SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, DC  20549

                                 FORM 10-K

               ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934

                    For fiscal year ended June 30, 2003

                      Commission File Number: 0-14712

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

         NEVADA                                  56-1774895
(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)

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


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 past 12 months (or for such shorter period
that  the  registrant was required to file such reports) and (2) has  been
subject to such filing requirement for the past 90 days.
                                            [ X ]Yes            [     ] No

           Indicate  by check mark if there is no disclosure of delinquent
filers  in response to Item 405 of Regulation S-K contained in this  form,
and  no  disclosure  will  be  contained,  to  the  best  of  Registrant's
knowledge,  in definitive proxy or information statements incorporated  by
reference in Part III of this Form 10-K or any amendment to this Form  10-
K.   [    ]

     Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act):   [  ]  Yes    [ X ]  No

      The aggregate market value of the Registrant's voting and non-voting
common  equity held by affiliates computed by reference to  the  price  at
which  the common equity was last sold as of the last business day of  the
Registrant's most recently completed second fiscal quarter was $7,650,394.

      As  of  September  2,  2003, the number  of  outstanding  shares  of
Registrant's Common Stock was 4,757,608.

      Portions  of  the  Registrant's definitive  proxy  statement  to  be
distributed in connection with its next Annual Meeting of Shareholders are
incorporated by reference into Part III of this Report.





                                  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  with standard reliable power 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 builds outboard powered center consoles, and  outboard
or  stern drive cabin model offshore sport fishing boats ranging from  23'
through  38'.  In addition the company also has a line of express cruisers
with  38'  and 48' offerings.  These boats are offered with gas or  diesel
options.   The  48'  utilizes  surface drives which  are  very  efficient,
durable,  and resist corrosion better than traditional stern drives.   The
48'  was named Boating Magazine's Boat of the Year award for 2002  in  its
December 2002 issue, which is the boating industries highest accolade.  In
addition, the Robb Report named the 48' the Best of the Best for  2003  in
their  June 2003 issue.  The Company also builds custom racing  boats  for
the APBA and SBI racing circuits.

      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'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  $431,000 to  $658,000.   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 retail price ranges from $327,000 to $432,000.

      The 38' Lightning operates at speeds of between 70 and 100 mph.  The
retail  price  ranges from $269,000 to $344,000, 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 $230,000  to
$303,000, depending primarily upon the type of engines selected.

     For  Fiscal  2003  we  reintroduced the 35' Executioner.   Its  retro
styling  and competitive retail price of $149,995 made it our  number  one
seller.

      The  32'  Fever was also reintroduced in Fiscal 2003.  Retail  price
ranges from $154,000 to $168,000.

     The 29' Fever is still one of the most popular boats.  It operates at
speeds  of 65 to 85 mph and retail price ranges from $112,000 to  $153,000
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.   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  27'  Fever is a single engine model that incorporates the  same
features, components and designs as our larger offshore performance boats.
Its retail price ranges from $101,000 and $131,000.

      The  Company also builds and markets a sport fishing line.  Our  new
generation of fishing boat is once again setting the standard for offshore
fishing.   The 34' and 38' are heavily campaigned on the Southern Kingfish
Association (SKA) tournament trail.

     The 38' sport fish model is a wide beam center console with T-Top and
cuddy  cabin  that  was  introduced in fiscal 2001.   It  features  triple
outboards and retail price ranges from $226,000 to $245,000.

     The  34' sport fish wide beam center console model was introduced  in
fiscal  2002  and  is offered with twin or triple outboard  engines.   Its
retail  prices  range  from $194,000 to $224,000,  depending  upon  engine
selection.  The addition of this model has added greatly to our fish  boat
volume and profitability.

     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.   Retail
price for this model ranges from $125,000 to $137,000.

      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 has 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.

      The 38' sport fish cruiser was introduced at the Miami Boat Show  in
February of 2003 and is offered with twin gas or diesel engines.  The  38'
sport  fish  cruiser offers the customer the luxury and  amenities  of  an
express  fisher  while  maintaining the  performance  and  handling  of  a
Fountain  sport boat.  Retail price for this boat ranges from $338,000  to
$371,000.

      During the past two years the Company has made great strides in  the
express  cruiser  market  by developing the 38' and  48'  express  cruiser
models.   These boats offer customers the speed and performance  that  you
would  typically find in a sport boat with the amenities of a  traditional
cruiser.   We  do  it  by  integrating our positive lift  bottom,  notched
transom and pad keel design, which greatly enhances the performance.

      The  38'  express 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.  This boat been extremely well received by  the
market and retail price ranges from $323,000 to $367,000.

     In  Fiscal  2002, the Company introduced the latest in their  express
cruiser  and  wide-beam lines.  The 48' wide-beam express 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  48'  retail
price  ranges from $697,000 to $864,000, depending upon engine choice  and
option configurations.

     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
                               2003               2002           2001

Sport boats                     198                115            219

Wide Beam Fish                   69                 44             16

Wide Beam Cruisers               29                 21             10

Sport fishing boats              89                 48             84

Other                             3                  3              1
                              ------             ------         ------
Total                           388                231            330
                               ====               ====           ====

      As of June 30, 2003 the Company had a backlog of firm orders for  54
boats, totaling sales of $7,585,761, all of which will be completed during
Fiscal 2004.

     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 28 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 2003                   $552,072       $1,056,852

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

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

      For  Fiscal 2004, design, research and development planned  expenses
are  estimated to be $529,000 and plug and mold construction  expenditures
are  estimated  to  be $750,000.  These expenditures  will  complete  work
already  in  progress to complete new tooling for a  38'  wide  beam  fish
express cruiser based on the hull design of the 38' center console, and to
update existing tooling to enhance current models.

      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 ten 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 44 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 2003    Fiscal 2002     Fiscal 2001
     United  States          $ 50,816,277    $ 35,450,436    $ 42,238,206

     Canada, Mexico, Central
     and South America       $    929,481    $  1,500,145    $  2,509,638

     Europe and
      the Middle East        $    595,777    $          -    $    380,190

     Asia                    $    235,549    $          -    $          -
                             -------------  --------------  -------------
     Total                   $ 52,557,084    $ 36,950,581   $  45,128,034
                             =============  ==============  =============

     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 or
risk related to foreign currency fluctuation.

      For  Fiscal  2003,  one dealer accounted for  10.3%  of  sales,  one
accounted  for  8.0% of sales and one accounted for 6.7%  of  sales.   For
Fiscal  2002,  one dealer accounted for 11.8% of sales, one for  11.7%  of
sales  and  two  each  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%  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.  As part of  this  sales  promotion
program the Company agrees to pay interest on the floor plan for a certain
period  of  time.  Similar sales promotion programs were in effect  during
fiscal years 2002 and 2001.

      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  whom
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 Outdoor Channel.  Additionally,  Fountain
single,  twin  and  triple  engine racing boats  continue  to  hold  their
respective  world speed records.  The result of these racing programs  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.  Fountain
fishermen  have  won the coveted SKA `Angler of the Year' title  in  1991,
1992,  1994,  1995 and 1997, more than any other boat manufacturer.   This
year  Fountain developed a new eight member team comprised of world  class
anglers  who own Fountain boats.  These fishermen can afford any boat  but
they  choose to run a Fountain.  Fountain is also a dominant force in  the
newly formed American Striper Association (ASA).  ASA tournaments are 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  installed
in  the  boats.   Warranty expenses of $1,152,573 or 2.2%  of  sales  were
incurred in Fiscal 2003, and $1,936,600 of expense or 5.16% of sales  were
incurred  in  Fiscal  2002 and charged against  net  income.   A  $900,000
reserve for warranty expenses estimated to be incurred in future years had
been established at June 30, 2003.

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
                              Contender Boats

      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, provide
a market ready for expansion into the cruiser segment.

Employees.

     As of September 2003 the Company had 353 employees, of whom nine were
executive  and  management personnel.  Sixteen 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 were held as collateral on notes and mortgages payable  having
a  balance  of $8,723,636 at June 30, 2003.  The property is now  held  as
collateral on a new loan of $18,000,000 obtained in July, 2003  (See  Note
16).   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   parts lamination.
  Building 6                23,800       Metal fabrication.
  Building 7                15,720       Racing, service, and warranty.
  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, 2003, the Company's chief operating subsidiary was  a
defendant in 9 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") that it had been identified  as  a
potentially  responsible party ("PRP") in the remediation of contamination
at a clean up site.  The Group administrator estimated the Company's share
of  future  remediation cost to be in the $40,000 to $60,000  range.   The
Company  is  likely to be eligible for a de Minimus Settlement  Agreement,
which is expected to be finalized in 2004.

