<PAGE>












                    FOUNTAIN POWERBOAT INDUSTRIES, INC.

                                 FORM 10-Q

                             QUARTERLY REPORT

                   FOR THE QUARTER ENDED MARCH 31, 2002


                    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 March 31, 2002

                                    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 or 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: (252) 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 March 31, 2002
 Common Stock, $.01 par value                4,732,608 shares


<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY


                                   INDEX

                                                                    Page No.

Part I Financial Information

       Unaudited Condensed Consolidated Balance Sheets,
        March 31, 2002 and June 30, 2001                            1 - 2

       Unaudited Condensed Consolidated Statements of
        Operations, for the three and nine months
        ended March 31, 2002 and March 31, 2001                       3

       Unaudited Condensed Consolidated Statements of
        Cash Flows, for the nine months ended
        March 31, 2002 and March 31, 2001                           4 - 5

       Notes to Unaudited Condensed Consolidated
        Financial Statements                                        6 - 10

       Management's Discussion and Analysis of Results
        of Operations and Financial Condition                      11 - 12

Part II Other Information

       Item 6  Exhibits and Reports on Form 8 and Form 8-K          12

       Signature                                                    13



<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS


                                  ASSETS





                                         March 31,      June 30,
                                            2002          2001
                                       ____________  _____________
CURRENT ASSETS:
  Cash and cash equivalents            $    994,041  $    796,606
  Accounts receivable, net                  803,467     1,939,886
  Inventories                             4,896,427     4,555,969
  Prepaid expenses                          284,965       172,538
  Current tax assets                      2,876,043     1,469,937
                                       ____________  _____________
     Total Current Assets                 9,854,943     8,934,936
                                       ____________  _____________
PROPERTY, PLANT AND EQUIPMENT            40,810,679    39,352,236

  Less:  Accumulated depreciation       (22,125,481)  (20,432,602)
                                       ____________  _____________
                                         18,685,198    18,919,634
                                       ____________  _____________
OTHER ASSETS                              1,400,260     1,093,182
                                       ____________  _____________
TOTAL ASSETS                           $ 29,940,401  $ 28,947,752
                                       ____________  _____________














                                [Continued]

                                    -1-
<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

              UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                   LIABILITIES AND STOCKHOLDERS' EQUITY

                                [Continued]


                                          March 31,      June 30,
                                            2002          2001
                                       ____________  _____________
CURRENT LIABILITIES:
  Current maturities - long-term debt  $  1,113,258   $   722,661
  Current maturities - capital lease         15,053        13,989
  Accounts payable                        6,023,784     5,682,729
  Accrued expenses                        1,217,741     1,006,459
  Dealer incentives                         783,621     2,030,126
  Customer deposits                         364,447       321,175
  Allowance for boat repurchases            200,000       200,000
  Reserve for warranty expense              590,000       590,000
                                       ____________  _____________
     Total Current Liabilities           10,307,904    10,567,139

LONG-TERM DEBT, less current maturities   9,837,946     6,580,299
CAPITAL LEASE, less current maturities       48,887        49,605
DEFERRED TAX LIABILITY                      867,978       759,577

COMMITMENTS AND CONTINGENCIES                     -             -
                                       ____________  _____________
     Total Liabilities                   21,062,715    17,956,620
                                       ____________  _____________



STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value,
   200,000,000 shares authorized,
   4,732,608 shares issued and
   outstanding                               47,326        47,326
  Additional paid-in capital             10,303,640    10,303,640
  Accumulated earnings                   (1,362,532)      750,914
                                       ____________  _____________
                                          8,988,434    11,101,880
  Less: Treasury stock, at cost,
   15,000 shares                           (110,748)     (110,748)
                                       ____________  _____________
     Total Stockholders' Equity           8,877,686    10,991,132
                                       ____________  _____________
                                        $29,940,401   $28,947,752
                                       ____________  _____________

 Note: The balance sheet as of June 30, 2001 was taken from the audited
  audited financial statements at that date and condensed.

