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 March 31, 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 March 31, 1998,
follow.



<PAGE>

Applied Capital Funding, Inc.
Balance Sheet

--------------------------------------------------------------------------------

                                                       Unaudited       Audited
                                                         March         December
                                                        31, 1998       31, 1997
                                                        --------       --------
ASSETS

Current Assets - Cash                                   $ 14,130       $ 18,010
                                                        --------       --------

TOTAL ASSETS                                            $ 14,130       $ 18,010
                                                        ========       ========


LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Accounts Payable                                        $      0       $      0
Other Accrued Expenses                                       800            622
                                                        --------       --------

TOTAL LIABILITIES                                            800            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                 31,520         31,520

Retained (Deficit)                                       (18,190)       (14,132)
                                                        --------       --------

TOTAL SHAREHOLDERS' EQUITY                                13,330         17,388
                                                        --------       --------

TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY                                    $ 14,130       $ 18,010
                                                        ========       ========


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


                                      F-2
<PAGE>


Applied Capital Funding, Inc.
Statement Of Operations

--------------------------------------------------------------------------------

                                                      Unaudited       Unaudited
                                                      3 Months        3 Months
                                                        March           March
                                                      31, 1998        31, 1997
                                                      --------        --------

Income:

Loan Fees                                            $         0     $       405
                                                     -----------     -----------

Total Revenue                                                  0             405
                                                     -----------     -----------

Operating Expenses:

Accounting                                                 2,000               0
Appraisals, Credit Reports & Closing Fees                  1,752              32
Bank Charges                                                   6              16
Office                                                         0              20
Rent                                                         300               0
Salaries                                                   1,500               0
Telephone                                                      0             103
                                                     -----------     -----------

Total Expenses                                             5,558             171
                                                     -----------     -----------

Net (Loss)                                                (5,558)            234
                                                     ===========     ===========

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.
Statement Of Cash Flow

--------------------------------------------------------------------------------

                                                        Unaudited      Unaudited
                                                        3 Months       3 Months
                                                          March          March
                                                         31, 1998      31, 1997
                                                         --------      --------

Net (Loss)                                               ($ 5,558)     $    234
                                                         --------      --------

Plus Items Not Affecting Cash Flow:                             0             0

Contributed Services                                        1,500             0

Increase (Decrease) in Accounts Payable                         0             0
Increase (Decrease) in Accrued Expenses                       178           (80)
                                                         --------      --------

Net Cash Flows From Operations                             (3,880)          154
                                                         --------      --------

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                            (3,880)          154
Cash At Beginning Of Period                                18,010             9
                                                         --------      --------

Cash At End Of Period                                    $ 14,130      $    163
                                                         ========      ========



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


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


                                      F-4
<PAGE>


Applied Capital Funding, Inc.
Notes To Unaudited Financial Statements
For The Three Month Period Ended March 31, 1998
-----------------------------------------------

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

The unaudited financial  information  included for the three month periods ended
March 31, 1998 and March 31, 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 three month period ended March 31, 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

Plan of Operations
------------------

     Since its inception on September 26,  1994,the  Company has been engaged in
the mortgage lending business. For the fiscal years ended December 31, 1995,1996
and 1997, the Company  realized total revenue from  operations in the amounts of
$60,424,$32,038 and $425, respectively, and net loss in the amounts of $(1,257),
($19) and $(8,451), respectively. Management's plan of operation during the next
twelve  months is to initiate a modest  advertising  campaign on the internet to
seek refinancing  mortgage lending business.  This advertising  campaign will be
conducted  on the  internet  with the  internet  service  provider  deemed  most
advantageous  based upon the cost to the Company in relation to the  anticipated
exposure.

     The Company's business is substantially impacted by the ongoing fluctuation
in mortgage  interest  rates.  As indicated  above,  the Company  experienced  a
decline in its mortgage  refinance  business during the period from 1994 to 1996
because of an increase in interest  rates;  thus  resulting  in a decline in the
demand for residential  mortgage loans. This historical  fluctuation in mortgage
business  revenue -- increase when interest  rates fall;  decrease when interest
rates rise -- is an  expected  aspect of the  mortgage  business.  Additionally,
general  economic  conditions have added impact upon the mortgage loan business.
In order to accommodate  anticipated  fluctuations in the level of the Company's
business  activity  caused  by  the  above-described,   among  other,   factors,
management seeks to condition  itself to downsize  operations in time of decline
and increase and expand during a rising market.

