UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10 - KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

     For the fiscal year ended September 30, 1999

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

     Commission file number: 33-27230


                         FOUNTAIN COLONY VENTURES, INC.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

           Colorado                                               95-4723110
           --------                                               ----------
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)



                 1621 Altivo Way, Los Angeles, California 90026
                 ----------------------------------------------
                    (Address of principal executive offices)

                                 (818) 980-0929
                                 --------------
                (Issuer's telephone number, including area code)

          Securities registered under Section 12(g) of the Exchange Act
                                      None
                                      ----
                               Title of each class

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past twelve 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. Yes X  No

Transitional Small Business Disclosure Format (Check one): Yes   No X

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. _____

        State the issuer's revenues for its most recent fiscal year. None

          State the aggregate market value of the voting stock held by
                        nonaffiliates of the registrant.

              There is no market for the registrant's voting stock

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

Date: September 30, 1999     Common Stock, par value $0.001 per share.

                                   Shares outstanding 900,000

<PAGE>


                       FOUNTAIN COLONY HOLDING CORPORATION

                                  FORM 10--KSB

                               SEPTEMBER 30, 1999


                                      INDEX

                                                                           Page
Part 1

   Item 1   Description of Business                                          3
   Item 2   Description of Property                                          9
   Item 3   Legal Proceedings                                                9
   Item 4   Submission of Matters to a Vote of Security Holders              9

Part II

   Item 5   Market for Common Equity and Related Stockholder Matters         9
   Item 6   Plan of Operation                                                9
   Item 7   Financial Statements                                            10
   Item 8   Changes in and Disagreements with Accountants on Accounting     11
              and Financial Disclosures

Part III

   Item 9   Directors, Executive Officers, Promoters and Control Persons,
              Compliance with Section 16(a) of the Exchange Act             11
   Item 10  Executive Compensation                                          12
   Item 11  Security Ownership of Certain Beneficial Owners
              and Management                                                12
   Item 12  Certain Relationships and Related Transactions.                 12

Part IV

   Item 13  Exhibits and Reports                                            13



                                       2
<PAGE>


                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

(a) and (b) Business Development and Business of Issuer


General

     Fountain Colony Ventures, Inc.(the "Company") is a Coloardo corporation
organized on February 16, 1999. The Company is the successor corporation to
Fountain Colony Holding Corporation, a Delaware corporation, by virtue of a Plan
of Merger entered into on February 25, 1999. Reference to the Company throughout
this Registration Statement is deemed to include reference to its successor
corporation.

     Like its predecessor, the Company's business purpose is to acquire a
business opportunity which Management believes offers potential long-term
growth. The Company will seek to acquire majority interests in an existing
business or purchase assets which it will use to establish a business.

     The Company does not intend to become involved in any business which would
require it to register as a securities broker-dealer under the Securities
Exchange Act of 1934, as an investment advisor under the Investment Advisor's
Act of 1940; or as an investment company under the Investment Company Act of
1940. Except as set forth herein under BUSINESS - Forms of Combination,
Management's discretion is otherwise unrestricted and it may participate in any
business which may, in the opinion of Management, meet the business objectives
discussed herein.

     Management believes that business opportunities will become available to
the Company due primarily to its status as a publicly-held company, and its
flexibility in structuring and participating in business opportunities. The
Company has no agreement or understanding to acquire or participate in any
business opportunity, nor does it currently have any opportunity under
investigation. Decisions as to which business opportunity to pursue will be made
by Management of the Company, which will in all probability act without the
consent, vote, or approval of the Company's stockholders.

     The Company's offices are located at 1621 Altivo Way, Los Angeles,
California 90026. Its telephone number is (818) 980-0929 and telecopier number
is (818) 980-8746.


                                    BUSINESS
Introduction

     The Company is a development stage enterprise which proposes to engage in
the active search for a business combination or merger opportunity which, in the
opinion of Management, will enhance stockholder value.

     Management believes that business opportunities will become available to
the Company due primarily to its status as a publicly-held company, and its
flexibility in structuring and participating in business opportunities. The

                                       3
<PAGE>


proposed corporate structure of the Company has not been the subject of a
feasibility study or market research nor is Management aware of statistical data
which would support the perceived benefits of a merger or acquisition
transaction for target company stockholders. Therefore, there can be no
assurance that a market exists for such a corporate vehicle. At present, there
are no plans, agreements, understandings, or commitments to acquire or
participate in any business opportunity nor has the Company solicited, received
or considered any proposals regarding a possible combination or merger. Further,
there can be no assurance that the Company will be successful in locating a
suitable entity for a merger or that the Company will be able to consummate a
combination.

Forms of Combination

     The manner in which the Company participates in a business opportunity is
predicated on the nature of the opportunity, the respective needs and desires of
the Company and the promoters of the combination, and the relative negotiating
strength of the Company and such promoters. It is likely that a combination will
take the form of a merger, consolidation, asset acquisition or some other form
of combination. The "target" entities may include private companies,
partnerships, or sole proprietorships.

     In transacting a combination, a significant amount of additional shares of
the Company's Common Stock may be issued. The Company is authorized to issue
50,000,000 shares of Common Stock of which 900,000 shares are issued and
outstanding. In the event that a substantial number of shares are issued
pursuant to a transaction, present Management and current stockholders may not
have control of a majority of the voting shares of the Company. Further, as part
of such a transaction, the Company's Management may be requested to relinquish
its positions and new directors and officers may be appointed without a vote by
stockholders. Moreover, no assurance can be given as to the experience or
qualifications of such persons either in the operation of the activities of the
Company or in the operation of the business, asset or property being combined.

     The Company does not propose to restrict its search for combination
opportunities to any particular industry, and may, therefore, engage in
essentially any business. Management contemplates that the Company will seek to
merge with or acquire a target company with either assets or earnings, or both.
The Company has not established a specific level of earnings or assets below
which it would not consider a merger or acquisition with a target company.

     The Company intends to obtain, if possible, audited financial statements
for the entity which it acquires. It is expected that audited financials will
help Management to understand the financial position of the company it acquires
and will also help the Company in complying with the financial reporting
requirements of the Securities Exchange Act of 1934, if the acquisition would
fall within the ambit of such law.

     It is anticipated that business opportunities will become available to the
Company from various sources, including its Directors and Officers, professional
advisors such as attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community, and others who may present
unsolicited proposals. The Company has no plans, understandings, agreements, or
commitments with any individuals other than its Directors and Officers to act as
finders of opportunities for the Company.

