SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, DC  20549
                                 FORM 10-K/A

                                (Mark One)
   X               ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (D) OF THE
                                SECURITIES
                 EXCHANGE ACT OF 1934   [NO FEE REQUIRED]

                    For fiscal year ended June 30, 2002

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
            SECURITIES EXCHANGE ACT OF 1934  [NO FEE REQUIRED]

         For the transition period from __________ to __________.
                      Commission File Number: 0-14712

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

     NEVADA                                       88-0160250
(State or other jurisdiction                   (IRS Employer
     of incorporation)                           Identification No.)

   Post Office Drawer 457, Whichard's Beach Road, Washington, NC  27889
 (Address of principal executive offices)                      (Zip Code)

    Registrant's telephone number, including area code:  (252) 975-2000

       Securities registered pursuant to Section 12 (g) of the Act:

                  Common Stock, par value $ .01 per share

      Indicate  by  check mark whether the registrant (1)  has  filed  all
reports  required  to be filed by Section 13 or 15 (d) of  the  Securities
Exchange  Act of 1934 during the preceding 12 months (or for such  shorter
period that the registrant was required to file such reports) and (2)  has
been subject to such filing requirement for the past 90 day.
                                            [ X ]Yes            [     ] No

       Indicate by check mark if disclosure of delinquent filers  pursuant
to  Item  405 of Regulation S-K is not contained herein, and will  not  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-K or any amendment to this Form 10-K.  [    ] Yes        [ X ] No

     The aggregate market value of the voting stock held by non-affiliates
of  the  registrant  was $7,602,506 at September 18,  2002  based  upon  a
closing  price  of  $3.29 per share on such date for the Company's  Common
Stock.

     As of September 18, 2002 there were 4,732,608 shares of the Company's
Common  Stock  issued of which 15,000 shares are owned  by  the  Company's
subsidiary Fountain Powerboats, Inc. and are regarded as treasury shares

           Documents  incorporated by reference: The Company's  definitive
proxy  statement  to be filed with the Commission in connection  with  its
annual meeting of shareholders.
                                  Part I

Item 1.  Business.

Background.

      Fountain  Powerboat  Industries, Inc. (the "Company"),  through  its
wholly-owned  subsidiary,  Fountain Powerboats, Inc.  (the  "Subsidiary"),
designs, manufactures, and sells offshore sport boats, sport fishing boats
and  sport  cruisers  intended for that segment of the recreational  power
boat  market  where speed, performance, and quality are the main  criteria
for  purchase.   The  Company  also produces military  support  craft  for
domestic  and  international  government agencies,  including  the  United
States Customs Service, the United States Navy and the United States Coast
Guard.   The Company's strategy in concentrating on these segments of  the
market  is  to  maximize its use of the reputation  of  its  Chairman  and
President,  Reginald  M.  Fountain, Jr., as an internationally  recognized
designer and builder of high speed power boats.

      The  Company's  products are sold through a  network  of  authorized
dealers worldwide.  The Company has targeted that segment of the market in
which  purchase decisions are generally predicated to a relatively greater
degree  on  the product's image, style, speed, performance,  quality,  and
safety.

Products.

      The majority of the company's recreational products are based upon a
deep V-shaped fiberglass hull with a V-shaped pad, a notched transom,  and
a  positive  lift  step hull.  This design enables  the  boat  to  achieve
performance and stability standards which the Company believes are greater
than those offered by any of its competitors worldwide.  As a result,  the
Company maintains that its boats are among the fastest, smoothest, safest,
and best-handling boats of their kind.

       The  Company's  sport  boats,  ranging  from  27'  to  47'  are  of
inboard/outboard  design.  These boats are propelled by single,  twin,  or
triple gasoline or diesel engines ranging from 300 HP to more than 900  HP
each.   The  Company  also  builds custom racing boats,  outboard  powered
center  consoles, and outboard or stern drive cabin model  offshore  sport
fishing  boats  ranging  from 23' through 38'.  During  Fiscal  2001,  the
Company completed tooling and design of a 38' wide-beam cruiser, and a 38'
wide-beam  fishing  boat.  During Fiscal 2002, the Company  completed  the
development  of a 48' wide-beam cruiser and a 34' wide-beam fishing  boat.
These  wide-beam  models form a new product line aimed  at  the  important
middle market of family oriented cruisers.

      In addition to Sportboats, Fishing boats, and the new Cruiser Lines,
the Company also produces a line of military/governmental boats of various
configurations.   These  boats  are  commercial  versions  of  the   large
sportboats  and  fishing boats, and along with the rigid inflatable  boats
(RIB), form a separate military/commercial product line.  The Company also
has  a joint agreement with Marine Technologies Inc. (MTI) to produce  the
Fountain Scism 42' High Performance Catamaran boat designed and tooled  by
Randy  Scism.   The Company produces race boat hulls and decks  which  Mr.
Scism completes and sells.  The Company builds a pleasure boat version  of
this Catamaran that is sold to its dealer network.

      The  Company's 47' Lightning Sport Boat operates at speeds of 75  to
100  mph and is very stable and suited for long range cruising in offshore
waters.   Its  sleek styling makes it particularly attractive.   Depending
primarily upon the type of engines and options selected, this boat retails
at  prices  ranging  from  $437,000 to  $664,000.   This  boat's  standard
features include a custom windshield, integrated swim platform, flush deck
hatches, and an attractively appointed cockpit and cabin.


The  Company's 42' Lightning, designed with the second-generation positive
lift  hull,  comes  with  a full wrap around windshield,  as  well  as  an
impressive  range of speed, stability and ride comfort.  This top  selling
model equipped with special engines currently holds the world speed record
for V-bottom boats at 142.969 mph recorded by APBA/UIM on October 13,2000.

      The 38' Lightning or Fever operates at speeds of between 70 and  100
mph.   The  retail  price  ranges  from $270,000  to  $341,000,  depending
primarily  upon  the type of engines selected.  This model  was  cited  by
Powerboat  Magazine in 2002 as "Offshore Performance Boat  of  the  Year".
In  Fiscal 2002, the 38' Lightning incorporated a new superventilated hull
that  is  the  most advanced superventilated hull produced by Fountain  to
date and it is based on their successful design, enhancing performance and
interior space.

     The 35' Lightning Sport Boat was totally redesigned and introduced in
Fiscal  2000 to go with a higher freeboard, new twin-step design, and  new
deck  and  interior.  It operates at speeds between 70 and 100 mph.   This
boat won the 2001 Offshore Boat of the Year by Powerboat Magazine and  has
proven itself as the fastest boat in Factory II history, setting the  kilo
record  at  94.187 mph.  This boat's retail price ranges from $220,000  to
$290,000, depending primarily upon the type of engines selected.

      The  29'  Fever  is one of the most popular boats.  It  operates  at
speeds of 65 to 85 mph and retails between $113,000 and $150,000 depending
on  engine  size.  It has great balance and speed for a single engine  and
operates  in  offshore sea conditions with superior safety  and  handling.
This  boat  is  also offered with twin small block engines.   The  Company
introduced a new 29' deck in Fiscal 2001.  This model has been awarded the
2001  Outstanding Sport Boat Performance Award by Powerboat  Magazine  and
has set the 2000 APBA F-1 record at 89.873 mph.

      The  Company also builds and markets a sport fishing line.  The  31'
sport  fish  model  features  a  center  console  with  T-Top  design  and
incorporates the same high performance, styling, and structural  integrity
as  the sport boat models.  It has a deck configuration engineered for the
knowledgeable,  experienced  sport  fisherman.   This  boat  has  won  the
Southern Kingfish Association's World Championship during the years  1991,
1992, 1994, 1995, and 1997.

      The  additional  models include the 29' twin engine  center  console
model   and   23'  single  engine  center  console  model.   The   design,
construction,  and performance of these models, together with  the  proven
features  of  the 31' center console model, makes a line that  appeals  to
many experienced sport fishermen, in addition to the weekend warrior.

      To  further enhance its sport fishing line, the Company added a  31'
walk  around  cabin  model based upon the proven 31' center  console  hull
design.  This model features a deck design that incorporates a cabin  with
standup  headroom, an enclosed head with shower, and a full galley.   With
twin  outboard engine power, this model is produced either  as  a  fishing
machine or as a recreational cruiser.

      The  Company  also produces both a 23' and a 29' walk  around  cabin
fishing boat with outboard engine power and a single stern drive 29' and a
32' walk around cabin fishing model with twin stern drive power.

      During  Fiscal 2001, the Company launched its new wide  beam  craft.
The 38' fish boat was introduced in the latter part of calendar 2000.  The
38'  fish boats feature triple engines and speeds above 69 mph.  At cruise
speed,  the boat has a 500 mile range.  The 38' Cruiser was introduced  at
the  Miami  Boat Show in February of 2001. The 38' Express Cruiser  offers
the  customer the luxury and space of a full Cruiser while maintaining the
performance and handling of a Fountain sport boat.  Both boats  have  been
extremely well received by the market.



In  Fiscal  2002, the Company introduced the latest in their  cruiser  and
wide-beam  lines.  The 48' wide-beam cruiser debuted offering a whole  new
level of comfort and luxury.  With speeds of up to 65 mph, the 48' Express
Cruiser  launched the Company into a new expanding market segment with  an
edge  in  performance  and class.  This boat retails  between  $650,000  -
$824,000, depending upon engine choice and option configurations.  The 34'
wide-beam  fish boat introduced in Fiscal 2002 retails between $168,000  -
$193,000 depending upon engine selection, and will reach speeds in  excess
of  68  miles  per hour.  This model has been sold out since introduction,
has  current  sales order backlog of $_2,500,000__  and  orders  for  this
model extend into January 2003.

     Following  is  a  table  showing the number of  boats  completed  and
shipped in each of the last three fiscal years by product line:

                             Fiscal             Fiscal           Fiscal
                              2002               2001             2000

  Sport boats                 115                219              325

  Wide Beam Fish               44                 16                -

  Wide Beam Cruisers           21                 10                -

  Sport fishing boats          48                 84              112

  Other                         3                  1                9
          ------             ------              -----          -----
          Total               231                330              446
                              ====               ====            ====

     The Company conducts research and development projects for the design
of  its  plugs and molds for hull, deck, and small parts production.   The
design,   engineering,   and   tooling   departments   currently    employ
approximately 21 full-time employees.  Amounts spent on design,  research,
and development to build new plugs and molds in recent years were:

                                       Design               Construction
                                    Research &              of New Plugs
                                   Development               and  Molds

          Fiscal 2002                   $952,332            $1,370,526

          Fiscal 2001                   $813,710            $2,819,252

          Fiscal 2000                   $926,486            $1,154,908






      For  Fiscal 2003, design, research and development planned  expenses
are  estimated to be $500,000 and plug and mold construction  expenditures
are  estimated  to  be $750,000.  These expenditures  will  complete  work
already  in  progress to update existing tooling and finalize a  new  deck
modification for the Company's 38' wide beam cruiser.

      Manufacturing capacity is sufficient to accommodate approximately 30
to   40  boats  in  various  stages  of  construction  at  any  one  time.
Construction   of  a  current  model  boat,  depending  on   size,   takes
approximately   three  to  five  weeks.   The  Company,  with   additional
personnel,  currently  has the capacity to manufacture  approximately  450
sport and fishing boats, and 100 cruisers per year.

      The manufacturing process for the hulls and decks consists primarily
of  the hand "lay-up" of vinylester resins and high quality stitched,  bi-
directional and quad-directional fiberglass over a foam core in the  molds
designed  and  constructed  by  the  Company's  engineering  and   tooling
department.   This  creates a composite structure with  strong  outer  and
inner  skins  with  a  thicker, light core in between.   The  "lay-up"  of
fiberglass  by  hand rather than using chopped fiberglass  and  mechanical
blowers, results in superior strength and appearance.  The resin  used  to
bind  the  composite structure together is vinylester, which is  stronger,
better  bonding, and more flexible than the polyester resins used by  most
other  fiberglass boat manufacturers.  Decks are bonded to the hulls using
bonding  agents,  rivets,  screws  and fiberglass  to  achieve  a  strong,
unitized construction.

      As  one  of  the most highly integrated manufacturers in the  marine
industry,  the Company manufactures many metal, plexiglass,  plastic,  and
small  parts  (such  as  fuel tanks, seat frames, instrument  panels,  bow
rails,  brackets,  T-tops, and windscreens) to  assure  that  its  quality
standards are met.  In addition, the Company also manufactures all of  its
upholstery  to  its own custom specifications and benefits from  receiving
these  parts  just  in time for assembly.  All other component  parts  and
materials  used  in  the manufacture of the Company's  boats  are  readily
available  from a variety of suppliers at comparable prices  exclusive  of
discounts.  However, the Company purchases certain supplies and  materials
from  a  limited  number of suppliers in order to obtain  the  benefit  of
volume discounts.

      Certain  materials used in boat manufacturing, including the  resins
used  to  make  the decks and hulls, are toxic, flammable,  corrosive,  or
reactive  and  are  classified by the federal  and  state  governments  as
"hazardous  materials."  Control of these substances is regulated  by  the
Environmental Protection Agency and state pollution control agencies which
require  reports and inspect facilities to monitor compliance  with  their
regulations.    The  Company's  cost  of  compliance  with   environmental
regulations has not been material.  The Company's manufacturing facilities
are   regularly   inspected  by  the  Occupational   Safety   and   Health
Administration and by state and local inspection agencies and departments.
The  Company  believes that its facilities comply with  substantially  all
regulations.  The Company, however, has been informed that it may incur or
may have incurred liability for re-mediation of ground water contamination
at  a  hazardous  waste disposal site resulting from  the  disposal  of  a
hazardous  substance  at those sites by a third-party  contractor  of  the
Subsidiary. (See Legal Proceedings.)

     Recreational powerboats must be certified by the manufacturer to meet
U.S.  Coast  Guard  specifications.  Their safety is  subject  to  federal
regulation  under  the  Boat Safety Act of 1971, as amended,  pursuant  to
which   boat  manufacturers  may  be  required  to  recall  products   for
replacement  of  parts  or  components  that  have  demonstrated   defects
affecting safety.  The Company has never had to conduct a product  recall.
In  addition,  boats manufactured for sale in the European Community  must
meet CE Certification Standards.







Sales and Marketing.

      Sales  are  made through approximately 32 dealer shipping  locations
throughout  the  United  States.  The Company  also  has  3  international
dealers.  Most of these dealers are not exclusive to the Company and carry
the boats of other companies, including some boats that may be competitive
with the Company's products.  The territories served by any dealer are not
exclusive to the dealer.  However, the Company uses discretion in locating
new dealers in an effort to protect the interests of the existing dealers.

