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

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

                    For fiscal year ended June 30, 2000

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

         For the transition period from __________ to __________.

                      Commission File Number: 0-14712

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

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

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

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

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

                  Common Stock, par value $ .01 per share

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

      Indicate by check mark if disclosure of delinquent filers pursuant to
Item  405  of  Regulation  S-K is not contained herein,  and  will  not  be
contained,  to the best of registrant's knowledge, in definitive  proxy  or
information statements incorporated by reference in Part III of  this  Form
10-K or any amendment to this Form 10-K.  [    ] Yes        [ X ] No

      The aggregate market value of the voting stock held by non-affiliates
of  the  registrant  was $ 6,096,628 at September 15,  2000  based  upon  a
closing  price  of $2.4063 per share on such date for the Company's  Common
Stock.

      As of September 15, 2000 there were 4,732,608 shares of the Company's
Common  Stock  issued  of which 15,000 shares are owned  by  the  Company's
subsidiary Fountain Powerboats, Inc. and are regarded as treasury shares.

          Documents incorporated by reference: None.


<PAGE>


                                  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  cruisers,
sport  fishing  boats  and sport yachts intended for that  segment  of  the
recreational  power boat market where speed, performance, and  quality  are
the  main criteria for purchase.  In addition, the Company produces various
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.

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

       The  Company's  sport  boats,  ranging  from  27'  to  47'  are   of
inboard/outboard  design.  They are propelled by single,  twin,  or  triple
gasoline (or diesel) engines ranging from 300 HP to more than 900 HP  each.
The  Company  also  builds  custom racing boats designed  specifically  for
competition.   The Company also produces outboard powered  center  consoles
and  outboard  or  stern  drive cabin model offshore  sport  fishing  boats
ranging from 25' through 32'.  Furthermore, the Company builds 38' and  47'
sport  cruisers.  During Fiscal 1999, the company introduced the  first  of
the  new  Cruiser  Line, a 65' long by 16' wide high speed cruising  yacht.
During Fiscal 2000, the Company initiated tooling and design of a 37' wide-
beam  cruiser,  a 37' wide-beam fishing boat, and a 48' wide-beam  cruiser.
These  wide-beam models will form the start of a new product line aimed  at
the hot middle market of family oriented cruiser sales.

      In  addition to Sportboats, Fishing boats, Sport Yachts, and the  new
Cruiser  Line,  the  Company  is  producing  an  ever-increasing  line   of
military/governmental  boats of various configurations.   These  boats  are
commercial  versions of the large sportboats and fishing boats,  and  along
with  the new models of rigid inflatables (RIB) in 38' and 40' and the  38'
Riverine  Craft,  form  the  beginning of  a  separate  military/commercial
product line.

     The  47  Sport Cruiser was designed with both performance and  maximum
amenities in mind.  Its hull design is based upon that of the Company's 47'
Lightning  which  currently holds the title of SBI Super-V World  Champion.
The  model  features a walk-in cabin, enclosed head with  shower,  complete
galley  with  refrigerator and microwave among its very extensive  list  of
standard  equipment.  With the amenities of a traditional  cruising  yacht,
the  Fountain 47' Sport Cruiser is capable of speeds in excess  of  70  mph
with standard triple MerCruiser 500 EFI engines.  A high performance diesel
engine  version  is also available.  This boat was named  "The  Outstanding
Offshore Performance Boat" by Powerboat Magazine and "Best of the Best"  by
Boating  Magazine.  Depending  primarily  upon  the  customer's  choice  of
engines, the retail price of this boat is from $417,000 to $509,000.

     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 $443,000 to $545,000.  This boat's standard features
include   an  integrated  swim  platform,  flush  deck  hatches,   and   an
attractively  appointed cockpit and cabin.

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<PAGE>


This boat  has  been  cited  by Powerboat   Magazine  as  "The  Outstanding
Offshore  Performance   Boat".Equipped  with  special racing engines, this
model set a  new  world  speed record for V-hulled boats in February, 1996
at 131.941 mph.

      The  42'  Lightning designed with the new second-generation  positive
lift  hull comes with a new style deck and full wrap around windshield  and
canvas top, which is designed for use in all running conditions.  This  top
selling  model equipped with special engines set a new world  speed  record
for V-hulled boats in August, 1999 at 140.120 mph.

      The  38' Sport Cruiser offers most of the amenities found on the  47'
Sport  Cruiser.   This  model  has  successfully  incorporated  performance
features  without compromising the comforts found in a cruiser.   Depending
primarily  upon the customer's choice of engines, the retail price  of  the
boat is from $236,000 to $270,000.

      The  38'  Lightning or Fever, introduced in Fiscal 1999, operates  at
speeds of between 70 and 100 mph.  The retail price ranges from $220,000 to
$263,000,  depending  primarily upon the type of  engines  selected.   This
model was cited by Powerboat Magazine as "Offshore Performance Boat of  the
Year".   It also captured an award from The Hot Boat Magazine for "Boat  of
the Year".

      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 will operate at speeds between 70 and 100 mph.  This
new  design  has proven itself as the fastest boat in Factory  II  history,
setting the kilo record at 91.490 mph.  This boat retails at prices ranging
from  $178,000  to $217,000, depending primarily upon the type  of  engines
selected.

      Fountain's 32' Fever Sport Boat satisfies the market's demand  for  a
mid-size twin engine sport boat between the single engine 29' Fever and the
35'  Lightning.  This model combines many of the advantages of both the 29'
model and the 35' model.  Depending primarily upon the customer's choice of
engines, the retail price of this boat is from $146,000 to $179,000.

      The  29'  Fever  is one of the most popular boats in  the  line.   It
operates at speeds of 55 to 75 mph and retails between $95,000 and $111,000
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 30 small block engines.  The
Company plans to introduce a new 29' deck in Fiscal 2001.

      Fountain's  27'  Fever and 27' Fever Classic  Sport  Boats  are  also
equipped  with  single engines.  These boats represent the most  affordable
access  to the Fountain line of safe, smooth, high performance boats.   The
27' Fever also captured the Powerboat Magazine award for "Outstanding full-
size Workmanship" in 1995.  The Company introduced a new 27' deck in Fiscal
2000.   Depending  primarily upon the type of engine selected,  the  retail
price of this boat is from $79,000 to $100,000.

      The  Company also builds and markets a sport fishing line.   The  31'
sport  fish  model  features  a  center  console  with  T-Top  design   and
incorporates  the same high performance, styling, and structural  integrity
as  its sport boat models.  It has a deck configuration engineered for  the
knowledgeable, experienced sport fisherman.  This boat has won the Southern
Kingfish Association's World Championship for five of the last nine  years,
which is more than all other manufacturers combined.

     The additional models include the 29' twin engine center console model
and  25' 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 boat line, the Company added  a
31'  walk around cabin model based upon the proven 31' center console  hull
design.   This model features a deck design that incorporates a cabin  with
standup  headroom, and 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 25' and a 29' walk  around  cabin
fishing  boat  with outboard engine power and a 29' and a 32'  walk  around
cabin fishing model with twin stern drive power.

3
<PAGE>


      For  Fiscal  1999,  Fountain introduced a 38' Rigid  Inflatable  Boat
(RIB),  the  first  in  a  series of special purpose  boats  with  a  rigid
fiberglass  hull  surrounded  with  an  inflatable  collar,  surface  drive
technology  and diesel engine power.  This type of boat will  primarily  be
sold  to  Government  Agencies such as the U. S.  Coast  Guard  and  U.  S.
Customs.

      For  Fiscal  1998, the Company introduced an all-new  42'  Lightning.
This  boat  comes  with the Company's new second-generation  positive  lift
hull.   It  comes  with a new style deck with full wrap around  windshield,
canvas  top  and  the  all-new positive lift hull, which  increases  speed,
stability and ride comfort.

     Also  in  1998,  Fountain  launched into the  yacht  market  with  the
introduction  of the all-new 65' Supercruiser.  This performance  yacht  is
much faster than the competition, while still providing all the comforts of
a  luxury  yacht  through the use of Fountain's all  new  super  ventilated
positive  lift hull equipped with Fountain's all new Surface Drive  System.
Performance at wide-open throttle can exceed 60 mph.

     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
                            2000                1999                1998

    Sport  boats             325                 316                 324

    Sport cruisers             -                   1                   9

    Yachts                     -                   1                   -

    Defense boats              9                   -                   -

    Sport fishing boats      112                 130                 116
                            ----                ----                ----
            Total            446                 448                 449
                            ====                ====                ====

      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
35  full-time employees.  Amounts spent on design research and  development
and to build new plugs and molds in recent years were:

                                 Design                Construction
                              Research &               of New Plugs
                              Development                and Molds

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

     Fiscal 1999 .......        $876,965                 $1,275,182

     Fiscal 1998 .......         575,918                 $2,050,745

     Fiscal 1997 .......         635,652                 $1,684,274


      For Fiscal 2001, planned design research and development expenses are
estimated  to  be $900,000 and plug and mold construction expenditures  are
estimated  to  be  $1,750,000.  These expenditures  will  be  primarily  to
complete  the  tooling for the new mid-size cruiser line,  wide  beam  fish
boats, and new diesel boats.

4
<PAGE>

      Manufacturing capacity is sufficient to accommodate approximately  30
to   40   boats  in  various  stages  of  construction  at  any  one  time.
Construction   of  a  current  model  boat,  depending   on   size,   takes
approximately three to five weeks.  The Company, with additional personnel,
currently  has  the  capacity to manufacture approximately  450  sport  and
fishing boats, 100 cruisers, and 12 yachts 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 gas tanks, seat frames, steering systems,  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 lower
costs  as it receives 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, where practicable, 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  two  hazardous waste disposal sites resulting from the  disposal  of  a
hazardous  substance  at  those sites by a third-party  contractor  of  the
Subsidiary. (See Item 3. Legal Proceedings.)

     Recreational powerboats must be certified by the manufacturer to  meet
U.S.  Coast Guard specifications.  In addition, 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 35 dealer shipping  locations
throughout  the  United  States.   The Company  also  has  6  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:

5
<PAGE>


                  Fiscal  2000          Fiscal  1999          Fiscal 1998

  United  States  $ 55,777,049         $  49,711,114         $ 46,068,495

  Canada, Mexico,
  Central and
  South  America  $  1,485,615         $   2,495,048         $  2,639,523

  Europe and the
  Middle East     $    269,797         $   1,222,325         $  1,834,524

  Asia            $          -         $           -         $    109,495
                 -------------         -------------         ------------

      Total      $  57,532,461         $  53,428,487         $ 50,652,037
                 =============         =============         ============


     The Company targets a portion of its advertising program into a number
of  foreign  countries through various advertising media.  It continues  to
seek  new dealers in many areas throughout Europe, South America,  the  Far
East and the Mideast.  In general, the Company requires payment in full  or
an irrevocable letter of credit from a domestic bank before it will ship  a
boat  overseas.  Consequently, there is no credit risk associated with  its
foreign  sales  nor  risk  related to foreign  currency  fluctuation.   The
Company believes that within several years, foreign sales could account for
up to 10% of its total sales.

      For  Fiscal 2000 one dealer accounted for 7.4% of sales, one for 6.1%
of  sales  and one for 5.7% of sales.  For Fiscal 1999 one dealer accounted
for 6.83% of sales, one for 6.77% of sales and one for 6.71% of sales.  For
Fiscal  1998 one dealer accounted for 6.7% of sales, one for 6.3%  and  one
other dealer accounted for more than 5% of sales. The Company believes that
the  loss  of  any  particular dealer would not have a  materially  adverse
effect  on  sales.  As sales continue to grow through more dealers,  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 Fountain National Director
of  Sales who is responsible for developing a full dealer organization  for
sport  boats, sport cruisers, sport fishing boats and yachts.  The  Company
is  seeking  to establish separate sport boat and fishing boat  dealers  in
most marketing areas due to the specialization of each type of boat and the
different sales programs required.

      Beginning  in Fiscal 1999, sales to Government and Defense  Agencies,
both  domestic  and  foreign,  are headed  up  by  a  Director  of  Defense
Operations  who  is responsible for establishing contractual  relationships
with  key  Armed Services and Congressional Leaders.  The Company continues
to seek new growth in this market.

      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 any material effect on the Company.  The Company
normally does not manufacture boats for inventory.

      The  Company ships boats to some dealers on a cash-on-delivery basis.
However,  most  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 in turn
sells  the boat to a retail customer, the dealer repays the lender, thereby
restoring  its  available  credit line.  For the  2000  model  year  (which
commenced  July  1,  1999), the Company had made arrangements  to  pay  all
interest  charged to dealers by certain floor plan lenders for  up  to  six
months.   This  and  other  incentives to  the  dealers  have  resulted  in
relatively  level month to month production and sales.  After  six  months,
the  free interest program ends and interest cost reverts to the dealer  at
the  rates  set by the lender.

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<PAGE>

The dealers will make curtailment  payments (principal   payments)  on  the
boats  as  required  by  their  particular commercial lenders.  Similar
sales promotion programs were in effect during Fiscal 1999, 1998, and 1997.

