SECURITIES AND EXCHANGE COMMISSION
     
                             WASHINGTON, DC 20549
     
                                  FORM 10-QSB
     
                  Quarterly Report Under Section 13 or 15(d)
                    of the Securities Exchange Act of 1934
     
     For the Quarter Ended September 30, 1998
     
     Commission file number 0-16819
     
                     National Capital Management Corporation               
------------------------------------------------------------------------------
                (Exact name of registrant as specified in its charter)
     
           Delaware                                  94-3054267              
(State or other jurisdiction of        (I.R.S.Employer Identification Number)
 incorporation or organization)
     
520 Madison Avenue    New York             NY         10022                 
(Address of principal executive offices)            (Zip Code)
Registrant's telephone number, including area code   (212) 980-3883      
Former name, former address and former fiscal year, if changed from last
report
    
                                                                              

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 ___________
      
Number of common shares outstanding as of September 30, 1998:
     
            Common stock, $0.01 par value, 1,673,190  shares
<PAGE>     

                NATIONAL CAPITAL MANAGEMENT CORPORATION
                     FORM 10-QSB QUARTERLY REPORT
                          SEPTEMBER 30, 1998
     
     
     
                           TABLE OF CONTENTS
     
     
     
                                                                  PAGE     
   
                  PART I.  FINANCIAL INFORMATION
     
     Consolidated Balance Sheets as of September 30, 1998
      (unaudited) and December 31, 1997                            3
     Consolidated Statements of Operations for the three
      and nine months ended September 30, 1998 and 1997
      (unaudited)                                                  4
     Consolidated Statements of Cash Flows for the nine
       months ended September 30, 1998 and 1997 (unaudited)        5
     Notes to Consolidated Financial Statements                 6-10
     
     ITEM II. Management's Discussion and Analysis of
                Financial Condition and
                Results of Operations                          11-13
     
                      PART II - OTHER INFORMATION
     
     Item 1.  Legal Proceedings                                   14
     Item 2.  Changes in Securities                               14
     Item 3.  Defaults Upon Senior Securities                     14
     Item 4.  Submission of Matters to a Vote of
              Security Holders                                    14
     Item 5.  Other Information                                   14
     Item 6.  Exhibits and Reports on Form 8-K                    14
              Signatures                                          15
     
    
                                  -2-
<PAGE>
<TABLE>
                    NATIONAL CAPITAL MANAGEMENT CORPORATION
                         CONSOLIDATED BALANCE SHEETS
                   SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
<CAPTION>     
     
                                                 September 30,   December 31
                                                    1998            1997    
         ASSETS                                   (Unaudited)     (Audited) 
     <S>                                          <C>            <C>
     Cash and cash equivalents                    $ 2,154,629    $    56,035
     Notes receivable, net of allowance for
      estimated losses                                 60,005        150,000
     Property and equipment, less accumulated
      depreciation of $78,528 and $71,958 at
      September 30, 1998 and December 31, 1997,
      respectively                                     26,303         32,873
     Net assets of discontinued operations -
      Viatical Settlements Segment                     28,985         25,528
      Real Estate Segment                               6,970      1,795,030
     Other assets                                      39,961         36,225
     
     Total assets                                 $ 2,316,853    $ 2,095,691
</TABLE>
     
          LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
     <S>                                          <C>            <C>  
     Accounts payable and accrued expenses        $   137,508    $   103,299
     
     Shareholders' equity:
      Preferred stock, $0.01 par value,
        3,000,000 shares authorized, no shares
        issued and outstanding                           -              -     
      Common stock, $0.01 par value, 6,666,666
        shares authorized, 1,813,056 shares
        issued, 1,673,190 outstanding                  16,732         16,732
      Additional paid-in capital                   23,125,123     23,125,123
      Accumulated deficit                         (20,788,293)   (20,975,246)
      Treasury stock, 139,866 shares at
        September 30, 1998 and
        December 31, 1997                            (174,217)      (174,217)
     
