EXHIBIT 99.4


                      COASTAL RESORTS MANAGEMENT, INC. AND
                          COASTAL RESORTS REALTY L.L.C.

                      FINANCIAL STATEMENTS
                      AS OF DECEMBER 31, 1997 AND MAY 26, 1998
                      TOGETHER WITH REPORT OF INDEPENDENT
                        PUBLIC ACCOUNTANTS


<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of Coastal Resorts Management, Inc. and
    the Members of Coastal Resorts Realty L.L.C.:

We have audited the  accompanying  combined  balance  sheets of Coastal  Resorts
Management,  Inc. (a Delaware  corporation) and Coastal Resorts Realty L.L.C. (a
Delaware limited liability company) (collectively, the "Company") as of December
31, 1997 and May 26, 1998,  and the related  combined  statements of operations,
changes in  stockholders'  and members' equity and cash flows for the year ended
December  31, 1997 and for the period from January 1, 1998 through May 26, 1998.
These  combined  financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion  on these  combined
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the combined  financial  statements  referred to above  present
fairly, in all material  respects,  the combined  financial  position of Coastal
Resorts  Management,  Inc., and Coastal Resorts Realty L.L.C. as of December 31,
1997 and May 26, 1998,  and the results of their  combined  operations  and cash
flows for the year ended  December  31, 1997 and for the period from  January 1,
1998 through May 26, 1998,  in conformity  with  generally  accepted  accounting
principles.





ARTHUR ANDERSEN LLP




Houston, Texas
July 15, 1998


<PAGE>




                      COASTAL RESORTS MANAGEMENT, INC. AND

                          COASTAL RESORTS REALTY L.L.C.

                             COMBINED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                            December 31,        May 26,
                                                                                                1997             1998
                                                                                          --------------      ----------
                                        ASSETS
                                        ------
<S>                                                                                           <C>             <C>    
CURRENT ASSETS:
    Cash and cash equivalents                                                                 $   203         $   711
    Cash held in escrow                                                                           442             638
    Accounts receivable                                                                           117             535
    Receivables from related parties                                                            1,130              40
                                                                                              -------         -------
              Total current assets                                                              1,892           1,924

PROPERTY AND EQUIPMENT, net                                                                       278             317

GOODWILL AND OTHER INTANGIBLE ASSETS, net                                                         718             699
                                                                                              -------         -------
              Total assets                                                                     $2,888          $2,940
                                                                                                =====           =====
                LIABILITIES AND STOCKHOLDERS' AND MEMBERS' EQUITY
                -------------------------------------------------

CURRENT LIABILITIES:
    Customer deposits and deferred revenue                                                      $ 212          $1,000
    Payable to property owners                                                                    258             330
    Accounts payable and accrued liabilities                                                      395               6
    Accounts payable and accrued liabilities-related parties                                       47             474
    Accrued shareholder distribution                                                               -              113
                                                                                              -------         -------
              Total current liabilities                                                           912           1,923
                                                                                              -------         -------
NOTE PAYABLE TO RELATED PARTY                                                                     715             -

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' AND MEMBERS' EQUITY:
    Common stock, $0.01 par; 100,000 shares authorized;
       25,000 issued and outstanding                                                               -               -
    Capital in excess of par value                                                                 25              25
    Members' equity                                                                               100             100
    Retained earnings                                                                           1,136             892
                                                                                              -------         -------
              Total stockholders' and members' equity                                           1,261           1,017
                                                                                              -------         -------
              Total liabilities and stockholders' and members' equity                          $2,888          $2,940
                                                                                                =====           =====
</TABLE>

              The accompanying notes are an integral part of these
                             financial statements.


<PAGE>




                      COASTAL RESORTS MANAGEMENT, INC. AND

                          COASTAL RESORTS REALTY L.L.C.

                        COMBINED STATEMENTS OF OPERATIONS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                            January 1,
                                                                                                              1998
                                                                                        Year Ended            through
                                                                                       December 31,           May 26,
                                                                                          1997                 1998  
                                                                                      -------------        -----------
<S>                                                                                      <C>                <C>    
REVENUES:
    Property rental fees                                                                 $1,415             $   380
    Real estate commissions, net including related party
       commissions of $1,244 and $375, respectively                                       1,268                 763
    Water plant                                                                             462                 -
    Service fees                                                                            470                 106
                                                                                         ------              ------
              Total revenues                                                              3,615               1,249

OPERATING EXPENSES                                                                        1,788                 742

GENERAL AND ADMINISTRATIVE
    EXPENSES                                                                                644                 278
                                                                                         ------              ------
              Income from operations                                                      1,183                 229

INTEREST INCOME (EXPENSE)                                                                   (47)                  8
                                                                                         ------              ------
NET INCOME                                                                               $1,136              $  237
                                                                                         ======              ======
</TABLE>


              The accompanying notes are an integral part of these
                             financial statements.


