U.S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549
                                FORM 10-KSB       
                                 
     [ X ]  Annual Report Pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934
           [Fee Required]
       For the fiscal year ended December 31, 1997
     
                             or
     
     [   ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
               Exchange Act of 1934 [No Fee Required]
     For the transition period from ----------------------------------- to 

     ------------------------------                              
     Commission file number 0-16819
     
             National Capital Management Corporation
           (Name of small business issuer in its charter)
     
                Delaware                                 94-3054267             
     (State or other jurisdiction of         (I.R.S. Employer Identification
     incorporation or organization)           Number)
     
     520 Madison Avenue, New York NY                      10022
     (Address of principal executive offices)          (Zip Code)
     
     Issuer's telephone number  (212) 980-3883 
     
     Securities registered pursuant to Section 12(b) of the Exchange Act:
                          NONE
     
     Securities registered pursuant to Section 12(g) of the Exchange Act:
     
                         Common Stock, $0.01 Par  
                           (Title of Class)
     
     
     Check whether the issuer (1) filed all reports required to be filed by
     Section 13 or 15(d) of the Exchange Act 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    
     
     Check if there is no disclosure of delinquent filers in response to Item
     405 of Regulation S-B contained herein, and will not be contained, to the
     best of registrant's knowledge, in definitive proxy or information
     statements incorporated by reference in Part III of this Form 10-KSB or
     any amendment to this Form 10-KSB.      [X]
     
     Issuer's revenues for its most recent fiscal year $6,872,330
     
     The aggregate market value of voting stock held by nonaffiliates of the
     Registrant is approximately $1,099,286 as of April 6, 1998
      
                                   1,673,190
          (Number of shares of common stock outstanding as of April 6, 1998)
                                
                 Total number of pages in this document is: 41
                      The exhibit index is on page 38  
                                  
<PAGE>                           
                                   PART I
     
     Item 1 - Description of Business
     
     Introduction
     
     National Capital Management Corporation ("NCMC") is a holding company that
     previously operated through its primary subsidiary, National Capital
     Benefits Corp. (collectively with NCMC, the "Company"), which purchased
     life insurance policies for cash, on a discounted basis, from individuals
     having life threatening illnesses, a transaction which is otherwise known
     as viatical settlements.  In December 1996 the Company made a
     determination to discontinue this operation.
     
     In prior years, the Company had been comprised of two additional
     distinctly different operating businesses, the Real Estate Segment and the
     Industrial Products Segment.  However, these segments were discontinued
     during 1995 through the sale of principally all of their assets and/or
     stock.   
     
     In August 1996 the Company was notified by NASDAQ that the Company no
     longer appeared to meet certain requirements for continued listing on
     NASDAQ's National Market System.  In particular, NASDAQ noted that (i) the
     closing bid price for the Company's common stock on August 12, 1996 was
     $.875 per share and therefore below NASDAQ's $1 minimum bid price and (ii)
     because of the bid price, the market value of the public float no longer
     appeared to meet the requirement for a $1 million public float.
     
     In September 1996, in response to the foregoing two concerns raised by
     NASDAQ, the Company proposed a stock repurchase program pursuant to which
     the Company would purchase up to 80,000 shares of the Company's common
     stock in the open market from time-to-time as market conditions permitted.
     
     However, NASDAQ immediately notified the Company that it had completed its
     review of the Company's proposal and request for continued listing on
     NASDAQ's National Market System, and had decided to deny the Company's
     request.
     
     The decision was based on several factors.  The NASDAQ staff noted that
     the Company was in the hearings process in 1995 for a minimum bid price
     deficiency.  At that time, the Company was successful in maintaining
     compliance by implementing a one-for-three reverse stock split.  NASDAQ
     stated that the Company's proposed repurchase program would further reduce
     the already limited shares of public float and would not guarantee
     achieving compliance with the minimum bid price and/or the market value of
     public float criteria.  NASDAQ further noted that the Company has had a
     history of financial losses.  In conclusion, as a result of the Company's
     inability to provide a plan which would ensure continual compliance, and
     that the Company was in the hearings process in 1995 for a bid price
     deficiency, the NASDAQ staff determined that continued listing on NASDAQ's
     National Market System was no longer Warranted and informed the Company
     that the common stock would be deleted from the National Market System,
     effective with the opening of business on October 31, 1996.  The Company
     is eligible to trade on the OTC Bulletin Board.
                                        
                                        -2-     
<PAGE>
     
     Discontinued Operation - Viatical Settlements
     
     On March 17, 1994, the Company formed National Capital Benefits Corp.
     ("NCBC") to engage in the business of purchasing life insurance policies
     which insure the lives of individuals with life threatening illnesses. 
     NCBC purchased policies which insured individuals projected to have a life
     expectancy of 36 months or less.  In March 1994, the Company funded NCBC
     with initial cash investments of $1,490,000, consisting of $1,450,000 of
     preferred stock and $40,000 of common stock, and purchased an additional
     $663,082 of preferred stock for cash through December 31, 1996.
     
     In addition, NCBC had a revolving line of credit ("The Facility") up to
     $15 million, based on a formula of eligible policies purchased, from an
     institutional lender which was to be used to provide working capital and
     funds for the purchase of such policies.  The facility is secured by all
     of the assets of NCBC, including purchased insurance policies, bears
     interest at 1/2% over the lender's prime rate or 2-7/8% over the 90 day
     London Inter-Bank Offer Rate ("Libor") at the option of NCBC. The Facility
     was amended on November 30, 1996, and can no longer be utilized to finance
     the purchase of policies.  However, the facility does provide for the use
     of maturity and reinsurance claim proceeds (see below) for debt service
     and certain operating expenses.  The outstanding balance as of December
     31, 1997 was approximately $9.5 million.
     
     In addition, as of December 29, 1995, NCBC issued a $2,000,000
     subordinated note (the "Note") bearing interest at a rate of 14% with
     interest payable monthly in arrears.  The interest rate on the Note is
     consistent with a market rate at which a similar borrowing could be
     obtained by the Company.  Therefore, the fair value of the Note
     approximates the carrying value at December 31, 1997.  The note is due
     December 31, 1998, and is secured by NCBC's purchased insurance policies,
     subject to the security interest granted to the Facility lender.  The
     purchaser of the Note was granted a Warrant to acquire 12% of the common
     stock of NCBC (68 shares) at a price of $1.47 per share.  The holder of
     the Warrant can exercise a put of the stock to NCBC under certain
     conditions, which would guarantee the holder a minimum additional 4%
     interest on the outstanding balance.  In April 1997, the Warrant Agreement
     was amended to reflect an increased interest rate of 14 3/4% on the Note. 
     In exchange for agreeing to this increase in the interest rate, NCBC, or
     its assigns, shall have the option to repurchase the Warrant for the sum
     of $1.00.
     
     NCBC insured 90% of the net death benefit of the acquired policies through
     a wholly-owned Bermuda insurance company which, in turn, has reinsured the
     risk with a consortium of large international insurance companies.  As of
     December 31, 1997, the face value of NCBC's purchased insurance policies
     remaining in its portfolio was approximately $19.1 million.  During 1997,
     approximately $1.4 million of policies matured.  Reinsurance claims made
     and paid during 1997 were approximately $3.7 million, and $3.4 million,
     respectively.
     
     A trust whose sole trustee was an executive officer of NCBC ("the Minority
     Owner") originally owned 14-1/2% of the common stock of NCBC.  Effective
     November 30, 1996, the Company acquired this minority interest and all
     agreements with the minority owner were terminated.
     
                                      -3-
<PAGE>

     On July 29, 1994, NCBC entered into an agreement and acquired certain
     assets of CAPX Corporation ("CAPX"), including the rights to certain
     service marks, trade names and proprietary computer software.  The
     purchase price of the assets was $125,000 and the issuance of 33,333
     shares of the $.01 par value of NCMC's common stock, which was valued at
     $5.25 per share, adjusted to reflect the reverse stock split.  As part of
     the agreement, as amended in September 1996, NCBC was required to
     immediately pay CAPX $25,000, and an additional $150,000 by January 1997
     to repurchase all of the CAPX shares.  The agreement was further modified
     in February 1997 at which time the Company paid $100,000 and the agreement
     was terminated.
     
     Nature of Recently Discontinued Viatical Settlement Business
     
     The viatical settlement business made it possible for people facing life
     threatening illnesses to sell their life insurance policies for cash at a
     discount from the policies' stated death benefit.  The sales proceeds gave
     them choices that they might not otherwise have, such as selecting quality
     health care, retaining ownership of a residence, retiring indebtedness or
     sharing funds with family, friends or favorite charities.  
     
     A prospective seller's medical records were reviewed by physicians
     retained by NCBC as consultants who specialized in treatment of the
     individual's particular illness or disorder.  A prognosis was then made by
     each physician of the life expectancy of that person, which is an
     essential element in determining NCBC's purchasing of the policy and the
     terms of such purchase.  Other factors considered when purchasing policies
     was the financial strength of the insurance company writing the policy,
     the amount of coverage provided by the policy, assignment restrictions
     contained in the policy, the amount of any loans against the policies,
     prior assignments, the beneficiary, the cost of policy premiums, issue
     date and type of policy. 
     
     NCBC is required 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 amounts of revenue and expenses during the reporting period. 
     Actual results could differ significantly from these estimates.
     
     The recognition of earned discount and the ultimate profitability
     associated with purchased insurance policies is directly related to NCBC's
     assumptions regarding the remaining life expectancy of terminally ill
     individuals.  Such estimates were made when the insurance policy was
     purchased based upon facts and circumstances then known, and are adjusted
     periodically, but not more than annually, based upon actual experience. 
     While NCBC believes that its estimate of life expectancy, and the related
     recognition of earned discount would closely approximate actual
     experience, given the inherent scientific uncertainty of such estimates,
     including the impact of recently announced medical treatments that might
     extend life expectancies, there can be no assurance that these policies
     will mature in accordance with management's estimates. Therefore, the
     Company established a $1,500,000 valuation reserve against purchase policy
     costs during 1996, and as adjusted during the year ended December 31,
     1997, as stated on the balance sheet (see footnote 3 to the financial
     statements).  During the fourth quarter ended December 31, 1997, the
     Company increased its original reserve by $350,000.  The amount of the
     reserve was determined based on projections of expected cash inflows from
     maturity and reinsurance claims, and cash outflows for debt service and
     operating costs during the portfolio administration process which is
     expected to take several more years (see footnote 3).
          
     In accordance with the discontinuance of this business segment, NCBC has
     restructured its organization and reduced its office staff to one person. 
     
                                     -4-
<PAGE>

     Discontinued Operation - Real Estate Segment
     
     In November 1995, the Company elected to discontinue operations of the
     Real Estate Segment. The following is the status of the Company's disposal
     activities:
     
     Appletree Townhouses:  The Company's wholly-owned subsidiary, Georgia
     Properties, Inc. ("GPI"), received advances of $650,000 on December 21,
     1995 and an additional $500,000 on February 1, 1996 from the same
     individual that purchased The Mart Shopping Center, in exchange for an
     option to purchase Appletree Townhouses for $3,500,000, which was
     exercised on March 31, 1996.
     
     The sales price of $3,500,000 consisted of the aforementioned advances by
     the buyer totaling $1,150,000, assumption of the existing first deed loan
     by the buyer in the amount of $1,048,795 and a purchase money note for the
     balance equal to $1,301,205.  The purchase money note paid interest on the
     balance due from the date of sale at 8% per annum until it was paid in
     December 1996.  In addition, the buyer was required to prepay $250,000 of
     this note on May 1, 1996, which was paid in April 1996.  A gain of
     $327,735, related to the sale of this property and the liquidation of the
     Appletree subsidiary, was reported in 1996.
     
