FOUNTAIN POWERBOAT INDUSTRIES, INC.
                                
                            FORM 10-Q
                                
                        QUARTERLY REPORT
                                
            FOR THE QUARTER ENDED SEPTEMBER 30, 1998
                                
                                
               SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, DC  20549
                                
                                

<PAGE>
                            FORM 10-Q
                                
             U.S. SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                                
 [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                                
        For the quarterly period ended September 30, 1998
                                
                               OR
                                
 [  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                                
 For the transition period from ____________ to _______________
                                
     For the Quarter Ended         Commission File Number

     ___________________                0-14712
                                
               FOUNTAIN POWERBOAT INDUSTRIES, INC.
     (Exact name of registrant as specified in its charter)

                Nevada                             56-1774895
     (State of other jurisdiction of            (I.R.S. employer
     incorporation or organization)             identification No.)
                                
                                
  Whichard's Beach Road, P.O. Drawer 457, Washington, NC  27889
            (Address of principal executive offices)

  Registrant's telephone no., including area code: (919) 975-2000

 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
 requirements for the past 90 days.
 
         Yes__X__                 No_____
 
 Indicate  the  number  of  shares outstanding  of  each  of  the
 issuer's  classes  of common stock as of the latest  practicable
 date.
  
         Class                  Outstanding at October 27, 1998
 
 Common Stock, $.01 par value          4,702,608 shares


<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                                
                                
                              INDEX
                                
                                                                   Page No.

Part I Financial Information

       Review Report of Independent Certified
        Public Accountants                                               1

       Unaudited Consolidated Balance Sheets,
        September 30, 1998 and June 30, 1998                         2 - 3

       Unaudited Consolidated Statements of Income, for the
        three months ended September 30, 1998
        and September 30, 1997                                       4 - 5

       Unaudited Consolidated Statements of Cash Flows, for the
        three months ended September 30, 1998
        and September 30, 1997                                       6 - 7

       Notes to Unaudited Consolidated Financial Statements         8 - 12

       Management's Discussion and Analysis of Results
         of Operations and Financial Condition                     12 - 14

Part II Other Information

        Item 2  Change in Securities                                    14

        Item 6  Exhibits and Reports on Form 8 and Form 8-K             14

        Signature                                                       15



<PAGE>











          PRITCHETT, SILER & HARDY, P.C.
           Certified Public Accountants
               430 East 400 South
           Salt Lake City, Utah 84111
                 (801) 328-2727





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


We  have reviewed the accompanying consolidated balance sheet  of
Fountain Powerboat Industries, Inc. as of September 30, 1998, and
the related consolidated statement of income for the three months
then  ended and the related consolidated statement of cash  flows
for  the  three months then ended.  All information  included  in
these   financial  statements  is  the  representation   of   the
management of Fountain Powerboat Industries, Inc.

We  conducted our review in accordance with standards established
by  the  American Institute of Certified Public  Accountants.   A
review  of interim financial information consists principally  of
applying  analytical  procedures to  financial  data  and  making
inquires  of  Company  personnel responsible  for  financial  and
accounting  matters.  It is substantially less in scope  than  an
audit,  conducted in accordance with generally accepted  auditing
standards, the objective of which is the expression of an opinion
regarding   the   financial  statements   taken   as   a   whole.
Accordingly, we do not express such an opinion.

Based   on   our  review,  we  are  not  aware  of  any  material
modifications  that should be made to the consolidated  financial
statements  referred to above for them to be in  conformity  with
generally accepted accounting principles.




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


PRITCHETT, SILER & HARDY, P.C.