Following is a table of sales by geographic area for the last three fiscal
years:

                              Fiscal 2002    Fiscal 2001    Fiscal 2000

United  States  ...........  $ 36,046,547   $ 43,191,806   $ 55,777,049

Canada, Mexico, Central
 and South America ........  $  1,500,145   $  2,509,638   $  1,485,615

Europe and
 the Middle East ..........  $          -   $    380,190   $    269,797

Asia    ...................  $          -   $          -   $          -
                             ------------   ------------   ------------
  Total    ................  $ 37,546,692   $ 46,081,634   $ 57,532,461
                              =========      =========      =========

     The Company targets a portion of its advertising program into foreign
countries  through various advertising media.  It continues  to  seek  new
dealers  throughout  Europe, South America, the Far East  and  the  Middle
East.   In general, the Company requires payment in full or an irrevocable
letter of credit from a domestic bank before it will ship a boat overseas.
Consequently,  there is no credit risk associated with its  foreign  sales
nor risk related to foreign currency fluctuation.

      For  Fiscal  2002,  one dealer accounted for  11.8%  of  sales,  one
accounted  for  11.7% of sales and two each accounted for 8.0%  of  sales.
For Fiscal 2001, one dealer accounted for 11.5% of sales, one for 10.5% of
sales and one for 6.0% of sales.  For Fiscal 2000 one dealer accounted for
7.4%  of  sales,  one for 6.1% of sales and one for 5.7%  of  sales.   The
Company  believes  that the loss of any particular dealer  could  have  an
adverse  affect on sales, yet the Company believes they could  find  other
dealers  within the same geographical area to replace any that  are  lost.
The Company is actively pursuing the addition of new, quality dealers.  As
sales  continue  to  grow through dealer additions, it  is  reasonable  to
assume the Company will grow less dependent on any one dealer.

      Field  sales representatives call upon existing dealers and  develop
new dealers.  The field sales force is headed by the National Director  of
Sales  who  is  responsible for developing a full dealer organization  for
sport  boats,  sport fishing boats and express cruisers.  The  Company  is
seeking  to  establish  separate sport boat,  fishing  boat,  and  cruiser
dealers in most marketing areas due to the specialization of each type  of
boat and the different sales programs required.

      Although a sales order can be cancelled at any time, most boats  are
pre-sold  to  a  dealer  before entering the  production  line.  To  date,
cancellations have not had a material effect on the Company.  The  Company
normally does not manufacture boats for its own inventory.

      The Company ships boats to some dealers on a cash-on-delivery basis.
However,  the  majority of the Company's shipments are  made  pursuant  to
commercial  dealer  "floor plan financing" programs in which  the  Company
participates on behalf of its dealers.  Under these arrangements, a dealer
establishes lines of credit with one or more third-party lenders  for  the
purchase  of showroom inventory.  When a dealer purchases a boat  pursuant
to  a floor plan arrangement, it draws against its line of credit and  the
lender  pays  the  invoice  cost  of the boat  directly  to  the  Company.
Generally, payment is made to the Company within five business days.  When
the  dealer  sells  the boat to a retail customer, the dealer  repays  the
lender,  thereby  restoring its available credit line.  The  dealers  make
curtailment  payments (principal payments) on the boats when  required  by
their  particular  commercial lenders.  Similar sales  promotion  programs
were in effect during fiscal years 2001 and 2000.

      Each  dealer's  floor  plan credit facilities  are  secured  by  the
dealer's inventory, letters of credit, and perhaps other personal and real
property.   In  connection with the dealer's floor plan arrangements,  the
Company  (together  with substantially all other major manufacturers)  has
agreed  to repurchase any of its boats which a lender repossesses  from  a
dealer and returns to the Company in a new or like new condition.  In  the
event  that  a  dealer defaults under a credit line, the lender  may  then
invoke  the  manufacturers' repurchase agreements  with  respect  to  that
dealer.   In  that  event, all repurchase agreements of all  manufacturers
supplying a defaulting dealer are generally invoked regardless of the boat
or  boats  with  respect  to  which the dealer  has  defaulted  (See  also
Management's Discussion and Analysis of Financial Condition and Results of
Operations).   The  Company participates in floor plan  arrangements  with
several  major third-party lenders on behalf of its dealers, most  of  who
have  financing  arrangements  with  more  than  one  lender.   Except  as
described  above,  or where it has a direct repurchase  agreement  with  a
dealer,  the  Company is under no material obligation to repurchase  boats
from  its  dealers.   From  time  to time  the  Company  will  voluntarily
repurchase a boat for the convenience of the dealer or for another  dealer
who  needs a particular model not readily available from the factory.  The
marketing of boats to retail customers is primarily the responsibility  of
the  dealer,  whose  efforts  are  supplemented  by  the  Company  through
advertising in boating magazines, and by participation in boat shows.

     Additionally,  in  order to further promote  its  products  over  the
years,  the  Company has developed racing programs to participate  in  the
major  classes  of offshore powerboat races, many of which  are  regularly
televised on networks such as ESPN, TNN, Outdoor Channel and Speed Vision.
Additionally,  Fountain  single,  twin  and  triple  engine  racing  boats
continue  to  hold their respective world speed records.   The  result  of
these  racing  victories  and  world speed  records  has  established  the
Company's products as the highest performing and safest designed  offshore
boats.   The  Company believes that the favorable publicity  generated  by
these  performance programs contributes to its sales volume.  The  Company
Founder  and  C.E.O.,  Reggie Fountain, has won  numerous  races  in  both
factory and customer boats; he has also set numerous speed records in both
factory and customer boats.

        As  part  of  the marketing program for its line of sport  fishing
boats,  the  Company  sponsors several outstanding sport  fishermen.   One
Fountain  fisherman, Clayton Kirby, placed in the top ten in the prominent
Southern Kingfish Association, eight out of the last ten years.   He  also
won  the  coveted  King Mackerel Tournament in 2000, and  is  a  four-time
winner  of  the  Greater  Jacksonville  King  Fish  Tournament.   Fountain
fishermen have won the coveted SKA `Angler of the Year' title 5 out of the
last  11  years, more than any other boat manufacturer.  Another  Fountain
fisherman,  Chuck  Arnold, has won the brand new  Division  Four  American
Striper  Association (ASA).  The ASA is held throughout the  northeast  in
areas  ranging from Virginia to Maine.  The Fountain fishing teams winning
records  have given the sport fishing boats favorable exposure to  serious
sport fishermen, in particular with respect to the superior performance of
Fountain's fishing boat line.


Domestic retail demand for pleasure boats is seasonal with sales generally
highest  in  the fourth quarter. A number of factors can influence  demand
for the Company's products, including, but not limited to:

    Economic conditions and consumer confidence in the United States and
       certain international regions;
    Adverse weather in key geographic areas, including excessive rain,
       prolonged below average temperatures and severe heat or drought,
       particularly during the key selling season;
    The level of inventories maintained by the dealers;
    The Company's ability to provide competitive products;
    Availability of effective distribution;
    Fuel costs;
    Prevailing interest rates; and
    Consumer interest in recreational boating.

Product Warranty.
     The Company warrants its boat hull and deck structure against defects
in  material  and  workmanship for a period  of  six  years.   Other  boat
components  are  covered  in accordance with the  manufacturer's  warranty
through the Company.  The engine manufacturer warrants engines included in
the  boats.   Warranty  expenses of $1,936,600  or  5.16%  of  sales  were
incurred in Fiscal 2002, and $1,380,800 of expense or 3.00% of sales  were
incurred  in  Fiscal  2001 and charged against  net  income.   A  $870,000
reserve for warranty expenses estimated to be incurred in future years had
been established at June 30, 2002.

Competition.
      Competition within the powerboat manufacturing industry is  intense.
While  the  high  performance sports boat market comprises  only  a  small
segment  of all boats manufactured, the higher prices commanded  by  these
boats  make it a significant market in terms of total dollars spent.   The
manufacturers that compete directly with the Company in its market segment
include:

          Formula, a Division of Thunderbird Products Corporation
              Baja Boats, a Division of Brunswick Corporation
                        Cigarette Racing Team, Inc.
                      Donzi, American Marine Holdings

      The Company believes that in its market segment, speed, performance,
quality,  image, and safety are the main competitive factors,  with  style
and price also being a consideration.

     Market demographics and industry experience indicate that the cruiser
market  is  the  best potential growth market.  Next in line  are  fishing
boats;  however, there are more fishing boat manufacturers than there  are
sport boat manufacturers.

      The  Company believes the current product owners, many of whom  have
purchased  multiple  and  increasingly  larger  boats  from  the  Company,
regenerate a market ready for expansion into the cruiser segment.

Employees.
      As of September 2002 the Company had 348 employees, of whom ten were
executive  and management personnel.  Seventeen were engaged primarily  in
administrative  positions including accounting, personnel,  marketing  and
sales  activities.   None  of  the Company's  employees  are  party  to  a
collective  bargaining  agreement.  The  Company  considers  its  employee
relations  to  be excellent.  The Company is an affirmative action,  equal
opportunity employer.


Item 2.  Properties.

      The  Company's  executive offices and manufacturing  facilities  are
located  on  66  acres along the Pamlico River in Beaufort  County,  North
Carolina.   All of the land, buildings and improvements are owned  by  the
Company and are held as collateral on notes and mortgages payable having a
balance  of $9,640,808 at June 30, 2002.  The operating facility  contains
buildings  totaling  235,040 square feet located on  fifteen  acres.   The
buildings consist of the following:

                      Approximate
                    Square Footage           Principal Use
     Building 1 .....   13,200       Executive offices,shipping,
                                       receiving, and paint shop.
     Building 2 .....    7,200       Final prep.
     Building 3 .....   75,800       Lamination, upholstery,assembly,
                                       inventory, cafeteria.
     Building 4 .....   14,250       Woodworking.
     Building 5  ....   26,800       Mating,  small  partslamination.
     Building 6 .....   23,800       Metal fabrication.
     Building 7  ....   15,720       Racing, service,  andwarranty.
     Building 8  ....    8,750       Lamination  extension area.
     Building 9   ...    4,800       Mold storage.
     Building 10 ....   26,960       Fabrication,  sportswear  sales.
     Building 11 ....   12,000       Cruiser manufacturing.
     Building 12 ....    5,760       Maintenance and storage.
                    ----------
     Total ..........  235,040
                       ======

     Over  the last several years there have been significant expenditures
for property, plant and equipment, which include plant additions, a travel
lift  bay,  a  boat  ramp, and docking facilities along a  600-foot  canal
leading  to the Pamlico River.  In addition, the Company has approximately
200,000  square  feet  of concrete paving surrounding  the  buildings  and
providing  guest  or  employee  parking.   The  present  plant  site   can
accommodate  an  addition of up to 300,000 square  feet  of  manufacturing
space.

Item 3.  Legal Proceedings.

     As  of June 30, 2002, the Company's chief operating subsidiary was  a
defendant  in  1 product liability suit and 4 alleged breach  of  warranty
suits.   In  the Company's opinion these lawsuits are without  merit  and,
therefore, the Company intends to vigorously defend its interest  in  such
suits.   The  Company carries sufficient liability and  product  liability
insurance  to cover attorney's fees and any losses that may occur  from  a
product  liability or breach of contract suit, over and  above  applicable
insurance  deductibles.  The management of the Company believes that  none
of such current proceedings will have a material adverse effect.

     The   Company's   subsidiary  was  notified  by  the  United   States
Environmental Protection Agency (EPA) and the North Carolina Department of
Environmental Health and Natural Resources that it had been identified  as
a potentially responsible party in the remediation of contamination at two
clean  up  sites.  The Group Administrator/Counsel estimated the Company's
future share of remediation cost not to exceed approximately $20,000.



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

None applicable.
                                  Part II

Item  5.   Market  for Registrant's Common Equity and Related  Stockholder
Matters.

      The  Company's common stock, $.01 par value, trades  on  the  NASDAQ
National Market System under the symbol "FPWR".

      The  following table lists certain historical price information  the
Company's common stock for each quarterly period during the Company's past
two  fiscal years.  Amounts shown reflect high and low sales prices of the
common stock on the NASDAQ National Market System.



                    Quarter Ending     High      Low
                    September 2000     2.44      2.03
                    December 2000      1.66      1.00
                    March 2001         2.63      2.00
                    June 2001          2.25      1.64

                    September 2001     2.10      1.51
                    December 2001      1.83      1.16
                    March 2002         3.50      2.50
                    June 2002          2.95      1.41

     The  Company  has  not declared or paid any cash dividends  since  it
began operations.  Any decision as to the future payment of dividends will
depend  on  the  Company's  earnings, financial position  and  such  other
factors as the Company's Board of Directors deems relevant.

     On September 15, 2002, there were approximately 200 holders of record
for the Company's common stock.

<TABLE>

Item 6.  Selected Financial Data

               Fountain Powerboat Industries, Inc. and Subsidiary
                             Selected Financial Data
                         Fiscal Years 1998 through 2002
<CAPTION>

                                                   Year Ended June 30,
Operations Statement Data: ------------------------------------------------------------------------------
   (Period Ended)                 2002            2001             2000           1999           1998

    ------------               -----------    ------------     ------------   ------------    -----------
<S>                            <C>            <C>              <C>            <C>             <C>
Sales                          $37,546,692    $46,081,634      $57,532,461    $53,428,487     $50,652,037

Net Income (loss)              $(7,031,593)      (899,526)     $ 1,258,342    $(1,255,791)    $ 2,740,487

Income (loss) per share        $     (1.49)   $      (.19)     $       .27    $      (.27)    $       .58

Weighted average shares
       outstanding               4,732,608      4,732,608        4,732,608      4,711,896       4,751,779

Diluted earnings per share     $     (1.49)   $      (.19)     $       .27    $      (.27)    $       .54

Diluted weighted average
     shares outstanding          4,732,608      4,732,608        4,732,651      4,711,896       5,110,090


Balance Sheet Data
   (At Period End)           ------------------------------------------------------------------------------
Current Assets                 $ 7,885,048    $ 8,934,936      $13,621,499    $14,084,888       $12,718,535

Total Assets                   $26,534,696    $28,947,752      $33,431,084    $33,930,960       $32,497,393

Current Liabilities            $11,775,953    $10,567,139      $12,144,123    $12,183,630       $10,289,985

Long-term debt                 $ 9,827,161    $ 6,629,904      $ 8,215,486    $10,215,334       $ 9,499,895

Stockholders' equity (1)       $ 3,968,702    $10,991,132      $11,890,658    $10,632,316       $11,780,706

             (1) The Company has not paid any cash dividends since its inception
</TABLE>


Item  7.  Management's Discussion and Analysis of Financial Condition  and
Results of Operations.

