U.S. Securities and Exchange Commission
                             Washington, D.C. 20549
                                   FORM 10-QSB

(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

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

                        For the transition period from to

                         Commission file number 0-22132


                          BUCKHEAD AMERICA CORPORATION
                     (Exact name of small business issuer as
                            specified in its charter)

              DELAWARE                              58-2023732
(State or other jurisdiction of        (IRS Employer Identification No.)
incorporation or organization

                      4243 DUNWOODY CLUB DRIVE, SUITE 200,
                       ATLANTA, GEORGIA 30350 (Address of
                          principal executive offices)

                                 (770) 393-2662
                           (Issuer's telephone number)

                                N/A
(Former name, former address and former fiscal year, if changed since last
report)

      Check  whether  the issuer (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 CORPORATE ISSUERS

      State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:     October 31, 1998

           Common stock, par value $.01 - 1,943,935 shares outstanding

      Transitional Small Business Disclosure Format (Check one):
Yes        No  X

                                        1

<PAGE>



                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS


                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Condensed Consolidated Financial Statements

                           September 30, 1998 and 1997

                                   (Unaudited)

                                        2

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                      Condensed Consolidated Balance Sheet
                               September 30, 1998
                                   (Unaudited)


                                     Assets
Current assets:
    Cash and cash equivalents, including
     restricted cash of $722,954           $            3,204,016
    Investment securities                                  83,162
    Accounts receivable                                 1,711,751
    Current portions of notes receivable                  363,765
    Other current assets                                  470,712
                                                      -----------
             Total current assets                       5,833,406

Noncurrent portions of notes receivable                 1,760,825
Property and equipment, at cost, net of
    accumulated depreciation                           41,335,244
Deferred tax assets                                     2,940,000
Deferred costs, net                                     2,073,731
Leasehold interests, net                                3,657,110
Other assets                                            1,461,702
                                                       ----------

                                           $           59,062,018
                                                       ==========

                      Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable and accrued expenses  $            4,149,607
    Current portions of notes payable                   1,241,020
                                                       ----------
             Total current liabilities                  5,390,627

Noncurrent portions of notes payable                   33,286,050
Other liabilities                                         291,179
             Total liabilities                         38,967,856

Minority interest in partnership                          650,587

Shareholders' equity:
    Series A preferred stock; par value $100;
      200,000 shares authorized; 30,000 shares
      issued and outstanding                            3,000,000
    Common stock; $.01 par value; 5,000,000
     shares authorized; 2,003,277 shares issued
     and 1,943,935 shares outstanding                      20,033
    Additional paid-in capital                          7,362,487
    Retained earnings                                   9,695,650
    Accumulated other comprehensive income (loss)        (163,576)
    Treasury stock (59,342 shares)                       (471,019)
                                                       ----------
             Total shareholders' equity                19,443,575

                                            $          59,062,018
                                                       ==========

See accompanying notes to condensed consolidated financial statements.

                                        3

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                Condensed Consolidated Statements of Income(Loss)
                  Nine Months ended September 30, 1998 and 1997
                                   (Unaudited)





                                             1998                       1997
                                          -----------                ---------
Revenues:
    Hotel revenues                       $19,846,707                10,796,669
    Interest and investment income           110,551                   762,108
    Other income                           1,566,178                 1,786,511
                                          ----------                ----------
               Total revenues             21,523,436                13,345,288
                                          ----------                ----------

Expenses:
    Hotel operations                      14,736,732                 7,847,418
    Other operating and administrative     3,168,483                 2,410,298
    Depreciation and amortization          1,325,622                   801,081
    Interest  2,175,301                    1,050,314
             ----------                   ----------
             Total expenses               21,406,138                12,109,111
                                          ----------                ----------

             Income before income taxes      117,298                 1,236,177

Deferred income tax benefit                  (10,000)                    -
                                          ----------                ----------
             Net income                  $   127,298                 1,236,177
                                          ==========                ==========



Net income(loss) per common share:
    Basic    $                                 (0.05)                     0.67
                                               ======                     ====

    Diluted  $                                 (0.05)                     0.64
                                               ======                     ====






See accompanying notes to condensed consolidated financial statements.