     Florida land:  The Company owned undeveloped land in Ft. Lauderdale,
     Florida which is zoned for commercial/industrial use.  This parcel was
     sold for $216,000 in August 1996, and the Company reported a gain of
     $190,489.
     
     Colony Ridge Apartments:  Colony Ridge Apartments is an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consists of 23
     two-story buildings containing a total of 212 apartment units.  On
     January 16, 1998, the Company entered into an agreement to sell the Colony
     Ridge Apartments for $3,650,000.  It is anticipated that the sale of this
     property will occur on or about April 30, 1998.  The purchase price is
     expected to be paid by the purchaser to the Company by delivery of
     immediately available and collectible funds.
     
     Redbird Trails Apartments and North Oak Apartments:  On June 13, 1994 and
     December 8, 1994, in accordance with previous agreements dated December
     30, 1993, the Company sold limited partnership interests in Redbird Trails
     Associates, L.P. ("Redbird") and Signature Midwest, L.P. ("Signature"),
     respectively, to two unrelated entities.  The Company retained a .9%
     interest in each partnership through two wholly-owned subsidiaries serving
     as the operating general partners.  Such operating general partners were
     obligated to provide loans of up to $150,000 and $75,000 to Redbird and
     Signature, respectively, to fund any operating deficits, as defined, for
     a three year period ending December 8, 1997.  No loans were made during
     1997.
     
                                        -5-
<PAGE>
     
     The Company retained a contingent interest in the cash flows of these
     partnerships.  It will receive any cash available from property
     operations, to the extent it exceeds approximately $61,000 annually, and
     any refinancing proceeds up to a total of approximately $4.5 million, plus
     interest at 9.25% per annum on the outstanding balance of this amount. 
     Any proceeds of sale  will be allocated, first, 99.1% to the new partners
     until they have received 135% of their investment, less any prior
     distributions.  Any remaining proceeds from a sale will be allocated to
     the Company up to $6 million, less any distributions from operations or
     refinancings as described above.  These arrangements have not been
     reflected in the Company's financial statements since their ultimate
     realization cannot reasonably be determined.  In addition, at such time as
     the tax benefits have been utilized, the Company has the right to purchase
     the interests of the newly admitted partners for 135% of their contributed
     capital (minus prior cash payments).  Should the Company choose not to
     exercise such right to purchase the partners' interests, the newly
     admitted administrative general partner has the right to require the
     Company to sell all of the assets and liquidate the partnerships.  The
     Company has not funded any operating deficits and has received
     approximately $40,000 and $-0- excess cash flows during 1997 and 1996.
     
     Discontinued Operation - Industrial Products Segment
     
     The Industrial Products Segment consisted of the Company's wholly-owned
     subsidiary, Jensen Corporation ("Jensen"), which manufactured and
     distributed machinery used primarily by commercial laundries, large
     institutions and hotels as well as commercial compactor products for waste
     disposal.  On November 10, 1995, the Company sold 100% of the common stock
     of Jensen, located in Fort Lauderdale, Florida to AMKO USA, Inc. ("AMKO"),
     an affiliate of AMKO International B.V., which is based in The
     Netherlands, for $1,726,000.  The sale proceeds included cash of $415,000
     and a promissory note receivable in the amount of $1,311,000, which is
     secured by Jensens stock, accounts receivable and inventory.  The
     $1,311,000 note is guaranteed in its entirety by AMKO International B.V.,
     and the sole shareholder of AMKO International B.V. guaranteed the first
     $585,000 of principal payments.
     
     AMKO also agreed to cause Jensen to pay to the Company a $765,000
     obligation in the form of a note,  which was loaned to Jensen, $500,000
     which was prior to the sale and $265,000 which was simultaneous with the
     sale, and an intercompany balance payable by Jensen to the Company of
     $337,650, which are secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes are guaranteed by AMKO
     International B.V.
     
     The $1,311,000 note as amended May 16, 1997 bears interest at 8.5% per
     annum and is payable in varying installments with the balance due in April
     1998, unless extended as indicated below.  The $765,000 note as amended
     May 16, 1997 bears interest at 8.5% per annum and is payable in varying
     installments with the balance due in April 1998, unless extended as
     indicated below.  The $337,650 note as amended May 16, 1997 bears interest
     at 8.5% per annum and is payable in varying installments with the balance
     due in April 1998, unless extended as indicated below.
     
     The Company advanced $198,000 to AMKO during February and March 1997, of
     which $82,500 was repaid.  The balance was a Demand Note with interest at
     12% per annum.  This note was also guaranteed by AMKO International.  As
     of December 31, 1997 this note was paid in full.
     
     In accordance with the May 16, 1997 amendment, the notes could be extended
     until April 1999, if AMKO prepays $500,000 on or before April 1, 1998.  If
     extended, the interest rate on all of the notes would increase to 12%. 
     The Company has charged AMKO a fee of $200,000 in conjunction with the
     latest amendment.  The fee was paid on May 16, 1997.
     
                                       -6-
<PAGE>

     The Company loaned Jensen an additional $200,035 in conjunction with the
     May 16, 1997 modification, and an additional $36,000 in October 1997. 
     These notes bear interest at 8.5% and mature simultaneously with the other
     notes.
     
     As of October, 1997, Jensen stopped making payments as required by the
     terms of the May 16, 1997 amendment.  On November 11, 1997, Jensen filed
     for Chapter 7 bankruptcy.  On March 26, 1998, an auction sale was held,
     the proceeds of which were distributed by the trustee in bankruptcy. The
     Company received $56,686 in April 1998 as a result of the sale and
     anticipates receiving approximately an additional $95,000.  The remaining
     balance of the notes was written off.
     
     Item 2 - Description of Property
     
     The Company maintains an office in New York for use by its executive
     officers and consultants at the premises of Resource Holdings, Ltd.
     ("Resource").  The Company is not a party to a lease, but there is an
     understanding that NCMC will pay rent for the offices in New York until
     the end of 1998. In addition, in accordance with its agreement with
     Resource, the Company has deposited with Resource's landlord the amount of
     $37,746 which will be returned, plus interest, to the Company on
     termination of Resource's lease (see Item 12 - Certain Relationships and
     Related Transactions).
     
     Mr. Shaw, a director of the Company, is a managing director and
     significant shareholder of Resource, and therefore may be deemed to have
     an interest in any payments to Resource.
     
     The Company considers this property to be suitable and adequate for its
     present needs.  The property is being fully utilized.  See Item 1
     "Business" for discussion of real properties owned in connection with the
     discontinued operations of the Real Estate Segment.
     
     Item 3 - Legal Proceedings
     
     The Company was a named defendant in a product liability lawsuit related
     to Jensen Corporation. In August 1996, the lawsuit was settled at no cost
     to the Company. 
     
     Item 4 - Submission of Matters to a Vote of Security Holders
     
     The Company did not hold an annual meeting during 1997.
     
                                      -7-
<PAGE>

                                   PART II
     
     Item 5 -  Market for Common Equity and Related Stockholder Matters
     
     a.                      Market Information
     
        The Company's common stock trades on the OTC Bulletin Board under
        the symbol NCMC.
     
        The high and low bid prices of shares of common stock of the Company
        for each quarter during the years ended December 31, 1997 and
        1996, are as follows:
<TABLE>
<CAPTION>
                                                         Bid Price    
                                                      -----------------
                                                      High       Low
                                                      ----       ----
       <S>                                            <C>         <C>
       For the Quarter Ended                         
       December 31, 1997............................  .6313      .4625
       September 30, 1997...........................  .6563      .4063
       June 30, 1997 ...............................  .5625      .3875
       March 31, 1997...............................  .5625      .3438
       December 31, 1996............................  .5620      .3750
       September 30, 1996........................... 1.0000      .8750
       June 30, 1996................................ 1.7500     1.0000
       March 31, 1996............................... 2.3750     2.3750
</TABLE>
       The quotations represent inter dealer quotations without retail mark-
       up, mark-down or commission, and do not necessarily represent actual
       transactions.  The last reported sales price of the Company's common
       stock on April 6, 1998 was $.657.

       Reverse Stock Split
     
       Pursuant to the approval of the stockholders on June 28, 1995, the
       Company implemented a reverse stock split which was effective July 11,
       1995, whereby each three shares of common stock was converted into one
       share of common stock.  As a result of the reverse stock split, the
       Registrant has 6,666,666 shares of authorized common stock, of which
       1,673,190 are issued and outstanding.  All such shares are of the par
       value of $.01.
     
       b.   Number of Holders of Common Stock
     
       At April 6, 1998, the approximate number of holders of record of shares
       of common stock of the Company was 947.
     
       c.   Dividends on Common Stock
     
       The Company has not declared any dividends on its common stock during
       the two year period ended December 31, 1997, and does not anticipate
       paying any dividends in the near future.
     
Item 6 - Management's Discussion and Analysis of Financial Condition and
            Results of Operations
     
       OVERVIEW
     
       During 1996, the Company initially expanded its viatical settlement
       business until it discontinued this operation at the end of the year.
     
       While the Company is managing the administration of the collection of the
       portfolio of life insurance policies and the orderly liquidation of its
       real estate, management intends to seek other acquisitions.

                                      -8-
<PAGE>
    
     FINANCIAL CONDITION AND LIQUIDITY
          
     The Company's cash decreased from $651,345 at December 31, 1996, to 
     $56,035 at December 31, 1997, principally as a result of financing
     operating activities, payment of $100,000 in conjunction with a common
     stock repurchase obligation, and a net $236,035 demand loan to Jensen
     Corporation. This was offset by receipt of approximately $700,000 in fees
     and interest from AMKO USA, Inc.  During 1996, cash used to finance
     operating activities and the viatical settlement business was offset by
     the receipt of $1,347,000 from the sale of Appletree Townhouses and the
     Florida land. 
     
     Other than in its Viatical Settlement Subsidiary, the Company does not
     have any existing general credit facilities to fund its ongoing working
     capital requirements.
     
     VIATICAL SETTLEMENT BUSINESS
     
     Effective as of December 29, 1995, NCBC entered into a revolving credit
     facility ("Facility") with a credit limit of up to $15 million, which
     expires December 1998. The closing of the transaction was January 8, 1996. 
     The Facility is secured by all the assets of NCBC, including purchased
     insurance policies.  The Facility bears interest at 1/2% over the lender's
     prime rate or 2-7/8% over the 90 day London Inter-Bank Offer Rate
     ("Libor") at the option of NCBC (Libor rate + 2-7/8% at December 31, 1997
     and 1996). Because the interest rate on the Facility adjusts quarterly
     based on Libor, the fair value of the borrowings under the Facility
     approximates the carrying amount.
     
     Under the terms of the Facility, the lender initially loaned NCBC a
     specified percentage of the cost of the insurance policies purchased, and
     the insurance policies purchased by NCBC had to meet certain underwriting
     criteria as established in the Facility.  Repayment of outstanding
     principal is required as insurance proceeds from matured policies are
     collected.
     
     NCBC negotiated a modification to the Facility, as of November 30, 1996,
     and can no longer use the Facility to purchase additional policies. 
     However, the Facility does provide for the drawdown of a specified
     percentage of the policy portfolio and the use of proceeds from maturity
     and reinsurance claims for debt service and certain operating expenses.
     
