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

                                   Form 10-QSB

(Mark One)

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

         For the quarterly period ended: September 30, 1998

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

         For the transition period from _______________ to _____________

                         Commission file number 0-17232

                           CAPITAL RESERVE CORPORATION
        (Exact name of small business issuer as specified in its charter)

           Colorado                                                84-0888594
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

        #11-1861 Beach Avenue, Vancouver, British Columbia V6G 1Z1 Canada
                    (Address of principal executive offices)

                                 (604) 687-4828
                           (Issuer's telephone number)

                                 Not Applicable
              (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 ___ No
_X_

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the last practicable date:

  546,045 shares of Class A Common Stock, no par value, as of November 12, 1998

        Transitional Small Business Disclosure Format (check one); Yes___ No _X_

Exhibit index on page 9                                       Page 1 of 12 pages


<PAGE>
                         Independent Accountants' Report


Board of Directors

Capital Reserve Corporation



The accompanying consolidated balance sheet of Capital Reserve Corporation as of
September 30, 1998,  and the related  consolidated  statements of operations for
the three months and nine months  ended  September  30, 1998,  and 1997 and cash
flows for the nine months ended September 30, 1998, and 1997 were not audited by
us, and accordingly, we do not express an opinion on them.

Consistent with the requirements of Item 310(b) of Regulation S-B management has
elected to omit  substantially  all of the  disclosures  required  by  generally
accepted accounting principles.  If the omitted disclosures were included in the
financial  statements,  they might influence the reader's  conclusions about the
Company's  financial  position,  results  of  operations,  and its  cash  flows.
Accordingly,  these financial  statements are not designed for those who are not
informed about such matters.




/s/Miller and McCollom, CPA's
Miller and McCollom, CPA's









Denver, Colorado
November 3, 1998



                                        2

<PAGE>

<TABLE>
<CAPTION>


                                                 CAPITAL RESERVE CORPORATION
                                                 Consolidated Balance Sheet
                                                     September 30, 1998

                                                         (Unaudited)


<S>                                                                                          <C>
ASSETS


CURRENT ASSETS
  Cash and cash equivalents                                                                                   $ 293
                                                                                             ------------------------


TOTAL ASSETS                                                                                                  $ 293
                                                                                             ========================


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued liabilities                                                                  $     -
                                                                                             ------------------------
     Total current liabilities                                                                                    -
                                                                                             ------------------------

STOCKHOLDERS' EQUITY
  Class A common stock                                                                                    3,138,102
  Class B preferred stock                                                                                    50,000
  Accumulated deficit                                                                                   (3,187,809)
                                                                                             ------------------------

                                                                                                                293
                                                                                             ------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                    $ 293
                                                                                             ========================

</TABLE>

           See accountants' report and notes to financial statements.


                                        3

<PAGE>

<TABLE>



                                                 CAPITAL RESERVE CORPORATION
                                            Consolidated statements of operations

                                                         (Unaudited)
<CAPTION>

                                                    Three Months Ended                                Nine Months Ended
                                                       September 30,                                    September 30,
                                          -------------------------------------------       -------------------------------------

                                                 1998                      1997                    1998                1997
                                          ---------------------    ------------------       ------------------    ---------------
<S>                                       <C>                      <C>                      <C>                   <C>
Revenues
  Insurance residuals                                    $ 381           $     4,759              $     2,692        $    13,314
  Consulting revenues                                       -                     -                        -               2,500
  Interest and dividends                                    22                   168                       37              1,941
  Investment (loss) gains                                   -                (12,275)                  (2,302)            57,083
  Loss on sale of assets                                    -                     -                   (13,813)           (16,168)
  Other                                                    450                 1,888                    9,319             13,838
                                          ---------------------    ------------------       ------------------    ---------------

    Total revenues                                         853                (5,460)                  (4,067)            72,508

Expenses
  General and administrative                             1,161                13,936                   17,440            184,286
                                          ---------------------    ------------------       ------------------    ---------------

Net (loss)                                              $ (308)            $ (19,396)               $ (21,507)        $ (111,778)
                                          =====================    ==================       ==================    ===============

Net (loss) per common share                           $      *          $       (.04)            $       (.04)           $  (.21)
                                          =====================    ==================       ==================    ===============

</TABLE>



* Less than $.01



           See accountants' report and notes to financial statements.