                                        4

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                   Condensed Consolidated Statements of Income
                 Three Months ended September 30, 1998 and 1997
                                   (Unaudited)





                                               1998                       1997
                                          -----------                  ---------
Revenues:
    Hotel revenues                         $7,799,274                 5,081,763
    Interest and investment income (loss)     (44,828)                   85,304
    Other income                              860,366                   311,880
                                            ---------                 ---------
               Total revenues               8,614,812                 5,478,947
                                            ---------                 ---------

Expenses:
    Hotel operations                        5,751,095                 3,583,952
    Other operating and administrative      1,111,093                 1,013,498
    Depreciation and amortization             453,197                   342,537
    Interest                                  760,909                   436,772
                                            ---------                 ---------
             Total expenses                 8,076,294                 5,376,759
                                            ---------                 ---------

             Income before income taxes       538,518                   102,188

Deferred income tax expense                   140,000                     -
                                            ---------                 ---------

             Net income                    $  398,518                   102,188
                                            =========                 =========



Net income per common share:
    Basic    $                                   0.17                      0.04
                                                 ====                      ====

    Diluted  $                                   0.16                      0.04
                                                 ====                      ====



See accompanying notes to condensed consolidated financial statements.

                                        5

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows
                  Nine Months Ended September 30, 1998 and 1997
                                   (Unaudited)


                                                  1998                    1997
                                            -----------             -----------

   Cash flows from operating activities:
        Net income                            $   127,298            1,236,177
        Adjustments to reconcile net income
         to net cash provided (used) by
         operating activities:
          Depreciation and amortization         1,325,622              801,081
          Sales (purchases) of trading 
             securities, net                    2,998,950            1,331,269
          Gain on note sale                       -                   (800,000)
          Other, net                              394,515           (1,605,064)
                                             ----------              ----------
           Net cash provided (used) by
            operating activities                4,846,385              963,463
                                             ----------              ----------

   Cash flows from investing activities:
        Note receivable principal receipts        598,958              934,137
        Originations of notes receivable       (1,628,721)            (320,000)
        Capital expenditures                   (4,116,041)            (887,416)
        Other, net                             (1,218,971)            (161,759)
                                              -----------            ----------
           Net cash provided (used) by
            investing activities               (6,364,775)            (435,038)
                                              -----------            ----------

   Cash flows from financing activities:
        Repayments of notes payable              (620,232)            (586,941)
        Additional borrowings                   2,184,872                 -
        Preferred stock dividends                (225,000)             (20,000)
        Other, net                                100,992               97,492
                                               ----------           ----------
           Net cash provided (used) by
            financing activities                1,440,632             (509,449)
                                               ----------           ----------


   Net increase (decrease) in cash and
      cash equivalents                            (77,758 )             18,976

   Cash and cash equivalents at beginning
      of period                                 3,281,774            1,801,670
                                               ----------           ----------

   Cash and cash equivalents at end of period $ 3,204,016            1,820,646
                                               ==========           ==========




                                   (Continued)




See accompanying notes to condensed consolidated financial statements.

                                        6

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

           Condensed Consolidated Statements of Cash Flows - Continued
                  Nine Months Ended September 30, 1998 and 1997
                                   (Unaudited)


Supplemental disclosures of noncash investing and financing activities:

     In May 1998,  the Company  recorded the  following  partial  cash  activity
     relating to an acquired 121-room hotel in Norcross, Georgia:

             Costs:
               Cash and payables                    $   223,101
               Debt assumed                           3,818,798
                                                      ---------

             Property and equipment acquired        $ 4,041,899
                                                      =========


     In June 1998,  the Company  recorded the  following  partial cash  activity
     relating to the acquisition of leasehold interests in seven hotels owned by
     Host Funding, Inc.:

             Costs:
               Cash and payables                    $   516,635
               Common stock issued                      400,000
                                                        -------

             Leasehold interests acquired           $   916,635
                                                        =======


     In August and September  1998, the Company  recorded the following  partial
     cash activity relating to the refinancing of four owned hotels:

             New mortgage notes issued                $ 4,885,000

             Discharge of old mortgage notes           (4,323,476)
             Debt issuance costs                         (187,084)

               Net proceeds                           $   374,440
                                                        =========







       (Continued)





See accompanying notes to condensed consolidated financial statements.