     In addition, as of December 29, 1995, NCBC issued a $2,000,000
     subordinated note (the "Note") bearing interest at a rate of 14% with
     interest payable monthly in arrears.  The interest rate on the Note is
     consistent with a market rate at which a similar borrowing could be
     obtained by the Company.  Therefore, the fair value of the Note
     approximates the carrying value at December 31, 1997.  The note is due
     December 31, 1998, and is secured by NCBC's purchased insurance policies,
     subject to the security interest granted to the Facility lender.  The
     purchaser of the Note was granted a Warrant to acquire 12% of the common
     stock of NCBC (68 shares) at a price of $1.47 per share.  The holder of
     the Warrant can exercise a put of the stock to NCBC under certain
     conditions, which would guarantee the holder a minimum additional 4%
     interest on the outstanding balance.  In April 1997, the Warrant Agreement
     was amended to reflect an increased interest rate of 14 3/4% on the Note. 
     In exchange for agreeing to this increase in the interest rate, NCBC, or
     its assigns, shall have the option to repurchase the Warrant for the sum
     of $1.00.
     
                                    -9-
<PAGE>

     On July 29, 1994, NCBC entered into an agreement and acquired certain
     assets of CAPX Corporation ("CAPX"), including the rights to certain
     service marks, trade names and proprietary computer software.  The
     purchase price of the assets was $125,000 and the issuance of 33,333
     shares of the $.01 par value of NCMC's common stock, which was valued at
     $5.25 per share, adjusted to reflect the reverse stock split.  As part of
     the agreement, as amended in September 1996, NCMC was required by CAPX to
     repurchase all of its shares at $5.25 per share on or before January 1997.
     In conjunction with the September 1996 amendment NCBC paid CAPX $25,000
     and the balance of $150,000 was due January 1997.  The agreement was
     further modified in February 1997, at which time the Company paid $100,000
     and the agreement was terminated. 
     
     The viatical settlement business was discontinued in December 1996.
     
     REAL ESTATE BUSINESS
     
     On November 27, 1995, the Company elected to discontinue operations of the
     Real Estate Segment to concentrate its efforts on its viatical settlements
     business.  The following is a description of the Company's disposal
     activities:
     
     Appletree Townhouses:  The Company's wholly-owned subsidiary, Georgia
     Properties, Inc. ("GPI"), received advances of $650,000 on December 21,
     1995 and an additional $500,000 on February 1, 1996 from the same
     individual that purchased The Mart Shopping Center, in exchange for an
     option to purchase Appletree Townhouses for $3,500,000, which was
     exercised on March 31, 1996.
     
     The sales price of $3,500,000 consisted of the aforementioned advances by
     the buyer totaling $1,150,000, assumption of the existing first deed loan
     by the buyer in the amount of $1,048,795 and a purchase money note for the
     balance equal to $1,301,205.  The purchase money paid interest from the
     date of sale at 8% per annum until it was paid in December 1996.  In
     addition, the buyer was required to prepay $250,000 of this note on May 1,
     1996, which was paid in April 1996.  A gain of $327,735, related to the
     sale of this property and the liquidation of the Appletree subsidiary, was
     reported in 1996.
     
     Florida land:  The Company owned undeveloped land in Ft. Lauderdale,
     Florida which is zoned for commercial/industrial use.  This parcel was
     sold for $216,000 in August 1996, and the Company reported a gain of
     $190,489. 
     
     Colony Ridge Apartments:  Colony Ridge Apartments is an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consists of 23
     two-story buildings containing a total of 212 apartment units.
     On January 16, 1998, the Company entered into an agreement to sell
     the Colony Ridge Apartments for $3,650,000.  It is anticipated that the
     sale of this property will occur on or about April 30, 1998.  The purchase
     price is expected to be paid by the purchaser to the Company by delivery
     of immediately available and collectible funds.
     
     Redbird Trails Apartments and North Oak Apartments:  On June 13, 1994 and
     December 8, 1994, in accordance with previous agreements dated December
     30, 1993, the Company sold limited partnership interests in Redbird Trails
     Associates, L.P. ("Redbird") and Signature Midwest, L.P. ("Signature"),
     respectively, to two unrelated entities.  The Company retained a .9%
     interest in each partnership through two wholly-owned subsidiaries serving
     as the operating general partners.  Such operating general partners were
     obligated to provide loans of up to $150,000 and $75,000 to Redbird and
     Signature, respectively, to fund any operating deficits, as defined, for
     a three year period ending December 8, 1997.  No loans were made during
     1997.
     
                                      -10-
<PAGE>
     
     The Company retained a contingent interest in the cash flows of these
     partnerships.  It will receive any cash available from property
     operations, to the extent it exceeds approximately $61,000 annually, and
     any refinancing proceeds up to a total of approximately $4.5 million, plus
     interest at 9.25% per annum on the outstanding balance of this amount. 
     Any proceeds of sale  will be allocated, first, 99.1% to the new partners
     until they have received 135% of their investment, less any prior
     distributions.  Any remaining proceeds from a sale will be allocated to
     the Company up to $6 million, less any distributions from operations or
     refinancings as described above.  These arrangements have not been
     reflected in the Company's financial statements since their ultimate
     realization cannot reasonably be determined.  In addition, at such time as
     the tax benefits have been utilized, the Company has the right to purchase
     the interests of the newly admitted partners for 135% of their contributed
     capital (minus prior cash payments).  Should the Company choose not to
     exercise such rights to purchase the partners' interests, the newly
     admitted administrative general partner has the right to require the
     Company to sell all of the assets and liquidate the partnerships.  The
     Company did not fund any operating deficits and has received approximately
     $40,000 and $-0- excess cash flows during 1997 and 1996.
     
     INDUSTRIAL PRODUCTS BUSINESS
     
     The Industrial Products Segment was also discontinued during 1995.  It
     consisted of the Company's wholly-owned subsidiary, Jensen Corporation
     ("Jensen"), which manufactured and distributed machinery used primarily by
     commercial laundries, large institutions and hotels as well as commercial
     compactor products for waste disposal.  On November 10, 1995, the Company
     sold 100% of the common stock of Jensen, located in Fort Lauderdale,
     Florida, to AMKO USA, Inc. ("AMKO"), an affiliate of AMKO International
     B.V. which is based in The Netherlands, for $1,726,000.  The sale proceeds
     included cash of $415,000 and a promissory note receivable in the amount
     of $1,311,000 which is secured by Jensen's stock, accounts receivable and
     inventory.  The $1,311,000 note is guaranteed in its entirety by AMKO
     International B.V., and the sole shareholder of AMKO International B.V.
     guaranteed the first $585,000 of principal payments.
     
     AMKO also agreed to cause Jensen to pay to the Company a $765,000
     obligation in the form of a note,  which was loaned to Jensen, $500,000 of
     which was prior to the sale and $265,000 which was simultaneous with the
     sale, and an intercompany balance payable by Jensen to the Company of
     $337,650, which are secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes are guaranteed by AMKO
     International B.V.
     
     The $1,311,000 note, as amended May 16, 1997, bears interest at 8.5% per
     annum and is payable in varying installments with the balance due in April
     1998, unless extended as indicated below. The $765,000 note, as amended
     May 16, 1997, bears interest at 8.5% per annum and is payable in varying
     installments with the balance due in April 1998, unless extended as
     indicated below.  The $337,650 note, as amended May 16, 1997, bears
     interest at 8.5% per annum and is payable in varying installments with the
     balance due in April 1998, unless extended as indicated below.
     
     The Company advanced $198,000 to AMKO during February and March 1997, of
     which $82,500 was repaid.  The balance was a Demand Note with interest at
     12% per annum.  This note was also guaranteed by AMKO International B.V. 
     As of December 31, 1997, this note was paid in full.
     
     In accordance with the May 16, 1997 amendment, the notes could be extended
     until April 1999, if AMKO prepays $500,000 on or before April 1, 1998.  If
     extended, the interest rate on all of the notes would increase to 12%. 
     The Company has charged AMKO a fee of $200,000 in conjunction with the
     latest amendment.  The fee was paid on May 16, 1997.
     
                                    -11-     
<PAGE>

     The Company loaned Jensen an additional $200,035 in conjunction with the
     May 16, 1997 modification, and an additional $36,000 in October 1997. 
     These notes bear interest at 8.5% and mature simultaneously with the other
     notes.
          
     As of October, 1997, Jensen stopped making payments as required by the
     terms of the May 16, 1997 amendment.  On November 11, 1997, Jensen filed
     for Chapter 7 bankruptcy.  On March 26, 1998, an auction sale was held,
     the proceeds of which were distributed by the trustee in bankruptcy. The
     Company received $56,686 in April 1998 as a result of the sale and
     anticipates receiving approximately an additional $95,000.  The remaining
     balance of the notes was written off.
     
     RESULTS OF OPERATIONS FOR 1997 COMPARED TO 1996
     
     National Capital Benefits Corp. ("NCBC") commenced operations on March 17,
     1994.  During the periods ended December 31, 1997 and 1996, NCBC had
     purchased at face value (including those in escrow) approximately $-0- 
     and $10.5 million of policies, respectively.  During 1997 and 1996,
     approximately $1.4 million and $4.3 million respectively, of policies
     matured.  Reinsurance claims made and paid during 1997 were approximately
     $3.7 million and $3.4 million, respectively.
     
     The recognition of earned discount and the ultimate profitability
     associated with purchased insurance policies is directly related to NCBC's
     assumptions regarding the remaining life expectancy of terminally ill
     individuals.  Such estimates were made when the insurance policy was
     purchased based upon facts and circumstances then known, and are adjusted
     periodically, but not more than annually, based upon actual experience.  
     
     While NCBC believed that its estimate of life expectancy, and the related
     recognition of earned discount would closely approximate actual
     experience, given the inherent scientific uncertainty of such estimates,
     including the potential impact of recently announced medical treatments
     that might extend life expectancies, there can be no assurance that these
     policies will mature in accordance with management's estimates. 
     Therefore, the Company established a $1,500,000 valuation reserve against
     purchase policy costs during 1996, and as adjusted during the year ended
     December 31, 1997, as stated on the balance sheet.  During the fourth
     quarter ended December 31, 1997, the Company increased its original
     reserve by $350,000. The amount of the reserve was determined based on
     projections of expected cash inflows from maturities and reinsurance
     claims, and cash outflows for debt service and operating costs during the
     portfolio administration process, which is expected to take several more
     years (see footnote 3).
     
     The Company previously announced that certain existing medications
     presently under development may, when used in combination, significantly
     prolong the life expectancy of persons previously diagnosed with AIDS. 
     These medical treatments and a July 1996 AIDS conference have had a
     significant impact on this segment of the viatical settlement industry. 
     The Company previously indicated that a large percentage of its portfolio
     involves individuals with terminal illnesses related to AIDS and that the
     development of a treatment for AIDS which extends the life expectancy of
     such persons could materially reduce the Company's future actual yield on
     its portfolio and materially adversely affect the Company's future
     performance.  From November 30, 1996 through the date of this report, the
     Company did not process new applications for policies.
     
     The Company decided to discontinue its viatical settlement business in
     December  1996.
     
                                       -12-
<PAGE>
     
     NCBC has restructured its organization and reduced its office staff to one
     person.  Management anticipates that this person, as well as NCMC
     management, will manage NCBC's existing portfolio of approximately $19.1
     million of insurance policies.  Management estimates that the
     administration of these policies will take several more years.
     
