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, 1996
     
                             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 $10,331,081.
     
     The aggregate market value of voting stock held by nonaffiliates of the
     Registrant is approximately $568,885 as of March 21, 1997.
      
                                    1,673,190          
      (Number of shares of common stock outstanding as of March 21, 1997)
                                
         Total number of pages in this document is: 39
               The exhibit index is on page 36  
                                  
                                
          
          
          
                                  -1-
     <PAGE>
          
                           PART I
     
     Item 1 - Description of Business
     
     Introduction
     
     National Capital Management Corporation ("NCMC") is a holding company that
     until recently 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 the prior two 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.   
     
     On August 20, 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.
     
     On September 17, 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.
     
     On September 27, 1996, NASDAQ 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.  Based on that review, NASDAQ determined
     to deny the Company's request.
     
     The determination 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 is not guaranteed of
     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 will 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 was scheduled to be deleted from the National Market
     System, effective with the opening of business on October 31, 1996.  The
     Company is eligible to trade on the OTC Bulletin Board.
     
                               -2-     
<PAGE>     
     Discontinued Operation - Viatical Settlements
     
     On March 17, 1994, the Company formed National Capital Benefits Corp.
     ("NCBC") to engage in the business of purchasing life insurance policies
     which insure the lives of individuals with life threatening illnesses. 
     NCBC purchased policies which insure individuals having a projected 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
     $3,210,000 of preferred stock for cash through December 31, 1995 and an
     additional $663,082 through December 31, 1996.
     
     In addition, NCBC had a revolving line of credit ("The Facility") up to $15
     million, based on a formula of eligible policies purchased, from an
     institutional lender which was to be used to provide working capital and
     funds for the purchase of such policies.  The facility is secured by all
     of the assets of NCBC, including purchased insurance policies, bears
     interest at 1/2% over the lender s prime rate or 2-7/8% over the 90 day
     London Inter-Bank Offer Rate ("Libor") at the option of NCBC, is subject
     to a commitment fee of 1/4% on the average daily unused amount of the line
     and expires in December 1998.  NCBC had drawn approximately $12,131,000 on
     this line of credit as of March 21, 1997.  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.
     
     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, 1996.  The note is due
     December 31, 1998, and is secured by NCBC s purchased insurance policies,
     subject to the security interest granted to the Facility lender.  The
     purchaser of the Note was granted a warrant to acquire 12% of the common
     stock of NCBC (68 shares) at a price of $1.47 per share.  The holder of
     the warrant can exercise a put of the stock to NCBC under certain
     conditions, which would guarantee the holder a minimum additional 4%
     interest on the outstanding balance.  This additional liability has not
     been reflected in the financial statements at December 31, 1996 as
     management is negotiating a modification to the warrant agreement, which
     is expected to result in minimal additional cost to the Company on a
     prospective basis only.  The warrant expires December 31, 2000.
     
     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.  At
     December 31, 1996, there was $120,000 of cash restricted to the Bermuda
     insurance company.  As of December 31, 1996, the face value of NCBC s
     purchased insurance policies remaining in its portfolio was approximately
     $20.5 million.  During 1996, approximately $4.3 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 Settlement Business
     
     The viatical settlement business made it possible for people facing life
     threatening illnesses to sell their life insurance policies for cash at a
     discount from the policies' stated death benefit.  The sales proceeds gave
     them choices that they might not otherwise have, such as selecting quality
     health care, retaining ownership of a residence, retiring indebtedness or
     sharing funds with family, friends or favorite charities.  
     
     A prospective seller's medical records were reviewed by physicians
     retained by NCBC as consultants who specialized in treatment of the
     individual's particular illness or disorder.  A prognosis was then made by
     each physician of the life expectancy of that person, which is an
     essential element in determining NCBC's purchasing of the policy and the
     terms of such purchase.  Other factors considered when purchasing policies
     was the financial strength of the insurance company writing the policy,
     the amount of coverage provided by the policy, assignment restrictions
     contained in the policy, the amount of any loans against the policies,
     prior assignments, the beneficiary, the cost of policy premiums, issue
     date and type of policy. 
     
     NCBC is required to make estimates and assumptions that affect the
     reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements and the
     reported amounts of revenue and expenses during the reporting period. 
     Actual results could differ significantly from these estimates.
     
     The recognition of earned discount and the ultimate profitability
     associated with purchased insurance policies is directly related to NCBC s
     assumptions regarding the remaining life expectancy of terminally ill
     individuals.  Such estimates were made when the insurance policy was
     purchased based upon facts and circumstances then known, and are adjusted
     periodically, but not more than annually, based upon actual experience. 
     While NCBC believes that its estimate of life expectancy, and the related
     recognition of earned discount will 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, as stated on the balance sheet, during 1996 (see footnote 3 to the
     financial statements).  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 years
     (see footnote 3).
     
                                        -4-
<PAGE>     
     In accordance with the discontinuance of this business segment, NCBC has
     restructured its organization and reduced its office staff to two persons. 
     
     Discontinued Operation - Real Estate Segment
     
     In November 1995, the Company elected to discontinue operations of the
     Real Estate Segment. The following is the status of the Company s disposal
     activities:
     
     The Mart Shopping Center:  On July 28, 1995, the Company sold The Mart
     Shopping Center ("the Mart") located on nine acres in the high technology
     business area of Hillsboro, Oregon, a suburb of Portland, to an individual
     affiliated with NCM Management Ltd., a company which provides management
     services to the Company.  The sales proceeds included $960,000 in cash, an
     eighteen month note secured by a second deed of trust on the property in
     the amount of $910,000 and the buyer s assumption of the $1,232,501 first
     deed of trust secured by the property for a total purchase price of
     $3,102,501.  The Company renegotiated payment of the note with the
     purchaser whereby it received a total of $800,000 in exchange for an early
     payoff on September 30, 1995, reducing the sale proceeds by $110,000.  A
     gain of $1,029,894 was recognized on this transaction in 1995.
     
     Appletree Townhouses:  The Company s wholly-owned subsidiary, Georgia
     Properties, Inc. ("GPI"), received advances of $650,000 on December 21,
     1995 and an additional $500,000 on February 1, 1996 from the same
     individual that purchased The Mart Shopping Center, in exchange for an
     option to purchase Appletree Townhouses for $3,500,000, which was
     exercised on March 31, 1996.
     
     The sales price of $3,500,000 consisted of the aforementioned advances by
     the buyer totaling $1,150,000, assumption of the existing first deed loan
     by the buyer in the amount of $1,048,795 and a purchase money note for the
     balance equal to $1,301,205.  The purchase money note paid interest on the
     balance due from the date of sale at 8% per annum until it was paid in
     December 1996.  In addition, the buyer was required to prepay $250,000 of
     this note on May 1, 1996, which was paid in April 1996.  A gain of
     $327,735, related to the sale of this property and the liquidation of the
     Appletree subsidiary, was reported in 1996.
     
     Florida land:  The Company owned undeveloped land in Ft. Lauderdale,
     Florida which is zoned for commercial/industrial use.  This parcel was
     sold for $216,000 in August 1996, and the Company reported a gain of
     $190,489.
     
     Colony Ridge Apartments:  Colony Ridge Apartments is an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consists of 23
     two-story buildings containing a total of 212 apartment units.  This
     property is currently being marketed and is expected to be sold during
     1997.
     
     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 are
     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 commencing December 8, 1994.
     
                                        -5-     
     <PAGE>
     The Company retained a contingent interest in the cash flows of these
     partnerships.  It will receive any cash available from property
     operations, to the extent it exceeds approximately $61,000 annually, and
     any refinancing proceeds up to a total of approximately $4.5 million, plus
     interest at 9.25% per annum on the outstanding balance of this amount. 
     Any proceeds of sale  will be allocated, first, 99.1% to the new partners
     until they have received 135% of their investment, less any prior
     distributions.  Any remaining proceeds from a sale will be allocated to
     the Company up to $6 million, less any distributions from operations or
     refinancings as described above.  These arrangements have not been
     reflected in the Company s financial statements since their ultimate
     realization cannot reasonably be determined.  In addition, at such time as
     the tax benefits have been utilized, the Company has the right to purchase
     the interests of the newly admitted partners for 135% of their contributed
     capital (minus prior cash payments).  Should the Company choose not to
     exercise such right to purchase the partners  interests, the newly
     admitted administrative general partner has the right to require the
     Company to sell all of the assets and liquidate the partnerships.  The
     Company has not funded any operating deficits and has not received any
     excess cash flows during 1996 and 1995.
     
     Discontinued Operation - Industrial Products Segment
     
     The Industrial Products Segment consisted of the Company s wholly-owned
     subsidiary, Jensen Corporation ("Jensen"), which manufactured and
     distributed machinery used primarily by commercial laundries, large
     institutions and hotels as well as commercial compactor products for waste
     disposal.  On November 10, 1995, the Company sold 100% of the common stock
     of Jensen, located in Fort Lauderdale, Florida to AMKO USA, Inc. ("AMKO"),
     an affiliate of AMKO International B.V., which is based in The
     Netherlands, for $1,726,000.  The sale proceeds included cash of $415,000
     and a promissory note receivable in the amount of $1,311,000, which is
     secured by Jensen s stock, accounts receivable and inventory.  The
     $1,311,000 note is guaranteed in its entirety by AMKO International B.V.,
     and the sole shareholder of AMKO International B.V. guaranteed the first
     $585,000 of principal payments.
     
