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, 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 June 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 June 30, 1998


<PAGE>


                          1150 LIQUIDATING CORPORATION


                                      INDEX


                                                                        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                                                  1998             1997
                                                                  ----------      ----------
                                                                  (Unaudited)      (Audited)
<S>                                                               <C>             <C>       
Cash and cash equivalents                                         $4,892,220      $5,015,698
Other assets                                                          74,773          36,971
                                                                  ----------      ----------
             Total assets                                          4,966,993       5,052,669

             LIABILITIES

Reserve for taxes                                                     41,000          70,000
Accounts payable                                                      90,461          83,888
Reserve for estimated costs during the period of liquidation         167,975         245,239
                                                                  ----------      ----------
             Total liabilities                                       299,436         399,127

Common stock held by employee benefit plans
   or plan participants - 304,693 shares (see Note 2)                827,192         825,231
                                                                  ----------      ----------

             Net assets                                           $3,840,365      $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                           $     2.05      $     2.04
                                                                  ==========      ==========

</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, 1998



<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                                                        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 June 30, 1998)          14,013

Allocation of net income and carrying value to common stock
    previously held by employee benefit plans                                              (1,959)
                                                                                     ------------

NET ASSETS AT JUNE 30, 1998 (unaudited)                                              $  3,840,365
                                                                                     ============

</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, and any
              now unknown liabilities or additional litigation (including any
              litigation resulting from the Schonlau


<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


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

              investigation described in Note 3) and the expenses and
              liabilities incurred in connection therewith. The statement of net
              assets in liquidation at June 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 June 30,
              1998. In addition, the financial statements do not reflect any
              investment income that is anticipated to be earned subsequent to
              June 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 June
              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 June 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


<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.


<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 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.

              Over the last several weeks, counsel to the Schonlau Trust and
              counsel to the Company have had discussions concerning the
              possibility that a shareholder and/or derivative action will be
              commenced by the trust and/or other shareholders. Company counsel
              understands that no final decision has been made as to whether
              such an action will be commenced. However, a few weeks ago Company
              counsel was advised that such claims "probably" would be commenced
              and was advised that the investigation of possible claims and
              defendants had been narrowed and more specifically identified by
              counsel to the Schonlau Trust. More recently, counsel was advised
              that "no final decision" has been made as to commencement of suit.
              Were suit to be commenced pursuant to the information which was
              disclosed to Company counsel, it is believed that claims against
              the Company would be asserted which would require the
              establishment of substantial reserves for costs of defense,
              possible liability and possible indemnity obligations.

              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 party claims,
              including claims for indemnity and contribution.


<PAGE>


                          1150 LIQUIDATING CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   (Unaudited)


Note 3.       Other Matters (Continued):

              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.


<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