----

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**U.S.      SECURITIES AND EXCHANGE COMMISSION **

**Washington,      D.C. 20549 **

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**FORM        10-Q**

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| **x** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended March 31, 2006**

**OR      **

| **o** | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

**          For the transition period from **
**            **
**      to **
**            **
** **

***Commission      File Number 0-14712***

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. **

**(Exact      name of registrant as specified in its charter) **

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|                                                                                                |                                                                      |
|-----------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|
| **Nevada**                                                                                          | **56-1774895**                                                            |
| **(State                or other jurisdiction of****incorporation                or organization)** | **(I.R.S.                employer****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: (252) 975-2000 **

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|                                        |   |                                             |
|---------------------------------------------|--------|--------------------------------------------------|
| **Class**                                   |   | **Outstanding                at March 31, 2006** |
| Common                Stock, $.01 par value |   | 4,834,275                shares                  |

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**INDEX      **

|             |                                                                                                                                                                       |                                 |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|
|             |                                                                                                                                                                       | **Page No.**               |
| **Part I**  | **Financial                Information**                                                                                                                                   |                                 |
|             |                                                                                                                                                                       |                                 |
|             | Item                1. Financial Statements                                                                                                                                |                                 |
|             |                                                                                                                                                                       |                                 |
|             | Unaudited                Condensed Consolidated Balance Sheets, March 31, 2006 and June 30,                2005                                                            | 3                -                4  |
|             |                                                                                                                                                                       |                                 |
|             | Unaudited                Condensed Consolidated Statements of Operations, for the three months                and                nine months ended March 31, 2006 and 2005 | 5                -                6  |
|             |                                                                                                                                                                       |                                 |
|             | Unaudited                Condensed Consolidated Statements of Cash Flows, for the nine months                ended                March 31, 2006 and 2005                  | 7                                    |
|             |                                                                                                                                                                       |                                 |
|             | Notes                to Unaudited Condensed Consolidated Financial Statements                                                                                              | 8                -                11 |
|             |                                                                                                                                                                       |                                 |
|             | Item                2. Management’s Discussion and Analysis of Results of Operations and                Financial Condition                                          | 12                - 13               |
|             |                                                                                                                                                                       |                                 |
|             | Item                3. Quantitative and Qualitative Disclosures of Market Risk                                                                                             | 13                                   |
|             |                                                                                                                                                                       |                                 |
|             | Item                4. Controls and Procedures                                                                                                                             | 13                                   |
|             |                                                                                                                                                                       |                                 |
| **Part II** | **Other                Information**                                                                                                                                       |                                 |
|             |                                                                                                                                                                       |                                 |
|             | Items                1, 2, 3, 4, 5 & 6                                                                                                                                 | 13                - 14               |
|             |                                                                                                                                                                       |                                 |
|             | Signature                                                                                                                                                                  | 15                                   |
|             |                                                                                                                                                                       |                                 |
|             | Exhibits                                                                                                                                                                   | 16                - 19               |

----

**PART      I.**
**      FINANCIAL INFORMATION. **

**ITEM 1:**
**      Financial Statements. **

**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**UNAUDITED      CONDENSED CONSOLIDATED BALANCE SHEETS**

|                                                  |   |   | **March                  31,****2006** |   |   | **June 30,****2005** |   |
|-------------------------------------------------------|--------|--------|----------------------------------------|--------|--------|---------------------------|--------|
| **ASSETS**                                            |   |   |                                   |   |   |                      |   |
|                                                  |   |   |                                   |   |   |                      |   |
| CURRENT                  ASSETS:                      |   |   |                                        |   |   |                           |   |
| Cash                  and cash equivalents            |   | $      | 2,280,394                              |   | $      | 4,013,225                 |   |
| Accounts                  receivable, net             |   |   | 4,067,805                              |   |   | 2,195,357                 |   |
| Inventories                                           |   |   | 7,893,375                              |   |   | 6,473,017                 |   |
| Prepaid                  expenses                     |   |   | 1,308,175                              |   |   | 341,989                   |   |
|                                                  |   |   |                                        |   |   |                           |   |
| Total                  Current Assets                 |   |   | 15,549,749                             |   |   | 13,023,588                |   |
|                                                  |   |   |                                   |   |   |                      |   |
| Property,                  Plant & Equipment |   |   | 47,451,410                             |   |   | 46,067,797                |   |
| Less:                  Accumulated Depreciation       |   |   | (30,247,599                            | )      |   | (28,889,410               | )      |
|                                                  |   |   |                                        |   |   |                           |   |
|                                                  |   |   | 17,203,811                             |   |   | 17,178,387                |   |
|                                                  |   |   |                                        |   |   |                           |   |
|                                                  |   |   |                                   |   |   |                      |   |
| CASH                  SURRENDER VALUE LIFE INSURANCE  |   |   | 2,352,213                              |   |   | 2,179,617                 |   |
| OTHER                  ASSETS                         |   |   | 927,615                                |   |   | 652,660                   |   |
|                                                  |   |   |                                        |   |   |                           |   |
| TOTAL                  ASSETS                         |   | $      | 36,033,388                             |   | $      | 33,034,252                |   |
|                                                  |   |   |                                   |   |   |                      |   |