     The Company has developed criteria for determining whether a shipment
should  be  recorded  as  a sale or as a deferred sale  (a  balance  sheet
liability).   The criteria for recording a C.O.D. sale ,or payments  prior
to   shipment  sale  or  sale  financed  through  third-party  floor  plan
arrangements  are  that  the  boat has been completed  and  shipped  to  a
customer,  that  title has passed to the customer, and that  there  is  no
direct  commitment  to repurchase the boat or to pay floor  plan  interest
beyond the sales program terms. As described more fully below at "Business
Environment",  most  of the Company's shipments to dealers  were  financed
through floor plan arrangements with third-party lenders pursuant to which
the  Company is subject to repurchase boats repossessed by the third-party
lenders  if the dealer defaults under his credit arrangement.  The Company
has  no  repurchase liability for the balance of shipments.  This  is  the
method  of  sales  recognition  believed  to  be  in  use  by  most   boat
manufacturers.

      At  June  30,  2002, 2001, and 2000, there were  no  commitments  to
dealers to pay the interest on floor plan financed boats in excess of  the
time  period  specified in the Company's written sales program  and  there
were  no  direct repurchase agreements.  There were no deferred  sales  or
cost of sales estimated at June 30, 2002, 2001, and 2000.

      The Company has a contingent liability to repurchase boats where  it
participates in the floor plan financing made available to its dealers  by
third-party  finance companies.  This liability amounted to  approximately
$16,066,953  and  $23,747,900  at June 30, 2002  and  2001,  respectively.
Sales  to  participating  dealers are approved by the  respective  finance
companies.   If a participating dealer does not satisfy its obligation  to
the  lender  and the boat is subsequently repossessed by the lender,  then
the Company may be required to repurchase the boat.

Business Environment.

      Fiscal  2002  presented the Company with an assortment of  difficult
challenges.   Indicators  early in the year led  management  to  expect  a
complicated  sales scenario for the 2002 fiscal period.  Other  challenges
faced the Company in the form of an aging dealer inventory and a sales mix
that  obliged the Company to build a heavier percentage of fish boats than
ever before.

      Fiscal  year  sales  were  down from  Fiscal  2001  over  19%,  from
$46,081,634 to $37,546,692 in Fiscal 2002.  The Company made the  decision
to  assist  its  dealers in retailing their aged inventory,  issuing  over
$2,000,000  in  special discounts, approximately 23% of  the  Fiscal  2002
decrease.

      Dealer  inventory levels were monitored and managed with the Company
ending  the  year at a dealer inventory level that was the lowest  of  the
last  six  years,  costing the Company during the Fiscal  2002  year,  but
setting the stage for Fiscal 2003 new product sales.

      During  the  year, the Company completed the tooling and  design  of
their two newest models in the wide-beam line, the 34' wide-beam fish boat
and the 48' wide-beam cruiser.  These units were first introduced into the
market  in  February 2002 at the Miami International Boat Show. These  two
lines  were  well  accepted by the market.  Since  their  introduction  in
February  2002, sales of these two models accounted for approximately  10%
of  2002  annual sales.  Sales from the new lines introduced in the  Miami
2001 Show sold strong during the year, with the 38' wide-beam fish and the
38' wide-beam cruiser generating over 20% of the Fiscal 2002 total sales.

     The  sales  mix  was perhaps the biggest challenge.   While  the  new
larger  fish  boats  show  profitable  margins,  the  previously  existing
fishboat models tended toward a very small profit for the Company.  Ending
the  year with total mix at almost 40% fish boats in an overall low volume
fiscal year, the Company faced significant difficulties operating with low
gross margins from their sales.




     No  boats  were  repurchased  in  Fiscal  2002,  2001,  and  2000  in
connection  with  floor plan arrangements.  At June 30,  2002,  2001,  and
2000, the Company had recorded a $200,000 reserve for losses which may  be
reasonably expected to be incurred on boat repurchases in future years.

     The Company also completed refinancing its long-term debt in November
2001.   Total  proceeds from the note were $10,000,000 which was  used  to
payoff  an existing note, to provide working capital, and to complete  the
cruiser tooling projects.

      For  the  coming  year, Fiscal 2003, the Company has  established  a
management  team  from  its top level, senior  managers.   This  team  has
launched  the  year  with a plan for significant  improvement.   The  plan
requires strict administration of cost savings and expense cuts, but a new
sales  strategy provides the essential basis for the plan's success, hence
a profitable and successful Fiscal 2003.

Results of Operations.

     Fiscal 2002 net loss for the Company was ($7,031,593) or ($1.49)  per
share.  This compares to a net loss of ($899,526) or ($.19) per share  for
Fiscal 2001.  The discounts issued to move aging dealer inventory, the low
sales volume and poor sales mix resulted in the Fiscal 2002 loss.

     Operating  losses increased to ($5,238,138) from ($2,443,431)  Fiscal
2001.   The  reduction in income was driven by the market decline,  and  a
less  favorable  sales mix as shipments of smaller fish boats,  which  are
lower margin, proved strong during the year.

     Overhead expenses increased slightly as a percent of sales, a  result
of  the drop in the volume level required to cover fixed factory overhead.
This  volume  decrease is reflected in the decline in gross  margins  from
13.46% in 2001 to 4.14% in Fiscal 2002.

      Depreciation expense was $2,294,254 for Fiscal 2002, $2,293,284  for
Fiscal  2001,  and  $2,397,085 for Fiscal 2000.  Depreciation  expense  by
asset category was as follows:

                                    Fiscal        Fiscal        Fiscal
                                     2002          2001          2000

     Land  improvements         $   126,037   $   121,857   $   116,350

     Buildings                  $   294,921   $   294,354   $   290,825

     Molds  &  plugs            $ 1,350,466   $ 1,184,807   $ 1,178,138

     Machinery  &  Equipment    $   412,493   $   473,496   $   481,074

     Furniture  &  fixtures     $    53,809   $    57,663   $    57,677

     Transportation equipment   $    56,533   $   161,107   $   246,139

     Racing Equipment                   -0-   $       -0-   $    26,882
                                -----------   -----------   -----------
     Total                      $ 2,294,254   $ 2,293,284   $ 2,397,085
                                  ========       =======    ===========

Following  is  a  schedule  of the net fixed asset  additions  (deletions)
during Fiscal 2002 and Fiscal 2001.

                                 Fiscal 2002         Fiscal 2001

     Buildings                   $       -0-         $   201,207
     Land  and  Improvements     $    36,214         $       -0-
     Molds   and   plugs         $ 2,099,710         $ 2,661,242
     Construction   in  Progress $  (729,182)        $   443,433
     Machinery   &  equipment    $   154,286         $    89,243
     Furniture  & fixtures       $     5,090         $       508
     Transportation equipment    $    35,490         $(1,729,438)
     Racing   equipment          $   (65,960)        $       -0-
                                 ------------        ------------
     Total                       $  1,535,648        $ 1,666,195
                                   =========           =========

     Overall  selling and administrative expenses were reduced by $670,612
in  Fiscal  2002  from $8,646,929 in Fiscal 2001 to $7,976,317  in  Fiscal
2002,  after additional expense of $1,182,320 for impairment of long-lived
assets in Fiscal 2002.

     Selling  expenses  were $4,758,384 for Fiscal  2002,  $5,955,103  for
Fiscal  2001  and $7,370,319 for Fiscal 2000.  The Company  continued  its
product promotions in Fiscal 2002, with focus on the new cruiser and wide-
beam  models.   The  Company also maintained a presence  in  the  offshore
racing circuit and tournament fishing programs, but significantly reducing
its  expenditures relative to the prior year.  More customers  are  racing
Fountain  boats  under their own sponsorship while still  maintaining  the
Company's leadership position.

      Major  selling  expenses for the past three  fiscal  years  were  as
follows:

                          Fiscal  2002    Fiscal 2001    Fiscal 2000

 Fishing  &  racing        $ 1,011,007    $ 1,508,162    $ 2,424,918

 Advertising               $   775,524    $ 1,123,977    $ 1,456,592
 Salaries  &  commissions  $   599,337    $   705,249    $   788,108
 Boat  shows               $   634,767    $   568,806    $   563,536

 Dealer  incentives        $   684,311    $ 1,171,067    $ 1,421,703
 Other   selling  expenses $ 1,053,438    $   877,842    $   715,462
                           -----------    -----------    -----------
     Total                 $ 4,758,384    $ 5,955,103    $ 7,370,319
                             ========       ========       ========

      General  and administrative expenses include the executive, finance,
personnel,  information  technology, legal  and  administrative  operating
expenses of the Company.  These expenses were $2,035,613 for Fiscal  2002,
$2,691,826 for Fiscal 2001, and $3,260,571 for Fiscal 2000.

      In  Fiscal 2002, the Company recorded an impairment loss  and  wrote
down certain long-lived assets to realizable values.  For Fiscal 2001, the
Company received $118,503 in other income and there was a gain of $500,446
on  the disposal of assets.  For Fiscal 2001, the Company recorded a  gain
of  $1,107,819  on insurance claims related to final insurance  settlement
from hurricane damages.

     Interest  expense net of amounts capitalized was $809,571 for  Fiscal
2002,  $700,965 for Fiscal 2001, and $1,065,514 for Fiscal 2000.  Interest
expense increased slightly in Fiscal 2002 primarily from the new long-term
debt amortization.

     Based upon the Company experiencing consecutive operating losses, the
Company  established  a  valuation allowance of  approximately  $2,600,000
against  deferred  tax assets because of the uncertainty  surrounding  the
realization of the Company's net operating loss carryforwards.  The amount
of  and  ultimate realization of the benefits from the net operating  loss
carryforwards for income tax purposes is dependent, in part, upon the  tax
laws  in  effect, the Company's future earnings, and other future  events,
the  effects  of  which cannot be determined.  Management recognizes  that
these  net operating loss carryforwards will be available to offset future
taxable income upon their return to profitability.

Liquidity and Financial Resources.

For  the  year  ended  June 30, 2002 and 2001, the  Company  had  negative
working  capital of $3,890,906 and $1,632,203, respectively.  As mentioned
in  Note  16  to  the  Financial  Statements  the  accompanying  financial
statements  have  been  prepared  in conformity  with  generally  accepted
accounting  principles in the United States of America  which  contemplate
continuation  of the Company as a going concern. The Company's  operations
will  require  significant  increases in cash  flows  from  operations  or
additional  financing  or  capital to  continue.   In  order  to  generate
positive  cash  flows,  the Company will need to return  to  profitability
through increasing sales of their sporting and fishing boats and wide beam
cruisers,  reducing  expenses  and capital expenditures  and  successfully
refinancing current liabilities to long-term obligations.

Management  plans  to  improve  cash  flows  from  current  operations  by
implementing an aggressive budget for Fiscal 2003 which they believe  will
result in significant improvement in sales and improved yield.  The budget
focuses  the Company's resources on existing sales order backlogs for  the
new higher margin wide beam cruisers, reducing capital projects, and other
capital  expenditures,  and  improving their  production  processes.   The
Company is further seeking to obtain additional debt financing, which will
enable  the  Company  to  reduce material cost by  taking  favorable  cash
discounts on material purchases.
With  significant  increase in sales and the costs  reductions  in  direct
labor  and  overhead,   the Company believes they can generate  sufficient
cash flows to support operations for the upcoming year.   If sales do  not
increase  the Company believes they can obtain the necessary debt  and  if
necessary equity financing..

Cash  decreased to $329,640 at June 30, 2002 compared to $796,606 at  June
30, 2001. The fiscal 2002 decrease in cash can be generally attributed  to
cash paid for the development of the new 34 and 48 foot wide beam cruisers
and losses from operations due to a 30% decrease in sales volume resulting
in  a  19%  decrease in sales dollars . This decrease in sales  management
believes is further attributable to effort by the Company to reduce  aging
dealer inventory and the poor economy.
The  Company's principal source of liquidity for the year ended  June  30,
2002 were the proceeds received from refinancing the credit agreement with
General  Electric Capital Corporation, the decrease in accounts receivable
balances and cash.
The  Company's  liquidity  needs  are principally  for  financing  of  raw
materials  and work in process inventory, paying down current obligations,
and meeting the current payments of long term obligations.






Net  cash used by operations in Fiscal 2002 amounted to ($1,734,962).  Net
loss  plus adjustments to reconcile net loss to net cash used by operating
activities  including depreciation expense of $2,294,254 and an impairment
on  the  long-lived  assets of $1,182,320 and other non-cash  transactions
used  ($2,635,695) before other changes in assets and liability  accounts.
$1,395,518  was  provided  by decrease in inventories.   The  ending  cash
balance was $329,640.

       Net  cash  provided  by  operations  in  Fiscal  2001  amounted  to
$4,284,701.  Net loss plus adjustments to reconcile net loss to  net  cash
provided  by  operating  activities  including  depreciation  expense   of
$2,293,284  changes  in  deferred  taxes  and  gain  on  sale  of   assets
contributed $500,446 and provided net cash of $483,801 before  changes  in
asset  and  liability accounts.  However, relatively  large  amounts  were
needed  to continue investment activities in constructing property, plant,
equipment, and molds.  The ending cash balance was $796,606.

     Net   cash  provided  by  operations  in  Fiscal  2000  amounted   to
$3,989,220.   Net income plus adjustments to reconcile net income  to  net
cash  provided by operating activities including depreciation  expense  of
$2,397,085  changes in deferred taxes of $1,020,970 and loss  on  sale  of
assets of $12,846 provided net cash of $4,689,243 before changes in  asset
and liability accounts.  However, relatively large amounts were needed  to
complete  investment activities in purchasing property, plant,  equipment,
inventory and molds.  The ending cash balance was $1,983,439.

     Investing  activities for Fiscal 2002 required $1,820,959,  of  which
$1,370,526  was  used  to complete construction of new  molds  and  plugs,
$231,080  was used to purchase property, plant and equipment, and $219,536
was  used for payments increasing the cash surrender value of certain  key
man life insurance policies.

     Investing  activities for Fiscal 2001 required $1,875,972,  including
$590,591  used  for  property, plant and equipment,  $2,819,252  used  for
construction of molds and plugs, $216,849 used for payments increasing the
cash surrender value of life insurance policies and proceeds of $1,750,720
generated from the sale of property and equipment.