     Total shareholders' equity                     2,179,345      1,992,392
     
     Total liabilities and shareholders' equity   $ 2,316,853    $ 2,095,691
     
     See Accompanying Notes to Financial Statements.
                                  -3-
</TABLE>
<PAGE>
<TABLE>
                    NATIONAL CAPITAL MANAGEMENT CORPORATION
                    CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<CAPTION>     
     
                                Three months ended       Nine Months Ended  
                                   September 30,           September 30,   
                                  1998        1997         1998      1997
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    <S>                          <C>        <C>          <C>        <C> 
    Income (expense):
      Other income               $102,429   $ 159,671    $180,155   $ 648,253
      Corporate administrative
        expense                  (137,732)   (411,091)   (574,804)   (966,877)
     
     Net loss from continuing
      operations before tax       (35,303)   (251,420)   (394,649)   (318,624)
     
     Provision for income taxes      -           -           -           -    
     
     Net loss from continuing
      operations after tax        (35,303)   (251,420)   (394,649)   (318,624)
     
     Discontinued operations:
      Net operating income
       (loss):
         Viatical settlements
           (Note 2)               (13,611)    (15,850)    (38,812)    (43,094)
             Real estate segment
            (Note 3)               (3,987)    (17,374)    (34,960)    (36,143)
         Gain on disposal of
           real estate segment,
           net of taxes of
           approximately
           $43,000 (Note 3)          -           -        655,374         -    
                                                  
     Net income (loss) from
      discontinued operations     (17,598)    (33,224)    581,602     (79,237)
     
     Net income (loss)           $(52,901)  $(284,644)   $186,953   $(397,861)
      
     Net loss from
      continuing operations
      per share                     $(.02)      $(.15)      $(.24)      $(.19)
     
     Net income (loss) from
      discontinued operations
      per share                      (.01)       (.02)        .35        (.05)
     
     Net income (loss) per share    $(.03)      $(.17)      $ .11       $(.24)
     
     Average number of shares
      outstanding               1,673,190   1,673,190   1,673,190   1,673,190
      
     See Accompanying Notes to Financial Statements.
                                  -4-
</TABLE>
<PAGE>
<TABLE>
                     NATIONAL CAPITAL MANAGEMENT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<CAPTION>     
                                                          NINE MONTHS ENDED
                                                            SEPTEMBER 30,     
                                                        1998         1997   
                                                     (Unaudited)  (Unaudited) 
     <S>                                             <C>           <C>
     Cash flows from operating activities:         
      Net income (loss)                              $ 186,953     $(397,861)
      Adjustments to reconcile net income (loss)
        to net cash used in operating activities:
          Depreciation                                   6,570         6,570
          Gain on sale of real estate segment         (655,374)         -   
          Reserves and allowances on notes
            receivable                                  17,000       450,000
      Changes in operating assets and
        liabilities:
          Increase in accounts receivable                 -          (72,230)
          Increase (decrease) in accounts
            payable and accrued liabilities             34,204      (174,420)
          Increase in other assets                      (3,736)       (7,930)
     
     Net cash used in operating activities            (414,383)     (195,871)

     Change in net assets of discontinued
      operations                                       (59,119)      (32,298)
     
     Cash flows from investing activities:
      Issuance of note receivable                         -         (200,035)
      Proceeds from sale of real estate segment      2,499,101          -   
      Collections on notes receivable                   72,995          -   
     
     Net cash provided by (used in) investing
      activities                                     2,572,096      (200,035)
      
     Increase (decrease) in cash and
      cash equivalents                               2,098,594      (428,204)
      
     Cash and cash equivalents at beginning
      of period                                         56,035       651,346
     
     Cash and cash equivalents at end of period     $2,154,629     $ 223,142
     
     Supplemental information:
     
      Interest paid                                  $ 707,640     $ 850,231
     
     See Accompanying Notes to Financial Statements.
                                  -5-
</TABLE>
<PAGE>
                     NATIONAL CAPITAL MANAGEMENT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          SEPTEMBER 30, 1998 AND 1997
                              (Unaudited)
     
     NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION
     
     The financial information for the three and nine month periods ended
     September 30, 1998 and 1997 presented in this Form 10-QSB has been
     prepared from the accounting records without audit.  The information
     furnished reflects all adjustments (consisting of only normal recurring
     adjustments) which are, in the opinion of management, necessary for a fair
     statement of the results of interim periods.  The results of operations
     for the three and nine months ended September 30, 1998 are not necessarily
     indicative of the results to be expected for a full year.  The
     consolidated balance sheet as of December 31, 1997 has been derived from
     audited financial statements.  This report should be read in conjunction
     with the consolidated financial statements included in the Company's
     December 31, 1997 Annual Report to shareholders on Form 10-KSB as filed
     with the Securities and Exchange Commission.
     
