Form 10-QSB
                    U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

(Mark One)

[X] Quarterly report pursuant section 13 or 15(d) of the Securites  Exchange Act
of 1934

For the quarterly period ended September 30, 1998.

[ ] Transition report pursuant section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from ________________ to ________________.

Commission file number: 0-23171 - CIK: 0001-45280

                         Applied Capital Funding, Inc.
                         -----------------------------
       (Exact name of small business issuer as specified in its charter)

           Colorado                                              84-1280679
           --------                                              ----------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

4155 E. Jewell Ave., Suite 909
Denver, Colorado                                                     80222
----------------                                                     -----
(Address of principal executive offices)                           (Zip Code)

Issuer's telephone number, (303) 691-6163

                                      NONE
                                      ----
              (Former name, former address and former fiscal year,
                          if changed since last report)


Check whether the issuer

(1)  filed  all  reports  required  to be  filed by  Section  13 or 15(d) of the
     Exchange Act during the past 12 months (or for such shorter period that the
     registrant was requird to file such reports), and

(2)  has been subject to such filing  requirements  for the past 90 days. 
     Yes: X   No:

               Applicable only to issuers involved in bankruptcy
                  Proceedings during the preceding five years

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by court. Yes   No   

                      Applicable only to corporate issuers

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of  the  latest  practicable  date:  15,112,000 
Transitional  Small Business Disclosure Format (check one): Yes:   No: X


<PAGE>



Applied Capital Funding, Inc.
Balance Sheet

--------------------------------------------------------------------------------
                                                       Unaudited       Audited
                                                       September       December
                                                        30, 1998       31, 1997
                                                        --------       --------
 
ASSETS
 
Current Assets - Cash                                   $  6,564       $ 18,010
                                                        --------       --------

TOTAL ASSETS                                            $  6,564       $ 18,010
                                                        ========       ========


LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Accounts Payable                                        $      0       $      0
Other Accrued Expenses                                     1,430            622
                                                        --------       --------

TOTAL LIABILITIES                                          1,430            622
                                                        --------       --------


SHAREHOLDERS' EQUITY

Preferred Stock, No Par Value,
 Non Voting, Authorized 5,000,000 shares;
 Issued And Outstanding -0- Shares                             0              0

Common Stock, No Par Value
 Authorized 50,000,000 shares;
 15,112,000  Shares Issued And Outstanding                34,520         31,520

Retained (Deficit)                                       (29,386)       (14,132)
                                                        --------       --------

TOTAL SHAREHOLDERS' EQUITY                                 5,134         17,388
                                                        --------       --------

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY                                    $  6,584       $ 18,010
                                                        ========       ========

 
 
                   The Accompanying Notes Are An Integral Part
                    Of These Unaudited Financial Statements.
 
                                        2
 
<PAGE>
 
 
Applied Capital Funding, Inc.
Unaudited Statement Of Operations

--------------------------------------------------------------------------------
                                                   Unaudited        Unaudited
                                                    3 Months         3 Months
                                                   September        September
                                                    30, 1998         30, 1997
                                                    --------         --------
 
Income:
 
Loan Fees                                         $          0     $         38
                                                  ------------     ------------

Total Revenue                                                0               38
                                                  ------------     ------------

Operating Expenses:

Appraisals, Credit Reports & Closing Fees                    0                0
Bank Charges                                                 8               18
Legal & Accounting                                       1,800                0
Office                                                     352              239
Rent                                                       300                0
Salaries                                                 4,500                0
Stock Transfer Fees                                        470                0
Taxes - Payroll                                            404                0
Telephone                                                    0                0
                                                  ------------     ------------

Total Expenses                                           7,834              257
                                                  ------------     ------------

Net (Loss)                                              (7,834)            (219)
                                                  ============     ============

Basic(Loss) Per Common Share                            $-0.00           $-0.00
                                                  ============     ============

Weighted Average Common Shares Outstanding          15,112,000       15,112,000
                                                  ============     ============

 
 
 
 
                   The Accompanying Notes Are An Integral Part
                    Of These Unaudited Financial Statements.
 
