Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549


[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
                               -------------------------------------------------

                                       OR

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

For the transition period from ____________________ to ____________________



For Quarter Ended September 30, 1998              Commission File Number 811-407
                  ------------------                                     -------

                          1150 LIQUIDATING CORPORATION
                             (formerly SBM Company)
             (Exact name of registrant as specified in its charter)

                MINNESOTA                                41-0557530
----------------------------------------   -------------------------------------
   (State or other jurisdiction of           (IRS Employer Identification No.)
   incorporation or organization)

           4440 IDS Center
        Minneapolis, Minnesota                              55402
----------------------------------------   -------------------------------------
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code       (612) 338-5254
                                                   --------------------------



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 ___

2,179,714 Common Shares were outstanding as of September 30, 1998

<PAGE>


                          1150 LIQUIDATING CORPORATION


                                    I N D E X


                                                                           Page
                                                                           ----

PART I. FINANCIAL INFORMATION

  Item 1. Financial Statements (Unaudited)

             Statements of Net Assets in Liquidation                          1

             Statement of Changes in Net Assets in Liquidation                2

             Notes to Condensed Financial Statements                        3-6


  Item 2. Management's Discussion and Analysis of Financial
            Condition and Changes in Net Assets in Liquidation                7


PART II.  OTHER INFORMATION                                                 8-9

<PAGE>


                          Part I. FINANCIAL INFORMATION
                          Item 1. FINANCIAL STATEMENTS

                          1150 LIQUIDATING CORPORATION
                     (formerly SBM COMPANY AND SUBSIDIARIES)

                     STATEMENT OF NET ASSETS IN LIQUIDATION

<TABLE>
<CAPTION>
                                                                  September 30,     December 31,
            ASSETS                                                    1998              1997
                                                                  ------------      ------------
                                                                  (Unaudited)         (Audited)
<S>                                                               <C>               <C>         
Cash and cash equivalents                                         $    871,000      $  5,015,698
Other assets                                                            77,525            36,971
                                                                  ------------      ------------
            Total assets                                               948,525         5,052,669

            LIABILITIES

Reserve for taxes                                                           --            70,000
Accounts payable                                                        72,830            83,888
Reserve for estimated costs during the period of liquidation           161,070           245,239
                                                                  ------------      ------------
            Total liabilities                                          233,900           399,127

Common stock held by employee benefit plans
   or plan participants - 304,693 shares (see Note 2)                  125,770           825,231
                                                                  ------------      ------------

            Net assets                                            $    588,855      $  3,828,311
                                                                  ============      ============

Common shares outstanding - 2,179,714 less 304,693 shares
   held by employee benefit plans or plan participants               1,875,021         1,875,021
                                                                  ============      ============

Net assets per common share outstanding                           $        .31      $       2.04
                                                                  ============      ============
</TABLE>


See Notes to Financial Statements.


                                       1

<PAGE>


                          1150 LIQUIDATING CORPORATION

                STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
           For the Period from December 31, 1994 to September 30, 1998


<TABLE>
<S>                                                                                         <C>          
NET ASSETS (DEFICIT) AT DECEMBER 31, 1994                                                   $(31,976,759)

Income from liquidating activities                                                            42,662,596

Preferred stock liquidation amount in excess
     of carrying value                                                                        (1,279,805)

Common stock dividend distribution - $2.75 per share                                          (5,994,214)

Allocation of common stock dividend distribution to
     common stock held by employee benefit plans                                                 837,906

Allocation of net loss and carrying value to common
     stock held by employee benefit plans                                                        442,472
                                                                                            ------------

NET ASSETS AT DECEMBER 31, 1995                                                                4,692,196

Income (loss) from liquidating activities                                                       (330,740)

Special allocation of carrying value to common stock held by
     employee benefit plans under settlement agreement (Note 2)                               (1,000,000)

Allocation of net loss and carrying value to
     common stock held by employee benefit plans                                                  11,286
                                                                                            ------------

NET ASSETS AT DECEMBER 31, 1996                                                                3,372,742

Income from liquidating activities                                                               529,599

Allocation of net income and carrying value to common stock
     held by employee benefit plans                                                              (74,030)
                                                                                            ------------

NET ASSETS AT DECEMBER 31, 1997                                                                3,828,311

Income (loss) from liquidating activities (January 1, 1998 through September 30, 1998)            61,082

Common stock dividend distribution - $2.32 per share                                            (708,000)

Common stock dividend distribution - $1.76 per share                                          (3,292,000)

Allocation of net income and carrying value to common stock
     previously held by employee benefit plans                                                   699,462
                                                                                            ------------

NET ASSETS AT SEPTEMBER 30, 1998 (unaudited)                                                $    588,855
                                                                                            ============
</TABLE>


See Notes to Financial Statements.


