SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549

                                Form 10-QSB
          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                     SECURITIES EXCHANGE ACT OF 1934

             For the quarterly period ended February 28, 2005
                   Commission File Number 33-96638-A

                         AMERICAN CAPITAL HOLDINGS, Inc.
------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

        Florida                                       65-0895564
--------------------------------              --------------------------------
 (State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                    Identification No.)

                       100 VILLAGE SQUARE CROSSING, SUITE 202
                         PALM BEACH GARDENS, FLORIDA  33410
------------------------------------------------------------------------------
                    (Address of principal executive offices)

                               (561) 207-6395
------------------------------------------------------------------------------
            (Registrant's telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 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.  Yes [   ]    No [ X ]

As of February 28, 2005 the issuer had 15,723,903 shares of common stock,
$.0001 Par Value, outstanding.

Transitional Small Business Disclosure format:  Yes [   ]   No [ X ]



















AMERICAN CAPITAL HOLDINGS, Inc.            Form 10-QSB     FEBRUARY 28, 2005

                                       INDEX

                                                                    PAGE NO.
PART I    FINANCIAL INFORMATION      



ITEM 1    FINANCIAL STATEMENTS

          Independent Accountants' Report . . . . . . . . . . . . . . .  3

          Consolidated Balance Sheets
           February 28, 2005 and May 31, 2004 . . . . . . . . . . . . .  4

          Consolidated Statement of Operations
           Nine Months Ended February 28, 2005 and February 29, 2004. .  5

          Consolidated Statement of Operations
           Three Months Ended February 28, 2005 and February 29, 2004..  6

          Consolidated Statement of Changes in Shareholders' Equity
           from June 1, 2003 Through February 28, 2005 . . . . . . . .   7

          Consolidated Statement of Cash Flows
           for the Nine Months Ended February 28, 2005 and 2004   . . .  8

          Notes to Consolidated Financial Statements  . . . . . . . . . 10

     
ITEM 2 Management's Discussion and Analysis or Plan of Operation  . . . 21 

ITEM 3 Controls and Procedures  . . . . . . . . . . . . . . . . . . . . 28


PART II       OTHER INFORMATION


ITEM 1 Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . 29

ITEM 2 Unregistered Sales Of Equity Securities and Use Of 
       Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

ITEM 3 Defaults Upon Senior Securities  . . . . . . . . . . . . . . . . 29

ITEM 4 Submission Of Matters to a Vote Of Security Holders. . . . . . . 29

ITEM 5 Other Information  . . . . . . . . . . . . . . . . . . . . . . . 30

ITEM 6 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

SIGNATURES AND CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . 30


                                      2
                       Wieseneck, Andres & Company, P.A. 
                         Certified Public Accountants 
                        772 U. S. Highway 1, Suite 100 
                       North Palm Beach, Florida  33408 
                               (561) 626-0400 
 
Thomas B. Andres, C.P.A.*, C.V.A.                     FAX (561) 626-3453 
Paul M. Wieseneck, C.P.A. 
*Regulated by the State of Florida 
 
 
                       Independent Accountants' Report 
 
 
To the Board of Directors and Stockholders 
American Capital Holdings, Inc. 
Palm Beach Gardens, Florida
 
We have reviewed the accompanying consolidated balance sheet of American Capital
Holdings, Inc. as of February 28, 2005 and May 31, 2004, and the related 
consolidated statements of operations, for the three-month periods and the nine 
month periods ended February 28, 2005 and 2004, the consolidated statement of 
changes in stockholders' equity from June 1, 2003 through February 28, 2005, and
the consolidated statement of cash flows for the nine month periods ended 
February 28, 2005 and 2004, in accordance with Statements on Standards for 
Accounting and Review Services issued by the American Institute of Certified 
Public Accountants.  All information included in these financial statements is 
the representation of the management of American Capital Holdings, Inc.

A review consists principally of inquiries of Company personnel and analytical 
procedures applied to financial data.  It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken 
as a whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should 
be made to the accompanying financial statements in order for them to be in 
conformity with accounting principles generally accepted in the United States of
America.

 
 
/s/Wieseneck, Andres & Company, P.A. 


North Palm Beach 
April 5, 2005








                                     3

AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
                                             FEBRUARY 28, 2005   MAY 31, 2004
ASSETS                         
    Current Assets          
         Cash and Cash Equivalents              $      34,487  $      22,614
         Accounts Receivable                           23,709              -
         Notes Receivable                             409,650        138,952
         Loans Receivable Related Parties (net)       158,618         27,067
         Prepaid Expenses                              66,432         87,197
         Marketable Securities                      2,586,054      2,963,178
         Other Current Assets                             600              -
                                                  ------------   ------------
             Total Current Assets                   3,279,549      3,239,008
                                                  ------------   ------------
            
    Property and Equipment, net                        24,219         43,472
                                                  ------------   ------------
    Other Assets                           
         Available for Sale Securities              1,268,812      2,960,668
         Goodwill                                   8,209,071      8,209,071
         Security Deposit                               3,110          3,110
                                                  ------------   ------------
             Total Other Assets                     9,480,993     11,172,849
                                                  ------------   ------------
TOTAL ASSETS                                    $  12,784,762  $  14,455,329
                                                  ============   ============
LIABILITIES & STOCKHOLDERS' EQUITY                      
  Liabilities                                
         Current Liabilities                      
            Accounts Payable                    $      43,675  $      27,806
            Accrued Expenses                           21,422         11,021
            Loan Payable Related Parties              234,953         57,681
            Current Portion of Notes 
                and Loans Payable                   1,034,977        834,977
                                                  ------------   ------------
            Total Current Liabilities               1,335,027        931,485
                                                  ------------   ------------
     Total Liabilities                              1,335,027        931,485
                                                  ------------   ------------
     Stockholders' Equity                                     
         Common Stock $.0001 par value, 100 million
          shares authorized, 15,723,903 shares issued
          and outstanding, 2,080,000 unissued           1,780          1,702
         Paid-in-Capital                           15,466,285     14,686,363
         Accumulated Deficit                       (1,615,068)      (651,224)
         Accumulated Comprehensive Loss            (2,403,262)      (512,997)
                                                  ------------   ------------
  Total Stockholders' Equity                       11,449,735     13,523,844
                                                  ------------   ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY         $ 12,784,762  $  14,455,329
                                                  ============   ============

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.

                                     4

AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS  
FOR THE NINE MONTHS ENDED
FEBRUARY 28, 2005 AND 2004

                                           FEBRUARY 28, 2005   FEBRUARY 29, 2004
  
       Revenues                              
               Net Sales                       $        123      $          -
               Cost of Sales                         (9,128)                -
                                                ------------      ------------

                   Gross Profit                      (9,005)                -
                                                ------------      ------------
    
       Operating Expenses                                      
               General and Administrative           913,164             3,474
               Sales and Marketing                   15,357                 -
               Amortization                               -                 -
                                                ------------      ------------
             Total Operating Expenses               928,521             3,474
           
                                                ------------      ------------
             Loss from Operations                  (937,526)           (3,474)
                                                ------------      ------------
       Other Income (Expense)                                  
               Interest Income                        9,564                 -
               Interest Expense                     (36,513)                -
               Loss on Disposition
                  of Marketable Securities         (343,364)                -
               Recovery of Bad Debt                 343,995
                                                ------------      ------------
                   Net Other Expenses               (26,318)                -
                                                ------------      ------------
    Net Loss Before Other Comprehensive Losses     (963,844)                -

       Other Comprehensive Income / (Loss)
           Unrealized Holding Loss During Period (1,890,265)                -
                                                ------------      ------------
       Total Comprehensive Loss                  (1,890,265)                -
                                                ------------      ------------
    Net Loss                                   $ (2,854,109)     $     (3,474)
                                                ============      ============

           
Basic and Diluted           
 Net Loss Per Common Share                     $       (.18)     $       (.00)
                                                ============      ============
           
           
Weighted Average Shares Outstanding              15,723,903         3,494,205
                                                ============      ============

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
                                     5

AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS  
FOR THE THREE MONTHS ENDED
FEBRUARY 28, 2005 AND 2004

