U.S. SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

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


                                  FORM 10-QSB

               [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                     For the Quarter Ended Sept. 30, 1998

              [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                        Commission File Number 33-82468
                        -------------------------------


                                AIM GROUP, INC.
       (Exact name of small business issuer as specified in its charter)

Jones Mills Industrial Park, Highway 270, P. O. Box 208, Jones Mills, AR 72105
             (Address of registrant's principal executive office)

                                 501-844-2600
                        (Registrant's telephone number)

                  Delaware                            13-3773537
         (State of Incorporation)         (I.R.S. Employer Identification No.)


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


Check  whether  the issuer (1) filed all  reports to be filed by Section 13 or
(15(d) of the  Exchange Act during the past 12 months and (2) has been subject
to such filing requirements for the past 90 days. Yes _X_ No ___

The number of shares of common  stock  outstanding  as of November  6,1998 was
1,323,702.

Transitional Small Business Disclosure Format: ___ Yes   _X_ No


<PAGE>

                        AIM GROUP, INC.AND SUBSIDIARIES
                                     INDEX
                        NINE MONTHS ENDED Sept.30, 1998

                                                                          PAGE


PART 1.     FINANCIAL INFORMATION

Item 1      Condensed Consolidated Balance Sheets -
            Sept. 30, 1998 and December 31, 1997                           3

            Condensed Consolidated Statements of
              Operations  - Three Months and Nine
            Months Ended Sept. 30,1998 and 1997                            4

            Condensed Consolidated Statements of
              Cash Flows - Three Months and Nine
            Months Ended Sept. 30, 1998 and 1997                           5


            Notes to Condensed Consolidated
            Financial Statements                                           6


Item 2      Management's Discussion and Analysis of                     7-10
            Financial Condition and Results of 
            Operations


PART II     OTHER INFORMATION


Item 5      Other Events                                               11-12


Item 6      Exhibits and Reports on Form 8-K                              11


            Signature Page                                                13

                                      2


<PAGE>

PART 1. FINANCIAL INFORMATION

                       AIM GROUP, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                           September 30,     December 31,
                                                               1998             1997
                                                           -------------     ------------
                                                            (Unaudited)        (Note)
<S>                                                        <C>               <C>
ASSETS
CURRENT ASSETS
  Cash                                                     $    16,933       $     9,898
  Accounts receivable
    Trade                                                      233,961           368,832
  Inventories                                                  162,909           202,155
  Prepaid expenses                                              11,559             6,967
                                                           ------------      ------------
    Total current assets                                       425,362           587,852

PROPERTY, PLANT AND EQUIPMENT                                  865,172           809,396
Less allowances for depreciation                              (282,262)         (236,685)
                                                           ------------      ------------

                                                               582,910           572,711

RESOURCE PROPERTY                                            4,031,536         4,000,373

OTHER ASSETS                                                    65,917            40,511
                                                           ------------      ------------
                                                           $ 5,105,725       $ 5,201,447
                                                           ============      ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                                         $   643,107       $   630,692
  Receivable financing liability                               160,840           277,441
  Note payable                                                 150,000                 0
  Current portion of long-term debt                            149,068            80,954
  Accrued expenses                                              38,119            46,062
                                                           ------------      ------------

    Total current liabilities                                1,141,134         1,035,149

LONG-TERM DEBT, less current portion                            59,038            93,091

CONVERTIBLE NOTES PAYABLE                                    1,050,000         1,050,000

STOCKHOLDERS' EQUITY
  Preferred Stock; 1,000,000 shares authorized;
    $1 par value; no shares issued or outstanding.                   -                 -
  Common stock; 12,000,000 shares authorized;
    $.01 par value; 1,326,684 shares issued
    and 1,323,702 shares outstanding at
    December 31, 1997 and  September 30, 1998.                  39,801            39,801
  Additional paid in capital                                 4,222,809         4,222,809
  Common stock held in treasury - 2,982 shares                  (6,876)           (6,876)
  Accumulated  deficit                                      (1,400,181)       (1,232,527)
                                                           ------------      ------------
                                                             2,855,553         3,023,207
                                                           ------------      ------------
                                                           $ 5,105,725       $ 5,201,447
                                                           ============      ============
</TABLE>

Note: The balance sheet at December 31, 1997 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.  The common  shares  listed  reflect  the one for three
reverse stock split effected on August 21, 1998.

See notes to condensed consolidated financial statements.