     AMKO also agreed to cause Jensen to pay to the Company a $765,000
     obligation in the form of a note,  which was loaned to Jensen, $500,000
     which was prior to the sale and $265,000 which was simultaneous with the
     sale, and an intercompany balance payable by Jensen to the Company of
     $337,650, which are secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes are guaranteed by AMKO
     International B.V.
     
     The $1,311,000 note as amended in August and October 1996, and again in
     February 1997 bears interest at 8.5% per annum and is payable in varying
     installments with the balance due in October, 1997.  The $765,000 note as
     amended in August and October 1996, and again in February 1997 bears
     interest at 8.5% per annum and is payable in varying installments with the
     balance due in March, 1998.  The $337,650 note as amended in August and
     October 1996, and again in February 1997 bears interest at 8.5% per annum
     and is payable in varying installments with the balance due in March 1998.
      
                                        -6-
     <PAGE>
     The Company believes that the assets securing the three notes, and the
     operations of Jensen as they now exist, may not be sufficient to provide
     for payment of the notes.  The Company has limited financial information
     concerning AMKO and the guarantors of the notes.  Consequently, no
     assurance can be given that the principal or interest due on the notes
     will be realized in full.  As of December 1996, AMKO had paid principal of
     $400,000, and the Company agreed to a $50,000 reduction in the face amount
     of the $1,311,000 Note to settle certain Contract disputes.  The Company
     is currently in discussion with AMKO to assure that AMKO will pay all
     future payments on a timely basis. The Company recorded a reserve of
     $1,150,000 for these notes as of December 31, 1996.  Based upon the
     guarantees and estimated liquidation value of Jensen s assets which were
     pledged as collateral for these notes, the Company believes that this
     reserve is adequate.
     
     Item 2 - Description of Property
     
     The Company maintains an office in New York for use by its executive
     officers 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 1997.  In
     addition, in accordance with its agreement with Resource, the Company has
     deposited with Resource s landlord the amount of $37,746 which will be
     returned, plus interest, to the Company on termination of Resource's lease
     (see Item 12 - Certain Relationships and Related Transactions).
     
     Mr. Shaw, a director of the Company, is a managing director and
     significant shareholder of Resource, and therefore may be deemed to have
     an interest in any payments to Resource.
     
     The Company considers this property to be suitable and adequate for its
     present needs.  The property is being fully utilized.  See Item 1
     "Business" for discussion of real properties owned in connection with the
     discontinued operations of the Real Estate Segment.
     
     Item 3 - Legal Proceedings
     
     The Company was a named defendant in a product liability lawsuit related
     to Jensen Corporation. In August 1996, the lawsuit was settled at no cost
     to the Company. 
     
     Item 4 - Submission of Matters to a Vote of Security Holders
     
     The Company held its annual meeting on October 29, 1996 in Dallas, Texas. 
     The Company solicited proxies and filed definitive proxy statements with
     the commission pursuant to Regulation 14A.  The matters voted upon at that
     meeting and the votes cast were as follows.
     <TABLE>
     <CAPTION>
     
             Proposal                                       Vote            
                                                  For    Against    Abstain
     <S>                                         <C>         <C>        <C>   
     (1) The election of the following
         people to the Board of Directors:        823,645    11,668      -    
           James J. Pinto
           John C. Shaw
           Herbert J. Jaffe
           David Faulkner
     
     (2) Ratification of the appointment
         of Arthur Andersen, LLP as the
         Company's independent auditors
         for fiscal year ending
         December 31, 1996                       823,645     11,668      -     
     </TABLE>

                                         -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, 1996 and 1995, are
       as follows:
       <TABLE>
       <CAPTION>                                                                                
                                                               Bid Price    
                                                             High       Low
      <S>                                                    <C>       <C>             
      For the Quarter Ended                         
      December 31, 1996............................           .5620     .3750
      September 30, 1996...........................          1.0000     .8750
      June 30, 1996................................          1.0000    1.7500
      March 31, 1996...............................          2.3750    2.3750
      December 31, 1995............................          1.5833    1.1667
      September 30, 1995...........................          1.9167    1.5000
      June 30, 1995 *..............................          1.0208     .7500
      March 31, 1995*..............................           .9375     .8229
     </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 21, 1997 was $.34.
     
     * Does not reflect stock split
    
     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 21, 1997, the approximate number of holders of record of
          shares of common stock of the Company was 973.
     
     c.   Dividends on Common Stock
     
          The Company has not declared any dividends on its common stock during
          the two  year period ended December 31, 1996.
     
     Item 6 - Management's Discussion and Analysis of Financial Condition and
              Results of Operations
     
     OVERVIEW
     
     During 1996, the Company initially expanded its viatical settlement
     business until it discontinued this operation at the end of the year.
     
                                       -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 was approximately $651,000 at December 31, 1996. During
     1996, cash used to finance operating activities and the viatical
     settlement business was offset by the receipt of $1,347,000 from the sale
     of Appletree Townhouses and the Florida land.  The Company s cash position
     decreased to $400,000 as of March 21, 1997, as a result of operating
     expenses and the CAPX settlement (see below). 
     
     Other than in its Viatical Settlement Subsidiary, the Company does not
     have any existing general credit facilities to fund its ongoing working
     capital requirements.  The Company may seek additional financing through
     the issuance of securities on a private or public basis, or through long
     or short-term borrowings.
     
     VIATICAL SETTLEMENT BUSINESS
     
     Effective as of December 29, 1995, NCBC entered into a revolving credit
     facility ("Facility") with a credit limit of up to $15 million, which
     expires December 1998. The closing of the transaction was January 8, 1996. 
     The Facility is secured by all the assets of NCBC, including purchased
     insurance policies.  The Facility bears interest at 1/2% over the lender s
     prime rate or 2-7/8% over the 90 day London Inter-Bank Offer Rate ("Libor")
     at the option of NCBC (Libor rate + 2-7/8 and 8-3/8% at December 31, 1996
     and 1995), and is subject to a commitment fee of 1/4% on the average daily
     unused amount of the Facility.  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, 1996.  The note is due
     December 31, 1998, and is secured by NCBC s purchased insurance policies,
     subject to the security interest granted to the Facility lender.  The
     purchaser of the Note was granted a warrant to acquire 12% of the common
     stock of NCBC (68 shares) at a price of $1.47 per share.  The holder of
     the warrant can exercise a put of the stock to NCBC under certain
     conditions, which would guarantee the holder a minimum additional 4%
     interest on the outstanding balance.  This additional liability has not
     been reflected in the financial statements at December 31, 1996 as
     management is negotiating a modification to the warrant agreement, which
     is expected to result in minimal additional cost to the Company on a
     prospective basis only.  The warrant expires December 31, 2000.

                                        -9-
     <PAGE>
     On July 29, 1994, NCBC entered into an agreement and acquired certain
     assets of CAPX Corporation ("CAPX"), including the rights to certain
     service marks, trade names and proprietary computer software.  The
     purchase price of the assets was $125,000 and the issuance of 33,333
     shares of the $.01 par value of NCMC s common stock, which was valued at
     $5.25 per share, adjusted to reflect the reverse stock split.  As part of
     the agreement, as amended in September 1996, NCMC was required by CAPX to
     repurchase all of its shares at $5.25 per share on or before January 1997.
     In conjunction with the September 1996 amendment NCBC paid CAPX $25,000
     and the balance of $150,000 was due January 1997.  The agreement was
     further modified in February 1997, at which time the Company paid $100,000
     and the agreement was terminated. 
     
     The viatical settlement business was discontinued in December 1996.
     
     REAL ESTATE BUSINESS
     
     On November 27, 1995, the Company elected to discontinue operations of the
     Real Estate Segment to concentrate its efforts on its viatical settlements
     business.  The following is a description of Company s disposal
     activities:
     
     The Mart Shopping Center:  On July 28, 1995, the Company sold The Mart
     Shopping Center ("the Mart") located on nine acres in the high technology
     business area of Hillsboro, Oregon, a suburb of Portland, to an individual
     affiliated with NCM Management Ltd., a company which provides management
     services to the Company.  The sales proceeds included $960,000 in cash, an
     eighteen month note secured by a second deed of trust on the property in
     the amount of $910,000 and the buyer s assumption of the $1,232,501 first
     deed of trust secured by the property for a total purchase price of
     $3,102,501.  The Company renegotiated payment of the note with the
     purchaser whereby it received a total of $800,000 in exchange for an early
     payoff on September 30, 1995, reducing the sale proceeds by $110,000.  A
     gain of $1,029,894 was recognized on this transaction in 1995.
     