                                        7

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

           Condensed Consolidated Statements of Cash Flows - Continued
                  Nine Months Ended September 30, 1998 and 1997
                                   (Unaudited)


     In May 1997,  the Company  recorded the  following  partial  cash  activity
     relating to the acquisition of The Lodge Keeper Group, Inc.:

             Costs:
               Cash                              $    825,000
               Common stock issued, net
                 of treasury stock acquired           658,580
               Debt assumed                         4,784,754

                                                 $  6,268,334

             Allocated to:
               Property and equipment            $  4,489,490
               Other assets                         3,127,860
               Working capital deficit             (1,349,016)
                                                    ---------

                                                 $  6,268,334


     In September 1997, the Company recorded the following partial cash activity
     relating to the acquisition of Hatfield Inns, LLC:


             Costs:
               Cash and payables                  $  1,464,293
               Preferred stock issued, net
                 of issuance costs                   2,887,194
               Debt assumed or placed                6,547,911

                                                  $ 10,899,398

             Allocated to:
               Property and equipment             $ 10,740,632
               Other assets                            158,766
                                                    ----------

                                                  $ 10,899,398










See accompanying notes to condensed consolidated financial statements.

                                        8

<PAGE>



                          BUCKHEAD AMERICA CORPORATION
                                AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements
                           September 30, 1998 and 1997
                                   (Unaudited)


   (1)    Basis of Presentation
          The accompanying unaudited condensed consolidated financial statements
          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. The results of operations for interim
          periods are not  necessarily  indicative  of the  results  that may be
          expected  for a full year or any other  interim  period.  For  further
          information, see the consolidated financial statements included in the
          Company's Form 10-KSB for the year ended December 31, 1997.


   (2)    Statement of Financial Accounting Standards No. 130,
          REPORTING COMPREHENSIVE INCOME

          In  June  1997,  the  Financial   Accounting  Standards  Board  issued
          Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  130,
          REPORTING  COMPREHENSIVE  INCOME. This statement establishes standards
          for reporting and display of  comprehensive  income and its components
          in a full  set of  general  purpose  financial  statements.  The  term
          "comprehensive  income" is used in SFAS No. 130 to describe  the total
          of all components of comprehensive income including net income. "Other
          comprehensive income" refers to revenues,  expenses, gains, and losses
          that are included in  comprehensive  income but excluded from earnings
          under current accounting  standards.  Currently,  "other comprehensive
          income" for the Company consists solely of items recorded as a
          component of shareholders'  equity under SFAS No. 115, ACCOUNTING FOR 
          CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES.

          Total  comprehensive  income(loss)for  the nine months ended September
          30, 1998 and 1997 was $(36,278) and  $781,049,  respectively,  and for
          the three  months ended  September  30, 1998 and 1997 was $234,942 and
          $102,188, respectively.



                                        9

<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS.

FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION.

First Nine Months of 1997

The Company completed the renovations of the Atlanta, Georgia Country Hearth Inn
in January 1997. The Company  completed the  renovations of the Dalton,  Georgia
Country Hearth Inn in February 1997 and also completed  certain  enhancements to
the  Orlando,  Florida  Country  Hearth Inn which were  required  under its debt
obligation.  Capital expenditures on these three hotels during the first half of
1997 aggregated  approximately  $608,000 and were funded from available cash and
restricted funds.

The Company received  $800,000 cash from the sale of a mortgage note in February
1997.  The  Company  also  received  approximately  $1.6  million  cash from its
investment in Industrial Revenue Bonds which were called in February 1997.

In February 1997, the Company sold two wholly owned  subsidiaries which held the
investment  in  Days  Inns  Mortgage  Trust  ("DIMT").  DIMT  was  treated  as a
partnership for income tax purposes and had produced significant tax purpose net
operating losses ("NOLs")  totaling  approximately  $34 million through December
31, 1996.  These NOLs had no impact on the Company's  book provision for regular
taxes  because the  ultimate  dissolution  of the  partnership  would  result in
immediate gain recognition for a comparable amount.  Because of NOL limitations,
the Company was exposed,  however,  to significant  potential future alternative
minimum tax liability. All of these tax attributes accompanied the DIMT interest
with its sale, and the Company's tax position is no longer impacted by DIMT.

On May 8, 1997, the Company completed its acquisition of The Lodge Keeper Group,
Inc.  of  Prospect,   Ohio  ("Lodge   Keeper").   The  purchase   price  totaled
approximately  $6.3 million  consisting  primarily of cash of $825,000,  106,320
shares of common stock of the Company,  and the assumption of approximately $4.8
million of debt.  Lodge Keeper operated 18 hotels under long-term  leases,  held
management  contracts on six Country Hearth Inn hotels and owned one independent
hotel, among other assets.