     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  Item  7,
Management's Discussion and Analysis of Financial Condition and Results  of
Operations).   The  Company participates in floor  plan  arrangements  with
several  major third-party lenders on behalf of its dealers,  most  of  who
have financing arrangements with more than one lender.  Except as described
above,  or  where it has a direct repurchase agreement with a  dealer,  the
Company  is  under  no  material obligation to repurchase  boats  from  its
dealers.  From time to time the Company will voluntarily repurchase a  boat
for  the  convenience  of  the dealer or for another  dealer  who  needs  a
particular model not readily available from the factory.  The marketing  of
boats  to  retail customers is primarily the responsibility of the  dealer,
whose  efforts  are  supplemented  by the Company  through  advertising  in
boating  magazines, participation in regional, national, and  international
boat shows, and on TNN, ESPN, and Speed Vision.

     Additionally, in order to further promote its products over the years,
the  Company  has  developed racing programs to participate  in  the  major
classes  of offshore powerboat races, many of which are regularly televised
on  networks  such  as ESPN, TNN and Speed Vision.  Additionally,  Fountain
single,  twin  and  triple  engine racing  boats  continue  to  hold  their
respective  world speed records.  The result of these racing victories  and
world  speed records has established the Company's products as the  highest
performing  and safest designed offshore boats.  The Company believes  that
the favorable publicity generated by these performance programs contributes
to  its sales volume.  The Company Founder and C.E.O., Reggie Fountain, has
won  numerous  races in both factory and customer boats; he  has  also  set
numerous  speed records in both factory and customer boats.  These Fountain
race boats were, in general, very successful in the various racing circuits
in  which  they  competed.  The Company constructed two race  boats  during
Fiscal 1997 and implemented a racing program during Fiscal 1998, of which a
major  engine  manufacturer was a sponsor.  In  Fiscal  1998,  the  company
completed  the  structure  of its racing program  with  a  third  boat  and
captured  several world speed records through the summer of  calendar  1998
with  the  100th victory completed by Reggie Fountain in New York  City  in
September, 1998.

        As  part  of  the marketing program for its line of  sport  fishing
boats,  the  Company sponsors several outstanding sport  fishermen  in  the
Southern  Kingfish Association Circuit.  This competitive circuit sanctions
King Mackerel Tournaments throughout the Atlantic and Gulf Coast from North
Carolina  to  Texas.   In Fiscal 1991, the Company's  boats  and  sponsored
fishermen  dominated this circuit by winning 4 of the  top  5  spots.   One
Fountain  fisherman,  Clayton Kirby was named  `Angler  of  the  Year'  and
finished in first place.  Since Fiscal 1992, the Fountain Fishing Team  has
continued  to  dominate the S.K.A. circuit winning many of the  top  spots.
Fountain Fishermen have won the coveted `Angler of the Year' title 5 of the
last 9 years. The S.K.A. Tournaments are held weekly and attract from 100 -
1000 entrants with prize money in excess of $500,000.  The Fountain fishing
teams winning records have given our sport fishing boats favorable exposure
to  serious  sport fishermen, in particular with respect  to  the  superior
performance of Fountain's fishing boat line.


Sales Order Backlog.

      The  sales order backlog typically builds to approximately 150  boats
during  the  August-October Dealer allocation period  having  an  estimated
sales value of $15,000,000.  All of the backlog is generally shipped within
6  months.      During  the  last  year, the  Company's  performance  boats
increased  in  sales  value to a greater degree than fishing  boats,  which
increased  the overall average unit boat price.  In addition, the  sale  of
the  first 65' SuperCruiser contributed to a substantial per boat increase.
The  Company's Fall Dealer Allocation Program is designed to promote  early
replenishment  of the stock in dealer inventories depleted  throughout  the
prime spring and summer selling seasons.

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<PAGE>



Product Warranty.

      The  Company  warrants  its boats against  defects  in  material  and
workmanship for a period of three years.  The engine manufacturer  warrants
engines  included in the boats.  Warranty expenses of $869,979 or 1.51%  of
sales were incurred in Fiscal 2000 and were charged-off against net income.
A  reserve  for warranty expenses estimated to be incurred in future  years
had  been  recorded and amounted to $590,000 at June 30, 2000.   For  1999,
warranty costs were $856,694 or 1.6 percent of sales.  Warranty costs as  a
percentage  of  sales are among the lowest in the marine  industry  thereby
reflecting the Company's superior construction of its boats.

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:

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

      The  Company believes that in its market segment, speed, performance,
quality,  image, and safety are the main competitive factors, with  styling
and price being somewhat lesser considerations.

      The  market for fishing boats is much larger than the one  for  sport
boats,  but there are many more fishing boat manufacturers than  there  are
sport boat manufacturers.

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

Employees.

      As of September 1, 2000 the Company had 390 employees, of whom eleven
were  executive and management personnel.  Nineteen 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 satisfactory. The Company is an affirmative action,  equal
opportunity employer.


Item 2.  Properties.

      The  Company's  executive  offices and manufacturing  facilities  are
located  on  66  acres  along the Pamlico River in Beaufort  County,  North
Carolina.   All of the land, buildings and improvements are  owned  by  the
Company and are held as collateral on notes and mortgages payable having  a
balance of $9,187,159 at June 30, 2000.

     The operating facility contains buildings totaling 235,040 square feet
located on fifteen acres.  The buildings consist of the following:

8
<PAGE>


                      Approximate
                    Square Footage           Principal Use

   Building 1          13,200              Executive  offices,
                                           shipping and receiving,
                                           and paint shop.

   Building 2           7,200              Final prep shop.

   Building 3          75,800              Lamination, upholstery,
                                           final, assembly, inventory,
                                           and 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              Yacht manufacturing.

   Building 12          5,760              Maintenance and storage.
                      -------
     Total            235,040
                      =======

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

Item 3.  Legal Proceedings.

     As  of  June 30, 2000, the Company's chief operating subsidiary was  a
defendant  in  2 product liability suits and 7 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  such
suits,  over  and  above  applicable insurance deductibles.  Management  of
Company believes that none of such current proceedings will have a material
adverse effect on Registrant.

     The   Company's   subsidiary  was  notified  by  the   United   States
Environmental Protection Agency("EPA") and the North Carolina Department of
Environmental Health and Natural Resources that it had been identified as a
potential responsibility party in the remediation of contamination  at  two
clean  up  sites.  The Group Administrator Counsel estimated the  Company's
future share of remediation cost not to exceed approximately $40,000.

9
<PAGE>



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 per value, was  listed  and  began
trading  on the NASDAQ National Market System (under the symbol "FPWR")  on
August  28,1996.  Prior to that time the Company's common stock was  traded
on the American Stock Exchange (under the symbol "FPI").

      The  following table contains certain historical high and  low  price
information  related  to the common stock for the past  quarter  indicated.
Amounts shown reflect high and low sales prices of the common stock on  the
NASDAQ National Market System:

          Quarter Ended                 High           Low

          September 30, 1997           14.88           9.00
          December 31, 1997            15.38           8.88
          March 31, 1998               12.75           8.50
          June 30, 1998                13.00           8.93

          September 30, 1998           11.13           4.38
          December 31, 1998             6.72           3.88
          March 31, 1999                7.00           4.50
          June  30,  1999               5.00           3.97

          September 30, 1999            4.19           2.00
          December 31, 1999             2.94           2.50
          March 31, 2000                3.19           3.00
          June 30, 2000                 3.25           2.94

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

     The number of shareholders of record for the Company's common stock as
of September 1, 2000 was approximately 133.

10
<PAGE>


Item 6.  Selected Financial Data

               Fountain Powerboat Industries, Inc. and Subsidiary
                             Selected Financial Data
                         Fiscal Years 1996 through 2000


                                    Year Ended June 30,
Operations Statement
Data: ----------------------------------------------------------------------
(Period
 Ended)     2000          1999           1998          1997         1996
        ------------- ------------- ------------ ------------- -------------
Sales   $  57,532,461 $  53,428,487 $ 50,652,037 $  50,514,325 $  41,598,051

Net
Income
(loss)  $   1,258,342 $  (1,255,791)$  2,740,487 $   1,239,951 $   3,680,034

Income
(loss)
per
share   $         .27 $        (.27)$        .58 $         .27 $         .81

Weighted
average
shares
outstanding 4,732,608     4,711,896    4,751,779     4,664,251     4,528,608

Diluted
earnings
(loss)
per
share   $         .27 $         N/A $        .54 $         .24 $         .77

Diluted
weighted
average
shares
outstanding 4,732,651           N/A    5,110,090     5,093,289     4,573,153

Balance Sheet Data
(At Period End)
------------------
Current
assets $   13,621,499 $  14,084,888 $  12,718,535 $  10,997,133 $  8,378,341

Total
Assets $   33,431,084 $  33,930,960 $  32,497,393 $  23,713,896 $ 18,498,104

Current
Liabilities
       $   12,144,123 $  12,183,630 $  10,289,985 $   6,305,212 $  6,180,476

Long-term
debt   $    8,215,486 $  10,215,334 $   9,499,895 $   8,047,039 $  5,433,184

Stockholders'
equity (1)
       $   11,890,658 $  10,632,316 $  11,780,706 $   9,361,645 $   6,884,444


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

11
<PAGE>


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

      As  described  more fully below at "Business  Environment",
more  than  half  of  the  Company's shipments  to  dealers  were
financed  through  so-called "100% floor plan arrangements"  with
third-party lenders pursuant to which the Company may be required
to  repurchase  boats repossessed by the lenders  if  the  dealer
defaults  under his credit arrangement.  The balance of shipments
was C.O.D. or payment prior to shipment.

     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 customer, that
title  and  all other incidents of ownership have passed  to  the
customer,  and  that there is no direct commitment to  repurchase
the  boat  or to pay floor plan interest beyond the normal  sales
program  terms. This is the method of sales recognition  believed
to be in use by most boat manufacturers.

      At June 30, 2000, 1999, and 1998, 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, 2000, 1999, and 1998.

      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.   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.   The  Company had a contingent liability of  approximately
$23,673,000  and $23,350,000 at June 30, 2000 and  1999  for  the
shipment  of  boats, which remained uncollected  by  the  finance
companies  at those dates.   Additionally, at June 30,  2000  and
1999, the Company had recorded reserves of $200,000 and $200,000,
which  represent losses which may be reasonably  expected  to  be
incurred on boat repurchases in future years.

Business Environment.

      The  Company's Sales have continued to increase each  year.
Sales  for  2000 were $57,532,461 up 7.7% from Fiscal 1999.   The
sales  volume  increase for Fiscal 2000  was  in  line  with  the
overall recreational boating industry.  Plant utilization  stands
at about 80% until the 65' yacht and the new cruiser and fishboat
product lines are in full production.

     Sales for Fiscal 1999 were $53,428,487, up more than 5% from
sales for Fiscal 1998.  Sales for Fiscal 1998 were $50,652,037.

      In  Fiscal  2000,  the Company continued to  advertise  and
market  aggressively.   Management believes  that  the  Company's
advertising, marketing, racing, and tournament fishing  programs,
as  well as its reputation as the builder of the highest quality,
best  performing,  and  safest  high  performance  boats  in  the
industry,  all contributed to maintaining our performance  market
share.

      Typically,  each dealer's floor plan credit facilities  are
secured  by  the dealer's inventory, and perhaps, other  personal
and  real  property.  In connection with the dealers' floor  plan
arrangements,  the  Company (as well as substantially  all  other
major  manufacturers) has agreed in most instances to repurchase,
under  certain  circumstances, any of its boats  which  a  lender
repossesses  from a dealer and returns to the  Company.   In  the
event  that  a dealer defaults under its credit line, the  lender
may  invoke the manufacturers' repurchase agreements with respect
to  that dealer.  In that event, all repurchase

12
<PAGE>

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.

     Except where there is a direct repurchase agreement with the
customer, the Company is under no obligation to repurchase  boats
from its dealers, although it will on occasion voluntarily assist
a  dealer in selling a boat or it will repurchase a boat for  the
convenience of a dealer.

      No  boats were repurchased in Fiscal 2000, 1999 and  Fiscal
1998  in  connection with floor plan arrangements.  At  June  30,
2000, 1999, and 1998, the Company had recorded a $200,000 reserve
for  losses  which may be reasonably expected to be  incurred  on
boat repurchases in future years.

Results of Operations.

      For Fiscal 2000, the Company had a net income of $1,258,342
or  $ .27 per share.  This compares to a net loss of ($1,255,791)
or  ($.27)  per share in Fiscal 1999.  The change in  net  income
from  the  prior  year's net loss is primarily  due  to  proceeds
received from the settlement of a lawsuit and insurance claims as
a  result  of  damages  sustained from  Hurricanes  "Dennis"  and
"Floyd";  the  restructuring charge in 1999;  a  drop  in  profit
margins in 2000 due to changes in the Company's sales mix; offset
by reduced operating expenses.

     During  April  2000,  the  Company received  $1,313,224  and
recorded  an extraordinary gain from the settlement  of  a  class
action lawsuit alleging antitrust violations against a vendor  of
the Company who is in the sterndrive and inboard engine business.