October 27, 1998

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                                
                   CONSOLIDATED BALANCE SHEETS
          (Unaudited - See Accountant's Review Report)
                                
                                
                             ASSETS
                                
                                
                                
                                
                                
                                    September 30,    June 30,
                                         1998          1998
                                    _____________ _____________
CURRENT ASSETS:
  Cash and cash equivalents          $ 3,359,125   $ 1,376,984
  Accounts receivable, net             1,558,709     2,715,754
  Inventories                          7,435,072     7,077,540
  Prepaid expenses                       705,476       489,290
  Current tax assets                   1,019,303     1,058,967
                                    _____________ _____________
     Total Current Assets             14,077,685    12,718,535
                                    _____________ _____________
PROPERTY, PLANT AND EQUIPMENT         34,536,509    33,411,011

  Less:  Accumulated depreciation    (14,844,814)  (14,254,156)
                                    _____________ _____________
                                      19,691,695    19,156,855
                                    _____________ _____________
OTHER ASSETS                             625,002       622,003
                                    _____________ _____________
                                     $34,394,382   $32,497,393
                                    _____________ _____________
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                           [Continued]

                             - 2 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                                
                   CONSOLIDATED BALANCE SHEETS
          (Unaudited - See Accountant's Review Report)
                                
                                
              LIABILITIES AND STOCKHOLDERS' EQUITY
                                
                           [Continued]


                                             September 30,    June 30,
                                                 1998          1998
                                            _____________ _____________
CURRENT LIABILITIES:
  Notes payable - related party                 355,910       415,821
  Current maturities - long-term debt         2,296,112       981,365
  Accounts payable                            2,780,597     3,591,489
  Accrued expenses                            1,771,759     1,939,791
  Dealer territory service accrual            1,810,210     2,046,939
  Customer deposits                             321,639       510,967
  Allowance for boat repurchases                200,000       200,000
  Reserve for warranty expense                  500,000       500,000
  Net liabilities of discontinued operations     10,000       103,612
                                           _____________ _____________
     Total Current Liabilities               10,046,227    10,289,984

LONG-TERM DEBT, less current maturities      11,951,808     9,499,895

DEFERRED TAX LIABILITY                          813,635       926,807

COMMITMENTS AND CONTINGENCIES [NOTE 6]                -             -
                                           _____________ _____________
     Total Liabilities                       22,811,670    20,716,686
                                           _____________ _____________



STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value,
    200,000,000 shares authorized,
    4,702,608 shares issued                      47,026        47,026
  Capital in excess of par value             10,196,540    10,196,540
  Accumulated earnings                        1,449,894     1,647,889
                                           _____________ _____________
                                             11,693,460    11,891,455
Less: Treasury stock, at cost 15,000 shares    (110,748)     (110,748)
                                           _____________ _____________
     Total Stockholders' Equity              11,582,712    11,780,707
                                           _____________ _____________
                                            $34,394,382   $32,497,393
                                           _____________ _____________
                                
                                
                                
                                
                                
                                
                                
                                
 The accompanying notes are an integral part of these unaudited
                      financial statements.

                             - 3 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                                
              CONSOLIDATED STATEMENTS OF OPERATIONS
          (Unaudited - See Accountant's Review Report)
                                
                                          For the Three Months Ended
                                                September 30,
                                         ___________________________
                                              1998          1997
                                         _____________ _____________
NET SALES                                 $12,422,227   $11,521,434

COST OF SALES                               9,838,911     8,568,073
                                         _____________ _____________
  Gross Profit                              2,583,316     2,953,361
                                         _____________ _____________
EXPENSES:
  Selling expense                           1,943,182     1,033,094
  General and administrative                  632,796       720,733
  General and administrative - related
    parties                                    10,756        72,921
                                         _____________ _____________
     Total expenses                         2,586,734     1,826,748
                                         _____________ _____________
OPERATING INCOME (LOSS)                        (3,418)    1,126,613

NON-OPERATING INCOME (EXPENSE):
  Other income (expense)                       (4,092)       16,458
  Interest expense                           (255,157)     (145,972)
  Interest expense - related parties           (8,836)            -
                                         _____________ _____________
INCOME (LOSS) BEFORE INCOME TAXES            (271,503)      997,099

