U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                FORM 10-Q/A



 [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                           EXCHANGE ACT OF 1934

             For the quarterly period ended December 31, 2003

                                    OR

[  ]   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

                    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  by  check  mark whether the registrant is an accelerated  filer
 (as defined in Rule 12b-2 of the Act)

         Yes[     ]                 No[ X ]

 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 December 31, 2003
        Common Stock, $.01 par value   4,757,608 shares


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY


                                   INDEX

                                                               Page No.

Part I Financial Information

   Item 1.  Financial Statements
            Unaudited Condensed Consolidated Balance Sheets,
             December 31, 2003 and June 30, 2003                 3 - 4

            Unaudited Condensed Consolidated Statements of
            Operations, for the three and six months ended
            December 31, 2003 and 2002                             5

            Unaudited Condensed Consolidated Statements of
            Cash Flows, for the three and six months ended
            December 31, 2003 and 2002                           6 - 7

            Notes to Unaudited Condensed Consolidated
            Financial Statements                                 8 - 15

   Item 2.  Management's Discussion and Analysis of Results
             of Operations and Financial Condition              16 - 18

   Item 3.  Quantitative and Qualitative Disclosures
            of Market Risk                                        18

   Item 4.  Controls and Procedures                               18

Part II  Other Information

   Items 1, 2, 3, 4, 5 & 6                                      18 - 19

   Signature                                                       20

   Exhibits







<PAGE>






                               Explanatory Note


      Fountain Powerboat Industries, Inc. is filing this Amendment to its
Quarterly Report on Form 10-Q for the quarterly period ended December 31,
2003 to restate earnings and earnings per share due to adjustments to its
previously reported allowance for deferred tax assets as required by SFAS
109.  Previous amounts did not reflect fully the effects of certain NOL
carryforwards and their affects on the net of deferred tax assets and
liabilities.  See Note 7 to the financial statements for further
information related to this issue.  Additional comments were also added to
the Managements' Discussion and Analysis, Results of Operations, to
further explain the Company's reasons for maintaining the deferred tax
asset allowance.
      The original Management's Discussion and Analysis, Liquidity and
Capital Resources, was further expanded to include additional discussion
about sufficient current and future cash flows to satisfy liquidity
demands of the Company.
      With the exception of the foregoing corrections, no other
information in the Quarterly Report on Form 10-Q for the quarterly period
ended December 31, 2003 has been supplemented, updated or amended.













<PAGE>


PART I.   FINANCIAL INFORMATION.
ITEM 1:   Financial Statements.


FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>

<CAPTION>

                                                                              December 31,             June 30,
ASSETS                                                                            2003                   2003


<S>                                                                    <C>                   <C>
CURRENT ASSETS:
        Cash and cash equivalents                                        $      3,995,211        $     1,224,935
        Accounts receivable, net                                                2,239,123              2,015,371
        Inventories                                                             3,891,464              3,460,286
        Prepaid Expenses                                                          838,397                644,581
        Current tax assets                                                        292,935                303,823

                Total Current Assets                                           11,260,130              7,648,996

PROPERTY, PLANT AND EQUIPMENT                                                  42,268,908             41,676,783

        Less: Accumulated depreciation                                        (26,554,008)           (25,511,099)

                                                                               15,714,900             16,165,684

CASH SURRENDER VALUE LIFE INSURANCE                                             1,479,000              1,378,626

OTHER ASSETS                                                                      611,403                736,288

TOTAL ASSETS                                                             $     29,065,433        $    25,929,594

</TABLE>

                                           (Continued)


<PAGE>


                         FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                           UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                            (Continued)

<TABLE>



LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                                   <C>                     <C>
CURRENT LIABILITIES:
        Current maturities - long-term debt                              $      1,070,916        $     1,060,444
        Current maturities - capital lease                                         17,709                 20,118
        Accounts payable                                                        1,945,322              7,498,762
        Accounts payable - related party                                           34,000                169,043
        Accrued expenses                                                          793,599              1,317,398
        Dealer incentives                                                         693,653                190,010
        Customer deposits                                                         229,937                290,658
        Allowance for boat repurchases                                            200,000                200,000
        Warranty reserve                                                          900,000                900,000