     During September 1999, the Company experienced flooding  and
the  temporary closure of the production facility as a result  of
Hurricanes  "Dennis" and "Floyd" hitting Eastern North  Carolina.
As  a result of the hurricanes, the Company sustained damages  of
approximately  $277,172 to inventory and  $389,063  to  property,
plant  and equipment, which includes $300,000 in damages  to  the
Company's yacht mold.  The Company incurred $51,658 in additional
expenses. The Company has filed a business interruption claim for
damages  due to loss revenues from the closure of the  production
facility and inefficiencies due to storm preparation, cleanup and
work  force  shortages.   As  of June  30,  2000,  the  insurance
carriers  have  paid  $1,058,618 for damages  to  the  inventory,
property, plant, and equipment including the Yacht Mold and other
expenses.    The  Company  has  filed  its  claim  for   business
interruption  and believed it complied with all  aspects  of  its
policy.   When  a timely and reasonable resolution could  not  be
reached,  the  Company filed suit against its  insurance  carrier
resulting  in  the  insurance  carrier  re-initiating  meaningful
discussions  to  resolve the claim.  As of  June  30,  2000,  the
insurance  carrier  has advanced $961,560  towards  the  business
interruption  claim.  The full effects of a business interruption
settlement cannot be reasonably estimated and will be recorded in
the  future when collected.  As of June 30, 2000 the Company  has
recorded  other income of $1,065,725 resulting from the  gain  on
insurance claims from the hurricanes.

     During  the  second  quarter of  Fiscal  1999,  the  Company
designed  and  implemented a restructuring plan  to  aggressively
improve the Company's cost structure, refocus sales and marketing
expenditures  and  divest the Company of  certain  non-realizable
assets.   In  connection with the restructuring plan the  Company
reviewed  components of its business for possible improvement  of
future profitability through reengineering or restructuring.   As
part  of  this plan, the Company decided to eliminate its  direct
racing  program  and  reduce  the yacht  tooling  cost  (carrying
value),  along  with  other  discontinued  unused  tooling.   The
carrying value of the assets held was reduced to fair value based
on estimated realizable value based on future cash flows from use
of the asset or sale of the related assets.  The resulting pretax
adjustment  of $2,440,000 was recorded as a strategic  charge  in
the statement of operations of the Company.

13
<PAGE>


     Operating income increased to $745,107 in Fiscal 2000.  This
compares  with  a loss of ($1,620,941) in Fiscal 1999,  primarily
due  to  restructuring charges.  Operating income decreased  from
$4,084,388  in Fiscal 1998, due to the less favorable  sales  mix
with  fishboat sales increasing by over 30%, the initial year  of
defense boats, yacht start up, and a commitment by the company to
maintain market share versus substantial price increases.

      The  Company's gross profit margin as a percentage of sales
decreased to 19.8% in Fiscal 2000 from 22.2% in Fiscal  1999  and
24.8%  in Fiscal 1998.  The change in the gross margin percentage
was due to the overall sales mix of boats.

       Depreciation  expense  was  $2,397,085  for  Fiscal  2000,
$2,280,871  for  Fiscal  1999, and $1,953,207  for  Fiscal  1998.
Depreciation expense by asset category was as follows:

                      Fiscal               Fiscal          Fiscal
                      2000                  1999            1998

Land improvements    $   116,350          $    57,065     $    29,504

Buildings            $   290,825          $   256,205     $   239,187

Molds  &  plugs      $ 1,178,138          $ 1,236,027     $ 1,112,705

Machinery &
 Equipment           $   481,074          $   387,732     $   353,102

Furniture & fixtures $    57,677          $    30,842     $    15,238

Transportation
 equipment           $   246,139          $   194,627     $   129,722

Racing Equipment     $    26,882          $   118,373     $    73,749
                    ------------         ------------    ------------
Total                $ 2,397,085          $ 2,280,871     $ 1,953,207
                        ========            =========       =========

Following  is  a  schedule  of  the  net  fixed  asset  additions
(deletions) during Fiscal 2000 and Fiscal 1999.

                          Fiscal 2000                Fiscal 1999

Buildings               $     543,707               $    555,475

Land and Improvements   $       2,697               $    804,226

Molds and plugs         $     404,360               $    312,045

Construction in
 Progress               $     (81,276)              $    760,052

Machinery  & equipment  $   1,151,897               $    597,610

Furniture  &  fixtures  $      11,036               $    217,123

Transportation equipment$     (73,159)              $    506,172

Racing equipment        $    (482,806)              $          -
                      ---------------            ---------------
 Total                  $   1,476,456               $  3,752,703
                      ===============             ==============

14
<PAGE>


     Selling expenses were $7,370,319 for Fiscal 2000, $7,934,683
for  Fiscal  1999, and $5,687,097 for Fiscal 1998.   The  Company
continued   to  promote  its  products  primarily   by   magazine
advertising  in Fiscal 2000.  Advertising expense was  $1,456,592
for  Fiscal  2000, $1,411,883 in Fiscal 1999, and $1,166,633  for
Fiscal  1998.  These advertising expenditures continue to promote
the  Company's visibility in the recreational marine industry and
its   boat  sales.   Management  believes  that  advertising   is
necessary  in  order to maintain the Company's sales  volume  and
dealer  base.  Additionally, in an effort to further promote  its
products,   the  Company  continued  its  offshore   racing   and
tournament fishing programs.   These programs cost $2,424,918  in
Fiscal  2000, $2,503,699 in Fiscal 1999, and $953,928  in  Fiscal
1998.

      Selling  expenses compared for the past three fiscal  years
were as follows:

                      Fiscal   2000       Fiscal   1999      Fiscal 1998

Offshore racing and
 tournament   fishing $   2,424,918       $   2,503,699     $    953,928

Advertising           $   1,456,592       $   1,411,883     $  1,166,633

Salaries &
 commissions          $     788,108       $   1,054,467     $    939,541

Boat Shows            $     563,536       $     494,832     $    446,706

Dealer incentives     $   1,421,703       $   1,612,415     $  1,031,611

Other selling
 expenses             $     715,462       $     857,387     $  1,148,678
                      -------------       -------------    -------------
Total                 $   7,370,319       $   7,934,683     $  5,687,097
                      =============       =============    =============

      General  and  administrative expenses include the  finance,
accounting, legal, personnel, data processing, and administrative
operating   expenses  of  the  Company.   These   expenses   were
$3,260,571  for  Fiscal 2000, $3,127,029  for  Fiscal  1999,  and
$2,796,518 for Fiscal 1998.

      Interest expense was $1,065,514 for Fiscal 2000, $1,023,727
for  Fiscal 1999, and $833,932 for Fiscal 1998.  The increase  in
interest expense for Fiscal 2000 was primarily due to an  overall
increase in prime rate throughout the fiscal year.

      For  Fiscal  2000, the Company received $106,239  in  other
income  and  there  was a loss of ($12,846) on  the  disposal  of
assets.   For  Fiscal  2000,  the  Company  recorded  a  gain  of
$1,065,725 on insurance claims related to hurricane damage.

Liquidity and Financial Resources.

      Net cash provided by operations in Fiscal 2000 amounted  to
$3,989,220.  Net income plus adjustments to reconcile net  income
to   net   cash   provided  by  operating  activities   including
depreciation  expense  of $2,397,085 and net  non-cash  items  of
$12,846  provided net cash of $3,668,273 before changes in  asset
and  liability accounts.  However, relatively large amounts  were
needed  to complete investment activities in purchasing property,
plant,  equipment, inventory and molds.  The ending cash  balance
was $1,983,439.

15
<PAGE>


     Net  cash provided by operations in Fiscal 1999 amounted  to
$2,738,206.  Net loss plus adjustments to reconcile net  loss  to
net  cash provided by operating activities including depreciation
expense  of  $2,280,874, the strategic charge of  $2,440,000  and
other net items of $20,900 provided net cash of $3,485,980 before
changes  in  asset  and liability accounts.  However,  relatively
large  amounts  were needed to continue investment activities  in
purchasing property, plant, equipment, inventory and molds.   The
ending cash balance was $2,217,301.

     Operations in Fiscal 1998 provided $3,869,619 in cash.   Net
income  plus  depreciation  expense provided  cash  amounting  to
$4,693,694.   However, relatively large amounts  were  needed  to
finance  investment  activities in  purchasing  property,  plant,
equipment,  inventory  and molds.  In  addition,  the  new  yacht
construction with associated development costs added to the heavy
use of cash.  The ending cash balance was $1,376,984.

     Investing  activities  for Fiscal 2000 required  $2,742,183,
including   $1,678,236   for  property,  plant   and   equipment,
$1,154,908 for additional molds and plugs, $122,637 for  payments
increasing  the  cash surrender value of life insurance  policies
and proceeds of $555,230 from the sale of property and equipment.

     Investing  activities  for Fiscal 1999 required  $3,710,206,
including   $2,477,520   for  property,  plant   and   equipment,
$1,275,183  for  additional  molds and  plugs  and  $131,696  for
payments  increasing the cash surrender value of  life  insurance
policies.

     Investing  activities  for Fiscal 1998 required  $8,218,341,
including  expenditures for additional molds and plugs  amounting
to  $2,050,745, for property, plant and equipment for  $6,745,936
and $124,396 for payments increasing the cash surrender value  of
life insurance policies.

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

     Financing  activities  for Fiscal 1999 provided  $1,812,317.
Included  in  this  amount are proceeds from  issuance  of  notes
payable  and  long-term  debt  to  Transamerica  Business  Credit
Corporation   and   General  Electric  Capital  Corporation   for
$4,000,000 along with total debt repayment of $2,574,637.

     Financing  activities  for Fiscal 1998 provided  $2,731,203.
Included  in  this  amount are proceeds from  issuance  of  notes
payable  and  long  term-debt to G. E.  Capital  Corporation  for
$3,362,137  and  the  retirement of previous  long-term  debt  of
$738,434.


     The  net  decrease  in cash for Fiscal  2000  was  $233,862,
primarily  due  to the investment in facilities,  equipment,  and
molds.   The  net increase in cash for Fiscal 1999 was  $840,317,
primarily from a new $4,000,000 promissory note with Transamerica
Business  Credit  Corporation,  which  included  restatement  and
amendment  of  certain  existing promissory  notes  with  General
Electric  Capital  Corporation.  The net  decrease  in  cash  for
Fiscal  1998  was $1,617,519, primarily due to the investment  in
facilities, equipment and molds.  During Fiscal 1998, the Company
borrowed  the  remaining $1,500,000 against the  initial  General
Electric  Capital  Corporation  loan,  bringing  the  balance  to
$10,000,000, less the scheduled monthly principal reductions. For
Fiscal   2001,  the  Company  anticipates  that  the   $1,983,439
beginning  cash balance along with the net projected increase  in
cash provided from operations will be sufficient to meet most  of
the  Company's liquidity needs for the year.  The Company intends
to  concentrate on reducing capital expenditures and building its
cash reserves during Fiscal 2001.

16
<PAGE>


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, its 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.

The Year 2000.

     The  "Y2K"  Bug  was expected to affect a  large  number  of
computer systems and software during or after the year 1999.  The
concern  was  that  any computer function that  requires  a  date
calculation might produce errors. The Company has taken the steps
necessary to prevent those errors from occurring.  Management  is
not  presently  aware  of any Year 2000  issues  that  have  been
encountered  by  any  third party providers  whose  services  are
critical  to  the  Company,  which could  materially  affect  the
Company's   operations.   At  present,  the  Company  has   spent
approximately  $644,000 in upgrading some  of  its  software  and
hardware  in  order  to  avoid any problems  resulting  from  the
Millennium  bug.  The Company does not expect to  experience  any
operational difficulties as a result of Year 2000 issues.

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.

17
<PAGE>



Item 8.  Financial Statements and Supplementary Data.



                  INDEPENDENT AUDITORS' REPORT



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


We  have audited the accompanying consolidated balance sheets  of
Fountain Powerboat Industries, Inc. and Subsidiary as of June 30,
2000  and  1999,  and  the  related  consolidated  statements  of
operations,  stockholders' equity and cash flows  for  the  years
ended  June 30, 2000, 1999 and 1998. 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.  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, 2000 and 1999, and the  consolidated
results  of their operations and their cash flows for  the  years
ended  June 30, 2000, 1999 and 1998 in conformity with  generally
accepted accounting principles.





PRITCHETT, SILER & HARDY, P.C.
/s/PRITCHETT, SILER & HARDY, P.C.