                                       2

<PAGE>


                          1150 LIQUIDATING CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note 1.  Sale and Liquidation of the Company:

         Effective May 31, 1995, SBM Company (the "Company") sold substantially
         all of the business operations and assets of the Company to ARM
         Financial Group, Inc. (ARM) (the Transaction) for a purchase price of
         $34.5 million, net of $4.1 million of liabilities assumed, pursuant to
         an Amended and Restated Stock and Asset Purchase Agreement dated
         February 16, 1995 between the Company and ARM. As part of the
         Transaction, ARM acquired all of the outstanding stock of the Company's
         wholly owned subsidiaries (State Bond and Mortgage Life Insurance
         Company ("SBM Life"), SBM Certificate Company ("SBMC") and SBM
         Financial Services, Inc.) and certain assets of the Company, including
         the investment adviser function of six mutual funds, and assumed
         certain liabilities of the Company. The following summarizes the
         proceeds from and net assets sold of the Transaction:

            Proceeds from the sale                              $   34,445,877

            Assets sold:
                Investments                                        808,543,939
                Receivable from reinsurer                           85,202,588
                Deferred acquisition costs                          61,683,713
                Other assets                                        14,863,970
                                                                --------------
                                                                   970,294,210

            Liabilities assumed:
                Future policy benefits                             861,067,924
                Face amount certificate reserves                    56,439,745
                Accounts payable and other liabilities              12,508,983
                                                                --------------
                                                                   930,016,652
                                                                --------------

            Net assets sold                                         40,277,558
                                                                --------------
            Less costs of the Transaction, including income
                taxes of $408,000                                      710,927
                                                                --------------

            Net loss on sale of Company operations              $   (6,542,608)
                                                                ==============

         The Company intends to wind up and liquidate the Company as soon as
         practicable. The Company has adopted a Plan of Dissolution effective
         May 31, 1995. At closing, the Series A Preferred Stock was redeemed for
         $20.5 million (including $1.5 million of dividends in arrears) as a
         result of its senior rights over the common stock.

         The Company's shareholders approved the Transaction and the Plan of
         Dissolution (the "Plan") at their regular shareholder meeting on May
         18, 1995. The Company also changed its name to "1150 Liquidating
         Corporation" effective June 14, 1995.

         As a result, the Company adopted the liquidation basis of accounting
         effective January 1, 1995. Assets have been valued at estimated net
         realizable value and liabilities provide for all expenses to be
         incurred during the period of liquidation. The reserve for estimated
         costs during the period of liquidation includes what management
         anticipates are reasonable estimates of costs required to liquidate the
         Company's remaining assets and to defend known legal claims, as well as
         the estimated costs of directors and officers and legal, audit and
         other professional fees and expenses expected to be incurred during the
         period of liquidation. The net assets ultimately available for
         distribution to shareholders will depend almost entirely upon the
         remaining time involved in winding up the affairs of the Company, and
         any now unknown liabilities or additional litigation and the expenses
         and liabilities incurred in connection therewith.


                                       3

<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


Note 1.  Sale and Liquidation of the Company (Continued):

         The statement of net assets in liquidation at September 30, 1998
         includes accruals for general and administrative expenses anticipated
         by management with respect to resolving such known matters in a
         reasonably timely fashion, as expected at that date. Net assets
         ultimately available for distribution will be reduced by the amount of
         any other unknown liabilities as may arise in the future, and to any
         extent general and administrative expenses incurred exceed the
         estimates included in the statement of net assets in liquidation at
         September 30, 1998. In addition, the financial statements do not
         reflect any investment income that is anticipated to be earned
         subsequent to September 30, 1998.

         The financial statements included in this Form 10-Q have been prepared
         by the Company without audit. In the opinion of management, all
         adjustments necessary to present fairly the statement of net assets in
         liquidation and changes therein for all periods presented have been
         made.