     Appletree Townhouses:  The Company s wholly-owned subsidiary, Georgia
     Properties, Inc. ("GPI"), received advances of $650,000 on December 21,
     1995 and an additional $500,000 on February 1, 1996 from the same
     individual that purchased The Mart Shopping Center, in exchange for an
     option to purchase Appletree Townhouses for $3,500,000, which was
     exercised on March 31, 1996.
     
     The sales price of $3,500,000 consisted of the aforementioned advances by
     the buyer totaling $1,150,000, assumption of the existing first deed loan
     by the buyer in the amount of $1,048,795 and a purchase money note for the
     balance equal to $1,301,205.  The purchase money paid interest from the
     date of sale at 8% per annum until it was paid in December 1996.  In
     addition, the buyer was required to prepay $250,000 of this note on May 1,
     1996, which was paid in April 1996.  A gain of $327,735, related to the
     sale of this property and the liquidation of the Appletree subsidiary, was
     reported in 1996.
     
     Florida land:  The Company owned undeveloped land in Ft. Lauderdale,
     Florida which is zoned for commercial/industrial use.  This parcel was
     sold for $216,000 in August 1996, and the Company reported a gain of
     $190,489. 
     
     Colony Ridge Apartments:  Colony Ridge Apartments is an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consists of 23
     two-story buildings containing a total of 212 apartment units.  This
     property is currently being marketed and is expected to be sold
     during 1997.
     
                                        -10-
     <PAGE>
     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 are
     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 commencing December 8, 1994.
     
     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 1996 and 1995.
     
     INDUSTRIAL PRODUCTS BUSINESS
     
     The Industrial Products Segment was also discontinued during 1995.  It
     consisted of the Company s wholly-owned subsidiary, Jensen Corporation
     ("Jensen"), which manufactured and distributed machinery used primarily by
     commercial laundries, large institutions and hotels as well as commercial
     compactor products for waste disposal.  On November 10, 1995, the Company
     sold 100% of the common stock of Jensen, located in Fort Lauderdale,
     Florida to AMKO USA, Inc. ("AMKO"), an affiliate of AMKO International B.V.
     which is based in The Netherlands, for $1,726,000.  The sale proceeds
     included cash of $415,000 and a promissory note receivable in the amount
     of $1,311,000 which is secured by Jensen s stock, accounts receivable and
     inventory.  The $1,311,000 note is guaranteed in its entirety by AMKO
     International B.V., and the sole shareholder of AMKO International B.V.
     guaranteed the first $585,000 of principal payments.
     
     AMKO also agreed to cause Jensen to pay to the Company a $765,000
     obligation in the form of a note,  which was loaned to Jensen, $500,000 of
     which was prior to the sale and $265,000 which was simultaneous with the
     sale, and an intercompany balance payable by Jensen to the Company of
     $337,650, which are secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes are guaranteed by AMKO
     International B.V.

                                        -11-
     <PAGE>
     The $1,311,000 note as amended in August and October 1996 and again in
     February 1997 bears interest at 8.5% per annum and is payable in varying
     installments with the balance due in October 1997. The $765,000 note as
     amended in August and October 1996 and again in February 1997 bears
     interest at 8.5% per annum and is payable in varying installments with the
     balance due in March 1998.  The $337,650 note as amended in August and
     October 1996 and again in February 1997 bears interest at 8.5% per annum
     and is payable in varying installments with the balance due in March 1998.
     
     The Company believes that the assets securing the three notes, and the
     operations of Jensen as they now exist, may not be sufficient to provide
     for payment of the notes.  The Company has limited financial information
     concerning AMKO and the guarantors of the notes.  Consequently, no
     assurance can be given that the principal or interest due on the notes
     will be realized in full.  As of December 1996, AMKO had paid principal of
     $400,000, and the Company agreed to a $50,000 reduction in the face amount
     of the $1,311,000 Note to settle certain Contract disputes.  The Company
     is currently in discussion with AMKO to assure that AMKO will pay all
     future payments on a timely basis. The Company recorded a reserve of
     $1,150,000 for these notes as of December 31, 1996.  Based upon the
     guarantees and estimated liquidation value of Jensen s assets which were
     pledged as collateral for these notes, the Company believes that this
     reserve is adequate.
     
     RESULTS OF OPERATIONS FOR 1996 COMPARED TO 1995
     
     National Capital Benefits Corp. ("NCBC") commenced operations on March 17,
     1994.  During the periods ended December 31, 1996 and 1995, NCBC had
     purchased at face value (including those in escrow) approximately $10.5
     million and $12.9 million of policies, respectively.  During 1996 and
     1995, approximately $4,300,000 and $1,871,000, 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 believes that its estimate of life expectancy, and the related
     recognition of earned discount will 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, as stated on the balance sheet, during 1996.  The amount of the
     reserve was determined based on projections of expected cash inflow 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 years (see footnote 3).
     
                                         -12-
     <PAGE>
     The Company previously announced that certain existing medications and
     medications presently under development may, when used in combination,
     significantly prolong the life expectancy of persons previously diagnosed
     with AIDS.  These studies 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 but engaged in an
     evaluation of the effect of the research results from the AIDS conference,
     and in particular, purchases by the Company of policies, and the estimated
     collection date of these policies.
     
     The Company decided to discontinue its viatical settlement business in
     December  1996.
     
     In light of the foregoing, the Company ceased purchasing insurance
     policies from individuals.  The Company may, however, seek the purchase of
     a portfolio of life insurance policies in bulk to the extent each of the
     policies in such bulk purchase is within the guidelines set forth in the
     reinsurance agreements with NCBC.  As previously announced, NCBC has
     restructured its organization and reduced its office staff to two persons. 
     Management anticipates that these persons, as well as NCMC management,
     will manage NCBC's existing portfolio of approximately $20.5 million of
     insurance policies.  Management estimates that the administration of these
     policies will take several years.
     
                                      -13-     
     <PAGE>
     Item 7 - Financial Statements and Supplementary Data
     
     
     
                       NATIONAL CAPITAL MANAGEMENT CORPORATION
     
     
                     INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
     
     
     
     
     
     
     
          Report of Independent Public Accountants                      15
          Consolidated Balance Sheet at December 31, 1996               16
          Consolidated Statements of Operations for the years ended
            December 31, 1996 and 1995                                  17
          Consolidated Statements of Shareholders' Equity for the
            years ended December 31, 1996 and 1995                      18
          Consolidated Statements of Cash Flows for the years ended
            December 31, 1996 and 1995                                  19
          Notes to Consolidated Financial Statements                 20-31
     
                                        -14-
     <PAGE>
     
     
     
     
     
     
     
                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
     
     
     The Board of Directors and Shareholders of
     National Capital Management Corporation:
     
          We have audited the accompanying consolidated balance sheet of
     National Capital Management Corporation (a Delaware corporation) as of
     December 31, 1996, and the related consolidated statements of operations,
     shareholders' equity and cash flows for each of the two years in the
     period ended December 31, 1996.  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, 1996,
     and the consolidated results of its operations and its cash flows for each
     of the two years in the period ended December 31, 1996, in conformity with
     generally accepted accounting principles.
     
     ARTHUR ANDERSEN LLP
     
     
     
     New York, New York
     April 11, 1997
     
                                         -15-
<PAGE>
 <TABLE>   
                 NATIONAL CAPITAL MANAGEMENT CORPORATION
                       CONSOLIDATED BALANCE SHEET
                            DECEMBER 31, 1996



      ASSETS                                                                
<S>                                                               <C>
Cash and cash equivalents                                         $   651,346
Accounts receivable                                                    18,240
Notes receivable (Note 4)                                             813,650
Property and equipment, less accumulated depreciation
 of $63,198                                                            41,633
Net assets of discontinued operations -
 Viatical Settlements Segment (Note 3)                                375,529
 Real Estate Segment (Note 6)                                       1,849,296
Other assets                                                           36,225

Total assets                                                      $ 3,785,919
</TABLE>
<TABLE>
     LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                                <C>
Accounts payable and accrued expenses                             $   268,369       
Common stock repurchase obligation (Note 9)                           100,000

Total liabilities                                                     368,369

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                                              (19,550,088)
 Treasury stock, 139,866 shares                                      (174,217)

Total shareholders' equity                                          3,417,550

Total liabilities and shareholders' equity                        $ 3,785,919


     The accompanying notes are an integral part of this statement.

