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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 16, 1996
Date of Report (Date of earliest event reported)
NATIONAL CAPITAL MANAGEMENT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-169819 93-3054267
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) Identification No.)
160 Sansome Street
San Francisco, California 94104
(Address of principal executive offices)
(415) 989-2661
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
National Capital Management Corporation the "Company" or ("NCMC") is a
holding company that currently operates through its primary subsidiary,
National Capital Benefits Corp. ("NCBC"). NCBC is a speciality financial
services company that purchases life insurance policies for cash, on a
discounted basis, from individuals having life-threatening illnesses, a
transaction which is otherwise known as viatical settlements. NCBC has
conducted its business through two wholly-owned subsidiaries, American Life
Resources Corporation ("ALRC"), which engages in viatical settlements with
persons afflicted with AIDS and HIV, and Living Benefits, Inc. ("LBI"), which
engages in viatical settlements with persons diagnosed with cancer and other
terminal illnesses.
The Company previously announced that certain existing medications and
medications presently under development may, when used in combination,
significantly prolong the life expectancy of persons previously diagnosed
with AIDS. These studies and a July 1996 AIDS conference have had a
significant impact on this segment of the viatical settlement industry. The
Company previously indicated that a large percentage of its portfolio
involves individuals with terminal illnesses related to AIDS and that the
development of a treatment for AIDS which extends the life expectancy of such
persons could materially reduce the Company's future actual yield on its
portfolio and materially adversely affect the Company's future performance.
From November 30, 1996 to December 16, 1996, the Company has not processed
new applications for policies. The Company is continuing to evaluate the
effect of the research results from the AIDS conference, and in particular,
purchases by the Company of policies by ALRC, and the estimated collection
date of these policies.
In light of the AIDS conference, the Company is primarily focusing on
the management and administration of its existing portfolio of insurance
policies. LBI intends to continue to review new applications for policies
insuring people diagnosed with cancer and other terminal illnesses.
Accordingly, NCBC has restructured its organization and plans to reduce its
office staff from 7 to 2 persons by December 31, 1996.
NCBC's primary need for capital has been the funding of policy purchases.
NCBC has a revolving credit facility with a credit limit up to $15 million which
expires in December 1998. NBCB also has a $2 million subordinated loan. NCBC and
these lenders have negotiated a modification to the respective loan agreements
to restructure certain covenants during the term of the respective loans.
Without such modifications, the Company would have been in technical default of
certain covenants. Under the terms of the amended loan agreements, NCBC cannot
use the facility to purchase additional policies. Additional debt or equity
financing will be required to finance any new policy acquisitions. There can be
no assurance that NCBC will be successful in obtaining additional financing on
satisfactory terms or receive equity financing.
The Company cannot predict what further impact the foregoing may have on
its business, prospects, results of operations or financial position.
Furthermore, even if financing is available, NCBC has not determined whether or
when it will resume processing applications for policies
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insuring people afflicted with HIV or AIDS or the implications of these recent
developments on the Company's strategic direction.
* * * * * * * * * * * * * *
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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
(Registrant)
Dated: December 16, 1996 By /s/ John C. Shaw
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John C. Shaw
Chief Executive Officer
(Principal Executive Officer)
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