Approximately  $4.5 million of the purchase  price was allocated to property and
equipment and  approximately  $2.9 million to leasehold  interests.  The Company
also assumed a working capital deficit of approximately $1.3 million.

Lodge Keeper continued to manage the 24 hotels it previously managed in addition
to managing the five properties previously managed by the Company.  Lodge Keeper
also manages all the properties subsequently acquired by the Company.

At its June 26,  1997  annual  meeting of  shareholders,  the  Company  received
authorization  to issue up to 200,000  shares of  preferred  stock.  The Company
issued $3 million of such preferred  stock in connection  with the Hatfield Inn,
LLC  ("Hatfield")  acquisition  which  was  completed  in  September  1997.  The
acquisition  was deemed  effective  on September  1, 1997.  The  purchase  price
totaled  approximately $11 million consisting  primarily of cash and payables of
$1.5 million, $3 million of preferred stock issued by the Company, and

                                       10

<PAGE>



the assumption or placement of approximately $6.5 million of debt. The preferred
stock is a 10%  cumulative  instrument  convertible  to common stock seven years
after issuance at the then current  market value of the common  shares.  The new
debt had a weighted average interest rate of approximately  9.4%. Hatfield owned
eight 40 unit hotel  properties  located in Kentucky and  Missouri.  The Company
converted  all  eight  properties  into  Country  Hearth  Inns  and has used the
Hatfield  plans and design  rights  which  were also  acquired  to  develop  and
construct additional properties.

Also in September 1997, the Company financed  approximately $260 thousand of its
Dalton Hotel  renovation costs by placing a second mortgage on the property with
the same local bank that holds the first mortgage.

The Company  received  approximately  $100 thousand of  additional  capital as a
result of the  exercises  of stock  options  by a former  director  and a former
employee.



First Nine Months of 1998

The  conversion of the Hatfield  properties to Country Hearth Inns was completed
in 1997 and the Company began 1998 with 16 hotel properties owned, 36 properties
managed, and 29 Country Hearth Inn franchise properties open and operating.

Since the beginning of the year, seven  additional  Country Hearth Inn franchise
properties have opened and an additional 21 are presently under development.

The above described properties include the construction of Company owned Country
Hearth Inns in  Nicholasville,  Kentucky which opened in September and Eddyvlle,
Kentucky  which is expected to open in March 1999.  The Company has also entered
into agreements to lease three newly constructed Country Hearth Inns in Georgia.
The first of such properties in Barnesville is expected to open in December 1998
and construction has begun on the second in Cedartown.

Also  included  is the  renovation  and  conversion  of two  Lodge  Keeper  Ohio
properties  to Country  Hearth  Inns.  The  renovation  of the 88-room  hotel in
Amherst has already been  completed  and the  renovation  and  conversion of the
67-room Port Clinton hotel is expected to be completed in the fourth  quarter of
1998.

Capital  expenditures in the first nine months of 1998 amounted to approximately
$4.1 million.  Construction  and other loan commitments  provided  approximately
$2.2  million of these  funds.  The  remainder  was provided by a portion of the
proceeds from the Company's December 1997 sale of convertible debentures.

In May 1998,  the Company  acquired a 121-room  hotel in Norcross,  Georgia (the
"Norcross Hotel") for approximately $4 million,  most of which being financed by
the assumption of a $3.8 million first mortgage loan.

In June 1998, the Company entered into lease agreements for the operation
and management of seven hotels owned by Host Funding, Inc.("Host"). The

                                       11

<PAGE>



leased properties are operated as "Sleep Inns" and "Super 8" hotels; are located
in Florida,  Illinois,  Missouri,  Kentucky, and Mississippi;  and aggregate 450
rooms. For the leasehold interests, the Company paid Host approximately $900,000
(consisting  of 53,647 shares of the Company's  $0.01 par value common stock and
the remainder in cash).  Additionally,  the Company  purchased  62,212 shares of
Host common stock by executing notes aggregating  $288,000 which are due in June
1999.  Such  Host  shares  represent   security  deposits  against  future  rent
obligations.  The Company's  September 30, 1998 condensed  consolidated  balance
sheet reflects an unrealized loss on the Host shares of approximately $164,000.

