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, 1997

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 9, 1997 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, 1997 (Unaudited) and 
February 24, 1997

Schedule of Portfolio Investments as of March 31, 1997 (Unaudited)

Statements  of  Operations  for the Period from  February  25, 1997 to March 31,
 1997 and for the Three Months ended May 31, 1996
(Unaudited)

Statements  of Changes in Net Assets for the Period from  February  25, 1997 to
 March 31, 1997 and for the Three Months ended May
31, 1996 (Unaudited)

Statements  of Cash Flows for the Period from  February  25, 1997 to March 31, 
1997 and for the Three  Months  ended May 31, 1996
(Unaudited)

Notes to Financial Statements (Unaudited)

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


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>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF NET ASSETS IN LIQUIDATION
As of March 31, 1997 and February 24, 1997
<TABLE>

                                                                                      March 31, 1997     February 24, 1997
                                                                                       (Unaudited)            (Predecessor)
ASSETS

Portfolio investments at fair value (cost $2,224,750 at
<S>      <C> <C>               <C> <C>                                             <C>                       <C>              
   March 31, 1997 and February 24, 1997)                                           $      2,344,286          $       2,696,593
Cash and cash equivalents - unrestricted                                                  4,798,985                  4,781,028
Cash and cash equivalents - restricted                                                    2,790,218                  2,790,218
Accrued interest receivable                                                                  38,056                     25,959
Receivable from settlement agreement                                                        600,000                    650,000
Other assets                                                                                 44,461                     24,846
                                                                                   ----------------          -----------------
   Total assets                                                                          10,616,006                 10,968,644
                                                                                   ----------------          -----------------

LIABILITIES

Accounts payable - legal                                                                  1,168,771                  1,076,982
Accounts payable - other                                                                    136,075                    108,351
                                                                                   ----------------          -----------------
   Total liabilities                                                                      1,304,846                  1,185,333
                                                                                   ----------------          -----------------

NET ASSETS IN LIQUIDATION                                                          $      9,311,160          $       9,783,311
                                                                                   ================          =================

</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, 1997
<TABLE>
                                                                                                                         % of
Issuer / Position                                                                   Cost              Fair Value       Net Assets(1)

Publicly-Held Securities:
Bennett Environmental Inc.
<C>                                                                              <C>                <C>                <C> 
112,500 shares of Common Stock                                                   $     47,250       $       85,536     .92%
                                                                                -------------       -------------- --------

Unigene Laboratories, Inc.
Warrant to purchase 615,000 shares of Common Stock
   at $1.375, expiring 7/7/00                                                               0            1,230,000      13.21%
                                                                                -------------       --------------      ------

YES! Entertainment Corporation
Warrant to purchase 11,437 shares of Common Stock
   at $15.30 per share, expiring 7/16/98                                                    0                    0           0%
                                                                                -------------       --------------     --------

Privately-Held Securities:
First Colony Acquisition Corp.
106,562 shares of Preferred Stock                                                     594,174              297,087
6% Convertible Promissory Note due 11/1/97(2)                                       1,343,326              671,663
Warrant to purchase 7,560 shares of Common Stock
   at $5.00, expiring 1/24/00                                                               0                    0
                                                                                -------------       --------------
                                                                                    1,937,500              968,750      10.40%
                                                                                -------------       --------------      ------
Oh-La-La! Inc.
9% Convertible Senior Note(2)                                                         140,000               34,800
9% Convertible Senior Note(2)                                                         100,000               25,200
                                                                                -------------       --------------
                                                                                      240,000               60,000     .65%
                                                                                -------------       -------------- --------

Total Portfolio Investments                                                     $   2,224,750       $    2,344,286      25.18%
                                                                                =============       ==============      ======
</TABLE>



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

(2)  Non-income producing securities.


     See notes to financial statements.