                                           FEBRUARY 28, 2005 FEBRUARY 29, 2004
  
       Revenues                              
               Net Sales                       $          -      $          -
               Cost of Sales                         (1,049)                -
                                                ------------      ------------

                   Gross Profit                      (1,049)                -
                                                ------------      ------------  
       Operating Expenses                                      
               General and Administrative           424,780             3,474
               Sales and Marketing                        -                 -
               Amortization                               -                 -
                                                ------------      ------------
             Total Operating Expenses               424,780             3,474
           
                                                ------------      ------------
             Loss from Operations                  (425,829)           (3,474)
                                                ------------      ------------
       Other Income (Expense)                                  
               Interest Income                        4,622                 -
               Interest Expense                     (11,854)                -
               Loss on Disposition
                  of Marketable Securities         (295,000)                -
               Recovery of Bad Debt                 343,995                 -
                                                ------------      ------------
                   Net Other Income                  43,763                 -
                                                ------------      ------------
    Net Loss Before Other Comprehensive Losses     (384,066)           (3,474)

       Other Comprehensive Income / (Loss)
           Unrealized Holding Loss During Period    (16,271)                -
                                                ------------      ------------
       Total Comprehensive Loss                     (16,271)                -
                                                ------------      ------------
    Net Loss                                   $   (400,337)     $     (3,474)
                                                ============      ============

           
Basic and Diluted           
 Net Loss Per Common Share                     $       (.03)     $       (.00)
                                                ============      ============
           
           
Weighted Average Shares Outstanding              15,723,903        10,482,604
                                                ============      ============

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.

                                     6
AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FROM JUNE 1, 2003 THROUGH FEBRUARY 28, 2005 

                                  Add'l Paid
               Number of  At Par  in Capital  Retained  Accum. other      Total
                  Shares   Value  & Treasury  Earnings  Comprehen-  Stockholder
                  Issued  $.0001    Stock       (Loss)   sive Inc.       Equity
                ---------- ------ ----------- ---------- ---------- -----------
Balance 6/01/03         5  $   0      $    0   $     0    $      0   $       0

Cancellation of Common Stock
 held by eCom eCom     (5)    (0)         (0)        0           0           0

Issuance of Common Stock
To eCom eCom.com Inc. 
 shareholders    2,497,756    250          -         -           -         250

Issuance of Common Stock
 for the acquisition
 of ACHI, Inc.
assets.         13,226,147  1,322  13,176,443        -           -  13,177,765

Issuance of
 detachable warrants     -      -      10,050        -           -      10,050

Purchase of IS Direct
 Agency NY for 800,000
 subscribed but 
 unissued shares         -     80     999,920        -           -   1,000,000

Conversion of 
 $500,000 Debt
 to stock - unissued     -     50     499,950        -           -     500,000

Accumulated other
 Comprehensive loss      -      -          -         -    (512,997)   (512,997)

Net Operating Loss       -      -          -   (651,224)         -    (651,224)
                ---------- ------ ----------- ---------- ---------- -----------
Balance 5/31/04 15,723,903  1,702  14,686,363  (651,224)  (512,997) 13,523,844

Sale of 780,000
 shares of Common
 Stock - unissued        -     78     779,922        -           -     780,000

Accumulated other
 Comprehensive Loss      -      -          -         -   (1890,265) (1,890,265)

Net Operating Loss       -      -          -   (963,844)         -    (963,844)
                ---------- ------ ----------- ---------- ---------- -----------
Bal. 02/28/05   15,723,903 $1,780 $15,466,285$(1615,068)$(2403,262)$11,449,735
                ========== ====== =========== ========== ========= ============

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
                                     7

AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2005 AND 2004

                                           FEBRUARY 28, 2005   FEBRUARY 29, 2004


Cash Flows From Operating Activities
    Cash received from customers               $        123      $          -
    Cash paid to suppliers of goods           
        and services                               (906,807)           (4,378)
    Income Taxes Paid                                     -                 -
    Interest Paid                                   (25,479)                -
    Interest Received                                   773                 -
                                              _______________  _______________
        Net Cash Flows Used in            
         Operating Activities                      (931,390)           (4,378)
                                              _______________  _______________
Cash Flows From Investing Activities            
    Purchase of Equipment                            (9,490)                - 
    Deposit Made on Insurance Carrier in Escrow    (250,000)                -
    Sale of Marketable Securities                   871,636                 -
    Purchase of Marketable Securities              (377,348)                -
    Purchase of Promissory Notes                    (11,906) 
    Payment of Security Deposit                           -            (2,535)
                                              _______________  _______________
        Net Cash Flows Provided By            
         (Used In) Investing Activities             222,892            (2,535)
                                              _______________  _______________
Cash Flows From Financing Activities            
    Loans from Related Companies                  1,005,205             6,913
    Loans to Related Companies                   (1,264,834)                -
    Proceeds from Sale of Stock                   1,030,000                 -
    Payments on Notes Payable                       (50,000)                -
                                              _______________  _______________
        Net Cash Flows Provided By            
         Financing Activities                       720,371             6,913
                                              _______________  _______________
Net Increase / (Decrease) in Cash                    11,873                 0
            
Cash and Cash Equivalents at            
 Beginning of Period, June 1, 2004 and 2003          22,614                 0
                                              _______________  _______________
Cash and Cash Equivalents at            
End of Period, February 28, 2005 and 2004      $     34,487     $           0
                                              ===============  ===============




See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.


                                     8

AMERICAN CAPITAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2005 AND 2004


Reconciliation of Net Loss to Net Cash Flows Used in Operating Activities
            
                                          FEBRUARY 28, 2005  FEBRUARY 29, 2004
            
    Net Income (Loss)                          $ (2,854,109)     $     (3,474)
    Cash was increased by:            
        Increase in accrued expenses                          
         Other Comprehensive Income               1,890,265                 -
         Valuation Loss                                       
         Amortization                                     -                 -
         Depreciation                                 9,128                 -
         Decrease in Prepaid Expenses                20,765                 -
         Increase in Accounts Payable                15,869                 -
         Increase in Accrued Expenses                10,401                96
    Cash was decreased by            
         Increase in Prepaid Expenses                     -            (1,000)
         Increase in Account Receivable             (23,709)                -
                                              _______________  _______________
        Net Cash Flows Used in            
         Operating Activities                  $   (931,390)    $      (4,378) 
                                              ===============  ===============




            
Supplemental Disclosures
Of Non Cash Investing and
Financing Activities:
------------------------
On February 29, 2004 the Company acquired approximately $137,000 in notes 
receivable, common and preferred stock in various entities valued at $3.1 
million, equipment of $47,000, intangible assets of $6,000, intellectual 
property valued at $3.5 million, various prepaid assets valued at $92,000, 
goodwill of $7.2 million and assumed $1,005,000 in debt for the issuance of 
13,226,147 shares of the Company's common stock.








See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.




                                     9

AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005 

NOTE A - DESCRIPTION OF BUSINESS

American Capital Holdings, Inc. ("American Capital Holdings") is a Florida 
Corporation whose primary business consists of solutions offered by proprietary 
financial products designed to utilize tax incentives, and mitigate the impact 
of balance sheet liabilities.  The Company's main office is located at 100 
Village Square Crossing, Suite 202, Palm Beach Gardens, Florida 33410, and the 
telephone number is (561) 207-6395.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation, Use of Estimates
The Company maintains its accounts on the accrual basis of accounting.  The
preparation of financial statements in conformity with U.S. generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial statements and 
the reported amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates.

Revenue Recognition
Revenue and dividends from investments are recognized at the time the investment
dividends are declared payable by the underlying investment. Capital gains and 
losses are recorded on the date of sale of the investment.

Cash and Cash Equivalents
Cash consists of deposits in banks and other financial institutions having
original maturities of less than ninety days.

Allowance for Doubtful Accounts
It is the policy of management to review the outstanding accounts receivable 
quarterly. At year end, the amount expensed as bad debt will be evaluated and 
compared to prior years to establish an allowance for the year to come.

Depreciation
Property and equipment are recorded at cost and depreciated over the
estimated useful lives of the related assets. Depreciation is computed using
the straight-line method.

