SECURITIES AND EXCHANGE COMMISSION
                       ----------------------------------
                             Washington, D.C. 20549
                             ----------------------

                                   FORM 10-QSB
                                   -----------
(Mark One)
[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT
---   --------------------------------------------------------------------------
      OF 1934
      -------
                  For the quarterly period ended June 30, 1997
                 ----------------------------------------------

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

                       Commission File Number:  0-18399
                       -----------------------  -------

                         FOUNTAIN PHARMACEUTICALS, INC.
             (Exact name of registrant as specified in its charter)

                 Delaware                                   62-1386759
       ------------------------------                    -----------------  
      (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                   Identification No.)
 
                   7279 Bryan Dairy Road, Largo, Florida 33777
                   -------------------------------------------
                    (Address of principal executive offices)

                                 (813) 548-0900
                                 --------------
              (Registrant's telephone number, including area code)

      Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the Registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.
                        (1)   Yes   X           No
                                  -----            -----

                        (2)   Yes   X           No
                                  -----            -----

         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                       DURING THE PRECEDING FIVE YEARS:

      Check whether the Registrant  filed all documents and reports  required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after
the distribution of securities under a plan confirmed by court.

                              Yes   X           No
                                  -----            -----

<PAGE>



                     APPLICABLE ONLY TO CORPORATE ISSUERS:

      State the number of shares outstanding of each of the Registrant's classes
of Common Stock, as of August 13, 1997:

Series A Preferred Stock, par value $.001 - 2,000,000

Common Stock, par value $.001 - 47,516,049

Class B Common Stock, par value $.001 - 90,100

Transitional Small Business Disclosure Format:

                              Yes               No     X
                                  --------         --------  







































                                       2


<PAGE>



                        FOUNTAIN PHARMACEUTICALS, INC.

                                     INDEX


                                                                        Page
                                                                        ----

Part I.         Financial Information*
-------         ----------------------

   Item 1.      Financial Statements
                (Unaudited)

                Balance Sheets - September 30, 1996,
                and June 30, 1997
                (Unaudited)                                                4

                Statements of Operations - for the nine
                months ended June 30, 1997 and 1996
                (Unaudited)                                                5

                Statement of Stockholders' Equity -
                for the period from September 30, 1996
                through June 30, 1997 (Unaudited)                          6

                Statements of Cash Flows - for the nine
                months ended June 30, 1997 and 1996
                (Unaudited)                                                7

                Notes to Condensed Financial Statements
                (Unaudited)                                                8

   Item 2.      Management's Discussion and
                Analysis or Plan of Operation                              9

Part II.        Other Information
--------        -----------------

                Item 1.    Legal Proceedings                              12
                Item 2.    Changes in Securities                          12
                Item 3.    Defaults Upon Senior Securities                12
                Item 4.    Submission of Matters to a Vote
                           of Security Holders                            12
                Item 5.    Other Information                              12
                Item 6.    Exhibits and Reports on Form 8-K               13


*  The  accompanying  financial  information  is not  covered by an  Independent
   Certified Public Accountant's Report.



                                       3


<PAGE>


                                FOUNTAIN PHARMACEUTICALS, INC.
                                        BALANCE SHEETS
<TABLE>
<CAPTION>


                  ASSETS                                                 LIABILITIES AND STOCKHOLDERS' EQUITY

                              June 30,                                                            June 30,
                                1997        September 30,                                           1997         September 30,
                             (Unaudited)        1996                                             (Unaudited)         1996
                             -----------    -------------                                        -----------     -------------
<S>                           <C>             <C>              <C>                               <C>             <C> 
Current assets:                                                Current liabilities:
   Cash and cash equivalents  $     3,520     $    66,647        Notes payable, officer (Note 3) $    80,000     $
   Accounts receivable            429,820         236,032        Current portion of
   Inventories                    102,800         104,866         liabilities not subject
   Prepaid expenses                40,892          46,574         to compromise                       28,780         26,808
                              -----------     -----------
                                                                 Current portion of
                                                                  liabilities subject to
                                                                  compromise                          90,046         84,983
                                                                 Accounts payable and
                                                                  accrued expenses                   337,069        108,091
                                                                                                  ----------     ----------