                                      3


<PAGE>

                       AIM GROUP, INC. AND SUBSIDIARIES

                           STATEMENT OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                 Three Months Ended            Nine Months Ended
                                                    September 30                 September 30
                                            ---------------------------   ---------------------------
                                                1998           1997           1998           1997
                                            ------------   ------------   ------------   ------------
<S>                                         <C>            <C>            <C>            <C>
Net sales                                   $   306,075    $   573,898    $ 1,632,686    $ 1,761,468
Costs and expenses
  Cost of products sold                         205,315        463,932      1,169,433      1,379,409
  Selling and administrative
    expenses                                    147,001        186,987        417,603        582,094
  Interest                                       44,515         43,711        150,388        142,354
  Depreciation and amortization                  19,400         19,401         58,201         58,202
                                            ------------   ------------   ------------   ------------
                                                416,231        714,031      1,795,625      2,162,059
                                            ------------   ------------   ------------   ------------
Earnings (loss) before taxes                   (110,156)      (140,133)      (162,939)      (400,591)

Income taxes                                          -              -              -              -
                                            ------------   ------------   ------------   ------------
Net earnings (loss)                         $  (110,156)   $  (140,133)   $  (162,939)   $  (400,591)
                                            ============   ============   ============   ============

Net earnings per share                      $    (0.083)   $    (0.106)   $    (0.123)   $    (0.303)
                                            ============   ============   ============   ============

Weighted average shares
  outstanding                                 1,323,702      1,322,577      1,323,702      1,323,803
                                            ============   ============   ============   ============
</TABLE>

The earnings per share and weighted average shares outstanding reflect the one
for three reverse stock split effected on August 21, 1998.

See notes to condensed consolidated financial statements.

                                      4


<PAGE>

                       AIM GROUP, INC. AND SUBSIDIARIES

                           STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                 Three Months Ended            Nine Months Ended
                                                    September 30                 September 30
                                            ---------------------------   ---------------------------
                                                1998           1997           1998           1997
                                            ------------   ------------   ------------   ------------
<S>                                         <C>            <C>            <C>            <C>
CASH FLOWS FROM OPERATIONS                  $   (17,209)   $   (14,459)   $   (64,681)   $   (31,415)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment            16,434        (36,570)       (55,776)       (43,620)
  Increases in other assets and
    resource property                            (7,882)          (673)       (56,569)        (5,000)
  Other                                               -         (3,140)             -         (3,140)
                                            ------------   ------------   ------------   ------------

    Net cash provided by investing
      activities                                  8,552        (40,383)      (112,345)       (51,760)
                                            ------------   ------------   ------------   ------------


CASH FLOWS FROM FINANCING ACTIVITIES:
  Net change in debt                            (12,781)        84,091        184,061         46,552
                                            ------------   ------------   ------------   ------------

    Net cash provided by (used in)
      Financing activities                      (12,781)        84,091        184,061         46,552
                                            ------------   ------------   ------------   ------------


    NET INCREASE (DECREASE) IN CASH         $   (21,438)   $    29,249    $     7,035    $   (36,623)
                                            ============   ============   ============   ============
</TABLE>

See notes to condensed consolidated financial statements.

                                      5


<PAGE>

                       AIM GROUP, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

Sept. 30, 1998

NOTE A - BASIS OF PRESENTATION

The accompanying  unaudited condensed financial  statements have been prepared
in  accordance  with  generally  accepted  accounting  principles  for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of 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 a fair
presentation  have been included.  Operating results for the nine months ended
September 30, 1998 are not  necessarily  indicative of the results that may be
expected for the year ended December 31, 1998. For further information,  refer
to the financial  statements and footnotes  thereto included in the AIM Group,
Inc. annual report on FORM 10-KSB for the year ended December 31, 1997.

NOTE B - INVENTORIES

The components of inventory consist of the following:

<TABLE>
<CAPTION>
                                 September 30,      December 31,
                                     1998               1997
<S>                               <C>                <C>
Finished Goods                    $   -0-            $   -0-
Raw Materials                       102,278            141,926
Klannerite Ore                       48,645             48,645
Spare Parts and Supplies             11,986             11,584

Totals                            $ 162,909          $ 202,155
                                  ==========         ==========
</TABLE>

                                      6


<PAGE>

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

RESULTS OF OPERATIONS

QUARTER ENDED SEPTEMBER 30, 1998 COMPARED TO QUARTER ENDED
SEPTEMBER 30, 1997

      Net sales of AIM Group,  Inc. (the  "Company")  for the third quarter of
1998  amounted to $306,075,  a decrease of $267,823 from net sales of $573,898
in the prior year's comparable quarter. The decline in net sales was primarily
attributable  to a significant  decrease in sales  associated with the surface
treatment  of fire  retardant  materials  resulting  from a decline in a major
customer's  product  line.  Cost of products  sold  amounted  to $205,315  and
$463,932 in the third quarters of 1998 and 1997, respectively,  resulting in a
gross  margin  of 33% in the third  quarter  of 1998  compared  to a 19% gross
margin in the third quarter of 1997.  The  improvement in the gross margin was
primarily attributable to significant expense savings in direct material costs
and better utilization and efficiency of manufacturing resources.