     Investing  activities for Fiscal 2000 required $2,400,549,  including
$1,678,236  for  property, plant and equipment, $1,154,908 for  additional
molds and plugs, $122,637 for payments increasing the cash surrender value
of  life  insurance policies and proceeds of $555,232  from  the  sale  of
equipment.

     Financing  activities  for  Fiscal 2002 provided  $3,088,955.  During
November 2001, the Company refinanced the 7.02% fixed $10,000,000  General
Electric Capital Corporation credit agreement with a remaining balance  of
$6,655,656  .  The new agreement with General Electric Capital Corporation
involves $3,000,000 and $7,000,000 notes with a variable interest rate  of
prime  plus 2% or 6.75% as of June 30, 2002. Combined monthly payments  on
these  notes  are  approximately $128,005. The  proceeds  from  the  notes
payable  and long term debt contributed $3,955,644.  Payments on long-term
debt used $560,181, and payments of deferred loan costs were $306,508.

     Financing  activities for Fiscal 2001 used $3,595,562.   Included  in
this  amount are proceeds from issuance of notes payable from Northwestern
Mutual  Life  for $150,000 and debt repayment to General Electric  Capital
Corporation and others in the amount of $3,745,562.

     Financing  activities for Fiscal 2000 used $1,822,534.   Included  in
this amount are proceeds from issuance of notes payable and long-term debt
to  Northwestern  Mutual  Life  Insurance  and  General  Electric  Capital
Corporation for $760,212 and debt repayment in the amount of $2,582,746.

     The  net  decrease in cash for Fiscal 2001 was $1,186,833,  primarily
due  to  the repayment of long-term debt, and the investment in  equipment
and  molds.   The  net  decrease in cash for  Fiscal  2000  was  $233,862,
primarily due to the investment in facilities, equipment, and molds.


Effects of Inflation.

      The  Company  has  not  been materially  affected  by  the  moderate
inflation  of  recent years.  Since most of the Company's  plant  and  its
equipment  are  relatively  new, expenditures  for  replacements  are  not
expected to be a factor in the near-term future.

      When  raw material costs increase because of inflation, the  Company
attempts  to  minimize the effect of these increases by using alternative,
less costly materials, or by finding less costly sources for the materials
it uses.  When the foregoing measures are not possible, selling prices are
increased to recover the cost increases.

      The  Company's products are targeted at the segment of the powerboat
market  where retail purchasers are generally less significantly  affected
by  price or other economic conditions.  Consequently, management believes
that  the impact of inflation on sales and the results of operations  will
not be material.

Cautionary  Statement  for  Purposes of "Safe Harbor"  Under  the  Private
Securities Reform Act of 1995.

      The  Company may from time to time make forward-looking  statements,
including  statements projecting, forecasting, or estimating the Company's
performance  and  industry trends.  The achievement  of  the  projections,
forecasts,  or  estimates  contained in these  statements  is  subject  to
certain risks and uncertainties, and actual results and events may  differ
materially from those projected, forecast, or estimated.

      The applicable risks and uncertainties include general economic  and
industry  conditions that affect all businesses, as well as  matters  that
are  specific to the Company and the markets it serves.  For example,  the
achievement  of  projections, forecasts, or  estimates  contained  in  the
Company's  forward-looking  statements may be  impacted  by  national  and
international economic conditions; compliance with governmental  laws  and
regulations;  accidents  and acts of God; and all  of  the  general  risks
associated with doing business.

      Risks  that are specific to the Company and its markets include  but
are  not  limited to compliance with increasingly stringent  environmental
laws and regulations; the cyclical nature of the industry; competition  in
pricing and new product development from larger companies with substantial
resources; the concentration of a substantial percentage of the  Company's
sales  with  a few major customers, the loss of, or change in demand  from
dealers, any of which could have a material impact upon the Company; labor
relations  at  the  Company and at its customers and  suppliers;  and  the
Company's  single-source supply and just-in-time inventory strategies  for
some  critical boat components, including high performance engines,  which
could  adversely affect production if a single-source supplier  is  unable
for any reason to meet the Company's requirements on a timely basis.


<PAGE>

Item 8.  Financial Statements and Supplementary Data.


                       INDEPENDENT AUDITORS' REPORT



To the Board of Directors
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
Washington, North Carolina


We  have  audited the accompanying consolidated balance sheets of Fountain
Powerboat  Industries, Inc. and Subsidiary as of June 30, 2002  and  2001,
and  the  related  consolidated  statements of  operations,  stockholders'
equity, cash flows and the Schedule of Valuation and Qualify Accounts  for
the years ended June 30, 2002, 2001 and 2000. These consolidated financial
statements  are  the  responsibility of  the  Company's  management.   Our
responsibility  is  to express an opinion on these consolidated  financial
statements based on our audits.

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

In  our  opinion,  the  consolidated financial statements  audited  by  us
present  fairly,  in  all  material respects, the  consolidated  financial
position of Fountain Powerboat Industries, Inc. and Subsidiary as of  June
30,  2002  and  2001,  and the consolidated results of  their  operations,
their  cash  flows and the Schedule of Valuation and Qualify Accounts  for
the  years ended June 30, 2002, 2001 and 2000 in conformity with generally
accepted accounting principles in the United States of America.

The  accompanying  financial statements have been  prepared  assuming  the
Company will continue as a going concern.  As discussed in Note 16 to  the
financial  statements, the Company, has current liabilities in  excess  of
current  assets  and  has  incurred recent losses.   These  factors  raise
substantial doubt about the ability of the Company to continue as a  going
concern.   Management's  plans  in  regards  to  these  matters  are  also
described  in  Note  16.   The financial statements  do  not  include  any
adjustments that might result from the outcome of these uncertainties.




PRITCHETT, SILER & HARDY, P.C.

July 26, 2002
Salt Lake City, Utah


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                        CONSOLIDATED BALANCE SHEETS

                                  ASSETS

                                                    June 30,
                                           _________________________
                                                2002       2001
                                           ___________   ___________
CURRENT ASSETS:
  Cash & cash equivalents                  $   329,640     $ 796,606
  Accounts receivable, less allowance
   for doubtful accounts of $27,841
   for 2002 and 2001                         3,003,992     1,939,886
  Inventories                                3,090,451     4,555,969
  Prepaid expenses                             328,783       172,538
  Current tax assets                         1,132,181     1,469,937

                                           ___________   ___________
        Total Current Assets                 7,885,047     8,934,936

PROPERTY, PLANT AND EQUIPMENT, net          17,114,661    18,919,634

CASH SURRENDER VALUE OF LIFE INSURANCE       1,179,223       959,687

OTHER ASSETS                                   355,765       133,495
                                           ___________   ___________
                                           $26,534,696   $28,947,752
                                           ___________   ___________

                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current maturities of long-term debt     $   919,182   $   722,661
  Current maturities of capital lease           15,674        13,989
  Accounts payable                           6,877,394     5,545,266
  Accounts payable-related party               147,234       137,463
  Accrued expenses                           1,193,672     1,006,459
  Dealer incentives                            921,707     2,030,126
  Customer deposits                            631,090       321,175
  Allowance for boat repurchases               200,000       200,000
  Warranty reserve                             870,000       590,000
                                           ___________   ___________
        Total Current Liabilities           11,775,953    10,567,139

LONG-TERM DEBT, less current maturities      9,791,949     6,580,299
CAPITAL LEASE, less current maturities          35,212        49,605
DEFERRED TAX LIABILITY                         962,880       759,577
COMMITMENTS AND CONTINGENCIES (See Note 9)           -             -
                                           ___________   ___________
        Total Liabilities                   22,565,994    17,956,620
                                           ___________   ___________
STOCKHOLDERS' EQUITY
  Common stock, $.01 par value,
   200,000,000 shares authorized,
   4,732,608 shares issued and
   outstanding                                  47,326        47,326
  Additional paid-in capital                10,343,935    10,303,640
  Retained earnings (deficit)               (6,280,679)      750,914
                                           ____________   __________
                                             4,110,582    11,101,880
Less: Treasury Stock, at cost,
        15,000 shares                         (110,748)     (110,748)
      Deferred compensation for
        stock options issued                   (31,132)            -
                                           ____________   __________
                                              3,968,702   10,991,132
                                           ____________   __________
                                           $ 26,534,696  $28,947,752
                                           ________________________

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

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                       Year Ended June 30,
                                 _____________________________________
                                    2002         2001         2000
                                 ___________  ___________  ___________
NET SALES                        $37,546,692  $46,081,634  $57,532,461
COST OF SALES                     35,990,833   39,878,136   46,156,464
                                 ___________  ___________  ___________
  Gross Profit                     1,555,859    6,203,498   11,375,997
                                 ___________  ___________  ___________
EXPENSES:
  Selling expense                  4,758,384    5,955,103    7,370,319
  General and
    administrative                 2,035,613    2,691,826    3,260,571
  Impairment of long-lived assets  1,182,320            -            -
                                 ___________  ___________  ___________
      Total expenses               7,976,317    8,646,929   10,630,890
                                 ___________  ___________  ___________
OPERATING INCOME (LOSS)           (6,420,458)  (2,443,431)     745,107
                                 ___________  ___________  ___________
NON-OPERATING INCOME (EXPENSE):
  Other income                        21,512      118,503      106,239
  Interest expense                  (809,571)    (700,965)  (1,065,514)
  Gain (loss) on disposal
    of assets                              -      500,446     (12,846)
  Gain on insurance claims
    from hurricane                         -    1,107,819    1,065,725
                                 ___________  ___________  ___________
                                     788,059    1,025,803       93,604
                                 ___________  ___________  ___________
INCOME (LOSS) BEFORE INCOME TAXES (7,208,517)  (1,417,628)     838,711

CURRENT TAX EXPENSE (BENEFIT)       (717,983)    (108,590)           -

DEFERRED TAX EXPENSE (BENEFIT)       541,059     (409,512)     370,410
                                 ___________  ___________  ___________
INCOME (LOSS) FROM CONTINUING
 OPERATIONS BEFORE EXTRAORDINARY
  ITEMS                           (7,031,593)    (899,526)     468,301
                                 ___________  ___________  ___________

GAIN ON SETTLEMENT OF LAWSUIT (net
  of $523,183 in income taxes)             -            -      790,041
                                 ___________  ___________  ___________

NET INCOME (LOSS)                $(7,031,593) $  (899,526)  $1,258,342
                                 ___________  ___________  ___________











                                [Continued]

<PAGE>
                  FOUNTAIN POWERBOAT, INC. AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                [CONTINUED]


                                       Year Ended June 30,
                                 _____________________________________
                                     2002        2001         2000
                                 ___________  ___________  ___________
BASIC EARNINGS (LOSS) PER SHARE:

  Continuing operations          $    (1.49)  $     (.19)  $      .10
  Gain from lawsuit                       -            -          .17
                                 ___________  ___________  ___________
BASIC EARNINGS PER SHARE         $    (1.49)  $     (.19)  $      .27
                                 ___________  ___________  ___________
WEIGHTED AVERAGE SHARES
  OUTSTANDING                     4,732,608    4,732,608    4,732,608
                                 ___________  ___________  ___________

DILUTED EARNINGS PER SHARE:

  Continuing operations          $    (1.49)  $     (.19)  $      .10
  Gain from lawsuit                       -            -          .17
                                 ___________  ___________  ___________
DILUTED EARNINGS PER SHARE       $    (1.49)  $     (.19)  $      .27
                                 ___________  ___________  ___________
DILUTED WEIGHTED AVERAGE
  SHARES OUTSTANDING              4,732,608    4,732,608    4,732,651
                                 ___________  ___________  ___________






















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

<PAGE>

<TABLE>
               FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                    FROM JUNE 30, 1999 THROUGH JUNE 30, 2002

<CAPTION>

                      Common Stock        Additional    Retained       Treasury Stock                       Total
                  _____________________     Paid-in     Earnings     ___________________     Deferred    Stockholders'
                    Shares     Amount       Capital     (Deficit)     Shares    Amount     Compensation     Equity
                  _________   _________   ___________   __________   _______   _________   ___________   ____________
<S>               <C>         <C>         <C>           <C>          <C>       <C>         <C>           <C>
BALANCE,
 June 30, 1999    4,732,608   $  47,326  $ 10,303,640  $   392,098    15,000  $ 110,748    $       -     $  10,632,316

Net income for
 the year ended
 June 30, 2000            -           -             -    1,258,342         -          -            -         1,258,342
                  _________   _________   ___________   __________   _______   _________   ___________   ____________
BALANCE,
 June 30, 2000    4,732,608   $  47,326  $ 10,303,640  $ 1,650,440    15,000  $ 110,748    $       -     $  11,890,658

Net loss for
 the year ended
 June 30, 2001            -           -             -     (899,526)        -          -            -          (899,526)
                  _________   _________   ___________   __________   _______   _________   ___________   ____________
BALANCE,
 June 30, 2001    4,732,608   $  47,326  $ 10,303,640  $   750,914    15,000  $ 110,748    $       -     $  10,991,132

Issuance of
options to
 purchase
 30,000 shares
 common stock
 at $1.45 to
 $1.67 per
 share for
 consulting
 services
 vesting
 through
 December 2004            -           -        40,295            -         -           -      (31,132)          9,163

Net loss for
 the year ended
June 30, 2002            -           -             -    (7,031,593)        -           -            -      (7,031,593)
                  _________   _________   ___________   __________   _______   _________   ___________   ____________
BALANCE,
 June 30, 2002    4,732,608   $  47,326  $ 10,343,935  $ 6,280,679    15,000   $ 110,748    $ (31,132)   $  3,968,702
                  _________   _________   ___________   __________   _______   _________   ___________   ____________