July 27, 2000
Salt Lake City, Utah

18
<PAGE>


       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                   CONSOLIDATED BALANCE SHEETS

                             ASSETS

                                                  June 30,
                                       ___________________________
                                            2000          1999
                                       _____________  ____________
CURRENT ASSETS:
  Cash & cash equivalents              $   1,983,439  $  2,217,301
  Accounts receivable, less allowance
    for doubtful
    accounts of $30,000 for 2000 and
    1999                                   1,701,643     1,576,712
  Inventories                              7,880,136     7,307,890
  Prepaid expenses                           574,615       761,486
  Current tax assets                       1,481,666     2,221,499
                                       _____________  ____________
        Total Current Assets              13,621,499    14,084,888

PROPERTY, PLANT AND EQUIPMENT, net        18,933,251    19,065,270

CASH SURRENDER VALUE OF LIFE INSURANCE       742,839       620,202

OTHER ASSETS                                 133,495       160,599
                                       _____________  ____________
                                       $  33,431,084  $ 33,930,960
                                       _____________  ____________

              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Current maturities of long-term debt $   2,613,534  $  2,464,535
  Current maturities of capital lease         12,999        11,788
  Accounts payable                         4,993,717     3,961,516
  Accrued expenses                         2,504,603     2,231,061
  Dealer territory service accrual           907,230     2,037,170
  Customer deposits                          322,040       687,560
  Allowance for boat repurchases             200,000       200,000
  Warranty reserve                           590,000       590,000
                                       _____________  ____________
        Total Current Liabilities         12,144,123    12,183,630

LONG-TERM DEBT, less current maturities    8,151,546    10,138,395
CAPITAL LEASE, less current maturities        63,940        76,939
DEFERRED TAX LIABILITY                     1,180,817       899,680

COMMITMENTS AND CONTINGENCIES (See Note 9)         -             -
                                       _____________  ____________
        Total Liabilities                 21,540,426    23,298,644
                                       _____________  ____________
STOCKHOLDERS' EQUITY
  Common stock, $.01 par value,
  200,000,000 shares authorized,
   4,732,608 shares issued and
   outstanding                                47,326        47,326
  Additional paid-in capital              10,303,640    10,303,640
  Accumulated earnings                     1,650,440       392,098
                                       _____________  ____________
                                          12,001,406    10,743,064
        Less: Treasury Stock, at
         cost, 15,000 shares                (110,748)     (110,748)
                                       _____________  ____________
                                          11,890,658    10,632,316
                                       _____________  ____________
                                       $  33,431,084  $ 33,930,960
                                       _____________  ____________



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

19
<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF OPERATIONS

                                       Year Ended June 30,
                         ________________________________________________
                             2000            1999             1998
                         ______________  ________________  ______________
NET SALES                $   57,532,461  $     53,428,487  $   50,652,037

COST OF SALES                46,156,464        41,547,716      38,084,034
                         ______________  ________________  ______________
  Gross Profit               11,375,997        11,880,771      12,568,003
                         ______________  ________________  ______________
EXPENSES:
  Selling expense             7,370,319         7,934,683       5,687,097
General and
 administrative               3,260,571         2,628,722       2,722,665
General and
 administrative -
 related parties                      -           498,307          73,853
  Strategic Charge                    -         2,440,000               -
                         ______________  ________________  ______________
      Total expenses         10,630,890        13,501,712       8,483,615
                         ______________  ________________  ______________
OPERATING INCOME (LOSS)         745,107        (1,620,941)      4,084,388
                         ______________  ________________  ______________
NON-OPERATING INCOME
 (EXPENSE):
  Other income                  106,239           130,118         252,967
  Interest expense           (1,065,514)       (1,003,280)       (807,423)
  Interest expense -
   related parties                    -           (20,447)        (26,509)
  Gain (loss) on
   disposal of assets           (12,846)           69,100           4,637
  Gain on insurance
   claims from hurricane      1,065,725                 -               -
                         ______________  ________________  ______________
      Total non-operating
        income (expense)         93,604          (824,509)       (576,328)
                         ______________  ________________  ______________
INCOME (LOSS) BEFORE
 INCOME TAXES                   838,711        (2,445,450)      3,508,060

CURRENT TAX EXPENSE                   -                         1,057,640
DEFERRED TAX EXPENSE
 (BENEFIT)                      370,410        (1,189,659)         10,864
                         ______________  ________________  ______________
INCOME (LOSS) FROM
 CONTINUING
 OPERATIONS BEFORE
 EXTRAORDINARY
 ITEMS                          468,301        (1,255,791)      2,439,556
                         ______________  ________________  ______________
DISCONTINUED OPERATIONS:
  Income on disposal
   of the operations of
   Fountain Power, Inc.
   and Mach Performance,
   Inc. (Net of $282,512
   income tax benefit)                -                 -         300,931
                         ______________  ________________  ______________
INCOME FROM DISCONTINUED
 OPERATIONS                           -                 -         300,931
                         ______________  ________________  ______________
EXTRAORDINARY ITEM:
  Gain on settlement of
   lawsuit (net of
   $523,183 in income
   taxes)                       790,041                 -               -
                         ______________  ________________  ______________

NET INCOME (LOSS)        $    1,258,342  $     (1,255,791) $    2,740,487
                         ______________  ________________  ______________



                           [Continued]
20
<PAGE>


             FOUNTAIN POWERBOAT, INC. AND SUBSIDIARY

              CONSOLIDATED STATEMENTS OF OPERATIONS

                           [CONTINUED]


                                       Year Ended June 30,
                         ________________________________________________
                             2000            1999             1998
                         ______________  ________________  ______________
BASIC EARNINGS (LOSS)
 PER SHARE:

  Continuing operations  $          .10  $           (.27) $          .51
  Discontinued operations             -                 -             .07
  Extraordinary item                .17                 -               -
                         ______________  ________________  ______________
BASIC EARNINGS PER SHARE $          .27  $           (.27) $          .58
                         ______________  ________________  ______________
WEIGHTED AVERAGE SHARES
  OUTSTANDING                 4,732,608         4,711,896       4,751,779
                         ______________  ________________  ______________

DILUTED EARNINGS PER SHARE:

  Continuing operations  $          .10  $            N/A  $          .48
  Discontinued operations             -               N/A             .06
  Extraordinary item                .17               N/A               -
                         ______________  ________________  ______________
DILUTED EARNINGS PER
 SHARE                   $          .27  $            N/A  $          .54
                         ______________  ________________  ______________
DILUTED WEIGHTED AVERAGE
  SHARES OUTSTANDING          4,732,651               N/A       5,110,090
                         ______________  ________________  ______________






















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

21
<PAGE>


               FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                    FROM JUNE 30, 1997 THROUGH JUNE 30, 2000



              Common Stock Additional          Treasury Stock      Total
        _________________  Paid-in Accumulated _____________    Stockholders'
         Shares   Amount   Capital  Earnings    Shares   Amount    Equity
        _________ _______ __________ __________ _______ ________ ___________

BALANCE,
June 30,
1997   4,725,108  47,251  10,517,740 (1,092,598) 15,000  110,748  9,361,645

Cancellation
of common
stock
previously
issued in
acquisition
of Mach
Performance
during
June 1998
at $8.17
per
share    (52,500)  (525)    (428,400)         -       -        -  (428,925)

Issuance
of common
stock upon
exercise
of options
at $3.58
per share
by a director
of the
Company
during
July
1997.     30,000     300     107,200          -       -        -    107,500
Net income
for the
year ended
June 30,
1998           -       -          -   2,740,487       -       -   2,740,487
        _________ _______ __________ __________ _______ ________ ___________
BALANCE,
June 30,
1998   4,702,608  47,026  10,196,540  1,647,889  15,000  110,748 11,780,707

Issuance
of common
stock
upon
exercise
of options
at
approximately
$3.58 per
share by a
director of
the
Company   30,000     300     107,100          -       -        -    107,400

Net loss
for the
year ended
June 30,
1999           -       -           - (1,255,791)      -        - (1,255,791)
        _________ _______ __________ __________ _______ ________ ___________
BALANCE,
June 30,
1999   4,732,608  47,326  10,303,640    392,098  15,000  110,748 10,632,316

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

        _________ _______ __________ __________ _______ ________ ___________




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

 22
<PAGE>


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


                                       Year Ended June 30,
                         ________________________________________________
                             2000            1999             1998
                         ______________  ________________  ______________
CASH FLOWS FROM OPERATING
 ACTIVITIES:
  Net income (loss)      $    1,258,342  $     (1,255,791) $    2,740,487
  Adjustments to
    reconcile net income
   (loss) to net cash
    provided by operating
    activities:
     Strategic charge                 -         2,440,000               -
    Depreciation expense      2,397,085         2,280,871       1,953,207
    (Gain) loss on disposal
     of and equipment            12,846           (69,100)         (4,637)
    Warranty reserve                  -            90,000               -
    Net effect of acquired
     Subsidiary                       -                 -        (525,095)
    Change in assets and
     liabilities:
      (Increase) decrease
        in accounts
        receivable             (124,931)        1,148,745        (848,007)
      (Increase) decrease
        in inventories         (572,246)         (959,172)     (3,139,783)
      (Increase) decrease
        in prepaid
        expenses                186,871          (281,492)        642,413
      (Increase) in net
        tax asset             1,020,970        (1,293,271)       (132,160)
      Increase in accounts
       payable                1,032,201           370,027       1,603,982
      Increase (decrease)
       in accrued expenses      273,542           292,316       1,079,005
      Increase (decrease)
       in Dealer territory
       service accrual       (1,129,940)           (1,520)        409,367
      Increase (decrease)
       in customer deposits    (365,520)          (23,407)        200,925
     (Decrease) in net
       liabilities of
       discontinued
       operations                     -                 -        (110,085)
                         ______________  ________________  ______________
          Net Cash
           Provided by
           Operating
           Activities    $    3,989,220  $      2,738,206  $    3,869,619
                         ______________  ________________  ______________
CASH FLOWS FROM INVESTING
 ACTIVITIES:
  Increase in notes
   receivable - related
    party                $            -  $        (36,807) $            -
  (Purchase) sale of
    certificates of
    deposits, net                     -                 -         696,155
  Proceeds from sale
   of equipment                 555,232           211,000           6,581
  Investment in molds
   and related plugs         (1,154,908)       (1,275,183)     (2,050,745)
  Purchase of property,
   plant and equipment       (1,678,236)       (2,477,520)     (6,745,936)
  Increase in cash
   surrender value of
   life Insurance              (122,637)         (131,696)       (124,396)
                         ______________  ________________  ______________
     Net Cash (Used) by
      Investing
      Activities         $   (2,440,549) $     (3,710,206) $   (8,218,341)
                         ______________  ________________  ______________
CASH FLOWS FROM FINANCING
 ACTIVITIES:
  Proceeds from issuance
   of common stock       $            -  $        107,400  $      107,500
  Proceeds from notes
   payable and long-term
    debt                        760,212         4,279,554       3,362,137
  Payments of long-term
   debt                      (2,570,958)       (2,157,885)       (738,434)
  Payments on capital
   lease                        (11,788)             (931)              -
  Payments on related
   party payable                      -          (415,821)              -
                         ______________  ________________  ______________
     Net Cash Provided by
      Financing
      Activities         $   (1,822,534) $      1,812,317  $    2,731,203
                         ______________  ________________  ______________
Net increase (decrease)
 in cash & cash
 equivalents             $     (233,862) $        840,317  $   (1,617,519)
Beginning cash & cash
 equivalents balance          2,217,301         1,376,984       2,994,503
                         ______________  ________________  ______________
Ending cash & cash
 equivalents balance     $    1,983,439  $      2,217,301  $    1,376,984
                         ______________  ________________  ______________

                                [Continued]
23
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                [CONTINUED]
                                       Year Ended June 30,
                         ________________________________________________
                             2000            1999             1998
                         ______________  ________________  ______________
Supplemental Disclosures
 of Cash Flow Information:
  Cash paid during the
   period for:
    Interest:
     Unrelated parties   $    1,088,857  $        996,640  $      767,867
     Related parties                  -            20,447          26,509
                         ______________  ________________  ______________
                         $    1,088,857  $      1,017,087  $      794,376
                         ______________  ________________  ______________
    Income taxes         $            -  $        263,345  $      825,570
                         ______________  ________________  ______________

Supplemental Schedule of
 Non-cash Investing and  Financing Activities:
     For the year ended
      June 30, 2000:
       None

     For the year ended June 30, 1999:
       None

     For the year ended June 30, 1998:
       The Company entered into an agreement whereby 52,500 shares of
       stock previously issued in the acquisition of Mach Performance
       at $8.17  per share were returned for cancellation.

       The  Company purchased an airplane for $1,375,000 by assuming  a
       $959,179 loan and issuing a $415,821 note payable.

       The Company borrowed $47,079 for the purchase of a vehicle.






















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

24
<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) manufactures high-performance  deep  water
  sport  boats,  sport cruisers, sport fishing boats, custom  offshore
  racing boats and super cruiser yachts.  These boats are sold to  the
  Company's  worldwide network of approximately  Forty  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 400 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.   Fountain Power, Inc. was not active  during  Fiscal
  1999  and  was  dissolved effective June 30,  1999.  Also  effective
  October  1,  1997, Fountain Trucking, Inc. and Fountain  Sportswear,
  Inc.  were  dissolved  and  the operations transferred  to  Fountain
  Powerboats,  Inc.  The operations of Fountain Power, Inc.  and  Mach
  Performance,  Inc.  were  discontinued  effective  as  of  June  30,
  1997(See Note 13).

