SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q


[X]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

For the Quarterly Period Ended March 31, 1999



Or

[  ]     Transition Report Pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934

For the transition period from                        to
                             Commission file number 0-29120

                           MICROCAP LIQUIDATING TRUST
                     (Successor to The MicroCap Fund, Inc.)
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


New York                                                             13-7110611
--------------------------------------------------------------------------------
(State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
Incorporation or Organization)


c/o Raymond S. Troubh
Ten Rockefeller Plaza, Suite 712
New York, New York                                                     10020
-------------------------------------------------------------------------------
(Address of Principal Executive Offices)                          (Zip Code)


Registrant's Telephone Number, Including Area Code:  (800) 888-6534


Not applicable
-------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock as of the latest  practicable  date.  As of May 1, 1998 there were
2,427,281 units of beneficial interest outstanding.


<PAGE>


                           MICROCAP LIQUIDATING TRUST
                     (SUCCESSOR TO THE MICROCAP FUND, INC.)
                                      INDEX


PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements.

Statements of Net Assets in Liquidation as of March 31, 1999 (Unaudited) and 
December 31, 1998

Schedule of Portfolio Investments as of  March 31, 1999 (Unaudited)

Statements of Operations for the Three Months ended March 31, 1999 and 1998 
(Unaudited)

Statements  of Changes in Net Assets for the Three  Months  ended March 31, 1999
and 1998 (Unaudited)

Statements of Cash Flows for the Three Months ended March 31, 1999 and 1998 
(Unaudited)

Notes to Financial Statements (Unaudited)

Item 2.       Management's Discussion and Analysis of Financial Condition and 
Results of Operations.

Item 3.       Quantitative and Qualitative Disclosure about Market Risk.


PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings.

Item 2.       Changes in Securities.

Item 3.       Defaults upon Senior Securities.

Item 4.       Submission of Matters to a Vote of Security Holders.

Item 5.       Other Information.

Item 6.       Exhibits and Reports on Form 8-K.



<PAGE>


                         PART I - FINANCIAL INFORMATION
Item 1.   Financial Statements.

MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF NET ASSETS IN LIQUIDATION
<TABLE>

                                                                                           March 31, 1999      December 31,
                                                                                             (Unaudited)             1998       
Assets

<S>                                       <C>             
Portfolio investments at fair value (cost $1,937,500 as of
   March 31, 1999 and December 31, 1998)                                                    $       484,375    $        484,375
Cash and cash equivalents - unrestricted                                                          1,116,126             813,832
Cash and cash equivalents - restricted                                                              370,000           2,790,218
Accrued interest receivable                                                                          13,291              14,826
Other receivables                                                                                         -              50,000
                                                                                            ---------------    ----------------
   Total assets                                                                                   1,983,792           4,153,251
                                                                                            ---------------    ----------------

Liabilities

Accounts payable and accrued expenses                                                                42,086              81,513
Due to Trustee                                                                                       18,205                   -
Litigation settlement reserve                                                                             -             278,200
                                                                                            ---------------    ----------------
   Total liabilities                                                                                 60,291             359,713
                                                                                            ---------------    ----------------

Net Assets in Liquidation                                                                   $     1,923,501    $      3,793,538
                                                                                            ===============    ================


Net assets in liquidation per Unit of beneficial interest                                          $   0.79              $ 1.56
                                                                                                   ========              ======

Number of Units of beneficial interest outstanding                                                2,427,281           2,427,281
                                                                                               ============           =========

</TABLE>















See notes to financial statements.


<PAGE>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
As of March 31, 1999
<TABLE>

Issuer / Position                                                                   Cost              Fair Value       Net Assets(1)

Publicly-Held Securities:

Unigene Laboratories, Inc.
<S>                 <C>                           
Warrant to purchase 475,000 shares of Common Stock
   at $1.375, expiring 7/7/00                                                   $           0       $            0       0.00%
                                                                                -------------       --------------     -------

Privately-Held Securities:

First Colony Acquisition Corp.
106,562 shares of Series A1 Preferred Stock                                           594,174              148,544
240,179 shares of Series B1 Preferred Stock                                         1,343,326              335,831
Warrant to purchase 7,560 shares of Common Stock
   at $5.00, expiring 1/24/00                                                               0                    0
                                                                                -------------       --------------
                                                                                    1,937,500              484,375      25.18%
                                                                                -------------       --------------    --------

Total Portfolio Investments (A)                                                 $   1,937,500       $      484,375      25.18%
                                                                                =============       ==============    ========

</TABLE>

(1) Represents fair value as a percentage of net assets.

