SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q
                                    ---------


(Mark One)

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2000

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ..................to ............................
Commission file number.....................................0-26214

                        FRESHSTART VENTURE CAPITAL CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              NEW YORK                                 13-3134761
   ---------------------------------              -------------------
     (State or other jurisdiction                  (I.R.S. Employer
   of incorporation or organization)              Identification No.)


                              24-29 Jackson Avenue
                           Long Island City, New York
                    ----------------------------------------
                    (Address of principal executive offices)

                                      11101
                                   ----------
                                   (Zip Code)

                                 (718) 361-9595
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


              (Former name, former address and former fiscal year,
                         if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days.

Yes. .[X].   No. . . .


    The number of shares of Common Stock, par value $.01 per share, outstanding
                    as of February 29 2000: 2,172,688

<PAGE>

                              TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Statements of Financial Position as of
  February 29, 2000 (unaudited) and May 31, 1999........................... 2-3

Statements of Operations for the Three Months
  and Nine Months Ended February 29, 2000 and
  February 28, 1999(unaudited)................................................4

Statements of Stockholders' Equity for the Nine
  Months Ended February 29, 2000 and February
  28, 1999 (unaudited)........................................................5

Statements of Cash Flows for Nine Months
  Ended February 29, 2000 and February 28,
  1999 (unaudited)............................................................6

Notes to the Financial Statements..........................................7-13

Supplemental Schedules.......................................................14

Per Share Data...............................................................15

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations...........................16-17

Part II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K ...................................18

Signatures...................................................................19

Schedule 27 .................................................................20

<PAGE>

                                    PART I
                            FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS

The statement of financial position of the Company as of February 29, 2000, the
related statements of operations, and cash flows for the nine months ended
February 29, 2000 and February 28, 1999 included in Item 1 have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the accompanying financial statements
include all adjustments (consisting of normal, recurring adjustments) necessary
to summarize fairly the Company's financial position and results of operations.
The results of operations for the nine months ended February 29, 2000 are not
necessarily indicative of the results of operations for the full year or any
other interim period. These financial statements should be read in conjunction
with the audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1999 as
filed with the Commission.

<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                        STATEMENTS OF FINANCIAL POSITION

                                     ASSETS
<TABLE>
<CAPTION>
                                                     February 29,           May 31,
                                                        2000                 1999
                                                     -----------         -----------
                                                     (Unaudited)
Loans Receivable:
<S>                                                  <C>                 <C>
Long Term Portion (Notes 2 and 3)                    $21,720,787         $25,123,632
Less:  Unrealized Depreciation on
  Loans Receivable (Note 3)                             (816,441)           (316,441)
                                                     -----------         -----------
                                                      20,904,346          24,807,191
Less:  Current Maturities - Loans Receivable          (3,258,118)         (3,768,545)
                                                     -----------         -----------

     Total Loans Receivable -
       Net of Current Maturities                      17,646,228          21,038,646
                                                     -----------         -----------

CURRENT ASSETS

Cash (Note 12)                                         1,453,685             814,340
Accrued Interest (Notes 2 and 3)                         288,037             308,897
Current Maturities - Loans Receivable                  3,258,118           3,768,545
Prepaid Expenses and Other Assets                        264,129             305,423
                                                     -----------         -----------

     Total Current Assets                              5,263,969           5,197,205
                                                     -----------         -----------

Fixed Assets - Net of Accumulated Depreciation

  of $38,447 and $31,364
  respectively (Note 2)                                   19,360              22,788
                                                    ------------         -----------
     Total Assets                                    $22,929,557         $26,258,639
                                                    ============         ===========
</TABLE>
            See Accompanying Notes to Unaudited Financial Statements

                                       2
<PAGE>


                             FRESHSTART VENTURE CAPITAL CORP.
                             STATEMENTS OF FINANCIAL POSITION

                           LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                          February 29,          May 31,
                                                             2000                1999
                                                         -------------       -------------
                                                          (Unaudited)
<S>                                                       <C>                 <C>
 LONG TERM DEBT:
 Debentures Payable to SBA (Note 5)                      $ 10,860,000        $ 12,360,000
 4% Cumulative, 15 Year Redeemable
   Preferred Stock (Note 6)                                 1,410,000           1,410,000
                                                         ------------        ------------
      Total Long Term Debt                                 12,270,000          13,770,000
                                                         ------------        ------------

 CURRENT LIABILITIES:
 Notes Payable - Bank                                       3,000,000           5,000,000
 Accrued Interest                                             375,142             325,202
 Other Current Liabilities                                     50,051              17,354
 Dividends Payable (Note 7)                                        --              14,100
                                                         ------------        ------------
      Total Current Liabilities                             3,425,193           5,356,656
                                                         ------------        ------------

      Total Liabilities                                    15,695,193          19,126,656
                                                         ------------        ------------