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**UNAUDITED      CONDENSED CONSOLIDATED BALANCE SHEETS**

|                                                                                                                                                                                                                 |   |   | **March                  31,****2006** |   |   | **June 30,****2005** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------|--------|--------|---------------------------|--------|
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                                                                                        |   |   |                                   |   |   |                      |   |
|                                                                                                                                                                                                                 |   |   |                                   |   |   |                      |   |
| CURRENT                  LIABILITIES                                                                                                                                                                                 |   |   |                                        |   |   |                           |   |
| Current                  maturities - long-term debt                                                                                                                                                                 |   | $      | 700,626                                |   | $      | 760,739                   |   |
| Accounts                  payable - trade                                                                                                                                                                            |   |   | 3,497,283                              |   |   | 3,844,102                 |   |
| Accrued                  expenses and other liabilities                                                                                                                                                              |   |   | 1,334,061                              |   |   | 1,079,558                 |   |
| Dealer                  incentives                                                                                                                                                                                   |   |   | 5,733,578                              |   |   | 3,702,738                 |   |
| Customer                  deposits                                                                                                                                                                                   |   |   | 832,507                                |   |   | 859,879                   |   |
| Allowance                  for boat repurchases                                                                                                                                                                      |   |   | 29,133                                 |   |   | 75,000                    |   |
| Warranty                  reserve                                                                                                                                                                                    |   |   | 766,579                                |   |   | 740,000                   |   |
|                                                                                                                                                                                                                 |   |   |                                        |   |   |                           |   |
| Total                  Current Liabilities                                                                                                                                                                           |   |   | 12,893,767                             |   |   | 11,062,016                |   |
|                                                                                                                                                                                                                 |   |   |                                   |   |   |                      |   |
| LONG-TERM                  DEBT, less current maturities                                                                                                                                                             |   |   | 15,411,012                             |   |   | 15,433,446                |   |
| COMMITMENTS                  AND CONTINGENCIES (Note 5)                                                                                                                                                              |   |   |                                        |   |   |                           |   |
|                                                                                                                                                                                                                 |   |   |                                        |   |   |                           |   |
| Total                  Liabilities                                                                                                                                                                                   |   |   | 28,304,779                             |   |   | 26,495,462                |   |
|                                                                                                                                                                                                                 |   |   |                                   |   |   |                      |   |
| STOCKHOLDERS’                  EQUITY                                                                                                                                                                          |   |   |                                        |   |   |                           |   |
| Common                  stock, $.01 par value, 200,000,000 shares authorized, 4,834,275                  shares                  issued and outstanding as of March 31, 2006 and June 30,                  2005 |   |   | 48,342                                 |   |   | 48,342                    |   |
| Additional                  paid-in capital                                                                                                                                                                          |   |   | 10,558,853                             |   |   | 10,558,853                |   |
| Accumulated                  deficit                                                                                                                                                                                 |   |   | (2,996,620                             | )      |   | (4,035,384                | )      |
|                                                                                                                                                                                                                 |   |   |                                        |   |   |                           |   |
|                                                                                                                                                                                                                 |   |   | 7,610,575                              |   |   | 6,571,811                 |   |
|                                                                                                                                                                                                                 |   |   |                                   |   |   |                      |   |
| Less:                  Treasury stock, at cost 15,000 shares                                                                                                                                                         |   |   | (110,748                               | )      |   | (110,748                  | )      |
| Accumulated                  other comprehensive income from interest rate swap                                                                                                                                      |   |   | 228,782                                |   |   | 77,727                    |   |
|                                                                                                                                                                                                                 |   |   |                                        |   |   |                           |   |
| Total                  Stockholders’ Equity                                                                                                                                                                    |   |   | 7,728,609                              |   |   | 6,538,790                 |   |
|                                                                                                                                                                                                                 |   |   |                                        |   |   |                           |   |
| **TOTAL                  LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                |   | $      | 36,033,388                             |   | $      | 33,034,252                |   |