     National Capital Management Corporation ("NCMC" or the "Company") is a
     holding company that currently is completing the orderly liquidation of
     its discontinued operations, while seeking other acquisitions.
     
     Prior to 1995, the Company had been comprised of three distinctly
     different operating businesses, the Viatical Settlements Segment, which
     was operated through National Capital Benefits Corporation ("NCBC"), a
     wholly owned subsidiary, the Real Estate Segment and the Industrial
     Products Segment.  The Industrial Products Segment and Real Estate Segment
     were discontinued in 1995.  The Viatical Settlement Segment was
     discontinued in 1996.
     
     Consolidation Principles
     
     The consolidated financial statements include the accounts of the Company
     and all of its majority-owned subsidiaries.  All significant intercompany
     accounts and transactions have been eliminated in consolidation.     
     
     Reclassifications
     
     Certain amounts as presented in prior year financial statements have been
     reclassified to conform with the current period presentation.
     
     Earnings per share
     
      Effective December 15, 1997, the Financial Accounting Standards Board
     issued Statement No. 128, "Earnings per Share".  Statement No. 128
     replaced the previously reported primary and fully diluted earnings per
     share with basic and diluted earnings per share.  Under the new
     requirements for calculating earnings per share, the dilutive effect of
     stock options will be excluded from basic earnings per share but included
     in the computation of diluted earnings per share.  All earnings per share
     amounts have been restated so as to comply with Statement No. 128.
     
     NOTE 2 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS
     
     The results of the Viatical Settlements Segment have been reported
     separately as discontinued operations in these consolidated statements of
     operations.
                                  -6-
<PAGE>     
     NOTE 2 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
     
     In December 1996, the Company decided to discontinue the operations of the
     Viatical Settlements business.  The Company reduced its staff and expects
     that the remaining personnel will administer the orderly liquidation of
     its existing portfolio.  It is expected that this process will take
     several years.  The Company established a $1,500,000 valuation reserve
     during 1996, and as adjusted during the quarter ended September 30, 1998,
     against accrued policy revenues and purchased policy costs which
     represents the estimated expected loss on holding the remaining policies
     to maturity in order to reflect management's estimate of the fair market
     value of the net assets.  During the fourth quarter ended December 31,
     1997, the Company increased its original reserve by $350,000.  The amount
     of the reserve was determined based on projections of expected cash
     inflows from maturities and reinsurance claims, and cash outflows for debt
     service and operating costs during the portfolio administration process,
     which is expected to take several more years.
     
     NCBC has an insurance contract with NCB Insurance Ltd. ("NCB"), a wholly-
     owned subsidiary of NCBC, which automatically provides for payment of 90%
     of the face value of the policies purchased at a specified period of time
     after the expected maturity date, in accordance with the contract.  NCB,
     in turn, has reinsured this risk with several large, non-affiliated
     international reinsurance companies.  NCBC, through NCB, maintains a
     participation in the residual 10%.
     
     The anticipated reinsurance recoveries represent a substantial element of
     the cash flow projections used to determine the valuation reserve.  While
     management expects full collection of reinsurance recoveries, these
     recoveries from the sole reinsurance facility represent a significant
     concentration of risk.
     