                                        3
<PAGE>


Applied Capital Funding, Inc.
Unaudited Statement Of Operations

--------------------------------------------------------------------------------
                                                    Unaudited        Unaudited
                                                    9 Months         9 Months
                                                    September        September
                                                    30, 1998         30, 1997
                                                    --------         --------
 
Income:
 
Loan Fees                                         $          0     $        425
                                                  ------------     ------------

Total Revenue                                                0              425
                                                  ------------     ------------

Operating Expenses:

Appraisals, Credit Reports & Closing Fees                1,752               56
Bank Charges                                                16               64
Legal & Accounting                                       3,800                0
Office                                                     412              239
Rent                                                       900                0
Salaries                                                 7,500                0
Stock Transfer Fees                                        470                0
Taxes - Payroll                                            404                0
Telephone                                                    0              208
                                                  ------------     ------------

Total Expenses                                          15,254              567
                                                  ------------     ------------

Net (Loss)                                             (15,254)            (142)
                                                  ============     ============

Basic(Loss) Per Common Share                            $-0.00     $      -0.00
                                                  ============     ============

Weighted Average Common Shares Outstanding          15,112,000       15,112,000
                                                  ============     ============

 
 
 
                   The Accompanying Notes Are An Integral Part
                    Of These Unaudited Financial Statements.
 
                                        4
<PAGE>


Applied Capital Funding, Inc.
Unaudited Statement Of Cash Flow

--------------------------------------------------------------------------------
                                                         Unaudited     Unaudited
                                                         9 Months      9 Months
                                                         September     September
                                                         30, 1998      30, 1997
                                                         --------      --------

Net (Loss)                                               ($15,264)     $   (142)
                                                         --------      --------

Plus Items Not Affecting Cash Flow:                             0             0

Contributed Services                                        3,000             0

Increase (Decrease) In Accounts Payable                       330         2,500
Increase (Decrease) In Accrued Expenses                       478           (95)
                                                         --------      --------

Net Cash Flows From Operations                            (11,446)        2,263
                                                         --------      --------

Cash Flows From Investing Activities:                           0             0
                                                         --------      --------

Net Cash Flows From Investing:                                  0             0
                                                         --------      --------

Cash Flows From Financing Activities:          
                                                
Common Stock Issued For Cash                                    0        27,400
Deferred Offering Costs                                         0        (5,500)
                                                         --------      -------- 

Net Cash Flows From Financing:                                  0        21,900
                                                         --------      --------


Net Increase (Decrease) In Cash                           (11,446)       24,163
Cash At Beginning Of Period                                18,010             9
                                                         --------      --------

Cash At End Of Period                                    $  6,584      $ 24,172
                                                         ========      ========



Summary Of Non-Cash Investing And Financing
 Activities:
                                                         $      0      $      0
                                                         ========      ========


  
                   The Accompanying Notes Are An Integral Part
                    Of These Unaudited Financial Statements.
 
                                        5
<PAGE>

Applied Capital Funding, Inc.
Notes To Unaudited Financial Statements
For The Nine Month Period Ended September 30, 1998
--------------------------------------------------

Note 1 - Unaudited Financial Information
----------------------------------------

The unaudited financial  information included for the three month and nine month
interim  period ended  September 30, 1998 and 1997 were taken from the books and
records  without  audit.  However,  such  information  reflects all  adjustments
(consisting  only of normal recurring  adjustments,  which are of the opinion of
management,  necessary  to reflect  properly  the  results  of  interim  periods
presented).  The results of operations for the nine month period ended September
30, 1998 are not necessarily  indicative of the results  expected for the fiscal
year ended September 30, 1998.




<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

The  unaudited  financial  statements  for the quarter year ended  September 30,
1998, are attached as follows.

