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, 1998
 
                              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 $207,820
     
     The aggregate market value of voting stock held by nonaffiliates of the
     Registrant is approximately $836,595 as of March 5, 1999             
      
                                   1,673,190
     (Number of shares of common stock outstanding as of March 30, 1999)

       Total number of pages in this document is: 42
              The exhibit index is on page 39

<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 Segment
     
     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, which originally expired December 31, 1998 (see below),
     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, 1998 was approximately $3.7 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, 1998.  The note was due
     December 31, 1998 and is secured by NCBC's purchased insurance policies,
     subject to the security interest granted to the Facility lender (see
     below).  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.
     
     As of December 31, 1998, the Company entered into a commitment to extend 
     the Facility and the Note for a two year period ending December 31, 2000.
     NCBC paid a $50,000 commitment fee in relation thereto.  No formal 
     extension has been executed as of March 30, 1999, and the bank reserves the
     right to not extend the Facilty due to lack of performance by NCBC.  The
     Company anticipates the execution of documents shortly, although there can 
     be no assurance that the execution will take place.  

     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, 1998, the face value of NCBC's purchased insurance policies
     remaining in its portfolio was approximately $17.4 million.  During 1998,
     approximately $1.8 million of policies matured.
     
     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 Settlements Segment
     
     The viatical settlements segment 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,
     1998, 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).

                                      -4-
<PAGE>     
     Management has reevaluated the expected costs of operations and has
     accordingly increased the reserve by $522,000 as of December 31, 1998.
     The amount is reflected as a charge to continuing operations on the 
     Consolidated Statements of Operations.

     In accordance with the discontinuance of this business segment, NCBC has
     restructured its organization and reduced its office staff to one person. 
     
     Discontinued Operation - Real Estate Segment
     In November 1995, the Company elected to discontinue operations of the
     Real Estate Segment to concentrate its efforts on its Viatical Settlements
     Segment. The following is a description of the Company's recent disposal
     activities:
     
     Colony Ridge Apartments:  Colony Ridge Apartments was an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consisted of 23 two-
     story buildings containing a total of 212 apartment units.  On May 6,
     1998, the Company sold the Colony Ridge Apartments for $3,650,000.  The
     Company received net proceeds of approximately $2,500,000.  The difference
     between the sales price and the net proceeds received is due to the
     repayment of the mortgage, state taxes, and miscellaneous expenses.  The
     Company reported a net gain of $695,270.
     
     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 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 not received any
     excess cash flows during 1998 and 1997. The Company is entitled to a 2%
     management fee from the partnerships.  In 1998 and 1997 the Company
     received management fees of approximately $44,000 and $40,000,
     respectively.
     
                                      -5-
<PAGE>
     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 was secured by Jensens stock, accounts
     receivable and inventory.  The $1,311,000 note was guaranteed in its
     entirety by AMKO International B.V., and the sole shareholder of AMKO
     International B.V. guaranteed, as amended May 16, 1997, $500,000 of
     payments of all notes.
     
     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 were secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes were guaranteed by AMKO
     International B.V.
     
     The $1,311,000 note as amended May 16, 1997 bore interest at 8.5% per
     annum and was payable in varying installments with the balance due in
     April 1998, unless extended as indicated below.  The $765,000 note was
     amended May 16, 1997, bore interest at 8.5% per annum and was payable in
     varying installments with the balance due in April 1998, unless extended
     as indicated below.  The $337,650 note was amended May 16, 1997 bore
     interest at 8.5% per annum and was 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 which bore
     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 prepaid $500,000 on or before April 1, 1998.  If
     extended, the interest rate on all of the notes would increase to 12%. 
     The Company charged AMKO a fee of $200,000 in conjunction with the
     amendment.  The fee was paid on May 16, 1997.
     
     The Company loaned Jensen an additional $200,000 in conjunction with the
     May 16, 1997 modification, and an additional $36,000 in October 1997. 
     These notes bore 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 are either to be distributed pursuant to an
     evidentiary hearing or a prior court approved agreement with the trustee.

     In March 1999, a settlement was reached with the trustee, in which a
     payment of $75,000 would be made to NCMC, as a result of the sale of
     Jensen's inventory, in exchange for which NCMC would assert no further
     claims against the debtor.  Such final settlement is subject to court
     approval.
 
     As a result of the bankruptcy filing, the Company reduced the value of its
     notes receivable to $150,000 as of December 31, 1997.  The Company has
     received approximately $73,000 during 1998 and anticipates receipt of an 
     additional $75,000, (as discussed above), as a result of its efforts.  The
     remaining balance has been written off as of December 31, 1998.