                                       -13-
<PAGE>
     Item 7 - Financial Statements and Supplementary Data
     ----------------------------------------------------
     

                      NATIONAL CAPITAL MANAGEMENT CORPORATION
     
                    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
     
     
          Report of Independent Public Accountants                      15
          Consolidated Balance Sheet at December 31, 1997               16
          Consolidated Statements of Operations for the years ended
               December 31, 1997 and 1996                               17
          Consolidated Statements of Shareholders' Equity for the
               years     ended December 31, 1997 and 1996               18
          Consolidated Statements of Cash Flows for the years ended
               December 31, 1997 and 1996                               19
          Notes to Consolidated Financial Statements                 20-31
     
                                      -14-
<PAGE>



     
                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
     
     


     The Board of Directors and Shareholders of
     National Capital Management Corporation:
     
     We have audited the accompanying consolidated balance sheet of National
     Capital Management Corporation (a Delaware corporation) as of December 31,
     1997, and the related consolidated statements of operations, shareholders'
     equity and cash flows for the year then ended.  These financial statements
     are the responsibility of the Company's management.  Our responsibility is
     to express an opinion on these financial statements based on our audits.
     The consolidated financial statements of the Company for the year ended
     December 31, 1996 was audited by other auditors whose report dated April
     11, 1997, expressed an unqualified opinion on those statements.
     
     We conducted our audits in accordance with generally accepted auditing
     standards. Those standards require that we plan and perform the audit to
     obtain reasonable assurance about whether the financial statements are
     free of material misstatement.  An audit includes examining, on a test
     basis, evidence supporting the amounts and disclosures in the financial
     statements.  An audit also includes assessing the accounting principles
     used and significant estimates made by management, as well as evaluating
     the overall financial statement presentation.  We believe that our audits
     provide a reasonable basis for our opinion.
     
     As discussed in the Notes to Consolidated Financial Statements, the
     Company had been comprised of three distinctly different operating
     businesses.  The real estate and the industrial products segments were
     discontinued in 1995.  The viatical settlements segment was discontinued
     in 1996.  As discussed in Notes 1 and 3, the Company expects to administer
     an orderly liquidation of its existing viatical settlements portfolio and
     expects the process will take several years.
     
     In our opinion, the consolidated financial statements referred to above
     present fairly, in all material respects, the consolidated financial
     position of National Capital Management Corporation at December 31, 1997,
     and the consolidated results of its operations and its cash flows for the
     year then ended, in conformity with generally accepted accounting
     principles.
     
     
     /s/ JANOVER RUBINROIT, LLC
     
     Garden City, New York
     April 6, 1998
       
                                         -15-
<PAGE>
<TABLE>
                     NATIONAL CAPITAL MANAGEMENT CORPORATION
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1997


      ASSETS                                                                
<S>                                                               <C>
Cash and cash equivalents                                         $    56,035
Notes receivable (Note 4)                                             150,000
Property and equipment, less accumulated depreciation
 of $71,958                                                            32,873
Net assets of discontinued operations -
 Viatical Settlements Segment (Note 3)                                 25,528
 Real Estate Segment (Note 6)                                       1,795,030
Other assets                                                           36,225
                                                                  ----- -----

Total assets                                                      $ 2,095,691
</TABLE>
     LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S>                                                              <C>
Accounts payable and accrued expenses                            $    103,299

Shareholders' equity (Notes 9 and 10):
 Preferred stock, $0.01 par value, 3,000,000 shares
    authorized, no shares issued or outstanding
 Common stock, $0.01 par value, 6,666,666 shares
    authorized, 1,813,056 shares issued, 
   1,673,190 outstanding                                               16,732
 Additional paid-in capital                                        23,125,123
 Accumulated deficit                                              (20,975,246)
 Treasury stock, 139,866 shares                                      (174,217)

Total shareholders' equity                                          1,992,392
                                                                  -----------

Total liabilities and shareholders' equity                        $ 2,095,691


         The accompanying notes are an integral part of this statement.

                                        -16-
</TABLE>
<PAGE>
<TABLE>
                       NATIONAL CAPITAL MANAGEMENT CORPORATION
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                                           
<CAPTION>
                                                    Years ended December 31,    
                                                       1997           1996   
                                                    -----------   -----------
<S>                                                <C>            <C>
Income (expense):
 Other income                                      $    584,876   $   134,041
 Corporate administrative expense                    (1,589,053)     (665,717)

Net loss from continuing operations before tax       (1,004,177)     (531,676)

Provision for income taxes                               -             -     

Net loss from continuing operations after tax        (1,004,177)     (531,676)

Discontinued operations:
 Net operating loss:
    Viatical settlements (Note 3)                      (374,413)   (3,603,572)
    Real estate segment (Note 6)                        (46,568)     (193,307)
 Net gain on disposal of:
    Real estate segment (Note 6)                         -            518,224

Net loss from discontinued operations                  (420,981)   (3,278,655)
                                                    -----------   -----------

Net loss                                            $(1,425,158)  $(3,810,331)

            The accompanying notes are an integral part of this statement.

                                         -17-
</TABLE>
<PAGE>
<TABLE>
                      NATIONAL CAPITAL MANAGEMENT CORPORATION
                   CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                      YEARS ENDED DECEMBER 31, 1997 and 1996
<CAPTION>

                            Additional                           Total     
                     Common  Paid-in     Accumulated  Treasury  Shareholders' 
                    Stock    Capital      Deficit      Stock      Equity     
                    ------   -------     -----------  --------  ------------
<S>                 <C>     <C>          <C>           <C>        <C>
Balances at
 December 31,
 1995              $17,904  $23,123,951  $(15,739,757)  $(224,217)  $7,177,881

Adjustment to
 Common Stock       (1,172)       1,172        -           -            -    

Reduction in cost due
 to CAPX settlement
 (Note 9)             -            -           -           50,000       50,000

Net loss              -            -       (3,810,331)      -       (3,810,331)

Balances at
 December 31,
 1996               16,732   23,125,123   (19,550,088)    (174,217)  3,417,550

Net loss              -            -       (1,425,158)      -       (1,425,158)
                   -------  -----------   -----------    ---------  ----------
Balance at
 December 31,
 1997              $16,732   $23,125,123  $(20,975,246)   $(174,217)  $1,992,392

             The accompanying notes are an integral part of this statements.

                                         -18-
</TABLE>
<PAGE>
<TABLE>
                       NATIONAL CAPITAL MANAGEMENT CORPORATION
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                     Years Ended December 31,
                                                         1997        1996 
                                                     -----------  ----------- 
<S>                                                  <C>          <C>
Cash flows from operating activities:
 Net loss                                            $(1,425,158) $(3,810,331)
 Adjustments to reconcile net loss to net
   cash used in operating activities:
     Depreciation and amortization                         8,760        8,760
     Reserves and allowances on notes
      and interest receivable                              -          200,000
     Reduction in value of notes receivable              979,408        -    
 Changes in operating assets and liabilities:
   Decease in accounts receivable                        (61,483)      21,490
    Increase (decrease) in accounts payable and
     accrued liabilities                                (165,070)    (529,024)
                                                      ----------   ----------   
 Net cash used in operating activities                  (663,543)  (4,109,105)
                                                      ----------   ----------

 Change in net assets of discontinued operations         304,267    3,736,443
                                                       ---------   ----------
 Cash flows provided by (used in) investing activities:
 Collections on notes receivable                           -          400,000
 Increase in other assets                                  -           15,223
 Additional loan to Jensen                              (236,035)       -  
                                                       ---------   ----------
   Net cash provided by (used in)
     investing activities                               (236,035)     415,223
                                                       ---------   ---------- 
Increase (decrease) in cash and cash equivalents        (595,311)      42,561

Cash and cash equivalents at beginning of period         651,346      608,785
                                                       ---------   ----------
Cash and cash equivalents at end of period            $   56,035   $  651,346
                    
Supplemental schedule of non-cash operating
 and financing activities:

   Reduction of accrued liability for
     treasury stock                                   $    -       $   50,000


           The accompanying notes are an integral part of this statements.
             
                                         -19-
</TABLE>
<PAGE>
                     NATIONAL CAPITAL MANAGEMENT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1997
     
     NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION
     
     National Capital Management Corporation ("NCMC"or the "Company") is a
     holding company that currently is completing the orderly liquidation of
     its discontinued operations, while seeking other acquisitions.
     
     Prior to 1995, the Company had been comprised of three distinctly
     different operating businesses, the Viatical Settlement Segment, which was
     operated through National Capital Benefits Corporation ("NCBC"), a wholly
     owned subsidiary, the Real Estate Segment and the Industrial Products
     Segment.  The Industrial Products Segment and Real Estate Segment were
     discontinued in 1995.  The Viatical Settlement Segment was discontinued in
     1996.  (Notes 3, 6 and 7).   
     
     Consolidation Principles
     
     The consolidated financial statements include the accounts of the Company
     and all of its majority-owned subsidiaries.  All significant intercompany
     accounts and transactions have been eliminated in consolidation.
     
     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     
     Property and Equipment - Property and equipment is stated at amortized
     cost net of accumulated depreciation.  Depreciation is computed using the
     straight-line and accelerated methods over the estimated useful lives of
     the assets.
     
     Income Taxes - Income taxes are accounted for in accordance with the
     provisions of Statement of Financial Accounting Standards ("SFAS") No.
     109, "Accounting for Income Taxes".   As required under SFAS No. 109,
     deferred tax assets and liabilities are recognized for the future tax
     consequences attributable to temporary differences between the financial
     statement carrying amounts of assets and liabilities and the respective
     tax basis amounts.  Deferred tax assets and liabilities are measured under
     tax rates that are expected to apply to taxable income in the years in
     which these differences are expected to be settled.  The effect of a
     change in tax rates on deferred tax assets and liabilities is recognized
     in the period of the tax change.
     
     Estimates - The preparation of financial statements in conformity with
     generally accepted accounting principals requires the Company 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 amounts of revenue and
     expenses during the reporting period.  Actual results could differ
     significantly from those estimates.
     
     Material estimates that are particularly susceptible to significant change
     in the near term relate to the determination of the valuation reserve
     against the cost of purchased policies, the collectibility of notes
     receivable, and the realizability of net deferred tax assets.  See Notes
     3, 4 and 8.
     
                                       -20-
<PAGE>
     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     
     Accounting for long-lived assets
     
     For the calendar year ended December 31, 1996, the Company adopted SFAS
     121, "Accounting for the Impairment of Long-lived assets and for Long-Lived
     Assets to Be Disposed Of", and determined that certain adjustments
     for impairments were required.  In addition to the write down of several
     assets of the Company, a $1.5 million valuation reserve was established,
     as adjusted during the year ended December 31, 1997, against the cost of
     purchased policy costs in order to reflect management's estimate of the
     fair market value of the net assets (Note 3).
     
     The accuracy of the valuation reserve established by the Company (Note 3)
     is directly related to NCBC's assumptions regarding the remaining life
     expectancy of terminally ill individuals.  While NCBC believes that its
     estimate of life expectancy, and the related valuation reserve will
     approximate actual experience, given the inherent scientific uncertainty
     of such estimates, including the impact of recent medical treatments that
     might extend life expectancies, there can be no assurance that these
     policies will mature in accordance with management's estimates. 
     Therefore, the Company established a $1,500,000 valuation reserve against
     purchase policy costs during 1996 and as adjusted during the year ended
     December 31, 1997.  During the fourth quarter ended December 31, 1997, the
     Company increased its original reserve by $350,000. The amount of the
     reserve was determined based on projections of expected cash inflows from
     maturities and reinsurance claims, and cash outflows for debt service and
     operating costs during the portfolio administration process, which is
     expected to take several more years (Note 3).
     
     Statement of Cash Flows
     
     The Company considers all short-term highly liquid investments purchased
     with a maturity of three months or less to be cash and cash equivalents
     for purposes of the Consolidated Statement of Cash Flows.
     
     Cash paid for interest was approximately $1,087,000 and $1,054,400, for
     1997 and 1996, respectively.  The Company paid no material amounts for
     income taxes during these years.
     