                                       4
<PAGE>


Plan of Acquisition

     The Directors and Officers of the Company will undertake the analysis of
business opportunities. Management will have unrestricted flexibility in
seeking, analyzing and participating in business opportunities. In its efforts,
Management intends to follow a systematic approach to identify its most suitable
acquisition candidates.

     Management intends to concentrate on identifying any number of preliminary
prospects which may be brought to its attention through present associations or
unsolicited. Management will then apply certain broad criteria to the
preliminary prospects. Essentially, this will entail a determination by
Management whether or not the prospects are in an industry which appears
promising and whether or not the prospects themselves have potential within
their own industries.

     During this initial screening process, Management will ask and receive
answers to questions framed to provide appropriate threshold information,
depending upon the nature of the prospect's business. Such evaluation is not
expected to be an in-depth analysis of the target company's operations, although
it will encompass a look at most, if not all, of the same areas to be examined
once, if and when, a target company is selected for an in-depth review. For
example, at this stage, Management may look at a prospect's unaudited balance
sheet. However, when a prospect is selected for an in-depth review, Management
will review the prospect's audited financial statements. Nevertheless,
Management anticipates this evaluation will entail a broad overview of the
business of the target company and should allow a significant percentage of
preliminary prospects to be eliminated from further consideration.

     Management will conduct an in depth analysis of five major areas of concern
with respect to the target company as follows:

     1. Managerial and Financial Stability. Management will review audited
financial statements of the target company and will also research the background
of each director and member of management of the target company in order to
discern whether the stability of the target company is such that further
negotiations are warranted.

     2. Industry Status. Management will research the potential of the target
company's industry. The concern here is whether the industry is in a growth,
stagnant or declining stage.

     3. Production of Product. If the target company is a manufacturer,
Management will review whether it has the necessary resources or access to the
necessary resources and supplies to produce a quality product in a timely
manner.

     4. Acceptance and Potential of Product. Management will review the
acceptance of the target company's product in the market place. Management will
also determine whether or not there is potential for the product to be workable
and to fulfill its intended purpose.

     5. Development of Target Company. Management will review the target
company's state of development (examples: start-up stage, established company,
etc.).

     The foregoing is an outline of the areas of concern which most often arise
and merit careful scrutiny by Management. Because of the possible varieties of
target companies which may come to the attention of Management, additional
factors will most likely be considered in any given analysis. Also, the
procedures used in such a review are expected to vary depending on the target
company being analyzed. Management may select a target company for further
negotiations even though the target may not receive a favorable evaluation in
one or more of the five primary areas of concern.

                                       5
<PAGE>


     Management expects to enter into further negotiations with various target
company managements following successful conclusion of the initial financial and
evaluation studies. Negotiations with target company management will be expected
to focus on the percentage of the Company which target company stockholders
would acquire in exchange for their shareholdings in the target company.
Depending on, amongst other things, the target company's assets and liabilities.

     The Company's stockholders will, in all likelihood, hold a lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
stockholders.

     Management does not intend to force an active participation in the affairs
of the acquired company. However, Management will evaluate any opportunity
offered for such participation if such participation was a necessary ingredient
of a merger. It is not the intention of Management to seek such participation.
Management will in all likelihood be requested to relinquish any voting control
it may exercise prior to a merger to the present management of the business
which is acquired.

     Current Management would clearly not control the surviving company
following such a dilution and will not be in a position to demand an active
participation and therefore would not participate unless invited to do so.

     The final stage of any merger or acquisition to be effected by the Company
will require the Company to retain the services of counsel and a qualified
accounting firm in order to properly effect the merger or acquisition. The
Company may be expected to incur significant legal fees and accounting costs
during the final stages of a merger or acquisition. Management intends to retain
legal and accounting services only on an as-needed basis in the latter stages of
a proposed merger or acquisition.

     The interest of Management is to increase stockholder value. If successful
all the stockholders, including Management, will benefit. Management's objective
is to issue restricted shares of the Company to acquire a private company which
is a going concern. If Management is requested to sell a portion of its shares,
give away a portion of its shares or cancel a portion of its shares to obtain
such a merger, then Management will face a conflict of interest. Presently,
Management has no plan on how to deal with this conflict and believes no general
plan can be formulated at this time; this may adversely affect the Company's
ability to successfully conclude a subsequent merger or acquisition. Conflict
resolutions will otherwise be handled on a case-by-case basis. If the conflict
cannot be resolved, litigation could therefore occur, which would likely damage
the Company's prospects.

     There are no corporate policies, board resolutions or bylaws which deal
with conflicts of interest with respect to the sale of shares of the company's
shares by Management and none are anticipated to be placed into effect.

     Management cannot commit at this time as to whether a stockholder will have
the right to vote to complete a merger/acquisition as the nature of the
transaction, and the needs of the candidate will dictate the legal requirements
of the transaction.

                                       6
<PAGE>


     In connection with the acquisition of a private business, the Company may
not obtain an independent appraisal of the value of the acquired business. Such
omission by the Company could result in an overvaluation or other related errors
which then could adversely effect the price paid by the Company for the private
business. It is probable that an existing stockholder's future share values
would be adversely effected by factors including but not limited to excess
dilution, reduced dividends, if any, and the lack of a market for his or her
shares.

     Should a stockholder wish to challenge the Company in Court to reverse a
merger or otherwise assert damages against the Company's Management for neglect
of fiduciary duties in the construction of a merger or acquisition, the legal
remedy available to that stockholder under state corporate law will most likely
be prohibitively expensive and time consuming to the Company.

     The Company has in effect no bylaws, understandings, agreements or
resolutions which prevent related party transactions. Such bylaws or resolutions
could be changed by Management initiative. No such changes are presently being
considered.

     There are no present plans, proposals, or arrangements to sell or issue
additional shares of the Company prior to an acquisition or a merger.

Competition
-----------

     The Company is and will remain an insignificant participant amongst the
firms which engage in mergers with and acquisitions of privately-held entities.
There are many established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical expertise
than the Company. In view of the Company's lack of working capital resources and
limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to its competitors.