     AMKO International filed for and was discharged from the bankruptcy in the
     Netherlands between January and April 1998.

                                      -6-
<PAGE>  

     The Company has pursued a remedy in judicial proceedings in the
     Netherlands with a procedural result that would allow the Company to
     pursue AMKO International in the United States courts.  As of February
     1999, the Company released both AMKO International and its successor in
     interest from any claims.  In addition, the Company and FNM Bank (a 
     Netherlands bank) agreed to settle all lender liability claims.  As a 
     result of the foregoing, the Company is free to pursue the former owner of
     AMKO International on his personal guarantee, and will allocate any 
     proceeds received on the basis of 75% to the Company and 25% to FNM 
     Holding, N.V., after all expenses have been paid.  The Company cannot 
     predict the outcome of this litigation.
     
     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 1999. 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.
     
     Item 3 - Legal Proceedings
     
     Not applicable.
     
     Item 4 - Submission of Matters to a Vote of Security Holders
     
     The Company anticipates holding the 1998 annual meeting during 1999.
     
                                      -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, 1998 and 1997, are
         as follows:
<TABLE>
<CAPTION)
                                                              Bid Price    
                                                          High        Low
         <S>                                             <C>         <C>
         For the Quarter Ended                         
         December 31, 1998............................   .5000       .3000
         September 30, 1998...........................   .5000       .3900
         June 30, 1998................................   .6250       .4375
         March 31, 1998...............................   .7500       .5625
         December 31, 1997............................   .6313       .4625
         September 30, 1997...........................   .6563       .4063
         June 30, 1997 ...............................   .5625       .3875
         March 31, 1997...............................   .5625       .3438
</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 March 5, 1999 was $.50.
     
         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 March 8, 1999,the approximate number of holders of record of shares
         of common stock of the Company was 1,623.
     
      c. Dividends on Common Stock
     
        The Company has not declared any dividends on its common stock during
        the two year period ended December 31, 1998, 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 settlements
      segment until it discontinued this operation at the end of the year.

                                      -8-
<PAGE>
     
     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.
     
     FINANCIAL CONDITION AND LIQUIDITY
     
     The Company's cash increased from $56,035 at December 31, 1997, to
     $2,058,674 at December 31, 1998, principally as a result of the sale of
     the Colony Ridge Apartments, the recovery of approximately $73,000 of
     receivables from AMKO, and proceeds of approximately $53,000 from a
     lawsuit settlement.
     
     Other than in its Viatical Settlements Segment, the Company does not have
     any existing general credit facilities to fund its ongoing working capital
     requirements.  These lending facilities were amended in 1997 in light of
     management's decision to discontinue the Viatical Settlements Segment and
     liquidate the portfolio.
     
     VIATICAL SETTLEMENTS SEGMENT
     
     Effective as of December 29, 1995, NCBC entered into a revolving credit
     facility ("Facility") with a credit limit of up to $15 million, which
     originally expired December 31, 1998 (see below).  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, 1998 and 1997). 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, 1998.  The note was due 
     December 31, 1998, and is secured by NCBC's purchased insurance
     policies, subject to the security interest granted to the Facility
     lender (see below).  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>
    
     As of December 31, 1998, the Company entered into a commitment to extend 
     the Facility and the Note for a two year period ending December 31, 2000.
     NCBC paid a $50,000 commitment fee in relation thereto.  No formal 
     extension has been executed as of March 30, 1999, and the bank reserves the
     right to not extend the Facility due to lack of performance by NCBC.  The
     Company anticipates the execution of documents shortly, although there can
     be no assurance that the execution will take place.

     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 settlements segment was discontinued in December 1996.
     
     REAL ESTATE SEGMENT
     
     In November 1995, the Company elected to discontinue operations of the
     Real Estate Segment to concentrate its efforts on its viatical settlements
     segment.  The following is a description of the Company's recent disposal
     activities:
     
     Colony Ridge Apartments:  Colony Ridge Apartments was an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consisted of 23 two-
     story buildings containing a total of 212 apartment units.  On May 16,
     1998, the Company sold the Colony Ridge Apartments for $3,650,000.  The
     Company received net proceeds of approximately $2,500,000.  The difference
     between the sales price and the net proceeds received is due to the
     repayment of the mortgage, state taxes, and miscellaneous expenses.  The
     Company reported a net gain of $695,270.
     