(A)  All  portfolio  securities  held  as  of  March  31,  1999  are  non-income
     producing.  As of March 31, 1999,  all of the Trust's  portfolio  companies
     were located in the eastern  United  States.  The  investments,  using fair
     value as a percentage  of net assets,  represented  biotechnology,  25.18%,
     consumer products, 0%, preferred stock, 25.18%, and common stock, 0%.







     See notes to financial statements.


<PAGE>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>


                                                                                    Three Months              Three Months
Ended March 31,                                                                    Ended March 31,
                                                                                        1999                      1998          
                                                                                 -------------------     -----------------------
INVESTMENT INCOME AND EXPENSES

Income:
<S>                                                                               <C>                       <C>              
   Interest from U.S. Treasury Bills and repurchase agreements                    $        40,934           $          73,756
   Other income                                                                                 -                      11,815
                                                                                  ---------------           -----------------
   Total investment income                                                                 40,934                      85,571
                                                                                  ---------------           -----------------
Expenses:
   Administrative expenses                                                                 19,629                      18,058
   Legal fees                                                                               7,259                      73,711
   Accounting fees                                                                         11,000                      11,250
   Trustee fees                                                                            43,705                      25,500
   Transfer agent and custodian fees                                                        5,416                       5,428
   Litigation expense                                                                       3,225                           -
   Other operating expenses                                                                   276                         656
                                                                                  ---------------           -----------------
   Total expenses                                                                          90,510                     134,603
                                                                                  ---------------           -----------------

NET INVESTMENT LOSS                                                                       (49,576)                    (49,032)

   Change in net unrealized depreciation of investments                                         -                     (29,687)
                                                                                  ---------------           -----------------
NET DECREASE IN NET ASSETS IN LIQUIDATION                                         $       (49,576)          $         (78,719)
                                                                                  ===============           ================= 

</TABLE>

See notes to financial statements.



<PAGE>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
<TABLE>




                                                                                      Three Months             Three Months
                                                                                     Ended March 31,      Ended March 31,    
1999                                                                                                1998  
----------------------------------------------------------------------------------          --------------
Changes in net assets resulting from operations:

Net investment loss                                                                 $       (49,576)        $       (49,032)
<S>                                                                                                                 <C>     
Change in net unrealized depreciation of investments                                              -                 (29,687)
                                                                                    ---------------         ---------------
Net decrease in net assets resulting from operations                                        (49,576)                (78,719)
                                                                                    ---------------         ---------------

Change in net assets from distributions:

Cash distributions paid                                                                  (1,820,461)                      -
                                                                                    ---------------         ---------------

Decrease in net assets in liquidation                                                    (1,870,037)                (78,719)

Net assets in liquidation at beginning of period                                          3,793,538               6,931,370
                                                                                    ---------------         ---------------

N  et Assets in Liquidation at End of Period                                        $     1,923,501         $     6,852,651
                                                                                    ===============         ===============


Net assets per unit of beneficial interest                                               $     0.79               $    2.82
                                                                                         ==========               =========

Number of units of beneficial interest                                                    2,427,281                 2,427,281
                                                                                          =========                 =========

</TABLE>


See notes to financial statements.