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

                                  -2-
<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                 For The Three             For The Nine
                                  Months Ended              Months Ended
                                    March 31                 March 31
                           ________________________  ________________________
                               2002         2001        2002          2001
                           ____________  __________  ___________  ___________

NET SALES                  $ 10,811,769  $9,966,147  $25,815,637  $32,491,111

COST OF SALES                 8,590,960   7,960,103   23,502,544   27,557,859
                           ____________  __________  ___________  ___________

   Gross Profit               2,220,809   2,006,044    2,313,093    4,933,252

EXPENSES
 Selling Expense              1,617,884   1,313,178    3,477,197    4,225,376
 Selling Expense -
   related parties                    -      38,692            -      196,067
 General & Administrative       564,133     491,473    1,527,639    1,969,170
                           ____________  __________  ___________  ___________

   Total Expenses             2,182,017   1,843,343    5,004,836    6,390,613
                           ____________  __________  ___________  ___________

OPERATING INCOME (LOSS)          38,792     162,701   (2,691,743)  (1,457,361)

NON-OPERATING INCOME/(EXPENSE)
 Other Income (Expense)            (225)     16,867       15,298    1,654,400
 Interest Expense              (319,101)   (125,548)    (734,706)    (656,216)


INCOME (LOSS) BEFORE TAX       (280,534)     54,020   (3,411,151)    (459,177)

CURRENT TAX EXPENSE                   -           -            -            -

DEFERRED TAXES (BENEFIT)        (91,382)     64,649   (1,297,705)    (114,186)
                           ____________  __________  ___________  ___________

NET INCOME (LOSS)          $   (189,152) $  (10,629) $(2,113,446) $  (344,991)
                           ____________  __________  ___________  ___________

EARNINGS (LOSS) PER SHARE  $     (.04)   $   (.00)   $    (.45)   $    (.07)
                           ____________  __________  ___________  ___________
WEIGHTED AVERAGE
    SHARES OUTSTANDING        4,732,608   4,732,608    4,732,608    4,732,608
                           ____________  __________  ___________  ___________

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

                                   -3-
<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

             Increase (Decrease) in Cash and Cash Equivalents

                                               For the Nine Months Ended
                                                        March 31,
                                                 ________________________
                                                     2002         2001
                                                 ____________  __________
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                              $(2,113,446)  $ (344,991)
  Adjustments to reconcile net income (loss)
    to net cash provided by operating activities:
     Depreciation expense                          1,692,879    1,718,518
     Gain on sale of fixed asset                           -     (500,446)
     Net deferred taxes                           (1,297,705)    (232,647)
     Change in assets and liabilities:
       (Increase) decrease in accounts receivable  1,136,419      723,120
       (Increase) decrease in inventories           (340,455)   2,015,319
       (Increase) decrease in prepaid expenses       (68,622)      (1,186)
       Increase (decrease) in deferred sales               -      102,496
       Increase (decrease) in accounts payable       341,051       89,691
       Increase (decrease) in accrued expenses       211,282     (865,285)
       Increase (decrease) in dealer incentives   (1,246,505)     185,433
       Increase (decrease) in customer deposits       43,272     (266,762)
                                                 ____________  __________
        Net Cash Provided (Used) by
          Operating Activities                   $(1,641,830)  $2,623,260
                                                 ____________  __________
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property, plant, and equipment     $(1,458,443) $(3,178,160)
  Proceeds from sale of fixed assets                       -    1,750,920
  (Increase) in other assets                        (362,745)     (85,612)
                                                 ____________  __________
        Net Cash Provided (Used) by
          Investing Activities                   $(1,821,188) $(1,512,852)
                                                 ____________  __________
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term debt                   $ 3,848,537    $       -
  Repayment of long-term debt                       (188,085)  (2,850,305)
                                                 ____________  __________
        Net Cash Provided (Used) by
          Financing Activities                   $ 3,660,452  $(2,850,305)
                                                 ____________  __________
Net increase (decrease) in cash
 and cash equivalents                            $   197,434  $(1,739,897)

Cash and cash equivalents at beginning of year       796,606    1,983,439
                                                 ____________  __________

Cash and cash equivalents at end of period       $   994,040   $  243,542

                                [Continued]

                                    -4-
<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

             Increase (Decrease) in Cash and Cash Equivalents

                                [Continued]

                                                For the Nine Months Ended
                                                         March 31,
                                                 ________________________
                                                     2002         2001
                                                 ____________  __________
Supplemental Disclosures of Cash Flow Information:
  Cash paid during the period for:

      Interest, net of amounts capitalized       $   653,245   $  596,423
      Income Taxes                               $         -   $        -


Supplemental Disclosures of Noncash Investing and Financing Activities:
  For the nine month period ended March 31, 2002:
     None

  For the nine month period ended March 31, 2001:
       None




















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

                                  -5-

<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - NATURE OF BUSINESS, AND ACCOUNTING POLICIES

  Nature  of  the  Business  -  Fountain Powerboat  Industries,  Inc.  and
  Subsidiary   (the  Company)  manufacture  high-performance   sportboats,
  sports  cruisers,  fishing  boats, race boats  and  wide-beam  cruisers.
  These   boats   are   sold  to  the  Company's  worldwide   network   of
  approximately  34  dealers.   The Company's  offices  and  manufacturing
  facilities  are located in Washington, North Carolina where the  Company
  has  been in business since 1979.  The Company employs approximately 340
  people and is an equal opportunity, affirmative action employer.