     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 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

                                      -10-
<PAGE>

     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 not received any
     excess cash flows during 1998 and 1997.  The Company is entitled to a 2%
     management fee from the partnerships.  In 1998 and 1997 the Company
     received management fees of approximately $44,000 and $40,000,
     respectively.
     
     INDUSTRIAL PRODUCTS SEGMENT
     
     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 was secured by Jensen's stock, accounts receivable and
     inventory.  The $1,311,000 note was guaranteed in its entirety by AMKO
     International B.V., and the sole shareholder of AMKO International B.V.
     guaranteed, as amended May 16, 1997, the first $500,000 of payments of all
     notes.
     
     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 were secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes were guaranteed by AMKO
     International B.V.
     
     The $1,311,000 note, as amended May 16, 1997, bore interest at 8.5% per
     annum and was 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, bore interest at 8.5% per annum and was payable in
     varying installments with the balance due in April 1998, unless extended
     as indicated below.  The $337,650 note, was amended May 16, 1997, bore
     interest at 8.5% per annum, and was 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 which bore
     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 prepaid $500,000 on or before April 1, 1998.  If
     extended, the interest rate on all of the notes would increase to 12%. 
     The Company charged AMKO a fee of $200,000 in conjunction with the 
     amendment.  The fee was paid on May 16, 1997.
     
     The Company loaned Jensen an additional $200,000 in conjunction with the
     May 16, 1997 modification, and an additional $36,000 in October 1997. 
     These notes bore interest at 8.5% and mature simultaneously with the other
     notes.

                                      -11-
<PAGE>     
     
     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 are either to be distributed pursuant to an
     evidentiary hearing or a prior court approved agreement with the trustee. 

     In March 1999, a settlement was reached with the trustee, in which a
     payment of $75,000 would be made to NCMC, as a result of the sale of
     Jensen's inventory, in exchange for which NCMC would assert no further
     claims against the debtor.  Such final settlement is subject to court
     approval.

     As a result of the bankruptcy filing, the Company reduced the value of its 
     notes receivable to $150,000 as of December 31, 1997.  The Company has
     received approximately $73,000 during 1998 and anticipates receipt of an
     additional $75,000, (as discussed above), as a result of its efforts. 
     The remaining balance has been written off as of December 31, 1998.

     AMKO International filed for and was discharged from the bankruptcy in the
     Netherlands between January and April 1998.
     
     The Company has pursued a remedy in judicial proceedings in the
     Netherlands with a procedural result that would allow the Company
     to pursue AMKO International in the United States courts.  As of February
     1999, the Company released both AMKO International and its successor
     in interest from any claims.  In addition, the Company and FNM Bank
     (a Netherlands bank), agreed to settle all lender liability claims.  As a
     result of the foregoing, the Company is free to pursue the former owner
     of AMKO International on his personal guarantee, and will allocate any 
     proceeds received on the basis of 75% to the Company and 25% to FNM 
     Holding, N.V., after all expenses have been paid.  The Company cannot 
     predict the outcome of this litigation.
              
     RESULTS OF OPERATIONS FOR 1998 COMPARED TO 1997
     
     National Capital Benefits Corp. ("NCBC") commenced operations on March 17,
     1994.  During 1998 and 1997, approximately $1.8 million and $1.4 million
     respectively, of policies matured.
     
     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, 1998, 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).  As of December 31, 1998, the Company increased
     the reserve by $522,000, as a result of management's reevaluation of the
     expected costs of operations.  The amount is reflected as a charge to
     continuing operations on the Consolidated Statements of Operations.
     
                                      -12-
<PAGE>     
     
     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 settlements segment in
     December  1996.  As a result, NCBC 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 $17.4 million of insurance policies.  Management
     estimates that the administration of these policies will take several more
     years.
     
     Year 2000

     The Year 2000 problem is the result of computer programs being written with
     two digits instead of four digits to define the applicable year.  The
     Company believes based upon its internal reviews and other factors, that
     future external and internal costs to be incurred relating to the
     modifications of internal-use software for the Year 2000 will not have a
     material adverse effect on the Company's results of operations or
     financial position.  The Company, due to the fact that it is in the
     process of orderly liquidating its discontinued operations, only makes
     minimal use of computers in operating its business.  In addition, the
     Company believes that its internal computer systems, facilitites and
     equipment will be upgraded, where required, for Year 2000.  However, 
     there is no assurance that all of the upgrades will be completed in time
     or function as intended.  In such an event, The Company may experience
     significant disruptions, the cost of which the Company is unable to
     estimate at this time.  The Company, also, cannot assure that its
     failure or failure of third parties to address adequately Year 2000
     issues will not have a material effect on the Company.