     Summarized below are the operations of the Company's Viatical Settlements
     for the three and nine months ended September 30, 1998 and 1997.
<TABLE>
<CAPTION>
                                    For the three          For the nine      
                                    months ended           months ended      
                                    September 30,         September 30,     
                                  1998       1997        1998       1997   
                              (Unaudited) (Unaudited) (Unaudited)(Unaudited)
     <S>                       <C>        <C>         <C>         <C>
     Revenue accrued and
       received                $810,438   $1,287,448  $2,711,516  $4,073,072
     Cost of insurance
       policies                (638,430)  (1,002,337) (2,082,093) (3,317,245)
     Valuation reserve
       income (expense)         149,589      (54,593)    412,326     151,438
     
     Earned discount            321,597      230,518   1,041,749     907,265
     Interest expense          (246,619)    (300,797)   (829,968)   (891,886)
     Earned discount (loss)
      after interest expense     74,978      (70,279)    211,781      15,379
     General and
       administrative
       expenses (income)         88,317      (54,702)    249,777      57,655
     Depreciation and
       amortization                 272          273         816         818
     
     Net loss                  $(13,611)   $ (15,850) $  (38,812) $  (43,094)
</TABLE>

                                  -7-
<PAGE>
     
     NOTE 2 - DISCONTINUED OPERATIONS - VIATICAL SETTLEMENTS (CONTINUED)
     
     The components of the Viatical Settlements Segment net assets from
     discontinued operations in the consolidated balance sheets as of
     September 30, 1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
                                               September 30,  December 31,
                                                   1998           1997    
                                                (Unaudited)    (Audited)
     <S>                                       <C>           <C>
     Purchased policy costs, less amortized
       policy costs of $20,133,173 and
       $18,051,081, respectively               $ 2,117,897   $ 4,200,382
     Valuation reserve                            (635,851)   (1,048,177)
     Accrued policy revenues, less matured
       revenues valuation of $8,981,794 and
       $7,820,301, respectively                 14,891,098    13,715,134
     Revolving credit facility                  (5,277,145)   (9,511,468)
     Subordinated note payable                  (2,000,000)   (2,000,000)
     Reinsurance liability                      (8,819,032)   (4,927,799)
     Other, net                                   (247,982)     (402,544)

                                               $    28,985   $    25,528
</TABLE>
     
     NOTE 3 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT
     
     On November 27, 1995, the Company elected to discontinue operations of the
     Real Estate Segment to concentrate its efforts on its viatical settlements
     business.  The following is a description of the Company's recent disposal
     activity:
     
     Colony Ridge Apartments was an apartment complex in Decatur, Georgia which
     was constructed in 1968 and consisted of 23 two-story buildings containing
     a total of 212 apartment units.  On May 6, 1998, the Company sold the
     Colony Ridge Apartments for $3,650,000.  The Company received net proceeds
     of approximately $2,500,000.  The difference between the sales price and
     the net proceeds received is due to the repayment of the mortgage, state
     taxes, and miscellaneous expenses.  The Company reported a gain, net of
     income taxes, of $655,374.
     
     The results of the Real Estate Segment have been reported separately as
     discontinued operations in these consolidated statements of operations.  
     
     Summarized below are the operations of the Company s Real Estate Segment
     for the three and nine months ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
     
                                For the three months     For the nine months 
                                 ended September 30,      ended September 30, 
                                  1998        1997        1998       1997   
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)
     <S>                       <C>          <C>          <C>         <C>
     Total revenues            $   -        $252,576     $393,148    $783,704
     Costs and expenses:
       Operations and
          maintenance              -         119,478      227,477     410,974
       Property taxes and
          insurance                -          19,715       22,143      59,147
       Depreciation and
          amortization             -          73,500      100,000     220,500
       Net interest                -          25,461       41,095      78,608
       Corporate administrative
         expenses                 3,987       31,796       37,393      50,618

     Total costs and expenses     3,987      269,950      428,108     819,847

     Net loss                   $(3,987)    $(17,374)    $(34,960)   $(36,143)
</TABLE>
     
                                  -8-
<PAGE>
     NOTE 3 - DISCONTINUED OPERATIONS - REAL ESTATE SEGMENT (CONTINUED)
     