<PAGE>


                      COASTAL RESORTS MANAGEMENT, INC. AND

                          COASTAL RESORTS REALTY L.L.C.

           STATEMENTS OF CHANGES IN STOCKHOLDERS' AND MEMBERS' EQUITY
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                Common Stock         Additional                                            
                                         -----------------------       Paid-in         Members'       Retained             
                                           Shares        Amount        Capital          Equity        Earnings        Total
                                           ------        ------        -------          ------        --------        -----
                                                                                                                           

<S>                                     <C>           <C>           <C>               <C>             <C>          <C>  
BALANCE, December 31,1996                  25,000        $  -          $25               $100          $   -       $   125
    Net Income                               -              -           -                 -              1,136       1,136
                                           ------        ------         ---               ----           -----       -----
BALANCE, December 31, 1997                 25,000           -           25                100            1,136       1,261
    Net income                               -              -           -                 -                237         237
    Contributions                            -              -           -                 -                762         762
    Distributions                            -              -           -                 -             (1,243)     (1,243)
                                           ------        ------         ---               ---            -----       -----
BALANCE, May 26, 1998                      25,000        $  -          $25               $100          $   892     $ 1,017
                                           ======        ======         ===               ===           ======       ======
</TABLE>



   The accompanying notes are an integral part of these financial statements.


<PAGE>




                      COASTAL RESORTS MANAGEMENT, INC. AND

                         COASTAL RESORTS REALTY L.L.C.

                       COMBINED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                               January 1
                                                           Year Ended           Through 
                                                          December 31,          May 26, 
                                                              1997               1998   
                                                          ------------       -----------                 
<S>                                                         <C>                 <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:                     
    Net income                                              $ 1,136             $   237
    Adjustments to reconcile net income to
      net cash provided by operating activities-
        Depreciation and amortization                            85                  38
        Gain on sale of assets                                   (8)                -
    Changes in operating assets and liabilities-
       Escrow accounts                                         (244)               (196)     
       Accounts receivable                                       26                (418)
       Customer deposits and deferred revenue                    49                 788
       Payable to property owners                                95                  72
       Accounts payable and accrued liabilities                 199                (389)
                                                             ------              ------
              Net cash provided by operating activities       1,338                 132
                                                             ------              ------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                         (261)                (58)
    Proceeds from sale of assets                                115                 -
                                                             ------              ------
              Net cash used in investing activities            (146)                (58)
                                                             ------              ------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Receivables from related parties                         (1,082)              1,090
    Accounts payable and accrued liabilities-related parties     47                 427
    Proceeds from note payable to related party                 200                 -
    Payments on note payable to related party                  (160)               (715)
    Capital contributions (distributions), net                  -                  (368)
                                                             ------              ------
    Net cash provided by (used in) financing activities        (995)                434
                                                             ------              ------
NET INCREASE IN CASH AND CASH EQUIVALENTS                       197                 508

CASH AND CASH EQUIVALENTS, beginning of period                    6                 203
                                                             ------              ------
CASH AND CASH EQUIVALENTS, end of period                    $   203             $   711
                                                             ======              ======
SUPPLEMENTAL DISCLOSURE OF NON-CASH
    FINANCING INFORMATION:
       Accrued distribution to stockholders                 $   -               $   113
                                                             ======              =======

</TABLE>

   The accompanying notes are an integral part of these financial statements.


<PAGE>



                      COASTAL RESORTS MANAGEMENT, INC. AND

                         COASTAL RESORTS REALTY L.L.C.


