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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                                        OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ________ TO ________

                         Commission file number 0-23587

                            CHAPMAN HOLDINGS, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

             MARYLAND                                       52-2069777
    -------------------------------                    -------------------
    (State or Other Jurisdiction of                     (I.R.S.   Employer
    Incorporation or Organization)                     Identification No.)

          401 EAST PRATT STREET, 28TH FLOOR, BALTIMORE, MARYLAND 21202
          ------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

Issuer's telephone number, including area code: (410) 625-9656 
                                                --------------
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, PAR VALUE $0.001 PER SHARE
                    -----------------------------------------
                                (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 past 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 disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, and no disclosure will 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/

The issuer's revenues for its most recent fiscal year were:  $2,935,069.
                                                            ------------

The aggregate market value of the voting stock and non-voting common equity held
by non-affiliates computed by reference to the average bid and asked price of
such common equity on March 10, 1999 was $5,129,691.

                     APPLICABLE ONLY TO CORPORATE REGISTRANTS

The number of outstanding shares of Common Stock of the registrant as of 
March 10, 1999 was 2,953,622. Transitional Small Business Disclosure Format 
(check one).   Yes [ ]   No [ X ]

                       DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the Registrant's Annual Report to Stockholders for the
year ended December 31, 1998 and selected portions of the Proxy Statement
pertaining to the Annual Meeting are incorporated herein by reference into
Parts II and III.


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         Chapman Holdings, Inc. (the "Company") is an African-American owned and
controlled holding company. The Company's full service securities brokerage and
investment banking subsidiary, The Chapman Co., is registered as a broker-dealer
with the Commission and in 34 states and the District of Columbia, and is a
member firm of the National Association of Securities Dealers, Inc. (the
"NASD"). (Unless the context otherwise indicates, the Company and The Chapman
Co. are hereinafter referred to collectively as the "Company")

         The Company is headquartered at the World Trade Center--Baltimore, 401
East Pratt Street, 28th Floor, Baltimore, Maryland and its telephone number is
(410) 625-9656. The Company was incorporated in Maryland on December 12, 1997.
The Chapman Co. was incorporated in Maryland in 1986.

         The Company is headquartered in Baltimore, Maryland with sales offices
in Alabama, California, Colorado, Illinois, Pennsylvania, Tennessee
and Texas.

         The Company's primary sources of revenue are derived from brokerage
services, corporate finance, and government finance activities. These activities
are supported by the Company's research capabilities.

BROKERAGE SERVICES

         The Company provides brokerage services to institutional and retail
clients. Commissions are charged to these clients for executing buy and sell
orders for securities on national and regional exchanges and in the
over-the-counter market. The Company's primary source of revenue for its
brokerage business has historically been commissions generated from
institutional brokerage. The Company's institutional clients include investment
managers, corporate retirement plans and municipal retirement plan sponsors. The
Company maintains floor broker relationships on the New York, American and
Chicago Stock Exchanges and executes buy and sell orders in the over-the-counter
markets. Approximately 46% and 40% of the Company's revenue during 1998 and
1997, respectively, was derived from its brokerage business.

         The Company also participates in fixed income secondary market trading
in government securities primarily for fixed income investment managers,
municipal treasurers and other investment professionals. This business is done
on a competitive basis where the Company acts as a broker. Approximately 4% and
29% of the Company's revenue during 1998 and 1997, respectively, was derived
from secondary market trading.

         As of December 31, 1998, the Company employed 12 brokers.

         The Company is a market-maker with respect to the securities of five
companies.


                                       3


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CORPORATE FINANCE

         To date, the Company's corporate finance activities have been limited
primarily to participation in syndicates. The Company has been a member of over
200 underwriting syndicates for corporate issues, substantially all of which
were equity offerings. During 1998 and 1997, approximately 20% and 16%,
respectively, of the Company's revenue was derived from corporate finance
transactions. In 1998, over half of the Company's corporate finance revenue was
derived from the sale of the stock of Chapman Capital Management Holdings, Inc.,
an affiliate and former subsidiary of the Company for whom the Company acted as
sole underwriter. In 1997, over half of the Company's corporate finance revenue
was derived from the sale of the stock of DEM, Inc. for which the Company was
the sole underwriter. DEM, Inc. was a publicly-traded closed-end company managed
by Chapman Capital Management, Inc., a former subsidiary of the Company.