Regulation and Taxation
-----------------------

     The Company could be subject to regulation under the Investment Company Act
of 1940 in the event the Company obtains and continues to hold a minority
interest in a number of entities. However, Management intends to seek at most
one or two mergers or acquisitions and Management's plan of operation is based
on the Company obtaining a controlling interest in any merger or acquisition
target company and, accordingly, the Company may be required to discontinue any
prospective merger or acquisition of any company in which a controlling interest
will not be obtained.

     The Company could also be required to register under the Investment Company
Act of 1940 in the event the Company comes within the definition of an
Investment Company contained in that Act due to its assets consisting
principally of shareholdings held in a number of subsidiaries. Management
intends to seek at most one or two mergers or acquisitions, which transactions
will result in the Company holding only majority interest in subsidiaries.

     Any securities which the Company acquires in exchange for its Common Stock
will be "restricted securities" within the meaning of the Securities Act of 1933
(the "1933 Act"). If the Company elected to resell such securities, such sale
could not proceed unless the Securities and Exchange Commission had declared a
Registration Statement effective or an exemption from registration was

                                       7
<PAGE>


available. Section 4(2) of the 1933 Act, which exempts sales of securities not
involving a public offering, would in all likelihood be available since it is
likely that any such sale would be a block sale to a private investor to raise
additional capital. Although Management's plan of operation does not contemplate
resale of securities acquired, in the event such a sale were necessary, the
Company would be required to comply with the provisions of the 1933 Act.

     As a condition of a merger or acquisition, it is possible that the target
company's management may request registration of the Company's Common Stock to
be received by target company stockholders. In such event, the Company could
incur significant registration costs. Management intends to require the target
company to bear most, if not all, of the cost of any such registration.
Alternatively, the Company may issue "restricted securities" to a prospective
target company, which securities may be subsequently registered for sale or sold
in accordance with Rule 144 of the Securities Act of 1933.

     The Company intends to structure a merger or acquisition in such a manner
as to minimize federal and state tax consequences to the Company and any target
company.

     In the course of a merger or acquisition the Company may undertake, a
substantial amount of attention will be focused upon federal and state tax
consequences to both the Company and the target company. Presently, under the
provisions of federal and various state tax laws, a qualified reorganization
between business entities will generally result in tax-free treatment to the
parties of the reorganization. This generally requires the company to acquire at
least 80% of the combined voting power of the acquired company plus at least 80%
of the total number of shares of all other classes of stock in exchange for the
voting stock of the acquiring company.

     While the Company expects to structure any merger or acquisition in a
manner which will minimize federal and state tax consequences to both the
Company and the target company, there is no assurance that such a business
combination will meet the statutory requirements of a re-organization or that
the parties will obtain the intended tax-free treatment upon a transfer of stock
or assets. A non-qualifying reorganization could result in the imposition of
both federal and state taxes which may have a substantial adverse effect on the
Company. Further, there is no assurance that federal and state tax laws may not
be amended in the foreseeable future to preclude the Company, as well as others,
from availing itself of the tax-free treatment presently afforded business
entities engaged in mergers and acquisitions.

     As of the date hereof no arrangements for merger or acquisition have been
made.

Employees

     The Company is a development stage operation and currently has no employees
other than its sole Officer and Director. Current Management does not intend to
devote its full-time efforts to the business of the Company. Current Management
is not compensated by the Company; however, it is anticipated that, upon
completion of an acquisition, the Company may engage full and part-time
employees which may include the Company's present management. The need for
employees and their availability will be addressed as circumstances warrant.

                                       8
<PAGE>


Facilities

     The Company utilizes the offices of its sole Director and Officer, Patrick
C. Brooks, on a month-to-month basis. With effect from January 1, 1999, the
Company has paid Mr. Brooks $500 per month for this usage. Management does not
foresee the need for separate offices until business circumstances dictate
otherwise.

ITEM 2. DECSRIPTION OF PROPERTY

     None


ITEM 3. LEGAL PROCEEDINGS

     None


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On February 19, 1999, a Plan of Merger was submitted to Security holders
for approval. The Plan of Merger was duly approved. Pursuant to the terms of the
Merger Agreement, the predecessor company, Fountain Colony Holding Corporation,
a Delaware corporation, was merged into a wholly owned subsidiary, Fountain
Colony Ventures, Inc. a Colorado corporation. The Subsidiary corporation was the
surviving entity of the Merger. The purpose of the Merger was to efectuate a
change of domicile from Delaware to Colorado.


                                     PART II



ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Not applicable - the Company's stock is not traded publicly and no
dividends have been paid.


ITEM 6. PLAN OF OPERATION

     During 1998, the Company continued its efforts to identify business
opportunities consistent with its objectives. However, the Company's ability to
operate was significantly and adversely impacted by the absence of operating
funds. Against this background, the Company was unsuccessful in identifying
established and profitable operating companies which desired a public listing
through a "reverse-merger".

     The Company intends to continue its efforts to achieve its stated
objectives. And, Management will continue to use all available resources in its
endeavor to successfully complete a business combination. However, in light of
the foregoing reasons, the Company's ability to continue to operate or achieve
its objectives at the current time is, at best, tenuous. In the absence of
operating funds, Management may find it necessary to liquidate the Company in
which event there will be a total loss of stockholder funds.

                                       9
<PAGE>


ITEM 7. FINANCIAL STATEMENTS

     See Audited Financial Statements attached hereto.









                       THIS SPACE LEFT BLANK INTENTIONALLY













                                       10
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUTING AND FINANCIAL
        DISCLOSURE

     The Company appointed a new firm of independent auditors during the fiscal
year. There were no disagreement with the Company's prior independent auditors
regarding any matter of accounting principles or practices or financial
statements disclosures.


                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PRMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF EXCHANGE ACT


                                   MANAGEMENT

     The following sets forth information concerning the Directors and Officers
of the Company:

             Name                Age        Positions
             ----                ---        ---------

      Patrick C. Brooks          52         Director, President, Chief Financial
                                              Officer and Secretary

     The following sets forth certain biographical information pertaining to the
Directors and Officers of the Company:

Patrick C. Brooks

     Mr. Brooks has served as the Company's sole member of the Board of
Directors and as its President, Chief Financial Officer and Secretary since
February 1999. He served as the sole member of the Borad of Directors,
President, Chief Financial Oficer and Secretary of the Company's predecessor
from August 1979 until its merger with the Company. He also served as a member
of the Board of Directors and President of the Company's predecessor entity from
1989 to 1991.