<PAGE>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>


                                                                                      Three Months            Three Months
Ended March 31,                                                                     Ended March 31,
                                                                                          1999                    1998          
                                                                                 --------------------    -----------------------

CASH FLOWS USED FOR OPERATING ACTIVITIES

<S>                                                                               <C>                      <C>              
Net investment loss                                                               $        (49,576)        $        (49,032)
Adjustments to reconcile net investment loss to cash
   used for operating activities:
(Decrease) increase in liabilities                                                        (299,422)                  43,172
Decrease in other assets                                                                    51,535                    3,095
                                                                                  ----------------         ----------------
Cash flows used for operating activities                                                  (297,463)                  (2,765)
                                                                                  ----------------         ----------------
CASH FLOWS USED FOR FINANCING ACTIVITIES

Cash distributions paid                                                                  (1,820,461)                      -
                                                                                    ---------------         ---------------
Cash flows used for financing activities                                                 (1,820,461)                      -
                                                                                    ---------------         ---------------

Decrease in cash and cash equivalents                                                   (2,117,924)                  (2,765)

Cash and cash equivalents at beginning of period                                         3,604,050                5,442,020
                                                                                  ----------------         ----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        $      1,486,126         $      5,439,255
                                                                                  ================         ================



</TABLE>


See notes to financial statements.


<PAGE>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
NOTES TO FINANCIAL STATEMENTS (Unaudited)

1.     Organization and Purpose

The MicroCap  Liquidating  Trust (the "Trust"),  a liquidating trust established
under the laws of the State of New York, is the successor entity to The MicroCap
Fund, Inc., formerly Commonwealth Associates Growth Fund, Inc. (the "Fund"). The
Fund,  which was a  Maryland  corporation  formed on  January  26,  1993,  was a
non-diversified,  closed-end  management  investment  company and  operated as a
business  development  company  under the  Investment  Company Act of 1940.  The
Fund's investment  objective was to achieve  long-term  capital  appreciation of
assets,  rather than current income,  by investing in debt and equity securities
of  emerging  and  established   companies  that  management   believed  offered
significant growth potential.

Pursuant to its Plan of Liquidation,  which was approved at a special meeting of
shareholders on July 23, 1996, the Fund  transferred all of its remaining assets
and its remaining fixed and contingent liabilities to the Trust, effective as of
the close of business on February 24, 1997, the Fund's termination date.

Also  effective as of the close of business on February 24, 1997,  the 2,188,085
common  shares and 191,357  preferred  shares of the Fund,  outstanding  on such
date,  were  automatically  deemed to represent  2,427,281  units of  beneficial
interest  in the Trust  ("Units").  As a result,  on  February  24,  1997,  each
shareholder  of the Fund  received  one Unit of the Trust for each  share of the
Fund's common stock held on such date and 1.25 Units of the Trust for each share
of the Fund's preferred stock held on such date.

2.       Significant Accounting Policies

Valuation of  Investments - Portfolio  investments  are carried at fair value as
determined  quarterly  by the  Trustee.  The fair  value  of each  publicly-held
portfolio  security is adjusted to the closing  public  market price on the last
day of the  calendar  quarter  discounted  by a  factor  of 0% to 20% for  sales
restrictions,  if any. Factors considered in the determination of an appropriate
discount include:  underwriter lock-up,  affiliate status by owning greater than
10% of the  outstanding  shares of a  portfolio  security,  and other  liquidity
factors such as the size of the Trust's  position in a given  portfolio  company
compared to the trading history of the public security. Privately-held portfolio
securities  are carried at cost until  significant  developments  affecting  the
portfolio company provide a basis for change in valuation, including adjustments
to reflect meaningful third-party transactions in the private market.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management 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  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Investment  Transactions  - Realized  gains and losses on  investments  sold are
computed on a specific  identification basis. The Trust records its transactions
on the accrual method.

Income Taxes - The Trust is a complete  pass-through  entity for federal  income
tax  purposes  and,  accordingly,  is not subject to income tax.  Instead,  each
beneficiary  of the Trust is required to take into account,  in accordance  with
such  beneficiary's  method of accounting,  such beneficiary's pro rata share of
the Trust's income, gain, loss,  deduction or expense,  regardless of the amount
or timing of distributions to beneficiaries.



<PAGE>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
NOTES TO FINANCIAL STATEMENTS - continued (Unaudited)

Cash and  Cash  Equivalents  - The  Trust  invests  its  available  cash in U.S.
Treasury Bills and overnight repurchase agreements  collateralized by securities
issued by the U.S.  Government or its agencies.  Such investments are considered
to be cash  equivalents  for the  statement  of cash  flows.  The  cash and cash
equivalents  of the Trust  include  restricted  cash of  $370,000,  comprised of
$250,000  relating to certain  indemnification  agreements  with Mr.  Raymond S.
Troubh, the Trustee of the Trust, and certain of the Fund's former directors and
officers and $120,000  relating to the potential  reimbursement of out-of-pocket
expenses of a shareholder  group that had solicited proxies in opposition to the
Fund's Plan of Liquidation. See Notes 4 and 5 below.