</TABLE>














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

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF CASH FLOWS


                                            Year Ended June 30,
                                    ______________________________________
                                        2002          2001         2000
                                    ___________    _________    __________
CASH FLOWS FROM
 OPERATING ACTIVITIES:
  Net income (loss)                 $(7,031,593)   $(899,526)   $1,258,342
  Adjustments to reconcile
   net income (loss) to net
   cash provided (used) by
   operating activities:
    Non-cash expense                      9,162            -             -
    Amortization of deferred
      loan costs                         89,098            -             -
    Depreciation expense              2,294,254    2,293,284     2,397,085
    Impairment of long-lived
      assets                          1,182,320            -             -
    (Gain) loss on disposal
      of and equipment                        -     (500,446)       12,846
    Warranty reserve                    280,000            -             -
    (Increase) decrease in
      net tax asset                     541,059     (409,511)    1,020,970
    Change in assets and liabilities:
      (Increase) decrease
        in accounts receivable       (1,064,107)    (238,243)     (124,931)
      (Increase) decrease
        in inventories                1,395,518    3,324,167      (572,246)
      (Increase) decrease
        in prepaid expenses            (161,286)     402,077       186,871
      Increase in accounts payable    1,341,929      689,012     1,032,201
      Increase (decrease)
        in accrued expenses               2,654     (261,314)      273,542
      Increase (decrease) in
        dealer incentives              (923,885)    (113,935)   (1,129,940)
      Increase (decrease)
        in customer deposits            309,915         (864)     (365,520)
                                    ___________    _________    __________
       Net Cash Provided (Used)
        by Operating Activities      (1,734,962)   4,284,701     3,989,220
                                    ___________    _________    __________
CASH FLOWS FROM
 INVESTING ACTIVITIES:
  Proceeds from sale of equipment             -    1,750,720       555,232
  Investment in molds and
   related plugs                     (1,370,526)  (2,819,252)   (1,154,908)
  Purchase of property, plant
   and equipment                       (231,080)    (590,591)   (1,678,236)
  Increase in cash surrender
   value of life Insurance             (219,536)    (216,849)     (122,637)
  Decrease in other assets                  183            -             -
                                    ___________    _________    __________
       Net Cash (Used)
        by Investing Activities      (1,820,959)  (1,875,972)   (2,400,549)
                                    ___________    _________    __________
CASH FLOWS FROM
  FINANCING ACTIVITIES:
   Proceeds from notes payable
    and long-term debt                3,955,644      150,000       760,212
   Payments of long-term debt          (545,788)  (3,732,563)   (2,570,958)
   Payments on capital lease            (14,393)     (12,999)      (11,788)
   Payments of deferred loan cost      (306,508)           -             -
                                    ___________    _________    __________
       Net Cash Provided (Used)
        by Financing Activities       3,088,955   (3,595,562)   (1,822,534)
                                    ___________    _________    __________
Net increase (decrease) in
 cash & cash equivalents           $   (466,966) $(1,186,833)  $  (233,862)
Beginning cash & cash
 equivalents balance                    796,606    1,983,439     2,217,301
                                    ___________    _________    __________
Ending cash & cash
 equivalents balance               $    329,640  $   796,606   $ 1,983,439
                                    ___________    _________    __________





                                [Continued]

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                [CONTINUED]


                                            Year Ended June 30,
                                    ______________________________________
                                       2002          2001          2000
                                    ___________    _________    __________
Supplemental Disclosures
 of Cash Flow Information:
  Cash paid during the period for:
    Interest:
     Unrelated parties, net
      of amounts capitalized        $ 798,700     $ 709,585    $ 1,088,857

    Income taxes                    $  45,424     $  12,016    $         -


Supplemental Schedule of Non-cash Investing and Financing Activities:
     For the year ended June 30, 2002:

  The  Company  issued 10,000 options to purchase common  stock  to  a
  consultant  for  services to be rendered  valued  at  $12,342.   The
  options  are  exercisable at $1.45 per share, vest through  December
  2004  and  expire December 2009.  As of June 30, 2002,  the  Company
  has recorded consulting expense of $2,313.

  The  Company  issued 20,000 options to purchase common  stock  to  a
  consultant  for  services to be rendered  valued  at  $27,953.   The
  options  are  exercisable at $1.67 per share, vest  through  January
  2004 and expire January 2009.  As of June 30, 2002, the Company  has
  recorded consulting expense of $6,850.

     For the year ended June 30, 2001:
       None

     For the year ended June 30, 2000:
       None




















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

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Nature of the Business and Significant Accounting Policies.

  Nature  of  the  Business:  Fountain  Powerboat  Industries,  Inc.   and
  Subsidiary  (the  Company)  manufacture  high-performance  sport  boats,
  sport  cruisers, sport fishing boats, custom offshore racing  boats  and
  super  cruiser yachts.  These boats are sold to the Company's  worldwide
  network  of  approximately  32  dealers.   The  Company's  offices   and
  manufacturing facilities are located in Washington, North  Carolina  and
  the  Company  has  been  in business since 1979.   The  Company  employs
  approximately  350  people  and  is an  equal  opportunity,  affirmative
  action employer.

  Principles  of  Consolidation:  The  consolidated  financial  statements
  include  the  accounts of the Company and its wholly  owned  subsidiary,
  Fountain  Powerboats, Inc.  All significant inter-company  accounts  and
  transactions have been eliminated in consolidation

  Fiscal  Year: The Company's fiscal year-end is June 30th, which  is  its
  natural business year-end.

  Accounting  Estimates:  The  preparation  of  financial  statements   in
  conformity  with generally accepted accounting principles in the  United
  States  of America requires management to make estimates and assumptions
  that  affect  the  reported  amounts  of  assets  and  liabilities,  the
  disclosures  of  contingent assets and liabilities at the  date  of  the
  financial statements, and the reported amounts of revenues and  expenses
  during  the  reporting period.  Actual results could differ  from  those
  estimated by management.

  Cash  and Cash Equivalents: For purposes of the statement of cash flows,
  the  Company  considers  all  highly  liquid  debt  instruments  with  a
  maturity  of three months or less to be cash equivalents.  At  June  30,
  2002  and 2001, the Company had $630,491 and $229,640, respectively,  in
  excess of federally insured amounts held in cash.

  Inventories:  Inventories are stated at the lower  of  cost  or  market.
  Cost is determined by the first-in, first-out method (See Note 2).

  Property,  Plant, and Equipment and Depreciation: Property,  plant,  and
  equipment  are  carried at cost.  Depreciation on property,  plant,  and
  equipment  is  calculated using the straight-line method  and  is  based
  upon the estimated useful lives of the assets (See Note 3).

  Fair  Value of Financial Instruments:  Management estimates the carrying
  value  of financial instruments on the consolidated financial statements
  approximates their fair values.

  Dealer  Territory  Service Accrual: The Company had, in  prior  periods,
  established a sales program to pay a service award to dealers  for  boat
  deliveries  into  their  market territory for which  they  will  perform
  service. The service award is a dollar amount based on the model of  the
  boat  sold,  combined with a factor for the dealer's service performance
  rating.   The  Company  had accrued estimated dealer  territory  service
  awards   at   June  30,  2002  and  2001  of  $491,710   and   $958,581,
  respectively.

  Allowance  for  Boat Repurchases: The Company provides an allowance  for
  boats,  financed by dealers under floor plan finance arrangements,  that
  may  be  repurchased from finance companies under certain  circumstances
  where  the  Company  has a repurchase agreement with  the  lender.   The
  amount  of the allowance is based upon probable future events which  can
  be reasonably estimated (See Note 9).

  Internal  Use  Software: The Company accounts for internal use  software
  and  development cost in accordance with the Statement of Position (SOP)
  98-1,  "Accounting for Computer Software Developed for or  Obtained  for
  Internal  Use".   The SOP requires the capitalization  of  certain  cost
  incurred  in  connection  with  developing  or  obtaining  software  for
  internal use.


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Nature  of  the  Business  and Significant  Accounting  Policies.
          [Continued]

  Revenue   Recognition:  The  Company  generally  sells  boats  only   to
  authorized dealers and to the U.S. Government.  A sale is recorded  when
  a  boat is shipped to a dealer or to the Government, legal title and all
  other  incidents of ownership have passed from the Company to the dealer
  or  to  the Government, and an account receivable is recorded or payment
  is  received from the dealer, from the Government, or from the  dealer's
  third-party  commercial lender.  This is the method of sales recognition
  in use by most boat manufacturers.

  The  Company has developed criteria for determining whether  a  shipment
  should  be  recorded as a sale or as a deferred sale  (a  balance  sheet
  liability).   The criteria for recording a sale are that  the  boat  has
  been  completed  and  shippeds to a dealer or to  the  Government,  that
  title  and  all other incidents of ownership have passed to  the  dealer
  or  to the Government (title passes at the point of shipment), and  that
  there  is  no  direct or indirect commitment to the  dealer  or  to  the
  Government to repurchase the boat or to pay floor plan interest for  the
  dealer beyond the normal, published sales program terms.

  The  sales  incentive  floor plan interest expense for  each  individual
  boat  sale  is  accrued for the six months (180 days)  interest  payment
  period  in the same fiscal accounting period that the related boat  sale
  is  recorded.  The entire six months' interest expense is accrued at the
  time  of  the  sale because the Company considers it a  selling  expense
  (See  Note 9).  The amount of interest accrued is subsequently  adjusted
  to  reflect the actual number of days of remaining liability  for  floor
  plan  interest  for  each  individual boat  remaining  in  the  dealer's
  inventory and on floor plan.

  Income  Taxes: The Company accounts for income taxes in accordance  with
  issued  Statement  of  Financial Accounting Standards  (SFAS)  No.  109,
  "Accounting for Income Taxes "(See Note 7).

  Advertising  Cost:  Cost  incurred in connection  with  advertising  and
  promotion  of  the  Company's products are expensed as  incurred.   Such
  costs  amounted  to $775,524, $1,123,976 and $1,456,592  for  the  years
  ended 2002, 2001 and 2000, respectively.

  Earnings  Per  Share:  The Company accounts for earnings  per  share  in
  accordance  with the Statement of Financial Accounting Standards  (SFAS)
  No.  128  "Earnings  Per Share," which requires the Company  to  present
  basic  and diluted earnings per share.  The computation of basic earning
  per  share is based on the weighted average number of shares outstanding
  during  the periods presented.  The computation of diluted earnings  per
  shares  is  based  on the weighted average number of outstanding  common
  shares  during the year plus, when their effect is dilutive,  additional
  shares  assuming  the  exercise of certain vested and  non-vested  stock
  options  and  warrants, reduced by the number of shares which  could  be
  purchased from the proceeds (See Note 14).

  Warranties:  The  Company warrants the entire deck and  hull,  including
  its  supporting  bulkhead  and  stringer  system,  against  defects   in
  materials  and workmanship for a period of six years.  The  Company  has
  accrued a reserve for these anticipated future warranty costs.

  Stock  Based  Compensation: The Company has adopted the disclosure  only
  provisions of SFAS No. 123 "Accounting for Stock-Based Compensation"  to
  account  for  stock  based  compensation accordingly,  the  Company  has
  elected  to  determine  net income using previous accounting  standards.
  This  statement establishes an accounting method based on the fair value
  of  equity  instruments awarded to employees as compensation.   However,
  companies   are  permitted  to  continue  applying  previous  accounting
  standards  in  the  determination of net income with disclosure  in  the
  notes  to  the financial statements of the differences between  previous
  accounting  measurements  and those formulated  by  the  new  accounting
  standard.

  Reclassifications:   The financial statements for years  prior  to  June
  30,   2002   have  been  reclassified  to  conform  with  headings   and
  classifications used in the June 30, 2002 financial statements.


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Nature  of  the  Business  and Significant  Accounting  Policies.
          [Continued]

  Recently   Enacted   Accounting  Standards:   Statement   of   Financial
  Accounting  Standards  ("SFAS") No. 141, "Business  Combinations",  SFAS
  No.   142,  "Goodwill  and  Other  Intangible  Assets",  SFAS  No.  143,
  "Accounting   for   Asset  Retirement  Obligations",   SFAS   No.   144,
  "Accounting  for the Impairment or Disposal of Long-Lived Assets',  SFAS
  No. 145, "Recission of SFAS No. 4, 44, and 64, Amendment of SFAS No.  13
  and  Technical  Corrections,  and SFAS No. 146,  "Accounting  for  Costs
  Associated  with Exit or Disposal Activities" were recently issued  SFAS
  No.  141,  142,  143, 144, 145 and 146 have no current applicability  to
  the  Company or their effect on the financial statements would not  have
  been  significant.  During the year ended June 30, 2001  Emerging  Issue
  Task  Force 00-10 "Accounting for Shipping and Handling Fees and  Costs"
  was  issued and adopted by the Company having no effect of the  included
  financial  statements.  During the year ended  June  30,  2002  Emerging
  Issue Task Force 01-9 "Accounting consideration given by a Vendor  to  a
  Customer  (Including  a Reseller of the Vendor's Products)"  was  issued
  requiring  the  Company beginning the first quarter of  fiscal  2003  to
  reclassify  dealer  incentive interest paid to  resellers  from  selling
  expense  to  net sales.  If the Company had elected to adopt EITF  01-9,
  the  Company's  net sales and selling expense for the years  ended  June
  30, 2002, 2001 and 2000 would be as follows:

                                               Year Ended June 30,
                                    ________________________________________
                                        2002           2001        2000
                                    ____________   ___________  _____________
     Net sales as reported          $ 37,546,692   $46,081,634  $ 57,532,461
     Less dealer incentive
       interest                         (596,111)     (953,600)   (1,164,561)
                                    ____________   ____________  ____________
     Net sales                        36,950,581    45,128,034    56,367,900
                                    ____________   ____________  ____________
    Selling expense as reported     $  4,758,384   $ 5,955,103  $  7,370,319
    Less dealer incentive interest      (596,111)     (953,600)   (1,164,561)
                                    ____________   ____________  ____________
    Selling expense                    4,162,273     5,001,503     6,205,758
                                    ____________   ____________  ____________

  Cash  Surrender  Value of life insurance policies: - At June  30,  2002,
  the  Company owns five life insurance policies on Reginald M.  Fountain,
  Jr.,  the Company's Chairman, President and Chief Executive Officer  for
  a  total  of $5,381,070 in coverage and $1,126,132 cash value.  At  June
  30,  2002  the  Company has borrowed $925,712 against the policies  (See
  Note 5).

Note 2.  Inventories.

  Inventories consist of the following:
                                                     June 30,
                                           ___________________________
                                                2002          2001
                                           ____________   ____________
               Parts and supplies            $2,071,709   $2,829,705
               Work-in-process                1,047,154    1,308,998
               Finished goods                   278,981      567,266
                                           ____________   ____________
                                              3,397,844    4,705,969
Reserve for obsolescence                       (307,393)    (150,000)
                                           ____________   ____________
                                             $3,090,451   $4,555,969
                                           ____________   ____________

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3.  Property, Plant, and Equipment.