     Formerly, Mr. Brooks served as Chairman and President of Bio-Dental
Technologies Corporation, a publicly-held company traded on the NASDAQ Stock
Exchange. Additionally, he served as joint principal and owner of Thunderbird
Securities Corporation and Meridian Securities, Inc., both companies being
securities-broker dealers licensed by the Securities and Exchange Commission and
the N.A.S.D.

     From 1987 to 1990, Mr. Brooks was the promoter and sponsor of three
publicly-held Business Investment Companies. In the fifteen years prior to 1987
he served in the casualty insurance industry in successively advancing
underwriting positions with major European and American insurance companies.

     From August 1997 to June 1999, Mr. Brooks has served of President and
Director of Reliance Resources, Inc., a publicly-held corporation. Since 1989 he
has served as President and Director of Goldcrest Corporation, a publicly-held
corporation. Since 1991 he has served as President and Director of Avocet
Ventures Inc., a publicly-held corporation. Since November 1997, Mr. Brooks has
served as a Director and President of Laurel Dental Plan, Inc., a dental managed
care organization based in southern California. Additionally, he serves as a
Director and Officer of several privately-held corporations.

                                       11
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

     None of the Company's present executive officers are compensated by the
Company.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information regarding ownership of the
Company's Common Stock by each person known by the Company to be the beneficial
owner of more than 5% of the outstanding Common Stock, by each director and by
each executive officer of the Company. All shares are held beneficially and of
record, and each recorded stockholder has sole voting, investment and
dispositive power.

                                                  Shares           Percentage of
                                               Beneficially            Shares
Name                                              Owned                Owned
----                                              -----                -----

Patrick C. Brooks (1)                            330,000               36.7

Directors and Officers as a Group                330,000               36.7

 (1) Director and/or Officer of the Company


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     As at September 30, 1996, the Company had accrued liabilities of $30,000.
In August 1997, the Company issued 330,000 shares of its Common Stock to Mr.
Patrick C. Brooks, its sole Director and Officer, as consideration for
satisfying $15,000 of those liabilities. This transaction was not conducted at
arm's length.

The Company utilizes the offices of its sole Director and Officer, Patrick C.
Brooks, on a month-to-month basis. With effect from January 1, 1999, the Company
has paid Mr. Brooks $500 per month for this usage. Additionally, the Company
pays Mr. Brooks $250 per month for administrative services which includes the
use of telephone, telecopier, computers, office fixtures and fittings, and
secretarial services. This transaction was not conducted at arm's length.

     As of the date hereof, the Company accrued liabilities of $26,100 to its
sole Director and Officer in consideration for satisfying Company liabilities to
third parties and accrued rental and administrative charges. No interest is
being charged at this time for the provision of this capital. (See "Financial
Information.")


                                       12
<PAGE>


                                     PART IV


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     Form 8 K dated February 19, 1999 incorporated herein by reference.





















                                       13
<PAGE>


                                   SIGNATURES


Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereto
duly authorized.


                                             FOUNTAIN COLONY VENTURES, INC.



                                             /s/ Patrick C. Brooks
                                             ---------------------
                                             Patrick C. Brooks
                                             Director, President and Secretary


Date: November 15, 1999
















                                       14
<PAGE>


                          FOUNTAIN COLONY VENTURES INC.
                 (Formerly Fountain Colony Holding Corporation)

                              FINANCIAL STATEMENTS

                      For the Year Ended September 30, 1999







Independent Auditor's Report...............................................F-1

Financial Statements:

Balance Sheet..............................................................F-2

Statement of Operations....................................................F-3

Statement of Stockholders' Equity..........................................F-4

Statement of Cash Flows....................................................F-5

Notes to Financial Statements............................................F-6-F-8


<PAGE>


                               GERALD R. PERLSTEIN
                           Certified Public Accountant
                      1260 S. Beverly Glen Blvd., Suite 106
                              Los Angeles, CA 90024

                  Telephone (310) 275 4650 Fax. (310) 275 4611




                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



Board of Directors
FOUNTAIN COLONY VENTURES INC.
Los Angeles, California



I have audited the  accompanying  statements  of financial  position of FOUNTAIN
COLONY  VENTURES INC.  (formerly  Fountain  Colony  Holding  Corporation)  as of
September  30,  1999 and the related  statements  of  operations,  stockholders'
equity, and cash flows for the year then ended.  These financial  statements are
the responsibility of the Company's management.  My responsibility is to express
an opinion on these financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of FOUNTAIN  COLONY  VENTURES INC.
(formerly Fountain Colony Holding  Corporation) as of September 30, 1999 and the
results of its operations, stockholders' equity and cash flows for the year then
ended in conformity with generally accepted accounting principles.




/s/ Gerald R. Perlstein
-----------------------
Gerald R. Perlstein
Los Angeles, California

November 15, 1999

                                       F-1
<PAGE>


                          FOUNTAIN COLONY VENTURES INC.
                 (Formerly Fountain Colony Holding Corporation)

                                  BALANCE SHEET

                               September 30, 1999
                               ------------------




                                     ASSETS
                                     ------




Current Assets:                                                          None
---------------

Other Assets:
-------------
    Organizational costs, Net                                         $   3,180
                                                                      ---------

         Total Assets                                                 $   3,180
                                                                      =========




                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities:
--------------------
    Due to Stockholder                                                   26,100
                                                                      ---------

         Total Liabilities                                               26,100
                                                                      ---------


Stockholders' Equity
--------------------
    Preferred Stock - 10,000,000 shares authorized;
         issued and outstanding - none @ $.001 par value

    Common Stock - 50,000,000 shares authorized;
         issued and outstanding 900,000 shares @ $.001 par value            900

    Paid-in-capital                                                     232,677

    Accumulated deficit                                                (256,497)
                                                                      ---------

         Total Stockholders' Equity                                     (22,920)
                                                                      ---------

         Total Liabilities and Stockholders' Equity                   $   3,180
                                                                      =========


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

                                       F-2

<PAGE>


                          FOUNTAIN COLONY VENTURES INC.
                 (Formerly Fountain Colony Holding Corporation)

                             STATEMENT OF OPERATIONS

                      For The Year Ended September 30, 1999






Operating Expenses:

    Amortization
    General and administrative                                          $    420
                                                                          12,500
                                                                        --------

    Total operating Expenses                                              12,920
                                                                        --------

Net loss                                                                $ 12,920
                                                                        ========