                     NOTES TO COMBINED FINANCIAL STATEMENTS

1.     BUSINESS AND ORGANIZATION:

Coastal Resorts  Management,  Inc. ("CRM"),  incorporated on September 26, 1996,
and  Coastal  Resorts  Realty  L.L.C.  ("CRR"),   formed  on  August  28,  1996,
(collectively the "Companies" or the "Company") are a Delaware corporation and a
Delaware  limited  liability  company,   respectively.   CRM  provides  property
management  services to homeowner  associations as well as other related service
companies.   CRR  provides  property  rental  services  to  owners  of  vacation
properties  and acts as an agent for sales of new and used vacation  properties.
The Company manages  approximately 550 rental units in Bethany Beach,  Delaware.
The Company  provides its  management  services to property  owners  pursuant to
management contracts, which range in length from one to five years. The majority
of such  contracts  allow  property  owners to terminate  the contract  only for
cause. The Company's  operations are seasonal,  with peaks during the second and
third quarters of the year.

On May 26, 1998, ResortQuest International, Inc. ("ResortQuest") consummated its
initial  public  offering  and  acquired  all of the  outstanding  stock  of the
Companies   in   exchange   for  shares  of   ResortQuest   common   stock  (the
"Combination").  In addition, the stockholders and members retained goodwill and
other  intangible  assets  that  were  excluded  from the  Combinations  and the
purchase  price  for the  Company  was  adjusted  for  certain  working  capital
adjustments of approximately $113,000.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

       Basis of Combination and Financial Statement Presentation

The  accompanying  financial  statements  of CRM and CRR have been prepared on a
combined basis as the Companies are under common control and will be the subject
of a consolidation with and into ResortQuest.

       Revenue Recognition

The Company  records  property  rental fees on the accrual basis of  accounting,
ratably over the term of guest stays, as earned.  The Company requires a deposit
equal to 33% of the rental fee 10 days after the  reservation  is booked.  These
deposits are  non-refundable  and are recorded as customer 


<PAGE>

deposits and deferred revenue in the accompanying combined financial statements.
The Company records revenue for cancellations as they occur.

Service fees are recorded  for a variety of services and are  recognized  as the
service is provided, including processing and inspection fees.

Commissions  on real estate sales are recognized at closing and are recorded net
of the related commission expense. The Company recognized commission revenues of
approximately $2,176,000 and $1,275,000 for the year ended December 31, 1997 and
the  period  from  January  1, 1998  through  May 26,  1998,  respectively,  and
commission  expense of  approximately  $908,000  and $512,000 for the year ended
December  31, 1997 and for the period from January 1, 1998 through May 26, 1998,
respectively.

       Operating Expenses

Operating  expenses include rental agent  commissions,  salaries,  marketing and
advertising   expense,  and  other  costs  associated  with  sales,  rental  and
management.

       Cash and Cash Equivalents

For purposes of the balance  sheets and  statements  of cash flows,  the Company
considers all cash held and investments  held with maturities of less than three
months as cash and cash equivalents.

       Property and Equipment

Property and equipment are stated at cost,  and  depreciation  is computed using
the straight-line method over the estimated useful lives of the assets.

Expenditures  for repairs and  maintenance are charged to expense when incurred.
Expenditures for major renewals and  betterments,  which extend the useful lives
of existing  equipment,  are  capitalized  and  depreciated.  Upon retirement or
disposition  of  property  and  equipment,  the  cost  and  related  accumulated
depreciation  are removed from the accounts  and any  resulting  gain or loss is
recognized in the statement of operations.

       Intangible Assets

On December 30,  1996,  CRR entered into an agreement to purchase the assets and
assume certain  liabilities of Interstate Realty Co., Inc. (a related party) for
the purchase price of $759,000. CRR borrowed 600,000 from a related party entity
to finance  the  purchase.  The fair value of the net assets  purchased  totaled
$2,000,  resulting in the recognition of goodwill of $642,000 and a trademark of
$115,000. The trademark was sold in 1997 (see Note 6).

On December 30, 1996, CRM entered into an agreement to purchase the common stock
of SCM (a related  party)  for the  purchase  price of  $132,000.  CRM  borrowed
$75,000 from a related party entity to finance the  purchase.  The fair value of
the net assets  purchased  totaled  $30,000,  resulting  in the  recognition  of
intangible assets, totaling $102,000.

                                      -2-
<PAGE>

The goodwill is being amortized over a period of 40 years.

The intangible assets are being amortized over a period of 10-15 years.