  Basis of Presentation - The accompanying financial statements have  been
  prepared  by  the Company without audit.  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 March 31,  2002  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   in  the United  States  of  America  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, 2001 audited financial statements.  The  results
  of  operations  for the period ended March 31, 2002 are not  necessarily
  indicative of the operating results for the full year.

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

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

  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
  incidents  of  ownership have passed from the Company to the  dealer  or
  Government,  and  an  accounts receivable  is  recorded  or  payment  is
  received  from  the dealer, the Government, or the dealer's  third-party
  commercial lender.  This is the method of sales recognition  in  use  by
  most boat manufacturers.

  The  Company has developed criteria for determining whether  a  shipment
  should  be  recorded as a sale or as a deferred sale.  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 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.


                                   -6-
  <PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS, AND ACCOUNTING POLICIES [Continued]

  Sales  incentive interest payments for boats sold are accrued for a  six
  month  (180  days) interest period in the same fiscal accounting  period
  that  the  related sale is recorded, since the Company  considers  it  a
  selling  expense.   The  amount  of  interest  accrued  is  subsequently
  adjusted  to  reflect  the actual number of days of remaining  liability
  for  floor  plan  interest for each individual  boat  remaining  in  the
  dealer's inventory and on floor plan.

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

  Recently   Enacted  Accounting  Standards  -  Statement   of   Financial
  Accounting  Standards  ("SFAS") No. 141, "Business  Combinations",  SFAS
  No.   142,  "Goodwill  and  Other  Intangible  Assets",  SFAS  No.  143,
  "Accounting  for  Asset  Retirement  Obligations",  and  SFAS  No.  144,
  "Accounting  for the Impairment or Disposal of Long-Lived Assets",  were
  recently  issued.   SFAS  No. 141, 142, 143  and  144  have  no  current
  applicability   to  the  Company  or  their  effect  on  the   financial
  statements  would not have been significant. Emerging Issue  Task  Force
  00-25  "Vendor  Income Statement Characterization of Consideration  Paid
  to  a Reseller of the Vendor's Products", was issued during 2000 and  is
  effective  for  fiscal years beginning after December  31,  2001.   This
  standard  will require the Company to reclassify interest  expense  paid
  for  dealers  from  Selling Expense to Net Revenues.   If  the  standard
  would  have been adopted for the three and nine months ended  March  31,
  2002  and  2001  net  revenues and selling expense would  have  been  as
  follows:


                         For the Three             For the Nine
                          Months Ended             Months Ended
                   ________________________  _________________________

                       2002         2001        2002         2001
                   ____________  __________  ___________  ____________
  Net Revenues      $10,626,380  $9,682,546  $25,321,366  $31,654,621
                   ____________  __________  ___________  ____________
  Selling Expense   $ 1,432,495  $1,068,269  $ 2,982,926  $ 3,584,953
                   ____________  __________  ___________  ____________



NOTE 2 - ACCOUNTS RECEIVABLE

  As  of  March  31, 2002, accounts receivable were $803,467  net  of  the
  allowance  for  bad  debts of $27,841.  This  is  a  decrease  from  the
  $1,939,886  in net accounts receivable recorded at June  30,  2001.   Of
  the  balance at March 31, 2002, $359,383 subsequently has been collected
  as  of  April  30, 2002, and the remaining $471,084 is  believed  to  be
  fully collectible.