Weighted number of shares outstanding:                                   900,000
                                                                        ========


Net loss per share                                                      $  0.001
                                                                        ========









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

                                      F-3
<PAGE>
<TABLE>
<CAPTION>


                                 FOUNTAIN COLONY VENTURES INC.
                        (Formerly Fountain Colony Holding Corporation)

                               STATEMENT OF STOCKHOLDERS' EQUITY

                             For The Year Ended September 30, 1999


                                     Common Stock                                     Total
                                ----------------------     Paid-In-  Accumulated  Stockholders'
                                 Number        Amount      Capital     Deficit       Equity
                                 ------        ------      -------     -------       ------

<S>                               <C>        <C>          <C>         <C>          <C>
Balance September 30, 1994        270,000    $     270    $ 203,307   $(223,577)   $ (20,000)


Net loss for period                                                      (5,000)      (5,000)
                                ---------    ---------    ---------   ---------    ---------


Balance September 30, 1995        270,000          270      203,307    (228,577)     (25,000)


Net loss for period                                                      (5,000)      (5,000)
                                ---------    ---------    ---------   ---------    ---------


Balance September 30, 1996        270,000          270      203,307    (233,577)     (30,000)


Issuance of common stock
   for payment of liabilities     630,000          630       29,370                   30,000


Net loss for period                                                      (5,000)      (5,000)
                                ---------    ---------    ---------   ---------    ---------


Balance September 30, 1997        900,000          900      232,677    (238,577)      (5,000)


Net loss for period                                                      (5,000)      (5,000)
                                ---------    ---------    ---------   ---------    ---------


Balance September 30, 1998        900,000          900      232,677    (243,577)     (10,000)


Net loss for period                                                     (12,920)     (12,920)
                                ---------    ---------    ---------   ---------    ---------

Balance September 30, 1999        900,000    $     900    $ 232,677   $(256,497)   $ (22,920)
                                =========    =========    =========   =========    =========



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

                                             F-4
</TABLE>
<PAGE>


                          FOUNTAIN COLONY VENTURES INC.
                 (Formerly Fountain Colony Holding Corporation)

                             STATEMENT OF CASH FLOWS

                      For The Year Ended September 30, 1999


CASH FLOWS FROM OPERATING ACTIVITIES

Net loss for the period                                                $(12,920)

Adjustments to reconcile net loss to net cash provided
    by operating activities
         Amortization                                                       420
         Increase in organizational costs                                (3,600)
         Increase in due to stockholder                                  16,100
                                                                       --------


NET CASH USED BY OPERATING ACTIVITIES                                         0
                                                                       --------


CASH FLOWS FROM INVESTING ACTIVITIES                                          0
                                                                       --------


CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from issuance of common stock                                    0
    Proceeds from contributed capital                                         0
                                                                       --------
    Net cash provided by financing activities                                 0
                                                                       --------


NET INCREASE (DECREASED) IN CASH                                              0


CASH BALANCE, BEGINNING OF PERIOD                                             0
                                                                       --------


CASH BALANCE, END OF PERIOD                                                   0
                                                                       ========




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

                                      F-5

<PAGE>

                          FOUNTAIN COLONY VENTURES INC.
                 (Formerly Fountain Colony Holding Corporation)

                          NOTES TO FINANCIAL STATEMENTS

                      For The Year Ended September 30, 1999



Note 1 Summary of Significant Accounting Policies
-------------------------------------------------

     (a)  Organization and Business Activities:

          The  Company  was  incorporated  on May 6, 1988  under the laws of the
          State of Delaware  under the name Argyle  Funding,  Incorporated.  The
          Company  changed  its  name to  Fountain  Colony  Holding  Corporation
          effective January 2, 1991. The Company has been inactive since October
          1994. The Company  changed its name to Fountain  Colony  Ventures Inc.
          effective  February  19,  1999 (see Note 2).  The  Company's  business
          purpose is to seek business opportunities,  including acquisitions and
          mergers,  which management believes offers long term growth potential,
          and  does  not  propose  to  engage  in any  activity  prior  to  this
          combination.

     (b)  Fiscal Year:

          The Company operates on a September 30 fiscal year end.

     (c)  Basis of Operation:

          The Company prepares its financial statements and federal income taxes
          on the accrual basis of accounting.

     (d)  Loss Per Share:

          Loss per share of common stock is computed using the weighted  average
          number of common shares outstanding during the periods shown.

     (e)  Use of Estimates:

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and assumptions  that affect certain reported amounts and disclosures.
          Accordingly, actual results could differ from those estimates.

     (f)  Organizational Costs:

          Organizational  costs  consist  of  costs  incurred  for  professional
          services at the  reorganization of the Company in February 1999 and is
          being amortized over a five year period.

                                      F-6
<PAGE>


                          FOUNTAIN COLONY VENTURES INC.
                 (Formerly Fountain Colony Holding Corporation)

                     NOTES TO FINANCIAL STATEMENTS continued

                      For The Year Ended September 30, 1999



     (g)  Prior Audits:

          The financial  statements of the Company for the years ended September
          30, 1998,  1997,  1996 and 1995 were audited by other  auditors  whose
          report were dated October, 1998, and expressed unqualified opinions of
          those financial statements.

     (h)  Statement of Cash Flow:

          Supplemental disclosure of cash flow information is as follows:

          There has been no cash paid for  interest  or taxes for the year ended
          September 30, 1999.


Note 2 Plan and Agreement of Merger
-----------------------------------

     A Plan and  Agreement  of Merger  was made as of the 19th day of  February,
     1999,  between  Fountain Colony Ventures Inc., a Colorado  corporation (the
     "Subsidiary  Corporation"),  and Fountain  Colony  Holding  Corporation,  a
     Delaware  corporation  (the  "Parent  Corporation")  to  effect a change of
     domicile from Delaware to Colorado.

     At the date of the merger,  the Parent  Corporation was authorized to issue
     one million two hundred  and fifty  thousand  (1,250,000)  shares of Common
     Stock, par value $.001 per share, of which nine hundred thousand  (900,000)
     shares were  issued and  outstanding  and the  Subsidiary  Corporation  was
     authorized to issue fifty million  (50,000,000) shares of Common Stock, par
     value $.001 per share,  of which one hundred  (100)  shares were issued and
     outstanding, and owned by the Parent Corporation.