       Income Taxes

CRM has elected S Corporation status as defined by the Internal Revenue Code and
state tax  statutes,  whereby the Company is not subject to taxation for federal
or state tax purposes. Under S Corporation status, the stockholders report their
share of CRM's taxable earnings or losses in their personal tax returns.  CRR is
a limited  liability  company and is taxed as a  partnership.  Accordingly,  the
Company is not subject to taxation  for federal or state  purposes.  The members
report  their share of CRR's  taxable  earnings or losses in their  personal tax
returns.

       Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  requires  the  use  of  estimates  and  assumptions  by
management in determining  the reported  amounts of assets and  liabilities  and
disclosures  of contingent  assets and  liabilities at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

       Concentration of Risk

The Companies'  operations are  exclusively in the Bethany Beach,  Delaware area
and are subject to significant changes due to weather conditions.

For the year ended  December 31, 1997 and the period from January 1, 1998 to May
26,  1998,  approximately  26  percent,  respectively,  of gross  revenues  were
attributable  to  commissions  on new homes sales which were built by Sea Colony
Development Corporation, Inc., a related party.

3.     DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS:

Property and equipment consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                           Estimated
                                                            Useful 
                                                             Lives        December 31,       May 26,
                                                            In Years        1997             1998
                                                            --------      ------------    ----------
<S>                                                           <C>          <C>              <C> 
         Computer equipment                                   5            $ 88             $100
         Furniture and fixtures                               7             241              288
                                                                          -----            -----
         Total                                                              329              388
                                                                          -----            -----
         Less -- Accumulated depreciation                                   (51)             (71)
                                                                          -----            -----
         Property and equipment, net                                       $278             $317
                                                                            ===              ===
</TABLE>



                                      -3-
<PAGE>



4.     COMMITMENTS AND CONTINGENCIES:

       Litigation

The  Companies  are involved in various  legal  actions  arising in the ordinary
course of business.  Management  does not believe that the outcome of such legal
actions will have a material adverse effect on the Companies' combined financial
position or results of operations.

       Insurance

Through  policies  secured by a related  party,  the  Companies are covered by a
broad  range  of  insurance  policies,   including  general  and  business  auto
liability,  commercial property,  workers'  compensation and a general umbrella.
The cost of  these  policies  has not been  allocated  to the  Companies  in the
accompanying  financial  statements.  The  Companies  expect to incur  insurance
expense in future years.

       Benefit Plans

A  related  party's  401(k)   retirement  plan  (the  "Plan")  is  available  to
substantially all of the Company's  employees.  The Plan is 100% employee funded
and the Companies have no current or future obligations related to the Plan. The
Companies currently pay a fee for the related administration costs.

       Future Minimum Lease Payments

The Company  rents office space and equipment  under  operating  leases.  Rental
expense  related to these leases was  approximately  $111,000 for the year ended
December  31, 1997 and $41,000 for the period from  January 1, 1998  through May
26,  1998.   Rental  expense   related  to  leases  with  related   parties  was
approximately  $77,000 and $50,000 for the year ended  December 31, 1997 and the
period from January 1, 1998 through May 26, 1998.

Minimum future lease payments under these noncancelable  operating leases are as
follows (in thousands):

<TABLE>
<CAPTION>
                Year                                                 Amount
           -----------------                                         -------
<S>                                                                  <C>  
           Remainder of 1998                                         $  70
           1999                                                        125
           2000                                                        129
           2001                                                         76
           2002                                                         38
                                                                      ----
           Total                                                      $438
                                                                      ====
</TABLE>


                                      -4-
<PAGE>


5.     RELATED PARTIES:

       Related Party Agreements

Effective  June 1, 1996,  an agreement  with CMF Fitness,  Inc., a related party
appointed the Company as the manager of, and exclusive agent for, the Sea Colony
Fitness Center located in Bethany  Beach,  Delaware.  The agreement is effective
from June 1, 1996 until  December 31 of the calendar  year in which the last new
home in the Sea Colony  community is sold,  but in no event later than  December
31, 2005. CMF Fitness,  Inc. paid the Company  approximately $70,000 and $29,000
for the year ended  December  31, 1997 and for the period  from  January 1, 1998
through May 26, 1998, respectively, under this agreement.

CRM  receives  a  management  fee of  approximately  $6,000  per  month  for its
services.  CRM  earned  approximately  $70,000  and  $29,000  for the year ended
December  31, 1997 and for the period from January 1, 1998 through May 26, 1998,
respectively, in relation to this management agreement.