In August 1998, the Company refinanced three of the former Hatfield  properties.
The new  mortgage  notes bear  interest at 8.25% and are  amortized  over twenty
years; replacing floating rate notes which had relatively shorter maturities. In
September  1998,  the Company  refinanced  its Daytona hotel  property.  The new
mortgage  note  bears  interest  at 8.5% and is  amortized  over  twenty  years;
replacing a note which was to be due in April 1999.  The four new notes  totaled
$4,885,000  and after  satisfaction  of the old notes and  issuance  costs,  the
Company  netted  proceeds  of  approximately  $375,000 in addition to locking in
long-term fixed rate financing on these four properties.


RESULTS OF OPERATIONS

Periods ended September 30, 1998 and 1997

Hotel revenues  amounted to $7,799,274 and  $19,846,707  for the three month and
nine  month  periods  ended  September  30,  1998,  respectively,  as opposed to
$5,081,763  and  $10,796,669  during the same periods in 1997.  Hotel  operating
profits for the 1998 three and nine month  periods  amounted to  $2,048,179  and
$5,109,975, respectively, versus $1,497,811 and $2,949,251 in 1997. Such changes
are primarily  attributable  to the acquisition of Lodge Keeper in May 1997, the
Hatfield acquisition in September 1997, the acquisition of the Norcross Hotel in
May 1998, and the Host leases in June 1998.

In the  third  quarter  of 1998,  hotel  revenues  and  operating  profits  were
generally below management's  expectations.  A variety of factors contributed to
revenue  declines  at several  of the  Company's  owned and  leased  properties.
Hurricane  Georges  caused a  significant  loss of  business at three gulf coast
properties.  The  postponement  of the Daytona  NASCAR  event auto race caused a
significant  loss of business at the Company's  Daytona hotel.  Lower convention
related  demand  caused a slight  decline in revenues at the  Company's  Orlando
hotel property. Management has noted a softening in business travel demand which
has negatively  impacted several  properties;  most  significantly,  some of the
Company's older leased properties in the Midwest which faced new competition.

The Company's  newer small market 40-room  Country Hearth Inns (the "Rural Gold"
properties)  have  continued to perform  favorably and  experienced  revenue and
operating profit increases versus last year.  Extensive  marketing  efforts have
also resulted in revenue increases at the Company's Atlanta and Dalton,  Georgia
Country  Hearth Inns.  Management  is focusing  future growth plans on the Rural
Gold type properties. Weaker performing older leased properties

                                       12

<PAGE>



are being sold.  Four such sales have occurred in 1998 resulting in net gains of
approximately $830,000. Additional leasehold interest sales are anticipated.

The  properties  presently  owned by the Company  are  subject to a  significant
amount of seasonal  fluctuation.  Fourth  quarter  results are  generally not as
favorable as in the third  quarter,  especially  in the  Company's  older leased
properties.  On an annual basis,  all  properties  are expected to satisfy their
debt and other cash  obligations  in addition  to  providing  the  Company  with
management and/or franchise fees.

Note receivable interest income continued to decline as a result of decreases in
the note  receivable  portfolio.  The first quarter of 1997 included  investment
income of  approximately  $450,000 as a result of the  Industrial  Revenue Bonds
which were  called.  The third  quarter of 1998  included  unrealized  losses of
approximately   $108,000  relating  to  the  decline  in  value  of  its  equity
investments in hospitality related companies.

Other  income in the first  quarter 1997  included  the $800,000  note sale gain
previously  discussed.  Other  income  in the  third  quarters  of 1998 and 1997
includes  Country  Hearth  Inn  franchise  fees of  approximately  $161,767  and
$156,533,  respectively,  excluding fees from Company owned properties which are
eliminated in consolidation. Management expects franchise fee income to increase
as more franchised  properties are opened. Other income in the first nine months
of 1998 and 1997 also includes approximately $50,000 and $300,000, respectively,
relating to favorable  settlements of "Old Buckhead" claims.  Further such gains
are not expected.

Other  operating  and  administrative  expenses  in the  third  quarter  of 1998
increased  $97,595  (9.6%)  versus the same period in 1997 and were in line with
management's expectations for such costs.

Property   related   depreciation   and  interest   expense  in  1998  increased
proportionately  to the revenue  increases  associated with the Hatfield,  Lodge
Keeper, and Norcross Hotel acquisitions. The Company also recognized $300,000 of
interest expense on its convertible debentures issued in December 1997.

Management believes the Company has adequate resources for the completion of its
present  acquisition and development  commitments.  Management also believes the
Company  has  adequate  liquidity  for  purposes of funding  seasonal  cash flow
shortfalls  and  does not  anticipate  the need  for  additional  financing  for
operating purposes.