                                         -16-
</TABLE>
<PAGE>
<TABLE>
                 NATIONAL CAPITAL MANAGEMENT CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                                           


<CAPTION>
                                                     Years ended December 31,    
                                                        1996          1995   
<S>                                                 <C>           <C>
Income (expense):
 Other income                                       $   134,041   $    61,333
 Corporate administrative expense                      (665,717)     (416,890)

Net loss from continuing operations before tax         (531,676)     (355,557)

Provision for income taxes                               -             -     

Net loss from continuing operations after tax          (531,676)     (355,557)

Discontinued operations:
 Net operating loss:
    Viatical settlements (Note 3)                    (3,603,572)   (1,170,525)
    Real estate segment (Note 6)                       (193,307)     (538,181)
    Industrial products segment (Note 7)                 -         (1,192,209)
 Net gain on disposal of:
    Real estate segment (Note 6)                        518,224     1,029,894
    Industrial products segment                          -             91,045

Net loss from discontinued operations                (3,278,655)   (1,779,976)

Net loss                                            $(3,810,331)  $(2,135,533)

Net loss from continuing operations per share            $(0.32)      $(0.22)      
Net loss from discontinued operations per share           (1.96)      $(1.07)

Net loss per share                                       $(2.28)      $(1.29)

Average number of shares outstanding                  1,673,190     1,651,711


     The accompanying notes are an integral part of this statement.

                                       -17-
</TABLE>
<PAGE>
<TABLE>
                 NATIONAL CAPITAL MANAGEMENT CORPORATION
             CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 YEARS ENDED DECEMBER 31, 1996 and 1995

<CAPTION>
 
                             Additional                             Total     
                     Common   Paid-in     Accumulated  Treasury  Shareholders'  
                     Stock    Capital       Deficit     Stock       Equity     
<S>                  <C>     <C>          <C>           <C>         <C>    
Balances at
December 31, 1994    $54,289 $23,516,649  $(13,604,224) $(643,625)  $9,323,089

Acquisition of
  treasury stock        -         -             -          (9,675)      (9,675)

Reverse stock
  split             (36,385)    (392,698)       -         429,083        -

Net loss               -          -         (2,135,533)      -      (2,135,533)

Balances at
December 31, 1995    17,904    23,123,951  (15,739,757)  (224,217)   7,177,881

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

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

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

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


     The accompanying notes are an integral part of this statement.

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



                                                      Years Ended December 31,
                                                            1996       1995                  
<S>                                                   <C>         <C>
Cash flows from operating activities:
 Net loss                                             (3,810,331) $(2,135,533)
 Adjustments to reconcile net loss to net
   cash used in operating activities:
     Depreciation and amortization                         8,760        8,663
     Reserves and allowances on notes receivable         200,000         -     
 Changes in operating assets and liabilities:
   Decease in accounts receivable                         21,490    1,251,461       
   Increase (decrease) in accounts payable and
     accrued liabilities                                (529,024)     523,469        
   
 Net cash used in operating activities                (4,109,105)    (351,940)

 Change in net assets of discontinued operations       3,736,443      344,278

Cash flows provided by investing activities:
 Collections on notes receivable                         400,000        -     
 Additions to property and equipment                      -           (11,340)
 Increase in other assets                                 15,223       62,005

   Net cash provided by investing activities             415,223       50,665

Cash flows used in financing activities:
 Acquisition of treasury stock                             -           (9,675)
 

Increase in cash and cash equivalents                     42,561       33,328

Cash and cash equivalents at beginning of period         608,785      575,457

Cash and cash equivalents at end of period            $  651,346   $  608,785

Supplemental schedule of non-cash operating
 and financing activities:

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


     The accompanying notes are an integral part of this statement.

                                        -19-
</TABLE>
<PAGE>
           NATIONAL CAPITAL MANAGEMENT CORPORATION
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 1996
     
     
     NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION
     
     National Capital Management Corporation ("NCMC"or the "Company") is a
     holding company that currently is completing the orderly liquidation of
     its discontinued operations, while seeking other acquisitions.
     
     Prior to 1995, the Company had been comprised of three distinctly
     different operating businesses, the Viatical Settlement Segment, which was
     operated through National Capital Benefits Corporation ("NCBC"), a wholly
     owned subsidiary, the Real Estate Segment and the Industrial Products
     Segment.  The Industrial Products Segment and Real Estate Segment were
     discontinued in 1995.  The Viatical Settlement Segment was discontinued in
     1996.  (Notes 3, 6 and 7).   
     
     Consolidation Principles
     
     The consolidated financial statements include the accounts of the Company
     and all of its majority-owned subsidiaries.  All significant intercompany
     accounts and transactions have been eliminated in consolidation.
     
     Reclassifications
     
     Certain amounts as presented in prior year financial statements have been
     reclassified to conform with the current year presentation.

                                         -20-
     <PAGE>
     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     
     Property and Equipment - Property and equipment is stated at amortized
     cost net of accumulated depreciation.  Depreciation is computed using the
     straight-line and accelerated methods over the estimated useful lives of
     the assets.
     
     Income Taxes - Income taxes are accounted for in accordance with the
     provisions of Statement of Financial Accounting Standards ("SFAS") No. 109,
     "Accounting for Income Taxes".   As required under SFAS No. 109, deferred
     tax assets and liabilities are recognized for the future tax consequences
     attributable to temporary differences between the financial statement
     carrying amounts of assets and liabilities and the respective tax basis
     amounts.  Deferred tax assets and liabilities are measured under tax rates
     that are expected to apply to taxable income in the years in which these
     differences are expected to be settled.  The effect of a change in tax
     rates on deferred tax assets and liabilities is recognized in the period
     of the tax change.
     
     Estimates - The preparation of financial statements in conformity with
     generally accepted accounting principals requires the Company to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the
     date of the financial statements and the reported amounts of revenue and
     expenses during the reporting period.  Actual results could differ
     significantly from those estimates.
     
     Material estimates that are particularly susceptible to significant change
     in the near term relate to the determination of the valuation reserve
     against the cost of purchased policies, the collectibility of notes
     receivable, and the realizability of net deferred tax assets.  See Notes
     3, 4 and 8.

                                         -21-
     <PAGE>
     NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     
     Accounting for long-lived assets
     
     For the calendar year ended December 31, 1996, the Company has 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 impairment were required.  In addition to the write down
     of several assets of the Company, a $1.5 million valuation reserve was
     established 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 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.  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 years (Note 3).
     
     Statement of Cash Flows
     
     The Company considers all short-term highly liquid investments purchased
     with a maturity of three months or less to be cash and cash equivalents
     for purposes of the Consolidated Statement of Cash Flows.
     
     Cash paid for interest was $1,054,400 and $913,447, for 1996 and 1995,
     respectively.  The Company paid no material amounts for income taxes
     during these years.
     
     During 1996, the Company sold two real estate properties in transactions
     in which one purchaser assumed a first mortgage obligation of the Company
     in the amount of $1,048,795 and recognized gains of $518,224 in connection
     with the sales.
     
     During 1995, the Company sold one real estate property in a transaction in
     which the purchaser assumed a first mortgage obligation of the Company in
     the amount of $1,232,501 and recognized a gain of $1,029,894.
     
     Per Share Amounts
     
     Per share information has been computed based on the weighted average
     number of common shares outstanding.  Outstanding warrants to purchase
     common shares have not been included in the computation because their
     effect would be antidilutive.  All per share amounts have been adjusted to
     reflect the reverse stock split on a retroactive basis (Note 10).
     
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS
     
     The results of the Viatical Settlements have been reported separately as
     discontinued operations in these consolidated statements of operations. 
     Prior period financial statements have been restated to present the
     Viatical Settlements as a discontinued operation.

                                        -22-
<PAGE>     
    NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
 
     In December 1996, the Company decided to discontinue the operations of the
     viatical settlement business.  The Company reduced its staff and expects
     that the remaining personnel will administer the orderly liquidation of
     its existing portfolio.  It is expected that this process will take
     several years.  The Company established a $1,500,000 valuation reserve
     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.  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 years.
     
     NCBC has an insurance contract with NCB Insurance Ltd. ("NCB"), a
     wholly-owned subsidiary of NCBC, which automatically provides for payment
     of 90% of the face value of the policies purchased at a specified period of
     time after the expected maturity date, in accordance with the contract.
     NCB, in turn, has reinsured this risk with several large, non-affiliated
     international reinsurance companies.  NCBC, through NCB, maintains a
     participation in the residual 10%.
     
     The anticipated reinsurance recoveries represent a substantial element of
     the cash flow projections used to determine the valuation reserve.  While
     management expects full collection of reinsurance recoveries, these
     recoveries from the sole reinsurance facility represent a significant
     concentration or risk.
     
     Summarized below are the operations of the Company s Viatical Settlements
     for the years ended December 31, 1996 and 1995.
<TABLE>

<CAPTION>
                                                        For the year ended     
                                                           December 31,        
                                                         1996         1995    
<S>                                                  <C>          <C>
Revenue accrued and received                         $ 8,915,792  $ 6,836,196
Cost of insurance policies                             7,781,846    5,506,685
Valuation reserve expense                              1,500,000       -     

Earned discount                                         (366,054)   1,329,511
Interest expense                                       1,294,648      568,551

Earned discount after interest expense                (1,660,702)     760,960
Selling and administrative expenses                    1,404,365    1,539,151
Depreciation and amortization                            538,505      392,334

Net loss                                             $(3,603,572) $(1,170,525)
</TABLE>

     The components of the Viatical Settlements net assets from discontinued
     operations in the consolidated balance sheet as of December 31, 1996 are
     as follows:
<TABLE>     

<S>                                                  <C>
Purchased policy costs, less amortized
 policy costs of $13,847,695                         $ 8,381,600
Valuation reserve                                     (1,500,000)
Accrued policy revenues, less matured
 revenues valuation of $6,446,841                      9,893,007
Revolving credit facility                            (12,806,701)
Subordinated note payable                             (2,000,000)
Reinsurance liability                                 (1,307,940)
Other, net                                              (284,437)


                                                     $   375,529
</TABLE>

                                         -23-
<PAGE>
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
     
     Restricted Cash - Certain cash held by NCBC is restricted as to use under
     the terms of certain escrow agreements and Bermuda insurance laws.
     