     The Parent Corporation was merged with and into the Subsidiary Corporation,
     and  the  Subsidiary   Corporation  became  the  surviving  corporation  in
     accordance  with  the  laws of the  State  of  Delaware  and the  State  of
     Colorado.

     On the  effective  date of the  merger,  all of the issued and  outstanding
     shares  of  stock  of the  Subsidiary  Corporation  held in the name of the
     Parent  Corporation  was canceled,  and the issued and  outstanding  Common
     Stock, par value $.001, of the Parent Corporation was converted into shares
     of Common Stock par value $.001, of the Subsidiary  Corporation as follows:
     each holder of Common Stock of the Parent Corporation received one share of
     Common Stock,  par value $.001 of the  Subsidiary  for each share of Common
     Stock, par value $.001, held in the Parent Corporation.

                                      F-7
<PAGE>


                          FOUNTAIN COLONY VENTURES INC.
                 (Formerly Fountain Colony Holding Corporation)

                     NOTES TO FINANCIAL STATEMENTS continued

                      For The Year Ended September 30, 1999



Note 3 Due to Related Party
---------------------------

     In order to effect the merger,  as outlined in Note 2 above,  the President
     of the  Company  paid  various  costs for  professional  services  totaling
     $3,600, which has been capitalized as organizational costs and accrued as a
     liability.

     In addition,  the President  paid various fees for auditing and  accounting
     services  totaling  $5,000,  and has accrued  office  rent and  secretarial
     services of $7,500 during the fiscal year.

     A total of $10,000 had been  accrued for general and  administrative  costs
     during the fiscal years ending September 30, 1997 and 1998.

Note 4 Income Taxes
-------------------

     At  September  30,  1999,   the  Company  has  a  federal   operating  loss
     carryforward  of $256,497 for financial  accounting  and federal income tax
     purposes.  Utilization of the net operating loss in any taxable year during
     the carryforward  period may be subject to an annual  limitation due to the
     ownership change limitations imposed by the tax law.

     The net  operating  losses will expire at various  dates  commencing in the
     year 2004 through 2019.

     The deferred tax asset consists of the future benefit of net operating loss
     carryforwards.  A valuation allowance limits the recognition of the benefit
     of deferred tax assets until  realization  is reasonable  assured by future
     profitability.

Note 5 Commitments
------------------

     The Company has no  outstanding  commitments  or  obligations,  nor is it a
     party to any litigation.  The Company  presently  utilizes office space and
     secretarial services provided by its President at a cost of $750 per month.

Note 6 Issuance of Stock
------------------------

     Effective  August 28, 1997,  the Company  issued  630,000  shares of common
     stock in consideration  for the payment of liabilities  totaling $30,000 as
     of the fiscal year ended September 30, 1996. Of the share issuance, 330,000
     shares were issued to an  officer/director in consideration for the payment
     of $15,000 of these  liabilities  and  300,000  shares were issued to other
     parties in consideration for the payment of $15,000 of these liabilities.

                                      F-8
<PAGE>


                       FOUNTAIN COLONY HOLDING CORPORATION
                     (Formerly Argyle Funding, Incorporated)

                              FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1998


Accountant's Report ...................................................... F-10

Financial Statements

 Balance Sheets -
              Assets, Liabilities and Stockholders' Equity................ F-11

    Statement of Operations .............................................. F-12

    Statement of Stockholders' Equity .................................... F-13

    Statements of Cash Flows ............................................. F-15

Notes to Financial Statements ............................................ F-16
















                                      F-9
<PAGE>


                              Henry Schiffer, CPA
                           A Professional Corporation
           315 South Beverly Drive, Suite 302 Beverly Hills, CA 90212
                     Phone: 310.286.6830 Fax: 310.286.6840







                               ACCOUNTANT'S REPORT


To The Board of Directors and Stockholders
Fountain Colony Holding Corporation

I have  audited  the  accompanying  balance  sheets of Fountain  Colony  Holding
Corporation  (Formerly  Argyle Funding,  Incorporated) at September 30, 1998 and
the related  statement  of income,  stockholders'  equity and cash flows for the
year then  ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  My  responsibility  is to  express  an  opinion on these
financial statements based on my audit.

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

In my opinion, the financial statements referred to above present fairly, in all
material aspects,  the financial position of Fountain Colony Holding Corporation
at September 30, 1998 and the results of its  operations,  stockholders'  equity
and cash flows for the year then ended,  in conformity  with generally  accepted
accounting principles.



/s/ Henry Schiffer
----------------------
Henry Schiffer
Certified Public Accountant


                                      F-10
<PAGE>
<TABLE>
<CAPTION>

                       FOUNTAIN COLONY HOLDING CORPORATION
                     (Formerly Argyle Funding, Incorporated)

                               SEPTEMBER 30, 1998

                                  BALANCE SHEET


                                     ASSETS
                                     ------


Current Assets:
<S>                                                 <C>         <C>       <C>
Cash                                                       0
                                                    --------
     Total  Current Assets                                 0
                                                    --------
Investment (note 1e and 2)                                 0
                                                    --------

Total Assets                                               0
                                                    ========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

Current Liabilities:

Accrued expenses                                      10,000
                                                    --------

Total Liabilities                                     10,000
                                                    --------

Stockholders' Equity:

Preferred stock - 1,000,000 shares
    Authorized; issued and outstanding
    none; $.01 par value                                --          --          --
Common stock - 1,250,000 shares authorized;
    issued and outstanding  900,000 shares at
    September 30, 1998,  @ $.001 par value
    (Notes 3, 4, 7 and 8)                                900
Paid in capital                                      232,677
Deficit accumulated during the
    development stage                               (243,577)   (233,577)   (228,577)
                                                    --------    --------    --------

     Total Stockholders' Equity (deficit)            (10,000)    (30,000)    (25,000)
                                                    --------    --------    --------

       Total Liabilities and Stockholders' Equity          0           0           0
                                                    ========    ========    ========


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

                                      F-11
</TABLE>

<PAGE>

                       FOUNTAIN COLONY HOLDING CORPORATION
                     (Formerly Argyle Funding, Incorporated)

                             STATEMENT OF OPERATIONS

                      FOR THE YEAR ENDED SEPTEMBER 30, 1998



Operating Expenses:

  Selling, G and A                                                        5,000
                                                                       --------

     Total operating expenses                                             5,000
                                                                       --------

Net (loss)                                                               (5,000)
                                                                       ========