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
                                    10 










AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Amortization
The accounting for a recognized intangible asset acquired after June 30, 2001 
is based on its useful life to the Company.  If an intangible asset has a 
finite life, but the precise length of that life is not known, that intangible 
asset shall be amortized over management's best estimate of its useful life.  
An intangible asset with a indefinite useful life is not amortized.  The useful 
life of an asset to an entity is the period over which the asset is expected to 
contribute directly or indirectly to the future cash flows of that entity.


Investments
Investments are stated at the lower of cost or market value.

NOTE C -  NOTES RECEIVABLE

Notes Receivable at February 28, 2005 consist of the following:
  An 8% non-collateralized note that matures in December 2004,
  Interest is payable quarterly.  Included in the balance is
  $15,957 of accrued interest receivable.                             $117,924

  A 4% non-collateralized note due on demand.  Included in
  The balance is $2,490 of accrued interest receivable.                 27,737

  Nine 8% promissory notes purchased from holders of notes
  with Air Media Now, Inc.                                              11,906

  A 5% non-collateralized surplus note that Cosmopolitan Life Insurance 
  has the right to repay, provided Cosmopolitan has sufficient capital
  to operate as a stipulated premiums life Insurance company.  
  Included in the balance is $2,083 of accrued interest.               252,083
                                                                     ----------
       Total Notes Receivable                                         $409,650
                                                                     ==========
Management has made a determination that all of the notes receivable are 
collectable and therefore, has not established an allowance for doubtful 
accounts.






See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.



                                     11


AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE D - LOANS RECEIVABLE RELATED PARTIES

The three loans receivable from related corporate entities are non-
collateralized, non-interest bearing and are due on demand.  The loans due
as of February 28, 2005 are as follows:
    A Super Deal.com, Inc    $  10,150
    Swap and Shop.net Corp.      7,150
    A Classified Ad, Inc.       10,150
    AAB National Company        31,050
    Pro Card Corporation        13,150
    USAS Digital, Inc.           7,150
    eSecureSoft Company          8,150
    eCom eCom.com Inc.          65,039
    MyZipSoft, Inc.              5,500
    USA Performance Products       150
    American Environmental, Inc.   979
                              ---------
        Total                $ 158,618
                              =========

NOTE E - INVESTMENTS

The Company accounts for its common stock investments using the equity 
method for investments in which the Company does not own a controlling interest.
These investments are currently recorded at cost.  The Company's 
share of the investors earnings or losses, if any, are not available at the 
date of these financial statements.  No quoted market price is available for 
these investments.

The Company accounts for common stock investments for which there is a 
quoted market price as an Available-for-Sale security under Statement of 
Financial Accounting Standards No. 115, Accounting for Certain Investments in 
Debt and Equity Securities.  












See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.



                                     12


AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE E - INVESTMENTS (CONTINUED)

On February 28, 2005, investments consisted of the following:

Equity Method of Accounting
Investment Securities at Cost
   @Visory, LLC                          $   112,500
   Brilliant Coatings, Inc.                  250,000
   Century Aerospace Corporation             285,000
   Efficien, Inc.                            287,000
   Metroflex, Inc.                           900,000
   MyZipSoft, Inc.                           670,199
                                          -----------
Total Equity Method Securities at Cost     2,504,699

Available-for-Sale method of accounting
  eCom eCom.com Inc.                          81,355
                                          -----------
    Total Available-for-Sale securities       81,355
                                          -----------
Total Investment Securities              $ 2,586,054
                                          ===========

Equity Method Securities:

@Visory, LLC is a Limited Liability Company located in East Aurora NY.  The 
Company owns 250,000 Series A units of @Visory, LLC.  The Company's investment 
amounts to 1.2% of the outstanding units of @Visory, LLC.  @Visory, LLC is 
taxed as a partnership, and is not publicly traded.  As of February 28, 2005, 
@Visory, LLC had investments in the following companies: Appraisal.com; 
SmartPill Diagnostcs; Efficien; Liquid Matrix; Saturn Internet Reservations; 
StudentVoice; Synacor; and Yipee, Inc.

Century Aerospace is a Delaware Corporation.  The Company owns 57,000 common 
shares of Century Aerospace.  The Company's investment amounts to .7% of the 
outstanding common shares of Century Aerospace.


eSmokes, Inc is a Florida Corporation.  The Company owned 300,000 common shares 
of eSmokes, Inc.  The Company's investment amounted to 3.3% of the outstanding 
shares of eSmokes, Inc. On October 19, 2004, the company sold the 300,000 common
shares for the cost of $45,000, which resulted in a loss of $55,000.
 
Efficien, Inc. is a Delaware Corporation.  The Company owns 500,000 common 
shares of Efficien, Inc. The Company's investment amounts to 11.9% of the 
outstanding common shares of Efficien, Inc.  Efficen, Inc. specializes in the 
development of internet-based applications to improve the efficiency of 
hospital supply and material flow through an integrated application service 
provider (ASP) solution.

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
                                     13
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE E - INVESTMENTS (CONTINUED)

SmartPill Diagnostics, Inc. is a Delaware Corporation.  The Company owned 
1,194,824 Series A preferred shares of SmartPill Diagnostics, Inc.  The 
Company's investment amounts to 11.60% of the outstanding shares of SmartPill 
Diagnostics, Inc.  SmartPill Diagnostics, Inc. is a leading developer of 
SmartPill Capsule endoscopy technology.   About the size of a vitamin pill, the 
SmartPill Capsule is a capsule endoscopy device that uses patented technology to
measure peristaltic pressure, pH and transit time, and determine real-time 
location--factors that aid Gastroenterologists in the diagnosis of such GI 
motility disorders such as gastroparesis and dyspepsia.  The patient benefits 
from a more accurate diagnosis and a more comfortable, non-invasive, non-
surgical approach to GI exploratory examinations.  On June 28, 2004 the Company 
sold all 1,194,824 shares for $776,635.60, resulting in a gain of $6,635.60.  On
June 30, 2004 the Company purchased 175,909 shares for $345,000.  On February 
25, 2005, the Company sold its remaining 175,909 shares of SmartPill 
Diagnostics, Inc. for $50,000.

Metroflex, Inc. is a Delaware Corporation.  The Company owns 900,000 common 
shares of Metroflex, Inc.  Metroflex's MetroFlexCard operates as a MasterCard 
debit card.  The card enables employers to set up programs through which 
employees can pay for commuter expenses-mass transit and parking expenses on a 
pretax basis.

Available-for-Sale Securities:

eCom eCom.com, Inc. is a Florida Corporation and trades on the OTC/PINK:ECEC. 
The company, which was the former parent of USA SportsNet Company, now American 
Capital Holdings, Inc., owns 1,437,100 common shares of eCom.  The Company's 
investment amounts to 2.9% of the outstanding shares of eCom.  The cost for 
this investment as of February 28, 2005 was $254,869.  On February 28, 2005 the 
market value based on a closing bid price of 0.05 per share was $81,355.  The 
difference in cost versus market value is recorded as a deficit in Accumulated 
Other Comprehensive Income of $173,514.












See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
                                     14




AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE F - PROPERTY AND EQUIPMENT

Equipment is stated at cost less depreciation. As of February 28, 2005, 
equipment consisted of computer hardware, software, and office furniture and 
equipment.  Depreciation expense of $1,049 has been recorded for the quarter 
ending February 28, 2005.  Accumulated depreciation at February 28, 2005 is 
$1,224.

NOTE G - PREPAID EXPENSES

Prepaid expenses consist principally of amounts paid for auditing work for the 
Company, along with marketing and research material to be used for investor 
relations.  

NOTE H - AVAILABLE FOR SALE SECURITIES

On February 29, 2004, a stockholder of the Company contributed 53,910,922 shares
of Air Media Now, Inc. to the Company as additional paid in capital. The only 
asset of Air Media Now, Inc. is the right to certain intellectual property.  The
fair value of the publicly traded shares at the date of receipt was $3,469,622 
($.064 per share.)  The market value of Air Media Now, Inc. shares between 
February 29, 2004 and February 29, 2005 has decreased in value by approximately 
$2,230,000 and has been recognized as an other comprehensive loss in the 
consolidated statement of operations.

