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 Securities  Exchange
     Act of 1934 For the quarterly period ended June 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: 0001045280

                          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 required 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>



PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

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



<PAGE>


Applied Capital Funding, Inc.
Balance Sheet

--------------------------------------------------------------------------------
                                                       Unaudited       Audited
                                                         June          December
                                                        30, 1998       31, 1997
                                                        --------       --------
 
ASSETS
 
Current Assets - Cash                                   $ 14,068       $ 18,010
                                                        --------       --------

TOTAL ASSETS                                            $ 14,068       $ 18,010
                                                        ========       ========


LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Accounts Payable                                        $      0       $      0
Other Accrued Expenses                                     1,100            622
                                                        --------       --------

TOTAL LIABILITIES                                          1,100            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)                                       (21,552)       (14,132)
                                                        --------       --------

TOTAL SHAREHOLDERS' EQUITY                                12,968         17,388
                                                        --------       --------

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY                                    $ 14,068       $ 18,010
                                                        ========       ========

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

--------------------------------------------------------------------------------
                                                   Unaudited        Unaudited
                                                    3 Months         3 Months
                                                      June             June
                                                    30, 1998         30, 1997
                                                    --------         --------
 
Income:
 
Loan Fees                                         $          0     $         20
                                                  ------------     ------------

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

Operating Expenses:

Appraisals, Credit Reports & Closing Fees                    0               24
Bank Charges                                                 2               30
Office                                                      60                0
Rent                                                       300                0
Salaries                                                 1,500                0
Telephone                                                    0              103
                                                  ------------     ------------

Total Expenses                                           1,862              157
                                                  ------------     ------------

Net (Loss)                                              (1,862)            (119)
                                                  ============     ============

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

Weighted Average Common Shares Outstanding          15,112,000        1,412,000
                                                  ============     ============

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


Applied Capital Funding, Inc.
Unaudited Statement Of Operations

--------------------------------------------------------------------------------
                                                     Unaudited        Unaudited
                                                     6 Months         6 Months
                                                       June             June
                                                     30, 1998         30, 1997
                                                     --------         --------
 
Income:
 
Loan Fees                                          $          0     $        425
                                                   ------------     ------------

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

Operating Expenses:

Accounting                                                2,000                0
Appraisals, Credit Reports & Closing Fees                 1,752               56
Bank Charges                                                  8               46
Office                                                       60                0
Rent                                                        600                0
Salaries                                                  3,000                0
Telephone                                                     0              208
                                                   ------------     ------------

Total Expenses                                            7,420              310
                                                   ------------     ------------

Net (Loss)                                               (7,420)             115
                                                   ============     ============

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

Weighted Average Common Shares Outstanding           15,112,000        1,412,000
                                                   ============     ============

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


Applied Capital Funding, Inc.
Unaudited Statement Of Cash Flow

--------------------------------------------------------------------------------
                                                         Unaudited     Unaudited
                                                         6 Months      6 Months
                                                           June          June
                                                         30, 1998      30, 1997
                                                         --------      --------

Net (Loss)                                               ($ 7,420)     $    115
                                                         --------      --------

Plus Items Not Affecting Cash Flow:                             0             0

Contributed Services                                        3,000             0

Increase (Decrease) In Accounts Payable                         0             0
Increase (Decrease) In Accrued Expenses                       478           (80)
                                                         --------      --------

Net Cash Flows From Operations                             (3,942)           35
                                                         --------      --------

Cash Flows From Investing Activities:

                                                                0             0
                                                         --------      --------

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

Cash Flows From Financing Activities:

                                                                0             0
                                                         --------      --------

Net Cash Flows From Financing:                                  0             0
                                                         --------      --------


Net Increase (Decrease) In Cash                            (3,942)           35
Cash At Beginning Of Period                                18,010             9
                                                         --------      --------

Cash At End Of Period                                    $ 14,068      $     44
                                                         ========      ========



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


  
                   The Accompanying Notes Are An Integral Part
                    Of These Unaudited Financial Statements.
 
                                       F-5

<PAGE>



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

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

The unaudited financial  information  included for the three month and six month
periods  ended  June 30,  1998 and June 30,  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 six month period ended June 30,
1998 are not necessarily  indicative of the results  expected for the year ended
December 31, 1998.




<PAGE>


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

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

     The management of the Company has completed its analysis of the specialized
marketing of the  Company's  business of  commercial  and  residential  mortgage
brokering.  Management  is capable of  proceeding  with  marketing  its mortgage
brokerage  service on the  internet,  but is unable to  accurately  evaluate the
affect of  competition or to project  revenues from such  marketing  activities.
Management  is  concerned  about a  potential  downturn  in the  economy  and an
accompanying increase in interest rates as they apply to mortgage loans. Such an
increase in interest  rates has  historically  deterred  new  borrowers  and the
number  of  mortgage  loans in the  Denver  and  Colorado  area  have  decreased
significantly in direct proportion to the amount of interest rate increase.

     Because of this, and to determine,  to whatever extent possible, the future
growth and  direction  of the  Company,  the  directors  have  called the Annual
Meeting of the  shareholders  for 10 am.,  July 20, 1998, at which the directors
will review the activities of management and seek guidance and suggestions  from
the  shareholders as to whether the thrust of the business of the Company should
be continued or changed to a more productive enterprise.

Financial Condition, Capital Resources and Liquidity
----------------------------------------------------

     The unaudited  financial statement for the quarter-year ended June 30,1998,
indicates  the  Company's  lack  of  sufficient   working   capital  and  raises
substantial   doubt  about  its   ability  to  continue  as  a  going   concern.
Nevertheless,  the Company has  continued  in operation  despite the  continuous
decline in its total revenue 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.
At the present time  management is unable to accurately  evaluate the likelihood
of any success of its business plan.  Management's  immediate plan is to discuss
with its  shareholders,  at the  Company's  Annual  Meeting  in  July,  possible
alternatives to its current business activities.

     To effect  any  alternative  business  plans or  arrangements  may  involve
seeking  addition  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   implementation  of  an  alternative   business  plan  appear
profitable.


<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 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.

                           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

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)



Date July 8, 1998                     By /s/
                                        ----------------------------------------
                                        David R. Reitsema, Secretary