Weighted number of shares outstanding:                                  900,000
                                                                       ========

Net (loss) per share                                                   nil
                                                                       ========



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

                                      F-12
<PAGE>
<TABLE>
<CAPTION>


                                   FOUNTAIN COLONY HOLDING CORPORATION
                                 (Formerly Argyle Funding, Incorporated)

                                    STATEMENT OF SHAREHOLDERS' EQUITY
                                     INCEPTION TO SEPTEMBER 30, 1998


                                         Common Shares             Paid In     Accumulated   Stockholders'
                                     Shares         Amount         Capital       Deficit        Equity
                                     ------         ------         -------       -------        ------
<S>                                <C>             <C>            <C>           <C>           <C>
May 6, 1988 to Sept
   30, 1988                                                                           (101)          (101)

Sale of common stock
   Feb 16, 1989                        520,000            520          4,480                        5,000

    Oct. 1, 1998 to Sept
    30, 1989                           120,000            120         59,880                       60,000

Net (loss) Oct. 1, 1988
   to Sept. 30, 1989                                                               (16,390)       (16,390)

Net (loss) Oct. 1, 1989
   to Sept. 30, 1990                                                               (38,667)       (38,667)
                                   -----------    -----------    -----------   -----------    -----------

Balance Sept. 30, 1990                 640,000            640         64,360       (55,158)         9,842

Surrender of shares by
   Shareholder                        (100,000)          (100)           100                            0

Issuance of common stock
   for acquisition of Pursuit
   Capital Corporation              10,260,000         10,260        128,317                      138,577
   October 25, 1990

December 17, 1990
    40:1 reverse stock split       (10,530,000)       (10,530)        10,530                            0

Net (loss) Oct. 1, 1990
   to Sept. 30, 1991                                                               (26,205)       (26,205)
                                   -----------    -----------    -----------   -----------    -----------

   Balance Sept. 30, 1991              270,000            270        203,307       (81,363)       122,214

Cash dividend in lieu
    of stock of Pursuit Ventures                                                    (1,216)        (1,216)

Net (loss) Oct. 1, 1991
   to Sept. 30, 1992                                                              (127,076)      (127,076)
                                   -----------    -----------    -----------   -----------    -----------

   Balance Sept. 30, 1992              270,000            270        203,307      (209,655)        (6,078)




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

                                                    F-13

<PAGE>


                          FOUNTAIN COLONY HOLDING CORPORATION
                        (Formerly Argyle Funding, Incorporated)

                           STATEMENT OF SHAREHOLDERS' EQUITY
                            INCEPTION TO SEPTEMBER 30, 1998



                                   Common Shares         Paid In  Accumulated  Stockholders'
                                 Shares      Amount      Capital    Deficit      Equity
                                 ------      ------      -------    -------      ------

Balance Sept. 30, 1992           270,000         270     203,307   (209,655)     (6,078)

Net (loss) Oct. 1, 1992
   to Sept. 30, 1993                                                 (7,960)     (7,960)
                                --------    --------    --------   --------    --------

Balance Sept. 30, 1993           270,000         270     203,307   (215,615)    (14,038)

Net (loss) Oct. 1, 1993
   to Sept. 30, 1994                                                 (5,962)     (5,962)
                                --------    --------    --------   --------    --------

     Balance Sept.30, 1994       270,000         270     203,307   (223,577)    (20,000)

Net (loss) Oct. 1, 1994
   to Sept. 30, 1995                                                 (5,000)     (5,000)
                                --------    --------    --------   --------    --------

     Balance Sept. 30, 1995      270,000         270     203,307   (228,577)    (25,000)

Net (loss) Oct. 1, 1995
   to Sept. 30, 1996                                                 (5,000)     (5,000)
                                --------    --------    --------   --------    --------

     Balance Sept. 30, 1996      270,000         270     203,307   (233,577)    (30,000)

Issuance of common stock
   for payment of liabilities
     Note 8                      630,000         630      29,370                 30,000

Net (loss) Oct. 1, 1996
   to Sept. 30, 1997                                                 (5,000)     (5,000)
                                --------    --------    --------   --------    --------

Balance Sept. 30, 1997           900,000         900     232,677   (238,577)     (5,000)

Net (loss) Oct. 1, 1997
   to Sept. 30, 1998                                                 (5,000)     (5,000)
                                --------    --------    --------   --------    --------

Balance Sept. 30, 1998           900,000         900     232,677   (243,577)    (10,000)
                                ========    ========    ========   ========    ========



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

                                         F-14
</TABLE>

<PAGE>

                       FOUNTAIN COLONY HOLDING CORPORATION
                     (Formerly Argyle Funding, Incorporated)

                             STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED SEPTEMBER 30, 1998



CASH FLOWS FROM OPERATING
      ACTIVITIES

Net (loss) for the year                                                  (5,000)

Adjustments to reconcile net income to net
     cash provided by operating activities

    Increase in accrued expenses                                          5,000
                                                                         ------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                     0
                                                                         ------

NET INCREASE (DECREASE) IN CASH                                               0

CASH BALANCE, BEGINNING OF PERIOD                                             0
                                                                         ------

CASH BALANCE, END OF PERIOD                                                   0
                                                                         ======




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

                                      F-15
<PAGE>


                       FOUNTAIN COLONY HOLDING CORPORATION
                     (Formerly Argyle Funding, Incorporated)

                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998



Note 1 Summary of Significant Accounting Policies
-------------------------------------------------

     This summary of significant  accounting policies of Fountain Colony Holding
     Corporation is presented to assist in understanding the Company's financial
     statements.  The financial  statements and notes are representations of the
     Company's  management,   which  is  responsible  for  their  integrity  and
     objectivity.  These  accounting  policies  conform  to  generally  accepted
     accounting principles and have been consistently applied in the preparation
     of the financial statements.

     (a)  Organization and Business Activities:

          The  Company  was  incorporated  on May 6, 1988  under the laws of the
          State of Delaware  under the name Argyle  Funding,  Incorporated.  The
          Company  changed  its  name to  Fountain  Colony  Holding  Corporation
          effective January 2, 1991.

          The Company's business purpose is to seek out business  opportunities,
          including   acquisitions,   that  the  Board  of  Directors,   in  its
          discretion, believes to be good opportunities.