CURRENT TAX EXPENSE                                 -       234,332

DEFERRED TAX (BENEFIT)                       (73,508)      (180,972)
                                         _____________ _____________
INCOME (LOSS) FROM CONTINUING OPER'S         (197,995)      943,739
                                         _____________ _____________
DISCONTINUED OPERATIONS:
  Income from Operations of Fountain
    Power, Inc. and Mach Performance, Inc.
    (Net of no income tax effect)                   -        26,600
  Estimated losses on disposal of the
    operations of Fountain Power, Inc. and
    Mach Performance, Inc. (Net of no
    income tax effect)                              -             -
                                         _____________ _____________
INCOME FROM DISCONTINUED OPERATIONS                 -        26,600
                                         _____________ _____________
NET INCOME (LOSS)                           $(197,995)    $ 970,339
                                         _____________ _____________
                                
                                
                                
                           [Continued]

                             - 4 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                                
              CONSOLIDATED STATEMENTS OF OPERATIONS
          (Unaudited - See Accountant's Review Report)
                                
                           [Continued]
                                
                                
                                     For the Three Months Ended
                                           September 30,
                                    ___________________________
                                         1998          1997
                                    _____________ _____________
EARNINGS (LOSS) PER SHARE:

  Continuing Operations             $      (.04)  $      .20
  Income from Operations of
    Discontinued Segments                     -          .01
  Estimated Loss on Disposal
    of Discontinued Segments                  -            -
                                    _____________ _____________
EARNINGS (LOSS) PER SHARE            $     (.04)  $      .21
                                    _____________ _____________
WEIGHTED AVERAGE SHARES
  OUTSTANDING                          4,702,608    4,734,891
                                    _____________ _____________

DILUTED EARNINGS PER SHARE:

  Continuing Operations             $    N/A             .18
  Loss from Operations of
    Discontinued Segments                N/A             .01
  Estimated Loss on Disposal
    of Discontinued Segments             N/A               -
                                    _____________ _____________
DILUTED EARNINGS PER SHARE:          $   N/A      $      .19
                                    _____________ _____________
DILUTED WEIGHTED AVERAGE
  SHARES OUTSTANDING                     N/A        5,113,349
                                    _____________ _____________















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

                             - 5 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                                
              CONSOLIDATED STATEMENTS OF CASH FLOWS
          (Unaudited - See Accountant's Review Report)
                                
        Increase (Decrease) in Cash and Cash Equivalents
                                
                                                For the Three Months Ended
                                                       September 30,
                                                   _______________________
                                                      1998         1997
                                                   __________   __________
CASH FLOWS FROM OPERATING ACTIVITIES: 
  Net income (loss)                                $(197,995)   $ 970,339
                                                   __________   __________
  Adjustments to reconcile net income (loss)
    to net cash provided by operating activities:
     Depreciation expense                            590,658      392,312
     Change in assets and liabilities:
       (Increase) decrease in accounts receivable  1,157,045   (2,080,838)
       (Increase) decrease in inventories           (357,532)  (1,766,154)
       (Increase) decrease in prepaid expenses      (216,186)     111,401
       (Increase) decrease in net tax asset                -            -
       Increase (decrease) in accounts payable      (810,892)   1,793,131
       Increase (decrease) in accrued expenses      (168,032)     197,315
       Increase (decrease) in dealer territory
         service accrual                            (236,729)    (416,755)
       Increase (decrease) in customer deposits     (189,328)     (98,770)
       Increase (decrease) in allowance for
         boat returns                                      -            -
       Increase (decrease) in warranty reserve             -            -
       Net deferred taxes                            (73,508)    (180,972)
       Net liabilities of discontinued operations    (93,612)    (131,701)
                                                   __________   __________
        Net Cash Provided (Used) by
          Operating Activities                     $(596,111) $(1,210,692)
                                                   __________   __________
CASH FLOWS FROM INVESTING ACTIVITIES:
  (Purchase) sale of certificates of deposit, net          -      696,155
  Investment in additional molds, plugs, and
    other tooling                                    (82,384)    (789,878)
  Purchase of property, plant, and equipment      (1,043,114)    (122,481)
  (Increase) in other assets                          (2,999)      (3,000)
                                                   __________   __________
        Net Cash Provided (Used) by Investing
          Activities                             $(1,128,497)   $(219,204)
                                                   __________   __________
                                
                                
                                
                                
                                
                                
                                
                                
                           [Continued]