                                      -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, 1998                16
       Consolidated Statements of Operations for the years ended
          December 31, 1998 and 1997                                  17
       Consolidated Statements of Shareholders' Equity for the
          years ended December 31, 1998 and 1997                      18
       Consolidated Statements of Cash Flows for the years ended
          December 31, 1998 and 1997                                  19
       Notes to Consolidated Financial Statements                  20-32
     
     
                                      -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,
     1998, and the related consolidated statements of operations, shareholders'
     equity and cash flows for the years ended December 31, 1998 and 1997. 
     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.
     
     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, 1998,
     and the consolidated results of its operations and its cash flows for the
     years ended December 31, 1998 and 1997, in conformity with generally
     accepted accounting principles.
     
     
     /s/ JANOVER RUBINROIT, LLC
     
     Garden City, New York
     March 30, 1999                 
     
                                      -15-
<PAGE>


                 NATIONAL CAPITAL MANAGEMENT CORPORATION
                       CONSOLIDATED BALANCE SHEET
                            DECEMBER 31, 1998
<TABLE>


      ASSETS                                                                
<S>                                                               <C> 
Cash and cash equivalents                                         $ 2,058,674
Notes receivable                                                       75,000
Accounts receivable                                                     3,711
Property and equipment, less accumulated depreciation
 of $80,718                                                            24,113
Net assets of discontinued operations -
 Real Estate Segment (Note 5)                                          11,426
Other assets                                                           39,960

Total assets                                                      $ 2,212,884
</TABLE>
     LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S>                                                               <C>

Net liabilities of discounted operations -
  Viatical Settlements Segment (Note 3)                           $   493,015
Accrued liabilities                                                    71,007

Total current liabilites                                              564,022
      
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                                              (21,318,776)
 Treasury stock, 139,866 shares                                      (174,217)

Total shareholders' equity                                          1,648,862

Total liabilities and shareholders' equity                        $ 2,212,884


     The accompanying notes are an integral part of this statement.

                                      -16-
</TABLE>
<PAGE>

                 NATIONAL CAPITAL MANAGEMENT CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION
                                                      Years ended December 31, 
                                                          1998        1997   
<S>                                                     <C>        <C>
Income (expense):
 Other income                                           $207,820   $   584,876
 Corporate administrative expense                       (643,446)   (1,589,053)
 Change in accounting estimate - increase
  in estimated cost on disposal of Viatical
  Settlements Segment (Note 3)                          (522,000)        -

Net loss from continuing operations before tax          (957,626)   (1,004,177)

Provision for income taxes                                  -            -     

Net loss from continuing operations after tax           (957,626)   (1,004,177)

Discontinued operations:
 Net operating loss:
    Viatical Settlements Segment (Note 3)                (58,039)     (374,413)
    Real Estate Segment (Note 5)                         (23,135)      (46,568)
 Net gain on disposal of Real Estate
    Segment, net of taxes (Note 5)                       695,270         -     

Net income (loss) from discontinued operations           614,096      (420,981)

Net loss                                             $  (343,530)  $(1,425,158)

Net loss from continuing operations
 per share                                                 $(.57)        $(.60)

Net income (loss) from discontinued operations
 per share                                                   .37          (.25)

Net loss per share                                         $(.20)        $(.85)

Average number of shares outstanding                   1,673,190     1,673,190
</TABLE>

     The accompanying notes are an integral part of this statement.

                                      -17-
<PAGE>

                 NATIONAL CAPITAL MANAGEMENT CORPORATION
             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 YEARS ENDED DECEMBER 31, 1998 and 1997
<TABLE>
<CAPTION>


                               Additional                           Total     
                      Common    Paid-in    Accumulated  Treasury  Shareholders' 
                      Stock     Capital     Deficit      Stock      Equity     
<S>                  <C>      <C>         <C>           <C>        <C> 
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)

Balances at
 December 31, 1997    16,732    3,125,123  (20,975,246)  (174,217)  1,992,392

Net loss                -          -          (343,530)      -       (343,530) 

Balances at
 December 31, 1998   $16,732  $23,125,123 $(21,318,776) $(174,217) $1,648,862
</TABLE>