Management reviews intangible assets for impairment annually. Intangible assets 
with a finite useful life acquired after June 30, 2001 are amortized over their 
useful lives to the company.  Intangible assets acquired after June 30, 2001 
having an infinite useful life are recorded at their fair value and are not 
amortized.  Management reviews all intangible assets for impairment annually.  

NOTE I - OTHER ASSETS

Other assets consist primarily of security deposits on the lease of office
facilities.









See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.





                                     15

AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE J - PROMISSORY NOTES

Promissory Notes as of February 28, 2005 consisted of:

Four interest bearing, non-collateralized loans.  The
loans have various maturities throughout 2004.           $ 444,950 
                                                         ---------- 
     Total Notes Payable                                   444,950 
     Less Current Portion                                 (444,950)
                                                         ----------
     Net Long-term Debt                                  $       0 
                                                         ==========
The short-term notes payable mature as follows:
     February 28, 2005                                   $ 444,950
                                                         ==========

The notes and loans can be converted to shares of the Company's $.0001 par value
common stock at the option of the holder.  The notes pay interest at 10% per 
annum.  Interest is paid quarterly.  The loan can be converted at 80% of the 
average closing price of Company's common stock for the preceding five (5) 
consecutive trading days with a floor of $1.  The holder of a $500,000 10% note 
payable with accrued interest of $9,315 agreed on May 7, 2004 to convert their 
debt to common shares.  By Agreement, the shares of common stock at conversion 
will not be issued until the effective date of the Company's filings with the 
United States Securities & Exchange Commission.

NOTE K - WARRANTS
The Company has issued 1,005,000 (505,000 + 500,000) detachable warrants for 
each dollar of debt as described in Note J above.  Management has determined 
that the value of the detachable warrants to be $.01 on the date of issuance and
have charged paid in capital $10,050 during the period.  Each warrant entitles 
the holder to purchase one (1) share of common stock at $.01.  The Company also 
issued 400,000 warrants to one of the former owners of IS Direct Agency for 
providing his insurance licensing in all fifty states.  The warrants can be 
exercised for $.01 each.  An additional 216,209 warrants were issued in 
connection with the acquisition of Spaulding Ventures, LLC ("Spaulding"); each 
unit of Spaulding entitled the owner to one warrant with an exercise price of 
$6.00 each.

The following is a summary of warrants through February 28, 2005:
 
     Outstanding warrants at the beginning of the year     $ 1,621,209
     Warrants issued                                                 0
     Warrants expired                                                0
     Warrants exercised                                              0
                                                           ------------
     Warrants outstanding at February 28, 2005             $ 1,621,209
                                                           ============

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.

                                     16
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE L - COMMITMENTS AND CONTINGENCIES

On October 30, 2004, the Company entered into a purchase agreement with 
Cosmopolitan Life Insurance Company to acquire 80% ownership of the entity.  The
acquisition is expected to close in the second quarter of 2005, pending approval
by the Insurance Commissioner of Arkansas.  

The Company leases approximately 1,231 feet office facilities in Palm Beach 
Gardens, Florida under an operating lease of $3,478 per month which expires on 
January 31, 2006.  ISDA leases approximately 200 square feet of office 
facilities in Buffalo, NY under a month to month agreement of $425.00 per month.
Future minimum lease payments including sales tax as of February 28, 2005 are:
Fiscal Years ending:

            May 31, 2005                      $ 10,433
            May 31, 2006                        27,822
                                              --------
            Total Minimum Lease Payments      $ 38,255

Rent expense for the nine month period ending February 28, 2005 was $32,601

NOTE M - INCOME TAXES

No provision for federal and state income taxes has been recorded
because the Company has incurred net operating losses since inception.  The
Company's net operating loss carry-forward as of February 28, 2005 totals
approximately $1,959,498.  These carry-forwards will be available to
offset future taxable income, and begin to expire May 31, 2024.

The Company does not believe that the realization of the related net
deferred tax asset meets the criteria required by generally accepted
accounting principles and, accordingly, the deferred income tax asset arising
from such loss carry forward has been fully reserved.

The Company accounts for income taxes in accordance with FASB Statement No. 
109, Accounting for Income Taxes (FASB 109). Under FASB 109, income taxes are 
provided for the tax effects of transactions reported in the financial 
statements and consist of taxes currently due plus deferred taxes related to 
certain income and expenses recognized in different periods for financial and 
income tax reporting purposes. Deferred tax assets and liabilities represent 
the future tax return consequences of those differences, which will either be 
taxable or deductible when the assets and liabilities are recovered or settled.
Deferred taxes also are recognized for operating losses and tax credits that 
are available to offset future taxable income and income taxes, respectively.  
A valuation allowance is provided if it is more likely than not that some or 
all of the deferred tax assets will not be realized. 


See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.


                                     17
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE N  STOCKHOLDERS' EQUITY
 
To facilitate the purchase of the assets of ACHI, the Company recorded a 1-for-
20 reverse split on the Effective Date of the currently outstanding 
common stock, while maintaining the conversion and exercise prices of the 
Senior Notes, the Secured Notes, the Subordinated Notes and the related 
warrants.  All prior period share and per-share amounts have been restated to 
account for the reverse split.  Any fractional shares remaining after the 
reverse split will be paid out in cash to the shareholder on the Effective 
Date.

Warrants were granted to Promissory Note holders with detachable warrants.  
Management has determined that the fair value of each warrant is $0.01.

The computation of diluted loss per share before extraordinary item for the 
nine-months ended February 28, 2005 does not include shares from potentially 
dilutive securities as the assumption of conversion or exercise of these would 
have an anti-dilutive effect on loss per share before extraordinary items.  In 
accordance with generally accepted accounting principles, diluted loss per share
from extraordinary item is calculated using the same number of potential common 
shares as used in the computation of loss per share before extraordinary items.

NOTE O - DEFERRED TAX ASSET

Deferred income taxes are provided for temporary differences between the
financial reporting and income tax basis of the Company's assets and
liabilities.  Temporary differences, net operating loss carry forwards
and valuation allowances comprising the net deferred taxes on the balance
sheets is as follows:
                                                  February 28, 2005
                                                  -----------------
         Loss carry-forward for tax purposes          $  1,959,498
                                                  =================
         Deferred tax asset (34%)                          666,229
         Valuation allowance                              (666,229)
                                                  -----------------
         Net deferred tax asset                       $          -
                                                  =================

No provision for federal and state income taxes has been recorded because the
Company has incurred net operating losses since inception. The Company's net
operating loss carry-forward as of February 28, 2005 was approximately
$1,959,000. These carry-forwards will be available to offset future
taxable income, and will expire through the year 2024.

The Company does not believe that the realization of the related net deferred
tax asset meets the criteria required by generally accepted accounting
principles and, accordingly, the deferred income tax asset arising from such
loss carry forward has been fully reserved.

See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.
                                     18
AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE P - RELATED PARTY TRANSACTIONS

The Company has receivables due from nine related company entities.  
eCom eCom.com, Inc. owes $65,039 for services paid to the Company's transfer 
agent and accountant.  Freedom 4 Wireless, Inc. owed the Company $670,199 for 
working capital and inventory purchased by ACHI, and for contributions made 
between March 2004 and June 2004.  On February 1, 2005, this investment was 
converted into 47,457,356 shares of MyZipSoft, Inc. common stock.  Additional 
advances were made to MyZipSoft after February 1, 2005, resulting in a balance 
due from MyZipSoft of $5,500.  Additional advances of $10,000 were made into 
each of the following seven spin-offs of eCom;  A Super Deal.com, Inc, Swap and 
Shop.net Corp, A Classified Ad, Inc, AAB National Company, Pro Card Corporation,
USAS Digital Inc, and eSecureSoft Company.  These related party transactions 
totaled $158,618 on February 28, 2005.  The Company has received loans from 
various Officers and Directors.  As of February 28, 2005, the company owes 
$187,555 to Barney Richmond and $17,244 to Richard Turner.