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  the high and low prices for the Company's common stock as  reported
on  The NASDAQ National Market for each calendar quarter during our fiscal
years ended June 30, 2002 and 2003.


                    Quarter Ending     High      Low
                    September 2001     2.10      1.51
                    December 2001      1.83      1.16
                    March 2002         3.50      2.50
                    June 2002          2.95      1.41

                    September 2002     3.80      1.25
                    December 2002      4.05      3.12
                    March 2003         4.08      2.44
                    June 2003          4.77      3.12


     The Company has not declared or paid any cash dividends on its common
stock since it first began operations.  In the future, any declaration and
payment  of  cash  dividends will be subject to the  Board  of  Directors'
evaluation of the Company's operating results, financial condition, future
growth plans, general business and economic conditions, and other relevant
considerations.   Management  of  the  Company  expects  that,   for   the
foreseeable future, any profits generated by the Company will be  retained
as  additional capital to support the Company's operations  and  that  the
Company will not pay any cash dividends.

      On  September  2,  2003, there were 219 holders of  record  for  the
Company's common stock.


     During Fiscal 2003, the Company sold an aggregate of 25,000 shares of
its  common stock to its Director, David L. Woods, for cash at a price  of
$1.344  per  share (an aggregate of $16,800) pursuant to his  exercise  of
stock  options  previously granted to him.  The shares were  sold  in  two
transactions (12,500 shares each on September 30, 2002 and April 18, 2003)
without  registration  in  reliance on  the  exemption  from  registration
provided  by  Section 4(2) of the Securities Act of 1933 and Rule  506  of
Regulation D promulgated thereunder.

Item 6.  Selected Financial Data

            Fountain Powerboat Industries, Inc. and Subsidiary
                          Selected Financial Data
                      Fiscal Years 1999 through 2003


                           Year Ended June 30
Operations Statement Data: -----------------------------------------------
(Period Ended)    2003        2002         2001         2000         1999
              -----------  -----------  -----------  -----------  ------------
Sales         $52,557,084  $36,950,581  $45,128,034  $56,367,899   $52,074,639


Net Income
(loss)        $   479,353  $(7,031,593) $ (899,526)  $ 1,258,342   $(1,255,791)


Income(loss)
per share     $       .10  $     (1.49) $     (.19)  $       .27   $     (.27)


Weighted
average shares  4,744,457     4,732,608    4,732,608    4,732,608     4,711,896
outstanding

Diluted earnings
per share     $       .10  $     (1.49) $     (.19)  $       .27  $      (.27)


Diluted weighted
average         4,818,806     4,732,608    4,732,608     4,732,651    4,711,896
shares outstanding


Balance Sheet Data
(At Period End)
-----------------------

Current
Assets        $ 8,152,488  $ 7,885,048  $ 8,934,936  $13,621,499  $14,084,888


Total Assets  $26,433,086  $26,534,696  $28,947,752  $33,431,084  $33,930,960


Current
Liabilities   $11,640,753  $11,775,953  $10,567,139  $12,144,123  $12,183,630


Long-term
debt          $ 9,010,527  $ 9,827,161  $ 6,629,904  $ 8,215,486  $10,215,334


Stockholders'
equity (1)    $ 4,568,168  $ 3,968,702  $10,991,132  $11,890,658  $10,632,316



        (1) The Company has not paid any cash dividends since its inception

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,  2003, 2002, and 2001, 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, 2003, 2002, and 2001.

      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
$16,378,985, $16,066,953 and $23,747,900 at June 30, 2003, 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  2003 was a year of rebound for the Company with Gross  sales
and  unit sales volume increasing to more historical levels.  The  Company
continues  to take steps to reduce  manufacturing cost and other operating
expenses by improving efficiencies and other cost reduction efforts.  As a
results,  the  Company achieved four quarters of operating  profit  during
2003.

     Net sales were up from Fiscal 2002 by more than 42%, from $36,950,581
to  $52,557,084  in  Fiscal  2003.  The significant  reduction  of  dealer
inventory  in  Fiscal 2002 set the stage for new product sales  in  Fiscal
2003.   Unit  sales  volume increased 68% from 231 to  388.   The  Company
attributes this increase to an improving economy and aggressive  marketing
campaign.   The Company experience net sales and unit sales growth  within
all   product  segments  with  the  greatest  net  sales  dollar  increase
experience by the Company's new model wide-beam fish boats and   wide-beam
express cruisers.

     The  Company  believes that they have effectively  diversified  their
sales  by  entering  into  the wide-beam express  cruiser  and  fish  boat
markets.  Sales of the four new models of wide-beam fish boats and express
cruisers introduced in Fiscal 2001 and 2002 have been well accepted in the
market.  During Fiscal 2003 the 34' and 38' fish boat models accounted for
approximately  18% of annual sales versus 15% in Fiscal  2002  and  6%  in
Fiscal  2001.  While the 38' and 48' express cruiser models accounted  for
approximately  19% of annual Fiscal 2003 sales versus 15% in  Fiscal  2002
and 4% in Fiscal 2001.

      Gross  margin on sales for Fiscal 2003 was $8,519,127, 16.2% of  net
sales,  as  compared  to  $959,748, 2.6% of net sales,  for  Fiscal  2002.
Improvement  in  gross  margin  was a result  of  improved  sales  volume,
effectively  allocating fixed costs over more units, improved product  mix
of  sport boats, and wide-beam fish boats, and efficiency improvements  in
manufacturing.

     No  boats  were  repurchased  in  Fiscal  2003,  2002,  and  2001  in
connection  with  floor plan arrangements.  At June 30,  2003,  2002,  and
2001, the Company had recorded a $200,000 reserve for losses which may  be
reasonably expected to be incurred on boat repurchases in future years.

      On  July  17,  2003, subsequent to the closing of Fiscal  2003,  the
Company  obtained an $18,000,000 long-term loan from Bank of America  that
was  guaranteed by Brunswick, a division of which supplies marine  engines
used  in  the  Company's products.  Proceeds from the loan  were  used  to
refinance  existing long-term debt, pay current liabilities,  and  provide
additional working capital funds.

      For the coming year, Fiscal 2004, the Company's management team  has
established  a plan for continued improvement in cost savings and  expense
reductions  to  support  the sales strategy for the  new  year.   The  new
financing  will  allow the Company to do business on a  cash  basis,  thus
eliminating  interest  on  outstanding  trade  payables,  obtaining   more
favorable terms and discounts from vendors, and reducing freight charges.

Results of Operations.

     Fiscal  2003  net  profit for the Company was $479,353  or  $.10  per
share.   This compares to a net loss of ($7,031,593) or ($1.49) per  share
for Fiscal 2002.  This is a result of the improved sales volume,   expense
and  cost reduction efforts and the contribution of improved manufacturing
efficiencies .

     Operating  profit was $2,089,110 in 2003 as compared  to  a  loss  of
($6,420,458)  in Fiscal 2002, which included a $1,182,320 charge  for  the
impairment  of  certain  long-lived  assets  in  2002.   The   return   to
profitability resulted from sales volume increase, more profitable product
mix, reduced costs and expenses and improved production efficiencies.

     Overhead  expenses decreased as a percent of sales, a result  of  the
increase  in  the  sales  volume level required  to  cover  fixed  factory
overhead.  This volume increase is reflected in the improvement  in  gross
margins from 2.6% in 2002 to 16.2% in Fiscal 2003.

      Depreciation expense was $2,112,051 for Fiscal 2003, $2,294,254  for
Fiscal 2002, and $2,293,284 for Fiscal 2001.  The decrease in depreciation
for the year 2003, is attributable to the $1,182,320 impairment  charge of
certain  long-lived  assets  in  Fiscal  2002  and  the  sale  of  certain
transportation  equipment  during 2003.   Depreciation  expense  by  asset
category was as follows:

                        Fiscal 2003     Fiscal 2002      Fiscal 2001

Land improvements       $   126,424     $   126,035      $   121,857

Buildings               $   295,922     $   294,921      $   294,354

Molds & plugs           $ 1,197,669     $ 1,350,466      $ 1,184,807

Machinery & Equipment   $   394,998     $   412,493      $   473,496

Furniture & fixtures    $    51,405     $    53,808      $    57,663

Transportation
equipment               $    45,633     $    56,531      $   161,107

Racing Equipment        $       -0-     $       -0-      $       -0-
                       -------------   --------------   --------------
     Total              $ 2,112,051     $ 2,294,254      $ 2,293,284
                       =============   ==============   ==============

Following  is  a  schedule  of the net fixed asset  additions  (deletions)
during Fiscal 2003 and Fiscal 2002.