     The components of the Real Estate Segment net assets from discontinued
     operations in the consolidated balance sheets as of September 30, 1998 and
     December 31, 1997 are as follows:
<TABLE>
<CAPTION>
                                            September 30,     December 31,
                                               1998              1997    
                                            (Unaudited)        (Audited)
     <S>                                      <C>             <C>
     Rental properties, less
       accumulated depreciation
       of $-0- and $1,457,881,
       respectively                            $ -            $2,905,725
     Mortgage note payable                       -            (1,115,599)
     Accounts payable                          (2,045)          (109,120)
     Other, net                                 9,015            114,024

                                               $6,970         $1,795,030 
</TABLE>
     
     NOTE 4 - DISCONTINUED OPERATIONS - INDUSTRIAL PRODUCTS SEGMENT
     
     The Industrial Products Segment was discontinued during 1995.  It
     consisted of the Company's wholly-owned subsidiary, Jensen Corporation
     ("Jensen"), which manufactured and distributed machinery used primarily by
     commercial laundries, large institutions and hotels as well as commercial
     compactor products for waste disposal.  On November 10, 1995, the Company
     sold 100% of the common stock of Jensen, located in Fort Lauderdale,
     Florida to AMKO USA, Inc. ("AMKO"), an affiliate of AMKO International
     B.V. which is based in The Netherlands, for $1,726,000.  The sale proceeds
     included cash of $415,000 and a promissory note receivable in the amount
     of $1,311,000 which was secured by Jensen's stock, accounts receivable and
     inventory.  The $1,311,000 note was guaranteed in its entirety by AMKO
     International B.V., and the sole shareholder of AMKO International B.V.
     guaranteed, as amended May 16, 1997, $500,000 of payments, of all notes. 
     
     AMKO also agreed to cause Jensen to pay to the Company a $765,000
     obligation in the form of a note,  which was loaned to Jensen, $500,000 of
     which was prior to the sale and $265,000 which was simultaneous with the
     sale, and an intercompany balance payable by Jensen to the Company of
     $337,650, which was secured by the assets of Jensen.  These notes were
     guaranteed by AMKO International B.V.
     
     The $1,311,000 note, as amended May 16, 1997, bore interest at 8.5% per
     annum and was payable in varying installments with the balance due in
     April 1998 unless extended as indicated below.  The $765,000 note, as
     amended May 16, 1997, bore interest at 8.5% per annum and was payable in
     varying installments with the balance due in April 1998 unless extended as
     indicated below.  The $337,650 note, as amended May 16, 1997, bore
     interest at 8.5% per annum and was payable in varying installments with
     the balance due in April 1998 unless extended as indicated below.
     
     The Company advanced $198,000 to AMKO during February and March 1997, of
     which $82,500 was repaid.  The balance was a Demand Note which bore
     interest at 12% per annum.  This note is also guaranteed by AMKO
     International.  As of December 31, 1997, this note was paid in full.
     
     In accordance with the May 16, 1997 amendment, the notes could be extended
     until April 1999, if AMKO prepaid $500,000 on or before April 1, 1998.  If
     extended, the interest rate on all of the notes would increase to 12%. 
     The Company charged AMKO a fee of $200,000 in  conjunction with the
     amendment.  The fee was paid on May 16, 1997. 

                                  -9-
<PAGE>     
     NOTE 4 - DISCONTINUED OPERATIONS - INDUSTRIAL PRODUCTS SEGMENT (CONTINUED)
     
     The Company loaned Jensen an additional $200,000 in conjunction with the
     May 16, 1997 modification and an additional $36,000 in October 1997. 
     These notes bore interest at 8.5% and mature simultaneously with the other
     notes.
     
     As of October 1997, Jensen stopped making payments as required by the
     terms of the May 16, 1997 amendment.  On November 11, 1997, Jensen filed
     for Chapter 7 bankruptcy.  On March 26, 1998, an auction sale was held,
     the proceeds of which are either to be distributed pursuant to an
     evidentiary hearing, or a prior court approved agreement with the
     trustee.
     
     AMKO International filed for and was discharged from the bankruptcy in the
     Netherlands between January and April 1998.
     
     The Company has pursued a remedy in judicial proceedings in the
     Netherlands with a procedural result that allows the Company to pursue
     AMKO International in the United States courts.  The Company has not yet
     elected to pursue a remedy in the United States Courts.  The Company is
     pursuing in the Netherlands collection efforts against the sole
     stockholder of AMKO for his personal guarantee and has filed a lien
     against him.  The Company cannot predict the outcome of this effort.
     