NOTE Q - RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations with 
an effective date for financial statements issued for fiscal years beginning 
after June 15, 2002.  The statement addresses financial accounting and 
reporting for obligations related with the retirement of tangible long-lived 
assets and the costs associated with asset retirement.  The statement requires  
the recognition of retirement obligations which will, therefore, generally 
increase liabilities; retirement costs will be added to the carrying value of 
long-lived assets, therefore, assets will be increased; depreciation and 
accretion expense will be higher in the later years of an asset's life than in 
earlier years.  The Company adopted SFAS No. 143 at January 1, 2002.  The 
adoption of SFAS No. 143 had no impact on the Company's operating results or 
financial positions.

The FASB also issued SFAS No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets and is effective for financial statements issued for
fiscal years beginning January 1, 2002.  This statement addresses financial
accounting and reporting for the impairment or the disposal of long-lived
assets.  An impairment loss is recognized if the carrying amount of a long-
lived asset group exceeds the sum of the undiscounted cash flow expected to 
result from the use and eventual disposition of the asset group.  Long-lived 
assets should be tested at least annually or whenever changes in circumstances
indicate that the carrying amount may not be recoverable.  This statement
does not apply to goodwill and intangible assets that are not amortized.
The Company adapted SFAS No. 144 in the first quarter of 2002.  The adoption
of SFAS No. 144 had no impact on the Company's operating results or
financial position.


See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.

                                    19


AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

NOTE Q - RECENT ACCOUNTING PRONOUNCEMENTS(CONTINUED)

In April 2002, the FASB issued SFAS No. 145, "Rescission of the FASB Statements 
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical 
Corrections"("SFAS No. 145"). SFAS No. 145 eliminates the requirement to 
classify gains and losses from the extinguishment of indebtedness as 
extraordinary, requires certain lease modifications to be treated the same as a 
sale-leaseback transaction, and makes other non-substantive technical 
corrections to existing pronouncements. SFAS No. 145 is effective for fiscal 
years beginning after May 15, 2002. SFAS No. 145 was adopted on June 1, 2003 
and did not have a material effect on the Company's financial position or 
results of operations.

The FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments 
with Characteristics of both Liabilities and Equity" and is effective for 
financial instruments entered into after May 31, 2003.  This Statement 
establishes standards for how an issuer classifies and measures in its 
statement of financial position certain financial instruments with 
characteristics of both liabilities and equity.  It requires that an issuer 
classify a financial instrument that is within its scope as a liability because 
that financial instrument embodies an obligation of the issuer.  The Company 
has adopted SFAS No. 150 and the adoption has had no impact on the Company's 
operating results or financial position.



Goodwill and intangible assets acquired prior to July 1, 2001 will continue to 
be amortized and tested for impairment in accordance with pre- SFAS No. 142 
requirements until adoption of SFAS No. 142. Under the provision of SFAS 
No.142, intangible assets with definite useful lives will be amortized to their 
estimated residual values over those estimated useful lives in proportion to 
the economic benefits consumed. Such intangible assets remain subject to the 
impairment provisions of SFAS No. 121. Intangible assets with indefinite useful 
lives will be tested for impairment annually in lieu of being amortized. The 
impact of adopting SFAS Nos. 141 and 142 will not cause a material change in the
Company's consolidated financial statements as of the date of this report.








See accompanying summary of accounting policies, notes to financial
statements and independent accountants' review report.

                                    20





AMERICAN CAPITAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED FEBRUARY 28, 2005

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

         HISTORY AND BUSINESS STRATEGY

History

The Company was incorporated in the State of Florida on January 25, 1999 as US 
Amateur Sports Company, a wholly-owned subsidiary of eCom eCom.com, Inc. 
("eCom") which trades on the OTC/Pink Sheets under the symbol 'ECEC.' On March 
24, 2003, the Company changed its name to USA SportsNet, Inc., and recently 
changed its name to American Capital Holdings, Inc. in connection with its spin-
off by eCom and its acquisition of certain assets of a company formerly known as
American Capital Holdings, Inc. (now known as ACHI, Inc.)  The Company's main 
office is located at 100 Village Square Crossings, Suite 202, Palm Beach 
Gardens, Florida 33410, and the telephone number is (561) 207-6395.

While a wholly-owned subsidiary of eCom, the Company developed an e-commerce 
Internet infrastructure. This product provided an affordable, user-friendly 
technological platform and professional resources to facilitate web business 
development.  It also operated an on-line business as a test model, using 
Company developed e-commerce concepts to sell sports products.  

The Company was one of ten wholly-owned subsidiaries of eCom, with varying 
business plans.  In recent years, eCom concluded that it did not have the 
financial resources necessary to develop all of its ten business units 
collectively.  eCom decided to spin off its subsidiaries into independent 
companies in the belief that independent companies, each with a distinct 
business, would be better able to obtain necessary funding and develop their 
business plans.  This belief was based in part on eCom's experience with 
potential business partners which sought involvement with only one of eCom's 
subsidiaries, rather than involvement with the multi-faceted eCom. 

On December 1, 2003, the Board of Directors of eCom approved the spin-off of the
Company.  They voted to issue to the shareholders of eCom one share of the 
Company for every one share of eCom owned as of the record date of January 5, 
2004.  Fractional shares will be purchased by the Company. No payment was 
required of the eCom shareholders.

After the spin-off of the Company was completed, the Company was presented with 
an opportunity to acquire certain assets of American Capital Holdings, Inc. (now
known as, and referred to hereafter as ACHI) On January 12, 2004, the Company 
entered into an Asset Purchase Agreement with ACHI whereby the Company acquired 
certain assets of ACHI in return for the issuance of common stock of the Company
in an amount equal to 84.1% of the total ownership of the Company.  In order to 
accomplish this transaction, the Company effected a 20-to-1 reverse stock split,
which reduced its outstanding stock to 2,497,756 shares, and issued to ACHI 
13,226,147 shares.  The Company then changed its name to American Capital 
Holdings, Inc., and ACHI changed its name to ACHI, Inc.  


                                     21


AMERICAN CAPITAL HOLDINGS, INC.

In addition, the Company agreed to reserve 25,000,000 of its authorized, but 
unissued shares, for issuance pursuant to a public offering, and to issue 
2,162,099 shares to Spaulding Ventures, LLC, or its shareholders, in replacement
of the shares of ACHI issued or to be issued to Spaulding in connection with a 
prior acquisition of assets by ACHI from Spaulding (see "Acquisition of 
Spaulding").  The proceeds of the public offering are to be used to acquire 
additional interests in some of the companies in which the Company currently 
holds an ownership interest, to provide capital to those companies, and to 
acquire interests in other businesses of interest to the Company, which have not
yet been identified. 

The assets acquired from ACHI consist primarily of approximately $10.8 million 
of investment interests in ten developing companies (described below), 
approximately $5.3 million of restricted securities, approximately $233,000 of 
marketable securities, approximately $100,000 in cash, and proprietary 
investment programs known as Energy Tax Incentive Preferred Securities 
("ETIPS")and Guaranteed Principal Insured Convertible Securities ("GPICS") which
ACHI had developed and specifically designed to facilitate investment in oil and
gas exploration in the United States, and in developing companies. See the 
American Capital Holdings balance sheet included in the Financial Statements 
section of this report.

On December 30, 2003, prior to the Company's acquisition from ACHI, ACHI entered
into a letter agreement with Spaulding Ventures, LLC, pursuant to which ACHI 
agreed to acquire all of Spaulding's assets in return for 2,162,099 shares of 
ACHI common stock, plus warrants to purchase a total of 216,210 additional 
shares of ACHI common stock at a purchase price of $6.00 per share. As part of 
its acquisition from ACHI of the assets ACHI acquired from Spaulding, the 
Company has agreed to replace the shares and warrants issued by ACHI with shares
and warrants of the Company.  In order to facilitate the distribution of these 
securities by Spaulding to its shareholders, the Company intends file a 
Registration Statement with the Securities and Exchange Commission registering 
the distribution to Spaulding's shareholders of both the acquisition shares and 
the shares to be issued upon exercise of the warrants.