                              Fiscal 2003             Fiscal 2002

  Buildings                   $    78,986             $       -0-
  Land and Improvements       $    20,245             $    36,214
  Molds and plugs             $   962,912             $ 2,099,710
  Construction in Progress    $    93,940             $  (729,182)
  Machinery & equipment       $    72,741             $   154,286
  Furniture & fixtures        $    19,385             $     5,090
  Transportation equipment    $  (217,215)            $    35,490
  Racing equipment            $  (242,095)            $   (65,960)
                            ---------------         ---------------
     Total                    $   788,900             $  1,535,648
                            ===============         ===============

     Overall  selling  and  administrative expenses for  Fiscal  2003  was
$6,430,017 a $950,189 decrease from $7,380,206 in Fiscal 2002.

     Selling  expenses  were $4,609,253 for Fiscal  2003,  $4,162,273  for
Fiscal  2002  and $5,001,503 for Fiscal 2001.  The Company  increased  its
product  promotions in Fiscal 2003, with focus on sport boats and the  new
48' express cruiser and 34' wide-beam fish boat.  The Company maintained a
presence  in the offshore racing circuit and tournament fishing  programs,
during  Fiscal  2003  with overall fishing and racing  promotion  expenses
decreasing  relative  to  the prior years as  more  customers  are  racing
Fountain boats under their own sponsorship.

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

                          Fiscal  2003     Fiscal 2002      Fiscal 2001
  Fishing & racing        $   828,741      $ 1,011,007      $ 1,508,162
  Advertising             $ 1,031,661      $   775,524      $ 1,123,977
  Salaries & commissions  $   910,090      $   599,337      $   705,249
  Boat shows              $   508,811      $   634,767      $   568,806
  Dealer incentives       $    66,438      $    38,656      $   217,467
  Other selling expenses  $ 1,263,512      $ 1,053,438      $   877,842
                         -------------    -------------    -------------
     Total                $ 4,609,253      $ 4,162,273      $ 5,001,503
                         =============    =============    =============

      General  and administrative expenses include the executive, finance,
personnel,  information  technology, legal  and  administrative  operating
expenses of the Company.  These expenses were $1,820,764 for Fiscal  2003,
$2,035,613 for Fiscal 2002, and $2,691,826 for Fiscal 2001.  The  decrease
in  general and administrative expenses for 2003 is partially attributable
to  a decrease in executive compensation due to the decrease in the number
of executives after the retirement of an officer.

      For  Fiscal 2002, the Company recorded an impairment loss and  wrote
down  certain long-lived assets to realizable values for $1,182,320.   For
Fiscal 2001, the Company received $118,503 in other income, had a gain  of
$500,446 on the disposal of assets, and recorded a gain of $1,107,819  for
insurance  claims related to final insurance settlement from the hurricane
damages.

     Interest expense net of amounts capitalized was $1,037,002 for Fiscal
2003,  $809,571  for Fiscal 2002, and $700,965 for Fiscal 2001.   Interest
expense  increased  in  Fiscal 2003 as a result of the  Company  obtaining
$3,955,644 in debt financing during 2002.

Liquidity and Financial Resources.

      On  July  17,  2003, subsequent to the closing of Fiscal  2003,  the
Company obtained an $18,000,000 long-term loan from Bank of America.   The
proceeds  were  used  to  refinance the two loans  with  General  Electric
Capital  Corporation totaling $10,000,000 with total remaining balance  of
$8,723,636  and a variable interest rate of prime plus 2% or 6.25%  as  of
June  30, 2003.  Proceeds from the Bank of America loan were also used  to
pay  trade  payables  to current status and provide  additional  operating
funds.   The new agreement with Bank of America has a $9,000,000  variable
interest note accruing at one month LIBOR plus 2.25% or 3.77% at July  17,
2003, and a $9,000,000 note under an interest rate swap to provide a fixed
rate of 6.02%.  The interest rate swap is designated as a fair value hedge
and  is  deemed effective pursuant to SFAS 133.  The Bank of America  loan
has  a  fifteen year amortization with a five year balloon payment and  is
secured  by  certain assets of the Company and President, Chief  Executive
Officer  and  majority shareholder, Reginald M. Fountain, Jr.  Obligations
are   guaranteed  by  the  Company  and  Mr.  Fountain  and  by  Brunswick
Corporation,  a  division of which supplies marine  engines  used  in  the
Company's products.  Combined monthly payments to Bank of America will  be
approximately $126,000.

     At  the  year ended June 30, 2003 and 2002, the Company had  negative
working  capital of $3,493,945 and $3,890,906, respectively.  As mentioned
in  Note  15  to  the  Financial  Statements  the  accompanying  financial
statements  this  would have raised substantial doubt  about  the  Company
ability to continue as a going concern had the Company not been successful
in  closing  the  $18,000,000  in debt financing  with  Bank  of  America.
Subsequent  to  applying the proceeds of the loan on July  17,  2003,  the
Company had positive working capital of approximately $6,500,000.

     Net cash provided by operations in Fiscal 2003 amounted to $3,345,801
resulting from net income plus adjustments to reconcile net income to  net
cash  provided by operating activities including depreciation  expense  of
$2,112,051,  changes in deferred taxes of $569,944 and loss  on  sales  of
assets of $8,378 before changes in asset and liability accounts.  $369,834
was  used to fund an increasing inventories.  The ending cash balance  was
$1,224,935.

     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.

      Investing activities for Fiscal 2003 required $1,561,651,  including
$268,410  for  property,  plant and equipment, $1,056,852  for  additional
plugs and molds, $199,403 for payments increasing the cash surrender value
of  certain  key  man  life  insurance  policies,  $190,796  for  payments
increasing other assets and proceeds of $153,810 on sales of property.

     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.

     Financing activities for Fiscal 2003 used $888,855.  Included in this
amount  are  proceeds  from  issuance of notes payable  from  Northwestern
Mutual  Life  on  key man life insurance policies for  $343,074  and  debt
repayment to General Electric Capital Corporation and others in the amount
of  $1,014,001.  Payments of deferred loan costs for the Bank  of  America
loan were $251,528 at June 30, 2003

     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.

     Net  increase  in cash for Fiscal 2003 was $895,295,  primarily  from
operating  profits and issuance of notes payable from Northwestern  Mutual
Life  Insurance.  The net decrease in cash for Fiscal 2002  was  $466,966,
primarily attributed to cash paid for the development of the new wide-beam
34'  fish boat and 48' express cruiser and losses from operations  due  to
decreased  sales  volume.  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.


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.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     Interest Rate Risk - At June 30, 2003, the Company owed $8,723,636 on
a  $10,000,000 credit agreement with General Electric Capital Corporation.
The  credit  agreement involves two notes, both with an interest  rate  of
prime  plus 2%, 6.25% as of June 30, 2003.  A hypothetical 100 basis point
increase  in  interest  rates  would result in  an  approximately  $90,000
increase  in  interest  expense, resulting in a  negative  impact  on  the
Company's liquidity and results of operations.

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, 2003  and  2002,
and  the  related  consolidated  statements of  operations,  stockholders'
equity,  cash flows and the Schedule of Valuation and Qualifying  Accounts
for  the  years  ended  June 30, 2003, 2002 and 2001.  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,  2003  and  2002,  and the consolidated results of  their  operations,
their cash flows and the Schedule of Valuation and Qualifying Accounts for
the  years ended June 30, 2003, 2002 and 2001 in conformity with generally
accepted accounting principles in the United States of America.




/s/ Pritchett, Siler & Hardy, P.C.