  Property, plant, and equipment consists of the following:

                               Estimated          June 30,
                              Useful Lives __________________________
                                in Years        2002         2001
                                 ________  ____________  ____________
   Land  and related improvements  10-30   $  4,544,278  $  4,508,064
   Buildings and related
    improvements                   10-30      8,748,746     8,748,746
   Construction-in-progress         N/A         117,673       165,327
   Production molds and
    related plugs                   8-10     19,967,872    18,549,691
   Machinery and equipment          3-5       5,958,160     5,803,875
   Furniture and fixtures            5          771,133       766,043
   Transportation equipment          5          537,926       502,436
   Racing boats                     N/A         242,095       308,054
                                          _____________  ____________
                                           $ 40,887,883  $ 39,352,236
          Accumulated depreciation          (23,773,222)  (20,432,602)
                                          _____________  ____________
                                           $ 17,114,661  $ 18,919,634
                                          _____________  ____________
  All  of  the  land, buildings and improvements are owned by the  Company
  and  are  held  as  collateral on notes and mortgages payable  having  a
  balance  of $9,640,808 at June 30, 2002.  Depreciation expense  amounted
  to  $2,294,254, $2,293,284, and $2,397,085, for the years ended June 30,
  2002,  2001  and  2000, respectively.  During Fiscal 2002,  the  Company
  recorded a loss on impairment of $1,112,320 in accordance with SFAS  No.
  121  "Accounting  for  Impairment of Long-Lived  Assets  and  Long-Lived
  Assets  to  be Disposed of" on certain molds and racing boats to  adjust
  the respective assets to their net realizable value.

  Construction  costs  of production molds for new  and  existing  product
  lines  are capitalized and depreciated over an estimated useful life  of
  ten  years.  Depreciation starts when the production mold is  placed  in
  service  to  manufacture  the product.  The  costs  include  the  direct
  materials,  direct  labor,  and  an  overhead  allocation  based  on   a
  percentage of direct labor.

Note 4.   Capital Lease.

  The  Company  is the lessee of equipment under a capital lease  expiring
  in  May 2004.  The assets and liabilities under the capital leases  were
  recorded  at  the  lower  of  the present value  of  the  minimum  lease
  payments  or  the  fair  value of the assets at the  time  of  purchase.
  Equipment under capital lease obligation is as follows:

                                                 June 30,
                                     ______________________
                                         2002       2001
                                     __________  __________
     Equipment                         $ 83,067   $  83,067
     Less: Accumulated amortization    (47,071)    (30,458)
                                     __________  __________
                                       $ 35,996   $  52,609
                                     __________  __________



<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4.   Capital Lease. [Continued]

  Total  future  minimum  lease  payments,  executory  costs  and  current
  portion of capital lease obligations are as follows:

    Year ending June 30,                        Lease Payments
            2003                                     $39,552
            2004                                      39,552
            2005                                      14,588
                                                   __________
      Total future minimum lease payments            $93,692
      Less: amounts representing maintenance and
        usage fee, interest and executory costs      (42,806)
                                                   __________
      Present value of the future minimum
        lease payments                                50,886
      Less: Lease current portion                    (15,674)
                                                   __________
      Capital lease obligations - long term        $  35,212
                                                   __________


Note 5.  Long-term Debt and Pledged Assets.
  The following is a summary of long-term debt:
                                                    June 30,
                                             _______________________
                                                2002         2001
                                             ___________  __________
     9.50% loan payable to a financial
      institution for the purchase of
      a vehicle, monthly payment of
      $1,765 through October 2003,
      secured by the vehicle purchased.           26,291    44,056
     9.99% loans payable to a financial
      institution for the purchase of
      vehicles, monthly payments
      totaling $1,383 through August
      2002, secured by the vehicles
      purchased.                                  44,337    56,365
     6.30% loan payable to a financial
      institution for the purchase of a
      vehicle, monthly payment of $771
      through December 2002,
      secured by the vehicle purchased.            4,435    13,203
     7.15% loan payable to a financial
      institution for the purchase
      of a vehicle, monthly payments of
      $1,055 through October 2002,
      secured by the vehicle purchased.            3,990    16,083
     8.25% loan payable to a financial
      institution for the purchase
      of a vehicle, monthly payments of
      $726 through October 2004, secured
      by the vehicle purchased.                   31,735         -
     7.50% loan payable to a financial
      institution for the purchase
      ofa vehicle, monthly payments of $371
      through December 2002, secured by
      the vehicle purchased.                      33,823         -
     7.93% to 8% loans payable borrowed
      against the cash surrender
      value of key-man life insurance
      policies during 1998, 2001, and
      2002, monthly payments of $25,004.         925,712    476,848
     $10,000,000 credit agreement with
      a financial Corporation
      (See Below).                             9,640,808  6,696,405
                                             ___________  __________
                                              10,711,131  7,302,960
 Less: Current maturities included in
       current liabilities:                    (919,182)   (722,661)
                                             ___________  __________
                                             $9,791,949   $6,580,299
                                             ___________  __________

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5.  Long-term Debt and Pledged Assets.  [Continued]

  On  November 2, 2001, the Company signed a $10,000,000 credit  agreement
  with  General Electric Capital Corporation.  Under the terms of the  new
  credit  agreement,  the  Company refinanced  substantially  all  of  its
  interest bearing debt and borrowed additional funds to complete  tooling
  projects  and  for working capital.  The credit agreement  involves  two
  notes,  both  with an interest rate of prime plus 2%.  Combined  monthly
  payments  are  $128,005.  The $7,000,000 note has  monthly  payments  of
  approximately  $85,000  and  a ten year amortization  with  a  five-year
  balloon  payment  and is secured by a first lien on the Company's  plant
  and  property.   The second note of $3,000,000 has monthly  payments  of
  approximately  $45,000,  a  seven year  amortization  with  a  five-year
  balloon payment, and is secured by a second lien on the Company's  plant
  and  property.   This  second note is guaranteed by  the  United  States
  Department  of  Agriculture.  These notes  are  further  secured  by  an
  assignment  of a $1,000,000 key man life insurance policy to the  lender
  and  the personal guarantee of the Company's President with real  estate
  valued at approximately $1,000,000.

  The  estimated aggregate maturities required on long-term debt for  each
  of the individual years at June 30, 2002 are as follows:

               2003                        $   919,182
               2004                            964,321
               2005                          1,031,733
               2006                          1,093,376
               2007                          4,951,543
            Thereafter                       1,750,976
                                           $10,711,131

Note 6.  Common Stock, Stock Options, and Treasury Stock.

  Common  Stock: The Company has authorized 200,000,000 shares  of  common
  stock, $.01 par value.  4,732,608 shares were issued and outstanding  at
  June 30, 2002, 2001 and 2000.

  Stock  Options:  During 1999, the shareholders voted to adopt  the  1999
  Employee  Stock Option Plan (the Plan), which expires January 11,  2009.
  Under  the Plan, the board is empowered to grant options to purchase  up
  to  120,000 shares of common stock to employees, officers, directors and
  consultants  of the Company.  Additionally, the Board will determine  at
  the  time  of  granting the vesting provisions and whether  the  options
  will  qualify  as  Incentive Stock Options  under  Section  422  of  the
  Internal  Revenue Code (Section 422 provides certain tax  advantages  to
  the employee recipients).

  During  2000, the Company granted options to purchase 10,000  shares  of
  common  stock under the Plan.  The options are exercisable at  $3.18  to
  $6.00  per share and vested on issuance.  The options expire on  May  8,
  2005.  As of June 30, 2002 none of the options have been exercised.

  During  2001, the Company granted options to purchase 35,000  shares  of
  common  stock.  The options are exercisable at $1.34 per share and  vest
  through  December 31, 2002.  The options expire December 12,  2007.   As
  of June 30, 2002 none of the options have been exercised.

  During  2002, the Company granted options to purchase 30,000  shares  of
  common  stock for consulting services.  The options have been valued  at
  $40,295 and are being expensed ratably over the vesting period.   As  of
  June  30,  2002,  the  Company  has recorded  deferred  compensation  of
  $31,132  and  $9,163 in consulting expense.  The options are exercisable
  at  $1.45 to $1.67 per share and vest five years from the date they were
  granted.   The options expire through December 29, 2009.   At  June  30,
  2002, none of these options had been exercised.


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6.  Common Stock, Stock Options, and Treasury Stock.  [Continued]

  During  Fiscal  2002,  the Company granted options  to  purchase  75,000
  shares  of  common stock to employees with exercise prices ranging  from
  $1.45  to  $1.60 per share and vested through June, 2005.  These  shares
  expire  five years from the date of vesting.  As of June 30,  2002  none
  of the options have been exercised.

  On  June 21, 1995, the shareholders voted to adopt the 1995 stock option
  plan.   The  plan allowed up to 450,000 options to purchase  the  common
  stock  to be granted by the Board of Directors to employees or directors
  of  the  Company.  On  August 4, 1995, the Board of Directors  voted  to
  grant  the  450,000 stock options to Mr. Reginald M.  Fountain,  Jr.  at
  $4.67  per share, exercisable for 10 years from the date granted,  on  a
  non-qualified  basis.  As of June 30, 2002, none of these  options  have
  been exercised.

  Effective  March  23,  1995,  the  Board  of  Directors  authorized  the
  issuance  of options to purchase up to 30,000 shares of common stock  to
  each  of  the Company's four outside directors at $3.58 per share  on  a
  non-qualified basis, exercisable for 10 years.  Through June  30,  2002,
  84,000  of  the  options  had been exercised and 36,000  options  remain
  outstanding.


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6.  Common Stock, Stock Options, and Treasury Stock. [Continued]

  A  summary  of  the  status of the options granted under  the  Company's
  stock  option  plans  and other agreements at June 30,  2002,  2001  and
  2000,  and  changes during the periods then ended is  presented  in  the
  table below:


                   2002                   2001                2000
            ____________________    _________________   ___________________
                         Weighted             Weighted             Weighted
                         Average              Average              Average
                         Exercise             Exercise             Exercise
             Shares      Price      Shares    Price      Shares    Price
            ________   _________    _______   _______   ________   ________
Outstanding
 at
 beginning
 of period   551,000    $ 4.40      526,000    $ 4.61   546,000    $ 4.57
Granted      105,000      1.56       35,000      1.34    10,000      4.59
Exercised          -         -            -         -         -         -
Forfeited          -         -      (10,000)     4.59
Canceled           -         -            -         -   (30,000)     3.94
            ________   _________    _______   _______   ________   ________
Outstanding
 at end of
 period      656,000    $ 3.95      551,000    $ 4.40   526,000    $ 4.61
            ________   _________    _______   _______   ________   ________
Exercisable
 at end of
 period      568,500    $ 4.32      516,000    $ 4.61   521,000    $ 4.61
            ________   _________    _______   _______   ________   ________
Weighted
 average
 fair
 value of
 options
 granted     105,000    $ 1.22       35,000    $  .10    10,000    $  .28
            ________   _________    _______   _______   ________   ________

  The  fair value of each option granted is estimated on the date  granted
  using   the  Black-Scholes  option  pricing  model  with  the  following
  weighted-average assumptions used for grants during the year ended  June
  30,  2002,  2001, and 2000; risk-free interest rates of 4.5%, 5.3%,  and
  6.7%,  respectively, expected dividend yields of zero for  all  periods,
  expected  lives  of 6.25, 7.5, and 5 years, respectively,  and  expected
  volatility of 94%, 132%, and 128%, respectively.

  A  summary  of the status of the options outstanding under the Company's
  stock  option  plans and other agreements at June 30, 2002 is  presented
  below:

                      Options Outstanding             Options Exercisable
               __________________________________  ______________________

                            Weighted
  Range                     Average      Weighted                Weighted
    Of                      Remaining    Average                 Average
  Exercise        Number    Contractual  Exercise  Number        Exercise
  Prices       Outstanding  Life         Price     Exercisable   Price
  ___________   _________  ___________   ________  _________    _________
  $1.34 to 1.67  140,000   6 years        1.51      52,500        1.49
    $3.58         36,000   3 years        3.58      36,000        3.58
    $4.67        450,000   3 years        4.67     450,000        4.67
    $5.00         30,000   1.5 years      5.00      30,000        5.00


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6.  Common Stock, Stock Options, and Treasury Stock. [Continued]

  The  Company  accounts for its option plans and other option  agreements
  under  Accounting Principles Board Opinion No. 25, "Accounting for Stock
  Issued  to Employees", and related interpretations.  Accordingly,  since
  all  options  granted were granted with exercise prices at market  value
  or  above,  no compensation cost has been recognized in the accompanying
  financial  statements.   Had compensation cost for  these  options  been
  determined  based on the fair value at the grant dates for awards  under
  these  plans  and  other option agreements consistent  with  the  method
  prescribed  by  Statement  of Financial Accounting  Standards  No.  123,
  "Accounting for Stock-Based Compensation", the Company's net income  and
  earnings  per  common  share would have been the pro  forma  amounts  as
  indicated below:

                                             Year Ended June 30,
                                    _______________________________________
                                        2002           2001        2000
                                    _____________  ___________  ___________

     Net Income (loss) As reported  $ (7,031,593)  $ (899,526)  $ 1,258,342
     Pro  forma                     $ (7,059,106)  $ (900,426)  $ 1,255,537

     Earnings (loss) per
       share As reported            $      (1.49)  $     (.19)  $       .27
     Pro forma                      $      (1.49)  $     (.19)  $       .27

  Treasury  Stock:  The Company holds 15,000 shares of its  common  stock.
  This  common stock is accounted for as treasury stock at its acquisition
  cost  of  $110,748  ($7.38  per  share) in  the  accompanying  financial
  statements.


Note 7.  Income Taxes.

  The  Company  accounts for income taxes in accordance with Statement  of
  Financial  Accounting Standards (SFAS) No. 109.  SFAS 109  requires  the
  Company  to provide a net deferred tax asset or liability equal  to  the
  expected   future   tax  benefit  or  expense  of  temporary   reporting
  differences between book and tax accounting and any available  operating
  loss or tax credit carryforwards.

  At  June  30, 2002 and 2001, the totals of all deferred tax assets  were
  $1,132,181  and  $1,469,937, respectively.  The totals of  all  deferred
  tax  liabilities were $962,879 and $759,577, respectively.   The  amount
  of  and  ultimate  realization of the benefits  from  the  deferred  tax
  assets for income tax purposes is dependent, in part, upon the tax  laws
  in  effect, the Company's future earnings, and other future events,  the
  effects of which cannot be determined.

  The   Company   has   an  unused  federal  and  state   operating   loss
  carryforwards   at  June  30,  2002  of  approximately  $6,269,213   and
  $9,368,943, respectively, which expires in various years through 2022.