    Total current assets          577,032         454,119        Total current liabilities           535,895        219,882
                                                                                                  ----------     ----------

                                                               Liabilities not subject to
                                                                 compromise, non-current              10,215         32,053
                                                                                                  ----------     ----------
Furniture and equipment, less                                  Liabilities subject to
   accumulated depreciation                                      compromise, non-current              23,936         92,298
                                                                                                  ----------     ----------
   ($251,949, June 30, 1997;
   $232,136, September 30, 1996)   12,110          31,924
                                                               Stockholders' equity:
Patent costs, less accumulated                                   Preferred stock, par value $.001,
   amortization ($24,579, June                                    2,000,000 shares authorized
   30, 1997; $22,065 September                                   Common stock, par value
   30, 1996)                      138,678         138,575         $.001, 50,000,000 shares
                                                                  authorized; 47,516,049 issued
Other assets                        6,595           6,250         and outstanding (one vote per
                              -----------     -----------
                                                                  share                               47,516         47,516
                                                                 Class B common stock; par value
                                                                  $.001, 5,000,000 shares
                                                                  authorized; 90,100 shares
                                                                  issued and outstanding (five
                                                                  votes per share)                        90             90
                                                                 Additional paid-in capital       14,529,102     14,529,102
                                                                 Accumulated deficit             (14,412,339)   (14,290,073)
                                                                                                  ----------     ----------
                                                                  Total stockholders'
                                                                  equity                             164,369        286,635
                                                                                                  ----------     ----------


                                                                 Total liabilities and
Total assets                  $   734,415     $   630,868         stockholders' equity           $   734,415    $   630,868
                              ===========     ===========                                        ===========    ===========

</TABLE>


                                             See notes to financial statements.

















                                                               4



<PAGE>
                         FOUNTAIN PHARMACEUTICALS, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                 Three Months Ended            Nine Months Ended
                                                      June 30,                        June 30,
                                             --------------------------    ---------------------------
                                                  1997          1996           1997            1996
                                             -----------    -----------    -----------     -----------
<S>                                          <C>            <C>            <C>             <C>        
Revenue                                      $   819,403    $   887,126    $ 1,141,761     $ 1,499,232

Cost of sales                                    448,204        479,770        597,886         753,282
                                             -----------    -----------    -----------     -----------

Gross profit                                     371,199        407,356        543,875         745,950
                                             -----------    -----------    -----------     -----------

Operating expenses:
    Research and development                      35,863         44,025        147,899          60,686
    General and administrative                    87,988        122,573        262,246         316,367
    Selling                                       74,697         78,823        204,137         208,155
    Depreciation and amortization                  5,855         10,242         22,328          33,647
                                             -----------    -----------    -----------     -----------

Total operating expenses                         204,403        255,663        636,610         618,855
                                             -----------    -----------    -----------     -----------

Income (loss) from operations                    166,796        151,693    (    92,735)        127,095

Other income (expenses):
    Interest expense                         (     9,339)    (   10,523)   (    21,438)    (    14,312)
    Other income (expense)                   (     4,239)    (      224)   (     8,093)    (       177)
    Reorganization expenses                                  (        8)                   (    22,843)
                                             -----------      ---------     ----------      ----------

Total other income (expenses)                (    13,578)    (   10,755)   (    29,531)    (    37,332)

Income (loss) before extraordinary item          153,218        140,938    (   122,266)         89,763

Extraordinary gain, net of $0 income taxes                       14,678                        337,046
                                              ----------     ----------     ----------     -----------

Net income (loss)                             $  153,218     $  155,616    ($  122,266)    $   426,809
                                              ==========     ==========     ==========     ===========



Earnings per share:

    Income (loss) before extraordinary item      $ .0032        $ .0030       ($ .0026)       $ .0020

    Extraordinary gain                                            .0003                         .0077
                                                 -------        -------        -------        -------

    Net income (loss)                            $ .0032        $ .0033       ($ .0026)       $ .0097
                                                 =======        =======        =======        =======

    Weighted average number of shares
      outstanding:                            47,606,149     47,606,149     47,606,149     43,977,117
                                              ==========     ==========     ==========     ==========

</TABLE>







                       See notes to financial statements.