      Selling and  administrative  expenses  during the third  quarter of 1998
were $147,001, or 48% of net sales, compared to $186,987, or 33% of net sales,
in the third quarter of 1997.  The increase of these expenses as a per cent of
sales is mainly due to the large  percentage  decline in net sales  during the
current quarter. These expenses in dollar terms were down $39,986 compared the
third quarter of 1997 reflecting positive cost containment efforts in the past
year.

      Interest  expenses  were  $44,515,  or 15% of net  sales,  in the  third
quarter of 1998 compared to $43,711,  or 8% of net sales, in the third quarter
of 1997.  The  increase  in  interest  expenses  as a percent of net sales was
attributable to the decline in net sales experienced  during the third quarter
of 1998 compared to the  comparable  1997 quarter.  This expense was basically
unchanged when comparing actual amounts.

      Primarily as a result of the above,  the Company  incurred a net loss of
$110,156,  or $.083 per  share,  in the  quarter  ended  September  30,  1998,
compared to a net loss of $140,133,  or $.106 per share,  in the quarter ended
September  30,  1997.  The per share  figures  reflect the one for three stock
split that occurred during the third quarter of 1998.

                                      7


<PAGE>

NINE MONTHS ENDED  SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED  SEPTEMBER
30, 1997

      Net sales of the Company for the nine months  ended  September  30, 1998
amounted to  $1,632,686,  a decrease of $128,782  from net sales of $1,761,468
for the nine months ended  September 30, 1997. The majority of the decline was
due to the decline in a major  customer's  product  line that  occurred in the
third  quarter  ended  September  30, 1998.  Cost of products sold amounted to
$1,169,433  and  $1,379,409  for the nine months ended  September 30, 1998 and
September 30, 1997,  respectively,  resulting in a gross margin of 28% for the
first nine months of 1998 compared to 22% for the  comparable  period in 1997.
The  increase in gross  margin is  primarily  the result of  negotiated  price
reductions   for  certain  direct   material  costs  and  improved   operating
efficiencies.

      Selling and administrative  expenses for the nine months ended September
30, 1998 were $417,603,  or 26% of net sales,  compared to $582,094, or 33% of
net sales,  for the nine months ended  September  30, 1997.  The decrease is a
result of  significant  cost  reduction in several  expense  areas within this
category over the past year.

      Interest expenses were $150,388,  or 9% of net sales, in the nine months
ended  September  30, 1998 compared to $142,354,  or 8% of net sales,  for the
comparable  period in 1997. The slight increase is primarily due to additional
financing  required for working capital  purposes during the nine months ended
September 30, 1998.

      Primarily as a result of the above,  the Company  incurred a net loss of
$162,939,  or $.123 per share,  in the nine months  ended  September  30, 1998
compared  to a net loss of  $400,591,  or $.303 per share,  in the nine months
ended  September  30, 1997.  The per share  figures  reflect the one for three
stock split that occurred during the third quarter of 1998.

                                      8


<PAGE>

LIQUIDITY and SOURCES of CAPITAL

      The Company  incurred a negative cash flow from operations of $17,209 in
the third quarter of 1998, compared to a negative cash flow from operations of
$14,459 in the third quarter of 1997. As of September  30,1998 the Company had
a working capital deficit of $715,772.

      In order to increase  available cash to meet expenses in the short term,
the Company  continued  its  factoring  arrangement  which  provides  for cash
advances  against  invoices  to  customers  during  the  period in which  such
invoices  are  outstanding.  Generally,  the  cost of  factoring,  similar  to
interest rates on short term borrowings, is payable on the amounts outstanding
and customer payments are then applied directly to advances.  Factoring, while
not  increasing  working  capital,  does  provide  liquidity  of  receivables.
Accounts  payable  increased  slightly  from $630,692 at December 31, 1997, to
$643,107 at September 30, 1998.  The larger current  liability  increases that
occurred in the nine months ended September 30, 1998 were the following: Notes
payable  increased  $150,000 which was required for working capital and a loan
for plant  improvements  increased  $69,000  reflecting  the  installation  of
various equipment designed to improve manufacturing efficiencies.

                                      9


<PAGE>

YEAR 2000 ISSUE

The Company is in the process of  developing  a formal  program to ensure that
all significant  computer systems are substantially Year 2000 compliant by the
year ending December 31, 1999. When completed the program will encompass:  (1)
identification  of all  information  technology  systems  ("IT  Systems")  and
non-information  technology  systems ("Non-IT Systems") that are not Year 2000
compliant;  (2) repair or replacement of the identified non-compliant systems,
and (3) testing of the repaired or replaced systems.