     The accompanying notes are an integral part of this statement.
                                      -18-
<PAGE>
                 NATIONAL CAPITAL MANAGEMENT CORPORATION
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                      Years Ended December 31,
                                                          1998       1997   
<S>                                                    <C>        <C>
Cash flows from operating activities:
 Net loss                                              $(343,530) $(1,425,158)
 Adjustments to reconcile net loss to
   net cash used in operating activities:
     Depreciation and amortization                          8,760       8,760
     Gain on sale of real estate segment                 (695,270)     -     
     Reduction in value of Viatical Settlements
       Segment                                            522,000      -
     Reduction in value of notes receivable                 2,005     979,408
     Changes in operating assets and liabilities:
       Increase in accounts receivable                     (3,711)    (61,483)
       Decrease in accrued liabilities                    (32,292)   (165,070)
       Increase in other assets                            (3,736)     -     
   
         Net cash used in operating activities           (545,774)   (663,543)

Change in net assets of discontinued operations           (23,683)    304,267

Cash flows from investing activities:
 Additional loan to Jensen                                   -       (236,035)
 Collections on notes receivable                           72,995      -     
 Proceeds from sale of real estate segment              2,499,101      -     

         Net cash provided by (used in) financing
            activities                                  2,572,096    (236,035)
         
Increase (decrease) in cash and cash equivalents        2,002,639    (595,311)

Cash and cash equivalents at beginning of period           56,035     651,346

Cash and cash equivalents at end of period             $2,058,674  $   56,035
</TABLE>

     The accompanying notes are an integral part of this statement.
                                      -19-
<PAGE>
                NATIONAL CAPITAL MANAGEMENT CORPORATION
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1998
     
     
     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 Settlements 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 Settlements Segment was discontinued
     in 1996.  (Notes 3, 5 and 6).   
     
     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, and the realizability of net
     deferred tax assets.  See Notes 3 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
     during 1996, as adjusted during the year ended December 31, 1998, 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, 1998.  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).
     
     Management has reevaluated the expected costs of operations and has
     accordingly increased the reserve by $522,000 as of December 31, 1998.
     The amount is reflected as a charge to continuing operations on the
     Consolidated Statements of Operations.

     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 $1,022,000 and $1,087,000, for
     1998 and 1997, respectively.  The Company paid approximately $55,000 for
     state income taxes as a result of the gain on the sale of the real estate
     segment during 1998, and no material amounts for income taxes during 1997.
     
     In April 1998, the Company sold its remaining real estate property in
     which the Company received cash of approximately $2,500,000, and
     recognized a net gain of $695,270 in connection with the sale.
     
     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 basic earnings per share but included
     in the computation of diluted earnings per share.  All earnings per share
     amounts have been restated so as to comply with Statement No. 128.
     
                                      -21-
<PAGE>     
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS SEGMENT
     
     The results of the Viatical Settlements Segment have been reported
     separately as discontinued operations in these consolidated statements of
     operations.  
     
     In December 1996, the Company decided to discontinue the operations of the
     Viatical Settlements Segment.  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,
     1998, 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.  Management has reevaluated the expected costs
     of operations and has accordingly increased the reserve by $522,000 as
     of December 31, 1998.  The amount is reflected as a charge to continuing
     operations on the Consolidated Statements of Operations.
     
     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%.
     
     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
     Segment for the years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
                                                       For the year ended     
                                                           December 31,        
                                                         1998        1997    
     <S>                                               <C>         <C>
     Revenue accrued and received                      $3,274,069  $5,203,919
     Cost of insurance policies                        (2,617,045) (4,203,385)
     Write-off against valuation reserve                  903,278     801,823
     Increase in valuation reserve                         -         (350,000)
     
     Earned discount                                    1,560,302   1,452,357
     Interest expense                                  (1,061,743) (1,275,111)
     
     Earned discount after interest expense               498,559     177,246
     Selling and administrative expenses                 (555,510)   (550,571)
     Depreciation and amortization                         (1,088)     (1,088)
     
     Net loss                                          $  (58,039) $ (374,413)
</TABLE>
                                      -22-
<PAGE>
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS SEGMENT
     (CONTINUED)
     
     The components of the Viatical Settlements Segment net liabilities from
     discontinued operations in the consolidated balance sheet as of December
     31, 1998 are as follows:
<TABLE>
     <S>                                                           <C>
     Purchased policy costs, less amortized
      policy costs of $20,668,126                                  $1,583,337
     Valuation reserve                                               (666,899)
     Accrued policy revenues, less matured
       revenues valuation of $9,586,769                            15,266,332
     Revolving credit facility                                     (3,660,216)
     Subordinated note payable                                     (2,000,000)
     Reinsurance liability                                        (10,522,723)
     Other, net                                                      (492,846)
     
                                                                  $  (493,015)
</TABLE>
     
     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.
     