     During 1996, the Company sold two real estate properties in transactions
     in which one purchaser assumed a first mortgage obligation of the Company
     in the amount of $1,048,795 and recognized gains of $518,224 in connection
     with the sales.
     
     Earnings per share
     
     Effective December 15, 1997, the Financial Accounting Standards Board
     issued Statement No. 128, "Earnings per Share".  Statement No. 128
     replaced the previously reported primary and fully diluted earnings per
     share with basic and diluted earnings per share.  Under the new
     requirements for calculating earnings per share, the dilutive effect of
     stock options will be excluded from basis earnings per share but included
     in the computation of diluted earnings per share.  All earnings per share
     mounts have been restated so as to comply with Statement No. 128.
     
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS
     
     The results of the Viatical Settlements have been reported separately as
     discontinued operations in these consolidated statements of operations.  
     
                                        -21-
 <PAGE>
     
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
     
     In December 1996, the Company decided to discontinue the operations of the
     Viatical Settlements business.  The Company reduced its staff and expects
     that the remaining personnel will administer the orderly liquidation of
     its existing portfolio.  It is expected that this process will take
     several more years.  The Company established a $1,500,000 valuation
     reserve during 1996, and as adjusted during the year ended December 31,
     1997, against purchased policy costs which represents the estimated
     expected loss on holding the remaining policies to maturity in order to
     reflect management's estimate of the fair market value of the net assets. 
     During the fourth quarter ended December 31, 1997, the Company increased
     its original reserve by $350,000.  The amount of the reserve was
     determined based on projections of expected cash inflows from maturities
     and reinsurance claims, and cash outflows for debt service and operating
     costs during the portfolio administration process, which is expected to
     take several more years.
     
     NCBC has an insurance contract with NCB Insurance Ltd. ("NCB"), a
     wholly-owned subsidiary of NCBC, which automatically provides for
     payment of 90% of the face value of the policies purchased at a specified
     period of time after the expected maturity date, in accordance with the
     contract.  NCB, in turn, has reinsured this risk with several large,
     non-affiliated international reinsurance companies.  NCBC, through NCB, 
     maintains a participation in the residual 10%.  Reinsurance claims made
     and paid  during 1997 were approximately $3.7 million and $3.4 million,
     respectively.
     
     The anticipated reinsurance recoveries represent a substantial element of
     the cash flow projections used to determine the valuation reserve.  While
     management expects full collection of reinsurance recoveries, these
     recoveries from the sole reinsurance facility represent a significant
     concentration or risk.
     
     Summarized below are the operations of the Company's Viatical Settlements
     for the years ended December 31, 1997 and 1996.
<TABLE>
<CAPTION>
                                                 For the year ended     
                                                    December 31,        
                                                   1997         1996    
                                                ----------  ----------
     <S>                                        <C>         <C>    
     Revenue accrued and received               $5,203,919  $ 8,915,792
     Cost of insurance policies                 (4,203,385)  (7,781,846)
     Write-off against valuation rese              801,823      -     
     Increase in valuation reserve                (350,000)  (1,500,000)
     Earned discount                             1,452,357     (366,054)
     Interest expense                           (1,275,111)  (1,294,648)
     Earned discount after interest expense        177,246   (1,660,702)
     Selling and administrative expenses          (550,571)  (1,404,365)
     Depreciation and amortization                  (1,088)    (538,505)
                                                ----------  -----------
     Net loss                                   $ (374,413) $(3,603,572)
</TABLE>
     The components of the Viatical Settlements net assets from discontinued
     operations in the consolidated balance sheet as of December 31, 1997 are
     as follows:
<TABLE>
     <S>                                                    <C>               
     Purchased policy costs, less amortized
       policy costs of $18,051,081                          $ 4,200,382
     Valuation reserve                                       (1,048,177)
     Accrued policy revenues, less matured
       revenues valuation of $7,820,301                      13,715,134
     Revolving credit facility                               (9,511,468)
     Subordinated note payable                               (2,000,000)
     Reinsurance liability                                   (4,927,799)
     Other, net                                                (402,544)
                                                            -----------
                                                            $    25,528 
                                        -22-
</TABLE>
<PAGE> 
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
     
     Purchased Policy Costs - NCBC purchased life insurance policies from
     terminally ill individuals at a discount from the policy's net face value
     (amount paid by the insurance carrier upon the death of the insured).  The
     amount of the discount was determined by the life expectancy of the
     insured.  The majority of the policies purchased by NCBC were from
     insureds with an estimated remaining life, at the time of purchase, of
     less than 24 months.
     
     Purchased insurance policies are stated at amortized cost.  Costs
     capitalized include the purchase price paid to the insured (or "viator"),
     and certain direct and indirect costs related to the acquisition of such
     policies.  The insurance policies purchased by the Company have been
     issued by various credit worthy insurance carriers, none of which
     represent a significant concentration of risk.
     
     Accrued Policy Revenues - Accrued policy revenues represent the accrued
     portion of insurance proceeds receivable on purchased policies that have
     not yet matured and amounts due on matured policies not yet received.
     
     Reinsurance Liability - As policies migrate to reinsurance and funds are
     collected by the Company, a corresponding liability is recorded for the
     amount that may be returned to the reinsurer upon collection of the policy
     proceeds.
     
     According to the terms of the reinsurance agreement this liability may be
     reduced if the policy proceeds are not collected within a specified time
     frame.
     
     Revenue and Cost Recognition - Revenue related to expected insurance
     proceeds is recognized by accreting the face value of purchased policies
     ratably over the period from the policy purchase date to the estimated
     maturity date ("accrual period").  Costs related to the purchase of
     insurance policies are also recognized through the amortization of such
     capitalized costs ratably over the accrual period.  The difference between
     revenue and costs recognized each period represents NCBC's earned discount
     on purchased insurance policies.
     
     The length of the accrual period is determined by NCBC based upon its best
     estimate of the maturity date (i.e. date on which it will collect the face
     value of the policy).  Such life expectancy estimates were based upon a
     review of the insured's medical records by NCBC's panel of medical
     specialists, as adjusted for actual collection experience on policies that
     have matured to date.  Should the policy mature earlier than expected, the
     entire proceeds and costs will be recognized at that time, less any
     amounts previously accrued or amortized.
     
     NCBC periodically, but not more than annually, adjusts the accrual period
     based upon actual collection experience on matured policies.  Adjustments
     to such estimates, if required, are recognized in the period determined.
     
     Additionally, as noted above, the Company established a $1,500,000
     valuation reserve against purchased policy costs during 1996, and as
     adjusted during the year ended December 31, 1997, which reflects the
     estimated expected loss on holding the remaining policies to maturity. 
     During the fourth quarter ended December 31, 1997, the Company increased
     its original reserve by $350,000.
     
                                       -23-
<PAGE>
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
     
     At December 31, 1997 the face value of purchased insurance policies
     remaining in NCBC's portfolio was approximately $19.1 million. NCBC did
     not purchase any new policies during 1997.  During 1997 and 1996,
     approximately $1.4 million and $4.3 million face value of policies
     matured, respectively.
     
     Since the Viatical Settlement is discontinued, these amounts, as well as
     the interest expense and most selling and administrative expenses are
     written off against the valuation reserve.
     
     Revolving Credit Facility and Subordinated Note Payable
     
     Effective as of December 29, 1995, NCBC entered into a revolving credit
     facility ("Facility") with a credit limit of up to $15,000,000, which
     expires December 1998.  The closing of the transaction was January 8,
     1996.  The Facility is secured by all the assets of NCBC, including
     purchased insurance policies.  The Facility bears interest at 1/2% over
     the lender's prime rate or 2-7/8% over the 90 day London Inter-Bank Offer
     Rate ("Libor") at the option of NCBC (8 1/2% at December 31, 1997).
     
     Under the terms of the Facility, the lender initially loaned NCBC a
     specified percentage of the cost of the insurance policies purchased, and
     the insurance policies purchased by NCBC had to meet certain underwriting
     criteria as established in the Facility.  Repayment of outstanding
     principal is required as insurance proceeds from matured policies are
     collected. 
     
     NCBC negotiated a modification to the Facility, as of November 30, 1996,
     and can no longer use the Facility to purchase additional policies. 
     However, the Facility does provide for the drawdown of a specified
     percentage of the policy portfolio and the use of proceeds from maturity
     and reinsurance claims for debt service and certain operating expenses. 
     The balance outstanding at December 31, 1997 was approximately $9.5
     million.
     
     In addition, as of December 29, 1995, NCBC issued a $2,000,000
     subordinated note (the "Note") bearing interest at a rate of 14% with
     interest payable monthly in arrears.  The interest rate on the Note is
     consistent with a market rate at which a similar borrowing could be
     obtained by the Company.  Therefore, the fair value of the Note
     approximates the carrying value at December 31, 1997.  The note is due
     December 31, 1998, and is secured by NCBC's purchased insurance policies,
     subject to the security interest granted to the Facility lender.  The
     purchaser of the Note was granted a Warrant to acquire 12% of the common
     stock of NCBC (68 shares) at a price of $1.47 per share.  The holder of
     the Warrant can exercise a put of the stock to NCBC under certain
     conditions, which would guarantee the holder a minimum additional 4%
     interest on the outstanding balance.  In April 1997, the Warrant Agreement
     was amended to reflect an increased interest rate of 14 3/4% on the Note. 
     In exchange for agreeing to this increase in the interest rate, NCBC, or
     its asignees, shall have the option to repurchase the Warrant for the sum
     of $1.00.
     
     The proceeds from issuing the Note were received on January 8, 1996, and
     used to reduce the outstanding balance of the Facility.  The interest rate
     on the Note is consistent with a market rate at which a similar borrowing
     could be obtained by the Company.  Therefore, the fair value of the Note
     approximates the carrying value at December 31, 1997.
     
                                        -24-     
     <PAGE>
     NOTE 4 - NOTES RECEIVABLE
     
     Notes receivable consists of the following at December 31, 1997:
<TABLE>
     <S>                                                <C>
     Notes receivable from AMKO USA, Inc. (Note 7)      $2,199,685
     Interest receivable and other                          79,723
                                                        ----------
                                                         2,279,408
     Less reduction in value of notes
       receivable (Note 7)                              (2,129,408)
                                                        ----------
                                                        $  150,000
</TABLE>
     NOTE 5 - TRANSACTIONS WITH AFFILIATES
     
     For the two-year period ended December 31, 1997, the Company had
     agreements with NCM Management Ltd., a real estate company affiliated with
     Mr. Herbert J. Jaffe, a director of the Company, to provide management
     services to the Company.  The Company also provided compensation and
     benefits to Mr. Jaffe.  Costs incurred under these agreements amounted to
     approximately $97,000 and $146,500 for 1997 and 1996, respectively.
     
     Effective April 1, 1995, Messrs. Pinto and Shaw entered into new
     agreements with the Company to act in the same capacities through March
     31, 1997, with options to extend these agreements for one year if certain
     conditions are met. Effective April 1, 1997, Messrs. Pinto and Shaw agreed
     to work for the Company for a monthly fee of $7,500 at the discretion of
     the Board.  Mr. Shaw and Mr. Pinto continue in the same capacities
     on a month to month basis.
             
     Messrs. Pinto and Shaw were each compensated $98,942 and $100,290 for 1997
     and $125,000 each for 1996, pursuant to these agreements, plus $102,000
     and $91,000 during 1997 and 1996, respectively, was paid to them or their
     assigns for other costs, certain office expenses, including rent for the
     offices in New York, and related services incurred for Company business.
     