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**UNAUDITED      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS **

|                                                                 |   |  **For                the Three Months                Ended** |
|----------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                 |   |                                                               |   |   |   |   |   |
|                                                                 |   |  **March                31,****2006**                         |   | **March                31,****2005** |   |
| NET                SALES                                             |   | $                                                                  | 18,526,332 |   | $ | 16,714,140 |   |
| COST                OF SALES                                         |   |                                                               | 15,761,799 |   |   | 13,822,547 |   |
| Gross                Profit                                          |   |                                                               | 2,764,533 |   |   | 2,891,593 |   |
| EXPENSES:                                                            |   |                                                               |  |   |   |  |   |
| Selling                expenses                                      |   |                                                               | 1,484,647 |   |   | 1,459,364 |   |
| General                and administrative expenses                   |   |                                                               | 1,063,484 |   |   | 824,396 |   |
| Total                Expenses                                        |   |                                                               | 2,548,131 |   |   | 2,283,760 |   |
| OPERATING                INCOME                                      |   |                                                               | 216,402 |   |   | 607,833 |   |
| NON-OPERATING                INCOME (EXPENSE):                       |   |                                                               |  |   |   |  |   |
| Other                income                                          |   |                                                               | 25,429 |   |   | 3,966 |   |
| Interest                expense                                      |   |                                                               | (219,421 | ) |   | (252,308 | ) |
| Total                Non-operating Expense                           |   |                                                               | (193,992 | ) |   | (248,342 | ) |
| INCOME                BEFORE INCOME TAXES                            |   |                                                               | 22,410 |   |   | 359,491 |   |
| CURRENT                TAX EXPENSE (BENEFIT)                         |   |                                                               | — |   |   | (969 | ) |
| NET                INCOME                                            |   | $                                                                  | 22,410 |   | $ | 360,460 |   |
| BASIC                EARNINGS PER SHARE                              |   | $                                                                  | 0.00 |   | $ | 0.07 |   |
| WEIGHTED                AVERAGE SHARES OUTSTANDING                   |   |                                                               | 4,834,275 |   |   | 4,814,275 |   |
| DILUTED                EARNINGS PER SHARE                            |   | $                                                                  | 0.00 |   | $ | 0.07 |   |
| WEIGHTED                AVERAGE SHARES OUTSTANDING ASSUMING DILUTION |   |                                                               | 4,993,041 |   |   | 4,927,051 |   |

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**UNAUDITED      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS **

|                                                                 |   |  **For                the Nine Months                Ended** |
|----------------------------------------------------------------------|--------|-------------------------------------------------------------------|
|                                                                 |   |                                                              |   |   |   |   |
|                                                                 |   | **March                31,****2006**                              |   | **March                31,****2005** |   |
| NET                SALES                                             |   | $                                                                 | 55,894,161 |   | $ | 50,712,967 |   |
| COST                OF SALES                                         |   |                                                              | 46,555,812 |   |   | 43,452,323 |   |
| Gross                Profit                                          |   |                                                              | 9,338,349 |   |   | 7,260,644 |   |
| EXPENSES:                                                            |   |                                                              |  |   |   |  |   |
| Selling                expenses                                      |   |                                                              | 4,211,356 |   |   | 3,994,954 |   |
| General                and administrative expenses                   |   |                                                              | 3,034,937 |   |   | 2,353,472 |   |
| Total                Expenses                                        |   |                                                              | 7,246,293 |   |   | 6,348,426 |   |
| OPERATING                INCOME                                      |   |                                                              | 2,092,056 |   |   | 912,218 |   |
| NON-OPERATING                INCOME (EXPENSE):                       |   |                                                              |  |   |   |  |   |
| Other                income (expense)                                |   |                                                              | (25,671 | ) |   | 4,758 |   |
| Interest                expense                                      |   |                                                              | (1,027,621 | ) |   | (793,417 | ) |
| Total                Non-operating Expense                           |   |                                                              | (1,053,292 | ) |   | (788,659 | ) |
| INCOME                (LOSS) BEFORE INCOME TAXES                     |   |                                                              | 1,038,764 |   |   | 123,559 |   |
| CURRENT                TAX EXPENSE (BENEFIT)                         |   |                                                              | — |   |   | (969 | ) |
| NET                INCOME (LOSS)                                     |   | $                                                                 | 1,038,764 |   | $ | 124,528 |   |
| BASIC                EARNINGS (LOSS) PER SHARE                       |   | $                                                                 | 0.21 |   | $ | 0.03 |   |
| WEIGHTED                AVERAGE SHARES OUTSTANDING                   |   |                                                              | 4,834,275 |   |   | 4,812,255 |   |
| DILUTED                EARNINGS (LOSS) PER SHARE                     |   | $                                                                 | 0.21 |   | $ | 0.03 |   |
| WEIGHTED                AVERAGE SHARES OUTSTANDING ASSUMING DILUTION |   |                                                              | 4,910,072 |   |   | 4,878,400 |   |