The assets acquired by ACHI from Spaulding, and subsequently acquired by the 
Company from ACHI, consist primarily of equity ownership positions in the 
following ten developing companies:
     Smart Pill Holding Corporation         Brilliant Roadways, Inc.
     @visory, LLC                           eSmokes, Inc.
     Efficien, Inc.                         IS Direct Agency, Inc.
     Solid Imaging, Ltd.                    Century Aerospace Corporation.
     Traffic Engine, Inc.                   Metroflex, Inc.


American Capital Holdings, Inc.'s principal executive offices are located at 100
Village Square Crossing, Suite 202, Palm Beach Gardens, FL 33410, and our 
telephone number is (561) 207-6395.  The Company's fiscal year ends May 31, 
2005.  The company maintains a web site at www.americancapitalholdings.com.
 


                                     22
                                     

AMERICAN CAPITAL HOLDINGS, INC.

Business Strategy

American Capital Holdings, Inc. ("the Company") is a Florida Corporation whose 
primary business consists of solutions offered by proprietary financial products
designed to utilize tax incentives for principal-guaranteed capital investment, 
and mitigate the impact of balance sheet liabilities of unfunded government and 
private sector post-employment benefit plans.   The Company has ownership rights
of the trademarks for five proprietary products:
	
       GPICSTM -- Guaranteed Principle Insured Convertible Securities

       ETIPSTM -- Energy Tax Incentive Preferred Securities

       ETICSTM -- Equipment Tax Incentive Convertible Securities

       GPACSTM -- Guaranteed Pension Accounting Contract Solutions

       GPACSTM -- Government Pension Accounting Contract Solutions

Our Chairman, Barney A. Richmond, has applied for a patent on the GPACS product,
and intends to assign the patent to the Company upon approval.

Our proprietary products use insurance as part of their investment structure.  
For example, the GPACSTM uses a life insurance platform to structure the balance
sheet towards a more favorable financial portrayal of the business organization.
These insurance contracts will be written through licensed insurance carriers, 
and underwritten through three subsidiaries of the Company:  IS Direct Agency, 
Inc.("ISDA"), Universe Life Insurance Company ("Universe"), and Cosmopolitan 
Life Insurance Company ("Cosmopolitan").  ISDA and Universe are wholly-owned 
subsidiaries of the Company, and Cosmopolitan will be a majority-owned 
subsidiary of the Company, with the transaction expected to close in the second 
quarter of 2005. The Company intends to conduct its primary business operations 
through these three subsidiaries.

SUBSIDIARIES

IS Direct Agency, Inc.

IS Direct Agency, Inc. ("ISDA") was incorporated in the State of Florida on May 
20, 2004.  On May 21, 2004 ISDA acquired the assets of IS Direct Agency, Inc., a
New York Corporation. On May 21, 2004 an asset purchase agreement was executed 
between American Capital Holdings and ISDA.  ISDA is currently licensed in 33 
states, but expects to obtain the necessary licenses to operate nationally.  
Chris Dillon, President of IS Direct, is licensed as an independent agent in 49 
states, and in the District of Columbia.  In addition to term life, annuities, 
and other traditional insurance products, IS Direct will offer placement for the
insurance components of our proprietary products.  We anticipate most of the 
insurance products sold by ISDA to be underwritten by Universe.  We also intend 
to sell the products of other licensed insurance carriers through ISDA.  
Although ISDA currently sells primarily term insurance products, the acquisition
of Universe is expected to broaden the scope of its offerings. 

                                     23

AMERICAN CAPITAL HOLDINGS, INC.

Universe Life Insurance Company

Universe is a wholly-owned subsidiary of The Company, pending change-of-control 
approval by the Insurance Commission of the State of Idaho.   Universe is a 
life, health, and annuities insurance carrier currently licensed in 23 states.  
Universe is in the process of obtaining licenses to operate in the remaining 27 
states.  We expect Universe to be domiciled in the state of South Carolina, with
principle offices in Charleston.   

Cosmopolitan Life Insurance Company

On October 30, 2004, the Company entered into a purchase agreement with 
Cosmopolitan Life Insurance Company to acquire 80% ownership of the entity.  The
acquisition is expected to close in the second quarter of 2005, pending approval
by the Insurance Commissioner of Arkansas. Cosmopolitan Life Insurance Company 
is a stipulated premium insurer, chartered in 1931 in the State of Arkansas.  
Until 1998, Cosmopolitan was engaged exclusively in providing burial / final 
expense insurance, and was operated as a small stipulated premium carrier in 
association with the mortuary business.  In 1998, Cosmopolitan broadened the 
company's offerings to include a dental insurance product and specific stop-loss
coverage for employer self-funded plans.  In recent periods, the majority of 
revenues reported are a result of re-insurance assumed, although the dental 
product has remained a small but profitable operating segment.  Cosmopolitan 
anticipates significant growth potential from the additional affiliations 
resulting from the American Capital Holdings, Inc. acquisition.

Capital City Holding, Inc.

Currently, the company is in negotiations with a company known as Capital City 
Holding Company, Inc. ("CCHC"), a South Carolina Corporation

PROPRIETARY PRODUCTS

Our GPICS(TM), ETIPS(TM), and ETICS(TM) products are investment structures 
designed to utilize and maximize energy and equipment tax incentives, while 
encouraging investment in oil and gas exploration in the United States, and 
investment in developing companies.  These products are characterized by the 
guarantee of principal due to the structure of the investment.  

Our GPACS(TM) product was created in response to General Accounting Standards 
Board Statement 45 ("GASB 45"), which requires state and local governments to 
account for and report the annual cost of other post-employment benefits 
(referred to hereafter as "OPEB"), in essentially the same manner in which they 
are required to account for pension obligations.  This creates a liability on 
the balance sheet which often misrepresents an entity's financial health in an 
adverse manner.  Our product is designed to structure an investment that offsets
the liability with an asset, and additionally, provides investment income and a 
tax benefit when coupled with the proper treatment of employee's accrued income 
(part of OPEB.) 
 


                                     24


AMERICAN CAPITAL HOLDINGS, INC.

Management's plan of operation consists of selling our proprietary products to 
government and private sector customers for whom the product provides maximum 
utilility, and underwriting the insurance element of the product through our 
wholly-owned subsidiaries.   We intend to use third-party insurance carriers, 
but intend to retain commissions and premium payments within our subsidiaries.

We intend to use the financial products of our subsidiaries as solutions, 
addressing the needs of governmental and private sector businesses regarding 
unfunded pension liabilities and other post-employment benefit ("OPEB") 
liabilities.  We also plan to sell annuities and other insurance products, 
through our subsidiaries, to both the public and private sectors.  We also 
intend to invest and/or sell our proprietary ETIPS((TM)) and ETICS((TM)) 
products in the public marketplace. 

Our GPACS((TM)) products, which refers to both the Guaranteed Pension Accounting
Contract Solutions product and the Government Pension Accounting Contract 
Solutions product, relate to a business method of adjusting the balance sheet of
a business or governmental organization, and particularly to a system for 
organizing the unfunded obligations of the organization so that the liability on
the balance sheet becomes offset by an asset.  The product also provides a 
systematic investing capability to enhance the profitability of the organization
and the improved treatment of tax obligations.

GPACS was created in response to the General Accounting Standards Board ("GASB")
Statement 45, which generally requires state and local governmental employers to
account for and report the annual cost of OPEB and the outstanding obligations 
and commitments related to OPEB in essentially the same manner as currently 
required pension obligations. Annual OPEB costs for most employers will be based
on actuarially determined amounts that, if paid on an ongoing basis, generally 
would provide sufficient resources to pay benefits as they come due. The 
provisions of Statement 45 do not require governments to fund their OPEB plans. 
An employer may establish its OPEB liability at zero as of the beginning of the 
initial year of implementation. However, the unfunded actuarial liability is 
required to be amortized over future periods. Statement 45 is effective for 
periods beginning after December 15, 2006, 2007, or 2008, depending on the size 
of the government entity based on annual revenues used for GASB 34 
implementation requirements. 

In May of 2004, the GASB issued a corresponding "plan" statement, Statement 43 -
Financial Reporting for Post-Employement Benefit Plans Other than Pension Plans.
Statement 43 is effective one year prior to Statement 45. This statement 
requires a statement of plan net assets, statement of changes in plan net 
assets, schedule of funding progress, and schedule of employer contributions in 
the stand-alone financial reports of OPEB plans, as well as in the financial 
statements of governments having OPEB trust funds. 