     In addition to the  increase in interest  rates during the period from 1994
through 1996, two other material  factors which have contributed to the decrease
in the Company's  total revenue and its lack of working  capital during the past
three years are the Company's  lack of operating  capital and the limited amount
of time and effort able to be devoted to the Company's affairs by its management
since June 1996. Mr. David R. Reitsema, the  Secretary/Treasurer  and a director
of the Company,  resigned his positions as an executive  officer and director of
the Company on August 21, 1996, to pursue other business  opportunities until he
rejoined the Company on July 25, 1997. The combined  effect of these factors has
been to preclude  advertising and other promotional expenses in 1997; which lack
of  promotional  activities  is  believed  by  management  to have had a further
adverse  effect  upon the  Company's  ability to generate  revenue.  Despite the
adverse  effects of failing to advertise,  management  determined not to conduct
fund-raising  activities  in 1996  which,  if  successful,  would  have  enabled
promotional activity in 1997,because of the belief that any increase in business
activity resulting from increased advertising and promotion would have failed to
materialize,  in any event, because of the effects of elevated interest rates in
suppressing the demand for residential mortgage loans.

     The  operation of the  Company's  mortgage  brokerage  business is not cash
intensive.   Its  loan  officers  are  compensated   with  modest  salaries  and
commissions  based upon  performance.  The  operating  expenses  incurred by the
Company  during the fiscal year ended  December 31, 1997,  with the exception of
salaries  aggregating  $6,000,  totaled $2,876 and various  expense  categories,
including advertising, contact labor and travel, reflected no expenses for 1997.



<PAGE>


The minimal operating  expenses for the fiscal year ended December 31, 1997, and
the quarter-year ended March 31, 1998, are attributable to the Company's minimal
level of  business  activity  during  these  periods.  Should  the  level of the
Company's  business  activity increase in the future as a result of the proposed
advertising campaign, related expenses could also be expected to increase. Thus,
subject to the availability of working capital, the trend would be for operating
expenses  to  increase  in  conjunction  with an  increase  in the  level of the
Company's business activity. In such event, additional revenue could be expected
to be generated to cover certain increased expenses and the Company's  executive
officers have verbally  agreed to fund  increased  operating  expenses,  such as
marketing and advertising,  personnel and related overhead,  from their personal
resources to the extent that operating  revenue is  insufficient  or alternative
capital resources are unavailable.

     Management believes that the Company's minimal level of business operations
currently will be sufficient to sustain its operations.  Management is prepared,
however,  to seek additional  equity and/or debt financing,  the availability of
which could not be  assured,  in order to expand and  increase  the level of the
Company's  operations.  This capital,  if  available,  would be utilized for the
immediate,  up-front  costs of employing  additional  loan  officers and support
staff for loan processing.  At the present time, management is unable to predict
the  number  of  additional  employees  which  may be  needed in the event of an
increase in its mortgage lending business in the future nor the costs associated
with any such increase in personnel.

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

     At December 31, 1997, the Company had cash assets totaling $18,010 and $622
in  liabilities.  Since the  Company's  inception,  it has  received  a total of
$30,000  in cash  paid as  consideration  for the  issuance  of shares of Common
Stock. At March 31, 1998, the Company had cash assets totaling  $14,130 and $800
in liabilities.

     The  unaudited  financial  statement for the  quarter-year  ended March 31,
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) the increase
in interest  rates during the period from 1994  through1996;  (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 approximately  twenty-four months.  While management's
business  plan  envisions the  Company's  conducting  operations in the mortgage
refinance and second mortgage business on an economic basis, management has been
unable,  despite recent efforts,  to generate  additional  revenue from business
activities.  Accordingly, at the present time, management is unable to determine
the likelihood of, or the  conditions or activities  which might  contribute to,
the  success of its  business  plan.  Management's  immediate  plan  intended to
mitigate the effects of its financial difficulties (including minimal assets and
working  capital,  net  tangible  book value,  and an  accumulated  deficit from



<PAGE>


operations) is to implement the proposed advertising campaign on the internet in
order to originate a greater  number of  refinance  and second  mortgage  loans.
Should this proposed advertising  campaign be successful,  of which there can be
no assurance,  thus requiring  additional capital to finance the increased level
of  operating  activity,  management  has  verbally  committed  to  provide  the
additional required funding should alternative capital resources be unavailable.
Management is incapable of determining the likelihood of success of the proposed
internet marketing campaign to revitalize the Company's  business.  However,  if
this business strategy fails, the Company could be expected to cease to continue
as a going concern only if management failed to develop an alternative marketing
strategy; determined not to provide additional funding based upon its assessment
of the Company's inability to implement its business plan; or failed to identify
other capital resources.

     The Company has no material commitments for capital expenditures.  The cost
of the modest advertising  campaign on the internet planned by management during
the next twelve  months is expected to be negotiated  with the internet  service
provider  selected by management  and to be determined  based upon the amount of
coverage  anticipated.  Accordingly,  the total cost is  presently  unknown  and
speculative,  and the Company has not yet budgeted a dollar amount therefor. The
source of funds to finance the proposed  advertising  campaign is expected to be
cash on hand.

     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 the Company's
business plan appear feasible.

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 will 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.


<PAGE>


(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   June 17, 1998                  By /s/  David R. Reitsema
    -----------------------------          -------------------------------------
                                            David R. Reitsema, Secretary