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**UNAUDITED      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS **

|                                                                                                                   |   |  **For                the Nine months                Ended**  |
|------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|
|                                                                                                                   |   |                                                                    |   |   |   |
|                                                                                                                   |   | **March                31,****2006**                                    |   | **March                31,****2005** |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                                   |   |                                                                    |   |   |   |
| Net                income (loss)                                                                                       |   | $                                                                       | 1,038,764 |   | $ | 124,528 |   |
| Adjustments                to reconcile net income (loss) to net cash provided by operating                activities: |   |                                                                    |  |   |   |  |   |
| Depreciation                                                                                                           |   |                                                                    | 1,477,923 |   |   | 1,397,680 |   |
| Deferred                loan costs expensed                                                                            |   |                                                                    | 229,801 |   |   | — |   |
| Gain                on termination of interest rate swap                                                               |   |                                                                    | (84,524 | ) |   | — |   |
| Loss                (Gain) on disposal of assets                                                                       |   |                                                                    | 11,875 |   |   | (4,000 | ) |
| Bad                debt expense                                                                                        |   |                                                                    | 66,615 |   |   | — |   |
| Amortization                                                                                                           |   |                                                                    | 34,323 |   |   | 59,949 |   |
| Change                in assets and liabilities:                                                                       |   |                                                                    |  |   |   |  |   |
| (Increase)                decrease in accounts receivable                                                              |   |                                                                    | (1,939,063 | ) |   | 34,213 |   |
| Increase                in inventories                                                                                 |   |                                                                    | (1,420,358 | ) |   | (1,525,301 | ) |
| Increase                in prepaid expenses                                                                            |   |                                                                    | (966,186 | ) |   | (351,337 | ) |
| (Increase)                decrease in other assets                                                                     |   |                                                                    | (208,016 | ) |   | 21,634 |   |
| Increase                (decrease) in accounts payable                                                                 |   |                                                                    | (346,819 | ) |   | 1,361,600 |   |
| Increase                in accrued expenses                                                                            |   |                                                                    | 254,503 |   |   | 378,339 |   |
| Increase                in dealer incentives                                                                           |   |                                                                    | 2,030,840 |   |   | 1,760,581 |   |
| Increase                (decrease) in customer deposits                                                                |   |                                                                    | (27,372 | ) |   | 798,103 |   |
| Increase                in warranty reserve                                                                            |   |                                                                    | 26,579 |   |   | — |   |
| Decrease                in buyback allowance                                                                           |   |                                                                    | (45,867 | ) |   | — |   |
| Net                Cash Provided by Operating Activities                                                               |   |                                                                    | 133,018 |   |   | 4,055,989 |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                                   |   |                                                                    |  |   |   |  |   |
| Purchase                of property, plant and equipment                                                               |   |                                                                    | (728,347 | ) |   | (1,232,275 | ) |
| Investment                in molds and related plugs                                                                   |   |                                                                    | (786,875 | ) |   | (1,483,911 | ) |
| Net                increase in cash surrender value of life insurance                                                  |   |                                                                    | (172,596 | ) |   | (431,778 | ) |
| Net                Cash Used by Investing Activities                                                                   |   |                                                                    | (1,687,818 | ) |   | (3,147,964 | ) |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                                   |   |                                                                    |  |   |   |  |   |
| Proceeds                from long-term debt                                                                            |   |                                                                    | 16,111,638 |   |   | — |   |
| Proceeds                received upon termination of interest rate swap                                                |   |                                                                    | 84,524 |   |   | — |   |
| Payment                of loan origination fees                                                                        |   |                                                                    | (180,009 | ) |   | — |   |
| Payments                of long-term debt                                                                              |   |                                                                    | (16,194,184 | ) |   | (2,224,158 | ) |
| Proceeds                from issuance of Common Stock                                                                  |   |                                                                    | — |   |   | 9,669 |   |
| Net                Cash Used by Financing Activities                                                                   |   |                                                                    | (178,031 | ) |   | (2,214,489 | ) |
| Net                decrease in cash and cash equivalents                                                               |   |                                                                    | (1,732,831 | ) |   | (1,306,464 | ) |
| Cash                and cash equivalents at the beginning of period                                                    |   |                                                                    | 4,013,225 |   |   | 3,622,258 |   |
| Cash                and cash equivalents at the end of period                                                          |   | $                                                                       | 2,280,394 |   | $ | 2,315,794 |   |
|                                                                                                                   |   |                                                                    |  |   |   |  |   |