                             - 6 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
                                
              CONSOLIDATED STATEMENTS OF CASH FLOWS
          (Unaudited - See Accountant's Review Report)
                                
        Increase (Decrease) in Cash and Cash Equivalents
                                
                           [Continued]
                                
                                
                                                For the Three Months Ended
                                                        September 30,
                                                   _______________________
                                                      1998         1997
                                                   __________   __________
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term debt                    $4,000,000    $       -
  Repayment of long-term debt                       (233,340)    (139,113)
  Repayment of long-term debt - related party        (59,911)           -
  Proceeds from issuance of common stock                   -      107,500
                                                   __________   __________
        Net Cash Provided (Used) by Financing
          Activities                              $3,706,749     $(31,613)
                                                   __________   __________
Net increase (decrease) in cash and cash equiv.'s $1,982,141  $(1,461,509)

Cash and cash equivalents at beginning of year     1,376,984    2,994,503
                                                   __________   __________
Cash and cash equivalents at end of period        $3,359,125  $ 1,532,994
                                                   __________   __________

Supplemental Disclosures of Cash Flow information:
  Cash paid during the period for:
     Interest:
      Unrelated parties               $ 216,480    $ 139,619
      Related parties                     8,836            -
                                     __________   __________
                                      $ 225,316    $ 139,619
                                     __________   __________
     Income taxes                     $ 222,538    $  55,264
                                     __________   __________

Supplemental Disclosures of Noncash investing and financing
activities:
  For the three month period ended September 30, 1998:
     None
     
     
  For the three month period ended September 30, 1997:
     On September 30, 1997 the Company purchased an airplane for
     $1,375,000 from a related party through the issuance of a
     $415,821 note payable to the related party and assuming
     $959,179 underlying indebtedness on the plane.
                                
 The accompanying notes are an integral part of these unaudited
                      financial statements.

                             - 7 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
          (Unaudited - See Accountant's Review Report)
                                
      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 1 - BASIS OF PRESENTATION
  
  Although   these   statements  have  been   reviewed   by   our
  independent  auditors, they are unaudited.  In the  opinion  of
  management,   all  adjustments  (which  include   only   normal
  recurring   adjustments)  necessary  to  present   fairly   the
  financial  position, results of operations and  cash  flows  at
  September  30,  1998  and for all periods presented  have  been
  made.
  
  Certain  information and footnote disclosures normally included
  in  financial statements prepared in accordance with  generally
  accepted  accounting principles have been condensed or  omitted
  for  purposes of filing interim financial statements  with  the
  Securities  and  Exchange Commission.   It  is  suggested  that
  these  condensed  financial statements be read  in  conjunction
  with  the  financial statements and notes thereto  included  in
  the  Company's June 30, 1998 audited financial statements.  The
  results  of operations for the period ended September 30,  1998
  and  1997  are  not  necessarily indicative  of  the  operating
  results for the full year.
  
NOTE 2 - ACCOUNTS RECEIVABLE
  
  As  of  September 30, 1998, accounts receivable were $1,558,709
  net   of  the  allowance  for  bad  debts  of  $30,000.    This
  represents a decrease of $1,157,045 from the $2,715,754 in  net
  accounts  receivable  recorded  at  June  30,  1998.   Of   the
  $1,558,709   balance  at  September  30,  1998,  $863,225   has
  subsequently  been collected as of October 31,  1998,  and  the
  remaining $695,484 is believed to be fully collectible.
  
NOTE 3 - INVENTORIES
  
  Inventories  at September 30, 1998 and June 30, 1998  consisted
  of the following:
  
                                       September 30,   June 30,
                                           1998          1998
                                        __________    __________
          Parts and supplies            $4,337,621    $4,510,373
         Work-in-process                 2,872,768     2,235,394
         Finished goods                    344,683       451,773
         Obsolete inventory reserve       (120,000)     (120,000)
                                        __________    __________
            Total                       $7,435,072    $7,077,540
                                        __________    __________
  
NOTE 4 - 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.
  