         Certain information and footnote disclosures normally included in the
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted. It is suggested
         that these financial statements be read in conjunction with the
         financial statements and notes thereto included in the 1150 Liquidating
         Corporation's Annual Report on Form 10-K for the year ended December
         31, 1997.

         The preparation of financial statements in accordance with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amount of revenues
         and expenses during the reporting period. For example, estimates and
         assumptions are used in determining the Reserve for Estimated Costs
         During the Period of Liquidation and Common Stock held by the Employee
         Benefit Plans or plan participants. While these estimates are based on
         the best judgment of management, actual results and revised estimates
         could differ from current estimates and are reflected in the period of
         change.


Note 2.  Common Stock Held by Employee Benefit Plans or Plan Participants:

         The Company's two employee benefit plans ("Plans") owned 304,693 shares
         of Company common stock. The value of such shares has been classified
         as a separate line outside of net assets in liquidation on the
         Company's statement of net assets in liquidation as of September 30,
         1998 and as of December 31, 1997 because of the Company's obligation to
         repurchase such shares, under certain circumstances, under a stock
         agreement ("Stock Agreement"), between the Company and the Plans'
         trustee dated September 30, 1993.

         On the December 31, 1997 and September 30, 1998 statement of net assets
         in liquidation, the liability to the Plans' participants has been shown
         as the estimated liquidation value of their shares of common stock
         under the settlement agreement discussed below.

         In January 1995, the trustee of the Plans notified the Company that it
         was tendering all shares held by the Plans to the Company for purchase
         by the Company under the Stock Agreement. Under the Stock Agreement, in
         certain circumstances, the Company has agreed to purchase common shares
         tendered to it by the Plans at a price equal to the higher of adjusted
         book value (as defined in the Stock Agreement) or fair market value.
         The Plans' trustee asserted in its tender that the correct basis under
         the Stock Agreement to determine the price of the shares for purposes
         of the Company's repurchase obligation is to


                                       4

<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


Note 2.  Common Stock Held by Employee Benefit Plans or Plan Participants
         (Continued):

         determine their adjusted book value at December 31, 1994 based on the
         books of the Company but using the amortized cost of the Company's
         investment portfolios, rather than their fair market value. The Company
         maintains that such price under the Stock Agreement must be based on
         the books of the Company which, after the effectiveness of the SFAS 115
         on January 1, 1994, must use the market value, rather than the
         amortized cost, of the substantial portion of the Company's investment
         portfolios which must be classified as "available-for-sale" under
         applicable accounting principles. In the alternative, the Company
         maintains that the tender was invalid in the circumstances under which
         it was made and, even if valid, that the correct price under such
         circumstances is the pro-rata estimated liquidation value of all of the
         Company's common shares pursuant to the Plan of Dissolution, rather
         than any value based upon the books of the Company as prepared on the
         going concern historical cost basis.

         The Company declined to repurchase such shares at the price demanded by
         the Trustee for various reasons, including those stated above, and
         commenced a declaratory judgment action in Minnesota District Court in
         March 1995 to determine its repurchase obligation and the applicable
         price under the Stock Agreement ("Plan Litigation").

         On November 13, 1995, the Company, the Trustee, and the Schonlau Trust
         agreed upon a settlement of the litigation and executed a settlement
         agreement in principle. A draft of a final and more formal settlement
         agreement (the Settlement Agreement) was subsequently prepared and
         circulated. In general, the Settlement Agreement contemplates payment
         by the Company of $1.15 million to the Plans in addition to the pro
         rata amounts otherwise distributable in liquidation with respect to the
         304,693 shares of Common Stock held by the Plans. This amount includes
         $150,000 in partial payment of attorneys' fees incurred by the Trustee.
         The Settlement Agreement also provides for the payment by the Company
         of up to $100,000 of the litigation costs incurred by the Schonlau
         Trust. The amounts payable as part of the settlement would be in
         addition to the pro rata amounts payable to Plan shareholders
         (determined without regard to the settlement amounts) and would be
         payable out of the amount otherwise available for pro rata distribution
         in liquidation to non-Plan shareholders.