                                    -7-
<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - INVENTORIES

  Inventories  at  March  31,  2002 and June 30,  2001  consisted  of  the
  following:


                                     March  31,      June 30,
                                        2002           2001
                                     __________    ____________
         Parts and supplies          $3,267,136    $ 2,829,705
         Work-in-process              1,553,349      1,308,998
         Finished goods                 225,943        567,266
         Obsolete inventory reserve    (150,000)      (150,000)
                                     __________    ____________
           Total                     $4,896,427    $ 4,555,969
                                     __________    ____________



NOTE 4- LONG TERM DEBT

  During  November 2001, the Company successfully refinanced its long-term
  debt  with  General Electric Capital Corporations ("GECC").   Under  the
  refinancing  agreement, the Company issued notes payable for  $7,000,000
  and  $3,000,000  in  payment of amounts outstanding  under  the  current
  financing  agreement  and  to provide additional  working  capital.  The
  notes  have a variable interest rate of prime + 2%, 6.75% at  March  31,
  2002.   The  $7,000,000  note  has  monthly  payments  of  approximately
  $85,000  and  a ten-year amortization with a five-year balloon  payment.
  The $3,000,000 note has monthly payments of approximately $45,000 and  a
  seven-year  amortization with a five-year balloon payment.  These  notes
  are  secured by the Company's real and personal property, an  assignment
  of  a  $1,000,000  key  man  life  insurance  policy  and  the  personal
  guarantee   of  the  Company  President  with  real  estate  valued   at
  approximately $1,000,000.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

  Manufacturer  Repurchase  Agreements  -  The  Company  makes   available
  through  third-party  finance companies a floor plan  financing  program
  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 March 31,  2002,
  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 $18,688,716.  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
  March 31, 2002, the allowance for boat repurchases was $200,000.

  Dealer  Interest  -  The  Company regularly pays  a  portion  of  dealer
  interest  charges  for  floor plan financing.   These  interest  charges
  amounted  to  approximately $494,271 for the  first  nine  months  ended
  March  31,  2002  and  are  classified in the accompanying  consolidated
  statements  of  operations as selling expense.  At March 31,  2002,  the
  estimated  unpaid  dealer  interest included  in  accrued  expenses  was
  $208,468.

                               -8-
<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - TRANSACTIONS WITH RELATED PARTIES

  At  March  31, 2002, the Company had receivables and advances  from  its
  employees amounting to $4,100.

  During  the  nine  month period ended March 31, 2002, the  Company  paid
  $17,300  for  services rendered to entities owned or controlled  by  the
  Company's Chairman, President, and Chief Executive Officer.

  The  Company paid $41,361 during the nine month period ended  March  31,
  2002  for  advertising  services received from  an  entity  owned  by  a
  Company director.

NOTE 7- INCOME TAXES

  For  the  nine month period ended March 31, 2002 and 2001,  the  Company
  had a benefit of $1,297,705 and $114,186 for deferred income taxes.

NOTE 8 - 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 nine month period  ended
  March  31,  2002  and 2001, was not presented as its  effect  was  anti-
  dilutive.   At  March  31,  2002 there were  596,000  unexercised  stock
  options,  of  which 550,000 were held by officers and directors  of  the
  Company  at prices ranging from $1.34 to $5.00 per share that  were  not
  included in the computation of earnings per share because the effect  is
  anti-dilutive.


  The  following  data  show the amounts used in  computing  earnings  per
  share  and  the  effect  on income and the weighted  average  number  of
  shares  of  potential dilutive  common  stock  for  the three  and  nine
  months ended March 31, 2002 and 2001:

                                      For the Three         For the Nine
                                       Months Ended         Months Ended
                                   ____________________  ____________________

                                     2002       2001       2002       2001
                                   _________  _________  _________  _________
  Income (loss) from continuing
   operations available
   to common stockholders         $(189,152) $(10,629) $(2,113,446)$(344,991)
                                   _________  _________  _________  _________
  Weighted average number of
   common shares outstanding
   used in basic (loss) per share  4,732,608  4,732,608  4,732,608  4,732,608
                                   _________  _________  _________  _________

  The Company had at March 31, 2002 options to purchase 596,000 shares  of
  common  stock at prices ranging from $1.45 to $5.00 per share that  were
  not  included in the computation of loss per share because their  effect
  was anti-dilutive.

                                  -9-
<PAGE>
            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - GOING CONCERN

  During  the  current  fiscal  year,  the  Company  incurred  significant
  expenses associated with the new product development of their 34 and  48
  foot  wide  beam  cruisers.  The resulting working capital  deficiencies
  raised  substantial  doubt about its ability  to  continue  as  a  going
  concern.   Having  completed  these capital projects,  the  Company  has
  halted   all  major  capital  expenditures,  choosing  to  focus   their
  resources   on  existing  sales  order  backlogs  and  improving   their
  production processes.  The Company fully believes it is able to  improve
  its  position with proper management and expects evidence of  such  will
  result  from  the  production  of  existing  retail  sales  orders   and
  continued progress with aged dealer inventories.