  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  requires
  management  to  make  estimates  and  assumptions  that  affect  the
  reported  amounts  of  assets and liabilities,  the  disclosures  of
  contingent  assets  and  liabilities at the date  of  the  financial
  statements,  and  the  reported amounts  of  revenues  and  expenses
  during  the  reporting  period.  Actual results  could  differ  from
  those estimated by management.

  Cash  and  Cash Equivalents: For purposes of the statement  of  cash
  flows,  the  Company  considers all highly liquid  debt  instruments
  with a maturity of three months or less to be cash equivalents.   At
  June  30,  2000 and 1999, the Company had $1,843,964 and $2,040,605,
  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 is 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 has  established  a
  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 percentage of the purchase price  of  the  boat
  ranging  from  0%  to  7% based on the dealer's service  performance
  rating.   The Company has accrued estimated dealer territory service
  awards  at  June  30,  2000  and 1999 of  $907,230  and  $2,037,170,
  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).

  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 three  years.
  The  Company  has  accrued  a reserve for these  anticipated  future
  warranty costs.

25
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

  The  Company  has  developed  criteria  for  determining  whether  a
  shipment  should  be  recorded as a sale or as a  deferred  sale  (a
  balance  sheet liability).  The criteria for recording  a  sale  are
  that  the boat has been completed and 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, 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 maximum six month (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.

  Presently,  the  Company's  normal sales program  provides  for  the
  payment  of  floor  plan interest on behalf of  its  dealers  for  a
  maximum  of  six months.  The Company believes that this program  is
  currently competitive with the interest payment programs offered  by
  other  boat  manufacturers, but may from  time  to  time  adopt  and
  publish   different  programs  as  necessary  in   order   to   meet
  competition.

  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:   Costs incurred in connection  with  advertising
  and  promotion of the Company's products are expensed  as  incurred.
  Such  costs  amounted to $1,456,592, $1,411,883 and  $1,166,633  for
  the years ended 2000, 1999 and 1998.

  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.   Prior  period earnings per share  and  weighted  average
  shares  have been restated to reflect the adoption of SFAS No.  128.
  (See Note 14)

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

26
<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  the  cost  of
  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.

  Reclassifications:   The financial statements  for  years  prior  to
  June  30,  2000 have been reclassified to conform with the  headings
  and classifications used in the June 30, 2000 financial statements.

Note 2.  Inventories.

  Inventories consist of the following:
                                                  June 30,
                                      ___________________________
                                           2000          1999
                                      _____________   ___________
               Parts and supplies     $   3,402,176   $ 3,296,244
               Work-in-process            3,743,713     3,208,982
               Finished goods               884,247       922,664
                                      _____________   ___________
                                          8,030,136     7,427,890
               Reserve for obsolescence    (150,000)     (120,000)
                                      _____________   ___________
                                      $   7,880,136   $ 7,307,890
                                      _____________   ___________

Note 3.  Property, Plant, and Equipment.

  Property, plant, and equipment consists of the following:
                             Estimated            June 30,
                            Useful Lives  ___________________________
                              in Years        2000         1999
                            ____________  _____________ _____________
    Land  and  related
     improvements              10-30       $  1,304,418 $   1,416,429
    Buildings  and
     related  improvements     10-30         11,751,186     11,092,771
    Construction-in-progress    N/A             446,523        760,052
    Production  molds  and
     related  plugs              8           15,163,821     14,527,208
    Machinery and equipment     3-5           5,714,631      4,562,734
    Furniture and fixtures       5              765,533        754,497
    Transportation equipment     5            2,231,874      2,305,033
    Racing boats                N/A             308,054        790,860
                                          _____________ _____________
                                             37,686,040    36,209,584
         Accumulated depreciation           (18,752,789)  (17,144,314)
                                          _____________ _____________
                                          $  18,933,251 $  19,065,270
                                          _____________ _____________

  Depreciation expense amounted to $2,397,085, $2,280,871,  $1,953,207
  for  the  years  ended  June 30, 2000, 1999 and 1998,  respectively.
  During  December  1998,  as  part of a strategic  restructuring  the
  Company wrote off assets totaling $2,440,000 (See Note 15).

27
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3.  Property, Plant, and Equipment. [Continued]

  The  Company's  airplane is collateral for loans with  an  aggregate
  balance  $1,017,257  and  $754,014  at  June  30,  2000  and   1999,
  respectively.

  Construction costs of production molds for new and existing  product
  lines are capitalized and depreciated over an estimated useful  life
  of  eight  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.  Production  molds  under
  construction amounted to $223,144 and $80,123 at June 30,  2000  and
  1999.

Note 4. Notes Payable - Related Party

  The  Company issued a 8.5%, $415,821 note payable to an officer  and
  director  of the Company in connection with purchase of an airplane.
  The Note was paid in full on March 31, 1999.

Note 5.  Long-term Debt and Pledged Assets.

  The  following is a summary of long-term debt at June 30,  2000  and
  1999:
                                                   2000          1999
                                               ___________   ____________
     7.26% Loan payable to a financing
     Corporation assumed in purchasing
     an airplane from an officer and
     director. Monthly payments of
     $15,181. Matures August 1, 2004.          $   622,581   $    754,014

     Loan payable to a financing Corporation
     for the rebuilding of engines for the
     Company's plane. The loan has a fixed
     interest rate of 8.12%. Monthly payments
     of $9,296. Matures August 1, 2004.            394,676              -

     6.30% loan payable to a financial
     institution for the purchase of a
     vehicle, monthly payment of $771
     through December 2002,
     secured by the vehicle purchased.              21,346         28,989

     7.15% loan payable to a financial
     institution for the purchase
     of a vehicle, monthly payments of
     $1,055 through October
     2002, secured by the vehicle purchased.        26,664         37,475

     6.30% loan payable to a financial
     institution for the purchase of a
     vehicle, president of the Company
     pays the monthly payments
     of $979 through December 2002,
     secured by the vehicle.                             -         36,807

     Amounts borrowed against the cash
     surrender value of key-man
     life insurance policies during
     June 1998, fixed interest rate or 8%
     on $274,060 and variable interest
     rate of 7.39% at June 30, 1999
     on the remaining $62,033, monthly
     payments of $10,000.                          512,654        336,093

     $14,000,000 credit agreement with a
     financial Corporation                       9,187,159     11,409,551
                                               ___________   ____________
                                                10,765,080     12,602,930
     Less: Current maturities included
     in current liabilities:                    (2,613,534)    (2,464,535)
                                               $ 8,151,546   $ 10,138,395
                                               ___________   ____________

28
<PAGE>



            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

  On  December  31,  1996, the Company concluded a $10,000,000  credit
  agreement  with  General  Electric Capital Corporation.   Under  the
  terms   of   the  new  credit  agreement,  the  Company   refinanced
  substantially  all of its interest bearing debts and had  additional
  funds  made  available to it for expansion.  Initially, the  Company
  borrowed $7,500,000 to primarily refinance existing debts.   All  of
  the  Company's  prior  interest bearing  debts  to  MetLife  Capital
  Corporation,  Deutsche Financial Services, GE  Capital  Corporation,
  Branch Bank & Trust Leasing Corp., and other smaller creditors  were
  paid  off  entirely.  During 1998 and 1997 the Company borrowed  the
  additional  $1,500,000 and $1,000,000, respectively, to  fund  plant
  and  equipment additions.  The credit agreement has a fixed interest
  7.02%.   The  agreement calls for monthly payments of  $123,103  and
  has  a  ten-year  amortization with a five-year  call.   The  credit
  agreement  is  secured  by all of the Company's  real  and  personal
  property  and  by the Company's assignment of a $1,000,000  key  man
  life  insurance  policy.   The  credit  agreement  was  subsequently
  amended   and   restated  during  1999  to  include  an   additional
  $4,000,000  credit  loan,  with  a fixed  interest  rate  of  7.02%,
  maturing  January  2,  2002, monthly payments  of  $100,000,  and  a
  prepayment penalty of $80,000 if paid prior to September 1, 2000  or
  $40,000 if paid prior to September 1, 2001.

  The  estimated  aggregate maturities required on long-term  debt  at
  June 30, 2000 are as follows:

               2001                      $  2,613,534
               2002                         2,104,135
               2003                         1,542,094
               2004                         1,509,023
               2005                         1,330,319
            Thereafter                      1,665,975
                                         ____________
                                         $ 10,765,080
                                         ____________

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

  Common  Stock: During July 1998 the Company recovered and  cancelled
  52,500  shares of common stock previously issued in the  acquisition
  of  Mach  Performance, Inc. from a former director  of  the  Company
  (See Note 13).

  Stock  Options:  During March 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
  up  to  120,000 stock options 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).  The Plan was  approved  by
  the  shareholders of the Company during January 1999.  During  1999,
  the  Company granted an officer of the Company 30,000 options  under
  the  Plan.   The  options are exercisable at $5 per share  and  5000
  options vest quarterly beginning June 30, 1999.  The Options  expire
  on  January 11, 2004.  As of June 30, 1999 none of the options  have
  been  exercised.  During  2000, the Company granted  10,000  options
  under  the Plan.  The options are exercisable at $3.18 to $6.00  per
  share  and  vested on issuance.  The options expire through  May  8,
  2005.  As of June 30, 2000 none of the options have been exercised.

29
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6.  Common Stock, Options, and Treasury Stock. [Continued]
  Under  the  terms of the Company's qualified 1986 employee incentive
  stock  option plan, which expired on December 5, 1996, options  were
  authorized to purchase up to 300,000 shares of the Company's  common
  stock  at  a price of no less than 100% of the fair market value  on
  the  date of grant as determined by the Board of Directors.  Options
  can  be  exercised  for a ten-year period from the  date  of  grant.
  During  Fiscal 1995, 30,000 options each were granted to the  former
  Chief  Executive Officer and to the Chief Financial Officer at $3.94
  and  $3.67  per share, respectively.  During fiscal 1997 the  former
  Chief Financial Officer exercised his 30,000 options.

  During June 1998, 30,000 options, issued to a former officer of  the
  Company   in  the  acquisition  of  Mach  Performance,  Inc.,   were
  cancelled  in  connection with the settlement  agreement  (See  Note
  13).

  On  June  21, 1995, the shareholders voted to adopt the  1995  stock
  option  plan.   The plan allowed up to 450,000 common stock  options
  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, 2000, none of these  options
  have been exercised.

  Effective  March  23,  1995, the Board of Directors  authorized  the
  issuance  of  30,000  stock options to each of  the  Company's  four
  outside  directors  at  $3.58 per share on  a  non-qualified  basis.
  During  the  year  ended  1999, a former director  exercised  30,000
  stock options for $107,400.  During the year ended June 30, 1998,  a
  director  exercised  30,000  stock  options  for  $110,000.   During
  Fiscal 1997, a director exercised his options for 24,000 shares  for
  $86,000  and  assigned, with the specific consent of  the  Company's
  Board of Directors, the remaining 6,000 options to another party.

  A  summary  of the status of the options granted under the Company's
  stock  option plans and other agreements at June 30, 2000, 1999  and
  1998, and changes during the periods then ended is presented in  the
  table below:

                   2000                  1999                    1998
             ____________________   _________________  ____________________
                        Weighted             Weighted              Weighted
                         Average              Average               Average
                        Exercise             Exercise              Exercise
             Shares      Price      Shares    Price      Shares      Price
           ___________  ________   _________ _________  __________ _________
Outstanding
 at beginning
 of period     546,000 $    4.57     546,000 $    4.50     606,000 $    4.63
Granted         10,000      4.59      30,000      5.00           -         -
Exercised            -         -     (30,000)     3.58     (30,000)     3.58
Forfeited            -         -           -         -           -         -
Canceled       (30,000)     3.94           -         -     (30,000)     8.17
           ___________  ________   _________ _________  __________ _________
Outstanding
 at end
 of period     526,000  $   4.61     546,000 $    4.57     546,000 $    4.50
           ___________  ________   _________ _________  __________ _________
Exercisable
 at end
 of period     521,000  $   4.61     522,000 $    4.55     546,000 $    4.50
           ___________  ________   _________ _________  __________ _________
Weighted
 average fair
 value of
 options
 granted        10,000  $    .28      30,000 $     .14           - $       -
           ___________  ________   _________ _________  __________ _________

30
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6.  Common 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
  years   ended  June  30,  2000  and  1999,  respectively:  risk-free
  interest  rates  of  6.7% and 4.5%, respectively, expected  dividend
  yields  of  zero  for  all  periods,  expected  lives  of  5  years,
  respectively,   and   expected   volatility   of   128%   and   60%,
  respectively.   No options were granted during the year  ended  June
  30, 1998.

