FORM 8
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934
National Capital Management Corporation
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following
items, financial statements, exhibits or other portions
of its Quarterly Report on Form 10-QSB for the period
ended September 30, 1995 as set forth in the pages
attached hereto:
Item 2. Management's Discussion and
Analysis of Financial Condition and Results of
Operations
The last paragraph in the discussion of
Financial Condition and Liquidity related to
the Company's plan to repurchase its own shares
for treasury was amended to reflect the change
in the number of shares authorized and
repurchased, which resulted from the Company's
reverse stock split on July 11, 1995.
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused
this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL CAPITAL
MANAGEMENT CORPORATION
(Registrant)
Date: November 21, 1995 By:/s/ Herbert J. Jaffe
Herbert J. Jaffe
President
By:/s/ Leslie A. Filler
Leslie A. Filler
Principal Financial Officer and
Principal Accounting Officer
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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 discussion is supplemental to and should be read
in conjunction with the Company's December 31, 1994 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 1 of this
report.
FINANCIAL CONDITION AND LIQUIDITY
The Company's cash decreased from approximately $776,000 at
December 31, 1994 to $642,000 at September 30, 1995
principally as a result of $925,000 used to finance operating
activities, $1,680,000 used to support the viatical settlement
business and $563,000 to finance Jensen Corporation's
operations prior to its disposition, offset by the receipt of
$1,253,000 in March 1995 pursuant to the admission of two
unaffiliated partners into Redbird Trails Associates, L.P. and
Signature Midwest, L.P., the receipt of $1,722,000 in the
third quarter from the sale of The Mart Shopping Center and
the receipt of an earnest money deposit of $100,000 in
September 1995 in connection with the sale of Jensen
Corporation. Of the $642,000 in cash at September 30, 1995,
$402,000 has been restricted for use by the Viatical
Settlement Division pursuant to the existing revolving line of
credit agreement as discussed below. The Company's cash
position decreased to approximately $397,000 as of November
20, 1995, of which approximately $367,000 is restricted for
use in the Viatical Settlement Division. This decline
resulted from $400,000 used to support the viatical settlement
business and $564,000 used to finance Jensen Corporation's
operations, offset by the receipt of $355,000 from a line of
credit provided by an officer and a member of the Board of the
Company discussed below and $315,000 in additional earnest
money received for the sale of Jensen Corporation.
The Company has incurred recurring losses from continuing and
discontinued operations, and has invested substantial amounts
in National Capital Benefits Corporation ("NCBC") to fund
policy purchases and its operating expenses, resulting in
significant negative cash flows. In addition, NCBC is
currently in default with respect to the Interest Coverage
Ratio covenant included in its revolving line of credit
facility with Transamerica Lender Finance ("Transamerica").
NCBC is currently working to obtain a waiver from
Transamerica. Although NCBC expects to successfully resolve
this matter, there can be no assurance of the outcome.
Additionally, Transamerica has informed NCBC that the loan
will not be renewed when it expires on April 24, 1996. These
factors raise substantial doubt about the Company's ability to
continue as a going concern.
The Company has obtained cash from an officer and a member of
the Board of the Company to continue operations, including a
line of credit of $500,000 on October 26, 1995 bearing
interest at 12% per annum, payable in monthly installments of
interest only until due on January 31, 1996 or on demand
thereafter. This line of credit provides that the Company
shall not encumber, transfer or assign any of its assets,
other than in the ordinary course of business, without prior
approval. The Company had drawn $355,000 on this credit
facility as of November 20, 1995. As discussed in Note 6, the
Company sold Jensen Corporation on November 10, 1995 which
heretofore had required significant amounts of cash from the
Company to fund its operations. The Company is considering
the sale of certain other assets to provide additional sources
of cash. In order to meet the increase in policy purchase
requirements of NCBC, and to fund operating expenses, the
Company may seek additional financing through the issuance of
securities on a private or public basis, or through long or
short-term borrowings.