August 1, 2003
Salt Lake City, Utah

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                        CONSOLIDATED BALANCE SHEETS

                                  ASSETS

                                                    June 30,
                                         ___________________________
                                              2003         2002
                                          ____________  ____________
CURRENT ASSETS:
  Cash & cash equivalents                 $  1,224,935   $   329,640
  Accounts receivable, less allowance
    for doubtful accounts of $27,841
    for 2003 and 2002                        2,015,371     3,003,992
  Inventories                                3,460,286     3,090,451
  Prepaid expenses                             644,581       328,783
  Current tax assets                           807,315     1,132,181
                                           ____________  _____________
        Total Current Assets                  8,152,488    7,885,047

PROPERTY, PLANT AND EQUIPMENT, net           16,165,684   17,114,661

CASH SURRENDER VALUE OF LIFE INSURANCE        1,378,626    1,179,223

OTHER ASSETS                                    736,288      355,765
                                           ____________  _____________
                                           $ 26,433,086  $ 26,534,696
                                           ____________  _____________

                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current maturities of long-term debt       $1,060,444  $   919,182
  Current maturities of capital lease            20,118       15,674
  Accounts payable                            7,498,762    6,877,394
  Accounts payable-related party                169,043      147,234
  Accrued expenses                            1,317,398    1,193,672
  Dealer incentives                             190,010      921,707
  Customer deposits                             290,658      631,090
  Allowance for boat repurchases                200,000      200,000
  Warranty reserve                              900,000      870,000
                                           ____________  ____________
        Total Current Liabilities            11,646,433   11,775,953

LONG-TERM DEBT, less current maturities       8,986,160    9,791,949
CAPITAL LEASE, less current maturities           24,367       35,212
DEFERRED TAX LIABILITY                        1,207,958      962,880
COMMITMENTS AND CONTINGENCIES (See Note 9)            -            -
                                           ____________  ____________
        Total Liabilities                    21,864,918   22,565,994
                                           ____________  ____________
STOCKHOLDERS' EQUITY
  Common stock, $.01 par value, 200,000,000
   shares authorized, 4,757,608 shares
   issued and outstanding                        47,576       47,326
  Additional paid-in capital                 10,436,551   10,343,935
  Retained earnings (deficit)                (5,801,326)  (6,280,679)
                                           ____________  ____________
                                              4,682,801    4,110,582
Less: Treasury Stock, at cost, 15,000 shares   (110,748)    (110,748)
        Deferred compensation for stock
        options issued                           (3,885)     (31,132)
                                           ____________  ____________
                                              4,568,168    3,968,702
                                           ____________  ____________
                                           $ 26,433,086 $ 26,534,696
                                           ____________  ____________
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,
                             _____________________________________________
                                    2003           2002            2001
                                ____________   ____________   ____________
NET SALES                       $ 52,557,084   $ 36,950,581   $ 45,128,034
COST OF SALES                     44,037,957     35,990,833     39,878,136
                                ____________   ____________   ____________
  Gross Profit                     8,519,127        959,748      5,249,848
                                ____________   ____________   ____________
EXPENSES:
  Selling expense                  4,609,253      4,162,273      5,001,503
  General and administrative       1,820,764      2,035,613      2,691,826
  Impairment of long-lived
   assets                                  -      1,182,320              -
                               _____________  _____________  _____________
      Total expenses               6,430,017      7,380,206      7,693,329
                               _____________  _____________  _____________
OPERATING INCOME (LOSS)            2,089,110     (6,420,458)    (2,443,431)
                               _____________  _____________  _____________
NON-OPERATING INCOME (EXPENSE):
  Other income (expense)               5,567         21,512        118,503
  Interest expense                (1,037,002)      (809,571)      (700,965)
  Gain (loss) on disposal
  of assets                           (8,378)             -        500,446
  Gain on insurance claims
  from hurricane                           -              -      1,107,819
                               _____________  _____________  _____________
                                  (1,039,813)      (788,059)     1,025,803
                               _____________  _____________  _____________
INCOME (LOSS) BEFORE
INCOME TAXES                       1,049,297     (7,208,517)    (1,417,628)

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

DEFERRED TAX EXPENSE (BENEFIT)       569,944        541,059       (409,512)
                                ____________  _____________  _____________

NET INCOME (LOSS)               $    479,353  $  (7,031,593) $    (899,526)
                                ____________  _____________  _____________


BASIC EARNINGS (LOSS) PER SHARE:$        .10  $       (1.49) $        (.19)
                                ____________  _____________  _____________
WEIGHTED AVERAGE SHARES
  OUTSTANDING                      4,744,457      4,732,608      4,732,608
                                ____________  _____________  _____________


DILUTED EARNINGS (LOSS)
PER SHARE:                      $        .10  $       (1.49)  $       (.19)
                                ____________  _____________  _____________
DILUTED WEIGHTED AVERAGE
  SHARES OUTSTANDING               4,818,806      4,732,608      4,732,608
                                ____________  _____________  _____________





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, 2000 THROUGH JUNE 30, 2003


<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, 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

Issuance of common
 stock upon exercise
 of options                 25,000         250       33,350           -            -            -             -         33,600

Payroll obligations
 forgiven by an officer
 and shareholder                 -           -       46,158           -            -            -             -         46,158

Issuance of options to
 purchase 10,000 shares
 common stock at $1.60
 per share for consulting
 services vesting
 through December 2003           -           -       13,108           -            -            -        27,247         40,355

Net profit for the year
 ended June 30, 2003             -           -            -     479,353            -            -             -        479,353
                       ___________  __________  ___________  __________  ___________  ___________  ____________  _____________
BALANCE, June 30, 2003   4,757,608  $   47,576  $10,436,551 $(5,801,326)     (15,000) $  (110,748) $     (3,885) $   4,568,168
                       ___________  __________  ___________  __________  ___________  ___________  ____________  _____________



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

</TABLE>

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

                                                 Year Ended June 30,
                                     ___________________________________________
                                          2003          2002           2001
                                     ____________  _____________  ______________
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                  $    479,353  $  (7,031,593) $    (899,526)
  Adjustments to reconcile net
  income (loss)to net cash provided
 (used) by operating activities:
    Non-cash expense                       86,512          9,162              -
    Amortization of deferred loan costs    61,800         89,098              -
    Depreciation expense                2,112,051      2,294,254      2,293,284
Impairment of long-lived assets                 -      1,182,320              -
    (Gain) loss on disposal of equipment    8,378              -       (500,446)
    Warranty reserve                       30,000        280,000              -
    (Increase) decrease in net tax asset  569,944        541,059       (409,511)
    Change in assets and liabilities:
     (Increase) decrease in accounts
       receivable                         988,621     (1,064,107)      (238,243)
     (Increase) decrease in inventories  (369,834)     1,395,518      3,324,167
     (Increase) decrease in prepaid
       expenses                          (315,798)      (161,286)       402,077
     Increase in accounts payable         643,152      1,341,929        689,012
     Increase (decrease) in accrued
      expenses                            123,726          2,654       (261,314)
     Increase (decrease) in dealer
      incentives                         (731,672)      (923,885)      (113,935)
     Increase (decrease) in customer
      deposits                           (340,432)       309,915           (864)
                                     ____________  _____________  _____________
Net Cash Provided (Used) by
  Operating Activities                  3,345,801     (1,734,962)     4,284,701
                                     ____________  _____________  _____________
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of equipment         153,810              -      1,750,720
Investment in molds and related plugs  (1,056,852)    (1,370,526)    (2,819,252)
  Purchase of property, plant
   and equipment                         (268,410)      (231,080)      (590,591)
  Increase in cash surrender value
   of life Insurance                     (199,403)      (219,536)      (216,849)
  (Increase) decrease in other assets    (190,796)           183              -
                                     ____________  _____________  _____________
Net Cash (Used) by
  Investing Activities                 (1,561,651)    (1,820,959)    (1,875,972)
                                    _____________  _____________  _____________
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from notes payable and
   long-term debt                         343,074      3,955,644       150,000
  Proceeds from issuance of
   common stock                            33,600              -             -
  Payments of long-term debt           (1,008,836)      (545,788)   (3,732,563)
  Payments on capital lease                (5,165)       (14,393)      (12,999)
  Payments of deferred loan cost         (251,528)      (306,508)            -
                                    _____________  _____________  ____________
Net Cash Provided (Used) by
  Financing Activities                   (888,855)     3,088,955    (3,595,562)
                                    _____________  _____________  _____________
Net increase (decrease) in cash
 & cash equivalents                  $    895,295  $    (466,966) $ (1,186,833)
Beginning cash & cash
 equivalents balance                      329,640        796,606     1,983,439
                                    _____________  _____________  _____________
Ending cash & cash
 equivalents balance                 $  1,224,935  $     329,640  $    796,606
                                    _____________  _____________  _____________
                                [Continued]

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                [CONTINUED]


                                            Year Ended June 30,
                                    ________________________________________
                                          2003         2002           2001
                                    _____________  _____________  __________

Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:
     Interest:
     Unrelated parties, net of
      amounts capitalized            $  1,035,553  $    798,700   $    709,585

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


Supplemental Schedule of Non-cash Investing and Financing Activities:
     For the year ended June 30, 2003:

  The  Company  recorded  consulting expense of $40,355  as  a  result  of
  amortization  of  deferred compensation from 40,000  options  issued  to
  purchase  stock  during Fiscal 2002, vesting through  January  2004  and
  expiring through January 2009.