 Commitments and Contingencies
   (Notes 11, 12 and 14)                                           --                  --

 STOCKHOLDERS EQUITY:
 4% Cumulative, 15 Year Redeemable Preferred
   Stock- $1 Par Value; 10,000,000 Shares
   Authorized, 1,410,000 Shares Issued and

   Outstanding, (See Long Term Debt)                               --                  --

 3% Cumulative Preferred Stock - $1 Par Value:
   No Shares Issued and Outstanding                                --                  --

 Common Stock - $.01 Par Value: 3,000,000 Shares
   Authorized, 2,172,688 Shares Issued and

   Outstanding                                                 21,726              21,726

 Additional Paid in Capital (Note 6)                        7,048,816           7,048,816
 Retained Earnings                                            163,822              61,441
 Restricted Capital - Realized Gain on
   Redemption (Note 6)                                             --                  --
                                                                   --                  --
      Total Stockholders' Equity                            7,234,364           7,131,983
                                                         ------------        ------------
      Total Liabilities and Stockholders' Equity         $ 22,929,557        $ 26,258,639
                                                         ============        ============

Net Assets Per Share                                     $       3.33        $       3.28
                                                         ============        ============

                 See Accompanying Notes to Unaudited Financial Statements
</TABLE>
                                             3
<PAGE>


                                 FRESHSTART VENTURE CAPITAL CORP.
                                     STATEMENTS OF OPERATIONS
                                            (UNAUDITED)
<TABLE>
<CAPTION>
                                              Three Months Ended           Nine Months Ended
                                                  February,                     February,
                                         --------------------------    --------------------------
                                             2000           1999          2000            1999
                                         -----------    -----------    -----------    -----------
<S>                                      <C>              <C>            <C>             <C>
REVENUE:
Interest Earned on
  Outstanding Receivables                $   769,372    $   692,220    $ 2,147,016    $ 2,148,623
Interest Income - Idle Funds                  10,258          3,544         18,363          9,575
                                         -----------    -----------    -----------    -----------
     Total Revenue (Note 2)                  779,630        695,764      2,165,379      2,158,198
                                         -----------    -----------    -----------    -----------

EXPENSES:

Interest (Notes 4 and 5)                     309,344        335,378        931,407      1,015,801
Professional Fees                             67,063         68,097        143,142        157,876
Officers' Salaries (Notes 9 and 10)           30,405         30,405         91,215         91,215
Other Salaries (Note 9)                       13,914         12,835         37,605         33,355
Other Operating Expenses                      45,642         52,198        124,496        125,413
Pension Expense (Note 8)                       3,700          3,371         10,731         10,981
Depreciation and Amortization (Note 2)        10,294         10,614         31,494         31,842
                                         -----------    -----------    -----------    -----------
     Total Expenses                          480,362        512,898      1,370,090      1,466,483
                                         -----------    -----------    -----------    -----------

Net Investment Income                        299,268        182,866        795,289        691,715
Unrealized Depreciation in Value of

  Investments (Notes 2 and 3)                (70,000)            --       (518,351)            --
                                         -----------    -----------    -----------    -----------
                                             229,268        182,866        276,938        691,715
PROVISION FOR TAXES:
Current Income Taxes (Note 2)                   (154)           (77)        (1,886)          (757)
                                         -----------    -----------    -----------    -----------
     Net Income                          $   229,114    $   182,789    $   275,052    $   690,958
                                         ===========    ===========    ===========    ===========

Earnings Per Share of Common Stock

  (Note 2)                               $      0.10    $      0.06    $      0.11    $      0.29
                                         ===========    ===========    ===========    ===========
Dividends Paid Per Share
  of Common Stock                        $     0.030    $     0.115    $      0.06    $      0.35
                                         ===========    ===========    ===========    ===========
Weighted Average Shares of Common          2,172,688      2,172,688      2,172,688      2,172,688
                                         ===========    ===========    ===========    ===========
  Stock Outstanding
</TABLE>
                     See Accompanying Notes to Unaudited Financial Statements

                                                 4
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)


                                               Nine Months Ended
                                                   February,
                                           ----------------------------
                                               2000            1999
                                           ------------    ------------
4% Cumulative, 15 Year Redeemable

  Preferred Stock - $1 Par Value:
  10,000,000 Shares Authorized,
  1,410,000 Shares Issued and

  Outstanding (See Long Term Debt)

Common Stock - $.01 Par Value:
  3,000,000 Shares Authorized, 2,172,688
  Shares Issued and Outstanding                 21,726         21,726
                                           -----------    -----------
Additional Paid in Capital -
  Beginning of Period                        7,048,816      7,048,816
Amortization of Restricted