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Income Taxes. [Continued]

  The  components of federal income tax expense from continuing operations
  consist of the following:
                                              Year Ended June 30,
                                      _____________________________________
                                         2002         2001          2000
                                      __________   ___________   __________
     Current income tax expense:
          Federal                      $(717,983)   $(108,590)   $        -
          State                                -            -             -
                                      __________   ___________   __________
     Net current tax (benefit)         $(717,983)   $(108,590)   $        -
                                      __________   ___________   __________
     Deferred tax expense (benefit)
      resulted from:
          Excess of tax over financial
             accounting  depreciation  $ (14,929)   $ (81,110)   $  197,521
          Donations                       (2,374)      (1,008)        1,059
          Warranty reserves             (109,200)           -             -
          Reserve for obsolete
           inventory                     (61,383)           -       (11,700)
          Accrued vacation                 5,945       (2,184)       (8,652)
          Dealer incentive reserves      230,631       (9,410)       46,534
          Bad debt reserves                    -            -             -
          Accrued dealer incentive
           interest                        9,046       66,312       (34,000)
          Accrued executive
           compensation                    6,352       39,777       (31,069)
          Accrued dealer service
           incentives                    180,492     (120,708)      (17,751)
          Inventory adjustment
           -Sec.263A                     (32,048)     123,579        61,057
          Health insurance reserve        17,238      (12,168)      (50,310)
          Decrease in NOL
           carryforwards              (2,506,922)     (72,461)      453,148
          Alternative minimum tax
           credits                       218,232     (253,837)     (153,882)
          Investment tax credits               -      (86,294)      (81,545)
          Valuations allowance         2,599,979            -             -
                                      __________   ___________   __________
      Net deferred tax expense
       (benefit)                      $  541,059   $ (409,512)   $  370,410
                                      __________   ___________   __________

  Deferred  income  tax  expense results primarily from  the  reversal  of
  temporary   timing  differences  between  tax  and  financial  statement
  income.

       The reconciliation of income tax from continuing operations computed at
  the  U.S. federal statutory tax rate to the Company's effective rate  is
  as follows:
                                              Year Ended June 30,
                                     __________________________________
                                        2002        2001         2000
                                     ________     _________    ________
     Computed tax at the expected
       federal statutory rate          34.00%       34.00%      34.00%
     State income taxes, net of
       federal benefit                  5.00         5.00        5.00
     Valuations allowance             (36.07)           -           -
     Compensation from stock options       -            -           -
     (Increase) decrease in NOL
       carryforwards                       -        (1.45)       3.78
     Officer's life insurance              -          .11        1.03
     Net effect of alternative
       minimum taxes                    (.07)           -           -
     Other                              (.41)       (1.11)       1.04
                                     ________     _________    ________
     Effective income tax rates         2.45%       36.55%      44.85%
                                     ________     _________    ________

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Income Taxes. [Continued]

     The  temporary  differences gave rise to the following  deferred  tax
  asset (liability):

                                                    June 30,
                                           __________________________
                                                2002       2001
                                           ____________  ____________
     Excess of tax over financial
       accounting depreciation             $(1,168,222)  $ (1,183,152)
     Warranty reserve                           339,300       230,100
     Obsolete inventory reserve                 119,883        58,500
     Accrued vacations                           59,122        65,067
     Allowance for boat repurchases              78,000        78,000
     Dealer incentive reserves                   97,944       328,575
     Bad debt reserve                            10,858        10,858
     Accrued Dealer incentive interest           57,832        66,878
     Inventory adjustments - Sec. 253A          117,516        85,468
     State NOL carryforwards                    468,447        82,366
     Federal NOL carryforwards                2,131,532        10,690
     Alternative minimum tax credits            119,049       337,281
     Accrued executive compensation               9,750        16,102
     Donations carryforwards                      3,382         1,008
     Accrued dealer service incentives          193,354       373,846
     Health insurance reserve                    45,240        62,478
     Investment tax credits                      86,294        86,294

Note 8. Research and Development.

  The  Company  expenses  the costs of research and  development  for  new
  products  and  components  as  the costs  are  incurred.   Research  and
  development  costs  are included in the cost of sales  and  amounted  to
  $952,332  for  Fiscal 2002, $813,710 for Fiscal 2001, and  $926,486  for
  Fiscal 2000.

Note 9. Commitments and Contingencies.

  Employment  Agreement:  The Company entered into a  one-year  employment
  agreement in 1989 with its Chairman, Mr. Reginald M. Fountain, Jr.   The
  agreement  provides for automatic one-year renewals at the end  of  each
  year  subject to Mr. Fountain's continued employment.  During 1998,  the
  Company  entered  into  a  three  year  employment  agreement  with  the
  Company's Chief Operating Officer and Executive Vice President.

  Dealer  Interest:  The  Company regularly pays  a  portion  of  dealers'
  interest  charges  for  floor  plan financing.  These  interest  charges
  amounted  to  $596,111 for Fiscal 2002, $953,600  for  Fiscal  2001  and
  $1,164,561  for  Fiscal  2000.  They are included  in  the  accompanying
  consolidated  statements of operations as part of selling  expense.   At
  June  30,  2002 and 2001 the estimated unpaid dealer incentive  interest
  included   in  accrued  dealer  incentives  amounted  to  $178,857   and
  $224,098, respectively.

  Product  Liability  and  Other Litigation: There  were  various  product
  liability and warranty lawsuits brought against the Company at June  30,
  2002.   The Company intends to vigorously defend its interests in  these
  matters.  The Company carries sufficient product liability insurance  to
  cover  attorney's  fees  and  any losses, which  may  occur  from  these
  lawsuits over and above the insurance deductibles.  The Company is  also
  involved  from  time  to  time in other litigation  through  the  normal
  course  of  its  business.   Management  believes  there  are  no   such
  undisclosed  claims which would have a material effect on the  financial
  position of the Company.



<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  Manufacturer Repurchase Agreements: The Company makes available  through
  third-party  finance  companies floor plan financing  for  many  of  its
  dealers.   Sales to participating dealers are approved by the respective
  finance  companies.   If a participating dealer  does  not  satisfy  its
  obligations under the floor plan financing agreement in effect with  its
  commercial  lender(s)  and  boats are subsequently  repossessed  by  the
  lender(s), then under certain circumstances the Company may be  required
  to  repurchase  the  repossessed boats if it has executed  a  repurchase
  agreement  with the lender(s).  At June 30, 2002 and 2001,  the  Company
  had  a  contingent liability to repurchase boats in the event of  dealer
  defaults  and  if  repossessed by the commercial  lenders  amounting  to
  approximately  $16,066,953 and $23,747,900, respectively.   The  Company
  has  reserved for the future losses it might incur upon the repossession
  and  repurchase  of boats from commercial lenders.  The  amount  of  the
  reserve  is  based upon probable future events, which can be  reasonably
  estimated.   At  June  30,  2002  and  2001,  the  allowance  for   boat
  repurchases was $200,000.

  401  (k) Payroll Savings Plan: During Fiscal 1991, the Company initiated
  a  401(k)  Payroll  Savings Plan (the 401(k) Plan)  for  all  employees.
  Eligible  employees may elect to defer up to fifteen  percent  of  their
  salaries.   The  amounts deferred by the employees are fully  vested  at
  all   times.   The  Company  currently  matches  fifty  percent  of  the
  employee's  deferred salary amounts limited to a maximum of six  percent
  of  their  salaried  amounts, or a maximum of  three  percent  of  their
  salaries.   Amounts contributed by the Company vest at a rate of  twenty
  percent  per  year of service.  Mr. Fountain, by his own election,  does
  not  participate  in  the  401(k) Plan.  There  are  no  post-retirement
  benefit plans in effect.

  Environmental:   The  Company  was  notified  by   the   United   States
  Environmental  Protection Agency (the EPA) that it has  been  identified
  as  a  potentially responsible party (a PRP) and may incur, or may  have
  incurred,  liability  for  the  remediation  of  contamination  at   the
  Seaboard  waste  disposal site, located in High Point,  North  Carolina,
  also  referred  to as the Jamestown, North Carolina site resulting  from
  the  disposal  of hazardous substances at those sites by a  third  party
  contractor  of  the  Company.   The Company  disposed  of  approximately
  19,000  gallons  of  hazardous  waste at  the  Seaboard  disposal  site,
  according  to  PRP  Group records.  The total of estimated  gallons  for
  this  site  is  approximately 14.3 million.  Accordingly, the  Company's
  share  is  .148%  of the total estimated assessment of cleanup  cost  or
  approximately $40,000.  The Group Administrator has confirmed that  this
  is  a  revised  estimate  and  that, under worst  case  conditions,  the
  Company's  potential liability at this site is now  expected  to  be  no
  more  than  $20,000,  and  could be less if eligible  for  a  settlement
  agreement  likely to be proposed by the EPA in early 2003.  If  approved
  by  the  North Carolina Department of Environment and Natural  Resources
  and  EPA,  the  Company's share could be as low as $18,000 according  to
  the Group Administrator.

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 10.  Export Sales.

  The  Company had export sales of $1,500,145 for Fiscal 2002,  $2,889,828
  for  Fiscal 2001, and $1,755,412 for Fiscal 2000.  Export sales were  to
  customers in the following geographic areas:

                                     Year Ended June 30,
                            _____________________________________
                                 2002        2001         2000
                            ___________  ___________  ___________
 Canada,   Central   and
   South  America           $ 1,500,145  $ 2,509,638  $ 1,485,615
 Middle East, and Europe              -      380,190      269,797
                            ___________  ___________  ___________
                            $ 1,500,145  $ 2,889,828  $ 1,755,412
                            ___________  ___________  ___________

Note 11.  Transactions with Related Parties.

  The  Company expensed the following amounts for apartment rentals  owned
  or  controlled  by  Reginald M. Fountain, Jr., the  Company's  Chairman,
  President,  and  Chief Executive Officer: for Fiscal 2002,  $22,013;  in
  Fiscal  2001,  $22,734; and in Fiscal 2000, $9,880.  At June  30,  2002,
  the Company owed Reginald M. Fountain, Jr. $1,100 for these rentals.

  The  Company  paid $41,361, $199,442, and $345,049 for  the  year  ended
  June  30,  2002,  2001  and 2000 for advertising  and  public  relations
  services  from  an entity owned by a director of the Company.   At  June
  30,  2002,  the Company owed an entity owned by a director $145,257  for
  these services.

  A  Director  of  the  Company is an owner of a marine dealership,  which
  accounted for 4% of the Company's sales in Fiscal 2002.

Note 12.  Concentration of Credit Risk.

  Concentration of credit risk arises due to the Company operating in  the
  marine industry, particularly in the United States. In Fiscal 2002,  one
  dealer  accounted  for 11.8% of sales, one dealer  for  11.7%,  and  two
  other   dealers  for  8%  individually.   For  Fiscal  2001  one  dealer
  comprised  11.5%  of sales, one dealer 10.5% of sales,  and  four  other
  dealers  4  to  6% of sales individually.  For Fiscal 2000,  one  dealer
  accounted  for 7.4% of sales, a dealer accounted for 6.1% of sales,  and
  a dealer accounted for 5.7% of sales.

Note 13.  Gain on Insurance Claims from Hurricanes.

  During  September  1999,  the  Company  experienced  flooding  and   the
  temporary  closure of the production facility as a result of  Hurricanes
  "Dennis"  and "Floyd" hitting Eastern North Carolina.  As  a  result  of
  the  hurricanes, the Company sustained damages of $277,172 to  inventory
  and  $389,063 to property, plant and equipment, which includes  $300,000
  in  damages  to  the  Company's yacht mold  and  $51,658  in  additional
  expenses.   The Company filed a business interruption claim for  damages
  due  to  loss  revenues from the closure of the production facility  and
  inefficiencies  due  to  storm  preparation,  cleanup  and  work   force
  shortages.   During  2000, the insurance carriers  paid  $1,058,618  for
  damages  to  the inventory, property plant, and equipment including  the
  Yacht  Mold  and  other  expenses, and  $725,000  towards  the  business
  interruption  claim.   During  October 2000,  the  Company  received  an
  additional   $1,350,000   as  final  and  full   payment   of   business
  interruption claims.  During the years ended June 30, 2001 and 2000  the
  Company  recorded  a  gain on insurance claims from  the  hurricanes  of
  $1,107,819 and $1,065,725, respectively.


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14. - Earnings Per Share.

  The  following  data  show the amounts used in  computing  earnings  per
  share  and  the  effect  on income and the weighted  average  number  of
  shares  of potential dilutive common stock for the years ended June  30,
  2002, 2001 and 2000:
                                        2002         2001         2000
                                   ____________  ____________  _________
  Income (loss) from continuing
   operations available to
   common stockholders             $(7,031,593)  $  (899,526)  $ 468,301
                                   ____________  ____________  _________
  Gain on Settlement of a lawsuit  $         -   $         -   $ 790,041
                                   ____________  ____________  _________
  Weighted average number of
   common shares outstanding
   used in basic earnings
   (loss) per share                  4,732,608     4,732,608   4,732,608

  Effect of dilutive stock options           -             -          43

  Weighted number of common
   shares and potential dilutive
   common shares outstanding used
   in dilutive earnings (loss)
   per share                         4,732,608     4,732,608   4,732,651
                                   ____________  ____________  _________

  The  Company had at June 30, 2002 options to purchase 656,000 shares  of
  common  stock at prices ranging from $1.34 to $5.00 per share that  were
  not  included in the computation of loss per share because their  effect
  was anti-dilutive.

Note 15. Extraordinary Item / Gain on Settlement of Lawsuit

  During  April  2000,  the Company recognized an  extraordinary  gain  of
  $790,041 net of income taxes of $523,183 from the settlement of a  class
  action  lawsuit alleging antitrust violations against a  vender  of  the
  Company who is in the sterndrive and inboard engine business.

Note 16. Going Concern

  The  accompanying financial statements have been prepared in  conformity
  with  generally accepted accounting principles in the United  States  of
  America  which  contemplate  continuation of  the  Company  as  a  going
  concern.   As shown in the financial statements for the year ended  June
  30,  2002  and  2001, the Company incurred net losses of $7,031,593  and
  $899,526,  respectively and had negative working capital  of  $3,890,906
  and  $1,632,203,  respectively.  These factors raise  substantial  doubt
  about  the  ability of the Company to continue as a going  concern.  The
  consolidated  financial statements do not include any  adjustments  that
  might result from the outcome of these uncertainties.

  The  Company's  operations will require significant  increases  in  cash
  flows  from  operations or additional financing or capital to  continue.
  In  order  to  generate positive cash flows, the Company  will  need  to
  return  to profitability through increasing sales of their sporting  and
  fishing  boats  and  wide beam cruisers, reducing expenses  and  capital
  expenditures and successfully refinancing current liabilities  to  long-
  term obligations.


