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 June 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 June 30, 1998:
     
           Common stock, $0.01 par value, 1,673,190 shares

<PAGE>
                NATIONAL CAPITAL MANAGEMENT CORPORATION
                     FORM 10-QSB QUARTERLY REPORT
                             JUNE 30, 1998
     
     
     
                           TABLE OF CONTENTS
     
       
          
                                                                     PAGE     
                                                                     
                    PART I.  FINANCIAL INFORMATION
     
     Consolidated Balance Sheets as of June 30, 1998
      (unaudited) and December 31, 1997                                 3
     Consolidated Statements of Operations for the three
       and six months ended June 30, 1998 and 1997 (unaudited)          4
     Consolidated Statements of Cash Flows for the six
       months ended June 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
                       JUNE 30, 1998 AND DECEMBER 31, 1997
<CAPTION>     
                                                   June 30,     December 31
                                                      1998          1997    
                                                  -----------   -----------
                                                  (Unaudited)     (Audited)
         ASSETS
         -------                                                                
     <S>                                           <C>          <C>
     Cash and cash equivalents                     $ 1,995,355  $    56,035
     Notes receivable                                   93,215      150,000
     Property and equipment, less accumulated
      depreciation of $76,338 and $71,958
      at June 30, 1998 and December 31, 1997,
      respectively                                      28,493       32,873
     Net assets of discontinued operations -
      Real Estate Segment                                6,970    1,795,030
      Viatical Settlements Segment                     215,785       25,528
     Other assets                                       39,961       36,225
                                                   -----------   ----------

     Total assets                                  $ 2,379,779  $ 2,095,691
                                                   ===========  ===========
</TABLE> 
          LIABILITIES AND SHAREHOLDERS' EQUITY
          ------------------------------------
<TABLE>
     <S>                                           <C>          <C>
     Accounts payable and accrued expenses         $   147,533  $   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                          (20,735,392) (20,975,246)
      Treasury stock, 139,866 shares at
        June 30, 1998 and December 31, 1997           (174,217)    (174,217)
                                                   -----------   ----------

     Total shareholders' equity                      2,232,246    1,992,392
                                                   -----------  -----------
                        
     Total liabilities and shareholders' equity    $ 2,379,779  $ 2,095,691
                                                   ===========  ===========

     See Accompanying Notes to Financial Statements.
                                        -3-
</TABLE>
<PAGE>
                      NATIONAL CAPITAL MANAGEMENT CORPORATION
                       CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
[CAPTION]     
                                  Three months ended     Six Months Ended  
                                       June 30,              June 30,     
                                   1998       1997        1998        1997  
                               ----------  ----------  ----------  ----------
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)
     [S]                        [C]         [C]         [C]         [C]
     Income (expense):  
      Other income               $ 66,833   $ 424,732   $ 77,726    $ 488,582
      Corporate administrative
        expense                  (299,633)   (179,084)  (437,072)    (555,786)
                                 --------   ---------   --------     --------
     Net income (loss) from
       continuing operations
      before tax                 (232,800)    245,648   (359,346)     (67,204)
     
     Provision for income taxes      -           -          -            -   
                                 --------    --------   --------     --------
     Net income (loss) from
      continuing operations
      after tax                  (232,800)    245,648   (359,346)     (67,204)
                                 --------    --------   --------     --------
     Discontinued operations:
      Net operating income
       (loss):
         Viatical settlements
           (Note 2)               (25,201)     10,752    (25,201)     (27,244)
             Real estate segment
            (Note 3)              (43,932)      3,780    (30,973)     (18,769)
         Gain on disposal of
           real estate segment,
           Net of taxes of
           approximately
           $43,000 (Note 3)       655,374        -       655,374          -    
                                 --------    --------   --------    ---------
     Net income (loss) from
      discontinued operations     586,241      14,532    599,200      (46,013)
                                 --------   ---------   --------    ---------
     Net income (loss)           $353,441   $ 260,180   $239,854    $(113,217)
                                 ========   =========   ========    =========
     Net income (loss) from
      continuing operations
      per share                    $(.14)        $.15      $(.21)       $(.04)
     
     Net income (loss) from
      discontinued operations
      per share                      .35          .01        .35         (.03)
                                    ----         ----      -----         ----

     Net income (loss) per share   $ .21         $.16      $ .14        $(.07)
                                   =====         ====      =====        =====
     Average number of shares
      outstanding              1,673,190    1,673,190  1,673,190     1,673,190
                               =========    =========  =========     =========

     See Accompanying Notes to Financial Statements.
                                        -4-

<PAGE>
<TABLE>
                      NATIONAL CAPITAL MANAGEMENT CORPORATION
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<CAPTION>     
                                                     SIX MONTHS ENDED    
                                                          JUNE 30,        
                                                     1998        1997   
                                                  ----------  ----------
                                                  (Unaudited) (Unaudited) 
     <S>                                           <C>         <C>
     Cash flows from operating activities:         
      Net income (loss)                            $ 239,854   $(113,217)
      Adjustments to reconcile net income (loss)
        to net cash provided by (used in)
        operating activities:
          Depreciation                                 4,380       4,380
          Bad debt expense                           127,767        -    
          Gain on sale of real estate segment       (655,374)       -    
          Reserves and allowances on notes
            receivable                                 -          300,000
      Changes in operating assets and
        liabilities:
          Decrease in accounts receivable              -           (7,926)
          Increase (decrease) in accounts
            payable and accrued liabilities           44,234     (172,068)
          Increase in other assets                    (3,736)       -    
                                                  ----------     --------
     Net cash (used in) provided by
      operating activities                          (242,875)      11,169
                                                  ----------     --------
     Change in net assets of discontinued
      operations                                    (373,691)     (75,082)
                                                  ----------     --------
     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                 56,785        -    
                                                  ----------     -------- 
     Net cash provided by (used in) investing
      activities                                   2,555,886     (200,035)
                                                  ----------     --------
     Increase (decrease) in cash and
      cash equivalents                             1,939,320     (263,948)
     