Effective  January 1, 1997,  CRM entered into an agreement with Sea Colony Water
Company,  L.L.C.,  ("SCWC"), a related party. The agreement appointed CRM as the
manager of and exclusive agent for the Sea Colony Water Plant located in Bethany
Beach,  Delaware. The agreement is effective from January 1, 1997 until December
31,  2001 or the sale of the  property.  CRM is  entitled  to retain all revenue
collected by the water plant, less the following:  (1) an annual payment to SCWC
of  $100,000,  (2) an annual  payment to SCWC  equal to 12.5% of the  cumulative
value of capital improvements made to the water plant after January 1, 1997, and
(3) all costs and expenses  associated with the operation of the property except
capital  improvements  and  expenditures,  costs  of  compliance  with  laws and
regulations,  and costs of  insurance.  CRM earned  approximately  $463,000  and
$206,000  in revenue  from the  operation  of the water plant for the year ended
December  31, 1997 and for the period from January 1, 1998 through May 26, 1998,
respectively.  Operating  expenses plus the  additional  costs  described  above
incurred  by CRM  related to the water  plant were  approximately  $319,000  and
$137,000 for the year ended December 31, 1997 and for the period from January 1,
1998 through May 26, 1998.

Effective  January  1,  1997,  CRR  entered  into an  agreement  with Sea Colony
Development Corporation,  Inc. ("SCDC"), a related party. The agreement requires
CRR to  develop  a  marketing  plan to  promote  new  homes  in the  Sea  Colony
community.  The agreement also appointed CRR as the sole and exclusive agent for
sale of new homes at Sea Colony from  January 1, 1997 until  December  31, 1999.
The  agreement  states that CRR shall  receive a commission  of 6.5% of the full
purchase  price on all new homes sold at Sea  Colony.  CRR earned  approximately
$1,244,000  and $715,000 for the year ended December 31, 1997 and for the period
from  January 1, 1998  through  May 26,  1998,  respectively,  in new home sales
commissions under this agreement.  At December 31, 1997, in connection with this
agreement the Company has a net receivable of  approximately  $674,000 from SCDC
consisting of a receivable of  approximately  $1,244,000 for  commissions on new
home  sales  in  1997  and a  related  payable  of  approximately  $570,000  for
commissions,  marketing and advertising  expenses paid by SCDC on behalf of CRR.
At May 26,  1998,  in  connection  with this  agreement  the  Company  has a net
receivable of  approximately  $448,000  from SCDC  consisting of a receivable of
approximately  $404,000 for commissions on new home sales during the period from
January 1, 1998  through  May 26,  1988 and a related  payable of  approximately
$44,000 for  commissions,  marketing  and  advertising  expenses paid by SCDC on
behalf of CRR.


                                      -5-
<PAGE>


Effective  January 1, 1997,  the  Companies  entered into an agreement  with CMF
Paymaster, Inc., a related party, to receive administrative services relating to
payroll and other employee  matters.  The agreement is effective from January 1,
1997 through  December 31, 1999, and requires the Companies to pay $2.00 per pay
period per employee of the Companies.

The  trademark  purchased  on December  30, 1996 for  $115,000  was sold to SCDC
pursuant to an agreement  effective  December 31, 1997. As of December 31, 1997,
the Company has  recorded a receivable  from SCDC for  $115,000  related to this
sale.  A gain of $4,000  was  recognized  on the sale and is  included  in other
revenues.

       Note Payable to Related Party

In  connection  with the  purchase of two  subsidiaries  of the  Companies,  the
Companies  borrowed  $675,000  from a related  party.  The loan has an effective
interest  rate of 7.25% and is due December 31, 2001.  During 1997 the Companies
received  additional  advances  of  $200,000  and  made  principal  payments  of
$160,000. Accrued interest payable at December 31, 1997, was $46,888. The assets
of the Company have been pledged as collateral for the note.

       Related Party Leases

The Company  leases  office  space under  three  separate  leases with a related
party. In aggregate,  the Company paid approximately $77,000 and $50,000 for the
year ended December 31, 1997 and the period from January 1, 1998 through May 26,
1998, respectively.

       Capital Contribution

On January 13, 1998, the owners of the Companies made a capital  contribution of
approximately  $762,000.  On the same  day,  this  amount  was used to repay the
Companies' related party debt of $715,000 and the related accrued interest.


                                      -6-