     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 of less than 24 months.
     
     Purchased insurance policies are stated at amortized cost.  Costs
     capitalized include the purchase price paid to the insured (or "viator"),
     and certain direct and indirect costs related to the acquisition of such
     policies.  The insurance policies purchased by the Company have been
     issued by various credit worthy insurance carriers, none of which
     represent a significant concentration of risk.
     
     Accrued Policy Revenues - Accrued policy revenues represent the accrued
     portion of insurance proceeds receivable on purchased policies that have
     not yet matured and amounts due on matured policies not yet received.
     
     Reinsurance Liability - As policies migrate to reinsurance and funds are
     collected by the Company, a corresponding liability is recorded for the
     amount that may be returned to the reinsurer upon collection of the policy
     proceeds.
     
     According to the terms of the reinsurance agreement this liability may be
     reduced if the policy proceeds are not collected within a specified time
     frame.
     
     Revenue and Cost Recognition - Revenue related to expected insurance
     proceeds is recognized by accreting the face value of purchased policies
     ratably over the period from the policy purchase date to the estimated
     maturity date ("accrual period").  Costs related to the purchase of
     insurance policies are also recognized through the amortization of such
     capitalized costs ratably over the accrual period.  The difference between
     revenue and costs recognized each period represents NCBC's earned discount
     on purchased insurance policies.
     
     The length of the accrual period is determined by NCBC based upon its best
     estimate of the maturity date (i.e. date on which it will collect the face
     value of the policy).  Such life expectancy estimates are 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 which reflects the
     estimated expected loss on holding the remaining policies to maturity.
     
     At December 31, 1996 the face value of purchased insurance policies
     remaining in NCBC s portfolio was approximately $20.5 million. During
     1996, NCBC purchased policies with a face value of approximately $10.5
     million and approximately $4.3 million face value of policies matured.

                                        -24-
     <PAGE>
     NOTE 3 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
     
     Revolving Credit Facility and Subordinated Note Payable
     
     Effective as of December 29, 1995, NCBC entered into a revolving credit
     facility ("Facility") with a credit limit of up to $15,000,000, which
     expires December 1998.  The closing of the transaction was January 8,
     1996.  The Facility is secured by all the assets of NCBC, including
     purchased insurance policies.  The Facility bears interest at 1/2% over
     the lender s prime rate or 2-7/8% over the 90 day London Inter-Bank Offer
     Rate ("Libor") at the option of NCBC (8 1/2% at December 31, 1996), and is
     subject to a commitment fee of 1/4% on the average daily unused amount of
     the line.  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, 1996.  The note is due
     December 31, 1998, and is secured by NCBC s purchased insurance policies,
     subject to the security interest granted to the Facility lender.  The
     purchaser of the Note was granted a warrant to acquire 12% of the common
     stock of NCBC (68 shares) at a price of $1.47 per share.  The holder of
     the warrant can exercise a put of the stock to NCBC under certain
     conditions, which would guarantee the holder a minimum additional 4%
     interest on the outstanding balance.  This additional liability has not
     been reflected in the financial statements at December 31, 1996 as
     management is negotiating a modification to the warrant agreement, which
     is expected to result in minimal additional cost to the Company on a
     prospective basis only.  The warrant expires December 31, 2000.
     
     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, 1996.
     
     NOTE 4 - NOTES RECEIVABLE
     
     Notes receivable consists of the following at December 31, 1996:
<TABLE>
<S>                                                          <C>     
     Notes receivable from AMKO USA, Inc. (Note 7)           $1,963,650
     Less reserve (Note 7)                                    1,150,000

                                                             $  813,650
</TABLE>
   
                                         -25-
     <PAGE>
     NOTE 5 - TRANSACTIONS WITH AFFILIATES
     
     For the two-year period ended December 31, 1996, the Company had
     agreements with NCM Management Ltd., a 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 $146,500 and
     $307,322 for 1996 and 1995, respectively.
     
     Pursuant to an employment agreement entered into in 1990, and subsequently
     modified effective January 1, 1994, Mr. Pinto served as Chairman of the
     Board of Directors. Pursuant to a Consulting Agreement dated as of January
     1, 1992, Mr. Shaw, Chief Executive Officer, provided services as a
     consultant to the Company on a nonexclusive basis through December 31,
     1993.  This agreement was amended effective January 1, 1994 whereby Mr.
     Shaw became Chief Executive Officer.  
     
     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. They are entitled to annual compensation of $125,000
     each plus Mandatory Incentive Bonuses which are based on achieving certain
     Company operating objectives, plus  Discretionary Bonuses which may be
     granted at the option of the Board of Directors.  If these agreements are
     terminated by the Company other than for cause, disability or death,
     Messrs. Pinto and Shaw are entitled to receive their base compensation
     through the existing term.  Messrs. Pinto and Shaw are continuing to work
     on a month to month basis and are currently discussing extensions of their
     respective agreements with the Company.
     
     Messrs. Pinto and Shaw were each compensated $125,000 and $142,500 for
     1996 and 1995, respectively, pursuant to these agreements, plus $91,120
     and $108,659, respectively, was paid to them or their assigns for other
     costs, certain office expenses, including rent for the offices in New
     York, and related services incurred for Company business.
     
     The Company obtained cash from an officer and a member of the Board of the
     Company to continue operations, including advances totaling $500,000 on
     October 26, 1995 bearing interest at 12% per annum, payable in monthly
     installments of interest only until due on January 31, 1996 and on demand
     thereafter.  The advances were repaid on February 1, 1996.
     
     NOTE 6 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT
     
     On November 27, 1995, the Company elected to discontinue operations of the
     Real Estate Segment to concentrate its efforts on its viatical settlements
     business.  The following is a description of Company s disposal
     activities:
     
     The Mart Shopping Center:  On July 28, 1995, the Company sold The Mart
     Shopping Center ("the Mart") located on nine acres in the high technology
     business area of Hillsboro, Oregon, a suburb of Portland, to an individual
     affiliated with NCM Management Ltd., a company which provides management
     services to the Company.  The sales proceeds included $960,000 in cash, an
     eighteen month note secured by a second deed of trust on the property in
     the amount of $910,000 and the buyer s assumption of the $1,232,501 first
     deed of trust secured by the property for a total purchase price of
     $3,102,501.  The Company renegotiated payment of the note with the
     purchaser whereby it received a total of $800,000 in exchange for an early
     payoff on September 30, 1995, reducing the sale proceeds by $110,000.  A
     gain of $1,029,894 was recognized on this transaction in 1995.
     
                                         -26-
     <PAGE>
     NOTE 6 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT (CONTINUED)
     
     Appletree Townhouses:  The Company s wholly-owned subsidiary, Georgia
     Properties, Inc. ("GPI"), received advances of $650,000 on December 21,
     1995 and an additional $500,000 on February 1, 1996 from the same
     individual that purchased The Mart Shopping Center, in exchange for an
     option to purchase Appletree Townhouses for $3,500,000, which was
     exercised on March 31, 1996.
     
     The sales price of $3,500,000 consisted of the aforementioned advances by
     the buyer totaling $1,150,000, assumption of the existing first deed loan
     by the buyer in the amount of $1,048,795 and a purchase money note for the
     balance equal to $1,301,205.  The purchase money note paid interest from
     the date of sale at 8% per annum until it was paid in December 1996.  In
     addition, the buyer was required to prepay $250,000 of this note on May 1,
     1996, which was paid in April 1996.  A gain of $327,735, related to the
     sale of this property and the liquidation of the Appletree Subsidiary, was
     reported in 1996.
     
     Florida land:  The Company owned undeveloped land in Ft. Lauderdale,
     Florida which is zoned for commercial/industrial use.  This parcel was
     sold for $216,000 in August 1996, and the Company reported a gain of
     $190,489. 
    
     Colony Ridge Apartments:  Colony Ridge Apartments is an apartment complex
     in Decatur, Georgia which was constructed in 1968 and consists of 23
     two-story buildings containing a total of 212 apartment units.  This
     property is currently being marketed and is expected to be sold during
     1997.
     
     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 are
     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 commencing December 8, 1994.
     