                                      -23-
<PAGE>
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS SEGMENT
     (CONTINUED)
     
     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, 1998, 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.  As of December 31, 1998, the Company
     increased the reserve by $522,000 as a result of management's reevaluation
     of the expected costs of operations.  The amount is reflected as a charge
     to continuing operations on the Consolidated Statements of Operations.
     
     At December 31, 1998 the face value of purchased insurance policies
     remaining in NCBC's portfolio was approximately $17.4 million. NCBC did
     not purchase any new policies during 1998.  During 1998 and 1997,
     approximately $1.8 million and $1.4 million face value of policies
     matured, respectively.
     
     Since the Viatical Settlement Segment 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
     originally expired December 31, 1998 (see below). 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
     (5.213% at December 31, 1998).
     
     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, 1998 was approximately $3.7
     million.

                                      -24-
<PAGE>
     
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS SEGMENT
     (CONTINUED)
     
     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, 1998.  The note was
     due December 31, 1998 and is secured by NCBC's purchased insurance
     policies, subject to the security interest granted to the Facility
     lender (see below).  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 assignees, shall have the
     option to repurchase the Warrant for the sum of $1.00.
     
     As of December 31, 1998, the Company entered into a commitment to extend 
     the Facility and the Note for a two year period ending December 31, 2000.
     NCBC paid a $50,000 commitment fee in relation thereto.  No formal 
     extension has been executed as of March 30, 1999, and the bank reserves 
     the right to not extend the Facility due to lack of performance by NCBC.
     The Company anticipates the execution of documents shortly, although there
     can be no assurance that the execution will take place.

     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, 1998.
     
     NOTE 4 - 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 for 1997.
     
     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.
              
                                      -25-
<PAGE>
     
     NOTE 4 - TRANSACTIONS WITH AFFILIATES (CONTINUED)
     
     Messrs. Pinto and Shaw were each compensated $90,000 for 1998, and $98,942
     and $100,290, respectively, for 1997, pursuant to these agreements, plus
     $120,000 and $102,000 during 1998 and 1997, 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.
     
     NOTE 5 - 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
     Segment.  The following is a description of the Company's disposal
     activities:
     
     Colony Ridge Apartments:  Colony Ridge Apartments was an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consisted of 23 two-
     story buildings containing a total of 212 apartment units.  On May 6,
     1998, the Company sold the Colony Ridge Apartments for $3,650,000.  The
     Company received net proceeds of approximately $2,500,000.  The difference
     between the sales price and the net proceeds received is due to the
     repayment of the mortgage, state taxes, and miscellaneous expenses.  The
     Company reported a net gain of $695,270.
     
     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
                                      -26-
<PAGE>     
     
     NOTE 5 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT (CONTINUED)
     
     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 not received any excess cash flows
     during 1998 and 1997.  The Company is entitled to a 2% management fee from
     the partnerships.  In 1998 and 1997 the Company received management fees
     of approximately $44,000 and $40,000, respectively.
     
     The results of the Real Estate Segment have been reported separately as
     discontinued operations in these consolidated statements of operations.  
     
     Summarized below are the operations of the Company's Real Estate Segment
     for the years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
                                                   For the year ended    
                                                       December 31,       
                                                    1998       1997   
     <S>                                           <C>       <C>    
     Total revenues                                $393,727  $1,083,537
     Costs and expenses:
      Operations and maintenance                    213,140     598,103
      Property taxes and insurance                   18,782      72,714
      Depreciation and amortization                 100,000     294,708
      Net interest                                   41,095     102,475
      Prepayment penalty                             10,717      -    
      Corporate administrative expenses              33,128      62,105
     
     Total costs and expenses                       416,862   1,130,105
     
     Net loss                                      $(23,135) $  (46,568)
</TABLE>
     
     The components of the Real Estate Segment net assets from discontinued
     operations in the consolidated balance sheet as of December 31, 1998
     are as follows:
     
             Cash                $11,426
     
     NOTE 6 - 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 was secured by Jensen's stock, accounts receivable and
     inventory.  The $1,311,000 note was guaranteed in its entirety by AMKO
     International B.V., and the sole shareholder of AMKO International B.V.
     guaranteed, as amended May 16, 1997, the first $500,000 of payments of all
     notes.