                Total Current Liabilities                                       5,885,136             11,646,433

LONG-TERM DEBT, less current maturities                                        18,070,298              8,986,160
CAPITAL LEASE, less current maturities                                             21,249                 24,367
DEFERRED TAX LIABILITY                                                            295,935                303,823

COMMITMENTS AND CONTINGENCIES (NOTE 5)

                Total Liabilities                                              24,272,618             20,960,783

STOCKHOLDERS' EQUITY:
        Common stock, $.01 par value, 200,000,000 shares authorized,
                4,757,608 shares issued and outstanding                            47,576                 47,576
        Additional paid-in capital                                             10,443,840             10,436,551
        Accumulated earnings (deficit)                                         (5,517,971)            (5,400,683)

                                                                                4,973,445              5,083,444

        Less: Treasury stock, at cost, 15,000 shares                             (110,748)              (110,748)
        Deferred compensation for stock options issued                             (2,090)                (3,885)
        Accumulated other comprehensive income from interest rate swap            (67,792)                     -

                Total Stockholders' Equity                                      4,792,815              4,968,811
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                               $     29,065,433        $    25,929,594

</TABLE>

The Accompanying notes are an integral part of these unaudited condensed
consolidated financial statements


<PAGE>


FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                               For the Three Months Ended                    For the Six Months Ended
                                                 December 31,        December 31,          December 31,         December 31,
                                                    2003                2002                  2003                 2002
                                                 (Restated)                                (Restated)

<S>                                           <C>                <C>                   <C>                  <C>
NET SALES                                        $ 13,361,811       $  12,941,227         $  26,247,043        $  25,016,213

COST OF SALES                                      11,334,711          10,570,853            22,187,762           20,739,887

        Gross Profit                                2,027,100           2,370,374             4,059,281            4,276,326

EXPENSES:
        Selling expense                             1,050,694           1,082,315             2,406,264            1,915,293
        General and administrative                    519,353             431,241             1,085,212              898,254
        Total Expenses                              1,570,047           1,513,556             3,491,476            2,813,547

OPERATING INCOME (LOSS)                               457,053             856,818               567,805            1,462,779

NON-OPERATING INCOME (EXPENSE):
        Other income (expense)                         (1,962)              1,389                 1,097               29,965
        Interest expense                             (216,032)           (214,475)             (686,190)            (520,676)

        Total Non-operating Income (Expense)         (217,994)           (213,086)             (685,093)            (490,711)

INCOME (LOSS) BEFORE INCOME TAXES                     239,059             643,732              (117,288)             972,068

CURRENT TAX EXPENSE (BENEFIT)                               -                   -                     -                    -

DEFERRED TAX EXPENSE (BENEFIT)                              0             161,273                     0              320,364

NET INCOME (LOSS)                                  $  239,059         $   482,459           $  (117,288)         $   651,704

BASIC EARNINGS (LOSS) PER SHARE                    $     0.05         $      0.10           $     (0.02)         $      0.14

WEIGHTED AVERAGE SHARES OUTSTANDING                 4,757,608           4,745,108             4,757,608            4,745,108

DILUTED EARNINGS (LOSS) PER SHARE                  $     0.05         $      0.10           $     (0.02)         $      0.14

WEIGHTED AVERAGE SHARES OUTSTANDING
        ASSUMING DILUTION                           4,819,635           4,825,399             4,821,862            4,803,886


</TABLE>

The Accompanying notes are an integral part of these unaudited condensed
consolidated financial statements



<PAGE>
                      FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

                  UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                      Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>

                                                                                           For the Six Months Ended
                                                                                       December 31,            December 31,
                                                                                            2003                    2002
CASH FLOWS FROM OPERATING ACTIVITIES:                                                    (Restated)