3.     Related Party Transactions

In July 1996, the Fund entered into an agreement with Raymond S. Troubh, whereby
Mr. Troubh provided  management services to the Fund in connection with its Plan
of  Liquidation  and has  continued to provide such services to the Trust during
its liquidation.  For services rendered under the agreement, Mr. Troubh receives
$8,500 per month,  plus 1% of the amount of each  distribution  (other  than the
initial  distribution paid by the Fund on August 30, 1996), plus a percentage of
any  proceeds  of sale or other  revenues  received  by the Fund or the Trust in
excess of the investment in the particular asset. Mr. Troubh was paid 5% of such
excess for amounts received in 1996 and 1997, 4% in 1998, and will be paid 2% in
1999 and 0% thereafter.

4.     Litigation

Regency  Holdings   (Cayman)  Inc.   ("Holdings")  and  Regency  Maritime  Corp.
("Maritime")  (collectively  "Regency")  along with other  related  entities are
debtors in a bankruptcy case pending in the United States  Bankruptcy  Court for
the Southern  District of New York, 95 B 45197 (TLB). In that  bankruptcy  case,
Regency  initiated an adversary  proceeding  against the Fund and certain  other
persons and entities to recover monies that it paid them on the ground that such
payments constituted  voidable  preferences or fraudulent  conveyances under the
Bankruptcy Code.  Holdings maintained that a payment made to the Fund between 90
days and one year prior to the filing of  Regency's  bankruptcy  petition in the
amount of  $1,940,000  to satisfy a bridge loan the Fund made to Regency,  was a
voidable preference because Kamal Mustafa, the former president of the Fund, was
a director of Regency (and  therefore an insider) for a portion of the time that
such amounts were due and owing. Holdings also maintained that such relationship
had an  impact on the  decision  to pay these  amounts.  Additionally,  Holdings
maintained  that a  payment  of  $145,728  made to the  Fund to  redeem  certain
warrants issued with respect to the loan  transaction was made within 90 days of
the filing of the  bankruptcy  petition and was therefore a voidable  preference
without  regard to  whether  Mustafa  was an  insider.  Alternatively,  Maritime
asserted  that  the  foregoing  payments  were  made  from  its  funds,  without
reasonably equivalent consideration,  and were therefore avoidable as fraudulent
conveyances.  The Fund served an answer  denying the  allegations of the amended
complaint and contested  Regency's  claims.  Pursuant to an order filed with the
Bankruptcy  Court,  the Trust had set aside  approximately  $2.4  million  in an
interest-bearing  cash account pending resolution by the Bankruptcy Court of the
adversary proceeding. Substantial discovery has been undertaken. A limited trial
based upon written  submissions to address the validity of Regency's  preference
claims was held in  December  1997 and  resulted  in a judgment  in favor of the
Trust, dismissing the preference claims with prejudice. A mediator was appointed
to attempt to  facilitate  a mutually  beneficial  settlement  of the  remaining
fraudulent  conveyance  claims,  and a mediation  session occurred on October 5,
1998. During that session, the parties reached a tentative consensual resolution
of the fraudulent  conveyance  claim.  The proposed  settlement was finalized in
March 1999 and the  defendants  agreed to pay a total of $535,000,  of which the
Trust's share was $281,425, exclusive of legal and other fees and expenses.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
NOTES TO FINANCIAL STATEMENTS - continued (Unaudited)

5.     Other Information

On July 15, 1996,  the Fund entered into a settlement  agreement with a group of
shareholders of the Fund's common stock that had solicited proxies in opposition
to the  Fund's  Plan of  Liquidation  (the "13D  Group").  Under the  settlement
agreement,  the Fund and the 13D Group agreed that,  (i) certain  members of the
13D Group and affiliated  persons would cease to have business  dealings with or
receive compensation from the Fund, (ii) a 13D Group member would have the right
to receive  notice of and attend all meetings of the Board of Directors  and any
committee  meeting thereof,  and (iii) subject to the approval of the Securities
and Exchange Commission (the "SEC"), the Trust would reimburse the 13D Group for
its reasonable out of pocket  expenses up to $120,000 in connection with the 13D
Group's efforts.  An application  relating to such reimbursement by the Trust to
the 13D Group was filed with the SEC on September 27, 1996.