                                        5



<PAGE>



                        FOUNTAIN PHARMACEUTICALS, INC.
                      STATEMENTS OF STOCKHOLDERS' EQUITY
         FOR THE PERIOD FROM SEPTEMBER 30, 1996 THROUGH JUNE 30, 1997
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                     Class B 
                                 Common Stock      Common Stock      Additional
                            --------------------  -----------------    Paid-In      Accumulated
                              Shares      Amount  Shares     Amount    Capital        Deficit       Total
                            ----------   -------  -------    ------  -----------    ------------   ---------
<S>                         <C>          <C>      <C>        <C>     <C>          <C>              <C>     
Balances
  October 1, 1996           47,516,049   $47,516  90,100     $   90  $14,529,102  ($14,290,073)    $286,635


Net loss for the period                                                             (   122,266)   (122,266)
                            ----------   -------  -------    ------  -----------    ------------   ---------

Balances
  June 30, 1997             47,516,049   $47,516  90,100     $   90  $14,529,102  ($14,412,339)    $164,369
                            ==========   =======  ======     ======  ===========  =============    ========

</TABLE>






































                      See notes to financial statements.

                                       6



<PAGE>

                        FOUNTAIN PHARMACEUTICALS, INC.
                           STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


                                                   Nine Months Ended June 30
                                                 ----------------------------
                                                   1997                 1996
                                                 --------             -------

Cash flows from operating activities:
   Net income (loss)                            ($122,266)           $426,809
   Adjustments to reconcile net income
   (loss) to net cash used in operating
   activities:
     Extraordinary gain                                             ( 337,046)
     Depreciation and amortization                 22,328              33,647
     Loss on disposal of assets                                         3,010
     Increase (decrease) in cash due to
        changes in assets and liabilities:
          Accounts receivable, trade            ( 193,788)           (453,760)
          Inventories                               2,066              39,090
          Prepaid expenses and
            other assets                            2,720               3,228
          Accounts payable and
            accrued expenses                      228,978             176,973
                                                 --------             -------

Net cash used in
   operating activities                         (  59,962)          ( 108,049)
                                                 --------            --------

Cash flows from investing activities:
   Deferred patent costs incurred                                   (  19,777)
   Acquisition of furniture and
     equipment                                                      (   7,851)
                                                 --------            --------

Net cash used in
   investing activities                                             (  27,628)
                                                 --------            --------

Cash flows from financing activities:
   Proceeds from line of credit                   270,000
   Repayment of line of credit                  ( 270,000)
   Officer loans and advances                      80,000
   Proceeds from stock offering, net                                  250,000
   Repayment of liabilities under
     Reorganization Plan                        (  83,165)          (  76,087)
                                                 --------            --------

Net cash provided by (used in)
   financing activities                         (   3,165)            173,913
                                                 --------            --------

Increase (decrease) in cash                     (  63,127)             38,236

Cash at beginning of period                        66,647              82,245
                                                 --------            --------

Cash at end of period                            $  3,520            $120,481
                                                 ========            ========

Interest paid for period                         $ 17,813            $ 13,486
                                                 ========            ========

                      See notes to financial statements.

                                       7


<PAGE>



                        FOUNTAIN PHARMACEUTICALS, INC.
                         NOTES TO FINANCIAL STATEMENTS
               FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND 1996
                                  (UNAUDITED)


1.   The financial  statements  and notes thereto  should be read in conjunction
     with the financial  statements  and notes for the year ended  September 30,
     1996.

2.   In the opinion of management,  all adjustments  (consisting  only of normal
     recurring  accruals)  necessary for a fair  presentation  of the results of
     operations for the periods  presented  have been  included.  The results of
     operations  for the  nine  months  ended  June  30,  1997  and 1996 are not
     necessarily indicative of the results for a full year.

3.   The  Company has  obtained  short term loans from its  president  which are
     payable upon demand at an interest rate of 10 percent per annum.