  The  Company  recorded  a $46,158 contribution  to  additional  paid  in
  capital  as  a result of payroll obligations forgiven by an officer  and
  shareholder of the Company.

     For the year ended June 30, 2002:

  The  Company  issued  20,000  options to  purchase  common  stock  to  a
  consultant  for services to be rendered valued at $25,450.  The  options
  are  exercisable at $1.60 per share, vest through June 2003  and  expire
  June  2008.   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.









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  wide beam cruisers, wide beam fishing boats, sport fishing boats,
  and  custom offshore racing boats.  These boats are sold worldwide to  a
  network  of  approximately  47  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 purchased with
  a  maturity of three months or less to be cash equivalents.  At June 30,
  2003  and  2002, the Company had $1,124,935 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  has accrued estimated dealer  territory  service
  awards  of  $97,748 and $491,710 remaining at June 30,  2003  and  2002,
  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).


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

  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.

  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 shipped 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 $1,031,661, $775,524 and $1,123,976  for  the  years
  ended 2003, 2002 and 2001, 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.

  Reclassifications:   The financial statements for years  prior  to  June
  30,   2003   have  been  reclassified  to  conform  with  headings   and
  classifications used in the June 30, 2003 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]

  Cash Surrender Value of life insurance policies: - At June 30, 2003  and
  2002,  the  Company  owns  six life insurance policies  on  Reginald  M.
  Fountain,  Jr.,  the Company's Chairman, President and  Chief  Executive
  Officer  for  a  total  of  $6,161,287 and $5,381,070  in  coverage  and
  $1,378,626  and  $1,179,223 cash value.  At June 30, 2003 and  2002  the
  Company  has borrowed $1,265,438 and $925,712 against the policies  (See
  Note 5).

  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 $552,072 for Fiscal 2003, $952,332  for  Fiscal
  2002, and $813,710 for Fiscal 2001.

  Recently   Enacted  Accounting  Standards  -  Statement   of   Financial
  Accounting  Standards ("SFAS") No. 146, "Accounting for Costs Associated
  with  Exit  or  Disposal  Activities", SFAS No.  147,  "Acquisitions  of
  Certain Financial Institutions - an Amendment of FASB Statements No.  72
  and  144  and  FASB Interpretation No. 9", SFAS No. 149,  "Amendment  of
  Statement  133  on  Derivative Instruments and Hedging Activities",  and
  SFAS  No.  150,  "Accounting  for  Certain  Financial  Instruments  with
  Characteristics  of both Liabilities and Equity", were recently  issued.
  SFAS  No.  146,  147  149 and 150 have no current applicability  to  the
  Company or their effect on the financial statements would not have  been
  significant.

  Stock-based compensation --  In December 2002, the FASB issued SFAS  No.
  148,   "Accounting  for  Stock-Based  Compensation  --  Transition   and
  Disclosure,  an amendment of FASB Statement No. 123" ("SFAS 148").  This
  Statement  amends SFAS 123 to provide alternative methods of  transition
  for a voluntary change to the fair value method of accounting for stock-
  based   employee  compensation.  In  addition,  SFAS  148   amends   the
  disclosure requirements of SFAS 123 to require prominent disclosures  in
  both  annual and interim financial statements. Certain of the disclosure
  modifications  are required for fiscal years ending after  December  15,
  2002  and  are  included  in the notes to these  consolidated  financial
  statements.

  The  Company  has  stock incentive plans that provides  for  stock-based
  employee  compensation,  including the granting  of  stock  options,  to
  certain  key employees and other individuals. The plans are  more  fully
  described  in Note 6. The Company accounts for stock options  issued  to
  employee,  officer  and  directors under the  stock  incentive  plan  in
  accordance  with  the  recognition and  measurement  principles  of  APB
  Opinion  No. 25, "Accounting for Stock Issued to Employees", and related
  Interpretations. Under this method, compensation expense is recorded  on
  the  date  of  grant only if the current market price of the  underlying
  stock  exceeded the exercise price. Under the Company's stock  incentive
  plan,  stock options are granted at exercise prices that equal or exceed
  the  market value of the underlying common stock on the date  of  grant.
  Therefore, no compensation expense related to stock options is  recorded
  in the Consolidated Statements of Income.

  During  the  periods presented in the accompanying financial  statements
  the  Company  has granted options under the 1995 and 1999 Stock  Options
  Plans  and executive and other employment agreements (SEE Note  6).  The
  Corporation  has adopted the disclosure-only provisions of Statement  of
  Financial  Accounting  Standards No. 123,  "Accounting  for  Stock-Based
  Compensation."  Accordingly, compensation cost under SFAS  No.  123  has
  been  recognized for certain stock options issued under other agreements
  to   non-employee  and  recorded  in  the  accompanying   statement   of
  operationsm,  but  no  compensation cost under SFAS  No.  123  has  been
  recognized  for stock options issued under plan and other agreement   to
  employees.

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

  Had  compensation cost for stock options issued to employees  under  the
  Company's  stock  option plans and agreements been determined  based  on
  the  fair  value  at the grant date for awards in 2003,  2002  and  2001
  consistent  with  the  provisions of SFAS No.  123,  the  Company's  net
  earnings net of taxes and earnings per share would have been reduced  to
  the pro forma amounts indicated below:

                                           Year Ended June 30,
                                   ________________________________________
                                       2003         2002         2001
                                   ____________  ___________  _____________

  Net Income (loss)  As reported   $  479,355    $(7,031,593) $    (899,526)
                     Pro forma     $  434,186    $(7,115,697) $    (900,426)
  Earnings  (loss)
   per share         As reported   $      .10    $     (1.49) $        (.19)
                     Pro forma     $      .09    $     (1.50) $        (.19)



Note 2.  Inventories.

  Inventories consist of the following:
                                                        June 30,
                                               ___________________________
                                                    2003          2002
                                               ____________   ____________
               Parts and supplies              $  1,593,057   $  2,071,709
               Work-in-process                    1,702,533      1,047,154
               Finished goods                       214,696        278,981
                                               ____________   ____________
                                                  3,510,286      3,397,844
               Reserve for obsolescence             (50,000)      (307,393)
                                               ____________   ____________
                                               $  3,460,286   $  3,090,451
                                               ____________   ____________


<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         2003         2002
                                      ____________  ____________  ____________
Land  and related improvements            10-30     $  4,564,523  $  4,544,278
Buildings   and   related  improvements   10-30        8,827,731     8,748,746
Construction-in-progress                   N/A           486,966       117,673
Production molds and related plugs        8-10        20,655,432    19,967,872
Machinery and equipment                    3-5         6,030,902     5,958,160
Furniture and fixtures                      5            790,518       771,133
Transportation equipment                    5            320,711       537,926
Racing boats                               N/A                 -       242,095
                                                    ____________  ____________
                                                    $ 41,676,783  $ 40,887,883
Accumulated depreciation                             (25,511,099)  (23,773,222)
                                                    ____________  _____________
                                                    $ 16,165,684  $ 17,114,661
                                                    ____________  _____________

  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 $8,723,636 at June 30, 2003.  Depreciation expense  amounted
  to  $2,112,051, $2,294,254, and $2,293,284, for the years ended June 30,
  2003,  2002  and  2001, 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
  eight  to  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 capital leases expiring  in
  May  2004 and April 2006.  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,
                                                __________________________
                                                    2003          2002
                                                ____________  ____________
     Equipment                                  $    92,774   $    83,067
     Less: Accumulated amortization                 (63,179)      (47,071)
                                                ____________  ____________
                                                $    29,595   $    35,996
                                                ____________  ____________


<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
                              2004                           43,582
                              2005                           18,618
                              2006                            3,358
                                                          __________
      Total future minimum lease payments                 $  65,558
      Less: amounts representing maintenance and
        usage fee, interest and executory costs             (21,073)
                                                          __________
      Present value of the future minimum
        lease payments                                       44,485
      Less: Lease current portion                           (20,118)
                                                          __________
      Capital lease obligations - long term               $  24,367
                                                          __________

Note 5.  Long-term Debt and Pledged Assets.