Efforts to date on the  program  have been  mainly in review of the  Company's
accounting and financial  reporting  systems.  The primary  computer  software
applications  in  this  area  are  vendor  supplied  and the  Company  will be
contacting  these  vendors  over the next  three  months to  obtain  how these
vendors will be Year 2000 on such applications.  For example, when appropriate
software  updates will be sent to address any Year 2000 issues.  Other efforts
on the Year 2000 issue will  include the  establishment  of a committee by the
Board of  Directors  during the  fourth  quarter of 1998 to carry out the Year
2000 program.

Thirdly,  there has been  correspondence with some key suppliers and customers
regarding  each  other's  plans to  handle  key Year 2000  issues  and this is
continuing.

At this point,  the Company  expects to establish a formal plan with  detailed
action items and targeted  completion times during the fourth quarter of 1998.
During this time  communication  with software  vendors and business  partners
will be on-going along with further effort in the identification  phase of the
program. Presently, it is difficult to assess the implementation costs of this
program without the formal plan, however,  such an assessment will be provided
by the end of the Company's fiscal year, Dec. 31, 1998.

The company will  continue to monitor and evaluate the impact of the Year 2000
issue on its  operations.  Until the Company is into the final testing part of
the  program  the risks  from  potential  Year 2000  failures  cannot be fully
assessed.  Due to this  situation,  the Company  cannot begin any  contingency
plans.  Such plans will be developed as any  potential  Year 2000 failures are
identified in the final testing stages.

                                      10


<PAGE>

PART II.  OTHER INFORMATION

Item 5.  OTHER EVENTS

      The  previously  announced  one-for-three  reverse  stock  split  of the
Company's Common Stock(the  "Reverse Split") was effective on August 21, 1998.
On that date, each certificate representing shares of Common Stock outstanding
immediately prior to the Reverse Split (the "Old Shares") was deemed,  without
any  action  on the  part  of the  shareholders,  automatically  to  represent
one-third  the number of shares of Common  Stock after the Reverse  Split (the
"New  Shares").  No fractional  New Shares are being issued as a result of the
Reverse  Split.  In lieu  thereof,  the number of New Shares  issuable to each
shareholder  whose  Old  Shares  are not  evenly  devisable  by three is being
rounded up to the nearest  whole share.  (For  example,  a holder of 1,000 Old
Shares is entitled to receive 334 New Shares in exchange  for his Old Shares.)
Shareholders  of record were  recently  requested  to  surrender  certificates
representing  the Old Shares in accordance  with the procedures set forth in a
letter  of  transmittal  sent to the  shareholders.  Upon  such  surrender,  a
certificate  representing  New  Shares  will be issued  and  forwarded  to the
shareholder.  Until surrender,  each stock certificate representing Old Shares
will  continue to be valid and  represent  New Shares equal to  one-third  the
number of Old Shares,  subject to the above-referenced  rounding up in lieu of
fractional shares. The CUSIP number assigned to the New Shares is 008881203.

      On October 16, 1998,  the Company  announced  that it had  suspended its
negotiations to acquire by merger United Granite Corporation, which would have
operated the  Company's  proposed  granite  processing  facility in Hot Spring
County, Arkansas. The Company is in discussions with other potential operators
of a granite processing facility. The previously announced municipal financing
of $4 million to fund  construction of the previously  proposed  facility will
require  a  new  application  accompanied  by  a  revised  business  plan  and
acceptance  by the  municipality  of the  final  terms and  conditions  of the
proposed operation.

      The Company is  considering  the raising of  additional  equity  capital
through a private offering of common stock in order to finance the purchase of
equipment for the proposed granite processing facility and for working capital
purposes.

                                      11


<PAGE>

      During  September,  1998,  the Company  completed the  relocation of its
corporate  headquarters  to the Jones  Mills  Industrial  Park  located in Hot
Spring  County,  Arkansas.  The Company's new address and telephone  number at
that location is AIM Group,  Inc., Jones Mills  Industrial Park,  Highway 270,
P.O. Box 208, Jones Mills, Arkansas 72105; telephone (501) 844-2600.


Item 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS. The following exhibit is filed herewith:

         EXHIBIT NO.               DOCUMENT

             3                     Amendment to Articles
                                   of Incorporation

            27                     Financial Data Schedule

(b)   REPORTS ON FORM 8-K. The Company  filed a Form 8-K on September 25, 1998
      reporting the  Company's  engagement  of Moore,  Stephens,  Frost as the
      Company's new certifying accountant effective September 17, 1998.

                                      12


<PAGE>

                                  SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.


                                AIM GROUP, INC.

November 9, 1998                By: /s/PAUL R. ARENA
                                    ----------------
                                    Paul R. Arena
                                    Chairman of the Board,
                                    Chief Executive Officer
                                     and President

November 9, 1998                By: /s/LEIGH S. ZOLOTO
                                    ------------------
                                    Leigh S. Zoloto
                                    Chief Financial Officer,
                                     Secretary and Treasurer