Effective on August 1, 1996,  the Fund entered into  indemnification  agreements
with Mr. Raymond Troubh and certain of the Fund's former directors and officers.
Pursuant  to such  agreements,  the Fund  established  an  escrow  account  that
contains  approximately  $250,000  in cash or cash  equivalents  to provide  for
potential  legal fees and settlement  payments  relating to certain actions that
may arise against such individuals relating to activity involving the Fund.

6.       Cash Distribution

On  March  2,  1999,  the  Trust   announced  that  an  additional   liquidation
distribution  would be paid to unit  holders of record on March 16,  1999.  This
distribution  totaled  $1,820,461  or $.75 per  Unit,  and was paid on March 31,
1999.


<PAGE>


Item 2.      Management's Discussion and Analysis of Financial Condition and 
             Results of Operations.

Liquidity and Capital Resources

As of March  31,  1999,  the  Trust  held  cash and  cash  equivalents  totaling
$1,486,126,  of which $370,000 was restricted due to certain  contingencies,  as
discussed below.  The Trust's cash balances are invested in U.S.  Treasury Bills
or overnight  repurchase  agreements  collateralized by securities issued by the
U.S.  Government or its agencies.  Interest earned from such investments for the
three months ended March 31, 1999,  totaled  $40,934.  Interest earned from such
cash  balances  in future  periods  is  subject to  fluctuations  in  short-term
interest rates and changes in cash equivalent balances held by the Trust.

The restricted cash and cash  equivalents  balance of $370,000,  is comprised of
$250,000  relating to certain  indemnification  agreements  with Mr.  Raymond S.
Troubh,  the  Trustee of the Trust,  and  certain  of the former  directors  and
officers of The MicroCap  Fund,  Inc. (the "Fund") and $120,000  relating to the
potential  reimbursement of out-of-pocket  expenses of a shareholder  group that
had solicited proxies in opposition to the Fund's Plan of Liquidation.  See Note
5 of the Notes to Financial Statements.

On March 2, 1999,  the Trust  declared an  additional  liquidation  distribution
totaling  $1,820,461 or $.75 per Unit. Such  distribution  was paid on March 31,
1999 to unit  holders  of record on March 16,  1999.  The Trust  expects to make
additional cash  distributions  to  beneficiaries  of the Trust as the remaining
assets are  liquidated and after the payment of, or reserve for, all current and
contingent liabilities.

Results of Operations

The Trust is  pursuing  the  orderly  liquidation  of its assets and  subsequent
distribution  to unit holders of the proceeds from such  liquidation,  including
the Trust's  remaining  cash  balances,  after payment of, or provision for, all
current, future and contingent liabilities.  Prior to the creation of the Trust,
the Fund had begun to pursue  this  objective  upon the  approval of its Plan of
Liquidation in July 1996.

Realized and Unrealized Gains and Losses from Portfolio Investments
For the three  months  ended  March 31,  1999,  the  Trust  had no  realized  or
unrealized gains or losses from portfolio investments.

For the three months ended March 31,  1998,  the Trust had a $29,687  unrealized
loss  resulting  from the  downward  revaluation  of its  investment  in Unigene
Laboratories,  Inc.,  due to the reduced  public market price of Unigene  common
stock at the end of the  period.  There were no  realized  gains or losses  from
portfolio investments during the three months ended March 31, 1998.

Investment Income and Expenses
For the  three  months  ended  March  31,  1999 and  1998,  the  Trust had a net
investment loss of $49,576 and $49,032, respectively. The slight increase in net
investment  loss for the three  months  ended  March 31, 1999 as compared to the
same period in 1998 resulted from a $44,637 decrease in investment income almost
fully offset by a $44,093  decrease in  operating  expenses for the 1999 period.
The decrease in investment  income  primarily  was due to a $32,822  decrease in
interest income from  short-term  investments for the 1999 period as compared to
the same  period in 1998.  This  decrease in  interest  income  from  short-term
investments primarily is due to a reduction of funds available for investment in
such  securities  during the three months  ended March 31, 1999  compared to the
same period in 1998. The Trust also had $11,815 of non-recurring  income for the
three months ended March 31, 1998.