     As a result of the bankruptcy filing, the Company reduced the value of its
     notes receivable to $150,000 as of December 31, 1997.  The Company has
     received approximately $73,000 during 1998 and anticipates receiving
     approximately $60,000 to $80,000.  The Company recorded a $17,000 reserve
     for these notes as of September 30, 1998.
     
     NOTE 5 - CONCENTRATION OF RISK
     
     The Company has bank balances in excess of the $100,000 of depository
     insurance provided by the Federal Deposit Insurance Corporation.
     
     NOTE 6 - SETTLEMENT OF LAWSUIT
     
     The Company received $53,000 during August 1998, as a result of a lawsuit
     settlement.  The amount is included in other income from continuing
     operations in the Consolidated Statements of Operations.
     
                                 -10-
<PAGE>     
                     NATIONAL CAPITAL MANAGEMENT CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     
     ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS:
     
     Overview
     
     The following is a discussion and analysis of the consolidated financial
     condition of the Company as of September 30, 1998 and of the results of
     operations for the Company for the three and nine months ended September
     30, 1998 and 1997, and of certain factors that may affect the Company's
     prospective financial condition and results of operations.  The following
     is supplemental to and should be read in conjunction with the Company's
     December 31, 1997 Annual Report to shareholders on Form 10-KSB as filed
     with the Securities and Exchange Commission, and the financial information
     and accompanying notes beginning on page 3 of this report.
     
     Information contained in this discussion and analysis contains "forward-
     looking statements" within the meaning of the Private Securities
     Litigation Reform Act of 1995, which can be identified by the use of
     forward-looking terminology such as "may", "will", "expect", "plan",
     "anticipate", "estimate" or "continue" or the negative thereof or other
     variations thereon or comparable terminology.  There are certain important
     factors that could cause results to differ materially from those
     anticipated by some of these forward-looking statements.  Investors are
     cautioned that all forward-looking statements involve risks and
     uncertainty.  The factors, among others, that could cause actual results
     to differ materially include: cures and advances in medical treatments for
     terminal illnesses; dependence on medical consultants and an ability to
     predict life expectancy; the Company's ability to execute its business
     plan, and the ability to collect reinsurance recoveries from a single
     reinsurance facility. 
     
     The preparation of financial statements in conformity with generally
     accepted accounting principles requires the Company to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenue and expenses
     during the reporting period.  Actual results could differ significantly
     from those estimates.
     
     Material estimates that are particularly susceptible to significant change
     in the near term relate to the determination of the valuation reserve
     against accrued policy revenues and the cost of purchased policies and the
     collectibility of notes receivable. 
     
     The Company is managing the administration of the collection of the
     portfolio of life insurance policies, it has completed the orderly
     liquidation of its remaining real estate, and continues to pursue
     collection of its receivables. Management intends to seek other
     acquisitions.

                                 -11-
<PAGE>     
     Accounting for long-lived assets
     
     For the nine months ended September 30, 1998 and calendar year December
     31, 1997, the Company has applied SFAS 121, "Accounting for the Impairment
     of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and
     determined that certain adjustments for impairment were required.  In
     addition to the write-down of several assets of the Company, a $1.5
     million valuation reserve was established against accrued policy revenues
     and purchased policy costs in order to reflect management's estimate of
     the fair market value of the net assets.  During the fourth quarter ended
     December 31, 1997, the Company increased its original reserve by $350,000
     (Note 2).
     
     The accuracy of the valuation reserve established by the Company (Note 2)
     is directly related to NCBC's assumptions regarding the remaining life
     expectancy of terminally ill individuals.  While NCBC believes that its
     estimate of life expectancy, and the related valuation reserve will
     approximate actual experience, given the inherent scientific uncertainty
     of such estimates, including the potential impact of recently announced
     medical treatments that might extend life expectancies, there can be no
     assurance that these policies will mature in accordance with management's
     estimates.  Therefore, the Company established a $1,500,000 valuation
     reserve against accrued policy revenues and purchase policy costs during
     1996, which is adjusted quarterly.  During the fourth quarter ended
     December 31, 1997, the Company increased its original reserve by $350,000. 
     The amount of the reserve was determined based on projections of expected
     cash inflows from maturity and reinsurance claims, and cash outflows for
     debt service and operating costs during the portfolio administration
     process which is expected to take several years (Note 2).
     