4.   Subsequent Events:

     Subsequent  to the quarter  ended June 30,  1997,  the Company  completed a
     private  placement  on July 17,  1997,  of  2,000,000  shares  of  Series A
     Convertible Preferred Stock to Fountain Holdings,  LLC, an investment group
     managed by Eaglestone Capital Services, Inc. As a result of this placement,
     the Company obtained  additional working capital of $2,500,000,  which will
     enhance the expansion of the Company's sales and marketing program, as well
     as to further the Company's research and development efforts. The placement
     was undertaken through the sale of newly designated  convertible  preferred
     stock which permits the holders thereof to convert into  approximately 25.3
     million shares of the Company's  Common Stock,  which currently  represents
     approximately  one-third  of  the  Company's  outstanding  stock  on a post
     conversion basis.  Prior to conversion,  the holders of the preferred stock
     will  have the right to  nominate  a  majority  of the  Company's  Board of
     Directors  and to vote as a class on all  matters  that  require  a vote of
     stockholders. As part of this transaction, the company repaid fifty percent
     of the  short-term  loans  owed to its  president  and  agreed to repay the
     remainder within the next quarter.













                                       8



<PAGE>



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      BACKGROUND

      During the quarter  ended  December  31,  1995,  the Company  emerged from
bankruptcy  proceedings  which commenced in November 1994. During and subsequent
to the bankruptcy  proceedings,  the principal source of the Company's  revenues
has  been  from  sales  of  its  sunscreen  products  to  licensees  who  act as
distributors and from royalties which are earned as the result of the subsequent
sale of these products by such distributors.

      During the fiscal year ended  September 30, 1995 ("Fiscal 1995") while the
Company was in bankruptcy  proceedings,  management restructured the Company and
significantly reduced its overall cost structure such that revenues derived from
sales and  royalties  were  sufficient to cover the  Company's  costs.  As such,
management no longer considers itself to be in the development stage.

      The Company's Plan of Reorganization (the "Plan"),  which became effective
on December 20, 1995,  resulted in, among other things, a substantial  reduction
in the Company's outstanding  liabilities,  infusion of capital by the Company's
Chief  Executive  Officer  through the  purchase of newly  issued  shares of the
Company's  Common  Stock  and  the  Company's   emergence  from  the  bankruptcy
proceedings.  The U.S.  Bankruptcy  Court  entered its final  decree on July 25,
1996,  and as such,  the  Court no  longer  has  jurisdiction  over  matters  in
connection with the bankruptcy.

      Subsequent to the quarter ended June 30, 1997,  the Company  completed the
sale of $2.5 million of newly designated Series A Convertible Preferred Stock to
a private investment group. (See "Liquidity and Capital Resources").

      RESULTS OF OPERATIONS

      During the quarter ended June 30, 1997, the Company realized net income of
$153,218 on revenues of $819,403, compared to net income of $155,616 on revenues
of $887,126 for the quarter  ended June 30, 1996.  The decreases in revenues and
income were primarily  attributable to discontinued  product lines and services.
The Company  expects  additional  orders from two principal  European  licensees
during the  remaining  months of the  fiscal  year  ending  September  30,  1997
("Fiscal 1997"). However, there can be no assurances that subsequent orders will
be received.

      During the quarter, the Company incurred operating expenses of $204,403, a
20% decrease over  operating  expenses of $255,663 in the quarter ended June 30,
1996.  This  decrease in operating  expenses was primarily due to a reduction in
salaries,  legal fees, and travel activities.  Management expects that operating
expenses are likely to increase modestly during the remainder of the year ending
September  30, 1997 due to  anticipated  increases in research  and  development
expenses  relating to new  projects.  Management  believes that the Company will
realize receipts during that time period sufficient to satisfy these expenses as
well as other anticipated obligations.




                                        9


<PAGE>




      During the nine months  ended June 30,  1997,  the Company  incurred a net
loss of $122,266, on revenues of $1,141,761,  compared to net income of $426,809
on revenues of $1,499,232  for the comparable  period ended June 30, 1996.  This
decrease in net income was attributable  primarily to decreased  revenues during
the nine  months  ended  June 30,  1997 and an  extraordinary  gain of  $337,046
recorded as of June 30, 1996 as a result of debt reduction pursuant to the Plan.
Such decreased revenues were a result,  primarily, of discontinued product lines
and services,  in addition to the negative impact of adverse climatic conditions
experienced  during this period in Europe,  which due to the seasonal  nature of
its principal product, a sunscreen,  resulted in lower sales volume.  Management
also anticipates that this seasonality of revenue will be reduced in time as the
Company's product line and geographic expansion continues.