Actuarial services will be required one year earlier if the "plan" Statement 43 
is applicable, unless an alternative measurement method is utilized. However, 
the alternative measurement method is only an option for plans with a total 
membership of fewer than one hundred. Many OPEB plans are currently paying 
benefits on a pay-as-you-go basis. If a government does not have an acceptable 
trust or equivalent arrangement established, actuarial valuations will not be 
necessary until Statement 45 is effective. Establishing a trust may be an option

                                      25
AMERICAN CAPITAL HOLDINGS, INC.

for funding OPEB benefits; employers should consider the impact of required 
actuarial services.

Our GPICS((TM)), ETIPS((TM)) and ETICS((TM)) products are each investment 
structures designed to maximize the benefit of energy and equipment tax 
incentives, in order to facilitate investment in energy related and other 
business enterprises.  An essential feature of these products is a guarantee of 
the principal invested, as a result of the structuring of the investment.  


Government Regulation 

Life insurance companies are subject to regulation and supervision by the states
in which they transact business. State insurance laws establish supervisory 
agencies with broad regulatory authority, including the power to: 

* grant and revoke licenses to transact business 
* regulate and supervise trade practices and market conduct
* establish guaranty associations
* license agents
* approve policy forms
* approve premium rates for some lines of business
* establish reserve requirements
* prescribe the form and content of required financial statements and reports
* determine the reasonableness and adequacy of statutory capital and surplus
* perform financial, market conduct and other examinations
* define acceptable accounting principles
* regulate the type and amount of permitted investments
* limit the amount of dividends and surplus note payments that can be paid
  without obtaining regulatory approval. 
                                     
Our life subsidiaries are subject to periodic examinations by state regulatory 
authorities.  The payment of dividends or the distributions, including surplus 
note payments, by our life subsidiaries is subject to regulation by each 
subsidiary's state of domicile's insurance department. In addition, dividends 
and surplus note payments may be made only out of earned surplus, and all 
surplus note payments are subject to prior approval by regulatory authorities.
 
Most states have also enacted regulations on the activities of insurance holding
company systems, including acquisitions, extraordinary dividends, the terms of 
surplus notes, the terms of affiliate transactions and other related matters.

Most states have enacted legislation or adopted administrative regulations 
affecting the acquisition of control of insurance companies as well as 
transactions between insurance companies and persons controlling them. The 
nature and extent of such legislation and regulations currently in effect vary 
from state to state. However, most states require administrative approval of the
direct or indirect acquisition of 10% or more of the outstanding voting 
securities of an insurance company incorporated in the state. The acquisition of
10% of such securities is generally deemed to be the acquisition of "control" 
for the purpose of the holding company statutes and requires not only the filing
of detailed information concerning the acquiring parties and the plan of 


                                     26
AMERICAN CAPITAL HOLDINGS, INC.

acquisition, but also administrative approval prior to the acquisition. In many 
states, the insurance authority may find that "control" in fact does not exist 
in circumstances in which a person owns or controls more than 10% of the voting 
securities. 

Federal legislation and administrative policies in several areas, including 
pension regulation, age and sex discrimination, financial services regulation, 
securities regulation and federal taxation can significantly affect the 
insurance business. 

State insurance regulators and the NAIC are continually reexamining existing 
laws and regulations and developing new legislation for the passage by state 
legislatures and new regulations for adoption by insurance authorities. Proposed
laws and regulations or those still under development pertain to insurer 
solvency and market conduct and in recent years have focused on: 

* insurance company investments
* risk-based capital ("RBC") guidelines, which consist of regulatory targeted 
  surplus levels based on the  relationship of statutory capital and surplus, 
  with prescribed adjustments, to the sum of stated percentages of each element 
  of a specified list of company risk exposures
* the implementation of non-statutory guidelines and the circumstances under 
  which dividends may be paid
* product approvals
* agent licensing
* underwriting practices
* insurance and annuity sales practices.

                                     
Results of Operations

Comparison of the nine months ended February 28, 2005 with the nine months
ended February 28, 2004.

Revenue for the nine month period ended February 28, 2005 was $123 compared to 
no revenue recorded during the same period of the prior year.  Revenues were 
recorded from commission received by our insurance subsidiary IS Direct Agency, 
Inc. 

Gross profit reflects a loss of $9,005 in the current year versus no loss for 
the prior years nine month period.  Depreciation expense contributed $9,128 to 
the current years deficit in gross profit.  

General and administrative costs of $913,164 for the current nine month period 
reflect costs of staffing our administrative and sales offices.  Consulting 
costs contributed $210,441, rent contributed $32,601, and travel contributed 
$101,189 of the total administrative expenses for the current nine month period.

Our operations for the nine months ended February 28, 2005 resulted in a net
loss of $963,844.  Unrealized holding losses during the current nine month 
period of $1,890,265 was the result of a decline in the market value of both the
Company's holdings in eCom eCom.com and Air Media Now, Inc.  A $154,008 decline 
in the eCom market value plus a $1,736,257 decline in the Air Media Now market 
value combined for the $1,890,265 loss the nine months ended February 28, 2005.
                                     27
AMERICAN CAPITAL HOLDINGS, INC.

Realized gains and losses during the current nine month period resulted in a net
loss of $343,364, comprised of a $55,000 loss on the company's sale of eSmokes, 
Inc., and a $288,364 loss on the company's sale of its 1,370,733 share holding 
of Smart Pill Diagnostics, Inc.
  

Liquidity and Capital Resources

As of February 28, 2005, current assets totaled $3,279,549, compared to 
$3,239,008 at the end of the prior fiscal year.  The $40,541 increase in total 
current assets is the result of an increase in cash from financing activities, 
and an increase in accounts receivable.
 
Accounts payable increased from $27,806 to $43,675 during the current nine 
months.  Current liabilities increased from $931,485 at the end of the prior 
fiscal year to $1,335,027 at the end of the current quarter, an increase of 
$403,542 due to the increase of short-term borrowing.

To the extent that additional funds are required to support operations or to
expand our business, we may sell additional equity, issue debt or obtain other 
credit facilities through financial institutions.  Any sale of additional equity
securities will result in dilution to our shareholders.

 
  
ITEM 3. CONTROLS AND PROCEDURES

Evaluation of the Company's Disclosure Controls and Internal Controls:
Within the 90 days prior to the date of this Quarterly Report on Form 10-QSB,
the Company evaluated the effectiveness of the design and operation of its
'disclosure controls and procedures'("Disclosure Controls").  This 'evaluation'
("Controls Evaluation") was done under the supervision and with the
participation of management, including the Chief Executive Officer/Chairman 
("CEO")and Chief Financial Officer ("CFO").  As a result of this review, the 
Company adopted guidelines concerning disclosure controls and the establishment 
of a disclosure control committee made up of senior management.

Limitations on the Effectiveness of Controls:
The Company's management, including the CEO/CHAIRMAN and CFO, does not expect 
that its Disclosure Controls or its 'internal controls and procedures for 
financial reporting' ("Internal Controls")will prevent all error and all fraud. 
control system, no matter how well conceived and managed, can provide only 
reasonable assurance that the objectives of the control system are met.  The 
design of a control system must reflect the fact that there are resource 
constraints, and the benefits of controls must be considered relative to their 
costs.  Because of the inherent limitations in all control systems, no 
evaluation of controls can provide absolute assurance that all control issues 
and instances of fraud, if any, within the Company have been detected. These 
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake.  
Additionally, controls can be circumvented by the individual acts of some 
persons, by collusion of two or more people, or by management override of the 
control.  The design of any system of controls also is based in part upon 

                                     28
AMERICAN CAPITAL HOLDINGS, INC.

certain assumptions about the likelihood of future events, and there can be no 
assurance that any design will succeed in achieving its stated goals under all 
potential future conditions; over time, control may become inadequate because of
changes in conditions, or the degree of compliance with the policies or 
procedures may deteriorate.  Because of the inherent limitations in a cost-
effective control system, misstatements due to error or fraud may occur and not 
be detected.

