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 June 30, 1997

                                       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 June 30, 1997                   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 June 30, 1997


<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                     3-7

   Item 2.   Management's Discussion and Analysis of Financial
                Condition and Changes in Net Assets in Liquidation            8


PART II.     OTHER INFORMATION                                             9-10


<PAGE>


                          Part I. FINANCIAL INFORMATION
                          Item I. FINANCIAL STATEMENTS

                          1150 LIQUIDATING CORPORATION
                     (formerly SBM COMPANY AND SUBSIDIARIES)

                     STATEMENT OF NET ASSETS IN LIQUIDATION

<TABLE>
<CAPTION>

                                                                                        June 30,           December 31,
             ASSETS                                                                       1997                 1996
                                                                                     --------------       --------------
                                                                                       (Unaudited)           (Audited)
<S>                                                                                  <C>                  <C>           
Cash and cash equivalents                                                            $    5,757,568       $    5,861,428
Federal income tax refund                                                                   120,000               15,541
Escrowed funds                                                                              910,922              888,634
Other assets                                                                                 45,202               60,893
                                                                                     --------------       --------------
             Total assets                                                                 6,833,692            6,826,496

             LIABILITIES

Reserve for taxes                                                                            60,000                -
Accounts payable                                                                            108,662              125,308
Reserve for estimated costs during the period of liquidation                                257,427              438,611
Reserve for legal expenses payable under settlement agreement                               250,000              250,000
                                                                                     --------------       --------------
             Total liabilities                                                              676,089              813,919

Common stock held by employee benefit plans - 304,693 shares (see Note 2)                 2,679,280            2,639,835
                                                                                     --------------       --------------

             Net assets                                                              $    3,478,323       $    3,372,742
                                                                                     ==============       ==============

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

Net assets per common share outstanding                                              $         1.86       $         1.80
                                                                                     ==============       ==============


</TABLE>

See Notes to Financial Statements.


<PAGE>


                          1150 LIQUIDATING CORPORATION

                STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
             For the Period from December 31, 1994 to June 30, 1997


<TABLE>
<CAPTION>

<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 (January 1, 1997 through June 30, 1997)                122,738

Allocation of net income and carrying value to common stock
    held by employee benefit plans                                                        (17,157)
                                                                                   --------------
NET ASSETS AT JUNE 30, 1997 (unaudited)                                            $    3,478,323
                                                                                   ==============

</TABLE>


See Notes to Financial Statements.


<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 has 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,
              particularly the litigation involving the Employee Benefit Plans
              and any now unknown liabilities or additional litigation
              (including


<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


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

              any litigation resulting from the Schonlau investigation described
              in Note 3) and the expenses and liabilities incurred in connection
              therewith. The statement of net assets in liquidation at June 30,
              1997 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 June 30, 1997. In addition, the financial
              statements do not reflect any investment income that is
              anticipated to be earned subsequent to June 30, 1997.

              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 SBM Company and Subsidiaries' Annual Report on
              Form 10-K for the year ended December 31, 1996.

              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 Employee Benefit Plans. 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:

              The Company's two employee benefit plans ("Plans") own 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 June
              30, 1997 and outside of stockholders' equity on the Company's
              consolidated balance sheet as of December 31, 1996 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, 1996 and June 30, 1997 statement of net assets
              in liquidation, the liability to the Plans has been shown as the
              estimated liquidation value of the Plans' shares of common stock
              under the settlement agreement discussed below, plus the $2.75
              dividend escrowed in September, 1995, pursuant to the Plan of
              Dissolution described above in Note 1, plus interest earned on
              such escrowed amounts. Interest earned from January 1, 1997
              through June 30, 1997 is $22,288.

              Escrowed funds represent distributions and related interest
              thereon allocated to the Plans which is currently being retained
              in a court ordered trust account pending settlement of the amounts
              owed them.