  Capital (Note 6)                                  --             --
                                           -----------    -----------
Balance, End of Period                       7,048,816      7,048,816
                                           -----------    -----------
Retained Earnings -
Beginning of Period                             61,441         22,205
Net Income                                     275,052        690,958
Dividends Paid and Accrued                    (172,671)      (791,883)
                                           -----------    -----------
     Balance, End of Period                    163,822        (78,720)
                                           -----------    -----------
     Total Stockholder's Equity            $ 7,234,364    $ 6,991,822
                                           ===========    ===========

            See Accompanying Notes to Unaudited Financial Statements

                                        5
<PAGE>
<TABLE>
<CAPTION>
                                FRESHSTART VENTURE CAPITAL CORP.
                                    STATEMENTS OF CASH FLOWS

                                                                      Nine Months Ended
                                                                          February,
                                                                  --------------------------
                                                                      2000           1999
                                                                  -----------    -----------
<S>                                                               <C>            <C>
CASH FLOWS PROVIDED (USED) BY
  OPERATING ACTIVITIES:
Net Income                                                        $   275,052    $   690,958
Depreciation and Amortization Expense                                  31,494         31,842
Increase in Unrealized Depreciation                                   500,000             --
(Increase) in Accrued Interest                                         20,860        (80,727)
Decrease (Increase) in Other Assets                                    13,228         19,477
Increase in Accrued Liabilities                                        82,637        125,393
Dividends Paid and Accrued                                           (186,771)      (791,883)
                                                                  -----------    -----------
Net Cash (Used) Provided By Operating Activities                      736,500         (4,940)
                                                                  -----------    -----------

CASH FLOWS PROVIDED (USED) BY
  INVESTING ACTIVITIES:
Net (Decrease) Increase in Loans Receivable                         3,402,845       (570,869)
                                                                  -----------    -----------
Net Cash (Used) By Investing Activities                             3,402,845       (570,869)
                                                                  -----------    -----------

CASH FLOWS (USED) PROVIDED BY
  FINANCING ACTIVITIES:
Acquisition of Fixed Assets                                                --        (15,000)
Repayment of Bank Line of Credit                                   (2,000,000)            --
(Decrease) in Debentures Payable to SBA (Net)                      (1,500,000)            --
                                                                  -----------    -----------
Net Cash (Used) Provided by Financing Activities                   (3,500,000)       (15,000)
                                                                  -----------    -----------
Net Increase (Decrease) in Cash                                       639,345       (590,809)
Cash Balance - Beginning of Period                                    814,340      1,528,168
                                                                  -----------    -----------
Cash Balance - End of Period                                      $ 1,453,685    $   937,359
                                                                  ===========    ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
Interest                                                          $   881,467    $   665,333
                                                                  -----------    -----------
Taxes                                                             $    (1,886)   $       680
                                                                  -----------    -----------
</TABLE>
            See Accompanying Notes to Unaudited Financial Statements

                                        6
<PAGE>

                        FRESHSTART VENTURE CAPITAL CORP.
                        NOTES TO THE FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 1     ORGANIZATION

           Freshstart Venture Capital Corp., a New York Corporation (the
           "Company"), was formed on March 4, 1982 for the purpose of operating
           as a specialized small business investment company ("SSBIC"),
           licensed under the Small Business Investment Act of 1958 and
           regulated and financed in part by the U.S. Small Business
           Administration ("SBA"). The Company is a non-diversified investment
           Company that has elected to be regulated as a business development
           Company, a type of closed-end Investment Company under the Investment
           Company Act of 1940. Beginning June 1, 1997, the Company elected to
           be taxed as a regulated Investment Company under sub-chapter M of the
           Internal Revenue Code of 1986, as amended. The Company's business is
           to provide financing to persons who qualify under SBA regulations as
           socially or economically disadvantaged and to entities which are at
           least fifty (50%) percent owned by such individuals.

NOTE 2     SIGNIFICANT ACCOUNTING POLICIES

           The following is a summary of significant accounting policies applied
           by the Company in the preparation of its financial statements. The
           Company maintains its accounts and prepares its financial statements
           on the accrual basis of accounting in conformity with generally
           accepted accounting principles for investment companies.

           VALUATION OF LOANS AND INVESTMENTS

           At February 29, 2000, the investment portfolio included net
           investments totaling $20,904,346, whose values had been estimated by
           the Board of Directors in the absence of readily ascertainable market
           values. Accordingly, the Board of Directors has valued the investment
           portfolio based upon the cost of such investments, less a provision
           for loan losses. However, because of the inherent uncertainty of the
           valuation, the estimated values might otherwise be significantly
           higher or lower than values that would exist in a ready market for
           such loans, which market has not in the past and does not now exist.
           The provision for loan losses represents a good faith determination
           by the Board of Directors maintained at a level that, in its
           judgment, is adequate to absorb losses. The balance in the reserve
           account is adjusted periodically by the Board of Directors on the
           basis of the fair value of the collateral held and past loss
           experience. Approximately eighty-three (83%) percent of the Company's
           loan portfolio consists of loans made for the financing of taxicab
           medallions and related assets. The remaining portions of the loans
           are made to various small commercial enterprises. The Company's loans
           to small business concerns range up to approximately $250,000 in
           size, typically have a five to fifteen year maturity and bear
           interest at rated ranging from 8.00% to 18.0% per annum.