         By April 1996, both the Trustee and the Schonlau Trust had indicated
         that they had no significant issues with respect to the economic terms
         of the Settlement Agreement. The Schonlau Trust did, however, indicate
         that it was unwilling to proceed to settlement unless a class
         consisting of all non-Plan shareholders was certified and unless it was
         named as representative of the class. The Company and the Trustee have
         agreed to these terms as part of the Settlement Agreement.

         During 1996, the Department of Labor (DOL) advised the Company of
         certain alleged violations of ERISA (of breach of fiduciary duty under
         Sections 404(a)(1)(A), (B), and (D) of ERISA and prohibited
         transactions based upon Section 406(b)(2) of ERISA) in connection with
         the Company's handling of the repurchase of shares owned by the Plans
         under the Put Agreement and the Internal Revenue Service (IRS) opened
         an audit alleging that the Company could be liable for certain excise
         taxes in connection with such matters. The Company objected to such
         allegations and, on February 27, 1997, received a letter from the DOL
         which advised it would take no further action in connection with the
         allegations if the litigation with the Plans is resolved pursuant to
         the Settlement Agreement and the Company subsequently was advised that
         the IRS would close its audit and not assess excise tax liabilities on
         the Company. These matters delayed implementation of the Settlement
         Agreement.


                                       5

<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


Note 2.  Common Stock Previously Held by Employee Benefit Plans (Continued):

         In October 1996, the Company, the Schonlau Trust and the Trustee agreed
         to sign the Settlement Agreement and proceed with its implementation at
         such time as the allegations of the DOL and IRS were resolved in a
         manner satisfactory to all parties to the Plan litigation. In June
         1997, these allegations of the DOL and IRS having been resolved, the
         Settlement Agreement was signed by all parties and was submitted to the
         court for approval. A hearing was held on August 21, 1997 and Judge
         William R. Howard approved the settlement and entered the Order
         Approving Settlement. The Settlement became effective on November 21,
         1997.

         Pursuant to the terms of the Settlement Agreement, on or about December
         1, 1997, the Company made settlement payments totaling $1.15 million to
         the Plan's Trustee and a settlement payment of $100,000 to the Schonlau
         Trust. Also, on or about December 1, 1997, the Company's initial
         liquidating distribution to the Trustee, which had been held in escrow
         pending resolution of the Plan litigation, was released to the Trustee.

         On February 16, 1998, the 304,693 shares of common stock held by the
         Employee Benefit Plans were distributed to plan participants.


Note 3.  Other Matters:

         The Company was notified that The Trust Under the Will of T.H. Schonlau
         ("Schonlau Trust"), its largest shareholder, had retained legal counsel
         for the purpose of investigating whether the Schonlau Trust had claims
         or rights against current or former officers, directors, employees,
         shareholders, representatives, agents, auditors, accountants, attorneys
         or anyone acting on its behalf (i) arising out of or relating to its
         ownership of SBM common shares and (ii) arising out of or relating to
         the management of SBM, or otherwise. The Trust had requested the
         Company to produce certain corporate records and documents in
         connection with its investigation.

         Any such shareholder action, even if successful in the long-term, would
         have the effect of delaying the liquidation and dissolution of the
         Company and of increasing its administrative and professional expenses
         in the short-term. No provision has been made to support any actual
         litigation by the Schonlau Trust, any possible liability of the
         Company, claims for indemnity by present or former officers or
         directors, or related litigation which may result, because the Schonlau
         Trust has not decided at this time to bring any such action.

         Company counsel has now been advised by counsel to the Schonlau Trust
         that its investigation of potential claims has been terminated and that
         the Trustees have no present intention of "commencing litigation on
         behalf of the Schonlau Trust against any person or entity arising from
         or related to the conduct and events that resulted in the sale of SBM's
         assets in 1995." Representatives of other significant shareholders have
         made similar statements to management.


                                       6

<PAGE>


                          1150 LIQUIDATING CORPORATION

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS


                                       7

<PAGE>


                           PART II. OTHER INFORMATION



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

         None



Item 6.  Exhibits and Reports on Form 8-K

         None


                                       8

<PAGE>


                                    SIGNATURE


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


                                     1150 LIQUIDATING CORPORATION



Date November 13, 1998               By:  /s/ Charles A. Geer
     ------------------------             -------------------------------------
                                          Charles A. Geer

                                     Its: President and Chief Financial Officer


                                       9