<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


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

              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 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"). If the views of the Company or those of the
              largest non-plan shareholder (the Schonlau Trust) which is a party
              to such litigation prevail, either the Company will have no
              obligation to purchase the shares held by the Plans under the
              Stock Agreement or the price at which any such repurchase
              obligation exists will be based either on the December 31, 1994
              appraised value of the shares ($5.38 per share) less the 1995
              escrowed dividend distribution ($2.75 per share) or the pro-rata
              estimated liquidation value of all of the Company's common shares
              pursuant to the Plan of Dissolution (estimated for purposes of the
              June 30, 1997 statement of net assets in liquidation to be $2.52
              per share). If the view of the Plans' trustee prevails, the
              Company will have the obligation to repurchase all of the shares
              held by the Plans at the December 31, 1994 adjusted book value of
              such shares on the books of the Company using the amortized cost
              of the Company's investment portfolios net of the dividend
              distribution already received in 1995 (estimated to be
              approximately $10-$12 per share).

              While the Company believes its interpretation of the Stock
              agreement is correct, the determination that the views of the
              Trustee are correct would have the effect at June 30, 1997 of
              increasing the value of the shares held by the Plans by
              approximately $2.8 million and reducing net assets in liquidation
              available for other shareholders by a like amount, thereby
              reducing the anticipated per share liquidating value under the
              Plan of Dissolution of all other shares by about $1.50 per share.

              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.


<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


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

              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 the year 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 hanlding 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 fromt he 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.

              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. As part of
              the approval process, a Notice of Settlement Hearing has been sent
              to all Plan and non-Plan shareholders advising them of their
              rights with respect to the Settlement Hearing scheduled for August
              21, 1997. While the Company believes the Settlement Agreement will
              be approved by the court, its effectiveness is conditioned upon
              such approval and there can be no assurance that the Settlement
              Agreement ultimately will be approved by the court.

              The failure of the court to approve the Settlement Agreement would
              result in continued litigation between the Company, the Trustee,
              and Schonlau Trust or would require the parties to attempt to
              reach an alternative settlement agreement, either of which would
              lead to further delays in making liquidating distributions. As
              well, such failure might result in the re-opening of the DOL's
              allegations under ERISA and the IRS allegations relating thereto.

              Should the Settlement Agreement not be executed and approved, the
              $1.0 million Special Allocation of Carrying Value to Common Stock
              Held by Employee Benefit Plans, as well as the $250,000 accrued
              payment for legal expenses payable under the Settlement Agreement
              would be reversed, and the Company likely would incur additional
              legal costs in defending its positions. The ultimate impact on the
              Company of these potential costs which includes litigation costs,
              potential settlement costs and exposure to IRS excise tax, are not
              reasonably estimable at this time.


<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


Note 3.       Other Matters:

              The Company was notified several months ago that The Trust Under
              the Will of T.H. Schonlau ("Schonlau Trust"), its largest
              shareholder, has retained legal counsel for the purpose of
              investigating whether the Schonlau Trust has 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 has requested the Company to produce certain corporate
              records and documents in connection with its investigation.

              At this time, it is impossible to anticipate whether the Schonlau
              Trust, or other shareholders, will commence suit with respect to
              the above, or other matters, and, if so, who would be named as
              defendants. Presumably, the Schonlau Trust would not commence any
              such action unless it believed that a substantial likelihood
              existed that the liquidation value of the Company, net to
              shareholders, would be materially enhanced by its efforts. Such a
              determination would have to factor in the following, and other
              considerations: (i) likely expenses to be incurred by the Company
              in supporting any such litigation; (ii) the expenses to be
              incurred by the Company in connection with its obligations to
              defend and indemnify present and past officers and directors in
              the event they were to become involved in any such litigation;
              (iii) expenses to be incurred by the Company in defending against
              probable third part claims, including claims for indemnity and
              contribution.

              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,
              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.

              The Company is also undergoing audits by the Internal Revenue
              Service of the years 1986-1990 and 1991-1993. An adjustment
              agreement, which is not material to the Company's financial
              condition, has been executed by the Company and the Internal
              Revenue Service with respect to the years 1986-1990 and will be
              effective if and when approved by the Joint Committee of Congress.
              A report has been received with respect to the audit of the years
              1991-1993, and adjustments resulting therefrom are not expected to
              be material to the Company's financial position.


<PAGE>


                          1150 LIQUIDATING CORPORATION

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


RESULTS OF OPERATIONS




<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


<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__________________             By:  /s/ Charles A. Geer
                                        Charles A. Geer

                                   Its: President and Chief Financial Officer