contingency plans for failure.   All AEG systems development
and purchases within the last year have been evaluated for Y2K compliance.  Y2K
indemnification and protection clauses are incorporated into contracts for new clients and client
renewals.  Company exposure will be risk-assessed and ranked, and significant risks with
important business partners may require additional verification.  Issues related to financial
exposure are also be addressed.  It is anticipated that a test of all systems, both partition testing
and fully integrated testing, will be completed by August 15.  Other IT projects have not been
delayed because additional resources and staff hours have been assigned to address the issue.

         AEG has committed additional financial resources to implement the Plan.  A separate
budget, in addition to the regular operating budget has been identified to implement the Plan. 
Incremental amounts include the cost of the outside systems consultant and an amount for the
verification of readiness for significant AEG business partners.  At this time, the incremental
cost is estimated to be $25,000, with the cost will be born by the parent company, American
Equities Group, Inc.

         AEG bears some risk related to the unreadiness of third parties which would expose the
Company to the potential for loss and impairment of business processes and activities.  AEG is
developing a business contingency plan to address the possibility of the failure of systems or
processes and will continue to assess the level and magnitude of these risks.
    
                        PART II.  OTHER INFORMATION


Item 1. Legal Proceedings

         None.

Item 2. Changes in Securities

         None.

Item 3. Defaults upon Senior Securities

         None.

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

         None.
         
Item 5. Other Information

         None.

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

         (a)  Exhibits 

              None.

         (b)  Reports on Form 8-K

              None.
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                                SIGNATURES



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



         Date:   March 2, 1999                                  By:S/S DAVID S. GOLDBERG
                                                                David S. Goldberg
                                                                Chief Executive Officer and
                                                                Chief Financial Officer


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