      For the near term,  the Company  will  continue  to focus upon  increasing
sales through its existing and new license arrangements and expanding upon these
associations.

      LIQUIDITY AND CAPITAL RESOURCES

      From  inception  through the quarter  ended June 30, 1994,  the  Company's
principal  sources  of working  capital  were  derived  from a series of private
financing  transactions  and an initial public  offering in 1990. As a result of
the  Company's  declining  equity and  assets,  the  Company's  securities  were
delisted from The NASDAQ SmallCap  Market(sm) during May 1994 and the securities
have since traded on the less liquid market of the OTC Bulletin Board.

      During the period from the  quarter  ended June 30,  1994  throughout  the
bankruptcy  proceedings,  the Company's operations were funded primarily through
sales  of  products  and from  royalties.  Under  the  terms  of the  Plan,  the
liabilities  of the Company  were reduced by  approximately  55% and the Company
obtained  working  capital  of  $250,000  as the result of the  purchase  by the
Company's Chief Executive  Officer of 25,000,000  shares of the Company's Common
Stock at a purchase price of $.01 per share.

      As of June 30,  1997,  the  Company  had  working  capital of  $41,137,  a
$193,100 decrease from working capital of $234,237 as of September 30, 1996, and
a $371,398  decrease from the Company's  working  capital of $412,535 as of June
30, 1996. Such decrease in working capital is primarily attributable to expenses
incurred  in  connection  with  increased  marketing   activity,   research  and
development  efforts,  and European patent fees, in addition to debt obligations
under the Plan, line of credit, and delays in orders from the Company's European
licensees due to adverse climatic conditions.







                                      10


<PAGE>



      Under the Plan,  the Company  was  subject to $319,278 of pre-  bankruptcy
liabilities  to be paid  under the Plan over a maximum  of  thirty-three  months
which commenced February 1996. Presently,  pre- bankruptcy liabilities amount to
$152,977.  Payments  pursuant to the Plan were current as of June 30, 1997,  and
management expects all such required payments to be made on a timely basis.

      During the periods covered by this report, the Company's principal sources
of working  capital were derived from revenues,  a $100,000 line of credit,  and
short term advances of $80,000 from the Company's Chief Executive Officer.

      Subsequent  to the quarter  ended June 30, 1997,  the Company  completed a
private  placement on July 17, 1997, of 2,000,000 shares of Series A Convertible
Preferred  Stock to Fountain  Holdings,  LLC,  an  investment  group  managed by
Eaglestone  Capital  Services,  Inc. As a result of this placement,  the Company
obtained  additional  working  capital of  $2,500,000,  which will  enhance  the
expansion of the Company's  sales and marketing  program,  as well as to further
the Company's  research and  development  efforts.  The placement was undertaken
through the sale of newly designated  convertible  preferred stock which permits
the holders  thereof to convert into  approximately  25.3 million  shares of the
Company's Common Stock, which currently  represents  approximately  one-third of
the Company's outstanding stock on a post conversion basis. Prior to conversion,
the holders of the preferred stock will have the right to nominate a majority of
the  Company's  Board of  Directors  and to vote as a class on all matters  that
require a vote of stockholders.

      Historically,  the  Company's  unexercised  warrants  had been a potential
source of capital for the Company.  However, all previously existing Class A, B,
C and D warrants have expired.  The 3,450,001  common stock  warrants  presently
vested and outstanding bear exercise prices ranging from $.04 to $.78. Given the
market price of the Company's  Common  Stock,  it is feasible that some of these
warrants could be exercised, but there can be no assurance in this matter.

      Based upon the Company's current capital structure,  an exercise of all of
the issued and outstanding warrants,  notwithstanding  market conditions,  would
not be possible since the number of warrants (assuming full vesting) exceeds the
number of shares that remain authorized and available for issuance. An inability
to issue shares upon the exercise of the warrants  could  conceivably  delay any
funding  which the Company  could  otherwise  receive  from the exercise of such
warrants pending adequate capitalization.