                                -10-
<PAGE>

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

Results of Operations.

The operating profit for the three months ended March 31, 2002 was $38,792
versus $162,701 for the same period in 2001.  The net loss for the quarter
ended   March 31, 2002  was $189,152  compared to a  Net loss  of  $10,629
for the same period of 2001.  The net loss for the nine months ended March
31, 2002, was $2,113,446 or $(.45) per share.  This compares to a net loss
of  $344,991 or $(.07) per share for the nine months ended March 31, 2001.
The  fiscal  2001  amount  includes non-operating  income  of  $1,654,400,
combined proceeds from the sale of the Company's corporate plane and  plus
proceeds of an insurance claim settlement.

Net  sales  were  $10,811,769 for the third quarter  of  Fiscal  2002,  as
compared  to $9,966,147 for the three months ended March 31, 2001.   Gross
margin  on sales for the three months ended March 31, 2002, was $2,220,809
as  compared  to  $2,006,044 for the three months ended  March  31,  2001.
Sales  volume for three months ended March 31, 2002, was 55 units compared
to  72  units for the prior year.  While unit volume for the third quarter
2002  was  only 76% of the unit volume for 2001, quarterly net  sales  and
gross  margin improved $845,622 and $214,765, respectively, over the prior
year.  The sales of the Company's new models have had significant, postive
impact in the third fiscal quarter, by generating increased revenues  with
lower sales volumes.

Gross  margin  for  the nine months ended March 31,  2002  was  $2,313,093
compared  with $4,933,252 for the same period of the previous year.   Year
to  date  margin differences result from decreased year to date sales  and
the  Company's decision to provide dealers with assistance in moving  aged
inventory.   Current  dealer inventories are down 35% from  the  inventory
levels of 2001.

Selling expenses were $1,617,884 for the three months ended March 31, 202,
as  compared  to  $1,351,870 for the three months ended  March  31,  2001.
Increased  selling expenses result from the advertising campaign  for  the
Company's new products which entered the market in February 2002.

General  and  administrative expenses were $564,133 for the  three  months
ended March 31, 2002 compared to $491,473 for the three months ended March
31,  2001.   This incremental increase results from  the  Company's hiring
of a lobbyist group to promote government and defense sales.

Interest expense for the three months ended March 31, 2002 was $319,101 as
compared to $125,548 for the three months ended March 31, 2001.  Increased
interest  expense results from the Company's refinance of  long-term  debt
and borrowing an additional $3,848,537.

                                -11-
<PAGE>

Financial Condition.

The  Company's summary cash flows for the nine months ended March 31, 2002
are:

     Net cash provided by operating activities     $ (1,641,830)
     Net cash used in investing activities           (1,821,188)
     Net cash provided by financing activities        3,660,452
                                                   ____________
     Net increase in cash                          $    197,434
                                                   ____________

The  $197,434 net cash increase compares to a $1,739,897 decrease for  the
nine  months  ended March 31, 2001, which included $1,750,920 in  proceeds
from the sale of the corporate aircraft.

Cash  used  in the nine months ended March 31, 2002 to acquire  additional
property, plant, and equipment (investing activity) amounted to $1,458,443
which  was invested in tooling of new product designs, including  the  48'
wide beam cruiser and the 34' wide beam fish boat.  These new designs have
generated retail orders into September 2002.

Cash  was  provided by financing activities as a result of new  long  term
debt  and  refinancing  of existing debt which was  completed  during  the
second quarter, yielding proceeds of $3,848,537.

For the remainder of the year ending June 30, 2002 and beyond, the Company
expects to generate sufficient cash to meet its needs and obligations.

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.


PART II.  Other Information.

ITEM 2:   Change in Securities.
There  was  no  change in securities during the quarter ending  March  31,
2002.

ITEM 6:   Exhibits and Reports on Form 8 and Form 8-K.
     (1)  Exhibits:  None.
     (a)   No Amendments on Form 8 were filed by the Registrant during the
           second three months of Fiscal 2002.
     (b)   No  Current  Reports on Form 8-K were filed by  the  Registrant
           during the first six months of Fiscal 2002.

                                    -12-
<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)






By:     /s/ Hannah Hale                              Date: May  10, 2002
     Chief Financial Officer






                                     -13-
<PAGE>