                             - 8 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
          (Unaudited - See Accountant's Review Report)
                                
      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 4 - REVENUE RECOGNITION [Continued]
  
  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  incentives  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.   The
  amount  of interest accrued is subsequently adjusted to reflect
  the  actual number of days of the 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 manufactures, but may from time to  time
  adopt  and publish different programs as necessary in order  to
  meet competition.
  
NOTE 5 - ALLOWANCE AND QUALIFYING ACCOUNTS
  
  For  the  three  months ended September 30, 1998,  the  Company
  adjusted its allowance and qualifying accounts as follows:
  
                            Balance at  Charged to                Balance
                            Beginning    Cost and   Additions     at End
                            of Period    Expense   (Deductions)  of Period
                            __________  __________  __________  __________
  Allowance for boat
    repurchases              $200,000   $       -    $      -   $ 200,000
  
  Allowance for doubtful
    accounts                   30,000           -           -      30,000
  
  Allowance for warranty
    claims                    500,000     200,478    (200,478)    500,000
  
  Allowance for inventory
    values                    120,000           -           -     120,000
                            __________  __________  __________  __________
  Total                      $850,000   $ 200,478  $ (200,478)  $ 850,000
                            __________  __________  __________  __________
  
  In  management's  opinion, the balances of  the  allowance  and
  qualifying  accounts are adequate to provide for all reasonably
  anticipated future losses.
                             - 9 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
          (Unaudited - See Accountant's Review Report)
                                
      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 6 - NOTES PAYABLE AND LINE OF CREDIT
  
  During  September, 1998 the Company concluded negotiations  for
  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  ("GECC").   An  omnibus  Agreement   was
  entered  into which provides that all the underlying collateral
  and  encumbered  property would apply ratably  to  all  of  the
  Notes  Payable.   The $4,000,000 promissory note  provides  for
  thirty-nine  monthly  principal  payments  in  the  amount   of
  $100,000 beginning October 1, 1998 with a final payment of  the
  entire  outstanding payment due on January  2,  2002.   Accrued
  interest  will  be  paid monthly in addition to  the  principal
  payment.   Interest will be calculated at 2.7% per annum  above
  the  published LIBOR Rate (London Interbank Offered Rates)  and
  is  calculated monthly.   The Company executed a  restated  and
  amended  Note  to  GECC  in  the amount  of  $9,007,797,  which
  replaces  a  previous  note with the same outstanding  balance.
  The   note   provides  for  thirty-nine  monthly  payments   of
  $123,103,  which  includes principal  and  interest.   A  final
  payment  of  the outstanding balance will be due on January  2,
  2002.   Interest  is  calculated at 2.7% per  annum  above  the
  published LIBOR Rate. The Company also executed a restated  and
  amended  Note to GECC in the amount of $855,050, which replaces
  a  previous note with the same outstanding balance.   The  note
  provides  for  seventy  monthly  payments  of  $15,181,   which
  includes  principal  and  interest.  A  final  payment  of  the
  outstanding  balance will be due on August 1,  2004.   Interest
  is  calculated  at  2.7% per annum above  the  published  LIBOR
  Rate.   All  of  the  notes  provide for  prepayment  penalties
  according to a predefined timetable.

NOTE 7 - COMMITMENTS AND CONTINGENCIES
  
  Employment  Agreement - The Company entered into  a  three-year
  employment  agreement  on  August  24,  1998  with  its   Chief
  Operating  Officer and Executive Vice President.  The agreement
  provides  for  a  base salary of $160,000  per  annum  with  an
  annual  bonus  equal  to one percent of the  Company's  pre-tax
  profits.    The  agreement  also  grants  the  Chief  Operating
  Officer  and  Executive Vice President a total of 30,000  stock
  options  to purchase the Company's common shares of stock  (See
  Note 10).
  
  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
  September   30,  1998,  the  Company  had  a  total  contingent
  liability  to repurchase boats in the event of dealer  defaults
  and  if  repossessed  by the commercial  lenders  amounting  to
  approximately  $10,300,000.  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  allowance is based upon probable future events, which  can
  be  reasonably estimated.  At September 30, 1998, the allowance
  for boat repurchases was $200,000.