           Substantially all loans are collateralized by either NYC taxi
           medallions or real estate and the personal guarantees of the
           individual owners.

           DEFERRED DEBENTURE COSTS

           SBA Debenture costs are amortized over ten years which represents the
           term of the SBA debentures.

                                        7
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                        NOTES TO THE FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000


NOTE 2     SIGNIFICANT ACCOUNTING POLICIES
           (Continued)

           DEPRECIATION AND AMORTIZATION

           Depreciation and amortization of furniture, fixtures and leasehold
           improvements is computed on the straight line method at rates
           adequate to allocate the costs of applicable assets over their
           expected useful lives.

           RECOGNITION OF INTEREST INCOME

           It is the Company's policy to record interest on loans and debt
           securities only to the extent that management and the Board of
           Directors anticipate such amounts may be collected. Interest on
           doubtful accounts and accounts, which are 180 days past due, is not
           recorded until, actually received.

           INCOME TAXES

           Effective 1998, the Company has elected to be taxed as a regulated
           investment company under sub-chapter M of the Internal Revenue Code.
           A regulated investment company can generally avoid taxation at the
           corporate level to the extent that ninety (90%) percent of its income
           is distributed to its stockholders. Therefore, no provision for
           federal income taxes has been made. The financial statements include
           provisions for New York State and local minimum taxes.

           EARNINGS PER SHARE

           The  Company  adopted  SFAS No.  128  "Earnings  per  Share"  which
           supercedes  Accounting  Principles  Board  Opinion  No.  15.  Under
           SFAS No. 128, net increase  (decrease) in  shareholders'  equity by
           the weighted  average  number of common shares  outstanding  during
           the period.  Diluted  earnings  per share  reflects  the  potential
           dilution  that could  occur if  securities  or other  contracts  to
           issue  common stock were  exercised or converted  into common stock
           or resulted in the issuance of common stock.

           RISKS AND UNCERTAINTIES

           Pursuant to Section 64 (b) (1) of the Investment Company Act of 1940,
           the Company is required to advise shareholders annually that the
           Company is engaged in a high risk business. Loans and other
           investments to small business concerns are extremely speculative.
           Most of such concerns are privately held. Even if a public market for
           the securities of such concerns exists, the loans and other
           securities purchased by the Company are often restricted against sale
           or other transfer for specified periods of time, Thus, such loans and
           other investments have little, if any, liquidity, and the Company
           must bear significantly larger risks, including possible losses on
           such investments, than would be the case with traditional investment
           companies.

                                        8
<PAGE>


                       FRESHSTART VENTURE CAPITAL CORP.
                      NOTES TO THE FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 2     SIGNIFICANT ACCOUNTING POLICIES
           (Continued)

           ACCOUNTING STANDARD FOR IMPAIRMENT OF LOANS

           Statement of Financial Accounting Standard No. 114, "Accounting by
           Creditors for Impairment of a Loan" ("SFAS 114") was issued in May
           1993 and is effective for fiscal years beginning after December 15,
           1994. SFAS 114 generally requires all creditors to account for
           impaired loans, except those loans that are accounted for at fair
           value or at the lower of cost or fair value, at the present value of
           expected future cash flows discounted at the loans' effective
           interest rate. Creditors may account for impaired loans at the fair
           value of the collateral or at the observable market price of the loan
           if one exists. Due to the nature of the Company's loan portfolio,
           SFAS 114 is not expected to have a material effect on the Company's
           financial condition or results of operations.

           USE OF ESTIMATES

           The preparation of financial statements in conformity with generally
           accepted accounting principles requires management 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
           income and expense during the reporting period. The most significant
           estimates relate to the valuation of the loans receivable. Actual
           results could differ from those estimates.

           OTHER

           Certain information from the prior years has been reclassified to
           conform its presentation to the current financial statements.

NOTE 3     LOANS RECEIVABLE

           The Company's loan portfolio includes participations with other
           lenders as presented in the following schedule. The following is a
           breakdown of the outstanding loans receivable:

                                             February 29, 2000
                                             -----------------

                Outstanding Loans               $38,814,777
                Participations Loan              17,093,990
                                                -----------
                Net Loans Outstanding           $21,720,787
                                                ===========


           Loans on non-accrual status as of February 29, 2000 were
           approximately $1,367,589. Additionally, the cumulative amount of
           accrued interest income not recorded was $1,034,734 as of February
           29, 2000.