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE      1. BASIS OF PRESENTATION **

**Stock      Options:**

*Accounting      for Stock-Based Compensation*

|                                                                                                                                                |   |  **For the Three Months Ended**  |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|---------|
|                                                                                                                                                |   |                                                           |    |   |   |
|                                                                                                                                                |   | **March                        31,****2006**                   |    | March                    31,2005 |   |
| Net                  income as reported                                                                                                             |   | $                                                              | 22,410  |   | $ | 360,460 |   |
| Add:                  Stock-based nonemployee compensation expense included in reported                  net                  income                |   |                                                           | — |   |   | — |   |
| Deduct:                  Total stock-based employee compensation expense determined under                  fair                  value based method |   |                                                           | — |   |   | (4,221 | ) |
|                                                                                                                                                |   |                                                           |         |   |   |  |   |
| Net                  Income Proforma                                                                                                                |   | $                                                              | 22,410  |   | $ | 356,239 |   |
|                                                                                                                                                |   |                                                           |         |   |   |  |   |
| Basic                  earnings per share: As reported                                                                                              |   | $                                                              | 0.00    |   | $ | 0.07 |   |
|                                                                                                                                                |   |                                                           |         |   |   |  |   |
| Proforma                                                                                                                                            |   | $                                                              | 0.00    |   | $ | 0.07 |   |
|                                                                                                                                                |   |                                                           |         |   |   |  |   |
| Diluted                  earnings per share: As reported                                                                                            |   | $                                                              | 0.00    |   | $ | 0.07 |   |
|                                                                                                                                                |   |                                                           |         |   |   |  |   |
| Proforma                                                                                                                                            |   | $                                                              | 0.00    |   | $ | 0.07 |   |

----

**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                                                                                                          |   |  **For the Nine                months Ended** |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|
|                                                                                                                                          |   |                                                              |      |   |   |
|                                                                                                                                          |   | **March                31,****2006**                              |      | **March                31,****2005** |   |
| Net                income (loss) as reported                                                                                                  |   | $                                                                 | 1,038,764 |   | $ | 124,528 |   |
| Add:                Stock-based nonemployee compensation expense included in reported                net                income                |   |                                                              | —   |   |   | — |   |
| Deduct:                Total stock-based employee compensation expense determined under                fair                value based method |   |                                                              | —   |   |   | (12,663 | ) |
|                                                                                                                                          |   |                                                              |           |   |   |  |   |
| Net                Income (Loss) Proforma                                                                                                     |   | $                                                                 | 1,038,764 |   | $ | 111,865 |   |
|                                                                                                                                          |   |                                                              |           |   |   |  |   |
| Basic                earnings (loss) per share: As reported                                                                                   |   | $                                                                 | 0.21      |   | $ | 0.03 |   |
|                                                                                                                                          |   |                                                              |           |   |   |  |   |
| Proforma                                                                                                                                      |   | $                                                                 | 0.21      |   | $ | 0.02 |   |
|                                                                                                                                          |   |                                                              |           |   |   |  |   |
| Diluted                earnings (loss) per share: As reported                                                                                 |   | $                                                                 | 0.21      |   | $ | 0.03 |   |
|                                                                                                                                          |   |                                                              |           |   |   |  |   |
| Proforma                                                                                                                                      |   | $                                                                 | 0.21      |   | $ | 0.02 |   |