  A  summary  of  the  status  of the options  outstanding  under  the
  Company's stock option plans and other agreements at June  30,  2000
  is presented below:

                          Options Outstanding          Options Exercisable
                 ___________________________________ _______________________

                              Weighted
                              Average      Weighted               Weighted
  Range of                    Remaining    Average                 Average
  Exercise         Number    Contractual  Excercise     Number     Exercise
  Prices        Outstanding      Life       Price     Exercisable    Price
  _____________ ___________ ____________ ___________ ____________ __________
  $3.19 - $3.58    36,000     4.9 years      3.71        36,000      3.71
      $4.67       450,000     5.4 years      4.67       450,000      4.67
  $5.00 - $6.00    40,000     3.6 years      5.14        35,000      5.29


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

                                            Year Ended June 30,
                                 ________________________________________
                                     2000         1999         1998
                                 ____________  ____________  _____________

  Net  Income(loss) As  reported $  1,258,342  $ (1,225,791) $   2,740,487
                    Proforma     $  1,261,147  $ (1,256,233) $   2,740,487
 Earnings per share As reported  $        .27  $       (.27) $         .58
                    Proforma     $        .27  $       (.27) $         .58

  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.


31
<PAGE>







            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED 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, 2000 and 1999, the totals of all deferred  tax  assets
  were  $1,481,666 and $2,221,499, respectively.  The  totals  of  all
  deferred    tax   liabilities   were   $1,180,817   and    $899,680,
  respectively.   The  amount  of  and  ultimate  realization  of  the
  benefits  from  the deferred tax assets for income tax  purposes  is
  dependent,  in  part,  upon the tax laws in  effect,  the  Company's
  future  earnings,  and  other future events, the  effects  of  which
  cannot be determined.

  The  Company  has  an unused state operating loss  carryforwards  at
  June 30, 2000 of approximately $2,080,000, which expires in 2019.

  The  components  of  federal  income  tax  expense  from  continuing
  operations consist of the following:
                                       Year Ended June 30,
                         ________________________________________________
                             2000            1999             1998
                         ______________  ________________  ______________
  Current income tax
    expense:
          Federal        $            -  $              -  $      783,508
          State                       -                 -         274,132
                         ______________  ________________  ______________
     Net current tax
      expense            $            -  $              -  $    1,057,640
                         ______________  ________________  ______________
     Deferred tax expense
     (benefit) resulted from:
          Excess of tax
           over financial
           accounting
           depreciation  $      197,521   $      (129,720) $      303,782
          Warranty reserves           -           (15,600)              -
          Accrued vacations      (8,652)           (2,317)         (3,850)
          Dealer incentive
           reserves              46,534           (13,537)       (293,662)
          Bad debt reserves           -            12,491               -
          Accrued Dealer
           incentive interest   (34,000)          (99,190)              -
          Excess contributions
           carryforwards          1,059            (1,059)              -
          Inventory adjustment-
           Sec.263A6              1,057           (13,170)       (131,941)
          Decrease in NOL
           carryforwards        453,148          (805,261)        204,380
          Decrease  in
           valuation
           allowance                  -                 -        (316,948)
          Allowance  for
           obsolete
           inventory            (11,700)                -          (7,800)
          Alternative
           minimum  tax
           credits             (153,882)          102,592         186,947
          Investment tax
           credits              (81,545)                -          86,294
          Allowance for
           boat repurchases           -            18,972               -
          Accrued executive
           compensation         (31,069)           (8,472)        (16,338)
          Accrued dealer
           incentives           (17,751)         (235,388)              -
          Health insurance
           reserve              (50,310)                -               -
                         ______________  ________________  ______________
     Net  deferred tax
      expense (benefit)  $      370,410  $     (1,189,659) $       10,864
                         ______________  ________________  ______________
32
<PAGE>



		FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Income Taxes. [Continued]

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

           The reconciliation of income tax from continuing operations
  computed  at  the U.S. federal statutory tax rate to  the  Company's
  effective rate is as follows:

                                       Year Ended June 30,
                         ________________________________________________
                             2000            1999             1998
                         ______________  ________________  ______________
     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
     Compensation from
      stock options                   -               .87          (2.77)
     (Increase) decrease
       in NOL carryforwards        3.78                 -           4.86
     Officer's life insurance      1.03              (.38)           .36
     Valuation allowance              -                 -          (9.03)
     Net effect of alternative
      minimum taxes                   -             (4.23)          (.34)
     Other                         1.04             13.84          (1.62)
                         ______________  ________________  ______________
     Effective income tax
      rates                       44.85%            49.10%          30.46%
                         ______________  ________________  ______________

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

                                                      June 30,
                                           ___________________________
                                                 2000         1999
                                           ______________  ___________
     Excess of tax over financial
         accounting depreciation           $   (1,264,261) $(1,066,740)
     Warranty reserve                             230,100      230,100
     Obsolete inventory reserve                    58,500       46,800
     Accrued vacations                             62,883       54,230
     Allowance for boat repurchases                78,000       78,000
     Dealer incentive reserves                    319,165      365,699
     Bad debt reserve                              10,858       10,858
     Accrued Dealer incentive interest            133,190       99,190
     Inventory adjustments - Sec. 253A            209,047      270,103
     NOL carryforwards                             20,596      805,262
     Alternative minimum tax credits               83,444      167,060
     Accrued executive compensation                55,879       24,810
     Donations carryforwards                            -        1,059
     Accrued dealer service incentives            253,138      235,388
     Health insurance reserve                      50,310            -


33
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Research and Development.

  The  Company expenses the costs of research and development for  new
  products  and  components as the costs are incurred.   Research  and
  development costs are included in the cost of sales and amounted  to
  $926,486  for  Fiscal 2000, $876,965 for Fiscal 1999,  and  $575,918
  for Fiscal 1998.

Note 9. Commitments and Contingencies.

  Employment   Agreement:  The  Company  entered   into   a   one-year
  employment  agreement  in 1989 with its Chairman,  Mr.  Reginald  M.
  Fountain,  Jr.   The  agreement  provides  for  automatic   one-year
  renewals  at  the  end  of  each  year  subject  to  Mr.  Fountain's
  continued  employment.   During 1999, the  Company  entered  into  a
  three  year  employment  agreement  with  the  Company's  new  Chief
  Operating Officer and Executive Vice President.

  Dealer  Interest: The Company regularly pays a portion  of  dealers'
  interest  charges  for floor plan financing for up  to  six  months.
  These  interest  charges  amounted to $1,164,561  for  Fiscal  2000,
  $1,353,848  for Fiscal 1999, and $1,031,611 for Fiscal  1998.   They
  are   included  in  the  accompanying  consolidated  statements   of
  operations  as part of selling expense.  At June 30, 2000  and  1999
  the  estimated unpaid dealer incentive interest included in  accrued
  expenses amounted to $418,458 and $327,643 , respectively.

  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,  2000  and  1999,  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  $23,673,000
  and  $23,350,000 .  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, 2000 and 1999, the allowance for boat repurchases was $200,000.

  Product  Liability and Other Litigation: There were various  product
  liability and warranty lawsuits brought against the Company at  June
  30,  2000.   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.

  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 benefits plans in effect.

34
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9.  Commitments and Contingencies. [Continued]

  Environmental:  The Company has been notified by the  United  States
  Environmental  Protection Agency (the EPA) and  the  North  Carolina
  Department  of  Environment, Health and Natural Resources  (NCDEHNR)
  that  it  has been identified as a potentially responsible party  (a
  PRP)  and  may  incur,  or  may  have incurred,  liability  for  the
  remediation  of  ground water contamination at  the  Spectron/Galaxy
  Waste  Disposal  Site located in Elkton, Maryland and  the  Seaboard
  Disposal  Site, located in High Point, North Carolina, also referred
  to  as  the  Jamestown,  North Carolina  site,  resulting  from  the
  disposal  of  hazardous substances at those sites by a  third  party
  contractor of the Company.  The Company has been informed  that  the
  EPA  and  NCDEHNR ultimately may identify a total of  between  1,000
  and  2,000,  or more, PRP's with respect to each site.  The  amounts
  of  hazardous  substances  generated  by  the  Company,  which  were
  disposed  of  at both sites, are believed to be minimal in  relation
  to  the  total  amount of hazardous substances disposed  of  by  all
  PRP's  at  the  sites.  At present, the environmental conditions  at
  the   sites,  to  the  Company's  knowledge,  have  not  been  fully
  determined by the EPA and NCDEHNR, respectively, and the Company  is
  not  able  to  determine at this time the amount  of  any  potential
  liability  it  may  have  in connection with remediation  at  either
  site.   Without  any acknowledgment or admission of  liability,  the
  Company  has  made payments as a non-performing cash-out participant
  in  an  EPA-supervised response and removal program at  the  Elkton,
  Maryland  site, and in a NCDEHNR-supervised removal and  preliminary
  assessment program at the Jamestown, North Carolina site.   A  cash-
  out  proposal  for the next phase of the project is expected  to  be
  forthcoming  from  the  PRP  Group for the  Elkton,  Maryland  site.
  According  to the PRP Group, the Company's full cash-out  amount  is
  estimated  to  be  approximately $10,000 for  the  Elkton,  Maryland
  site, based upon an estimated 3,304 gallons of waste disposed of  at
  that  site  by the Company.  A cash-out proposal in the  approximate
  amount  of $30,000 based on an estimated 19,245 gallons of waste  is
  anticipated  from  the PRP Group for the Jamestown,  North  Carolina
  site,  according to the PRP Group administrator.  Any such  cash-out
  agreement   will  be  subject  to  approval  by  EPA  and   NCDEHNR,
  respectively.   The  Company  has accrued  the  estimated  liability
  related to these matters in the accompanying financial statements.

Note 10.  Export Sales.

  The  Company  had  export  sales  of  $1,755,412  for  Fiscal  2000,
  $3,717,373 for Fiscal 1999, and $4,583,542 for Fiscal 1998.   Export
  sales were to customers in the following geographic areas:

                                           Year Ended June 30,
                           ______________________________________________
                               2000             1999            1998
                           ______________ ______________  _______________
     Canada,  Central  and
      South  America       $    1,485,615 $    2,495,048  $     2,639,523
     Asia                               -              -        1,834,524
     Middle East and Europe.      269,797      1,222,325          109,495
                           ______________ ______________  _______________
                           $    1,755,412 $    3,717,373  $     4,583,542
                           ______________ ______________  _______________


35
<PAGE>




            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11.  Transactions with Related Parties.

  The  Company  paid  or  accrued the following amounts  for  services
  rendered  or  for  interest  on  indebtedness  to  Mr.  Reginald  M.
  Fountain,  Jr.,  the Company's Chairman, President, Chief  Executive
  Officer,  and  Chief  Operating Officer, or  to  entities  owned  or
  controlled by him:
                                        Year Ended June 30,
                          ___________________________________________
                               2000          1999           1998
                          ____________  ______________  _____________
     Apartments rentals   $      9,880  $       19,731  $       6,716
     R.M.  Fountain, Jr.
      -  airplane  rentals           -               -        107,312
     R.M.  Fountain,  Jr.
      - interest  on  loans          -          20,447         26,509
                          ____________  ______________  _____________
                          $      9,880  $       40,178  $     140,538
                          ____________  ______________  _____________

  During  the  year  ended  June 30, 1998  the  Company  purchased  an
  airplane  from Mr. Fountain for $1,375,000 by assuming the  loan  on
  the  airplane  from GE Capital Services for $959,179, (See  Note  5)
  and  issuing  a note to Mr. Fountain in the amount of $415,821  (See
  Note 4).

  As  of  June  30,  2000  and 1999 the Company  had  receivables  and
  advances  from  employees  of  the Company  amounting  to  $9,001and
  $39,658,   respectively  which  includes  $1,000   and   $36,808   ,
  respectively from Mr. Fountain.

  The  Company paid $345,049, $478,576 and $288,915 for the year ended
  June  30,  2000, 1999 and 1998 for advertising and public  relations
  services from an entity owned by a director of the Company.

  Prior  to  June  30,  1997,  the Company  received  consulting  fees
  pursuant  to  a consulting agreement with a vendor of  the  Company.
  Mr.  Fountain  has assigned these consulting fees  to  the  Company.
  Included  in  other non-operating income are consulting fees  earned
  by   the  Company  amounting  to  $498,307  for  Fiscal  1998.   The
  consulting agreement expired on June 30, 1997 and has not  been  re-
  negotiated.

  During  1998,  the  Company's  President  purchased  a  vehicle   in
          the  name of   the  Company. All
  payments  on   the vehicle are being  paid by the   President.   The
  transaction   has  been  recorded  in  the  accompanying   financial
  statements  as  a  receivable  from  the  president  equal  to   the
  remaining amount owed on the vehicle (See Note 5).

Note 12.  Concentration of Credit Risk.

  Concentration of credit risk arises due to the Company operating  in
  the  marine industry, particularly in the United States. For  Fiscal
  2000  one  dealer accounted for 7.4% of sales, one dealer  accounted
  for  6.1% of sales and one dealer accounted for 5.7% of sales.   For
  Fiscal  1999 one dealer accounted for 6.8% of sales and two  dealers
  each  accounted  for  6.7% of sales.  For  Fiscal  1998  one  dealer
  accounted for 6.7% of sales, another for 6.3%, and one other  dealer
  for 5% of sales.

36
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13.  Discontinued Operations.