                                        9
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                        NOTES TO THE FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 3     LOANS RECEIVABLE
           (Continued)

           RECONCILIATION OF LOAN LOSS RESERVE

           A reconciliation of loan loss reserve is as follows:


                                             February 29, 2000
                                             -----------------
            Balance, Beginning                  $  316,441
            Provision for Loan                     518,351
            Losses
            Charge-Offs                            (18,351)
                                                ----------
            Balance, Ending                     $  816,441
                                                ==========

NOTE 4      LOANS PAYABLE - LINE OF CREDIT

            Effective March 6, 1997, the Company established a $5,000,000 line
            of credit with Israel Discount Bank. All advances bear interest at
            1.75% above the LIBOR rate. Pursuant to the terms of the line of
            credit, the Company is required to comply with certain terms,
            covenants and conditions. The line of credit is unsecured and the
            Company is required to maintain a minimum $100,000 compensating
            balance with the bank. Effective March 31, 1999, the line of credit
            was increased to $10,000,000.

NOTE 5      LONG TERM DEBT

            The long-term debt to the SBA consisted of the following
            subordinated debentures as of February 28, 1999 and February 29,
            2000 with interest payable semi-annually:

            MATURITY DATE        FIRST SECOND     FACE AMOUNT

            June 1, 2005         6.690%6.690%    $  520,000
            December 1, 2005     6.540%6.540%       520,000
            December 16,2002     4.510%7.510%     1,300,000
            March 1, 2007        7.380%7.380%     4,210,000
            June 1, 2006         7.710%7.710%       250,000
            September 1, 2007    7.760%7.760%     4,060,000
                                                -----------
                                                $10,860,000
                                                ===========

            During the period ended May 31, 1998, the Company paid off $150,000
            in subsidized debentures and sold an additional debenture for
            $4,060,000 due September 1, 2007 with interest and fees totaling
            7.760% per annum.

            Under the terms of the subordinated debentures, the Company may not
            repurchase or retire any of its capital stock or make any
            distributions to its stockholders other than dividends out of
            retained earnings without the prior written approval of the SBA.
            Effective September 2, 1999, the Company paid off $750,000 in
            subsidized debentures.

                                     10
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                        NOTES TO THE FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 6     RESTRICTED CAPITAL - UNREALIZED GAIN ON REDEMPTION

           REPURCHASE OF 3% PREFERRED STOCK

           The Company and the SBA entered into a repurchase agreement dated May
           10, 1993. Pursuant to the agreement, the Company repurchased all
           1,520,000 shares of its $1 par value, 3 percent cumulative preferred
           stock from the SBA for a purchase price of $.36225670 per share, or
           an aggregate of $550,630. The repurchase price was at a substantial
           discount to the original sale price of the 3 percent preferred stock,
           which was sold to the SBA at par value or $1.00 per share. The full
           value of the discount aggregating $969,370 is included in
           paid-in-capital.

           The Company issued the SBA a liquidating interest in a newly created
           restricted capital surplus account that was equal to the amount of
           the repurchase discount. This repurchase discount was amortized over
           a sixty month period and was fully amortized as of May 31, 1998.

NOTE 7     DIVIDENDS

           Dividedends paid to the SBA for the nine months ended February 29,
           2000 were $56,400.

NOTE 8     MONEY PURCHASE PLAN

           Effective for the fiscal year ending May 31, 1989 the Company
           initiated a defined contribution pension plan. The eligibility
           requirements for participation in the plan are a minimum age of 21
           years old and 24 months of continuous employment with the Company.
           Contributions are currently limited to ten percent of each
           participants compensation. The provision made for the nine months
           ended February 29, 2000 and February 28, 1999 were $10,731 and
           $10,981 respectively. All contributions to the plan have been funded
           on a current basis.

NOTE 9     MANAGEMENT FEES

           The SBA approved the Company's total compensation of $225,000.
           Compensation is inclusive of officers' and staff salaries and pension
           contributions.

NOTE 10    RELATED PARTY TRANSACTION

           Effective November 1, 1998, the Company entered into a lease
           agreement with a corporation whose shareholder is also a shareholder
           of the Company. Total rental expense under this lease was $22,430.

           Certain officers and directors of the Company are also shareholders
           of the Company. Officers' salaries are set by the Board of Directors
           and are also subject to maximum compensation set by the SBA. For the
           nine months ended February 29, 2000 and February 28, 1999 officers'
           salaries, including pension contributions, were $100,333 and
           $100,333, respectively.

NOTE 11    SIGNIFICANT CONCENTRATION OF CREDIT RISK

           Approximately eighty-three (83%) percent of the Company's loan
           portfolio consists of loans made for the financing and purchase of
           New York City taxicab medallions and related assets.