                                      -27-
<PAGE>      
     NOTE 6 - DISCONTINUED OPERATION - INDUSTRIAL PRODUCTS SEGMENT (CONTINUED)
     
     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 were secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes were guaranteed by AMKO
     International B.V.
     
     The $1,311,000 note was amended May 16, 1997, bore interest at 8.5% per
     annum and was 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 bore interest at 8.5% per annum and was 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 bore
     interest at 8.5% per annum and was 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 which bore
     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 prepaid $500,000 on or before April 1, 1998.  If
     extended, the interest rate on all of the notes would increase to 12%. 
     The Company charged AMKO a fee of $200,000 in conjunction with the 
     amendment.  The fee was paid on May 16, 1997.
     
     The Company loaned Jensen an additional $200,000 in conjunction with the
     May 16, 1997 modification and an additional $36,000 in October 1997. 
     These notes bore 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 are either to be distributed pursuant to an
     evidentiary hearing or a prior court approved agreement with the trustee.

     In March 1999, a settlement was reached with the trustee, in which a
     payment of $75,000 would be made to NCMC, as a result of the sale of
     Jensen's inventory in exchange for which NCMC would assert no further
     claims against the debtor.  Such final settlement is subject to court
     approval.

     As a result of the bankruptcy filing, the Company reduced the value of its
     notes receivable to $150,000 as of December 31, 1997.  The Company has 
     received approximately $73,000 during 1998 and anticipates receipt of of an
     additional $75,000, (as discussed above), as a result of its efforts.
     The remaining balance has been written off as of December 31, 1998.

     AMKO International filed for and was discharged from the bankruptcy in the
     Netherlands between January and April 1998.
     
     The Company has pursued a remedy in judicial proceedings in the
     Netherlands with a procedural result that would allow the Company
     to pursue AMKO International in the United States courts.  As of February
     1999, the Company released both AMKO International and its successor in 
     interest from any claims.  In addition, the Company and FNM Bank, (a
     Netherlands bank), agreed to settle all lender liability claims.  As a
     result of the foregoing, the Company is free to pursue the former owner
     of AMKO International on his personal guarantee, and will allocate any
     proceeds received on the basis of 75% to the Company and 25% to FNM
     Holding, N.V., after all expenses have been paid.  The Company cannot
     predict the outcome of this litigation.
     
     
                                       -28-
<PAGE>
     NOTE 7 - 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, 1998, the Company had federal net operating loss 
     carryforwards of approximately $13.3 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, 1998, 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,      
                                             1998                 1997       
                                       Amount    Percent    Amount    Percent
     <S>                              <C>         <C>     <C>          <C>  
     Income tax benefit at federal
       statutory rate                 $(116,800)  (34.0)% $(484,554)   (34.0)%
     Valuation allowance                116,800    34.0     484,554     34.0

     Other                               -           -         -          -  
     
                                      $  -           - %  $    -          - %
</TABLE>

     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, 1998 and 1997 of approximately $4 million and
     $3.4 million, 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 8 - 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 1998.

                                      -29-
<PAGE>
     NOTE 8 - SHAREHOLDERS' EQUITY (CONTINUED)
     
     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 in 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
     1998 and 1997.
     
     NOTE 9 - 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.
     
     NOTE 10 - SETTLEMENT OF LAWSUIT
     
     The Company received $53,000 during August 1998, as a result of a lawsuit
     settlement.  The amount is included in other income from continuing
     operations in the Consolidated Statements of Operations.     
     
     NOTE 11 - CONCENTRATION OF RISK
     
     The Company has bank balances in excess of the $100,000 of depository
     insurance provided by the Federal Deposit Insurance Corporation. 

                                    -30-
<PAGE>                                       
     
     NOTE 12 - INTERIM FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
                                       First      Second     Third     Fourth
                                       Quarter    Quarter    Quarter   Quarter 
     <S>                             <C>        <C>         <C>       <C>
     Calendar year ended
       December 31, 1998:
      Net loss from continuing
        operations                   $(126,546) $(232,800)  $(35,303)$(562,977)
      Net income (loss) from
        discontinued operations         12,959    586,241    (17,598)   32,494
       Net loss per share from
        continuing operations:
          Basic and diluted               (.08)      (.14)      (.02)     (.33)
       Net income (loss) per share
         from discontinued operations:
           Basic and diluted               .01        .35       (.01)      .02
      Net income (loss) per share:
        Basic and diluted                 (.07)       .21       (.03)     (.31)
      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, 1997:
      Net income (loss) from
        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
</TABLE>
                                      -31-
<PAGE>
     