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16. Going Concern [Continued]

  Management  plans  to  improve cash flows  from  current  operations  by
  implementing  an  aggressive budget for Fiscal 2003 which  they  believe
  will  result  in  significant improvement in sales and  improved  yield.
  The  budget  focuses  the Company's resources on  existing  sales  order
  backlogs for the new higher margin wide beam cruisers, reducing  capital
  projects,   and   other  capital  expenditures,  and   improving   their
  production  processes.   The  Company  is  further  seeking  to   obtain
  additional  debt  financing, which will enable  the  Company  to  reduce
  material cost by taking favorable cash discounts on material purchases.

The  statements  in  the above paragraphs regarding the  Company's  plans,
intentions  and  beliefs, and the expected results of  its  budgetary  and
other  actions, are "forward-looking" statements and are subject to  risks
and uncertainties and should be read considering the cautionary statement
for  purposes of "Safe Harbor" under the Private Securities Reform Act  of
1995.   Various factors could affect the Company's ability to successfully
implement  its  plans  or actions or could cause  the  actual  outcome  or
results of the Company's plans and actions to differ materially from those
that the statements indicate or imply that the Company believes or expects
to  occur.   Examples of those factors include: sales falls  significantly
short   of   forecast,   production  efficiency   improvements   are   not
accomplished, and company does not obtain additional debt funding.


Note 17 - Fourth Quarter Adjustments.

  During  the  fourth quarter ended June 30, 2002, the Company recorded  a
  loss  on impairment of $1,112,320 on certain molds that the Company does
  not  have  current plans of producing and a racing boat.  The impairment
  loss  was recorded to adjust these assets to their net realizable  value
  based  on management's estimated of future cash flows from these  assets
  in  accordance  with SFAS No. 121, "Accounting for impairment  of  Long-
  Lived Assets and Long-Lived Assets to be Disposed of".
  During  the  fourth  quarter  ended June  30,  2002,  the  Company  also
  increased the allowance for future warranty claims by $280,000 based  on
  estimated  future  warranty claims and the extension  of  the  Company's
  warranty period.

Note 18 - Segment Reporting.

  The Company's net sales resulted from the following product segments
  for the years ended June 30, 2002, 2001 and 2000:

                                    2002          2001         2000
                              _____________  ____________  ____________
  Sports boats                $  21,550,912  $ 31,027,308  $ 45,240,772
  Wide Beam Cruiser               5,478,777     1,729,858             -
  Fish boats                      3,235,519     7,425,654     9,333,346
  Wide Beam Fish                  5,495,665     2,726,043             -

  Non-Boat Sales including
  (Service, Parts, Trucking,
   Sportswear)                    1,785,819     3,172,770     2,958,343
                              _____________  ____________  ____________
  Net Sales                   $  37,546,692  $ 46,081,634  $ 57,532,461
                              _____________  ____________  ____________


<PAGE>

<TABLE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                   SCHEDULES TO THE FINANCIAL STATEMENTS

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<CAPTION>

Fiscal 2002                       Balance    Charge                  Balance
Valuation and Qualifying          June 30,   to Expense  Payments/   June 30,
Account  Description               2001     Adjustments  Deductions  2002
___________________________      _________  ___________  __________  __________
<S>                               <C>        <C>         <C>         <C>
Allowance for Doubtful accounts     27,841            -           -      27,841
Inventory Valuation Reserve        150,000      157,393           -     307,393
Deferred Tax Valuation Allowance         -    2,599,979           -   2,599,979
Warranty Expense                   590,000    2,216,600   1,936,600     870,000
Allowance for Boat Repurchases     200,000            -           -     200,000

Fiscal 2001                       Balance     Charge                 Balance
Valuation and Qualifying          June 30,   to Expense   Payments/  June 30,
Account  Description               2000     Adjustments  Deductions  2001
___________________________      _________  ___________  __________  __________
Allowance for Doubtful accounts     27,841            -           -      27,841
Inventory Valuation Reserve        150,000            -           -     150,000
Warranty Expense                   590,000    1,380,800   1,380,800     590,000
Allowance for Boat Repurchases     200,000            -           -     200,000

Fiscal 2000                       Balance     Charge                 Balance
Valuation and Qualifying          June 30,   to Expense   Payments/  June 30,
Account  Description               1999     Adjustments  Deductions  2000
___________________________      _________  ___________  __________  __________
Allowance for Doubtful accounts     27,841            -           -      27,841
Inventory Valuation Reserve        120,000       30,000           -     150,000
Warranty Expense                   590,000      869,979     869,979     590,000
Allowance for Boat Repurchases     200,000            -           -     200,000

</TABLE>

<PAGE>

<TABLE>

FOUNTAIN POWERBOATS INDUSTIRES, INC.
SUPPLEMENTARY DATA
UNAUDITED SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA

<CAPTION>
                                First      Second        Third       Fourth
                               Quarter     Quarter       Quarter     Quarter
<S>                           <C>         <C>          <C>         <C>

Fiscal 2002
Revenue *                     8,450,793   6,553,076    10,811,769  11,731,055
Gross profit                    687,486     (595,201)   2,220,809    (757,234)
Income (loss) before taxes     (814,875)  (2,315,742)    (280,534) (3,797,366)
Net income (loss)              (506,643)  (1,417,651)    (189,152) (4,918,147)
Net income (loss) per share:
  Basic                            (.11)        (.30)        (.04)      (1.04)
  Diluted                           N/A          N/A          N/A         N/A

Fiscal 2001
Revenue *                    13,686,344    8,838,621    9,966,147   13,590,523
Gross profit                  1,895,127    1,022,082    2,006,044    1,270,246
Income (loss) before taxes     (771,343)     258,147       54,020    (958,451)
Net loss                       (490,724)     156,363      (10,629)   (554,535)
Net loss per share
  Basic                            (.10)         .03         (.00)       (.12)
  Diluted                           N/A          .03          N/A          N/A

Fiscal 2000
    Revenue*                 10,795,168   15,384,022   14,306,940   17,046,331
Gross profit                  2,035,227    3,170,859    2,517,676    3,497,822
Income (loss) before taxes     (654,061)     707,516      728,072       57,184
Net Income (loss) before
  Extraordinary item           (369,768)     381,413      558,193    (101,547)
Extraordinary Income                  -            -            -      790,041
Net income (loss)              (369,768)     381,413      558,193      688,494
Net income (loss) per share
  Before extraordinary item:
  Basic                           (.08)          .08          .12        (.02)
  Diluted                          N/A           .08          .12         N/A
Net income (loss) per share:
  Basic                           (.08)          .08          .12         .15
  Diluted                          N/A           .08          .12         .15


</TABLE>

* During June 30, 2002 the Company adopted Emerging Issue Task Force 00-25
"Vendor  Income  Statement Characterization of  Consideration  Paid  to  a
Reseller  of  the  Vendor's Products", as amended by Emerging  Issue  Task
Force  01-9 "Accounting for Consideration Given by a Vendor to a  Customer
(Including a Reseller of the Vendor's Products)", requiring the Company to
reclassify  dealer  incentive  interest paid  to  resellers  from  selling
expense to net revenues.





<PAGE>

Item  9.  Changes in and Disagreements with Accountants on Accounting  and
Financial Disclosure.

      There  were  no  changes in or disagreements  with  the  independent
auditors on accounting and financial disclosure matters.



                                 Part III


Item 10.  Directors and Executive Officers of Registrant.

Incorporated herein by reference from the Company's definitive Proxy
Statement to be filed with the Commission in connection with the Company's
annual meeting of shareholders (under the following captions:  (a)
"Section 16(a) Beneficial Ownership Reporting Compliance," (b) "Proposal
1:  Election of Directors," and (c) "Executive Officers").


Item 11.  Executive Compensation.

Incorporated herein by reference from the Company's definitive Proxy
Statement to be filed with the Commission in connection with the Company's
annual meeting of shareholders (under the following captions:  (a)
"Compensation Committee Interlocks and Insider Participation," (b) "Board
Report on Executive Compensation," (c) "Executive Compensation," (d)
"Employment Contracts and Termination of Employment and Change-in-Control
Arrangements," and (e) "Employee Stock Options."


Item  12.   Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.

Incorporated herein by reference from the Company's definitive Proxy
Statement to be filed with the Commission in connection with the Company's
annual meeting of shareholders (under the captions (a) "Beneficial
Ownership of Securities" and (b) "Securities Authorized for Issuance under
Equity Compensation Plans."


Item 13.  Certain Relationships and Related Transactions.

Incorporated herein by reference from the Company's definitive Proxy
Statement to be filed with the Commission in connection with the Company's
annual meeting of shareholders (under the caption "Compensation Committee
Interlocks and Insider Participation").




                                  Part IV


Item  14.  Exhibits, Financial Statement Schedules, and Reports on Form  8
and Form 8-K.

(a)  Documents filed with Report:

  (1)Financial  Statements.    The  following  consolidated   financial
     statements of Registrant are contained in Item 8 of this Report.

     Independent auditor's report

     Consolidated balance sheets at June 30, 2002 and 2001

     Consolidated statements of operations for the years ended  June  30,
        2002, 2001 and 2000

     Consolidated statements of stockholder's equity for the  years  ended
        June 30, 2002, 2001 and 2000

     Consolidated statements of cash flows for the years ended  June  30,
        2002, 2001 and 2000

     Notes to consolidated financial statements

  (2)Financial Statement Schedules.

     Not applicable.

  (3)Exhibits.  An index of exhibits that are a part of this Form 10-K
     appears following the signature page and is incorporated herein by
     reference.


(b)  Reports on Form 8-K.  During the last quarter of the period  covered
      by this Report, no Current Reports on Form 8-K were filed by Registrant.


     Signatures

      Pursuant  to  the  requirements of Section  13  or  15  (d)  of  the
Securities  Exchange  Act of 1934, the Registrant  has  duly  caused  this
report  to  be  signed  on its behalf by the undersigned,  thereunto  duly
authorized.

FOUNTAIN POWERBOAT INDUSTRIES, INC.

By:  /S
March 18, 2003
Reginald M. Fountain, Jr.
Chairman, President, and Chief Executive Officer


     Pursuant to the requirements of the Securities Exchange Act of  1934,
this  report has been signed below by the following persons on  behalf  of
the Registrant and in the capacities and on the dates indicated.


/S
March 18, 2003
Reginald M. Fountain, Jr.
Chairman, President, and Chief Executive Officer
(Principal Executive Officer)


/S
March 18, 2003
George L. Deichmann, III
Director


/S
March 18, 2003
Guy L. Hecker, Jr.
Director


/S
March 18, 2003
Myles Cartrette
Director



/S
March 18, 2003
Mark L. Spencer
Director


/S
March 18, 2003
David L. Woods
Director


/S
March 18, 2003
Irving L. Smith
Chief Financial Officer



Certifications

  I, Reginald M. Fountain, Jr., certify that:

1.   I have reviewed this annual report on Form 10-K of Fountain Powerboat
       Industries, Inc.
2.   Based on my knowledge, this annual 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 annual report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the period presented in this annual report.

  March 18, 2003              /s
                              ____________________________________
                              Reginald M. Fountain, Jr.
                              President and Chief Executive Officer


  I, Irving L. Smith, certify that:

1.   I have reviewed this annual report on Form 10-K of Fountain Powerboat
     Industries, Inc.
2.   Based on my knowledge, this annual 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 annual report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the period presented in this annual report.

  March 18, 2003              /s
                              ____________________________________
                              Irving L. Smith
                              Chief Financial Officer


(Certification Pursuant to 18 U.S.C. Section 1350)
     The undersigned hereby certifies that (i) the foregoing annual report
on Form 10-K filed by Fountain Powerboat Industries, Inc. (the "Company")
for the year ended June 30, 2002, fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii)
the information contained in that Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.

Date:  March 18, 2003              /s
                                   _______________________
                                   Reginald M. Fountain, Jr.
                                   President and Chief Executive Officer



Date:  March 18, 2003              /s
                                   _______________________
                                   Irving L. Smith
                                   Chief Financial Officer



                               EXHIBIT INDEX

Exhibit
Number       Description of Exhibit


  3.1  Registrant's  Articles  of Incorporation, as amended  (incorporated
          herein by reference to exhibits to Registrant's Annual Report on
          Form 10-K for the fiscal year ended June 30, 2001)

  3.2  Registrant's Bylaws, as amended (incorporated herein by reference to
          exhibits to Registrant's Annual Report on Form 10-K for the
          fiscal year ended June 30, 2001)

  4.1       Form of stock certificate (incorporated herein by reference
          to  exhibits to Registrant's Annual Report on Form 10-K for  the
          fiscal year ended October 1, 1989)

 10.1   *    Employment Agreement dated March 31, 1989, between Reginald
          M.  Fountain,  Jr.  and Fountain Powerboats, Inc.  (incorporated
          herein  by reference from Exhibits to Registrant's Annual Report
          on Form 10-K for the fiscal year ended October 1, 1989)

 10.2   *      Employment  Agreement  dated  August  24,  1998,  between
          Fountain  Powerboats, Inc. and Anthony J. Romersa  (incorporated
          herein  by reference from exhibits to Registrant's Annual Report
          on Form 10-K for the fiscal year ended June 30, 1999)

 10.3   *     Stock  Option  Agreement dated  August  4,  1995,  between
          Registrant and Reginald M. Fountain, Jr. (incorporated herein by
          reference to exhibits to Registrant's Annual Report on Form 10-K
          for the fiscal year ended June 30, 2001)

 10.4   *     1999  Employee Stock Option Plan (incorporated  herein  by
          reference to exhibits to Registrant's Annual Report on Form 10-K
          for the fiscal year ended June 30, 1999)

 10.5 *  Stock   Option   Agreement  dated  January  12,   1999,   between
          Registrant  and  Anthony  J.  Romersa  (incorporated  herein  by
          reference from Exhibits to Registrant's Annual Report on Form 10-
          K for the fiscal year ended June 30, 1999)

 10.6 *  Stock  Option Agreement dated March 17, 1995, between  Registrant
          and  Mark  L.  Spencer  (incorporated  herein  by  reference  to
          exhibits  to  Registrant's Annual Report on Form  10-K  for  the
          fiscal year ended June 30, 2001)

 10.7 *  Stock   Option   Agreement  dated  February  7,   2001,   between
          Registrant and David L. Woods (filed herewith).

 10.8 *  Stock   Option   Agreement  dated  December  19,  2001,   between
          Registrant and Anthony J. Romersa (filed herewith).

 99        Definitive proxy statement to be filed with the Commission.
______________________________
*     Denotes  a  management  compensation plan or  compensatory  plan  or
arrangement.


<PAGE>