     The Company obtained cash from an officer and a member of the Board of the
     Company to continue operations, including advances totaling $500,000 on
     October 26, 1995 bearing interest at 12% per annum, payable in monthly
     installments of interest only until due on January 31, 1996 and on demand
     thereafter.  The advances were repaid on February 1, 1996.
     
     NOTE 6 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT
     
     On November 27, 1995, the Company elected to discontinue operations of the
     Real Estate Segment to concentrate its efforts on its viatical settlements
     business.  The following is a description of Company's disposal
     activities:
     
     Appletree Townhouses:  The Company's wholly-owned subsidiary, Georgia
     Properties, Inc. ("GPI"), received advances of $650,000 on December 21,
     1995 and an additional $500,000 on February 1, 1996 from the same
     individual that purchased The Mart Shopping Center, in exchange for an
     option to purchase Appletree Townhouses for $3,500,000, which was
     exercised on March 31, 1996.
     
     The sales price of $3,500,000 consisted of the aforementioned advances by
     the buyer totaling $1,150,000, assumption of the existing first deed loan
     by the buyer in the amount of $1,048,795 and a purchase money note for the
     balance equal to $1,301,205.  The purchase money note paid interest from
     the date of sale at 8% per annum until it was paid in December 1996.  In
     addition, the buyer was required to prepay $250,000 of this note on May 1,
     1996, which was paid in April 1996.  A gain of $327,735, related to the
     sale of this property and the liquidation of the Appletree Subsidiary, was
     reported in 1996.
     
                                         -25-
<PAGE>
     NOTE 6 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT (CONTINUED)
     
     Florida land:  The Company owned undeveloped land in Ft. Lauderdale,
     Florida which is zoned for commercial/industrial use.  This parcel was
     sold for $216,000 in August 1996, and the Company reported a gain of
     $190,489. 
     
     Colony Ridge Apartments:  Colony Ridge Apartments is an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consists of 23
     two-story buildings containing a total of 212 apartment units.
     On January 16, 1998, the Company entered into an agreement to sell
     the Colony Ridge Apartments for $3,650,000.  It is anticipated that
     the sale of this property will occur on or about April 30, 1998.  The
     purchase price is expected to be paid by the purchaser to the Company by
     delivery of immediately available and collectible funds.
     
     Redbird Trails Apartments and North Oak Apartments:  On June 13, 1994 and
     December 8, 1994, in accordance with previous agreements dated December
     30, 1993, the Company sold limited partnership interests in Redbird Trails
     Associates, L.P. ("Redbird") and Signature Midwest, L.P. ("Signature"),
     respectively, to two unrelated entities.  The Company retained a .9%
     interest in each partnership through two wholly-owned subsidiaries serving
     as the operating general partners.  Such operating general partners were
     obligated to provide loans of up to $150,000 and $75,000 to Redbird and
     Signature, respectively, to fund any operating deficits, as defined, for
     a three year period ending December 8, 1997.  No loans were made during
     1997.
     
     The Company retained a contingent interest in the cash flows of these
     partnerships.  It  is entitled to receive any cash available from property
     operations, to the extent it exceeds approximately $61,000 annually, and
     any refinancing proceeds up to a total of approximately $4.5 million, plus
     interest at 9.25% per annum on the outstanding balance of this amount. 
     Any proceeds of sale are to be allocated, first, 99.1% to the new partners
     until they have received 135% of their investment, less any prior
     distributions.  
     
     Any remaining proceeds from a sale are to be allocated to the Company up
     to $6 million, less any distributions from operations or refinancings as
     described above.  These commitments have not been reflected in the
     Company's financial statements since their ultimate realization cannot
     reasonably be determined.  In addition, at such time as any tax benefits
     have been utilized, the Company has the right to purchase the interests of
     the newly admitted partners for 135% of their contributed capital (minus
     prior cash payments).  Should the Company choose not to exercise such
     right to purchase the partners' interests, the newly admitted
     administrative general partner has the right to require the Company to
     sell all of the assets and liquidate the partnerships.  The Company did
     not fund any operating deficits and has received approximately $40,000 and
     $-0- excess cash flows during 1997 and 1996, respectively.
     
     The results of the Real Estate Segment have been reported separately as
     discontinued operations in these consolidated statements of operations.  
     
                                         -26-
<PAGE>
     NOTE 6 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT (CONTINUED)
     
     Summarized below are the operations of the Company's Real Estate Segment
     for the years ended December 31, 1997 and 1996.
<TABLE>
<CAPTION>
                                                For the year ended     
                                                     December 31,       
                                               1997              1996   
                                           ----------          ----------
<S>                                        <C>                 <C>
     Total revenues                        $1,083,537          $1,281,248
                                           ----------          ----------
     Costs and expenses:
       Operations and maintenance             598,103             656,097
       Property taxes and insurance            72,714             128,435
       Depreciation and amortization          294,708             366,421
       Net interest                           102,475             145,917
       Corporate administrative expenses       62,105             177,685
                                           ----------          ----------
     Total costs and expenses               1,130,105           1,474,555
                                           ----------          ----------   
     Net loss                              $  (46,568)         $ (193,307)
</TABLE>
     The components of the Real Estate Segment net assets from discontinued
     operations in the consolidated balance sheet as of December 31, 1997
     are as follows:
<TABLE>
     <S>                                   <C>
     Rental properties, less accumulated
        depreciation of $1,457,881         $2,905,725
     Mortgage note payable                 (1,115,599) 
     Accounts payable                        (109,120)
     Other, net                               114,024
                                           ----------
                                           $1,795,030
</TABLE> 
     NOTE 7 - DISCONTINUED OPERATION - INDUSTRIAL PRODUCTS SEGMENT
     
     The Industrial Products Segment was discontinued during 1995.  It
     consisted of the Company's wholly-owned subsidiary, Jensen Corporation
     ("Jensen"), which manufactured and distributed machinery used primarily by
     commercial laundries, large institutions and hotels as well as commercial
     compactor products for waste disposal.  On November 10, 1995, the Company
     sold 100% of the common stock of Jensen, located in Fort Lauderdale,
     Florida to AMKO USA, Inc. ("AMKO"), an affiliate of AMKO International
     B.V. which is based in The Netherlands, for $1,726,000.  The sale proceeds
     included cash of $415,000 and a promissory note receivable in the amount
     of $1,311,000 which is secured by Jensen's stock, accounts receivable and
     inventory.  The $1,311,000 note is guaranteed in its entirety by AMKO
     International B.V., and the sole shareholder of AMKO International B.V.
     guaranteed the first $585,000 of principal payments.
     
     AMKO also agreed to cause Jensen to pay to the Company a $765,000
     obligation in the form of a note,  which was loaned to Jensen, $500,000 of
     which was prior to the sale and $265,000 which was simultaneous with the
     sale, and an intercompany balance payable by Jensen to the Company of
     $337,650, which are secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes are guaranteed by AMKO
     International B.V.
     
     The $1,311,000 note as amended May 16, 1997 bears interest at 8.5% per
     annum and is payable in varying installments with the balance due in April
     1998, unless extended as indicated below.  The $765,000 note as amended 
     May 16, 1997 bears interest at 8.5% per annum and is payable in varying
     installments with the balance due in April 1998, unless extended as
     indicated below.  The $337,650 note as amended May 16, 1997 bears interest
     at 8.5% per annum and is payable in varying installments with the balance
     due in April 1998, unless extended as indicated below.
     
                                         -27-
<PAGE>
     NOTE 7 - DISCONTINUED OPERATION - INDUSTRIAL PRODUCTS SEGMENT (CONTINUED)
     
     The Company advanced $198,000 to AMKO during February and March 1997, of
     which $82,500 was repaid.  The balance was a Demand Note with interest at
     12% per annum.  This note was also guaranteed by AMKO International B.V. 
     As of December 31, 1997, this note was paid in full.
     
     In accordance with the May 16, 1997 amendment, the notes could be extended
     until April 1999, if AMKO prepays $500,000 on or before April 1, 1998.  If
     extended, the interest rate on all of the notes would increase to 12%. 
     The Company has charged AMKO a fee of $200,000 in conjunction with the
     latest amendment.  The fee was paid on May 16, 1997.
     
     The Company loaned Jensen an additional $200,035 in conjunction with the
     May 16, 1997 modification and an additional $36,000 in October 1997. 
     These notes bear interest at 8.5% and mature simultaneously with the other
     notes.
     
     As of October, 1997, Jensen stopped making payments as required by the
     terms of the May 16, 1997 amendment.  On November 11, 1997, Jensen filed
     for Chapter 7 bankruptcy.  On March 26, 1998, an auction sale was held,
     the proceeds of which were distributed by the trustee in bankruptcy. The
     Company received $56,686 in April 1998 as a result of the sale and
     anticipates receiving approximately an additional $95,000.  The remaining
     balance of the notes was written off.
         
     NOTE 8 - INCOME TAXES
     
     Effective January 1, 1993, the Company changed its method of accounting
     for income taxes from the deferred method to the asset and liability
     method required by FASB Statement No. 109, "Accounting for Income Taxes". 
     The implementation of Statement 109 did not have a material impact on the
     Company's financial statements.
     
     At December 31, 1997, the Company had federal net operating carryforwards
     of approximately $11.4 million.  The net operating losses will expire in
     the various years through December 31, 2012.  The Company had state net
     operating loss carryforwards of various amounts in the states in which it
     operates.
     
     At December 31, 1997, the Company had federal alternative minimum tax
     credits of approximately $13,000, which may be carried forward
     indefinitely.
     
     Federal and state laws impose limitations on the use of the net operating
     losses and tax credits following certain changes in ownership.  If such an
     ownership change occurs, the limitation could reduce the amount of the
     benefits of the net operating losses and credit that would be available to
     offset future taxable income starting in the year of the ownership change.
     
     A reconciliation of income tax computed at the federal statutory corporate
     tax rate to income tax expense on the net loss from continuing and
     discontinued operations is:
<TABLE>
<CAPTION>
                                                Year ended December 31,      
                                              1997                 1996       
                                      ------------------    ------------------
                                        Amount   Percent     Amount    Percent
                                      ---------  -------    --------   -------
     <S>                              <C>        <C>       <C>          <C>
     Income tax benefit at federal
       statutory rate                 $(484,554) (34.0)%   $(1,295,513) (34.0)%
     Valuation allowance                484,554   34.0       1,295,513   34.0
                                      ---------  -----     -----------  -----
     Other                                -         -           -         - 
                                      ---------  -----     -----------  -----
                                      $   -         -  %   $    -         -  %
</TABLE>

                                         -28-
<PAGE>
     NOTE 8 - INCOME TAXES (CONTINUED)
     
     Deferred income taxes reflect the net effects of temporary differences
     between the carrying amounts of assets and liabilities for financial
     reporting purposes and the amounts used for income tax purposes.
     
     The Company has a net deferred tax asset related to discontinued
     operations at December 31, 1997 and 1996 of approximately $3,403,593 and
     $3,609,000, respectively.  This amount consists primarily of net operating
     losses and reserves recorded for book and not yet deducted for tax.  A 
     valuation allowance has been established to reduce this net deferred asset
     to zero based upon the uncertainty regarding realization of such tax
     benefits given the Company's history of operating losses.
     
     NOTE 9 - SHAREHOLDERS' EQUITY
     
     No warrants were exercised during 1997, and 863,094 warrants, which
     represented all warrants outstanding, expired at December 31, 1997.  No
     warrants were issued during 1997.
     