<PAGE>


MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>

                                                                                                                Three Months
                                                                                          Period From               Ended
                                                                                       February 25, 1997      May 31, 1996
                                                                                       to March 31, 1997      (Predecessor)

INVESTMENT INCOME AND EXPENSES

Income:
<S>                                                                                    <C>                    <C>             
   Interest from short-term investments                                                $       36,303         $        128,473
   Interest and dividends from portfolio investments                                                -                   56,498
   Other interest income                                                                        2,844                        -
                                                                                       --------------         ----------------
   Total investment income                                                                     39,147                  184,971
                                                                                       --------------         ----------------

Expenses:
   Legal fees                                                                                 121,063                  580,544
   Accounting fees                                                                             14,000                   24,178
   Trustee fees                                                                                 8,500                        -
   General and administrative expenses                                                         14,362                   52,964
   Transfer agent and custodian fees                                                            1,066                    3,457
   Mailing and printing                                                                             -                   24,844
   Salary expense                                                                                   -                   85,903
   Consulting fees                                                                                  -                  125,040
   Amortization of deferred organizational costs                                                    -                    9,843
   Directors' fees and expenses                                                                     -                   20,678
   Insurance expense                                                                                -                   11,366
   Other operating expenses                                                                         -                   37,825
                                                                                       --------------         ----------------
   Total expenses                                                                             158,991                  976,642
                                                                                       --------------         ----------------

NET INVESTMENT LOSS                                                                          (119,844)                (791,671)
                                                                                       --------------         ----------------

NET REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO
   INVESTMENTS

     Net realized gain from portfolio investments                                                   -                  295,242
     Change in net unrealized appreciation of investments                                    (352,307)               2,280,534
                                                                                       --------------         ----------------
     Net realized and unrealized gain (loss) from portfolio investments                      (352,307)               2,575,776
                                                                                       --------------         ----------------

NET (DECREASE) INCREASE IN NET ASSETS
   IN LIQUIDATION                                                                      $     (472,151)        $      1,784,105
                                                                                       ==============         ================

</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
                                                                                         Period From                Ended
                                                                                      February 25, 1997      May 31, 1996
                                                                                      to March 31,1997       (Predecessor)

<S>                                                                                  <C>                      <C>       
Net investment loss                                                                  $       (119,844)        $(791,671)
Net realized gain from portfolio investments                                                        -                    295,242
Change in net unrealized appreciation of portfolio
   investments                                                                               (352,307)                 2,280,534
                                                                                     ----------------         ------------------

(Decrease) increase in net assets in liquidation                                             (472,151)                 1,784,105

Net assets in liquidation at beginning of period                                            9,783,311                 17,235,158
                                                                                     ----------------         ------------------

N  ET ASSETS IN LIQUIDATION AT END OF PERIOD                                         $      9,311,160         $       19,019,263
                                                                                     ================         ==================


Net asset per unit                                                                          $    3.84                 $     7.84
                                                                                            =========                 ==========

Number of units of beneficial interest
   or common equivalent shares                                                              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
                                                                                         Period From                Ended
                                                                                      February 25, 1997      May 31, 1996
                                                                                    to March 31, 1997        (Predecessor)

CASH FLOWS PROVIDED FROM (USED FOR)
   OPERATING ACTIVITIES

<S>                                                                                   <C>                    <C>                
Net investment loss                                                                   $        (119,844)     $         (791,671)
Adjustments to reconcile net investment loss to cash
   provided from (used for) operating activities:
Amortization of deferred organizational costs                                                         -                   9,843
Depreciation expense                                                                                498                   1,148
Increase in payables and other liabilities                                                      119,513                 468,703
Decrease in receivables and other assets                                                         17,790                 219,482
                                                                                      -----------------      ------------------
Cash flows provided from (used for) operating activities                                         17,957                 (92,495)
                                                                                      -----------------      ------------------

CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES

Cost of portfolio investments purchased                                                               -                 (44,040)
Repayment of note                                                                                     -               1,310,000
                                                                                      -----------------      ------------------
Cash flows provided from investing activities                                                         -               1,265,960
                                                                                      -----------------      ------------------


Increase in cash and cash equivalents                                                            17,957               1,173,465
Cash and cash equivalents at beginning of period                                              7,571,246               9,878,280
                                                                                      -----------------      ------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $       7,589,203      $       11,051,745
                                                                                      =================      ==================
</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"),  is the successor 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.