      EFFECTS OF INFLATION

      The Company does not expect inflation to materially  affect its results of
operations,  however,  it does expect that its  operating  costs and the cost of
capital  equipment  to be  acquired  in the  future  may be  subject  to general
economic and inflationary pressures.

                                      11


<PAGE>

Part II.    Other Information

Item 1.     Legal Proceedings
            -----------------
      None.

Item 2.     Changes in Securities
            ---------------------
      None.

Item 3.     Defaults upon Senior Securities
            -------------------------------
      None.

Item 4.     Submission of Matters to a Vote of Security Holders
            ---------------------------------------------------
      None.

Item 5.     Other Information
            -----------------

      a.    Change in Board of Directors
            ----------------------------

      Concurrent with the closing of the sale of 2 million shares of convertible
preferred stock to Fountain Holdings, LLC ("Holdings"), the Company accepted the
resignation  of  James  Vatell  and  James  Goddard,  M.D.,  from  its  Board of
Directors.  These  vacancies  were  filled  by the  appointment  to the Board of
Directors of Dr.  Christopher Brown and Joseph Schuchert,  nominees of Holdings.
As reconstituted, the Company's Board of Directors presently consists of John C.
Walsh, Chairman and Chief Executive Officer,  James Fuchs, Dr. Christopher Brown
and Joseph Schuchert.

      b.    Patents
            -------

      The Company was granted a Norwegian patent on June 18, 1997 (No.  180771).
This patent is a  counterpart  to the  already-granted  patents in the Company's
portfolio which cover a method for making Solvent Dilution  Microcarriers.  This
patent will remain in effect for twenty  years from the date of filing  (June 8,
1989) until June 8, 2009.

      c.    General
            -------

                      CAUTIONARY STATEMENT FOR PURPOSES OF
                       THE "SAFE HARBOR" PROVISIONS OF THE
                PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

      When used in this  Quarterly  Report on Form  10-QSB  and in other  public
statements  by the  Company  and  Company  officers,  the words  "may",  "will",
"expect", "anticipate", "continue", "estimate", "project", "intend", and similar
expressions are intended to identify forward-looking statements regarding events
and financial trends which may affect the Company's future operating results and
financial position.  Such statements are subject to risks and uncertainties that

                                       12


<PAGE>


could  cause the  Company's  actual  results  and  financial  position to differ
materially.  Such factors include,  among others:  (i) the Company's  ability to
retain  existing or obtain  additional  licensees who act as distributors of its
products;  (ii) the Company's ability to obtain additional patent protection for
its  encapsulation  technology;  and  (iii)  other  economic,   competitive  and
governmental factors affecting the Company's  operations,  market,  products and
services. Additional factors are described in the Company's other public reports
and registration  statements filed with the Securities and Exchange  Commission.
Readers are cautioned not to place undue reliance on forward-looking  statements
when made,  which  speak only as of the date made.  The  Company  undertakes  no
obligation   to  publicly   release  the  results  of  any   revision  of  these
forward-looking  statements to reflect  events or  circumstances  after the date
they are made or to reflect the occurrence of unanticipated events.

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

      (a)   Exhibits:

            Exhibit 27 - Financial Data Schedule (Electronic filing only).

      (b)   Reports on Form 8-K

            The Company filed a Current Report on Form 8-K on July 31, 1997, for
            the  purpose  of  reporting  the sale of $2.5  million  of  Series A
            Convertible Preferred Stock to Fountain Holdings, LLC, an investment
            group  managed  by  Eaglestone   Capital   Services,Inc.,   and  the
            appointment of Mr. Joseph Schuchert and Christopher C. Brown,  M.D.,
            to the Board of Directors, to fill vacancies on the Board created by
            the resignations of Mr. James Vatell and James Goddard, M.D.

























                                       13


<PAGE>


                        FOUNTAIN PHARMACEUTICALS, INC.

                                  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.


                                          FOUNTAIN PHARMACEUTICALS, INC.



Dated:  August 14, 1997                   /s/John C. Walsh
                                          --------------------------------------
                                          JOHN C. WALSH,
                                          Chief Executive Officer