     On July 29, 1994, NCBC entered into an agreement and acquired certain
     assets of CAPX Corporation ("CAPX"), including the rights to certain
     service marks, trade names and proprietary computer software.  The
     purchase price of the assets was $125,000 and the issuance of 33,333
     shares of the $.01 par value of NCMC's common stock, which was valued at
     $5.25 per share, adjusted to reflect the reverse stock split.  As part of
     the agreement, as amended in September 1996, NCMC was required by CAPX to
     repurchase all of its shares at $5.25 per share on or before January 1997.
     In conjunction with the September 1996 amendment NCBC paid CAPX $25,000
     and the balance of $150,000 was due January 1997.  The agreement was
     further modified in February 1997, at which time the Company paid $100,000
     and the agreement was terminated. 
     
     The Company continues to account for its stock-based warrants using the
     intrinsic value method in accordance with APB 25, "Accounting for Stock
     Issued to Employees" and its related interpretations.  Accordingly, no
     compensation expense has been recognized in the financial statements for
     employee stock arrangements.
     
     SFAS 123, "Accounting for Stock-Based Compensation", requires the
     disclosure of pro forma net income and earnings per share had the Company
     adopted the fair value method as of the beginning of fiscal 1996.  Under
     SFAS 123, the fair value of stock-based warrants to employees is
     calculated through the use of option pricing models, even though such
     models were developed to estimate the fair value of freely tradable, fully
     transferable options without vesting restrictions, which significantly
     differ from the Company's stock based warrants.  These models also require
     subjective assumptions, including future stock price volatility and
     expected time to exercise, which greatly affect the calculated values. 
     The Company has determined that the effect of SFAS 123 was immaterial for
     1997.
     
     NOTE 10 - COMMITMENTS AND CONTINGENCIES
     
     NCBC's lease was terminated during January 1997.  The landlord retained
     the $20,000 security deposit, and the Company paid an additional $20,000
     for a release from all obligations under the lease.
     
                                        -29-
<PAGE>
     NOTE 11 - LITIGATION
     
     The Company was a named defendant in a product liability lawsuit related
     to Jensen Corporation.  In August 1996 the lawsuit was settled at no cost
     to the Company. 
     
     NOTE 12 - INTERIM FINANCIAL DATA (UNAUDITED)
[CAPTION]
<TABLE>
                                    First       Second      Third    Fourth
                                   Quarter      Quarter    Quarter   Quarter
                                   -------      -------    -------   -------
     <S>                           <C>          <C>        <C>       <C>
     Calendar year ended
       December 31, 1997:
     Net income (loss) from
       continuing
       continuing operations     $(312,852)    $245,648  $(251,420) $(685,553)
     Net income (loss) from
       discontinued operations     (60,545)      14,532    (33,224)  (341,744)
     Net income (loss) per
       share from
       continuing operations:
         Basic and diluted            (.19)         .15       (.15)      (.41)
     Net income (loss) per
       share from
       discontinued operations:
         Basic and diluted            (.04)         .01       (.02)      (.20)
     Net income (loss) per share:
        Basic and diluted             (.22)         .16       (.17)      (.61)
     Denominator for basic and
        diluted income (loss)
        per share -
        weighted average shares  1,673,190    1,673,190  1,673,190   1,673,190
     
     Calendar year ended
       December 31, 1996:
     
     Net loss from continuing
       operations                 (163,597)     (91,454)   (77,426)   (199,199) 
     Net loss from discontinued
       operations                 (214,235)    (208,405)(1,002,613) (1,853,402)
     Net loss per share from
       continuing operations:
       Basic and diluted              (.10)        (.06)      (.05)      (.12)
     Net loss per share from
       discontinued operations:
       Basic and diluted              (.13)        (.12)      (.60)      (1.11)
     Net loss per share:
       Basic and diluted              (.23)        (.18)      (.65)      (1.23)
     Denominator for basic and
       diluted income (loss)
       per share - weighted
       average shares            1,673,190    1,673,190   1,673,190   1,673,190
</TABLE>
                                        -30-
<PAGE>
     NOTE 13 - EARNINGS PER SHARE
     
     The following table sets forth the computation of basic and diluted loss
     per share:
[CAPTION]
<TABLE>
                                                      Years Ended
                                                ---------------------------
                                                December 31,   December 31,
                                                   1997           1996    
                                                ------------   ------------
<S>                                             <C>            <C>
     Numerator:

       Net loss from continuing
          operations                             (1,004,177)     (531,676)
     
       Net loss from discontinued
          operations                               (420,981)   (3,278,655)
     
       Net loss from continuing operations -
         numerator for basic and diluted loss
         per share                                     (.60)         (.32)
     
       Net loss from discontinued operations -
         numerator for basic and diluted loss
         per share                                     (.25)         (1.96)
     
     Denominator:
     
       Denominator for basic and diluted loss
         per share - weighted average shares       1,673,190      1,673,190
       Loss per share:
         Basic and diluted                              (.85)         (2.28)
     
</TABLE>
     
In accordance with FASB No. 128, as a result of losses from continuing
operations, the inclusion of employee stock options were antidilutive and,
therefore, were not utilized in the computation of diluted earnings
per share.
     
                                        -31-
<PAGE>
     Item 8 - Changes In and Disagreements With Accountants on Accounting and
     Financial Disclosure
     
     Incorporated by reference from Form 8-K filed by the Company on February
     27, 1998.
                                   PART III
     
     Item 9 - Directors, Executive Officers, Promoters, and Control Persons;
     Compliance With Section 16(a) of the Exchange Act
     
     At April 6, 1998, there were four directors on the Company's Board of
     Directors, two of which are also executive officers of the Company.  The
     principal occupations and affiliations during the last five years of the
     directors and executive officers are described in the following table. 
     Each director's term of office expires at the next meeting of shareholders
     following his election and upon the election and qualification of his
     successor.  The executive officers serve at the pleasure of the Board of
     Directors.
     
     James Pinto              Chariman since 1989       NCMC
     Chairman of the Board    Director                  Biscayne Holdings,
                                                        Inc.
     Age 47                                             (apparel  
     Director since 1988                                manufacturer)
     
                              Director                  Anderson Group, Inc.
                                                        (electronics
                                                         company)
   
                              Director                  Empire of Carolina,
                                                        Inc. (toys)
     
     John C. Shaw             Chief Executive Officer   NCMC
     Director and             since 1994
     Chief Executive          Chief Financial Officer   NCMC  
     Officer                  since 1997
     Age 44                   Managing Director since   Resource Holdings, 
     Director since 1988      1983                      Ltd.
                                                        (investment  firm)
     
                              1989 to 1992 Co-Chairman  NCMC
     
                              Trustee                   Wedgestone Financial
                                                        (diversified lender
                                                         and truck parts
                                                         manufacturer)
     
     Herbert J. Jaffe         President 1988-1996        NCMC
     Director
     Age 63                   1983-95 Chairman           NCM Management Ltd.
     Director since 1987                                 (real estate 
                                                         management company
                                                         of NCMC)
     
     David Faulkner           1989-1996 Vice Chairman/   Memorex Telex Inc.
     Director                 CFO                        (computer industry)
     Age 57
     Director since July 1994
     
                                         -32-
<PAGE>
     Jeffrey Goldstein        Chief Financial Officer     NCMC
     Age 52                   September 1996-June 1997
                      
                               Chief Executive Officer     NCBC
                              June 1995-June 1997
     
                              Trustee since October 1992  Wedgestone 
                              President 1992-1997         Financial
                                                          (diversified lender
                                                          and
                                                          truck parts
                                                          manufacturer)
     Item 10 - Executive Compensation
     
     The following table sets forth information in respect to the compensation
     of the Chief Executive Officer and each of the other two most highly
     compensated executive officers of NCMC, whose compensation exceeded
     $70,000, for services in all capacities to the Corporation and its
     subsidiaries in 1997, 1996 and 1995.
<TABLE>
<CAPTION>
                                            Annual Compensation        
                                    ----------------------------------------
                                                                 Other Annual
                                    Year      Salary     Bonus  Compensation
                                    ----     -------     -----  ------------
<S>                                 <C>      <C>         <C>      <C>
     John C. Shaw                   1997     100,290        -        -      
     Chief Executive Officer        1996     125,000        -        -      
     Chief Financial Officer        1995     142,500        -        -      
     
     James J. Pinto                 1997      98,942        -        -      
     Chairman                       1996     125,000        -        -      
                                    1995     142,500        -        -      
     
     Jeffrey S. Goldstein (1)       1997       -            -        -      
     Chief Executive Officer        1996      80,000        -        -      
     NCBC                           1995      70,000        -        -      
     
     Herbert J. Jaffe (2)           1997      35,100        -        -      
     President and                  1996      86,664        -        -      
     Chief Operating Officer        1995     100,000        -        -      
                                        
     Ken M. Klein (3)               1995     150,000        -        -      
     President
     NCBC
</TABLE>
     
     (1) Mr. Goldstein was hired as Chief Executive Officer of NCBC in June
         1995 and as Chief Financial Officer of NCMC in September 1996.  Mr.
         Goldstein resigned in June 1997 from NCMC and NCBC to pursue other
         interests.
     (2) Mr. Jaffe resigned as president in October 1996. 
     (3) Mr. Klein left the Company in November 1996 to pursue other
         interests.
     
     No stock options were granted to the individuals named in the summary
     compensation table during 1997 and none of those individuals exercised a
     stock option during 1997.  All warrants expired on December 31, 1997.
     
                                         -33-
<PAGE>     
     Effective April 1, 1995, Messrs. Pinto and Shaw entered into new
     agreements with the Company to act in the same capacities through March
     31, 1997, with options to extend these agreements for one year if certain
     conditions are met. Effective April 1, 1997, Messrs. Pinto and Shaw agreed
     to work for the Company for a monthly fee of $7,500 at the discretion of
     the Board.  Mr. Shaw and Mr. Pinto continue in the same capacities on
     a month to month basis.
                  
     Messrs. Pinto and Shaw were each compensated $98,942 and $100,290 for 1997
     and $125,000 each for 1996, pursuant to these agreements, plus $102,000
     and $91,000 during 1997 and 1996, respectively, was paid to them or their
     assigns for other costs, certain office expenses, including rent for the
     offices in New York, and related services incurred for Company business. 
     
     The bylaws of the Company provide for indemnification by it of its
     officers and directors to the fullest extent permitted by law. In order to
     mitigate the cost of indemnification the Company has a policy for
     directors and officers insurance.
     
     During 1997, members of the Board of Directors, who are not either
     employees, officers or consultants of the Company, received quarterly
     compensation of $2,000 and $250 for each meeting attended.  Directors are
     entitled to be reimbursed for reasonable out of pocket expenses incurred
     with respect to meetings of the Board.
     
                                         -34-
<PAGE>
     Item 11 - Security Ownership of Certain Beneficial Owners and Management
     
     The following table sets forth certain information regarding the
     beneficial ownership of NCMC common stock as of April 6, 1998, by: (i)
     each person known by the Company to own beneficially more than 5% of the
     shares of NCMC common stock (ii) each person who is a director or
     executive officer of the Company; and (iii) all directors and executive
     officers of the Company as a group.
<TABLE>
<CAPTION>
                                             Beneficial Owner of   
                                             NCMC Common Stock
                                         ---------------------------         
                                         Number of        Percent of
                                          Shares            Class   
                                         --------         ----------
     <S>                                 <C>              <C>
     Name and address of NCMC
       Beneficial Owner (1)  
     -----------------------
     RHEC, L.P.                           388,681              23.2%
      10 East 53rd Street
      New York, NY 10022
     
     Herbert J. Jaffe                      11,512 (2)            *  
     
     James J. Pinto                       309,748               18.5%
     
     John C. Shaw                         483,570               28.9%
     
     David Faulkner                         -                     *  
     
     Jeffrey S. Goldstein                   -                     *  
     
     All executive officers and
      directors as a group
      (5 persons)                         804,830(3)            48.1%
</TABLE>
     --------------                   
     * less than 1%
     
                                         -35-
<PAGE>
     NOTES TO TABLE OF BENEFICIAL OWNERS AND MANAGEMENT
      
         
     1.  Unless otherwise indicated, each shareholder listed has the sole power
         to vote and direct the disposition of the shares of the Company
         beneficially owned by such shareholder.
     