                                       11
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                        NOTES TO THE FINANCIAL STATEMENTS

                                FEBRUARY 29, 2000

NOTE 12    FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISKS

           The Company maintained approximately $947,269 in one bank in excess
           of amounts that would be insured by the Federal Depository Insurance
           Corporation. Management of the Company feels that the bank is well
           capitalized under FDIC guidelines.

NOTE 13    MERGER

           On December 22, 1999, an Agreement and Plan of Merger (the "Merger
           Agreement") was executed by and among Medallion Financial Corp.
           ("Medallion"), FS Merger Corp., a wholly owned subsidiary of
           Medallion ("Merger Corp."), and the Company. Under the terms and
           subject to the satisfaction of certain conditions contained in the
           Merger Agreement, it is anticipated that Merger Corp. will merge with
           and into the Company (the "Merger") and that the Company will become
           a wholly-owned subsidiary of Medallion. Following the satisfaction of
           pre-closing conditions, including the approval the shareholders of
           the Company and regulatory approval, it is expected that the closing
           of the Merger will occur during the first half of 2000.

           The Merger Agreement contemplates the issuance of shares of common
           stock of Medallion as consideration for the surrender and exchange of
           the outstanding shares of common stock of the Company. The number of
           shares to be issued by Medallion as the merger consideration is
           dependent upon the market price of Medallion common stock at the time
           of closing the Merger. If the fair market value of Medallion common
           stock is less than $16.00 per share, then each outstanding share of
           Company common stock will receive a fraction of a share of Medallion
           common stock having a fair market value equal to $4.025. If the
           market price of Medallion common stock is greater than $27.51 per
           share, then each outstanding share of Company common stock will
           receive a fraction of a share of Medallion common stock having a fair
           market equal to $4.875. If the market price of Medallion common stock
           is between $16.01 and $27.50 per share, then each outstanding share
           of Company common stock will receive a fraction of a share of
           Medallion common stock having a fair market value ranging between
           $4.125 and $4.625. If the fair market price of the Medallion common
           stock is less than $12.00 per share, Medallion has the right to
           terminate the Merger Agreement. The Merger Agreement contains other
           customary terms and provisions, including representations,
           warranties, covenants and conditions. The Merger Agreement
           contemplates that the Merger will be accounted for under the pooling
           method of accounting.

           In addition, Zindel Zelmanovitch, the President and a director of the
           Company, and Neil Greenbaum, the Secretary and a director of the
           Company, executed a Voting Agreement pursuant to which Messrs.
           Zelmanovich and Greenbaum agreed, among other things, to vote the
           shares of the Company beneficially owned by them in favor of the
           Merger.

NOTE 14    FAIR VALUE OF FINANCIAL INSTRUMENTS

           The following disclosures represent the Company's best estimate of
           the fair value of financial instruments, determined on a basis
           consistent with requirements of Statement of Financial Accounting
           Standard No. 107, "Disclosure about Fair Value of Financial
           Instruments".

           The estimated fair values of the Company's financial instruments are
           derived using estimation techniques based on various subjective
           factors including discount rates. Such estimates may not necessarily
           be indicative of the net realizable or liquidation values of these
           instruments.

                                       12
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                        NOTES TO THE FINANCIAL STATEMENTS
                                FEBRUARY 29, 2000

NOTE 14    FAIR VALUE OF FINANCIAL INSTRUMENTS
           (Continued)

           Fair values typically fluctuate in response to changes in market or
           credit conditions. Additionally, valuations are presented as of a
           specific point in time and may not be relevant in relation to the
           future earnings potential of the Company, accordingly, the estimates
           presented herein are not necessarily indicative of the amounts the
           Company will realize in a current market exchange. The use of
           different market assumptions and/or estimation methodologies may have
           a material effect on the estimated fair value amounts.

           Loans Receivable - The fair value of loans is estimated at cost net
           of the allowance for loan losses. The Company believes that the rates
           of these loans approximate current market rates (see Note 2).

           The fair value of financial instruments that are short-term or
           reprice frequently and have a history of negligible credit losses is
           considered to approximate their carrying value. Those instruments
           include balances recorded in the following captions:

                     ASSETS                           LIABILITIES
           ---------------------------    -----------------------------------

           Cash                           Notes Payable to Banks
           Accrued Interest Receivable    Debentures Payable to SBA
                                          4% Cumulative Preferred Stock


NOTE 15    COMMITMENTS AND CONTINGENCIES

           Effective November 1, 1998, the Company entered into a five year
           lease agreement expiring November 30, 2003, with a minimum rental of
           $2,331 plus 15% of the total expense for the entire building. The
           minimum future rental throughout the lease term shall be as follows:

                March 31, 2000 through May 31, 2000           $    6,626
                June 1, 2000 through November 30, 2003            97,872
                                                              ----------

                     Total future minimum rental              $  104,498
                                                              ==========

NOTE 16    SUBSEQUENT EVENTS

           On February 29, 2000 the Company declared dividends of $.03 per share
           to shareholders of record on February 29, 2000. The total dividends
           paid on March 10, 2000 aggregated $65,190.