The decrease in operating expenses for the three months ended March 31, 1999, as
compared to the same period in 1998,  primarily was due to a $66,452 decrease in
legal fees.  Such  decrease  reflects  the  declining  legal work  required  for
activities  relating to the Trust during the 1999 period as compared to the same
period in 1998.  This  decrease was partially  offset by an $18,205  increase in
Trustee fees resulting from the additional fee payable for the cash distribution
paid to  beneficial  holders  on March  31,  1999.  See  Note 3 of the  Notes to
Financial Statements.

Net Assets in Liquidation
As of March 31, 1999, net assets in liquidation totaled  $1,923,501,  a decrease
of $1,870,037  from net assets in  liquidation  of $3,793,538 as of December 31,
1998.  This decrease is the result of the $1,820,461 cash  distribution  paid in
March 1999  combined with the $49,576 net  investment  loss for the three months
ended  March 31,  1999.  As of March 31,  1999,  the net asset value per Unit of
beneficial interest was $0.79, compared to $1.56 as of December 31, 1998.

Year 2000 Issue - The Year 2000 ("Y2K")  concern  arose  because  many  existing
computer  programs  use only the last two digits to refer to a year.  Therefore,
these computer  programs do not properly  recognize a year that begins with "20"
instead of "19".  If not  corrected,  many computer  applications  could fail or
create erroneous results. The impact of the Y2K concern on the operations of the
Trust is currently being assessed.

Palmeri  Fund  Administrators,   Inc.  (the  "Administrator")  provides  certain
administrative and accounting services for the Trust,  including  maintenance of
the books and  records of the  Trust,  preparation  and  issuance  of  financial
reports and tax information to beneficial  holders of the Trust and other day to
day administrative and accounting functions.

The  Administrator  has  assessed its  computer  hardware and software  systems,
specifically  as they  relate to the  operations  of the  Trust.  As part of its
investigation  of possible Y2K concerns,  the  Administrator  contracted with an
outside computer service provider to examine all of the Administrator's computer
hardware and software  applications,  to identify any Y2K concerns.  This review
and evaluation has been completed and certain Y2K concerns have been identified.
The  Administrator  is in the process of purchasing,  installing and testing the
necessary software patches and new computer hardware required to ensure that all
of its computer systems are Y2K compliant.  This correction phase is expected to
be completed by September 1999.

Additionally, the Administrator has contacted all outside service providers used
to assist the Administrator with the administration of the Trust's operations to
ascertain  whether these  entities are addressing the Y2K issue within their own
operation.  There can be no guarantee that the  Administrator's  systems or that
systems of other companies  providing services to the Trust will be corrected in
a timely manner.

Costs to be incurred by the Trust relating to the investigation or correction of
potential Y2K problems affecting the Trust are not expected to be material.

The Y2K  issue is a  global  concern  that may  affect  all  business  entities,
including the Trust's remaining portfolio  companies.  The Trustee is continuing
to assess  the  impact of Y2K  concerns  affecting  these  portfolio  companies.
However,  the  extent to which any  potential  Y2K  concerns  could  affect  the
valuations  of these  companies  is  presently  unknown.  At the  time  such Y2K
concerns  are  identified,  if any,  the  Trustee  will  take such  issues  into
consideration  in adjusting  the fair value of the Trust's  remaining  portfolio
investments.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

The Trust is subject to market  risk  arising  from  changes in the value of its
portfolio  investments,  investments in U.S. Treasury Bills and interest-bearing
cash  equivalents,  which may result from  fluctuations  in  interest  rates and
equity prices.  The Trust has calculated its market risk related to its holdings
of these  investments  based on changes  in  interest  rates and  equity  prices
utilizing  a  sensitivity  analysis.  The  sensitivity  analysis  estimates  the
hypothetical  change in fair values, cash flows and earnings based on an assumed
10% change  (increase  or  decrease)  in interest  rates and equity  prices.  To
perform the  sensitivity  analysis,  the assumed 10% change is applied to market
rates  and  prices  on  investments  held  by the  Trust  as of  the  end of the
accounting period.