<S>                                                                              <C>                   <C>

        Net income (loss)                                                           $      (117,288)      $         651,704

        Adjustments to reconcile net income (loss) to net cash
          provided (used) by operating activities:
                Depreciation                                                              1,042,909               1,028,308
                Net deferred taxes                                                                -                 320,365
                Loss on sale of fixed asset                                                       -                  29,613
                Amortization of deferred loan cost                                          246,980                  30,900
                Non-cash expense                                                              9,085                   8,846
                Change in assets and liabilities:
                        Decrease (increase) in accounts receivable                         (223,752)              2,293,396
                        (Increase) in inventories                                          (431,179)               (477,112)
                        (Increase) in prepaid expenses                                     (193,816)               (238,089)
                        (Decrease) in accounts payable                                   (5,688,483)               (514,714)
                        (Decrease) in accrued expenses                                     (447,814)               (245,572)
                        Increase (decrease) in dealer incentives                            427,658                (489,937)
                        (Decrease) in customer deposits                                     (60,721)               (381,106)

                Net Cash Provided (Used) by Operating Activities                         (5,436,421)              2,016,602

CASH FLOWS FROM INVESTING ACTIVITIES:
        Purchase of property, plant and equipment                                          (110,857)               (793,891)
        Investment in molds and related plugs                                              (481,269)                      -
        Proceeds from sale of fixed assets                                                        -                 110,500
        (Increase) in other assets                                                         (222,468)               (100,824)

                Net Cash Provided (Used) by Investing Activities                           (814,594)               (784,215)

CASH FLOWS FROM FINANCING ACTIVITIES:
        Proceeds from long-term debt                                                     18,067,841                  95,000
        Payments of long-term debt                                                       (8,898,421)               (497,442)
        Payment of deferred loan cost                                                      (148,129)                      -
        Proceeds from stock options exercised                                                   -                    16,800

                Net Cash Provided (Used) by Financing Activities                          9,021,291                (385,642)

Net increase in cash and cash equivalents                                                 2,770,276                 846,745

Cash and cash equivalents at beginning of year                                            1,224,935                 329,640

Cash and cash equivalents at end of period                                            $   3,995,211          $    1,176,385

</TABLE>




                            (Continued)



<PAGE>

FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash and Cash Equivalents
(Continued)

<TABLE>
<CAPTION>
                                                                                           For the Six Months Ended
                                                                                         December 31,       December 31,
                                                                                            2003                2002
<S>                                                                                <C>                 <C>
Supplemental Disclosures of Cash Flow Information:
        Cash paid during the period for:
                Interest, net of amounts capitalized                                     $  498,339        $    520,677

                Income taxes                                                             $        -        $          -


</TABLE>



 The Accompanying notes are an integral part of these unaudited condensed
                     consolidated financial statements







Supplemental Disclosures of Noncash Investing and Financing Activities:

  For the six month period ended December 31, 2003:
     The  Company  recorded consulting expense of $1,795 as  a  result  of
     amortization of deferred compensation from 20,000 options  issued  to
     purchase  common  stock during Fiscal 2002, vesting  through  January
     2004 and expiring through January 2009.

  For the six month period ended December 31, 2002:
     The  Company  recorded consulting expense of $8,846 as  a  result  of
     amortization of deferred compensation from 40,000 options  issued  to
     purchase  common  stock during Fiscal 2002, vesting  through  January
     2004 and expiring through January 2009.














 The Accompanying notes are an integral part of these unaudited condensed
                     consolidated financial statements



<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - 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 December  31,
2003 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,  2003  audited
financial  statements. The results of operations for  the  three  and  six
month  periods  ended  December  31, 2003 and  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  in  the  United
States  of  America requires management to make estimates and  assumptions
that   affect  the  reported  amounts  of  assets  and  liabilities,   the
disclosures  of  contingent assets and liabilities  at  the  date  of  the
financial  statements, and the reported amounts of revenues  and  expenses
during  the reporting period.  Actual operating results could differ  from
those estimated by management.