**NOTE      2. LONG-TERM DEBT AND PLEDGED ASSETS **

*Accounting      for Derivative Instruments and Hedging Activities*

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**FOUNTAIN      POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY **

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL      STATEMENTS**

**NOTE      3. COMMITMENTS AND CONTINGENCIES **

**Manufacturer      Repurchase Agreements**

**Dealer      Interest**

**Interest      Rate Risk**
** **

**Engine      Supply Agreement **

**NOTE      4. TRANSACTIONS WITH RELATED PARTIES **

**NOTE      5. EARNINGS (LOSS) PER SHARE **

----

|                                                                                                                                                          |   |                **For                the Three                Months Ended** |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|-----------|
|                                                                                                                                                          |   |                                                                                  |      |   |   |
|                                                                                                                                                          |   | **March                31,****2006**                                                  |      | **March                31,****2005** |   |
| Weighted                average common shares outstanding used in basic earnings per share                for the                three and nine months ending |   |                                                                                  | 4,834,275 |   |   | 4,814,275 |   |
|                                                                                                                                                          |   |                                                                                  |      |   |   |   |   |
| Effect                of dilutive stock options                                                                                                               |   |                                                                                  | 158,766   |   |   | 112,776 |   |
|                                                                                                                                                          |   |                                                                                  |           |   |   |  |   |
| Weighted                average common shares and potential dilutive common equivalent shares                outstanding used in dilutive earnings per share  |   |                                                                                  | 4,993,041 |   |   | 4,927,051 |   |

|                                                                                                                                                          |   |  **For                the Nine                months Ended**  |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|-----------|
|                                                                                                                                                          |   |                                                                         |      |   |   |
|                                                                                                                                                          |   | **March                31,****2006**                                         |      | **March                31,****2005** |   |
| Weighted                average common shares outstanding used in basic earnings per share                for the                three and nine months ending |   |                                                                         | 4,834,275 |   |   | 4,812,255 |   |
|                                                                                                                                                          |   |                                                                         |      |   |   |   |   |
| Effect                of dilutive stock options                                                                                                               |   |                                                                         | 75,797    |   |   | 66,145 |   |
|                                                                                                                                                          |   |                                                                         |           |   |   |  |   |
| Weighted                average common shares and potential dilutive common equivalent shares                outstanding used in dilutive earnings per share  |   |                                                                         | 4,910,072 |   |   | 4,878,400 |   |

**NOTE      6. COMPREHENSIVE INCOME**

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**ITEM 2:**
**      Management’s Discussion and Analysis of Results of Operations and Financial      Condition **

**Results      of Operations **

**Liquidity      and Capital Resources **

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**Cautionary      Statement for Purposes of “Safe Harbor” Under the Private Securities Reform Act      of 1995. **

**ITEM 3:**
**      Quantitative and Qualitative Disclosures about Market Risk.**

** **

**ITEM 4**
**:      Controls and Procedures **

**PART      II.**
**      OTHER INFORMATION. **

**ITEM 1:**
**      Legal Proceedings. **

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**ITEM 2:**
**      Unregistered Sales of Equity Securities and Use of Proceeds.**

**Item 3:**
**      Defaults Upon Senior Securities. **

**ITEM 4:**
**      Submission of Matters to a vote of Security Holders. **

**ITEM 5:**
**      Other Information. **

**ITEM 6:**
**      Exhibits. **

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**SIGNATURE      **

|                                                           |                                   |                                   |
|----------------------------------------------------------------|----------------------------------------|----------------------------------------|
| FOUNTAIN                POWERBOAT INDUSTRIES, INC.(Registrant) |                                   |
|                                                           |                                   |                                   |
| By:                                                            | /s/                Irving L. Smith     | Date: May                10, 2006 |
|                                                           | Irving                L. Smith         |                                   |
|                                                           | Chief                Financial Officer |                                   |

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**EXHIBIT      INDEX **

|                 |   |                                                                                                  |
|----------------------|--------|-------------------------------------------------------------------------------------------------------|
| **Exhibit No.** |   | **Exhibit                Description**                                                                |
|                 |   |                                                                                                  |
| 31.1                 |   | Certification                pursuant to Rule 13a-14(a) by the Chief Executive                Officer |
|                 |   |                                                                                                  |
| 31.2                 |   | Certification                pursuant to Rule 13a-14(a) by the Chief Financial                Officer |
|                 |   |                                                                                                  |
| 32    |   | Certifications                Pursuant to 18 U.S.C.                Section 1350                  |

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