The  Company  has made  public  announcements  of its  intention  to expand  the
development  of its Rural Gold  properties.  This  expansion  is being  effected
through   franchise   development   agreements   with  third  parties,   partial
participations with third party developers via joint ventures and leases, and by
purely Company owned projects.  The continued  expansion of these  properties is
contingent on the  availability of construction and permanent  financing,  among
many other  contingencies.  Also, the Company  and/or its business  partners may
need to raise additional  equity capital in order to facilitate this growth.  No
assurances can be made regarding these issues.




                                       13

<PAGE>



YEAR 2000 ISSUES

Many  existing  computer  programs use only two digits to identify a year in the
date field.  These programs were designed and developed without  considering the
impact of the upcoming  change in the century.  If not corrected,  many computer
applications  could fail or create erroneous results by or at the Year 2000. The
Year 2000 issue affects virtually all companies and organizations.

The Company has reviewed its computer  systems and has  determined  that most of
the  systems  are  already  Year  2000  compliant  (i.e.  no  modifications  are
necessary).   Specifically,  the  Company's  computerized  accounting,  payroll,
receivable,  and payable  systems,  which  constitute  the vast  majority of the
Company's computerized systems, do not need to be replaced or reprogrammed.

Certain   non-interfaced  less  critical  systems  may  require  replacement  or
modification. Such systems include cash registers, electronic locks, credit card
machines, and telephone systems. The Company expects to expend less than $50,000
to bring such systems into  compliance and expects that such  compliance will be
achieved prior to the end of the third quarter of 1999.


RISK FACTORS

This Form 10-QSB  contains  forward  looking  statements  that involve risks and
uncertainties.  Statements contained in this Form 10-QSB that are not historical
facts are forward looking statements that are subject to the safe harbor created
by the Private  Securities  Litigation  Reform Act of 1995. The Company's actual
results may differ  significantly  and materially from the results  indicated by
such forward  looking  statements and by past results.  For a discussion of risk
factors,  see the "RISK FACTOR" section contained in the Company's  Registration
Statement on Form S-3 (File No. 333-37691).


                                       14

<PAGE>



                           PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBIT INDEX

       Exhibit             Description

       3(i)                Articles of  Incorporation.(Incorporated by reference
                           to  Exhibit  3(i)  to the  Registrant's  Registration
                           Statement  on Form 10-SB  (No.0-22132)  which  became
                           effective on November
                           22, 1993.)

       3(i)(a)             Certificate    of   Amendment   of   Certificate   of
                           Incorporation.  (Incorporated by reference to Exhibit
                           3(i)(a)  to the  Registrant's  Annual  Report on Form
                           10-KSB for the fiscal year ended December 31, 1994.)

       3(i)(b)             Certificate    of   Amendment   of   Certificate   of
                           Incorporation. (Incorporated by reference to Appendix
                           "A" to the  Registrant's  Definitive  Proxy Statement
                           filed with the Securities and Exchange  Commission on
                           June 9, 1997.)

       3(i)(c)             Certificate    of   Amendment   of   Certificate   of
                           Incorporation. (Incorporated by reference to Appendix
                           "A" to the  Registrant's  Definitive  Proxy Statement
                           filed with the Securities and Exchange  Commission on
                           May 5, 1998.)

       3(ii)               By-Laws - Amended and  Restated as of June 27,  1994.
                           (Incorporated  by reference  to Exhibit  3(ii) to the
                           Registrant's  Annual  Report on Form  10-KSB  for the
                           fiscal year ended December 31, 1994.)

       4(i)                Certificate of Designation, Preferences and Rights of
                           Series  A   Preferred   Stock   of  the   Registrant.
                           (Incorporated  by reference to Exhibit 3(i)(c) to the
                           Registrant's  Quarterly Report on Form 10-QSB for the
                           quarter ended September 30, 1997.)

       11                  Statement re: Computation of per share earnings

       27                  Financial Data Schedule




(B) REPORTS ON FORM 8-K

       The  Company has not filed any reports on Form 8-K during the quarter for
       which this report is filed.



                                       15

<PAGE>







                                   SIGNATURES


In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.





Buckhead America Corporation
        (Registrant)



Date:    November 12, 1998         /s/Douglas C. Collins
                                   Douglas C. Collins
                                   President and Chief Executive Officer




Date:    November 12, 1998         /s/Robert B. Lee
                                   Robert B. Lee
                                   Senior Vice President and
                                   Chief Financial Officer





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