  During  June,  1997, the Company adopted a plan to  discontinue  the
  operations  of Mach Performance Inc. and Fountain Power,  Inc.   The
  accompanying   financial  statements  have  been   reclassified   to
  segregate  the  discontinued operations from continuing  operations.
  Included  in  the operating losses from the discontinued  operations
  for  June  30,  1997  is  the write down of  $395,761  of  remaining
  goodwill  and  $461,422  of  propeller  inventory  which  management
  believes  is  not saleable.  The Company also reclassified  $539,457
  in  fixed  assets to net liabilities of discontinued operations  and
  accrued  a  $440,401  for estimated future  losses  expected  to  be
  incurred  in the disposition. During the year ended June  30,  1998,
  the Company adjusted it estimates for loss on disposal resulting  in
  a  gain on the disposal of discontinued operations of $290,512  (net
  of  a  tax  benefit of $272,093).   The gain was  a  result  of  the
  return  of  52,500 shares of common stock, valued at $428,925,  from
  former  officer  and  director,  his  wife,  Mach,  Inc.,  and  Mach
  Performance,  Inc.,  less  associated legal  fees  of  approximately
  $486,399  plus  adjustments to the estimated  loss  on  disposal  of
  approximately $75,893.

  The  following is a condensed proforma statement of operations  that
  reflects  what the presentation would have been for the years  ended
  June   30,   1998   without   the  reclassifications   required   by
  "discontinued operations" accounting principles:
                                                    1998
                                               _____________
         Net sales                             $  50,652,037
         Cost of goods sold                      (38,084,034)
        Other operating expenses                  (8,894,121)
         Other income (expense)                     (147,403)
         Provision for taxes                        (785,992)
                                               _____________
         Net income                            $   2,740,487
                                               _____________
         Earnings per share                    $         .58
                                               _____________








37
<PAGE>







            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14. - Earnings Per Share.

  The  following data show the amounts used in computing earnings  per
  share  and  the effect on income and the weighted average number  of
  shares  of  potential dilutive  common  stock  for  the years  ended
  June 30, 2000, 1999 and 1998:
                                    2000        1999         1998
                              _____________ ___________ ______________
  Income from continuing
    operations available to
    common stockholders       $     468,301 $(1,255,791)$    2,439,556
                              _____________ ___________ ______________
  Discontinued operations     $           - $         - $      300,931
                              _____________ ___________ ______________
  Extraordinary item          $     790,041 $         - $            -
                              _____________ ___________ ______________
  Weighted average number of
    common shares outstanding
    used in basic earnings
    per share                     4,732,608   4,711,896      4,751,779

  Effect of dilutive stock
    options                              43           -        358,311
                              _____________ ___________ ______________
  Weighted number of common
    shares and potential
    dilutive common shares
    outstanding used in
    dilutive earning per
    share                         4,732,651   4,711,896      5,110,090
                              _____________ ___________ ______________

  The  Company had at June 30, 2000 options to purchase 526,000 shares
  of  common  stock  at prices ranging from $3.19 to $6.00  per  share
  that  were  not  included in the computation of  earning  per  share
  because their effect was anti-dilutive.

Note 15.  Strategic Charge.

  During  December  1998,  The  Company  designed  and  implemented  a
  restructuring  plan  to  aggressively  improve  the  Company's  Cost
  Structure,  refocus sales and marketing expenditures and divest  the
  Company  of certain non-realizable assets.  In connection  with  the
  restructuring plan the Company reviewed components of  its  business
  for   possible   improvement   of   future   profitability   through
  reengineering or restructuring.  The Company decided in the plan  to
  eliminate  its  racing  program, to write-off excess  yacht  tooling
  costs  along  with other discontinued unused tooling.   The  Company
  completed  these  actions during the third and  fourth  quarters  of
  Fiscal  1999.  The carrying value of the assets held was reduced  to
  their  estimated  realizable fair value based on future  cash  flows
  from  use of the assets or sale of the related assets. The resulting
  adjustment of $2,440,000 was recorded as a strategic charge  in  the
  statement of operations of the Company.

Note 16. Extraordinary Item / Gain on Settlement of Lawsuit

  During  April 2000, the Company received proceeds of $1,313,224  and
  recorded  an  extraordinary net of tax gain  of  $790,041  from  the
  settlement  of a class action lawsuit alleging antitrust  violations
  against  a  vender  of  the Company who is  in  the  sterndrive  and
  inboard engine business.

38
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 17. Capital Lease.

  The  Company  is  the  lessee of equipment  under  a  capital  lease
  expiring in May 2004.  The assets and liabilities under the  capital
  leases  were  recorded  at the lower of the  present  value  of  the
  minimum  lease payments or the fair value of the assets at the  time
  of  purchase.   Equipment at June 30, 2000 and  1999  under  capital
  lease obligations is as follows:
                                          2000       1999
                                    ____________  __________
     Equipment                      $     83,067  $   83,067
     Less: Accumulated amortization      (13,844)         (-)
                                    ____________  __________
                                    $     69,223  $   83,067
                                    ____________  __________

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

  Future minimum lease payments for the years ended June 30:

   Year ending June 30,                Lease Payments
            2001                           39,552
            2002                           39,552
            2003                           39,552
            2004                           54,140
                                       __________
   Total future minimum lease payments $  172,796
   Less: amounts representing
   maintenance and usage fee, interest
   and executory costs                    (95,857)
                                       __________
   Present value of the future minimum
   lease payments                          76,939
   Less: Lease current portion            (12,999)
                                       __________
   Capital lease obligations -
   long term                           $   63,940
                                       __________

Note 18. Gain on Insurance Claims from Hurricanes.

  During  September  1999, the Company experienced  flooding  and  the
  temporary  closure  of  the  production  facility  as  a  result  of
  Hurricanes "Dennis" and "Floyd" hitting Eastern North Carolina.   As
  a  result  of  the  hurricanes,  the Company  sustained  damages  of
  approximately $277,172 to inventory and $389,063 to property,  plant
  and  equipment, which includes $300,000 in damages to the  Company's
  yacht  mold  and  $51,658 in additional expenses.  The  Company  has
  filed  a  business  interruption  claim  for  damages  due  to  lost
  revenues   from   the  closure  of  the  production   facility   and
  inefficiencies  due  to storm preparation, cleanup  and  work  force
  shortages.   As of June 30, 2000, the insurance carriers  have  paid
  $1,058,618  for  damages  to  the inventory,  property,  plant,  and
  equipment including the Yacht Mold and other expenses.  The  Company
  has  filed  its  claim  for business interruption  and  believed  it
  complied  with  all  aspects  of its  policy.   When  a  timely  and
  reasonable  resolution could not be reached, the Company filed  suit
  against  its  insurance carrier. As of June 30, 2000, the  insurance
  carrier  has  advanced  $961,560 towards the  business  interruption
  claim.   The  full  effects  of a business  interruption  settlement
  cannot  be  reasonably estimated and will be recorded in the  future
  when  collected.   As of June 30, 2000 the Company  has  recorded  a
  gain on insurance claims from the hurricanes of $1,065,725.

39
<PAGE>



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

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

                                 Part III

Item 10.  Directors and Executive Officers of Registrant.

The  Current  directors and executive officers of Registrant  and  its
Subsidiary are as follows:

REGINALD  M.  FOUNTAIN, JR., age 60, founded the Company's  Subsidiary
during  1979  and has served as its Chief Executive Officer  from  its
organization.  He became a director and President of the Company  upon
its  acquisition  of  the Subsidiary in August,  1986.   Mr.  Fountain
presently serves as Chairman, President and Chief Executive Officer of
the Company and its Subsidiary.  From 1971 to 1979, Mr. Fountain was a
world  class  race  boat  driver, and was the  Unlimited  Class  World
Champion in 1976 and 1978.

ANTHONY  J.  ROMERSA,  age  55, Executive  Vice  President  and  Chief
Operating Officer, became a director of the Company on March 2,  1999.
Mr. Romersa joined the Company following a 28 year business career  in
a number of senior management positions with the Brunswick Corporation
and its Mercury Marine Consumer and Vapor Divisions.  As the corporate
director of Brunswick's Marine Operations Planning since 1986, he  was
actively involved in Brunswick's acquisition of Bayliner and  Sea  Ray
and  was  responsible to the Vice President of Corporate Planning  and
Development for the strategic performance of global marine operations.

DARRYL  M. DIAMOND, M. D., age 64, is a retired physician.  From  1984
to 1986, Dr. Diamond served as a director of the Company's subsidiary.

GEORGE L. DEICHMANN, III, age 56, is the President and owner of  Trent
Olds/Cadillac/Buick/GMC, an automobile dealership located in New Bern,
North Carolina.

CRAIG  F.  GOESS,  age  46, is the President and  General  Manager  of
Greenville  Toyota,  an automobile dealership located  in  Greenville,
North Carolina.

GUY  C.  HECKER,  JR., age 67, is the President of Stafford,  Burke  &
Hecker,  Inc.,  a  high  technology  consultant  firm  in  Alexandria,
Virginia.  General Hecker also serves as a director of 8 X 8, Inc.,  a
public  company  headquartered in Santa  Clara,  CA,  which  develops,
manufactures, and markets telecommunications equipment.

FEDERICO PIGNATELLI, age 47, became a director of the Company on April
8,  1992.  From  1989  to  April, 1992, he  was a Managing Director at
Gruntal & Company, an investment banking  firm.   From  1988  to  1989,
he  was  General   Manager  of  Euromobiliar  Ltd., a   subsidiary  of
Euromobiliare,  SpA, a publicly  held investment and merchant  bank in
Italy and  Senior Vice President of  New York  and  Foreign Securities
Corporation, an institutional brokerage firm in New York. From 1986 to
1988, he  was  Managing  Director  at  Ladenburg,  Thalmann &  Co., an
investment banking firm.  From  1980  to 1986,  he  was Assistant Vice
President of  E. F. Jutton  International. Prior  to  1980,  he  was a
financial journalist.

40
<PAGE>


Mr.  Pignatelli also serves as  chairman of BioLase Technology,  Inc.,
a  company  which produces  medical and  dental lasers and  endodontic
products.

MARK  SPENCER,  age 44, became a director on February  26,  1992.   He
founded  Spencer Communications Inc., an advertising public  relations
firm  specializing in the marine industry, in 1987.   Previously,  Mr.
Spencer began his journalism career at Powerboat Magazine in 1976.  He
was named Executive Editor of Powerboat Magazine in 1981 and served in
that capacity until 1987.  During the last seven years Mr. Spencer has
served  as on-camera expert commentator for ESPN covering the  boating
industry.

DAVID  A.  SIMMONS, age 62, was appointed to serve as Chief  Financial
Officer of Registrant during September 2000.  He previously served  as
Chief  Financial  Officer of Century Boat Company (boat  manufacturer)
from  1993  through  1997,  and as Chief Financial  Officer  of  Loe's
Highport, Inc. (marina and retail boat sales) since 1998.  Mr. Simmons
was  previously employed by the Registrant as Vice President and Chief
Financial  Officer from 1989 through 1991 and as Controller from  1997
through  1998.  He has a total of 20 years experience in  the  boating
industry.


Section 16(a) Beneficial Ownership Reporting Compliance.  Registrant's
directors and executive officers are required by Section 16(a) of  the
Securities Exchange Act of 1934, as amended, to file reports with  the
Securities and Exchange Commission regarding the amount of and changes
in  their beneficial ownership of Registrant's common stock.  Based on
its  review  of  copies of those reports, Registrant is required  each
year  to  disclose  failures to report shares  beneficially  owned  or
changes  in  such beneficial ownership, and failures  to  timely  file
required  reports, during the previous fiscal year.  It  has  come  to
Registrant's  attention that, during Registrant's  fiscal  year  ended
June  30,  2000, two of its directors filed  reports after  their  due
dates.   Mr.  Fedrico Pignatelli made a timely filing  to  report  two
purchase  transactions but, due to errors in information  supplied  by
his  broker, the report described transactions other than those he had
actually  effected.   Upon  discovery of the error,  Mr.  Pignatelli's
report  was  amended  to accurately describe his purchases.   However,
because  his  transactions  were  not accurately  reported  until  the
amended  report  was filed (approximately one week following  the  due
date  of  the original report), Mr. Pignatelli may be deemed  to  have
filed a late report.  George L. Deichmann III inadvertently failed  to
report one purchase transaction.  Upon discovery of the omission,  his
report was filed approximately one month following its due date.

41
<PAGE>



Item 11.  Executive Compensation.

     The  following  table  contains information  regarding  cash  and
certain  other  compensation  paid  to  or  deferred  by  certain   of
Registrant's   executive  officers  for  the  fiscal   years   listed.
Registrant's  executive  officers also serve and  are  compensated  as
officers and employees of Fountain, and no additional compensation  is
paid  to  any  officer  for  his  or her  service  as  an  officer  of
Registrant.