     The Company retained a contingent interest in the cash flows of these
     partnerships.  It  is entitled to receive any cash available from property
     operations, to the extent it exceeds approximately $61,000 annually, and
     any refinancing proceeds up to a total of approximately $4.5 million, plus
     interest at 9.25% per annum on the outstanding balance of this amount. 
     Any proceeds of sale are to be allocated, first, 99.1% to the new partners
     until they have received 135% of their investment, less any prior
     distributions.  
    
     Any remaining proceeds from a sale are to be allocated to the Company up
     to $6 million, less any distributions from operations or refinancings as
     described above.  These commitments have not been reflected in the
     Company s financial statements since their ultimate realization cannot
     reasonably be determined.  In addition, at such time as any tax benefits
     have been utilized, the Company has the right to purchase the interests of
     the newly admitted partners for 135% of their contributed capital (minus
     prior cash payments).  Should the Company choose not to exercise such
     right to purchase the partners  interests, the newly admitted
     administrative general partner has the right to require the Company to
     sell all of the assets and liquidate the partnerships.  The Company has
     not funded any operating deficits and has not received any excess cash
     flows during 1996 and 1995.
     
     The results of the Real Estate Segment have been reported separately as
     discontinued operations in these consolidated statements of operations.  

                                        -27-
     <PAGE>
     NOTE 6 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT (CONTINUED)
     
     Summarized below are the operations of the Company's Real Estate Segment
     for the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
                                                        For the year ended     
                                                            December 31,        
                                                          1996        1995   
<S>                                                   <C>          <C>
 Total revenues                                       $1,281,248   $2,260,458

 Costs and expenses:
   Operations and maintenance                            656,097    1,368,620
   Property taxes and insurance                          128,435      286,335
   Depreciation and amortization                         366,421      662,831
   Net interest                                          145,917      323,478
   Corporate administrative expenses                     177,685      157,375

 Total costs and expenses                              1,474,555    2,798,639

 Net loss                                             $ (193,307)  $ (538,181)
</TABLE>

     The components of the Real Estate Segment net assets from discontinued
     operations in the consolidated balance sheet as of December 31, 1996 are
     as follows:
<TABLE>
      <S>                                                          <C>          

      Rental properties, less accumulated depreciation
        of $1,163,173                                              $3,116,778
      Mortgage note payable                                        (1,239,914)
      Accounts payable                                                (73,773)
      Other, net                                                       46,205

                                                                   $1,849,296
</TABLE>

     NOTE 7 - DISCONTINUED OPERATION - INDUSTRIAL PRODUCTS SEGMENT
     
     The Industrial Products Segment was discontinued during 1995.  It
     consisted of the Company s wholly-owned subsidiary, Jensen Corporation
     ("Jensen"), which manufactured and distributed machinery used primarily by
     commercial laundries, large institutions and hotels as well as commercial
     compactor products for waste disposal.  On November 10, 1995, the Company
     sold 100% of the common stock of Jensen, located in Fort Lauderdale,
     Florida to AMKO USA, Inc. ("AMKO"), an affiliate of AMKO International B.V.
     which is based in The Netherlands, for $1,726,000.  The sale proceeds
     included cash of $415,000 and a promissory note receivable in the amount
     of $1,311,000 which is secured by Jensen s stock, accounts receivable and
     inventory.  The $1,311,000 note is guaranteed in its entirety by AMKO
     International B.V., and the sole shareholder of AMKO International B.V.
     guaranteed the first $585,000 of principal payments.
     
     AMKO also agreed to cause Jensen to pay to the Company a $765,000
     obligation in the form of a note,  which was loaned to Jensen, $500,000 of
     which was prior to the sale and $265,000 which was simultaneous with the
     sale, and an intercompany balance payable by Jensen to the Company of
     $337,650, which are secured by the assets of Jensen.  The first $765,000
     of principal payments under these notes are guaranteed by AMKO
     International B.V.
     
                                         -28-
<PAGE>
     NOTE 7 - DISCONTINUED OPERATION - INDUSTRIAL PRODUCTS SEGMENT (CONTINUED)
     
     The $1,311,000 note as amended in August and October 1996 and again in
     February 1997 bears interest at 8.5% per annum and is payable in varying
     installments with the balance due in October 1997.  The $765,000 note as
     amended in August and October 1996 and again in February 1997 bears
     interest at 8.5% per annum and is payable in varying installments with the
     balance due in March 1998.  The $337,650 note as amended in August and
     October 1996 and again in February 1997 bears interest at 8.5% per annum
     and is payable in varying installments with the balance due in March 1998.
     
     The Company believes that the assets securing the three notes, and the
     operations of Jensen as they now exist, may not be sufficient to provide
     for payment of the notes.  The Company has limited financial information
     concerning AMKO and the guarantors of the notes.  Consequently, no
     assurance can be given that the principal or interest due on the notes
     will be realized in full.  As of December 1996, AMKO had paid principal of
     $400,000, and the Company agreed to a $50,000 reduction in the face amount
     of the $1,311,000 Note to settle certain Contract disputes. The Company is
     currently in discussion with AMKO to assure that AMKO will pay all future
     payments on a timely basis. The Company recorded a reserve of $1,150,000
     for these notes as of December 31, 1996.  Based upon the guarantees and
     estimated liquidation value of Jensen s assets which were pledged as
     collateral for these notes, the Company believes that this reserve is
     adequate.
     
     The results of the Industrial Products Segment have been reported
     separately as discontinued operations in the consolidated statements of
     operations.
     
     Summarized below are the operations of the Company s Industrial Products
     Segment for the year ended December 31, 1995.
    <TABLE>                                            
    <S>                                            <C>
     Total revenues                                $3,920,718

     Costs and expenses:
       Cost of sales                                3,073,708
       Selling and administrative                     935,908
       Reserve for note receivable                  1,000,000
       Depreciation and amortization                   15,493
       Interest expense                                 4,956
       Corporate administrative expenses               82,862

     Total costs and expenses                       5,112,927

     Net loss                                     $(1,192,209)
</TABLE>

     NOTE 8 - INCOME TAXES
     
     Effective January 1, 1993, the Company changed its method of accounting
     for income taxes from the deferred method to the asset and liability
     method required by FASB Statement No. 109, "Accounting for Income Taxes". 
     The implementation of Statement 109 did not have a material impact on the
     Company s financial statements.
     
     At December 31, 1996, the Company had federal net operating carryforwards
     of approximately $9 million.  The net operating losses will expire in the
     various years through December 31, 2011.  The Company had state net
     operating loss carryforwards of various amounts in the states in which it
     operates.
     
                                        -29-
<PAGE>     
     NOTE 8 - INCOME TAXES (CONTINUED)
     
     At December 31, 1996, 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,          
                                            1996                  1995       
                                     Amount     Percent    Amount     Percent
<S>                               <C>           <C>       <C>         <C>   
Income taxes at federal
  statutory rate                  $(1,295,513)  (34.0)%   $(726,081)  (34.0)%
Increase (decrease) in
  income taxes resulting from:                                    
   Change in valuation allowance    1,295,513    34.0        717,221    33.6
   Other                                -          -           8,860     0.4
                                  $     -          - %    $   -           - %
</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, 1996 and 1995 of approximately $3,609,000 and
     $2,789,000, respectively.  This amount consists primarily of net operating
     losses and reserves recorded for book and not yet deducted for tax.  A
     valuation allowance has been established to reduce this net deferred asset
     to zero based upon the uncertainty regarding realization of such tax
     benefits given the Company s history of operating losses.
     
     NOTE 9 - SHAREHOLDERS' EQUITY
     
     Outstanding warrants to purchase shares of the Company's common stock,
     adjusted to reflect the reverse stock split, together with the related
     grant and expiration dates as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
                                                             Expiration Date
Description                 Shares     Price    Grant Date     December 31, 
<S>                         <C>        <C>        <C>             <C>
Investor Warrants           658,333    $ 9.00     1988            1997

Investor Warrants            71,428     10.50     1988            1997

Management Warrant          133,333      9.00     1988            1997
</TABLE>

     All warrants were exercisable at December 31, 1996.  During 1996 and 1995,
     9,333 and 3,000 shares, adjusted to reflect the reverse stock split, of
     director and consultant options expired, respectively.  No other warrants
     were exercised or expired during the two-year period ended December 31,
     1996.
     
                                        -30-
     <PAGE>
     NOTE 9 - 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 January 1997.  The agreement was
     further modified in February 1997, at which time the Company paid $100,000
     and the agreement was terminated. 
     
     On May 11, 1995, the Company repurchased 3,333 shares of its common stock,
     adjusted to reflect the reverse stock split, for treasury at a cost of
     $9,675.
     
     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
     1996.
     
     NOTE 10 - 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.
     
     NOTE 11 - 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.  These liabilities
     have been accrued in the financial statements as of December 31, 1996.
     
     As of December 31, 1996, NCB Insurance Ltd., the Bermuda subsidiary of
     NCBC, did not meet the minimum statutory capital requirement under Bermuda
     insurance regulations.  While the Company is currently in discussions with
     the Bermuda regulators to satisfactorily resolve this situation,
     management believes that this matter will have no significant impact on
     the intent or the ability of the reinsurance facility to settle all
     reinsurance recoverables.