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 ("Unit").  As a result,  each  shareholder of the Fund on February 24,
1997,  became the holder of one Unit for each share of the Fund's  common  stock
held on such date and 1.25 Units 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 the Trust's publicly-held
portfolio  securities is adjusted to the closing public market price on the last
day of the  fiscal  quarter  discounted  by a  factor  of 0% to  20%  for  sales
restrictions. 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 (UNAUDITED) - continued



The  transfer  of net assets  from the Fund to the Trust is  considered  to be a
liquidating distribution of the Fund for federal income tax purposes. Therefore,
each holder of the common or preferred  stock of the Fund will recognize gain or
loss  equal to the  difference  between  the net fair  value of the  liquidating
distribution,  of $4.03 per common equivalent share,  deemed received in respect
of such shares and the holder's adjusted tax basis in such shares.  Such gain or
loss is a capital gain or loss if such shares were held as a capital asset,  and
such capital gain or loss is long-term if such shares are held for more than one
year as of February 24, 1997, the date the liquidating  distribution  was deemed
to have been made.

Cash and  Cash  Equivalents  - The  Trust  invests  its  available  cash in U.S.
Treasury Bills or overnight repurchase  agreements  collateralized by securities
issued by the U.S.  Government or its  agencies.  Investments  in U.S.  Treasury
Bills and overnight repurchase  agreements are considered to be cash equivalents
for the statement of cash flows.

The  cash  and  cash  equivalents  of  the  Trust  include  restricted  cash  of
approximately  $2.8 million,  comprised of $2.4 million  relating to the Regency
Holdings (Cayman) Inc. litigation,  $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 will  continue 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, at the time any
proceeds  of sale or other  revenues  are  received  by the Fund or the Trust in
excess of the investment in the particular  asset, Mr. Troubh will receive 5% of
such excess for amounts  received in 1996 or 1997, 4% of such excess for amounts
received in 1998, 2% in 1999 and 0% thereafter;  provided,  however,  that in no
event shall the total compensation paid to Mr. Troubh be less than $250,000. For
the period from February 25, 1997 to March 31, 1997,  the Trust paid fees to the
Trustee totaling $8,500.

4.     Litigation
On April 19, 1996, the Fund filed a complaint against Commonwealth Associates, a
registered  broker-dealer  and the  underwriter  of the  Fund's  initial  public
offering,   Michael  S.  Falk,  the  chief  executive  officer  of  Commonwealth
Associates,  a minority  shareholder  and  director of the Fund,  and Stephen J.
Warner,  a former  executive  officer of Commonwealth  Associates and the former
president of the Fund. The civil action, which was filed in federal court in the
Southern  District of New York,  alleged fraud,  breach of fiduciary  duties and
violations of the Investment Company Act of 1940. On December 24, 1996, the Fund
and the defendants agreed to a settlement of the complaint, whereby Commonwealth
Associates  will make  settlement  payments  to the Fund and the Trust  totaling
$1,150,000.  In connection  therewith,  the Fund  received  $500,000 in December
1996.  The  remaining  balance  of the  settlement  payments  is  being  paid in
installments  through December 15, 1997 and will earn interest at an annual rate
of 4.50%.  Commonwealth  Associates  has  delivered  securities  to the Trust as
collateral for the remaining payments. Such securities, which are held in escrow
by the Trust,  had a fair value that exceeded the $600,000  balance due from the
settlement  agreement as of March 31, 1997.  Through May 1, 1997,  the Trust had
received  additional  payments totaling $100,000.  Additionally,  as part of the
settlement,  the Fund and the defendants  agreed to pursue claims against former
counsel to the Fund.  The Trust would be entitled to receive 50% of any recovery
from such claims,

<PAGE>


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

after the  reimbursement  to  Commonwealth  Associates of all costs and expenses
associated with pursuing the claims.

