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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
April 2, 1997
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
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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 through the date of this report, the Company did not process new
applications for policies but engaged in an evaluation of 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.
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. NCBC 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. Under the terms of the amended loan agreements, NCBC cannot use the
revolving credit facility to purchase additional policies.
In light of the foregoing, the Company will cease purchasing insurance
policies from individuals. The Company may, however, seek the purchase of a
portfolio of life insurance policies in bulk to the extent each of the policies
in such 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 2 persons. Management anticipates
that these persons, as well as NCMC management, will manage NCBC's existing
portfolio of approximately $19 million of insurance policies. Management
estimates that the administration of these policies will take several years.
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SIGNATURES
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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: April 2, 1997
By /s/ John C. Shaw
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John C. Shaw
Chief Executive Officer
(Principal Executive Officer)
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