     (b)  Depreciation:

          Depreciation  is  provided  by  the  straight-line   method  at  rated
          calculated  to  amortize  cost  over  the  estimated  useful  lives of
          respective  assets.  Upon sale or retirement of the respective assets,
          the related cost and accumulated  depreciation are eliminated from the
          accounts,  and gains or losses are  reflected  in  income.  Repair and
          maintenance  expenditures,  not  anticipated to extend  original asset
          lives, are charged to income as incurred.

     (c)  Fiscal Year:

          The Company operates on a September 30 fiscal year end.

     (d)  Basis of Operation:

          The Company prepares its financial statements and federal income taxes
          on the accrual basis of accounting.

     (e)  Principles  of   previously   reported   Consolidation   of  financial
          statements:

          The accompanying financial statements include the accounts of Fountain
          Colony Holding Corporation and previous  subsidiaries as listed below.
          All  significant  inter company  balances and  transactions  have been
          eliminated.

                                      F-16
<PAGE>

                       FOUNTAIN COLONY HOLDING CORPORATION
                     (Formerly Argyle Funding, Incorporated)

                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998



Note 1 Summary of Significant Accounting Policies (continued)
-------------------------------------------------------------

     (e)  Principles of Consolidation: (continued)

          a.   Pursuit Capital  Corporation was acquired on October 25, 1990 for
               10,260,000  shares of common  stock  (retroactively  reflected at
               255,500  shares  after the 40 for 1  reverse  stock  split).  The
               acquired   Company  was  in  the  business  of  venture   capital
               activities.  Pursuit  Capital was  voluntarily  dissolved  by the
               Company effective August 5, 1994.

          b.   Pursuit  Venture  Corporation was formed on December 7, 1990 as a
               wholly owned  subsidiary of Fountain Colony Holding  Corporation.
               The Company  purchased  270,000  shares with a par value of $.001
               and paid $5,000 for the stock. Pursuit Venture was a wholly owned
               subsidiary  through  September  30,  1991.  In 1992  the  Company
               distributed 257,844 shares of the common stock of Pursuit Venture
               Corporation to the existing  shareholders  of the Company and the
               Company carries the investment in Pursuit Venture  remaining held
               stock of 12,156 shares at $0.

          c.   Effective  September  30, 1995 the  Company has no  consolidating
               subsidiaries  as Pursuit  Capital was  voluntarily  dissolved and
               substantially all the shares of Pursuit Venture  Corporation have
               been distributed.


Note 2 Capitalization of the Company
------------------------------------

     On February 16, 1989, the Company issued 520,000 shares of common stock for
     a total  consideration of $5,000.  These shares were restricted  securities
     under Rule 144 of the  Securities  Act of 1933. As such,  these shares were
     not available to be sold or traded for a period of two years which ended on
     February 16, 1991.

Note 3 Public Offering
----------------------

     The  Company  filed a Form S-18 public  offering  with the  Securities  and
     Exchange Commission.  The Company sold 10,000 units at a price of $6.00 per
     unit.  Each unit  consists of 12 shares of its publicly  registered  common
     stock, 12 Class A redeemable  common stock warrants,  12 Class B redeemable
     common  stock  purchase  warrants  and 12 Class C  redeemable  common stock
     purchase  warrants.  As of  September  30, 1989 all 10,000  units  (120,000
     shares) were sold and the gross  proceeds of the  offering,  $60,000,  were
     received by the Company.

Note 4 Acquisition and Formation of Subsidiary
----------------------------------------------

     Pursuit Capital Corporation was acquired on October 25, 1990 for 10,260,000
     shares of common stock (retroactively reflected at 255,500 shares after the
     40 for 1 reverse stock split).  The Company was acquired under the purchase
     method of  accounting.  The sole asset of the Company  reflected  as of the
     date of acquisition was cash and certificates of deposit totaling $138,577.

                                      F-17

<PAGE>

                       FOUNTAIN COLONY HOLDING CORPORATION
                     (Formerly Argyle Funding, Incorporated)

                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998


Note 4 Acquisition and Formation of Subsidiary (continued):
-----------------------------------------------------------

     Pursuit  Venture  Corporation  was formed on December 7, 1990.  The initial
     capitalization  of Pursuit  Venture  was based on the  issuance  of 270,000
     shares of common stock to the Company for a purchase  price of $5,000.  The
     Company then loaned the newly formed subsidiary  $30,000.  This $30,000 was
     spent by the subsidiary and accordingly  was reflected in the  consolidated
     financials as operating expenses of the Company in fiscal 1991. However, in
     1992 the Company distributed 257,844 of Pursuit Venture's common stock that
     terminated the parent company-subsidiary relationship.

Note 5 Income Taxes
-------------------

     At  September  30,  1998,   the  Company  has  a  federal   operating  loss
     carryforward  of $243,577 for financial  accounting  and federal income tax
     purposes.  Utilization of the net operating loss in any taxable year during
     the carryforward  period may be subject to an annual  limitation due to the
     ownership change limitations imposed by the tax law.

     The net  operating  losses will expire at various  dates  commencing in the
     year 2004 through 2009.

     The deferred tax asset consists of the future benefit of net operating loss
     carryforwards.  A valuation allowance limits the recognition of the benefit
     of deferred tax assets until  realization  is reasonable  assured by future
     profitability.

     The following is a summary of deferred taxes:

                        Deferred asset        $ 77,000
                        Valuation allowance    (77,000)
                                              --------
                                                     0
                                              ========


Note 6 Options & Warrants
-------------------------

     The  Company  has  not  adopted  a  stock  option  plan  and  there  are no
     outstanding warrants.

Note 7 Dividend Policy
----------------------

     The Company has not yet adopted a policy regarding dividends. However, as a
     result  of  the  stock  distribution  of  Pursuit  Venture  Corporation  to
     shareholders  of the Company,  cash in the amount of $1,216 was distributed
     as a dividend in lieu of the stock of Pursuit  Venture at the option of the
     shareholders in fiscal year 1992.

Note 8 Issuance of Stock
------------------------

     Effective  August 28, 1997,  the Company  issued  630,000  shares of common
     stock in consideration  for the payment of liabilities  totaling $30,000 as
     of the fiscal year ended September 30, 1996. Of the share issuance, 330,000
     shares were issued to an  officer/director in consideration for the payment
     of $15,000 of these  liabilities  and  300,000  shares were issued to other
     parties in consideration for the payment of $15,000 of these liabilities.

                                      F-18