     Cash and cash equivalents at beginning
      of period                                       56,035      651,346
                                                  ----------     --------

     Cash and cash equivalents at end of period   $1,995,355     $387,398
                                                  ==========     ========

     See Accompanying Notes to Financial Statements.
                                        -5-
</TABLE>
<PAGE>
                      NATIONAL CAPITAL MANAGEMENT CORPORATION
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              JUNE 30, 1998 AND 1997
                                  (Unaudited)
     
     NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION
     
     The financial information for the three and six month periods ended June
     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
     six months ended June 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 Settlement Segment, which was
     operated through National Capital Benefits Corporation ("NCBC"), a wholly
     owned subsidiary, the Real Estate Segment and the Industrial Products
     Segment.  The Industrial Products Segment and Real Estate Segment were
     discontinued in 1995.  The Viatical Settlement Segment was discontinued in
     1996.
     
     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 June 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 six months ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
                                    For the three          For the six       
                                     months ended          months ended      
                                       June 30,              June 30,        
                                  1998       1997        1998        1997   
                               ----------  ----------  ----------  ----------
                               (Unaudited) (Unaudited) (Unaudited) (Unaudited)
     <S>                        <C>         <C>         <C>         <C>
     Revenue accrued and
       received                $867,340    $1,323,903  $1,901,078 $2,785,624
     Cost of insurance
       policies                (686,820)   (1,106,183) (1,443,663)(2,314,908)
     Valuation reserve
       income                   170,532        95,710     262,737    206,031
                               --------    ----------  ----------  ----------

     Earned discount            351,052       313,430     720,152    676,747
     Interest expense          (274,975)     (253,397)   (583,349)  (591,089)  
                               --------    ----------  ----------  ---------
     Earned discount after
      interest expense           76,077        60,033     136,803     85,658
     General and
       administrative
       expenses                (101,007)      (49,009)   (161,460)  (112,357)
     Depreciation and
       amortization                (271)         (272)       (544)      (545)
                               --------    ----------   ---------  ----------

     Net income (loss)         $(25,201)   $   10,752   $ (25,201) $  (27,244)
                               ========    ==========   =========  ==========

                                        -7-
</TABLE>
<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 June 30,
     1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
                                                   June 30,   December 31,
                                                     1998         1997    
                                                 ----------   ------------
                                                 (Unaudited)    (Audited)
     <S>                                        <C>           <C>
     Purchased policy costs, less amortized
       policy costs of $19,494,743 and
       $18,051,081, respectively                 $ 2,756,327   $ 4,200,382
     Valuation reserve                              (785,440)   (1,048,177)
     Accrued policy revenues, less matured
       revenues valuation of $8,117,801 and
       $7,820,301, respectively                   14,972,552    13,715,134
     Revolving credit facility                    (7,989,767)   (9,511,468)
     Subordinated note payable                    (2,000,000)   (2,000,000)
     Reinsurance liability                        (6,333,954)   (4,927,799)
     Other, net                                     (403,933)     (402,544)
                                                 -----------   -----------
                                                 $   215,785   $    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 net gain 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 six months ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
                               For the three months    For the six months 
                                 ended June 30,          ended June 30,    
                                 1998        1997        1998        1997   
                              ----------  ----------  ----------  ----------
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
     <S>                       <C>          <C>         <C>         <C>      
      
   Total revenues              $113,560     $269,721    $393,148    $531,128
                               --------     --------    --------    --------
     Costs and expenses:
       Operations and
          maintenance            80,045      141,906     227,477     291,496
       Property taxes and
          insurance               2,101       19,716      22,143      39,432
       Depreciation and
          amortization           25,000       73,500     100,000     147,000
       Net interest              16,940       26,242      41,095      53,147
       Corporate
         administrative
         expenses                33,406        4,577      33,406      18,822
                               --------     --------    --------    --------
     Total costs and
       expenses                (157,492)    (265,941)   (424,121)   (549,897)
                               --------     --------    --------    --------

     Net income (loss)         $(43,932)    $  3,780    $(30,973)   $(18,769)
                               ========     ========    ========    ========
</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 June 30, 1998 and
     December 31, 1997 are as follows:
<TABLE>
<CAPTION>
                                              June 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 to be distributed pursuant to an evidentiary
     hearing to be scheduled in late August, 1998.  The Company anticipates
     receiving a distribution of approximately $95,000 as a result of the
     hearing.  The Company received $56,686 in April 1998 as a result of the
     collection of receivables assigned to it from Jensen. The remaining
     balance of the notes were written off as of December 31, 1997.
     
     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. A
     hearing has been scheduled for August 31, 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.
     
                                       -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 June 30, 1998 and of the results of
     operations for the Company for the three and six months ended June 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 six months ended June 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
     $1,995,355 at June 30, 1998, principally as a result of the sale of the
     Colony Ridge Apartments and the recovery of receivables from AMKO.
     
     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 six months ended June 30, 1998, approximately
     $160,000 and $297,500 of life insurance policies matured as compared to
     $288,000 and $1,028,000 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 six months
     ended June 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 net gain 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
     received $56,686 in April 1998 as a result of the collection of
     receivables assigned to it from Jensen and anticipates receiving a
     distribution of approximately $95,000 as a result of collection efforts. 
     The remaining balance of the notes was written off as of December 31,
     1997.
     
                                        -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-