  The following is a summary of long-term debt:           June 30,
                                                  _________________________
                                                       2003        2002
                                                  ___________  ____________
9.50% loan payable to a financial institution
for the purchase of a vehicle.                              -        26,291
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.                                32,224        44,337
6.30% loan payable to a financial institution
for the purchase of a vehicle                               -         4,435
7.15% loan payable to a financial institution
for the purchase of a vehicle.                              -         3,990
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.                                     25,306         31,735
7.50% loan payable to a financial institution
for the purchase of land.                                   -         33,823
7.93% to 8% loans payable borrowed against the
cash surrender value of key-man life insurance
policies 1998, 2001, and 2002, monthly payments
of $25,004.                                         1,265,438        925,712
$10,000,000 credit agreement with a financial
Corporation
       (See Below).                                  8,723,636     9,640,808
                                                   ___________   ___________
                                                    10,046,604    10,711,131
Less: Current maturities included
 in current liabilities:                            (1,060,444)     (919,182)
                                                   ___________   ___________
                                                   $ 8,986,160   $ 9,791,949
                                                   ___________   ___________


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

  The  Company  had  a $10,000,000 credit agreement with General  Electric
  Capital  Corporation.   The credit agreement involved  two  notes,  both
  with  an interest rate of prime plus 2%.  Combined monthly payments  are
  $128,005.   The  $7,000,000 note had 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 had 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  was  guaranteed by the United States  Department  of
  Agriculture.   These notes were 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.

  On  July  17, 2003,  the Company obtained an $18,000,000 long-term  loan
  from  Bank  of  America.  Proceeds from the loan were used to  refinance
  existing long-term debt (See Note 16).

  The  estimated aggregate maturities required on long-term debt for  each
  of the individual years at June 30, 2003 are as follows:
               2004                        1,060,444
               2005                        1,172,877
               2006                        1,245,801
               2007                        5,084,179
            Thereafter                     1,483,303
                                        ____________
                                         $10,046,604

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.  4,757,608 shares were issued and outstanding  at
  June  30, 2002 and 4,732,608 shares were issued and outstanding at  June
  30, 2002 and 2001.

  During  2003,  a  director  of the Company  exercised  his  options  and
  purchased  25,000  shares  of Common stock at  $1.34  per  share.   Also
  during  during  2003,  the  Company recorded a capital  contribution  of
  46,158  when payroll obligations owed an officer and shareholder of  the
  Company were forgiven.

  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 the  Company's  November  19,  2002
  Annual  Meeting the shareholders approved amendment of the 1999 Employee
  Stock  Option  Plan  to  increase the number  of  shares  available  for
  issuance under that plan from 120,000 to 175,000 shares. As of June  30,
  2003, 95,000 options are available for grant under the plan.


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

  During  2001, the Company granted options to purchase 35,000  shares  of
  common stock, on a non-qualified basis.  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, 2003 25,000 of the options have  been
  exercised.

  During  2002, the Company granted options to purchase 40,000  shares  of
  common  stock for consulting services.  The options have been valued  at
  $53,403 and are being expensed ratably over the vesting period.   As  of
  June  30,  2003,  the  Company  has recorded  deferred  compensation  of
  $49,518 in consulting expense.  The options are exercisable at $1.60  to
  $1.67  per  share  and vest within two years from  the  date  they  were
  granted.   The  options  expire five years from vesting.   At  June  30,
  2002, none of these options had 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 30,000  options  remain
  outstanding.

  A  summary of the status of the options granted under the Company's 1995
  and  1999 stock option plans and other agreements at June 30, 2003, 2002
  and  2001, and changes during the periods then ended is presented in the
  table below:

                       2003                2002                  2001
             __________________________________________________________________
                 Weighted Average        Weighted Average       Weighted Average
           Shares  Exercise Price  Shares  Exercise Price  Shares Exercise Price
          ________ _______________ _______ _______________ _______ _____________
Outstanding at
 beginning
 of period  686,000 $        3.855   51,000 $         4.40  526,000 $       4.61
Granted          -              -   135,000           1.42   35,000         1.34
Exercised   25,000           1.34        -              -        -             -
Forfeited   51,000           3.79                       -   (10,000)        4.59
Canceled         -              -        -              -        -             -
          ________ ______________ ________ ______________ ________ _____________
Outstanding at
 end of
 period    610,000  $       3.966   86,000  $       3.855   51,000  $       4.40
          ________ ______________ ________ ______________ ________ _____________
Exercisable at
 end of
 period    573,334  $       4.115   76,000  $       4.295   16,000  $       4.61
          ________ ______________ ________ ______________ ________ _____________
Weighted average
 fair value
 of options
 granted         -              -  135,000  $        1.29   35,000          .10
          ________ ______________ ________ ______________ ________ _____________


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

  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,  and  2001;  risk-free  interest  rates  of  4.5%,  and  5.3%,
  respectively,  expected  dividend  yields  of  zero  for  all   periods,
  expected  lives  of  6.25,  and 7.5 years,  respectively,  and  expected
  volatility of 94% and 132%, respectively.

  A  summary  of the status of the options outstanding under the Company's
  stock  option  plans and other agreements at June 30, 2003 is  presented
  below:

                            Options Outstanding             Options Exercisable
               __________________________________________ ______________________
                           Weighted Average Weighted Average    Weighted Average
  Range of        Number        Remaining      Exercise    Number    Exercise
Exercise Prices Outstanding Contractual Life     Price   Exercisable   Price
_______________ ___________ ________________ ____________ __________ ___________
$1.34 to 1.67      130,000       5 years            1.58     93,334        1.57
    $3.58           30,000       2 years            3.58     30,000        3.58
    $4.67          450,000       2 years            4.67    450,000        4.67
                -----------                               -----------
                   610,000                                  573,334

  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, 2003 and 2002, the total current deferred tax assets  were
  $3,550,871  and $3,732,160, respectively.  The totals net  deferred  tax
  liabilities were $1,207,958 and $962,879, 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. Because  of  the  uncertainty
  surrounding  the realization of the deferred tax assets the Company  has
  established a valuation allowance of $2,743,556 and $2,599,979  at  June
  30,  2003  and 2002, respectively. The change in the valuation allowance
  for the year ended June 30, 2003 is approximately $143,576.

  The  Company has an unused federal operating loss carryforwards at  June
  30,   2003   and  2002  of  approximately  $6,637,357  and   $6,269,213,
  respectively, which expires in various years through 2022.  The  Company
  has  an  unused state operating loss carryforwards at June 30, 2003  and
  2002  of  approximately $9,737,087 and $9,368,943,  respectively,  which
  expires in various years through 2023.


<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,
                               ___________________________________________
                                    2003          2002          2001
                               ____________  _____________  ______________
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 $  245,079   $     (14,929) $    (81,110)
     Donations                      (1,227)         (2,374)       (1,008)
     Warranty reserves             (11,700)       (109,200)            -
     Reserve for obsolete
      inventory                    100,383         (61,383)            -
     Accrued vacation              (14,563)          5,945        (2,184)
     Dealer incentive reserves      97,944         230,631        (9,410)
     Bad debt reserves                   -               -             -
     Accrued dealer incentive
      interest                      32,454           9,046        66,312
     Accrued executive
      compensation                 (45,634)          6,352        39,777
     Accrued dealer service
      incentives                   155,232         180,492      (120,708)
     Inventory adjustment-Sec.263A   7,296         (32,048)      123,579
     Health insurance reserve        4,680          17,238       (12,168)
     Decrease in NOL carryforwards(143,576)     (2,506,922)      (72,461)
     Alternative minimum tax credits     -         218,232      (253,837)
     Investment   tax   credits          -               -       (86,294)
          Valuations allowance     143,576       2,599,979            -
                               ___________  ______________  _____________
Net deferred tax
 expense (benefit)             $   569,944   $     541,059   $   (409,512)
                               ___________  ______________  ______________

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


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Income Taxes. [Continued]

       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,
                     _____________________________________________
                                  2003        2002         2001
                            _______________________________________
     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           13.68       (36.07)       -
     Compensation from stock options (.69)        -           -
     (Increase) decrease in NOL
       carryforward                  -            -          (1.45)
     Officer's life insurance         .20         -            .11
     Net effect of alternative minimum taxes      -           (.07)   -
     Other                           2.13         (.41)      (1.11)
                            _______________________________________
     Effective income tax rates     54.32%        2.45%      36.55%
                            _______________________________________

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

                                                    June 30,
                                       ___________________________
                                                2003       2002
                                           ________________________
     Excess of tax over financial
      accounting depreciation              $(1,413,301) $(1,168,222)
     Warranty reserve                           351,000    339,300
     Obsolete inventory reserve                  19,500    119,883
     Accrued vacations                           73,685     59,122
     Allowance for boat repurchases              78,000     78,000
     Dealer incentive reserves                        -     97,944
     Bad debt reserve                            10,858     10,858
     Accrued Dealer incentive interest           25,378     57,832
     Inventory adjustments - Sec. 253A          110,220    117,516
     State NOL carryforwards                    486,854    468,447
     Federal NOL carryforwards                2,256,701  2,131,532
     Alternative minimum tax credits            119,049    119,049
     Accrued executive compensation              55,384      9,750
     Donations carryforwards                      4,608      3,382
     Accrued dealer service incentives           38,122    193,354
     Health insurance reserve                    40,560     45,240
     Investment tax credits                      86,294     86,294


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. 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.