The Fund is a creditor of PSSS, Inc. f/k/a Oh-La-La! Inc. ("PSSS"), which is the
subject of  proceedings  under chapter 11 of the United States  Bankruptcy  Code
pending in San Francisco, California (the "Bankruptcy Case"). In connection with
the Bankruptcy Case, Oh-La-La!  International,  S.A.  ("International"),  one of
PSSS's  largest  shareholders,  has filed a  precautionary  proof of claim  (the
"Precautionary  Proof of Claim"), on behalf of International and other similarly
situated  shareholders of PSSS, against,  among others, the Trust, certain other
creditors of PSSS, and parties  involved in the intended  underwriting  for, and
conduct of, an initial  public  offering which PSSS had  anticipated  would have
occurred in or about 1994. The Precautionary  Proof of Claim alleges a claim for
damages as a result of, among other things,  (a) the failure to  effectuate  the
intended initial public offering, and (b) the Bankruptcy  Court-approved sale of
PSSS's assets, which was allegedly prejudicial to PSSS's shareholders.  PSSS and
International  have taken no other action  regarding this claim. The Fund denied
liability  for the  claims  set  forth  in the  Precautionary  Proof  of  Claim.
Resolution efforts are ongoing.

Regency  Holdings   (Cayman)  Inc.   ("Holdings")  and  Regency  Maritime  Corp.
("Maritime"),   Plaintiffs  v.  The  MicroCap  Fund,  Inc.  f/k/a   Commonwealth
Associates Growth Trust, Inc., et al. Regency Holdings (Cayman) Inc. and Regency
Maritime Corp.  (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 under the Bankruptcy Code.  Regency
maintains  that a payment  Regency 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,  is 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.  Regency also maintains that such relationship had an impact
on Regency's decision to pay these amounts. Additionally, Regency maintains that
a payment of  $145,728  made by Regency 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 is therefore a voidable preference without
regard to whether Mustafa was an insider. In an amended complaint,  Regency also
asserted that the payments to the Fund constitute a fraudulent transfer,  as the
payments  were in fact made by Maritime and not Holdings.  Regency  asserts that
Maritime had no obligation to make such payments and received no value for them.
The Fund has served an answer denying the  allegations of the amended  complaint
and is vigorously  contesting Regency's claims.  Pursuant to an order filed with
the Bankruptcy Court, the Trust has set aside  approximately  $2.4 million in an
interest-bearing  cash account pending resolution by the Bankruptcy Court of the
adversary  proceeding.  At the present time,  discovery is underway to determine
the validity of the allegations asserted by Regency.

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

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


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.     Subsequent Event
In May 1997,  the Trust  declared  an interim  liquidating  distribution  of 
$1.00 per Unit,  to be paid on July 15, 1997 to unit
holders of record on June 30, 1997.


<PAGE>


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

Liquidity and Capital Resources

Pursuant to its Plan of  Liquidation,  the Fund  terminated  its  operations  on
February  24,  1997,  at which time the Fund  transferred  all of its  remaining
assets and  liabilities  to the  Trust,  including  $7,571,246  of cash and cash
equivalents.

On March 31, 1997, the Trust had cash and cash equivalents  totaling $7,589,203,
of which  $2,790,218 is 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 period
from February 25, 1997 to March 31, 1997, totaled $36,303.  Interest earned from
such cash balances in future  periods is subject to  fluctuations  in short-term
interest rates and changes in the Trust's cash balances.

The restricted cash and cash equivalents  balance of approximately $2.8 million,
is comprised  of $2.4 million  relating to the Regency  Holdings  (Cayman)  Inc.
litigation,  $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 of the Notes to
Financial Statements.

Additionally,  on March 31,  1997,  the Trust had  accounts  payable and accrued
liabilities totaling  $1,304,846,  of which $1,168,771 related to legal fees and
litigation  expenses.  The Fund has submitted  claims  against its directors and
officers liability  insurance policy, for the possible recovery of approximately
$250,000 of certain legal fees relating to former  officers and directors of the
Trust. The recovery of these amounts or any portion thereof remains uncertain.