The note payable of approximately $1.1 million secured by
Appletree Townhouses was due on October 1, 1995. The lender
has agreed to extend the loan under the same terms to December
31, 1996.
In February 1995 the Company initiated a plan to repurchase up
to 250,000 of its own shares for treasury in the open market
or through isolated transactions to December 31, 1995.
Subsequent to the Company's three for one reverse stock split
on July 11, 1995, the authorized amount was adjusted to
83,333. On May 11, 1995, 3,333 shares, adjusted to reflect
the reverse stock split, were purchased pursuant to this plan
at a cost of $9,675.
RESULTS OF OPERATIONS
Consolidated revenues increased approximately $1,048,000 and
$1,978,000 for the three and nine month periods ended
September 30, 1995 from the three and nine month periods ended
September 30, 1994, respectively, as a result of the addition
of the viatical settlement division totaling approximately
$1,270,000 and $3,104,000, for the three and nine months ended
September 30, 1995 and a slight increase in real property
operating revenues from the Georgia properties, offset by
approximately $280,000 and $1,177,000 for the same periods, in
connection with the loss of operating revenues associated with
the sale of partnership interests in Redbird Trails
Associates, L.P. ("Redbird") and Signature Midwest, L.P.
("Signature") and the sale of the Mart. Total costs and
expenses increased during the three and nine month periods
ended September 30, 1995 from the three and nine months period
ended September 30, 1994 by approximately $1,029,000 and
$2,250,000, respectively, primarily as a result of the costs
related to the operations of the Viatical Settlement Division
totaling approximately $1,283,000 and $3,573,000 for the same
periods and a slight decrease in real property operating
expenses from the Georgia properties, offset by the sale of
partnership interests in Redbird and Signature and the sale of
the Mart totaling approximately $215,000 and $1,086,000 for
the same periods.
VIATICAL SETTLEMENT DIVISION
NCBC commenced operations on March 17, 1994. As of October
31, 1995, NCBC had purchased, at face value, approximately $14
million of policies. During the nine months ended September
30, 1995, $1,013,000 of policies matured. These policies had
related direct costs of $811,000 and a corresponding gross
profit of $202,000. Additional gross revenues of $1,940,000
and related direct costs of $1,801,000 were accrued pursuant
to NCBC's policy to recognize such revenue and costs over the
period from purchase of the policy to the date on which the
company may file a reinsurance claim. NCBC had operating
expenses of approximately $913,000 for the nine months ended
September 30, 1995. These expenses consist primarily of wages
and benefits, advertising, physician and professional fees,
and other office expenses.
REAL ESTATE DIVISION
Rental property revenue decreased principally as a result of
the sale of partnership interests in Redbird on June 13, 1994
and Signature on December 8, 1994 and the sale of the Mart on
July 28, 1995, offset by a slight increase in revenue from the
remaining properties totaling approximately $37,000 and
$73,000 for the three and nine months ended September 30,
1995. Occupancy at Appletree Townhouses has remained constant
with an average of approximately 91% for the first three
quarters of 1995 and 1994. Average occupancy at Colony Ridge
Apartments increased to 87% in the first three quarters of
1995 from 81% in the first three quarters of 1994. Current
occupancy is 91%. The decrease in total operating and
maintenance expenses of approximately 12% and 33% during the
three and nine months ended September 30, 1995, respectively,
compared to the same periods in 1994 is principally related to
the sale of partnership interests in Redbird and Signature and
the sale of the Mart. Property taxes, interest expense,
depreciation and amortization decreased during the same period
as a result of the sale of partnership interests in Redbird
and Signature and the sale of the Mart. Real estate property
operations, as a whole, produced operating losses of
approximately $103,000 and $175,000 for the three and nine
months ended September 30, 1995 compared to $76,000 and
$221,000 for the same periods in 1994, after all operating
expenses, including depreciation and interest expense.
INDUSTRIAL PRODUCTS DIVISION
The Industrial Products Division was sold on November 10, 1995
and has been classified as discontinued operations in the
consolidated statement of operations.