                      SUMMARY COMPENSATION TABLE
                       Annual compensation      Long-term compensation

                                     Other   Restricted  Securities     All
Name and  Fiscal                    annual     stock    underlying     other
Principal  year  Salary (1) Bonus Compensation awards   options(#) compensation
                                      (2)
_________ ____ _________   _______ ___________ ______  __________  ___________
Reginald M.
Fountain  2000 $ 361,330  $81,438 $    -0-     $ -0-       -0-    $    -0-
President
and Chief 1999   350,000      -0-      -0-       -0-       -0-         -0-
Executive
Officer   1998   350,000  192,023      -0-       -0-       -0-         -0-


Anthony J.2000   184,347   16,288      -0-       -0-       -0-        5,771(3)
Romersa
Executive
Vice      1999   131,731      -0-      -0-       -0-     30,000       1,477(3)
President
and Chief
Operating 1998         -       -        -         -          -           -
Officer

(1)  Includes  amounts deferred at Mr. Romersa's election pursuant  to
     Fountain's   Section  401(k)  plan.   Mr.   Fountain   does   not
     participate in that plan.
(2)  In  addition  to compensation paid in cash, Fountain's  executive
     officers  receive certain personal benefits.  The value  of  such
     benefits  received by each executive officer each  year  did  not
     exceed 10% of his cash compensation for that year.
(3)  Consists  of Fountain's contributions to the Section 401(k)  plan
     for Mr. Romersa's account.



Employment  Contracts  and  Termination of Employment  and  Change-in-
Control Arrangements.

     Mr. Fountain is employed as an officer of Fountain pursuant to an
employment  agreement entered into during 1989 which  provides  for  a
base  term  of one year and for automatic renewal at the end  of  each
year  for  an additional one-year period until terminated as  provided
therein.    Pursuant  to  the agreement, Mr.  Fountain  receives  base
salary  in an amount approved by the Board of Directors (but not  less
than  $104,000),  an annual cash bonus in an amount  equal  to  5%  of
Registrant's  consolidated net income (calculated after deductions  of
profit  sharing contributions and before deductions for income  taxes,
but not more than $250,000), and certain other benefits.

     Mr. Romersa is employed as an officer of Fountain pursuant to  an
employment  agreement entered into during 1998, which provides  for  a
term  ending August 23, 2001.  Pursuant to the agreement, Mr.  Romersa
receives  base salary in an amount approved by the Board of  Directors
(but  not  less than $160,000), an annual cash bonus equal  to  1%  of
Fountain's  net  profits  before taxes and  before  the  deduction  of
bonuses  paid to other officers, and certain other benefits.   In  the
event  (i)  Mr.  Romersa's employment is terminated within  24  months
following  a  "change  in control" (as defined in  the  agreement)  of
Registrant  or  Fountain  (other  than  a  termination  for   "Cause,"
retirement,  death  or disability), or (ii) following  any  Change  in
Control,  and  without  his  consent, Mr. Romersa's  job  location  is
transferred an unreasonable distance from Washington, NC,  he  is  not
paid  salary  or bonus at the rates described in the agreement,  other
employee benefits are reduced or eliminated in a manner that does  not
apply  proportionately to all salaried employees, or  he  is  assigned
duties inconsistent with his position,

42
<PAGE>



duties or status at the time of the Change in Control, then he will be
entitled to receive (or, in the case  of (ii), he may terminate his own
employment and be entitled  to receive) from Fountain all compensation
he would have been entitled to receive  under  the agreement and which
then remains  unpaid  (not  to exceed the amount of his then current base
salary for two years).  The agreement may be terminated by Fountain for
"Cause" (as defined in the agreement).


Employee Stock Options.

     The following table contains information regarding all options to
purchase shares of Registrant's common stock held at June 30, 2000, by
Registrant's  executive  officers named in  the  Summary  Compensation
Table above:

     AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION
                                  VALUES

                             Number of securities         Value of unexercised
                           Underlying unexercised        in-the-money options
       Shares                 Options at FY-end                 at FY-end
      Acquired on  Value
Name   exercise   Realized Exercisable Unexercisable Exercisable Unexercisable

Reginald
M.
Fountain,
Jr.      (1)         (1)    450,000(2)       -0-          (4)          --

Anthony
J.
Romersa  (1)         (1)     25,000(3)      5,000 (3)     (4)          (4)

(1)  No options were exercised during fiscal 2000.
(2)   Includes options to purchase 450,000 shares at a price of  $4.67
per share which expire on August 4, 2005.
(3)   Includes options to purchase an aggregate of 30,000 shares at  a
price  of $5.00 per share which become exercisable as to 5,000  shares
each  calendar quarter-end, beginning June 30, 1999, and, which expire
on  January  11,  2004.   At June 30, 2000,  the  options  had  become
exercisable  as  to  an  aggregate  of  25,000  shares  and   remained
unexercisable as to 5,000 shares.
(4)   The options had no value on June 30, 2000, since, on that  date,
the  aggregate  exercise price of the options exceeded  the  aggregate
market value of the underlying shares (based on the $3.25 closing sale
price of Registrant's common stock on that date).


Director Compensation.

     Registrant's directors currently do not receive any fees or other
compensation for their services as directors, but they are  reimbursed
for  travel  and other out-of-pocket expenses incurred  in  connection
with their attendance at meetings of the Board of Directors.

43
<PAGE>



Item  12.   Security  Ownership  of  Certain  Beneficial  Owners   and
Management.

      Principal  Shareholders.  The following  table  reflects  as  of
September  15,  2000, the beneficial ownership of Registrant's  common
stock  by  shareholders known to Registrant to beneficially  own  more
than 5% of Registrant's common stock.

Name and address              Amount and nature of          Percent of
of beneficial owner           Beneficial Ownership           Class (1)

Reginald M. Fountain, Jr.
P.O. Drawer 457
Whichard's Beach Road
Washington, N.C. 27889            2,588,372 (3)                50.08%

Triglova Finanz, A.G.
Edificio Torre Swiss Bank
Piso 16, Apartado Postal 1824
Panama 1, Republica de Panama       266,500 (3)                 5.65%


(1)  Percentages  are calculated based on 4,732,608 total  outstanding
     shares,  minus 15,000 treasury shares held by the Company,  plus,
     in the case of Mr. Fountain, the number of additional shares that
     he could purchase upon the exercise of stock options.
(2)  Includes  450,000 shares which could be purchased by Mr. Fountain
     from  Registrant  upon the exercise of stock options  and  as  to
     which shares he may be deemed to have sole investment power only.
(3)  Based on information contained in filings with the Securities and
     Exchange  Commission  and  other  information  available  to  the
     registrant.

Management Ownership.

     The  following  table  reflects as of  September  15,  2000,  the
beneficial  ownership  of Registrant's common  stock  by  its  current
directors  and certain executive officers, individually,  and  by  all
current directors and executive officers of Registrant as a group.

Name and address            Amount and nature of            Percent of
of beneficial owner         Beneficial Ownership(1)          Class (2)

Reginald Mr. Fountain,Jr.      2,588,372 (3)                    50.08%

Darryl M. Diamond, M. D.            -0-                           --

George L. Deichmann, III           7,100                           *

Craig F. Goess                      -0-                           --

Guy L. Hecker, Jr.                  -0-                           --

Federico Pignatelli               30,000                           *

Anthony J. Romersa                30,000  (4)                      *

Mark L. Spencer                   33,525  (5)                      *

All current directors and
executive officers  as  a
group  (9  persons)            2,688,997  (6)                   51.49%

44
<PAGE



(1)  Except  as  otherwise  noted  below, the  named  individuals  and
     persons included in the group exercise sole voting and investment
     power with respect to all shares.
(2)  Percentages  are calculated based on 4,732,608 total  outstanding
     shares,  minus 15,000 shares held by Fountain, plus, in the  case
     of each individual and the group, the number of additional shares
     (if any) that could be purchased by that individual or by persons
     included  in  the group upon the exercise of stock  options.   An
     asterisk indicates less than 1.0%.
(3)  Includes  450,000 shares which could be purchased by Mr. Fountain
     from Registrant upon the exercise of stock options and with respect to
     which shares he may be deemed to have sole investment power only.
(4)  Includes  25,000 shares which could be purchased by  Mr.  Romersa
     from Registrant upon the exercise of stock options and with respect to
     which shares he may be deemed to have sole investment power only.  Mr.
     Romersa holds options to purchase 5,000 additional shares which have
     not yet become exercisable.
(5)  Includes  30,000 shares which could be purchased by  Mr.  Spencer
     from Registrant upon the exercise of stock options and with respect to
     which shares he may be deemed to have sole investment power only.
(6)  Includes  an aggregate of 505,000 shares which could be purchased
     by persons included in the group from Registrant upon the exercise of
     stock options and as to which shares such persons may be deemed to
     have sole investment power only.


Item 13.  Certain Relationships and Related-Party Transactions.

      The  following  is a schedule of related party transactions  for
Fiscal  2000, 1999, and1998.  The Company has paid rentals at what  it
believes  to be their fair market values during the last three  fiscal
years to Mr. Fountain or to entities owned by him as follows:

                              Fiscal         Fiscal         Fiscal
                               2000           1999           1998

Apartment Rentals.......... $  9,880       $  19,731      $   6,717

R. M. Fountain, Jr.
 - airplane rentals ....... $    -0-       $     -0-      $ 107,312

 -  interest .............. $    -0-       $  20,447      $  26,509

                           ----------     ----------    -----------
                            $   9,880      $  40,178      $ 140,538
                           ==========      =========     ==========

      The  rentals  paid  to Eastbrook Apartments  and  Village  Green
Apartments  are  primarily for temporary lodging  for  relocating  and
transient  Company personnel and visitors.  The rental  paid  for  the
airplane is based upon the actual hours that the airplane was used for
Company business plus a monthly stand-by charge for the exclusive  use
of  the airplane.  The airplane rental ended in September 1997. During
the  first  quarter of Fiscal 1998 the Company purchased  an  airplane
from  Mr.  Fountain  for  $1,375,000.   Principal  financing  for  the
airplane  is through General Electric Capital Corporation.   A  second
note  payable to Mr. Fountain for $415,821 was paid off during  Fiscal
year 1999.

      Mr.  Mark  L.  Spencer  is a director of  the  Company  and  the
President  and sole shareholder of Spencer Communications, Inc.  which
has  been  retained  by  Fountain to provide it with  advertising  and
public  relations  services.  Pursuant to their arrangement,  Fountain
pays  $12,000  per  month for the services of Mr.  Spencer's  company,
together  with  additional amounts for printing and productions  costs
and  other  associated expenses.  Fountain paid Spencer Communications
$345,049  in  Fiscal 2000, $478,576 in Fiscal 1999,  and  $288,915  in
Fiscal 1998.

45
<PAGE>
                                  Part IV


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

(a)  Documents filed with Report:

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

     Independent auditor's report

     Consolidated balance sheets at June 30, 2000 and 1999

     Consolidated statements of operations for the years  ended  June
     30, 2000, 1999 and 1998

     Consolidated  statements of stockholder's equity  for  the  years
     ended June 30, 2000, 1999 and 1998

     Consolidated statements of cash flows for the years  ended  June
     30, 2000, 1999 and 1998

     Notes to consolidated financial statements

     (2)Financial Statement Schedules.

     Not applicable.

     (3)Exhibits.  The following exhibits are filed herewith or
     incorporated herein by reference as part of this Report.

                               EXHIBIT INDEX

Exhibit
Number              Description of Exhibit

3.1     Registrant's Articles of Incorporation, as amended(filed herewith)

3.2     Registrant's Bylaws, as amended (filed herewith)

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

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

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

10.3*   Stock   Option  Agreement  dated  August  4,  1995,  between
        Registrant and Reginald M. Fountain, Jr. (filed herewith)

46
<PAGE>


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

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

10.6*   Stock  Option  Agreement dated March 17, 1995,  between Registrant
        and Mark L. Spencer (filed herewith)

27      Financial data schedule
_________________________________
*     Denotes a management compensation plan or compensatory  plan  or
arrangement.




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

47
<PAGE>



     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 26, 2000
        Chairman, President, and Chief Executive Officer


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



/s/Reginald M. Fountain, Jr.                             September 26, 2000
   Reginald M. Fountain, Jr.
   Chairman, President, and Chief Executive Officer
  (Principal Executive Officer)



 /s/Anthony J. Romersa                                   September 26, 2000
    Anthony J. Romersa
    Executive Vice President, and
    Chief Operating Officer



/s/Darryl M. Diamond, M.D.                               September 26, 2000
   Darryl M. Diamond, M. D.
   Director



/s/George L. Deichmann, III                              September 26, 2000
   George L. Deichmann, III
   Director



/s/Craig F. Geoss                                        September 26, 2000
   Craig F. Geoss
   Director



/s/Guy C. Hecker, Jr.                                    September 26, 2000
Guy C. Hecker, Jr.
Director

48
<PAGE>





/s/Federico Pignatelli                                   September 26, 2000
   Federico Pignatelli
   Director



/s/Mark L. Spencer                                       September 26, 2000
   Mark L. Spencer
   Director



/s/David A. Simmons                                      September 26, 2000
   David A. Simmons
   Chief Financial Officer
  (Principal Accounting and Financial Officer)

49
<PAGE>