     NOTE 12 - LITIGATION
     
     The Company was a named defendant in a product liability lawsuit related
     to Jensen Corporation.  In August 1996 the lawsuit was settled at no cost
     to the Company. 

                                        -31-

<PAGE>
     Item 8 - Changes In and Disagreements With Accountants on Accounting and
     Financial Disclosure
     
     Incorporated by reference from Form 8-K filed by the Company on November
     17, 1995 and Form 8-K filed by the Company on February 20, 1996.
     
                          PART III
     
     Item 9 - Directors, Executive Officers, Promoters, and Control Persons;
     Compliance With Section 16(a) of the Exchange Act
     
     At March 21, 1997, 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               Biscayne Holdings, Inc.
      Age 46                                            (apparel
      Director since 1988                               manufacturer and
                                                        distributor)
    
                                 Director               Anderson Group, Inc.
                                                        (dental
                                                        and electronics)
     
                                 Director               Electro Star, Inc. 
                                                        (printer circuit
                                                        board 
                                                        manufacturer)
     
     John C. Shaw               Chief Executive
                                Officer                 NCMC
      Director and              since 1994
      Chief Executive   
      Officer
      Age 43                    Managing Director       Resource Holdings, 
      Director since 1988       since 1983              Ltd.
                                                        (investment firm)
     
                                1989 to 1992            NCMC
                                Co-Chairman      
     
                                Trustee                 Wedgestone Financial
                                                        (diversified lender
                                                        and truck parts
                                                        manufacturer)
     
     Herbert J. Jaffe           President 1988-1996     NCMC
      Director
      Age 62                    1983-95 Chairman        NCM Management Ltd.
      Director since 1987                               (management company
                                                        of NCMC)
     
     David Faulkner             1989-1996               Memorex Telex Inc.
      Director                  Vice Chairman/CFO       (computer industry)
      Age 56
      Director since
      July 1994

                                         -32-
    <PAGE> 
     Jeffrey Goldstein          Chief Financial         NCMC
                                Officer       
      Age 51                    since September 1996
                      
                                Chief Executive         NCBC
                                Officer 
                                since June 1995
     
                                President and Trustee   Wedgestone Financial
                                since October 1992      (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 1996, 1995 and 1994.
<TABLE>
<CAPTION> 
                                              Annual Compensation            
                                                           Other Annual       
                               Year    Salary    Bonus     Compensation
<S>                           <C>     <C>        <C>          <C>
John C. Shaw                  1996    125,000       -            -
Chief Executive Officer       1995    142,500       -            -   
                              1994    257,500       -          4,000

James J. Pinto                1996    125,000
Chairman                      1995    142,500       -            -   
                              1994    257,500       -          4,000
                                             
Jeffrey S. Goldstein (1)     1996     80,000        -            -   
Chief Executive Officer      1995     70,000        -            -   
NCBC                         1994      -            -            -    
Herbert J. Jaffe (2)         1996     86,664        -            -   
President and                1995    100,000        -            -
Chief Operating Officer      1994    100,000     10,000        4,000
 
Ken M. Klein (3)             1995    150,000        -            -   
 President                   1994    170,835        -          8,333
 NCBC
</TABLE>

(1)  Mr. Goldstein was hired as Chief Executive Officer of NCBC in June
     1995 and as Chief Financial Officer of NCMC in September 1996.           
(2)  Mr. Jaffe resigned as president in October 1996.
(3)  Mr. Klein left the Company in November 1996 to pursue other
     interests.
     
     The Company presently provides various non-cash benefits to its executive
     officers, but it does not believe, except as noted, that such benefits
     exceeds the lesser of $50,000 or 10% of the cash compensation set forth
     for each of the executive officers of the preceding cash compensation
     table.
     
     No stock options were granted to the individuals named in the summary
     compensation table during 1996 and none of those individuals exercised a
     stock option during 1996.  The following table sets forth for each of the
     executive officers named in the summary compensation table above, the
     year-end value of unexercised warrants.

                                         -33-
<PAGE>
<TABLE>
<CAPTION>
                   Aggregated Warrant Exercised in 1996
                       And Year-End Warrant Values

                                                     Value of Unexercised
                        Number of Unexercised        In-the-Money Warrants
                       Warrants at Year End (#)         at Year-end ($)    
                    Exercisable   Unexercisable    Exercisable   Unexercisable
    Name      
<S>                      <C>          <C>              <C>           <C>
John C. Shaw..........    73,375      -                -             -
James J. Pinto........   282,194      -                -             -
Herbert J. Jaffe......    40,000      -                -             -
</TABLE>                                       

     James J. Pinto serves as Chairman of the Board of Directors.  Pursuant to
     an employment agreement entered into in 1990, and subsequently modified
     effective January 1, 1994, Mr. Pinto has acted in the same capacity. 
     Pursuant to a Consulting Agreement dated as of January 1, 1992, Mr. Shaw
     provided services as a consultant to the Company on a nonexclusive basis
     through December 31, 1993.  This agreement was amended effective January
     1, 1994 whereby Mr. Shaw acted in the capacity of Chief Executive Officer
     through March 31, 1995.  
     
     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. They will receive annual compensation of $125,000 each
     plus Mandatory Incentive Bonuses which are based on achieving certain
     Company operating objectives, plus  Discretionary Bonuses which may be
     granted at the option of the Board of Directors.  If these agreements are
     terminated by the Company other than for cause, disability or death,
     Messrs. Pinto and Shaw shall be entitled to receive their base
     compensation through the existing term.  Messrs. Pinto and Shaw are
     continuing to work on a month to month basis and are currently discussing
     extensions of their respective agreements with the Company.
     
     Messrs. Pinto and Shaw were each compensated $125,000 and $142,500 for
     1996 and 1995, respectively, pursuant to these agreements.  In addition,
     in 1996 and 1995 the Company paid $91,120 and $108,659, respectively, for
     other costs, certain office expenses, including rent for the Company's
     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.
     
     During 1996, members of the Board of Directors, who are not either
     employees, officers or consultants of the Company, received quarterly
     compensation of $2,000 and $250 for each meeting attended.  Directors are
     entitled to be reimbursed for reasonable out of pocket expenses incurred
     with respect to meetings of the Board.

                                         -34-
<PAGE>
     Item 11 - Security Ownership of Certain Beneficial Owners and Management
     
     The following table sets forth certain information regarding the
     beneficial ownership of NCMC common stock as of March 21, 1997, 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.
     
     The Investor Warrants referred to below consist of warrants to acquire an
     aggregate of 729,761 shares of NCMC common stock, at any time prior to
     December 31, 1997.  Of the aggregate Investor Warrants, 658,333 permit
     acquisition of shares of NCMC common stock at an exercise price of $9.00
     per share (the "$9.00 Investor Warrants") and 71,428 permit acquisition of
     shares of NCMC common stock at an exercise price of $10.50 per share (the
     "$10.50 Investor Warrants").  The Management Warrants, referred to below,
     consist of warrants to acquire an aggregate of 133,333 shares of NCMC
     common stock at any time prior to December 31, 1997 for an exercise price
     of $9.00 per share.  The Management Warrants and the Investor Warrants are
     collectively referred to as the Warrants.
     
<TABLE>
<CAPTION>
                             Beneficial Owner of        Beneficial Owner of
                            NCMC Common Stock (1)      NCMC Common Stock (2)
                          Number of    Percent of      Number of  Percent of
                           Shares        Class          Shares       Class   
<S>                        <C>     <C>   <C>            <C>     <C>   <C>            
Name and address of NCMC
  Beneficial Owner (3)  

RHEC, L.P.                 388,681       23.2%          757,728 (4)   29.9%
 10 East 53rd Street
 New York, NY 10022

Herbert J. Jaffe            11,512 (5)     *             51,512 (6)    2.0%

James J. Pinto             309,748       18.5%          591,942 (7)   23.3%

John C. Shaw               483,570 (8)   28.9%          925,992 (8)   36.5%

David Faulkner                -            *               -            * 

Jeffrey S. Goldstein          -            *               -            * 

All executive officers
 and directors as a
 group(5 persons)         804,830 (9)    48.1%        1,569,446 (10)   61.8%
</TABLE>
              
* less than 1%

                                         -35-
<PAGE>
      NOTES TO TABLE OF BENEFICIAL OWNERS AND MANAGEMENT
   
         1.   This column assumes that none of the Warrants have been
              exercised.
         
         2.   This column assumes that all of the Warrants have been
              exercised.
         
         3.   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.
         
         4.   Includes 369,047 shares of NCMC common stock which may be
              issued upon the exercise of Investor Warrants.  Mr. Shaw, a
              director of the Company, is a managing director of Resource
              Holdings, Ltd., the general partner of RHEC, L.P.
         
         5.   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.
         
         6.   Includes 40,000 shares of NCMC common stock issuable on
              exercise of Management Warrants, 11,379 shares owned by NCM
              Holdings and 133 shares owned directly by Mr. Jaffe.
         
