Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EX
         CHANGE ACT OF 1934

               For the quarterly period ended September 30, 1996
                                              ------------------

                                       OR

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

           For the transition period from _____________ to___________



For Quarter Ended September 30, 1996             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, 1996
---------



                          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




                          Part I. FINANCIAL INFORMATION
                          Item I. FINANCIAL STATEMENTS

                          1150 LIQUIDATING CORPORATION
                     (formerly SBM COMPANY AND SUBSIDIARIES)
<TABLE>
<CAPTION>
                     STATEMENT OF NET ASSETS IN LIQUIDATION


                                                                              September 30,    December 31,
             ASSETS                                                               1996              1995
                                                                              -------------    ------------
                                                                               (Unaudited)       (Audited)
<S>                                                                           <C>             <C>       
Cash and cash equivalents                                                      $5,845,430      $6,048,325
Federal income tax refund                                                          15,541         118,831
Escrowed funds                                                                    878,595         846,419
Other assets                                                                       42,055          13,188
                                                                               ----------      ----------
             Total assets                                                       6,781,621       7,026,763

             LIABILITIES

Accounts payable                                                                   55,374          55,166
Reserve for estimated costs during the period of liquidation                      377,500         577,527
Deferred compensation and retirement benefits for officers                           --            92,968
                                                                               ----------      ----------
             Total liabilities                                                    432,874         725,661

Common stock held by employee benefit plans - 304,693 shares (see Note 2)       1,643,244       1,608,906
                                                                               ----------      ----------

             Net assets                                                        $4,705,503      $4,692,196
                                                                               ==========      ==========

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                                        $     2.51      $     2.50
                                                                               ==========      ==========

See Notes to Financial Statements.
</TABLE>



                          1150 LIQUIDATING CORPORATION
<TABLE>
<CAPTION>
                STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
          For the Period from December 31, 1994 to September 30, 1996

<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 from liquidating activities (January 1, 1996 through September 30, 1996)        47,645

Allocation of net income and carrying value to
    common stock held by employee benefit plans                                       (34,338)
                                                                                 ------------

NET ASSETS AT SEPTEMBER 30, 1996 (unaudited)                                     $  4,705,503
                                                                                 ============

See Notes to Financial Statements.
</TABLE>



                          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 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
         September 30, 1996 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, 1996. In addition, the financial statements do not
         reflect any investment income that is anticipated to be earned
         subsequent to September 30, 1996.

         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, 1995.

         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 September 30,
         1996 and outside of stockholders' equity on the Company's consolidated
         balance sheet as of December 31, 1995 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 September 30, 1996 statement of net assets in liquidation, the
         liability to the Plans has been shown as the pro-rata estimated
         liquidation value of all of the Company's common shares, 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.

         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.

         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 September 30, 1996
         statement of net assets in liquidation to be $2.51 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 September 30, 1996 of increasing the value of
         the shares held by the Plans by approximately $1.9 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 $1.01 per
         share.

         On October 16, 1995, the court heard the motion for summary judgment of
         the Schonlau Trust on its state law claims as well as the Company's
         second motion for summary judgment. After the hearing, the parties
         asked the court to defer ruling on the motions pending settlement
         negotiations.

         On November 13, 1995, the Company, the Trustee and the Schonlau Trust
         agreed upon a preliminary settlement of the litigation and executed a
         settlement agreement in principle. After several months of further
         negotiation, counsel for the parties agreed on the final settlement
         documentation the week of September 9 and the principals of each party
         thereafter agreed to the documentation, as well. The documentation has
         been forwarded to the Department of Labor ("DOL") for review in
         accordance with the procedure described in the following paragraph.
         Upon resolution of the allegations which have been made by the DOL and
         the Internal Revenue Service ("IRS"), the process of seeking approval
         of the settlement in Minnesota District Court will be commenced. The
         final settlement agreement is subject to approval by the Court after
         notice to all shareholders and Plan participants and an opportunity for
         such persons to be heard, as may be determined by the Court, and no
         assurances can be given that any such final agreement will be approved
         by the Court. In general, the settlement 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
         payment of a portion of the Trustee's costs incurred in connection with
         the litigation. In addition, the Company will pay $100,000 toward the
         costs incurred by the Schonlau Trust in the litigation. These amounts
         payable as part of the settlement would reduce the amounts available
         for distribution in liquidation to non-Plan shareholders.

         In early June 1996, the U.S. Department of Labor ("DOL") advised the
         Company by letter of its position that Charles A. Geer, members of the
         Administrative Committee of the SBM Profit Sharing Stock Plan and
         certain of the Company's officers and directors "may have violated
         several provisions of ERISA," apparently principally in connection with
         positions taken with respect to the Plan Litigation and alleges that
         such persons "are in violation of ERISA and will remain so until the
         . . . [Plan Litigation] is resolved." The DOL letter "invites the . . .
         [Company] to discuss with [the DOL] the final terms of the settlement"
         and has advised that "if the Company take[s] proper corrective action
         it will not bring a law suit with regard to . . . [such issues]." The
         Company has strongly opposed the position taken by the DOL. The Company
         has communicated with the DOL and now understands that the Department
         does not intend to take enforcement action so long as the Plan
         Litigation is resolved consistent with the November 13, 1995 settlement
         agreement in principle. Accordingly, a procedure has been worked out to
         obtain written acknowledgement from the DOL that "it will not take
         enforcement action" if the proposed settlement of the valuation
         litigation is completed.

         On October 10, 1996, the Company was advised by the IRS that the DOL
         had referred the SBM Company Profit Sharing Stock Plan for "prohibited
         transctions under Internal Revenue Code Section 4975" and requested
         certain information. The Company has been in contact with the IRS and
         the DOL regarding this referral and has supplied all information which
         was requested. The Company is awaiting further advice from the DOL and
         the IRS regarding the referral.


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.



                          1150 LIQUIDATING CORPORATION

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


RESULTS OF OPERATIONS



                           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



                                    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