                                        4

<PAGE>

<TABLE>


                                                 CAPITAL RESERVE CORPORATION
                                            Consolidated Statements of Cash Flows

                                                         (Unaudited)

<CAPTION>

                                                                                        Nine Months Ended
                                                                                          September 30,
                                                                            ------------------------------------------
                                                                                     1998                     1997
                                                                            ----------------------    ---------------------
<S>                                                                         <C>                       <C>                        
Operations activities:
  Net loss                                                                            $ (21,507)              $ (111,778)
                                                                            ----------------------    ---------------------
  Reconciling adjustments:
     Depreciation and amortization                                                           964                    6,218
     Loss (gain) on investments                                                            2,302                 (57,083)
     Loss on sale of assets                                                               13,813                   16,168
     Partnership (loss) income                                                            11,175                        -
    Other                                                                                  8,047                        -
Changes in assets and liabilities:
  Other current assets                                                                       351                   32,511
  Accounts payable and accrued liabilities                                              (49,012)                (180,451)
                                                                            ----------------------    ---------------------

     Total adjustments                                                                  (12,360)                (182,637)
                                                                            ----------------------    ---------------------

Net cash used for operating activities                                                  (33,867)                (294,415)
                                                                            ----------------------    ---------------------

Investing activities:
  Investments in common stock                                                            (1,893)                 (17,767)
  Sales of investments in common stock                                                    21,462                   99,247
  Proceeds from sale of assets                                                             5,843                   16,500
  Purchase of property                                                                         -                  (8,109)
                                                                            ----------------------    ---------------------

    Net  cash provided by investing activities                                            25,412                   89,871
                                                                            ----------------------    ---------------------

Net change in cash and cash equivalents                                                  (8,455)                (204,544)
Cash and cash equivalents at beginning of period                                           8,748                  229,375
                                                                            ----------------------    ---------------------

Cash and cash equivalents at end of period                                            $      293             $     24,831
                                                                            ======================    =====================

</TABLE>


           See accountants' report and notes to financial statements.

                                        5

<PAGE>



                           CAPITAL RESERVE CORPORATION
                   Notes to Consolidated Financial Statements
                               September 30, 1998

                                   (Unaudited)

Note 1 - Management's Statement

In the opinion of management,  the accompanying unaudited consolidated financial
statements  contain all  adjustments  (all of which are normal and  recurring in
nature)  necessary to present fairly the financial  position of Capital  Reserve
Corporation  as of September  30, 1998,  and the results of  operations  for the
three months and nine months ended  September 30, 1998,  and 1997 and cash flows
for  the  nine  months  ended  September  30,  1998,  and  1997.  The  Notes  to
Consolidated  Financial  Statements  which are contained in the  Company's  Form
10-KSB  should  be  read  in  conjunction  with  these  consolidated   financial
statements.

Note 2 - Related Party Transaction

In March  1998,  a  corporation  with  which an officer  of the  Corporation  is
affiliated,  purchased the Corporation's  insurance  residual for $15,000.  This
amount is included in other revenue in the accompanying financial statements.


                                        6

<PAGE>



Item 2.  Management's Discussion And Analysis or Plan of Operation (Item 303)

Liquidity and Capital Resources

Our working  capital at September 30, 1998, was $293, as compared to ($9,996) at
December  31,  1997.  Since we have no  significant  source of revenue,  working
capital will continue to be depleted by operating expenses.  Furthermore,  if we
should  generate an operating  loss for the current year  comparable to the loss
incurred for the year ended December 31, 1997, we will have very little, if any,
cash and working capital remaining.

We had no current  liabilities  at September 30, 1998. At December 31, 1997, our
current liabilities were $49,012.

As of  November  12,  1998,  we were in the  process  of  conducting  a  private
placement of up to 5,000,000 shares of the  Corporation's  Class A Common Stock,
no par  value  (the  "Shares")  pursuant  to Rule  506 of  Regulation  D. We are
offering  the  shares at $0.10 per  share,  or an  aggregate  offering  price of
$500,000.  There is no  guaranty  that we will be able to sell any or all of the
Shares being offered.

Results of Operations

We have  essentially  suspended  all of the  Corporation's  operations.  We have
disposed of most of our assets and applied the  proceeds  from the sale of those
assets to decreasing our  outstanding  liabilities.  As of November 12, 1998, we
had no source of income.