                                       13
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                             SUPPLEMENTAL SCHEDULES

                                FEBRUARY 29, 2000

                          SCHEDULE I - LOANS RECEIVABLE
<TABLE>
<CAPTION>
                                                                                 Balance
                              Number of                                        Outstanding
   Type of Loan                 Loans     Interest Rate     Maturity Date   February 29, 2000
  --------------              ---------  --------------     -------------   -----------------
<S>                              <C>      <C>      <C>        <C>            <C>
NYC Taxi Medallion               189      8.00% - 18.00%     1 - 7 years    $18,060,492
Services                           3     13.90% - 16.00%     1 - 7 years        457,441
Auto Repair Service                7      9.38% - 15.00%     1 - 4 years        482,004
Renovation and Construction        1              10.50%         5 years        134,852
Retail Establishment               4     11.25% - 13.00%     1 - 4 years        342,972
Restaurant                         7     11.00% - 18.00%         1 year         398,594
Gasoline Service Station           3     11.50% - 15.00%         1 year         505,292
Manufacturing                      1              15.00%         1 year         151,572
Laundromat and Dry Cleaners       14     11.00% - 15.00%     1 - 4 years      1,187,568
                             -------                                        -----------
     TOTAL                       229                                        $21,720,787
                             =======                                        ===========
</TABLE>
Substantially all of the above loans are  collateralized by either New York City
taxi medallions or real estate holdings.

                      SCHEDULE VII - SHORT TERM BORROWINGS

Short term borrowing activities for the periods presented were as follows:
<TABLE>
<CAPTION>
                                        Weighted
                         Balance         Average      Maximum Amount     Average Amount
Category of              End of         Interest       Outstanding         Outstanding
Borrowing                Period           Rate        During Period      During Period (1)
---------                ------           ----        -------------     -----------------
<S>                   <C>                <C>           <C>               <C>
May 31, 1999 (2)      $ 5,000,000        7.00%         $ 5,000,000       $ 5,000,000
February 28, 1999     $ 5,000,000        7.44%         $ 5,000,000       $ 5,000,000
February 29, 2000     $ 3,000,000        7.24%         $ 5,000,000       $ 4,888,888
</TABLE>

(1) Computed based on weighted average of amount outstanding during the period.

(2) The Company did not renew its Line of Credit.

                                       14
<PAGE>


                        FRESHSTART VENTURE CAPITAL CORP.
                            SUPPLEMENTARY INFORMATION
                       SELECTED PER SHARE DATA AND RATIOS
        FOR THE NINE MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999


                                             For the Nine Months Ended
                                               February 29, and 28
                                          -------------------------------
                                            2000                   1999
                                          ---------             ---------
Per Share Data

Investment Income                         $    1.00             $    0.99
Investment Expenses                           (0.63)                (0.68)
                                          ---------             ---------
Net Investment Income                          0.37                  0.31
Net Realized and Unrealized
  Gains and Losses on
  Securities                                  (0.24)                   --
Dividends - Common Stock                      (0.06)                (0.34)
Dividends - Preferred Stock                   (0.02)                (0.02)
                                          ---------             ---------
Net Increase/Decrease
  in Net Asset Value                           0.05                 (0.05)
Net Asset Value - Beginning
  of Period                               $    3.28             $    3.26
                                          =========             =========
Net Asset Value - End of

  Year                                    $    3.33(1)          $    3.21(1)
                                          =========             =========
Net Asset Value - End of
  Year Excluding Retained
  Earnings (2)                            $    3.25(1)          $    3.25(1)
                                          =========             =========
Ratios

Ratio of Expenses to
  Average Net Assets                          26.32%                20.83%
                                          =========             =========
Ratio of Net Income to

  Average Net Assets                           3.83%                 9.81%
                                          =========             =========

Weighted Average of Common
Shares Outstanding                        2,172,688             2,172,688
                                          =========             =========

(1)  The net asset value includes the realized gain from the repurchase of three
     percent stock and the undistributed retained earnings at the end of the
     period.
(2)  Excluded undistributed retained earnings at the end of the period.

                                       15
<PAGE>

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

The information contained in this section should be sued in conjunction with the
Financial Statements and Notes therewith appearing in this report Form and the
Company's Annual Report for the year ended May 31, 1999.

General

      The Company is licensed by the Small Business Administration (SBA) to
operate as a Specialized Small Business Investment Company (SSBIC) under the
Small Business Investment Act of 1958, as amended. The Company has also elected
to be regulated as a business development company under the Investment Company
Act of 1940.