     NOTE 13 - EARNINGS PER SHARE
     
     The following table sets forth the computation of basic and diluted income
     (loss) per share:
<TABLE>
<CAPTION>
                                                         Years Ended       
                                                  December 31,   December 31,
     <S>                                            <C>          <C> 
     Numerator:
       Net loss from continuing operations          (957,626)    (1,004,177)
       Net income (loss) discontinued operations     614,096       (420,981)
       Net loss from continuing operations -
         numerator for basic and diluted loss
         per share                                      (.57)          (.60)
       Net income (loss) from discontinued
         operations - numerator for basic and
         diluted loss per share                          .37           (.25)

     Denominator:
       Denominator for basic and diluted loss
         per share - weighted average shares       1,673,190       1,673,190
       Loss per share:
         Basic and diluted                              (.20)           (.85)
 
</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.
     
                                      -32-
<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 March 11, 1999, 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                 Chairman since 1989       NCMC
      Chairman of the Board      Director                  Bristol Hotels &
      Age 48                                               Resorts
      Director since 1988                                  (traveler  
                                                            accommodations)
                                 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 45                     Managing Director since   Resource Holdings,  
     Director since 1988         1983                      Ltd.
                                                           (investment firm)
                                 1989 to 1992 Co-Chairman  NCMC
     
     Herbert J. Jaffe            President 1988-1996       NCMC
      Director
      Age 64                     1983-95 Chairman          NCM Management Ltd.
      Director since 1987                                  (real estate 
                                                            management company 
                                                            of NCMC)
     
                                       -33-
<PAGE>
     
     David Faulkner              1989-1996 Vice Chairman/   Memorex Telex Inc.
      Director                   CFO                        (computer industry)
      Age 58
      Director since July 1994
     
     Jeffrey Goldstein           Chief Financial Officer     NCMC
      Age 53                     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 1998, 1997 and 1996.
<TABLE>
<CAPTION>
                                                Annual Compensation         
                                                                  Other Annual
                                     Year      Salary    Bonus    Compensation
     <S>                             <C>      <C>        <C>          <C>
     John C. Shaw                    1998      90,000      -           -
     Chief Executive Officer         1997     100,290      -           -      
     Chief Financial Officer         1996     125,000      -           -      
     
     James J. Pinto                  1998      90,000      -           -
     Chairman                        1997      98,942      -           -      
                                     1996     125,000      -           -      
     
     Jeffrey S. Goldstein (1)        1998       -   
                                     1997       -          -           -      
                                     1996      80,000      -           -      
     
     Herbert J. Jaffe (2)            1998       -          -           -
                                     1997       -          -           -      
                                     1996      86,664      -           -      
     
</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. 
     
     No stock options were granted to the individuals named in the summary
     compensation table during 1998 and none of those individuals exercised a
     stock option during 1998.  All warrants expired on December 31, 1997.

                                      -34-
<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 $90,000 for 1998, and $98,942
     and $100,290, respectively, for 1997  pursuant to these agreements, plus
     approximately $120,000 and $102,000 during 1998 and 1997, 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 1998, members of the Board of Directors, who are not either
     employees, officers or consultants of the Company, received quarterly
     compensation of $2,000 for each meeting attended.  Directors are entitled
     to be reimbursed for reasonable out of pocket expenses incurred with
     respect to meetings of the Board.
     
                                     -35-
<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%
     
     * less than 1%
</TABLE>
     
                                       -36-
<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.
             
     
                                      -37-
<PAGE>  
     
     Item 12 - Certain Relationships and Related Transactions
     
     The Company and NCM Management Ltd. ("NCM") agreed that NCM would
     provide real estate management services through December 1998 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 1998, NCM did not receive any 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 1999.  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
     $109,000 to Resource for providing such office space and related services
     in 1998.  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, 1998.
     
                                      -38-
<PAGE>
     
     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 Report 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).
     
                                      -39-
<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.
 
                                      -40-
<PAGE>
          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.
          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.
     
                                      -41-
<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
                             March 30, 1999
     
     
     
                             
                        By:                             /s/ JAMES PINTO  
                             James Pinto, Director
                             March 30, 1999
     
     
                             
                        By:                              /s/ JOHN C. SHAW
                             John C. Shaw, Director
                             March 30, 1999



                        By:                            /s/ DAVID FAULKNER
                             David Faulkner, Director
                             March 30, 1999
     
                                      -42-