We had  total  revenues  of  ($4,067)  and  $72,508  for the nine  months  ended
September  30,  1998  and  1997,  respectively.  As the  result  of the  sale of
marketable securities, for the nine months ended September 30, 1998, we recorded
an investment  loss of $2,302,  as compared to an investment gain of $57,083 for
the same period during 1997. We also generated  other revenues of $9,319 for the
nine months ended  September 30, 1998,  which was largely due to the sale of our
insurance residual to a related party. See "Item 1. Financial  Statements - Note
2." During the nine months ended  September  30, 1998, we incurred a loss on the
sale of assets, attributable to the sale of the our furniture and fixtures to an
unrelated party, in the amount of $13,183, compared to a loss of $16,168 for the
same period during 1997. See "Item 1. Financial Statements."

General and  administrative  expenses  for the nine months ended  September  30,
1998, include legal expenses of $4,257. General and administrative  expenses for
the nine months ended  September 30, 1998,  also  include:  (i) rent expenses of
$2,806;  (ii) accounting and auditing  expenses of $5,875,  and outside services
expenses of $1,121.

As compared to the nine months ended September 30, 1997,  operating expenses for
the current period decreased by 91%. The net loss from continuing operations for
the nine months ended  September  30,  1998,  decreased by 81% compared to 1997,
generally attributable to a decrease in expenses and total revenues.


                                        7

<PAGE>



We are in the  process of  seeking a viable  company to acquire or with which to
merge.  Until such a company can be identified,  we have no source of income and
no viable  operations.  There is no guaranty  that we will be able to locate any
such company.


                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings (Item 103)

                  Not Applicable.

Item 2.   Changes in Securities

                  Not Applicable

Item 3.   Defaults Upon Senior Securities

                  Not Applicable

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

                  Not Applicable

Item 5.   Other Information

                  Not Applicable.

Item 6.   Exhibits and Reports on Form 8-K (ITEM 601)
<TABLE>
                  a)       Exhibits
<CAPTION>

         Regulation S-B                                                 Consecutive
            Number                Exhibit                               Page Number
             <S>     <C>                                                    <C>
              2      Plan of purchase, sale, reorganization
                     arrangement, liquidation, succession                   N/A
             3(i)    Articles of Incorporation as Amended(1)<F1>            N/A
             3(ii)   Bylaws as Amended(2)<F2>                               N/A
              4      Instruments defining the rights of security
                     holders, including indentures                          N/A
             10.1    Settlement Agreement(3)<F3>                            N/A
             10.2    Sub-Contracting Agreement with Columbia
                     Financial Group(6)<F6>                                 N/A
              11     Statement re computation of per share  earnings(4)<F4> N/A
              15     Letter on  unaudited  financial information(5)<F5>     N/A
              16.1   Letter from John M. Hanson & Company, P.C.
                     regarding change in certifying accountants(6)<F6>      N/A
              18     Letter on change in accounting principles              N/A
              19     Report furnished to security holders                   N/A

                                                         8

<PAGE>

              22     Published report regarding matters submitted
                     to vote of security holders                            N/A
              23     Consents of experts and counsel                        N/A
              24     Power of Attorney                                      N/A
              27     Financial Data Schedule                                11
--------------------------------
<FN>
<F1>
(1)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Corporation's  Annual  Report on Form 10-K for the  fiscal  year  ended
         December 31, 1990.
<F2>
(2)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Corporation's  Annual  Report on Form  10-KSB for the fiscal year ended
         December 31, 1994.
<F3>
(3)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Corporation's  Annual Report on Form  10-KSB/A  Amendment No. 1 for the
         fiscal year ended December 31, 1996.
<F4>
(4)      See Part I - Financial Statements.
<F5>
(5)      See Part I - Financial Statements.
<F6>
(6)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Corporation's  Quarterly  Report on Form  10-QSB for the  period  ended
         September 30, 1997.
</FN>
</TABLE>

         b)       Reports on Form 8-K:  None

                                        9

<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.

                                    CAPITAL RESERVE CORPORATION
                                    (Registrant)

Date:    November 12, 1998          By:/s/Glen C. Loder 
                                    Glen C. Loder
                                    Principal Financial and Accounting
                                    Officer and President


93098.10Q

                                       10

<PAGE>


                                   Exhibit 27

                             Financial Data Schedule

                                       11

<PAGE>