      The Company primarily makes loans and investments to persons who qualify
under SBA regulations as socially or economically disadvantaged and loans and
investments to entities which are at least 50% owned by such persons. The
Company's primary lending activity is to originate and service loans
collateralized by New York City Taxicab Medallions. The Company also makes loans
and investments in other diversified businesses.

Results of Operations For the Nine Months ended February 29, 2000 and February
28, 1999

      Total investment income. The Company's investment income for the nine
months ended February 29, 2000 was $2,165,379 as compared to $2,158,198 for the
period ending February 28, 1999. Although the loan portfolio decreased, the
Company collected interest on several of its delinquent loans. The expanded
collection efforts on these loans resulted in a small increase in its investment
income. The increase aggregated $7.181 (an increase of .03%).

Operating Expenses

      Interest expense for the nine-month period ended February 29, 2000
decreased by $84,394 ($931,407 from $1,015,801) over the similar period ended
February 28, 1999. The Company paid off $1,500,000 in SBA subordinated
debentures during the current period, and $2,000,000 on February 15, 2000 on its
bank line of credit, which resulted in a lower period interest rate.

      Other operating expenses decreased by $11,401 when compared with the
similar nine-month period ended February 28, 1999. The decrease was mainly due
to decreases in dues, equipment rental and miscellaneous fees. The Management of
the Company reviewed its loan portfolio as of February 29, 2000, and based on
such review, the provision for bad debt was increased by $500,000. Accordingly,
the reserve for bad debt was increased to $816,441 from $316,441.

Statement of Financial Position

      Total assets and liabilities decreased by $3,329,082 as of February 29,
2000 when compared with the statement of financial position as of May 31, 1999.
The decrease consisted of paying off two SBA debentures aggregating $1,500,000,
repayment of the bank line of credit in the amount of $2,000,000 and a decrease
in the loan portfolio of $3,402,845. The reserves for bad debts were increased
by $500,000 as of February 29, 2000 and were deemed to be adequate as of
February 29, 2000.

                                      16
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

      To date, the Company has funded its operations through capital
contributions by its principal stockholders, public and private sales of its
securities, the issuance to the SBA of its subordinated debentures and SBA 4%
cumulative preferred stock, in order to make loans, increase its leverageable
capital and pay its operating expenses.

      The Company's potential sources of liquidity are credit facilities with
banks, fixed rate long-term subordinated debentures that are issued to the SBA
and loan amortization and prepayments. The Company currently distributes at
least 90% of its investment company taxable income; consequently, the Company
primarily relies upon external sources of funds to finance growth. At February
29, 2000, the Company's $15,695,193 of debts consisted of $10,860,000 SBA
subordinated debentures with fixed rates of interest with a weighted average of
6.93%, $1,410,000 of 4% cumulative preferred stock and a $3,000,000 short term
bank line of credit.

      Loan amortization and prepayments also provide a source of funding for the
Company. Prepayments on loans are influenced significantly by general interest
rates, economic conditions and competition.

      The Company believes that anticipated borrowings from the SBA, bank credit
facilities which will be applied for, and cash flow from operations (after
distributions to stockholders) will be adequate to fund the continuing growth of
the Company's loan portfolio. In addition, in order to provide the funds
necessary for the Company's expansion strategy, the Company expects to incur,
from time to time, additional short-and long-term bank and (to the extent
permitted) SBA loans. There can be no assurance that such additional financing
will be available on terms acceptable to the Company.

      As a result of several factors, the number and dollar volume of taxi loans
originated by the Company have not increased. The factors which contributed to
this included an increased competition for taxi loans, and more alternative loan
products. These other products often provide prospective borrowers with interest
only rates, which the Company does not provide.

      The current lower interest rate environment and increased lending
competition have reduced the spread between the rate at which the Company lends
funds and the cost of such funds. There can be no assurance that the Company
will experience increased spreads in the foreseeable future. In some cases, the
increased level of lending competition has resulted in interest rates
considerable more aggressive than those offered by the Company. In order to
maintain a quality portfolio, the Company has and will continue to adhere to its
historical underwriting criteria. Accordingly, certain loan origination
opportunities which do not meet the Company's underwriting criteria will not be
funded by the Company.

                                      17
<PAGE>


PART II - OTHER INFORMATION


Item 6. EXHIBITS AND REPORTS ON FORM 8-K


(b) REPORTS ON FORM 8-K. The Registrant filed a Current Report on Form 8-K on
December 29, 1999, disclosing the Merger Agreement with Medallion (See Part I -
Note 13).

                                      18
<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.

Dated:  April 14, 2000            Freshstart Venture Capital Corp.



                                  BY:  /s/ ZINDEL ZELMANOVITCH
                                       -----------------------------------------
                                           Zindel Zelmanovitch, Chief Executive,
                                           Financial and Accounting Officer

                                      19