GOVERNMENT FINANCE

         The Company participates in the tax-exempt public finance market and
has managed, primarily as co-manager, over 250 transactions in 22 states and the
District of Columbia, including approximately 59 transactions in the past two
years. Over half of the total dollar amount of these transactions has been with
jurisdictions located in Alabama, California, Pennsylvania and Tennessee.

         During 1998 and 1997, approximately 17% and 13%, respectively, of the
Company's revenue was derived from management fees, financial advisory fees and
selling concessions in public finance transactions. The Company currently
employs four investment bankers whose primary responsibility is the development
of the Company's public finance business.

STRATEGY

         The Company intends to utilize its available resources to both exploit
its DEM strategic initiative and to expand its existing business activities.

         DOMESTIC EMERGING MARKETS

         The Company has implemented its Domestic Emerging Markets, or DEM,
strategy pursuant to which the Company markets financial services, primarily
investment banking services to domestic companies that are owned or controlled
by African-Americans, Asian-Americans, Hispanic Americans or women. As part of
the DEM strategy, the Company makes markets in the stocks of selected DEM
companies. The Company believes that the DEM market is underserved and its DEM
strategy will permit the Company to develop a market niche for its corporate
finance business.

         The Company has identified approximately 180 DEM companies and seeks to
establish relationships with such companies that intend to raise additional
equity or debt financing. The Company's target clients are small capitalization
companies traded in the over-the-counter market and privately-held companies
undertaking an initial public offering. While the size of any particular
offering may vary, the Company anticipates that most such transactions would
range from $2 million to $15 million. The Company seeks to manage or co-manage a
substantial portion of these underwritings in which it participates.


                                        4


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         The Company's ability to exploit its DEM strategy in the context of
corporate underwritings is dependent upon its ability to identify potential
clients fitting the DEM company profile and convincing such potential clients
that the Company is the right investment banking firm for their needs. The
Company has not conducted any independent research to test the marketability of
the DEM strategy, nor has the Company engaged in any significant marketing of
the strategy. Therefore, while the Company believes the concept to be viable,
the level of market acceptance is largely unknown. The Company intends to devote
a substantial amount of its resources to the execution of the DEM strategy.

         EXPANSION OF EXISTING BUSINESS

         The Company is expanding its existing business as follows:

         The Company is expanding its research capabilities, focusing primarily
on DEM companies, hiring additional brokers and marketing specialized products
to retail and institutional clients.

         In addition to the DEM corporate finance strategy discussed above, the
Company is aggressively seeking larger allocations in corporate underwriting
syndicates managed by other investment banking firms.

         The Company is seeking larger positions in state and local public 
finance transactions. As a result of its ability to undertake larger 
participations, the Company believes it is better positioned to seek manager 
roles in these transactions, entitling the Company to receive management fees 
in addition to selling concessions. The Company intends to expand its 
participation in the state and local public finance market by establishing a 
presence in states with major issuers of negotiated tax-exempt bonds and by 
seeking more assignments as manager of such transactions. The Company has 
identified California, New York, Texas, Illinois, Pennsylvania, Michigan, 
Ohio and Florida as representing over 45% of the dollar amount of aggregate 
tax-exempt bonds issued in the U.S. in 1997. In addition to its other 
offices, the Company currently has offices in Texas, Illinois and 
Pennsylvania and has recently opened an office in California. The Company 
intends to use its increased capital to expand its participation in federal 
agency debt transactions as a member of selling groups in direct offerings 
and syndicates, as well as aggressively seeking management roles in these 
offerings.

RESEARCH

         The Company currently employs four research analysts and provides
research primarily on selected DEM companies. The Company intends to
substantially increase the number of DEM companies covered by its research.