         7.   Includes 309,748 shares owned directly by Mr. Pinto and 282,194
              shares upon exercise of Investor Warrants.
         
         8.   Mr. Shaw is a managing director of Resource Holdings, Ltd., the
              general partner of RHEC, L.P.  Except for 94,889 shares plus
              73,375 shares  issuable on exercise of Investor Warrants which
              are owned directly by Mr. Shaw, the shares of NCMC common stock
              shown as beneficially owned by Mr. Shaw are the same shares
              shown as beneficially owned by RHEC, L.P.
     
         9.   Includes 400,060 shares of NCMC common stock owned by NCM
              Holdings and RHEC, L.P.
         
         10.  Includes 400,060 shares of NCMC common stock owned by NCM
              Holdings and RHEC, L.P., and 783,449 shares of NCMC common stock
              issuable on exercise of all the Warrants and the Options.

                                        -36-
     <PAGE>
     Item 12 - Certain Relationships and Related Transactions
     
     The Company and NCM Management Ltd. ("NCM") have agreed that NCM will
     provide management services through December 1997 and provide personnel,
     equipment and facilities for the day to day management and operations of
     the Company including supervision of its remaining real estate properties. 
     As compensation for its services, NCM received a monthly management fee of
     4% of revenues from Colony Ridge Apartments, and 6% of revenues from
     Redbird Trails Apartments and North Oak Apartments from January 1, 1996
     until August 31, 1996 and 4% for all properties thereafter.  Mr. Jaffe, a
     director of the Company, is NCM's Chairman of the Board.  He also owns
     approximately 33% of the outstanding capital stock of NCM and may be
     deemed to have a material interest in all payments to NCM. During 1996,
     NCM received an aggregate of $146,500 for management services rendered to
     the Company, included in which amount was Mr. Jaffe's compensation as an
     officer of the Company.
     
     The Company maintains an office in New York for use by its executive
     officers 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 1997.  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 $86,120 to Resource for providing such
     office space and related services in 1996.  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' 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, 1996.

                                         -37-
     <PAGE>
                           PART IV
     
     Item 13 - Exhibits and Reports on Form 8-K
     
     The following documents are filed as part of this report:
     
     (a)   Exhibits:
       3.1    Articles of Incorporation and By-Laws of National Capital
              Management Corporation (the "Company" or "NCMC")
              (incorporated by reference from Schedule 4 to the Prospectus
              included in the Registration Statement on Form S-4 of the
              Company  (No. 33 19149) filed on December 18, 1987 (the
              "Registration Statement")).
       3.2    Certificate of Amendment of Certificate of Incorporation of
              National Capital Management Corporation implementing one for
              three reverse stock split dated June 29, 1995. 
       3.3    Resolution of Board of Directors amending NCMC By-Laws dated
              April 12,1995 (incorporated by reference from Exhibit
              3(ii).1 of the Annual Report on Form 10-K of the Company
              filed on April 17, 1995).
       4.1    Form of Warrant for 2,400,000 shares of NCMC common stock
              (incorporated by reference from Exhibit 4.1 of the Annual
              Report on Form 10-K of the Company filed on March 29, 1988).
       4.2    Form of Warrant for 214,285 shares of NCMC common stock
              (incorporated by reference from Exhibit 4.2 of the Annual
              Report on Form 10-K of the Company filed on March 29, 1988).
      10.1    Registration Agreement dated February 25, 1988 between NCMC
              and certain other persons (incorporated by reference from
              Exhibit 10.3 of the Annual Report on Form 10-K of the
              Company filed on March 29, 1988).
      10.2    Employment Agreement dated September 1, 1990 between James
              J. Pinto and NCMC (incorporated by reference from Exhibit
              10.4 of the Annual Report on Form 10-K of the Company filed
              on April 1, 1991).
      10.3    Amended and Restated Employment Agreement dated as of June
              15, 1994 between James J. Pinto and NCMC (incorporated by
              reference from Exhibit 10.3 of the Annual Report on Form 10-K of
              the Company filed on April 17, 1995).
      10.4    Agreement dated as of April 1, 1995 between James J. Pinto
              and NCMC (incorporated by reference from Exhibit 10.4 of the
              Annual 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).
 
                                         -38-
<PAGE>   
     10.8     Second Amended and Restated Agreement of Limited Partnership
              of Redbird Trails Associates, L.P. by and among NCQ Redbird,
              Inc. National Corporate Tax Credit Fund and National
              Corporate Tax Credit, Inc. dated as of November 23, 1994
              (incorporated by reference from Exhibit 10.3 of the Annual
              Report on Form 10-K of the Company filed on April 17, 1995).
     10.9     Operating Deficit and Rental Achievement Agreement among
              Redbird Trails Associates, L.P., National Capital
              Management Corp., National Corporate Tax Credit Fund and
              National Corporate Tax Credit, Inc. dated as of June 6,
              1994 (incorporated by reference from Exhibit 10.7 of the
              Quarterly Report on Form 10-QSB of the Company filed on
              August 15, 1994).
      10.10   Second Amended and Restated Agreement of Limited
              Partnership of Signature Midwest, L.P. by and among NCQ
              North Oak, Inc. National Corporate Tax Credit Fund and
              National Corporate Tax Credit, Inc. dated as of November
              23, 1994 (incorporated by reference from Exhibit 10.3 of
              the Annual Report on Form 10-K of the Company filed on
              April 17, 1995).
      10.11   Operating Deficit and Rental Achievement Agreement among
              Signature Midwest, L.P., National Capital Management Corp.,
              National Corporate Tax Credit Fund and National Corporate
              Tax Credit, Inc. dated as of November 23, 1994
              (incorporated by reference from Exhibit 10.3 of the Annual
              Report on Form 10-K of the Company filed on April 17,
              1995).
      10.12   Employment Agreement dated as of March 1, 1994 between NCMC
              and Kenneth M. Klein (incorporated by reference from
              Exhibit 10.15 of the Annual Report on Form 10-KSB of the
              Company filed on March 31, 1994).
      10.13   Loan Agreement by and between Bank One and National Capital
              Benefits Corp. dated December 29, 1995.
      10.14   Security Agreement and Assignment by National Capital
              Benefits Corp. for the benefit of Bank One dated December
              28, 1995.
      10.15   Senior Subordinated Note and Warrant Purchase Agreement by
              and between National Capital Benefits Corp. and Banc One
              Capital Partners V, Ltd. dated December 29, 1995.
      10.16   Warrant Certificate from National Capital Benefits Corp. in
              favor of Banc One Capital Partners V, Ltd. dated December
              29, 1995.
      10.17   Property Purchase Agreement by and between National Capital
              Management Corporation and William R. Dixon, Jr. for sale
              of The Mart Shopping Center dated July 26, 1995.
      10.18   Option Agreement by and between Georgia Properties, Inc.
              and William R. Dixon, Jr. for the sale of Appletree
              Townhouses dated December 21, 1995.
      10.19   Promissory Note from William R. Dixon, Jr. in favor of
              Georgia Properties, Inc. dated March 29, 1996.
      10.20   Agreement of Purchase and Sale of Stock among AMKO USA,
              Inc., National Capital Management Corporation and Jensen
              Corporation dated October 30, 1995.
      10.21   Promissory Note from AMKO USA, Inc. in favor of National
              Capital Management Corporation for $1,311,000 dated
              November 1995.
     
                                         -39-
<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 October 30, 1996 with the commission
     indicating that although the Company submitted a request for continued
     listing on The NASDAQ Stock Market, the qualifications panel determined
     that an exception would not be granted to the Company and that the
     Company's common stock would not be traded on The NASDAQ Stock Market,
     although eligible to trade on the OTC Bulletin Board.
     
     The Company filed a Form 8-K dated December 16, 1996 with the commission
     announcing that in light of medical advances with respect to AIDS
     patients, the Company was reducing its office staff and focusing on the
     management and administration of its existing portfolio of life insurance
     policies.

                                        -40-
<PAGE>

                                SIGNATURES
     
     Pursuant to the requirements of section 13 or 15(d) of the Securities
     Exchange Act of 1934, the registrant has duly caused this report to be
     signed on its behalf by the undersigned, thereunto duly authorized.
     
     
                             NATIONAL CAPITAL MANAGEMENT CORPORATION
                             
                        
     
                             By:                             /s/ JOHN C. SHAW
                                  John C. Shaw
                                  Chief Executive Officer, 
     
     
                        
                             By:                       /s/ JEFFREY S. GOLDSTEIN
                                  Jeffrey S. Goldstein
                                  Principal Financial Officer 
                                  and Principal Accounting 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 21, 1997
     
     
     
                             By:                             /s/ JAMES PINTO  
                                  James Pinto, Director
                                  March 21, 1997
     
     
                             By:                              /s/ JOHN C. SHAW
                                   John C. Shaw, Director
                                   March 21, 1997
     
     
                             By:                             /s/ DAVID FAULKNER
                        
                                   David Faulkner, Director
                                   March 21, 1997

                                      -41-