                             - 10 -

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
          (Unaudited - See Accountant's Review Report)
                                
      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                
NOTE 7 - COMMITMENTS AND CONTINGENCIES [Continued]
  
  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 approximately
  $380,000  for  the first three months of Fiscal  1999  and  are
  included   in  the  accompanying  consolidated  statements   of
  operations as part of selling expense. At September  30,  1998,
  the  estimated  unpaid  dealer incentive interest  included  in
  accrued expenses amounted to $400,000.
  
NOTE 8 - 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:
  
                                           For the Three Months Ended
                                                  September 30,
                                            ______________________
                                               1998        1997
                                            __________  __________
    Apartments  rentals                     $    1,920  $     970
    R.M. Fountain, Jr. - airplane rental             -     71,951
    R.M. Fountain, Jr. - interest on loans       8,836          -
                                            __________  __________
                                            $   10,756  $  72,921
                                            __________  __________
  
  At   September  30,  1998,  the  Company  had  receivables  and
  advances  from employees of the Company amounting  to  $88,679,
  which $69,824 was due from Mr. Fountain.
  
  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 G.E. Capital Services for $959,179,  and
  issuing  a note to Mr. Fountain in the amount of $415,821.  For
  the  three  months ended September 30, 1998, the  Company  paid
  $257,910  to  Mr. Fountain leaving a balance of $157,911  still
  owing at September 30, 1998.
  
  The  Company  paid  $22,500 for the three  month  period  ended
  September  30,  1998,  for  advertising  and  public  relations
  services from an entity owned by a director of the Company.
  
NOTE 9 - INCOME TAXES
  
  For  the  three  month  period ended September  30,  1998,  the
  Company  provided  $0 for current income taxes  and  a  benefit
  of $73,508 for deferred income taxes.

                             - 11 -  

<PAGE>

       FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
          (Unaudited - See Accountant's Review Report)
                                
      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  
NOTE 10 - STOCK OPTIONS
  
  At  September  30,  1998 there were 576,000  unexercised  stock
  options,  which 570,000 were held by officers and directors  of
  the Company at prices ranging from $3.58 to $7.8125 per share.
  
  During  August  1998, the Company granted 30,000 stock  options
  in  connection with an employment agreement with the  Company's
  Chief  Operating  Officer and Executive  Vice  President.   The
  options  vest at a rate of 6,000 options per year beginning  on
  June 30, 1999 and expire ten years after the date vested.
  
NOTE 11 - EARNINGS (LOSS) PER SHARE
  
  The  computations  of  earnings (loss) per  share  and  diluted
  earnings per share amounts are based upon the weighted  average
  number  of outstanding common shares during the periods,  plus,
  when  their effect is dilutive, additional shares assuming  the
  exercise  of  certain  vested stock  options,  reduced  by  the
  number  of  shares which could be purchased from  the  proceeds
  from  the  exercise  of the stock options  assuming  they  were
  exercised.   Diluted  earnings per share for  the  three  month
  period  ended  September 30, 1998, was  not  presented  as  its
  effect was anti-dilutive.



<PAGE>


Management's Discussion and Analysis of Results of Operations
                     and Financial Condition

Results of Operations.

     The operating loss for the first quarter ended September 30,
1998  was $(3,418) or $(.00) per share versus $1,126,613 or  $.24
per share for the corresponding period of the previous year.  The
operating  loss  as a percent of sales for the first  quarter  of
Fiscal  1999  was  (.0)%  versus 9.8% for  the  same  period  the
previous  Fiscal  year. The net loss for  the  first  quarter  of
Fiscal 1999 was $(197,995) or $(.04) per share.  This compares to
net  income  amounting to $970,339, or $.21 per share  (increased
from effect of NOL carry-forward from 1994) for the first quarter
of Fiscal 1998.

      Net  sales were $12,422,227 for the first quarter of Fiscal
1999  as  compared to $11,521,434 for the first  quarter  of  the
prior  Fiscal year.  Unit sales volume for the first  quarter  of
Fiscal 1999 was 104 boats as compared to 110 boats for the  first
quarter of Fiscal 1998. The overall sales increase with a smaller
number of units resulted in a higher average price per boat and a
higher  concentration of larger boats.  Overall,  sales  were  as
planned for the first quarter of Fiscal 1999.