         The Company has created the DEM Index which tracks the results of
certain of those companies meeting the DEM profile. The Company believes that
inclusion of a DEM company in the DEM Index offers certain advantages such as
facilitating identification by fund managers and other institutions seeking to
invest in minority or women controlled businesses. The Company will seek to earn
fees from subscriptions to the DEM Index and the sale of limited information
regarding the companies included in the DEM Index.


                                       5


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CLEARING AGENT AND CUSTOMER CREDIT

         The Company utilizes the services of RPR Clearing Services, Inc. as 
its clearing agent on a fully disclosed basis (the "Clearing Agent"). The 
Clearing Agent processes all securities transactions and maintains the 
accounts of customers. Customer accounts are protected through the Securities 
Investor Protection Corporation for up to $500,000, of which coverage for 
cash balances is limited to $100,000. The Company has selected the Pershing 
Division of Donaldson, Lufkin & Jenrette Securities Corporation to replace 
RPR Clearing Services, Inc. as the Clearing Agent. The Company expects that 
Pershing will commence operations as the Company's clearing agent in 
mid-Summer 1999.

         The services of the Clearing Agent include billing, credit control,
receipt and custody and delivery of securities. The Clearing Agent provides the
operational support necessary to process, record and maintain securities
transactions for the Company's brokerage and distribution activities. The total
cost of the Clearing Agent's services to the Company is less than the cost the
Company would incur to provide these services itself.

         The Clearing Agent lends funds to the Company's customers through the
use of margin credit. These loans are made to customers on a secured basis, with
the Clearing Agent maintaining collateral in the form of salable securities,
cash or cash equivalents. Under the terms of the Company's clearing agreement,
the Company indemnifies the Clearing Agent for any loss on these credit
arrangements. As of December 31, 1998, the Company had approximately $2,559,189
of margin credit outstanding to its customers through its Clearing Agent. There
have been no defaults on margin loans in the last two years. The net interest
income to the Company from margin activities for the years ending December 31,
1997 and 1998 was not material.

GOVERNMENT REGULATION

         The securities business is subject to extensive and frequently changing
federal and state laws and substantial regulation under such laws by the
Commission and various state agencies and self-regulatory organizations, such as
the NASD. The Company is registered as a broker-dealer with the Commission and
is a member firm of the NASD. Much of the regulation of broker-dealers has been
delegated to self-regulatory organizations, principally the NASD, which has been
designated by the Commission as the Company's primary regulator. The NASD adopts
rules (which are subject to approval by the Commission) that govern its members
and conducts periodic examinations of member firms' operations. Securities firms
are also subject to regulation by state securities administrators in those
states in which they conduct business. The Company is registered as a
broker-dealer in 34 states and the District of Columbia.

         Broker-dealers are subject to regulations which cover all aspects of
the securities business, including sales methods and supervision, trading
practices among broker-dealers, use and safekeeping of customers' funds and
securities, capital structure of securities firms, record keeping and the
conduct of directors, officers and employees. Additional legislation, changes in
rules promulgated by the Commission and self-regulatory organizations, or
changes in the interpretation or enforcement of existing laws and rules, may
directly affect the mode of operation and profitability of broker-dealers.


                                        6


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         The Commission, self-regulatory organizations and state securities
commissions may conduct administrative proceedings which can result in censure,
fine, the issuance of cease-and-desist orders or the suspension or expulsion of
a broker-dealer, its officers or employees. The principal purpose of regulation
and discipline of broker-dealers is the protection of customers and the
integrity of the securities markets.

         The Company's mutual fund distribution business is subject to extensive
regulation as to its duties, affiliations, conduct and limitations on fees under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"), and the regulations
of the NASD. As discussed above, the Company is an NASD member. The NASD has
prescribed rules (Rule 2830 of the NASD Conduct Rules) with respect to maximum
commissions, charges and fees related to investment in any open-end investment
company registered under the 1940 Act.