     Financial condition and liquidity
     
     The Company's cash increased from $56,035 as of December 31, 1997 to
     $2,154,629 at September 30, 1998, principally as a result of the sale of
     the Colony Ridge Apartments, the recovery of receivables from AMKO, and
     proceeds from a lawsuit settlement.
     
     Other than in its Viatical Settlement subsidiary, the Company does not
     have any existing general credit facilities to fund its ongoing working
     capital requirements.  These lending facilities were amended in 1997 in 
     light of management's decision to discontinue the Viatical Settlement
     business and liquidate the portfolio.
     
     Results of operations
     
     As a result of the Company's decision to discontinue its Viatical
     Settlements business in December 1996, the Company ceased purchasing
     insurance policies from individuals.  The Company may, however, seek the
     purchase of a portfolio of life insurance policies to the extent each of
     the policies in such a bulk purchase is within the guidelines set forth in
     the reinsurance agreements with NCBC.  As previously announced, NCBC has
     restructured its organization and reduced its office staff to one person. 
     Management anticipates that this remaining person, as well as NCMC
     management, will manage NCBC's existing portfolio of approximately $18.8 
     million of insurance policies.  Management estimates that the
     administration of these policies will take several more years.
     
     During the three and nine months ended September 30, 1998, approximately
     $864,000 and $1,161,000 of life insurance policies matured as compared to
     $170,000 and $1,198,000 for the same periods last year.
     
                                 -12-
<PAGE>     
     The recognition of earned discount and the ultimate profitability
     associated with purchased insurance policies is directly related to NCBC's
     assumptions regarding the remaining life expectancy of terminally ill
     individuals.  Such estimates were made when the insurance policy was
     purchased based upon facts and circumstances then known. While NCBC
     believes that its estimate of life expectancy, and the related recognition
     of earned discount will closely approximate actual experience, given the
     inherent scientific uncertainty of such estimates, including the potential
     impact of recently announced medical treatments that might extend life
     expectancies, there can be no assurance that these policies will mature in
     accordance with management's estimates. Therefore, the Company established
     a $1,500,000 valuation reserve against accrued policy revenues and
     purchase policy costs during 1996, and as adjusted during the nine months
     ended September 30, 1998.  During the fourth quarter ended December 31,
     1997, the Company increased its original reserve by $350,000.  The amount
     of the reserve was determined based on projections of expected cash
     inflows from maturity and reinsurance claims, and cash outflows for debt
     service and operating costs during the portfolio administration process
     which is expected to take several more years (Note 2).
     
     On May 6, 1998, the Company sold the Colony Ridge Apartments for
     $3,650,000.  The Company received net proceeds of approximately
     $2,500,000.  The difference between the sales price and the net proceeds
     received is due to the repayment of the mortgage, state taxes, and
     miscellaneous expenses.  The Company reported a gain, net of income taxes, 
     of $655,374.
     
     In December 1997, the Company wrote off all except $150,000 of notes
     receivable as a result of Jensen's bankruptcy (Note 4).  The Company has
     received approximately $73,000 during 1998 and anticipates receiving
     approximately $60,000 to $80,000.  The Company recorded a $17,000 reserve
     for these notes as of September 30, 1998.
     
                                 -13-
<PAGE>
                          PART II - OTHER INFORMATION
     
     ITEM 1. LEGAL PROCEEDINGS
             Not applicable
     
     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
             Not applicable
     
     ITEM 5. OTHER INFORMATION
            
     ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
             Not applicable
     
                                   -14-
<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.
     
                                          NATIONAL CAPITAL
                                          MANAGEMENT CORPORATION
     
     
     
     
     Dated:                               By:           //s// John C. Shaw
                                              John C. Shaw
                                              Chief Executive Officer
     
                                 -15-