  Dealer  Interest:  The  Company regularly pays  a  portion  of  dealers'
  interest  charges  for  floor  plan financing.  These  interest  charges
  amounted  to  $816,152 for Fiscal 2003, $596,111  for  Fiscal  2002  and
  $953,600  for  Fiscal  2001.   They are  included  in  the  accompanying
  consolidated  statements of operations as part of net  sales.   At  June
  30,  2003  and  2002  the  estimated unpaid  dealer  incentive  interest
  included  in accrued dealer incentives amounted to $92,262 and $178,857,
  respectively.

  Product  Liability  and  Other Litigation: There were  various  warranty
  lawsuits  brought  against the Company at June 30,  2003.   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.

  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, 2003 and 2002,  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  $16,378,985 and $16,066,953, 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,  2003  and  2002,  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.  The Company's employer contribution  to  the
  401(k)  Plan  was $93,650 for Fiscal year 2003, $86,958 for Fiscal  2002
  and $160,768 for Fiscal 2001.

  Environmental:  The Company was notified in 1994 by  the  United  States
  Environmental  Protection Agency ("EPA") that it has been identified  as
  a  potential  responsible  party ("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 that site by  a  third  party
  contractor  of  the  Company.  The Company's share of the  approximately
  14.3  million gallons of waste is 19,245 gallons, a volumetric share  of
  .1387%.  The Company's potential liability at this site is estimated  by
  the  Group administrator to be in the range of $40,000 to $60,000.   The
  Company  is likely to be eligible for a de Minimus Settlement Agreement,
  which is expected to be finalized in 2004.

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 9.  Export Sales.

  The  Company  had export sales to customers in the following  geographic
  areas:

                                       Year Ended June 30,
                            _______________________________________
                                  2003        2002         2001
                            _______________________________________
     Canada,   Central  and
	  South  America       $  929,481  $1,500,145   $2,509,638
     Middle East, and Europe      595,777           -      380,190
     Asia                         235,549           -            -
                            _______________________________________
                               $1,760,807  $1,500,145   $2,889,828
                            _______________________________________
Note 10.  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 2003,  $11,489;  in
  Fiscal  2002, $22,013; and in Fiscal 2001, $22,734.  At June  30,  2003,
  the Company owed Reginald M. Fountain, Jr. $0 for these rentals.

  The  Company paid $58,000, $41,361, and $199,442 for the year ended June
  30,  2003,  2002 and 2001 for advertising and public relations  services
  from  an  entity owned by a director of the Company.  At June 30,  2003,
  the  Company  owed  an  entity  owned by a director  $15,029  for  these
  services.

  A  Director  of  the  Company is an owner of a marine dealership,  which
  accounted for 8.0% of the Company's sales in Fiscal 2003.

Note 11.  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 2003,  one
  dealer  accounted  for 10.3% of sales, one for 8.0% of  sales,  and  one
  dealer  for  6.7%.  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.

Note 12.  Gain on Insurance Claims from Hurricanes.

  During  the  years ended June 30, 2001 the Company recorded a $1,107,819
  gain  on  insurance  claims  resulting from damages  and  loss  revenues
  sustained  from hurricanes ."Dennis" and "Floyd" hitting  Eastern  North
  Carolina  during  September  1999. The Company  experienced  damages  to
  inventory  , property, plant and equipment and the temporary closure  of
  the   production  facility  as  a  result  of  flooding  caused  by  the
  Hurricanes.

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13. - 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,
  2003, 2002 and 2001:
                                      2003      2002      2001
                              ______________________________________
  Income (loss) from continuing
     operations available
     to common stockholders       $479,353 $(7,031,593) $  (899,526)
                              ______________________________________
  Weighted average number
    of common shares outstanding
    used in basic earnings (loss)
    per share                    4,744,457   4,732,608    4,732,608

  Effect of dilutive stock options  74,349         -         -

  Weighted number of common
     shares and potential
     dilutive common shares
     outstanding used in
     dilutive earnings (loss)
     per share                  4,818,806    4,732,608     4,732,608
                              ______________________________________

  The  Company had at June 30, 2003 options to purchase 480,000 shares  of
  common  stock at prices ranging from $3.58 to $4.67 per share that  were
  not  included  in the computation of gain(loss) per share because  their
  effect was anti-dilutive.

Note 14 - Segment Reporting.

  The Company's net sales resulted from the following product lines for
  the years ended June 30, 2003, 2002 and 2001:

                                      2003      2002      2001
                              ______________________________________
  Sports Boats                  $26,612,517 $21,191,672 $30,337,763
  Wide Beam Cruiser               9,923,547   5,387,449   1,691,414
  Fish boats                      5,302,763   3,181,585   7,260,627
  Wide Beam Fish                  9,291,260   5,404,056   2,665,460
  Non-Boat Sales including
  (Service, Parts, Trucking,
   Sportswear)                    1,426,997   1,785,819   3,172,770
                              ______________________________________
  Net Sales                     $52,557,084 $36,950,581 $45,128,034
                              ______________________________________


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15. Going Concern

  At  June  30,  2003,  the  Company had a working capital  deficiency  of
  $3,493,945  which  would  have  raised  substantial  doubt   about   the
  Company's  ability to continue as a going concern, however,   the  going
  concern  was  alleviated  due  to,  the Company  successfully  obtaining
  $18,000,000  in  debt financing, on July 17, 2003 (See  Note  16).   The
  proceeds  of  the  debt  financing were used  to  repay  a  majority  of
  existing   debt  financing,  pay  current  trade  payables   and   other
  liabilities  and  provide  needed  additional  working  capital.     The
  Company  has  further been successful in increasing sales sufficient  to
  generate net income and positive cash-flows from operating activities.

Note 16 - Subsequent Event.

  On  July  17,  2003, the Company obtained an $18,000,000 long-term  loan
  from  Bank  of  America.  The proceeds were used to  refinance  the  two
  loans  with  General  Electric Capital Corporation totaling  $10,000,000
  with  total remaining balance of $8,723,636 and a variable interest rate
  of  prime plus 2% or 6.25% as of June 30, 2003.  Proceeds from the  Bank
  of  America  loan was also used to pay trade payables to current  status
  and provide additional operating funds.  The new agreement with Bank  of
  America  has $9,000,000 at one month LIBOR plus 2.25% or 3.77%  at  July
  17,  2003, and $9,000,000 under an interest rate swap to provide a fixed
  rate  of  6.02%.  The interest rate swap is designated as a  fair  value
  hedge  and  is  deemed  effective pursuant to SFAS  133.   The  Bank  of
  America  loan  has a fifteen year amortization with a five year  balloon
  payment  and is secured by certain assets of the Company and  President,
  Chief  Executive Officer and majority shareholder, Reginald M. Fountain,
  Jr.   Obligations are guaranteed by the Company and Mr. Fountain and  by
  Brunswick Corporation, a division of which supplies marine engines  used
  in  the  Company's  products.   Combined monthly  payments  to  Bank  of
  America will be approximately $126,000.