         NET CAPITAL REQUIREMENTS

         As a registered broker-dealer and a member firm of the NASD, the
Company is subject to the net capital rule of the Commission. The net capital
rule, which specifies minimum net capital requirements for registered brokers
and dealers, is designed to measure the general financial integrity and
liquidity of a broker-dealer and requires that at least a minimum part of its
assets be kept in relatively liquid form. Net capital is essentially defined as
net worth (assets minus liabilities), plus qualifying subordinated borrowings
and less certain mandatory deductions that result from excluding assets not
readily convertible into cash and from valuing certain other assets, such as a
firm's positions in securities, conservatively. Among these deductions are
adjustments in the market value of securities to reflect the possibility of a
market decline prior to disposition. The Company has elected to compute its net
capital under the standard aggregate indebtedness method permitted by the net
capital rule, which requires that the ratio of aggregate indebtedness to net
capital, both as defined, shall not exceed a 15-to-1 ratio. At December 31,
1998, the Company had net capital and a net capital requirement of $797,382 and
$100,000, respectively. The Company's ratio of aggregate indebtedness to net
capital was .7 to 1.

         Failure to maintain the required net capital may subject a firm to
suspension or expulsion by the NASD, the Commission and other regulatory bodies
and ultimately may require its liquidation. The Company entered into a consent
agreement with the NASD regarding alleged violations of the net capital rules in
late 1993 and early 1994. Pursuant to such agreement, the Company and Mr.
Chapman were jointly fined $30,000 and Mr. Chapman was suspended from
association with the Company for 10 days. The Company has exceeded all net
capital requirements since such alleged violations. The net capital rule also
prohibits payments of dividends, redemption of stock and the prepayment or
payment in respect of principal of subordinated indebtedness if net capital,
after giving effect to the payment, redemption or repayment, would be less than
a specified percentage (currently 120%) of the minimum net capital requirement.
Compliance with the net capital rule could limit those operations of the
Company's brokerage subsidiary that require the intensive use of capital, such
as underwriting and trading activities, and also could restrict the Company's
ability to withdraw capital from its operating subsidiary, which in turn, could
limit the Company's ability to pay dividends, repay debt and redeem or purchase
shares of its outstanding capital stock.


                                       7


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COMPETITION

         The Company encounters intense competition in all aspects of its
securities business and competes directly with other securities firms, a
significant number of which have greater capital and other resources. In
addition to competition from firms currently in the securities business, there
has recently been increasing competition from other sources, such as commercial
banks and insurance companies offering financial services, and from other
investment alternatives. The Company believes that the principal factors
affecting competition in the securities industry are the quality and abilities
of professional personnel, including their ability to effectuate a firm's
commitments, and the quality, range and relative prices of services and products
offered.

         Although the Company may expand the financial services it can offer to
its customers, it does not now offer as broad a range of financial services as
national stock exchange member firms, commercial banks, insurance companies and
others.

PERSONNEL

         At December 31, 1998, the Company had 35 full-time employees, including
25 registered representatives. None of the Company's personnel is covered by a
collective bargaining agreement. The Company considers its relationships with
its employees to be good.



                                       8


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                                   SIGNATURES

In accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                      CHAPMAN HOLDINGS, INC.



Dated:   April 5, 1999                /S/ NATHAN A. CHAPMAN, JR.
                                          -------------------------------
                                          Nathan A. Chapman
                                          Chairman of the Board of Directors,
                                          President and Chief Executive Officer

In accordance with the requirements of the Exchange Act, this report is signed
below by the following persons on behalf of the Registrant in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>

SIGNATURES                               TITLE AND CAPACITY                 DATE
----------                               ------------------                 ----
<S>                                     <C>                                <C> 
/S/ NATHAN A. CHAPMAN, JR.               President and Director            April 5, 1999
-------------------------------          (Principal Executive Officer)     
Nathan A. Chapman, Jr.                  

                                         Treasurer and Controller          April 5, 1999
/S/ M. LYNN BALLARD                      (Principal Financial
------------------------------           Officer andP rincipal
M. Lynn Ballard                          Accounting Officer)

The Entire Board of Directors

  Nathan A. Chapman, Jr.
  Donald V. Watkins
  Earl U. Bravo, Sr.
  Lottie Shackelford

By: /S/ NATHAN A. CHAPMAN, JR.                                             April 5, 1999
    ---------------------------
     Nathan A. Chapman, Jr.
     Attorney-in-Fact
</TABLE>