In May 1997, the Trust declared an interim liquidating distribution of $1.00 per
Unit,  to be paid on July 15, 1997 to unit  holders of record on June 30,  1997.
Additional cash  distributions will be made to beneficiaries of the Trust as the
remaining  assets are  liquidated  and after the  payment of and 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 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 period from February 25, 1997 to March 31, 1997 (the "1997 period"), the
Trust had a $352,307  unrealized loss from its remaining  portfolio  investments
resulting  from the net  downward  revaluation  of its  publicly-held  portfolio
investments,  primarily  due to the  decreased  public  market  price of Unigene
Laboratories, Inc. common stock at the end of the period. There were no realized
gains or losses from portfolio investments during the 1997 period.

For the three months ended May 31, 1996,  the Fund had a $2,575,776 net realized
and  unrealized  gain from  portfolio  investments,  comprised of a $295,242 net
realized  gain from  portfolio  investments  and a  $2,280,534  increase  in net
unrealized appreciation of investments.

During the three months ended May 31, 1996,  the Fund sold  warrants to purchase
190,000  shares of  Accumed  International,  Inc.  common  stock  for  $313,329,
realizing a gain of $297,440.  Additionally  during the  quarter,  the Fund sold
12,500 shares of Accumed common stock for $49,213, realizing a loss of $2,198.

The $2,280,534  increase in net unrealized  appreciation  of investments for the
quarter  included  a  $2,438,446  net  unrealized  gain,  primarily  due  to the
increased public market price of Unigene  Laboratories,  Inc. and Shells Seafood
Restaurants,  Inc.  common  stock  at the end of the  quarter.  This  additional
unrealized  gain was offset by a $157,912  transfer from  unrealized to realized
gain due to the Accumed warrants sold during the quarter, as discussed above.

Investment Income and Expenses
The significant  decrease in net investment loss for the 1997 period as compared
to the 1996 period primarily  reflects the termination of the ongoing operations
of the  Fund,  the  adoption  of its Plan of  Liquidation  and  transfer  of its
remaining  assets to the Trust, as discussed  above. For the 1997 period and for
the three  months  ended May 31, 1996,  the Trust had a net  investment  loss of
$119,884 and $791,671, respectively.

Investment  income for the 1997 period, a period of slightly over one month, was
$39,147.  Investment  income  for the  fiscal  quarter  ended  May 31,  1996 was
$184,971.  The Trust had no interest or dividend income for the 1997 period, due
to the reduction in interest earning  portfolio  securities held during the 1997
period.  Such securities will continue to decline as the Trust proceeds with the
liquidation of its remaining assets.

The operating expenses of the Trust during the 1997 period consists of legal and
accounting fees,  consulting fees, Trustee fees,  custodial fees and general and
administrative expenses.  During the 1997 period, such expenses were incurred in
connection with ongoing litigation and the continued  liquidation of the Trust's
remaining  assets.  Expenses  incurred  during the  quarter  ended May 31,  1996
included certain ongoing expenses of the Fund, which will not be incurred by the
Trust, including salary expense, amortization expense, directors fees, insurance
and other expenses.

Net Assets in Liquidation
At March 31, 1997, net assets in liquidation totaled  $9,311,160,  a decrease of
$472,151  from the net assets of the Fund of  $9,783,331  at February  24, 1997.
This decrease was comprised of the $352,307 net  unrealized  loss from portfolio
investments and the $119,844 net investment  loss for the 1997 period.  At March
31, 1997,  the net asset value per Unit was $3.84,  compared to $4.03 per common
equivalent share at February 24, 1997.



<PAGE>


                           PART II - OTHER INFORMATION

Item 1.       Legal Proceedings.