     For  the  first quarter of Fiscal 1999, the gross margin  on
sales  was  $2,583,316 (21%) as compared to $2,953,361 (26%)  for
the  first  quarter of the prior fiscal year.   The  decrease  in
gross  margin was due primarily to increased expenses  associated
with  the new yacht program.  Management anticipates delivery  of
the  first yacht in the second quarter and the next yacht in  the
third quarter.

      Selling  expenses were $1,943,182 for the first quarter  of
Fiscal  1999 as compared to $1,033,094 for the first  quarter  of
last  Fiscal  year.   Increased selling expense  was  due  to  an
increase  in the number of dealers participating in the Company's
floor plan interest program, added advertising expense to support
retail sales and promotional racing activities.

                             - 12 -

<PAGE>

      General and administrative expenses were $643,552  for  the
first  quarter  of  Fiscal 1999 as compared to $793,654  for  the
first quarter of last Fiscal year.

      Interest expense for the first quarter of Fiscal  1999  was
$263,993  as compared to $145,972 for the first quarter  of  last
Fiscal year.  Interest expense is up due to an increase in  notes
payable during the first quarter of Fiscal 1998.

      Other  non-operating (income)/expense for the first quarter
was $4,092 as compared to $(16,458) for the first quarter of last
fiscal year, primarily due to a decrease in vender cash discounts
which traditionally offset miscellaneous other expenses.


Financial Condition.

      The  Company's  cash flows for the first  three  months  of
Fiscal 1999 are summarized as follows:


         Net cash used in operating activities.....$  (596,111)
         "   "   used in investing activities.......(1,128,497)
         "   "   provided by financing activities... 3,706,749

        Net increase in cash.......................$ 1,982,141
                                                     ==========


      This  net increase compares to a $(1,461,509) net  decrease
for the first three months of the prior fiscal year.

      Cash  used  in  the first three months of  Fiscal  1999  to
acquire  additional  property, plant,  and  equipment  (investing
activity)  amounted to $1,128,497 of which $2,999 was  for  other
assets.

      During  the  first  quarter of  Fiscal  1999,  the  Company
borrowed $4,000,000 to supplement and offset the cash used during
Fiscal  1998  to  increase  property,  plant  and  equipment   by
$6,937,699 and inventory by $3,139,783.  Refer to Note 6  to  the
Consolidated  Financial  Statements for  complete  notes  payable
details.  Both the General Electric Capital Corporation loan  and
the Transamerica Business Credit Corporation loans are 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.

     For the remainder of 1998 and beyond, the Company expects to
generate sufficient cash through operations to meet its needs and
obligations.   Management believes that the Company's  sales  and
production   volume  will  continue  to  grow  with   a   gradual
improvement in net earnings and cash flow.  Most of the Company's
cash resources will be used to maintain and improve its plant and
equipment,  for  new  product tooling,  and  for  work-on-process
inventory  in  its new yacht production facility.  We  anticipate
finishing our first yacht during the second quarter.

                             - 13 -

<PAGE>

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, forecasted, 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, 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.


PART II.  Other Information.


ITEM 2:   Change in Securities.

      During  the  first quarter of Fiscal 1998, the  Company  an
nounced  a  three  for two forward stock split,  The  shareholder
record  date  was  set at August 1, 1997, with fractional  shares
paid in cash on the payable date, August 14, 1997.





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

      (a)   No  Amendments on Form 8 were filed by the Registrant
during the first three months of Fiscal 1999.

      (b)   No  Current  Reports on Form 8-K were  filed  by  the
Registrant during the first three months of Fiscal 1998.
                                

                             - 14 -

<PAGE>

                                
                                
                            SIGNATURE



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



                FOUNTAIN POWERBOAT INDUSTRIES, INC.
                           (Registrant)





    /s/ Joseph F. Schemenauer
By:   Joseph F. Schemenauer             Date: November  13,  1998
Vice President, Chief Financial
   Officer, and Designated Principal
   Accounting Officer


                             - 15 -