Item 2.  Management's Discussion and Analysis or Plan of Operation

Management's Discussion and Analysis
------------------------------------

The  management  of the Company is pursuing  the  development  of the  Company's
historical   residential   mortgage   brokerage   business.   It  currently  has
arrangements  with  wholesale  lenders  to fund  loans the  Company  originates,
although  several  lenders the Company has dealt with in the past have filed for
bankruptcy  or  merged  with  other  entities.   Management  believes  that  the
developing  economic  conditions,   including  a  falling  dollar,  collapse  of
unregulated hedge funds holding mortgage backed securities, decreasing liquidity
in the marketplace,  and potential  governmental  economic policy to inflate the
economy of offset  current  deflationary  pressures all may affect the Company's
efforts to develop its business.  Management has been unsuccessful in concluding
the  review  process of its Form 10-SB by the SEC,  which has been  ongoing  for
almost one year. Neither corporate counsel nor the SEC reviewer have offered any
idea as to when this will occur.  As a result,  the Company has no likelihood of
raising  additional  funding for its activities and its officers  cannot be paid
more than a minimal salary.  Management will continue to work towards completion
of that process.

     The unaudited  financial statement for the quarter-year ended September 30,
1998,  indicates the Company's  limited working  capital and raises  substantial
doubt about its ability to continue as a going concern absent  additional funds.
Nevertheless,  the Company  has  continued  in  operation  despite the  on-going
decline  in  its  total  revenue  and  capital  since  inception,  resulting  in
management's  opinion,  primarily,  from the  combined  effect of the  following
factors:  (i)  intense  competition  from  larger and better  financed  mortgage
brokers and banks;  (ii) the Company's  lack of operating  capital and (iii) the
limited amount of time and effort able to be devoted to the Company's affairs by
its  management  since June 1996. At the current  minimum level of the Company's
operations,  management  believes,  without  assurance,  that  the  Company  has
sufficient  cash  assets to  enable it to  continue  in  operation  for the next
twenty-four  months.  While  management's  business  plan  envisions the Company
continuing its historic operations in the mortgage refinance and second mortgage
business on an economic basis,  management has not generated  additional revenue
from business activities.

     To effect  any  alternative  business  plans or  arrangements  may  involve
seeking  additional  capital for the Company,  but there is no commitment by any
person to  provide  additional  equity or debt  funding  to the  Company.  While
management has determined to explore potential capital  resources,  there can be
no assurance that  additional  equity and/or debt financing will be available to
the Company.  The Company's  executive officers have indicated their willingness
to  provide  capital  to fund  the  Company's  operations  from  their  personal
resources should the Company's business plan appear profitable.

                                       6
<PAGE>


     Year 2000 Issues.  The mortgage  business of the Company may be impacted to
an unknown degree in the  computation of forward  interest rates and any unknown
problems exhibited by the Company's  wholesalers of mortgage funds and ancillary
services such as credit  agencies upon which the  Company's  lending  activities
entirely  depend.  The  Company  is unable  at this date to make any  reasonable
estimate  of  difficulties  which may be  encountered  in the  future due to the
impact of computer  technology  which may be unable to accommodate the automatic
use of the year 2000 in numbered  use. The Company has tested its  computers and
they appear to be Y2K compliant.

                          PART II - Other Information

Item 6.  Exhibits and Reports on Form 8-K

Exhibits:

(2)  Plan  of   acquisition,   reorganization,   arrangement   liquidation,   or
     succession.
     Not applicable.

(4)  Instruments defining the rights of holders,  incl.  Indentures.
     Previously filed.

(10) Material contracts.
     None

(11) Statement re: computation of per share earnings.
     Previously filed.

(15) Letter on unaudited interim financial information. See Note 1. Of unaudited
     financial statements.

(19) Reports furnished to securities holders.
     None

(22) Published report regarding matters submitted to vote.
     None.

(23) Consents of experts and counsel.
     Previously filed.

(24) Power of attorney.
     Previously filed.

(27) Financial Data Schedule.

                                       7
<PAGE>


                                   Signatures

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                        APPLIED CAPITAL FUNDING, INC.     
                                        (Registrant)


                                        /s/  David R. Reitsema
                                        ----------------------------------------
                                        President and CEO

                                       8