The Trust's portfolio  investments had an aggregate fair value of $484,375 as of
March 31,  1999.  An assumed 10% decline  from this fair value would result in a
reduction  to the  fair  value of such  investments  and an  unrealized  loss of
$48,438.

Market  risk  relating  to  the  Trust's   interest-bearing   cash  equivalents,
investments  in  U.S.  Treasury  Bills  and  overnight   repurchase   agreements
collateralized by securities issued by the U.S.  Government or its agencies held
as of March 31, 1999 is considered to be immaterial.



<PAGE>


                           PART II - OTHER INFORMATION

Item 1.       Legal Proceedings.

Regency  Holdings   (Cayman)  Inc.   ("Holdings")  and  Regency  Maritime  Corp.
("Maritime")  (collectively  "Regency")  along with other  related  entities are
debtors in a bankruptcy case pending in the United States  Bankruptcy  Court for
the Southern  District of New York, 95 B 45197 (TLB). In that  bankruptcy  case,
Regency  initiated an adversary  proceeding  against the Fund and certain  other
persons and entities to recover monies that it paid them on the ground that such
payments constituted  voidable  preferences or fraudulent  conveyances under the
Bankruptcy Code.  Holdings maintained that a payment made to the Fund between 90
days and one year prior to the filing of  Regency's  bankruptcy  petition in the
amount of  $1,940,000  to satisfy a bridge loan the Fund made to Regency,  was a
voidable preference because Kamal Mustafa, the former president of the Fund, was
a director of Regency (and  therefore an insider) for a portion of the time that
such amounts were due and owing. Holdings also maintained that such relationship
had an  impact on the  decision  to pay these  amounts.  Additionally,  Holdings
maintained  that a  payment  of  $145,728  made to the  Fund to  redeem  certain
warrants issued with respect to the loan  transaction was made within 90 days of
the filing of the  bankruptcy  petition and was therefore a voidable  preference
without  regard to  whether  Mustafa  was an  insider.  Alternatively,  Maritime
asserted  that  the  foregoing  payments  were  made  from  its  funds,  without
reasonably equivalent consideration,  and were therefore avoidable as fraudulent
conveyances.  The Fund served an answer  denying the  allegations of the amended
complaint and contested  Regency's  claims.  Pursuant to an order filed with the
Bankruptcy  Court,  the Trust had set aside  approximately  $2.4  million  in an
interest-bearing  cash account pending resolution by the Bankruptcy Court of the
adversary proceeding. Substantial discovery has been undertaken. A limited trial
based upon written  submissions to address the validity of Regency's  preference
claims was held in  December  1997 and  resulted  in a judgment  in favor of the
Trust, dismissing the preference claims with prejudice. A mediator was appointed
to attempt to  facilitate  a mutually  beneficial  settlement  of the  remaining
fraudulent  conveyance  claims,  and a mediation  session occurred on October 5,
1998. During that session, the parties reached a tentative consensual resolution
of the fraudulent  conveyance  claim.  The proposed  settlement was finalized in
March 1999 and the  defendants  agreed to pay a total of $535,000,  of which the
Trust's share was $281,425, exclusive of legal and other fees and expenses.

Item 2.       Changes in Securities.

Not applicable.

Item 3.       Defaults Upon Senior Securities.

Not applicable.

Item 4.       Submission of Matters to a Vote of Security Holders.

No matter was brought to a vote of security holders during the period covered by
this report.

Item 5.       Other Information.

Not applicable.

Item 6.       Exhibits and Reports on Form 8-K.

              (a)  Exhibits

                    (27)   Financial Data Schedule

              (b)  Reports on Form 8-K

                   None.


<PAGE>


                                   SIGNATURES



Pursuant  to the  requirements  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.



              MICROCAP LIQUIDATING TRUST


              /s/    Raymond S. Troubh                            
              Raymond S. Troubh
              Trustee



Date:         May 17, 1999