Conclusions:
Based upon the Controls Evaluation, the CEO/CHAIRMAN and CFO have concluded 
that, subject to the limitations noted above, the Disclosure Controls are 
effective to timely alert management to material information relating to the 
Company during the period when its periodic reports are being prepared.

In accordance with SEC requirements, the CEO/CHAIRMAN and CFO note that, since 
the date of the Controls Evaluation to the date of this Quarterly Report, there 
have been no significant changes in Internal Controls or in other factors that 
could significantly affect Internal Controls, including any corrective actions 
with regard to significant deficiencies and material weaknesses.


PART II. OTHER INFORMATION


ITEM 1. Legal Proceedings.

The Company is not a party to any legal proceedings.

ITEM 2. Unregistered sales of equity securities and use of proceeds.
        

In February 2004, the Company issued 162,099 shares for Spaulding, in connection
with the company's acquisition of certain assets from that company (See 
Description of Business - Acquisition of American Capital Holdings").  Inasmuch 
as American Capital Holdings had access to comprehensive information about the 
Company, the shares were issued in reliance upon Section 4(2) of the Securities 
Act.  A legend was placed on the certificates stating that the securities were 
not registered under the Securities Act and setting forth appropriate 
restrictions on their transfer or sale.


ITEM 3. Defaults Upon Senior Securities. 

        None

ITEM 4. Submission of Matters to a Vote of Security Holders.

        None



                                     29



AMERICAN CAPITAL HOLDINGS, INC.

ITEM 5. Other Information.

Board of Directors Vote

On November 15, 2004 the Board of Directors of American Capital Holdings made a 
motion which was passed to appoint the following individuals to the Board of 
Directors;  Barney A. Richmond, Richard C. Turner, Matt Salmon, Michael 
Camilleri, Douglas Sizemore, Norman E. Taplin, and Barry M. Goldwater, Jr.
Mr. Richmond will serve as Chairman, President and Secretary and Mr. Turner will
serve as Treasurer.
 
On November 15, 2004 the Board of Directors of American Capital Holdings amended
the Articles of Incorporation.  Article Four was changed to increase the
authorized shares of the corporation from one hundred million shares to three 
hundred million shares.

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

(a) Exhibits:
     Exhibit 3.1  Amended Articles of Incorporation dated November 15, 2004
                  (incorporated by reference to the Company's Form 10-SB/A
                  filed January 11, 2005)

     Exhibit 3.2  Bylaws of the Company (incorporated by reference to the
                  Company's Form 10-SB filed May 24, 2004)

     Exhibit 31.1  Certification required under Section 302 of
                   the Sarbanes-Oxley Act of 2002 by the CE0 on page    

     Exhibit 31.2  Certification required under Section 302 of
                   the Sarbanes-Oxley Act of 2002 by the CFO on page    

     Exhibit 32    Section 1350 Certification on page                   

(b) Reports on Form 8-K:
     None

SIGNATURES AND CERTIFICATIONS
In accordance with the requirements of the Exchange Act, the registrant has 
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                       American Capital Holdings, Inc.

      Date: April 5, 2005                    /s/   Barney A. Richmond
                                             --------------------------
                                               Barney A. Richmond
                                               President
      

      Date: April 5, 2005                    /s/   Richard C. Turner
                                             --------------------------
                                               Richard C. Turner
                                               Chief Financial Officer


Exhibit 31.1

CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Barney A. Richmond, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of American Capital 
Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of 
a material fact or omit to state a material fact necessary to make the 
statements made, in light of the circumstances under which such statements were 
made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial 
information included in this report, fairly present in all material respects 
the financial condition, results of operations and cash flows of the registrant 
as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for 
establishing and maintaining disclosure controls and procedures (as defined in 
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 a) designed such disclosure controls and procedures to ensure that material  
information relating to the registrant, including its consolidated  
subsidiaries, is made known to us by others within those entities,  
particularly during the period in which this report is prepared;

 b) evaluated the effectiveness of the registrant's disclosure controls and  
procedures as of a date within 90 days prior to the filing date of this  report 
(the "Evaluation Date"); and 

 c) presented in this report our conclusions about the effectiveness  of the 
disclosure controls and procedures based on our evaluation as of the  
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our 
most recent evaluation, to the registrant's auditors and the audit committee of 
registrant's board of directors (or persons performing the equivalent 
function):

 a) all significant deficiencies in the design or operation of internal  
controls which could adversely affect the registrant's ability to record,  
process, summarize and report financial data and have identified for the  
registrant's auditors any material weaknesses in internal controls; and 

 b) any fraud, whether or not material, that involves management or other  
employees who have a significant role in the registrant's internal controls.

6. The registrant's other certifying officer and I have indicated in this 
report whether or not there were significant changes in internal controls or in 
other factors that could significantly affect internal controls subsequent to 
the date of our most recent evaluation, including any corrective actions with 
regard to significant deficiencies and material weaknesses.


Date: April 5, 2005

/s/ Barney A. Richmond
--------------------------
Barney A. Richmond
President



Exhibit 31.2

CERTIFICATION REQUIRED UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard C. Turner, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of American Capital 
Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of 
a material fact or omit to state a material fact necessary to make the 
statements made, in light of the circumstances under which such statements were 
made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial 
information included in this report, fairly present in all material respects 
the financial condition, results of operations and cash flows of the registrant 
as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for 
establishing and maintaining disclosure controls and procedures (as defined in 
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

 a) designed such disclosure controls and procedures to ensure that material  
information relating to the registrant, including its consolidated  
subsidiaries, is made known to us by others within those entities,  
particularly during the period in which this report is prepared;

 b) evaluated the effectiveness of the registrant's disclosure controls and  
procedures as of a date within 90 days prior to the filing date of this report 
(the "Evaluation Date"); and

 c) presented in this quarterly report our conclusions about the effectiveness
 of the disclosure controls and procedures based on our evaluation as of the 
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our 
most recent evaluation, to the registrant's auditors and the audit committee of 
registrant's board of directors (or persons performing the equivalent 
function):

 a) all significant deficiencies in the design or operation of internal 
controls which could adversely affect the registrant's ability to record,  
process, summarize and report financial data and have identified for the  
registrant's auditors any material weaknesses in internal controls; and

 b) any fraud, whether or not material, that involves management or other  
employees who have a significant role in the registrant's internal controls.

6. The registrant's other certifying officer and I have indicated in this 
report whether or not there were significant changes in internal controls or in 
other factors that could significantly affect internal controls subsequent to 
the date of our most recent evaluation, including any corrective actions with 
regard to significant deficiencies and material weaknesses.

 Date: April 5, 2005


/s/ Richard C. Turner
---------------------------
Richard C. Turner
Chief Financial Officer

Exhibit 32

CERTIFICATIONS OF CEO AND CFO PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Registration Statement of American Capital Holdings 
Inc., a Florida corporation (the "Company"), on Form 10-SB for the period 
ending August 31, 2004 as filed with the Securities and Exchange Commission 
(the "Report"), Barney A. Richmond, President of the Company and Richard C. 
Turner, Chief Financial Officer of the Company, respectively, do each hereby 
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 
1350), that to his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) 
of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material 
respects, the financial condition and result of operations of the Company.

      /s/   Barney A. Richmond
      ---------------------------
      Barney A. Richmond
      President
      Date: April 5, 2005


      /s/   Richard C. Turner
      --------------------------
      Richard C. Turner
      Chief Financial Officer
      Date: April 5, 2005








[A signed original of this written statement required by Section 906 has been 
provided to American Capital Holdings, Inc. and will be retained by American 
Capital Holdings, Inc. and furnished to the Securities and Exchange Commission 
or its staff upon request.]

Exhibits to Form 10-QSB will be provided to shareholders of the Registrant upon 
written request addressed to American Capital Holdings, Inc., 100 Village 
Square Crossing, Suite 202, Palm Beach Gardens, Florida 33410. Any exhibits 
furnished are subject to a reasonable photocopying charge.

The Securities and Exchange Commission has not approved or disapproved of this 
Form 10Q-SB nor has it passed upon its accuracy or adequacy.