On April 19, 1996, the Fund filed a complaint against Commonwealth Associates, a
registered  broker-dealer  and the  underwriter  of the  Fund's  initial  public
offering,   Michael  S.  Falk,  the  chief  executive  officer  of  Commonwealth
Associates,  a minority  shareholder  and  director of the Fund,  and Stephen J.
Warner,  a former  executive  officer of Commonwealth  Associates and the former
president of the Fund. The civil action, which was filed in federal court in the
Southern  District of New York,  alleged fraud,  breach of fiduciary  duties and
violations of the Investment Company Act of 1940. On December 24, 1996, the Fund
and the defendants agreed to a settlement of the complaint, whereby Commonwealth
Associates  will make  settlement  payments  to the Fund and the Trust  totaling
$1,150,000.  In connection  therewith,  the Fund  received  $500,000 in December
1996.  The  remaining  balance  of the  settlement  payments  is  being  paid in
installments  through December 15, 1997 and will earn interest at an annual rate
of 4.50%.  Commonwealth  Associates  has  delivered  securities  to the Trust as
collateral for the remaining payments. Such securities, which are held in escrow
by the Trust,  had a fair value that exceeded the $600,000  balance due from the
settlement  agreement as of March 31, 1997.  Through May 1, 1997,  the Trust had
received  additional  payments totaling $100,000.  Additionally,  as part of the
settlement,  the Fund and the defendants  agreed to pursue claims against former
counsel to the Fund.  The Trust would be entitled to receive 50% of any recovery
from such claims,  after the  reimbursement  to  Commonwealth  Associates of all
costs and expenses associated with pursuing the claims.

The Fund is a creditor of PSSS, Inc. f/k/a Oh-La-La! Inc. ("PSSS"), which is the
subject of  proceedings  under chapter 11 of the United States  Bankruptcy  Code
pending in San Francisco, California (the "Bankruptcy Case"). In connection with
the Bankruptcy Case, Oh-La-La!  International,  S.A.  ("International"),  one of
PSSS's  largest  shareholders,  has filed a  precautionary  proof of claim  (the
"Precautionary  Proof of Claim"), on behalf of International and other similarly
situated  shareholders of PSSS, against,  among others, the Trust, certain other
creditors of PSSS, and parties  involved in the intended  underwriting  for, and
conduct of, an initial  public  offering which PSSS had  anticipated  would have
occurred in or about 1994. The Precautionary  Proof of Claim alleges a claim for
damages as a result of, among other things,  (a) the failure to  effectuate  the
intended initial public offering, and (b) the Bankruptcy  Court-approved sale of
PSSS's assets, which was allegedly prejudicial to PSSS's shareholders.  PSSS and
International  have taken no other action  regarding this claim. The Fund denied
liability  for the  claims  set  forth  in the  Precautionary  Proof  of  Claim.
Resolution efforts are ongoing.

Regency  Holdings   (Cayman)  Inc.   ("Holdings")  and  Regency  Maritime  Corp.
("Maritime"),   Plaintiffs  v.  The  MicroCap  Fund,  Inc.  f/k/a   Commonwealth
Associates Growth Trust, Inc., et al. Regency Holdings (Cayman) Inc. and Regency
Maritime Corp.  (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 under the Bankruptcy Code.  Regency
maintains  that a payment  Regency 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,  is 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.  Regency also maintains that such relationship had an impact
on Regency's decision to pay these amounts. Additionally, Regency maintains that
a payment of  $145,728  made by Regency 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 is therefore a voidable preference without
regard to whether Mustafa was an insider. In an amended complaint,  Regency also
asserted that the payments to the Fund constitute a fraudulent transfer,  as the
payments  were in fact made by Maritime and not Holdings.  Regency  asserts that
Maritime had no obligation to make such payments and received no value for them.
The Fund has served an answer denying the  allegations of the amended  complaint
and is vigorously  contesting Regency's claims.  Pursuant to an order filed with
the Bankruptcy Court, the Trust has set aside  approximately  $2.4 million in an
interest-bearing  cash account pending resolution by the Bankruptcy Court of the
adversary  proceeding.  At the present time,  discovery is underway to determine
the validity of the allegations asserted by Regency.

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.



              THE MICROCAP LIQUIDATING TRUST


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



Date:         May 15, 1997