<PAGE>



            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                   SCHEDULES TO THE FINANCIAL STATEMENTS

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Fiscal 2003
Valuation and Qualifying            Balance  Charge to  Payments/     Balance
Account  Description                June 30, Expense    Deductions   June  30,
                                       2002  Adjustments                 2003
___________________________          _______________________________________

Allowance for Doubtful accounts        27,841         -         -     27,841
Inventory Valuation Reserve           307,393         -   257,393     50,000
Deferred Tax Valuation Allowance    2,599,979   130,287         -  2,730,266
Warranty Expense                      870,000 1,182,573 1,152,573    900,000
Allowance for Boat Repurchases        200,000         -         -    200,000

Fiscal 2002
Valuation and Qualifying            Balance  Charge to   Payments     Balance
Account  Description                June 30, Adjustments Deductions  June  30,
                                     2001                                2002
___________________________          _______________________________________

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
Valuation and Qualifying             Balance   Charge to  Payments/   Balance
Account  Description                 June 30, Adjustments Deductions June  30,
					2000                             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




<PAGE>



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


                     First      Second    Third    Fourth
                     Quarter   Quarter   Quarter   Quarter

Fiscal 2003
Revenue          12,002,119  12,941,227 12,783,311  14,830,427
Gross profit      1,905,951   2,370,374  1,911,352   2,331,450
Income (loss)
  before taxes      328,335     643,732   (91,338)     168,568
Net income (loss)   169,244     482,459  (177,402)       5,052

Net income (loss) per share:
  Basic                  .04       .10      (.04)          .00
  Diluted                .04       .10       N/A           .00

Fiscal 2002
Revenue           8,238,779  6,456,208  10,626,380  11,629,215
Gross profit        475,472   (692,069)  2,035,420    (859,074)
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          13,313,669  8,658,397  9,682,556   13,473,413
Gross profit      1,522,452    841,858  1,722,453    1,153,136
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





<PAGE>

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

     Not applicable.


Item 9A.  Controls and Procedures.

     An evaluation of the effectiveness of the Company's disclosure
controls and procedures as of the end of the period covered by this report
has been performed under the supervision and with the participation of the
Company's Chief Executive Officer and Chief Financial Officer.  Based on
that evaluation, those officers concluded that the Company's disclosure
controls and procedures were effective as of the end of the period covered
by this report.

     There has been no change in the Company's internal control over
financial reporting that occurred during the most recent fiscal quarter
that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.




                                 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.

     Information regarding the beneficial ownership of the Company's
equity securities appearing under the caption "Beneficial Ownership of
Securities" in the Company's definitive Proxy Statement filed with the
Commission in connection with the Company's annual meeting of shareholders
is incorporated herein by reference.

       Securities Authorized for Issuance Under Equity Compensation Plans.
The following table summarizes all compensation plans and individual
compensation arrangements that were in effect on June 30, 2003, and under
which shares of the Company's common stock were authorized for issuance.

              EQUITY COMPENSATION PLAN INFORMATION
                      (a)                            (c)
                   Number of       (b)        Number of shares
                    shares      Weighted-         remaining
                     to be       average    available for future
                    issued      exercise    issuance under equity
Plan                 upon       price of     compensation plans
category           exercise    outstanding       (excluding
                      of         options              shares
                  outstanding                 reflected in column
                    options                        (a)

Equity compensation
 plans approved     530,000       $4.20             95,000
 by security holders

Equity compensation
 plans not           80,000 (1)    2.33                -0-
 approved by
 security holders

Total               610,000        3.96                -0-



 (1) Includes individual options to purchase shares of the Company's
     common stock held by current or former directors or independent
     contractors as follows:  (i) option for 30,000 shares at an exercise
     price of $3.58 per share granted during 1995 and expiring during
     2005;  (ii) option for 10,000 shares at an exercise price of $1.34
     per share granted during 2001 and expiring during 2007;  (iii) option
     for 20,000 shares at an exercise price of $1.67 per share granted
     during 2002, becoming exercisable as to 10,000 shares during 2003 and
     as to the remaining 10,000 shares during 2004, and expiring as to
     10,000 during 2008 and as to the remaining 10,000 shares during 2009;
     and (iv) option for 20,000 shares at an exercise price of $1.60 per
     share granted during 2002 and expiring as to 10,000 shares during
     2008 and as to the remaining 10,000 shares during 2009.


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").


Item 14.  Principal Accountant Fees and Services

     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 "Ratification of
Appointment of Independent Accountants).


                                  Part IV


Item  15.  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 the Company are contained in Item 8 of this Report.

     Independent auditor's report

     Consolidated balance sheets at June 30, 2003 and 2002

     Consolidated statements of operations for the years ended  June  30,
      2003, 2002 and 2001

     Consolidated statements of stockholder's equity for the  years  ended
      June 30, 2003, 2002 and 2001

     Consolidated statements of cash flows for the years ended  June  30,
      2003, 2002 and 2001

     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, the Company filed one Current Reports on Form 8-K dated
      May  8,  2003,  which  reported (under Items 9 and 12)  its  results  of
      operations for the quarter ended March 31, 2003.


     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/ Reginald M. Fountain, Jr.
September 15, 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.

Signature                      Title                          Date


/S/ Reginald M. Fountain, Jr.  Chairman,President,and September 15, 2003
    Reginald M. Fountain, Jr.  Chief Executive Officer
                              (Principal Executive Officer)

/S/ A. Myles Cartrette         Director               September 15, 2003
    A. Myles Cartrette


/S/ George L. Deichmann, III   Director               September 15, 2003
    George L. Deichmann, III


/S/ Guy L. Hecker, Jr.         Director               September 15, 2003
    Guy L. Hecker, Jr.


/S/ David C. Miller            Director               September 15, 2003
    David C. Miller


/S/ Mark L. Spencer            Director               September 15, 2003
    Mark L. Spencer


/S/ David L. Woods             Director               September 15, 2003
    David L. Woods


/S/ Irving L. Smith           Chief Financial Officer September 15, 2003
    Irving L. Smith

                               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 *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)

            10.3 *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)

            10.4 *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)

            10.5  Loan Agreement between Fountain Powerboats, Inc. and
            Bank of America, N.A. (incorporated herein by reference to
            exhibits to Registrant's Current Report on
                  Form 8-K dated July 17, 2003)

            10.6  Promissory Note between Fountain Powerboats, Inc. and
            Bank of America, N.A. (incorporated herein by reference to
            exhibits to Registrant's Current Report on
                  Form 8-K dated July 17, 2003)

            10.7  Continuing and Unconditional Guaranty between
            Registrant and Bank of America, N.A. (incorporated herein by
            reference to exhibits to Registrant's Current Report on
                  Form 8-K dated July 17, 2003)

            10.8  Continuing and Unconditional Guaranty between Reginald
            M. Fountain, Jr. and Bank of America, N.A. (incorporated
            herein by reference to exhibits to Registrant's Current
            Report on Form 8-K dated July 17, 2003)

            10.9  Security Agreement between Fountain Powerboats, Inc.
            and Bank of America, N.A. (incorporated herein by reference
            to exhibits to Registrant's Current Report on
                  Form 8-K dated July 17, 2003)

            10.10 Deed of Trust between Fountain Powerboats, Inc. and
            Bank of America, N.A. (incorporated herein by reference to
            exhibits to Registrant's Current Report on
                  Form 8-K dated July 17, 2003)

            10.11 Master Agreement between Registrant, Fountain
            Powerboats, Inc., Reginald M. Fountain, Jr. and Brunswick
            Corporation (incorporated herein by reference to exhibits to
            Registrant's Current Report on Form 8-K dated July 17, 2003)

            10.12 Security Agreement between Fountain Powerboats, Inc.
            and Brunswick Corporation (incorporated herein by reference
            to exhibits to Registrant's Current Report on
                  Form 8-K dated July 17, 2003)

            10.13 Deed of Trust between Fountain Powerboats, Inc. and
            Brunswick Corporation (incorporated herein by reference to
            exhibits to Registrant's Current Report on
                  Form 8-K dated July 17, 2003)

            10.14 Engine Supply Agreement between Registrant Fountain
            Powerboats, Inc. and Brunswick Corporation (incorporated
            herein by reference to exhibits to Registrant's Current
            Report on Form 8-K dated July 17, 2003)

            31.1  Certification of Registrant's Chief Executive Officer
            required by Rule 13a-14(a) (filed herewith)

            31.2  Certification of Registrant's Chief Financial Officer
            required by Rule 13a-14(a) (filed herewith)

            32    Certifications of Registrant's Chief Executive Officer
            and Chief Financial Officer pursuant to 18 U.S.C. 1350
            (furnished herewith)

            99    Registrant's definitive proxy statement to be filed
            with the Commission
______________________________

*     Denotes a management compensation plan or compensatory plan or
arrangement