     2.  Includes 11,379 shares owned by NCM Holdings, a general partnership of
         which Mr. Jaffe is a general partner, and 133 shares owned directly by
         Mr. Jaffe.
         
     3.  Includes 400,060 shares of NCMC common stock owned by NCM Holdings and
         RHEC, L.P.
         
                                         -36-
<PAGE>
     Item 12 - Certain Relationships and Related Transactions
     
     The Company and NCM Management Ltd. ("NCM") have agreed that NCM will
     provide real estate management services through December 1997 and provide
     personnel, equipment and facilities for the day to day management and
     operations of the Company including supervision of its remaining real
     estate properties.  As compensation for its services, NCM received a
     monthly management fee of 4% of revenues from Colony Ridge Apartments, and
     6% of revenues from Redbird Trails Apartments and North Oak Apartments
     from January 1, 1996 until August 31, 1996 and 4% for all properties
     thereafter.  Mr. Jaffe, a director of the Company, is NCM's Chairman of
     the Board.  He also owns approximately 33% of the outstanding capital
     stock of NCM and may be deemed to have a material interest in all payments
     to NCM. During 1997, NCM received an aggregate of approximately $97,000
     for management services rendered to the Company, included in which amount
     was Mr. Jaffe's compensation.
     
     The Company maintains an office in New York for use by its executive
     officers and consultants at the premises of Resource Holdings, Ltd.
     ("Resource").  The Company is not a party to a lease, but there is an
     understanding that NCMC will pay rent for the offices in New York until
     the end of 1998.  In addition, in accordance with its agreement with
     Resource, the Company has deposited with Resource's landlord the amount of
     $37,746 which will be returned, plus interest, to the Company on
     termination of Resource's lease.  The Company reimbursed approximately
     $100,000 to Resource for providing such office space and related services
     in 1997.  Mr. Shaw, a director of the Company, is a managing director and
     significant shareholder of Resource, and therefore may be deemed to have
     an interest in any payments to Resource.
      
     Stock Transaction Reports by Officers, Directors and 10% Stockholders
     
     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
     the Company's directors, executive officers and holders of more than 10%
     of the Company's common stock to file with the Commission initial reports
     of ownership and reports of changes in ownership of common stock and other
     equity securities of the Company.  Other than one late filing by Mr. Shaw,
     to the Company's knowledge, based solely on copies of reports furnished to
     the Company and information furnished by the reporting persons, each
     officer, director and 10% stockholder of the Company was in compliance
     with all reporting requirements under Section 16(a) for the year ended
     December 31, 1997.
     
                                         -37-
<PAGE>
                                        PART IV
     
     Item 13 - Exhibits and Reports on Form 8-K
     
     The following documents are filed as part of this report:
     
     (a)   Exhibits:
       3.1    Articles of Incorporation and By-Laws of National Capital
              Management Corporation (the "Company" or "NCMC")
              (incorporated by reference from Schedule 4 to the Prospectus
              included in the Registration Statement on Form S-4 of the
              Company  (No. 33 19149) filed on December 18, 1987 (the
              "Registration Statement")).
       3.2    Certificate of Amendment of Certificate of Incorporation of
              National Capital Management Corporation implementing one for
              three reverse stock split dated June 29, 1995. 
       3.3    Resolution of Board of Directors amending NCMC By-Laws dated
              April 12,1995 (incorporated by reference from Exhibit
              3(ii).1 of the Annual Report on Form 10-K of the Company
              filed on April 17, 1995).
       4.1    Form of Warrant for 2,400,000 shares of NCMC common stock
              (incorporated by reference from Exhibit 4.1 of the Annual
              Report on Form 10-K of the Company filed on March 29, 1988).
       4.2    Form of Warrant for 214,285 shares of NCMC common stock
              (incorporated by reference from Exhibit 4.2 of the Annual
              Report on Form 10-K of the Company filed on March 29, 1988).
      10.1    Registration Agreement dated February 25, 1988 between NCMC
              and certain other persons (incorporated by reference from
              Exhibit 10.3 of the Annual Report on Form 10-K of the
              Company filed on March 29, 1988).
      10.2    Employment Agreement dated September 1, 1990 between James
              J. Pinto and NCMC (incorporated by reference from Exhibit
              10.4 of the Annual Report on Form 10-K of the Company filed
              on April 1, 1991).
      10.3    Amended and Restated Employment Agreement dated as of June
              15, 1994 between James J. Pinto and NCMC (incorporated by
              reference from Exhibit 10.3 of the Annual Report on Form 10-K of
              the Company filed on April 17, 1995).
      10.4    Agreement dated as of April 1, 1995 between James J. Pinto
              and NCMC (incorporated by reference from Exhibit 10.4 of the
              Annual Rep ort on Form 10-K of the Company filed on April 17,
              1995).
      10.5    Consulting Agreement dated January 1, 1992 between John C.
              Shaw and NCMC (incorporated by reference from Exhibit 10.5
              of the Annual Report on Form 10-K of the Company filed on
              April 15, 1992).
      10.6    Amended and Restated Employment Agreement dated as of June
              15, 1994 between John C. Shaw and NCMC (incorporated by
              reference from Exhibit 10.6 of the Annual Report on Form 10-K of
              the Company filed on April 17, 1995).
      10.7    Agreement dated as of April 1, 1995 between John C. Shaw and
              NCMC (incorporated by reference from Exhibit 10.7 of the
              Annual Report on Form 10-K of the Company filed on April 17,
              1995).
     
                                        -38-
<PAGE>
      10.8    Second Amended and Restated Agreement of Limited Partnership
              of Redbird Trails Associates, L.P. by and among NCQ Redbird,
              Inc. National Corporate Tax Credit Fund and National
              Corporate Tax Credit, Inc. dated as of November 23, 1994
              (incorporated by reference from Exhibit 10.3 of the Annual
              Report on Form 10-K of the Company filed on April 17, 1995).
      10.9    Operating Deficit and Rental Achievement Agreement among
              Redbird Trails Associates, L.P., National Capital Management
              Corp., National Corporate Tax Credit Fund and National
              Corporate Tax Credit, Inc. dated as of June 6, 1994
              (incorporated by reference from Exhibit 10.7 of the
              Quarterly Report on Form 10-QSB of the Company filed on
              August 15, 1994).
     10.10    Second Amended and Restated Agreement of Limited Partnership
              of Signature Midwest, L.P. by and among NCQ North Oak, Inc.
              National Corporate Tax Credit Fund and National Corporate
              Tax Credit, Inc. dated as of November 23, 1994 (incorporated
              by reference from Exhibit 10.3 of the Annual Report on Form
              10-K of the Company filed on April 17, 1995).
     10.11    Operating Deficit and Rental Achievement Agreement among
              Signature Midwest, L.P., National Capital Management Corp.,
              National Corporate Tax Credit Fund and National Corporate
              Tax Credit, Inc. dated as of November 23, 1994 (incorporated
              by reference from Exhibit 10.3 of the Annual Report on Form
              10-K of the Company filed on April 17, 1995).
     10.12    Employment Agreement dated as of March 1, 1994 between NCMC
              and Kenneth M. Klein (incorporated by reference from Exhibit
              10.15 of the Annual Report on Form 10-KSB of the Company
              filed on March 31, 1994).
     10.13    Loan Agreement by and between Bank One and National Capital
              Benefits Corp. dated December 29, 1995.
     10.14    Security Agreement and Assignment by National Capital
              Benefits Corp. for the benefit of Bank One dated December
              28, 1995.
     10.15    Senior Subordinated Note and Warrant Purchase Agreement by
              and between National Capital Benefits Corp. and Banc One
              Capital Partners V, Ltd. dated December 29, 1995.
     10.16    Warrant Certificate from National Capital Benefits Corp. in
              favor of Banc One Capital Partners V, Ltd. dated December
              29, 1995.
     10.17    Property Purchase Agreement by and between National Capital
              Management Corporation and William R. Dixon, Jr. for sale of
              The Mart Shopping Center dated July 26, 1995.
     10.18    Option Agreement by and between Georgia Properties, Inc. and
              William R. Dixon, Jr. for the sale of Appletree Townhouses
              dated December 21, 1995.
     10.19    Promissory Note from William R. Dixon, Jr. in favor of
              Georgia Properties, Inc. dated March 29, 1996.
     10.20    Agreement of Purchase and Sale of Stock among AMKO USA,
              Inc., National Capital Management Corporation and Jensen
              Corporation dated October 30, 1995.
     10.21    Promissory Note from AMKO USA, Inc. in favor of National
              Capital Management Corporation for $1,311,000 dated November
              1995.
     10.22    Guaranty of Note from AMKO International B.V. in favor of
              National Capital Management Corporation dated November 1995
              related to Promissory Note in amount of $1,311,000.
     10.23    Promissory Note from Jensen Corporation in favor of National
              Capital Management Corporation for $765,000 dated November
              1995.
                      
                                        -39-
<PAGE>
       
     10.24    Promissory Note from Jensen Corporation in favor of National
              Capital Management Corporation for $337,650 dated November
              1995.
     10.25    Guaranty of Note from AMKO International B.V. in favor of
              National Capital Management Corporation dated November 1995
              related to Promissory Note in amount of $765,000.
     10.26    Guaranty of Note from Jan Oerlemans in favor of National
              Capital Management Corporation dated November 1995 related
              to Promissory Note in amount of $1,311,000.
     10.27    Letter of revisions of the Asset Purchase Agreement between
              National Capital Benefits Corp. and AutoLend Group, Inc.
              dated October 6, 1995.
     10.28    Promissory Note between National Capital Management
              Corporation and Fifth Avenue Partners dated October 26,
              1995.
     10.29    Subsidiaries of NCMC (including controlled partnerships).
     
     (b)   Reports on Form 8-K.
     
     The Company filed a Form 8-K dated July 3, 1997 relating to the
     resignation of Jeffrey S. Goldstein, the Company's former Chief Financial
     Officer.
     
     The Company filed a Form 8-K dated February 27, 1998 with the commission
     stating the Company's change in certifying accountant retained to handle
     the audit for the year ended December 31, 1997.
     
                                          -40-
<PAGE>
                                     SIGNATURES
     
     Pursuant to the requirements of section 13 or 15(d) 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.
     
     
                       NATIONAL CAPITAL MANAGEMENT CORPORATION
                             
                        
     
                   By:                             /s/ JOHN C. SHAW
                        John C. Shaw
                        Chief Executive Officer, 
                        Principal Financial Officer
     
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
     report has been signed below by the following persons on behalf of the
     registrant and in the capacities and on the dates indicated:
     
     
                   By:                           /s/ HERBERT J. JAFFE
                       Herbert J. Jaffe, Director
                       April 6, 1998
     
     
                   By:                             /s/ JAMES PINTO  
                       James Pinto, Director
                       April 6, 1998
     
     
                   By:                              /s/ JOHN C. SHAW
                       John C. Shaw, Director
                       April 6, 1998
     
     
                   By:                             /s/ DAVID FAULKNER
                       David Faulkner, Director
                       April 6, 1998
     
                                         -41-