Cash  and  Cash Equivalents: For purposes of the statement of cash  flows,
the  Company considers all highly liquid debt instruments with a  maturity
of  three months or less to be cash equivalents.  At December 31, 2003 and
June 30, 2003, the Company had $3,895,211 and $1,124,935, respectively, in
excess of federally insured amounts held in cash.

Fair  Value  of Financial Instruments: Management estimates  the  carrying
value  of  financial instruments on the consolidated financial  statements
approximates their fair values.

Derivative  Financial  Instruments: The Company uses derivative  financial
instruments  for  the  purpose  of  reducing  its  exposure   to   adverse
fluctuations  in  interest  rates.  While these  hedging  instruments  are
subject  to fluctuations in value, such fluctuations are generally  offset
by  the  value  of  the  underlying exposures being hedged.   The  Company
accounts  for these derivative financial instruments as an effective  cash
flow  hedge  under  the  provisions of Statement of  Financial  Accounting
Standards  (SFAS)  No.  133,  "Accounting for Derivative  Instruments  and
Hedging Activities" and it has the effect of converting the interest  rate
paid  on the notional amount of $9,000,000 of the Company's variable  debt
to  a  fixed  rate  of 6.02%. The difference between the Company's  actual
variable  interest  rate and 6.02% on the notional  amount  for  the  next
twelve  months  is  reclassified  from  other  comprehensive  income   and
recognized  as interest expense. The Company is not a party  to  leveraged
derivatives  and  does  not  hold  or  issue  financial  instruments   for
speculative purposes.

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


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION (continued)

The  Company  has  developed criteria for determining whether  a  shipment
should  be  recorded  as  a sale or as a deferred sale  (a  balance  sheet
liability).  The criteria for recording a sale are that the boat has  been
completed  and  shipped to a dealer or to the Government, that  title  and
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 save those manufacturer's  repurchase
agreements  with  lending institutions which are more fully  discussed  in
Note 6 to these financial statements.

The sales incentive interest payment program for each boat sale is accrued
for  the entire interest period in the same fiscal accounting period  that
the  related  sale is recorded (see Note 6 to these financial statements).
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.

Stock  Options:  The Company has stock incentive plans  that  provide  for
stock-based  employee  compensation,  including  the  granting  of   stock
options,  to  certain key employees and other individuals. The  plans  are
more  fully  described in Note 5. The Company accounts for  stock  options
issued  to employee, officer and directors under the stock incentive  plan
in  accordance  with  the recognition and measurement  principles  of  APB
Opinion  No.  25, "Accounting for Stock Issued to Employees", and  related
Interpretations. Under this method, compensation expense  is  recorded  on
the date of grant only if the current market price of the underlying stock
exceeded  the  exercise price. Under the Company's stock  incentive  plan,
stock  options  are granted at exercise prices that equal  or  exceed  the
market  value  of  the  underlying common stock  on  the  date  of  grant.
Therefore, no compensation expense related to stock options is recorded in
the Consolidated Statements of Operations.

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

Had  compensation  cost for stock options issued to  employees  under  the
Company's stock option plans and agreements been determined based  on  the
fair  value at the grant date for awards in the six months ended  December
31,  2003  and  2002 consistent with the provisions of SFAS No.  123,  the
Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below:


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION (continued)



<TABLE>
<CAPTION>
                                                        For the Three Months Ended        For the Six Months Ended
                                                        December 31,    December 31,    December 31,    December 31,
                                                            2003             2002          2003            2002
                                                         (Restated)                     (Restated)


<S>                                                 C>             <C>               <C>             <C>
Net Income (Loss) as Reported                         $   239,059      $  482,459       $ (117,288)     $ 651,704
Add: Stock-based nonemployee compensation
        expense included in reported net income              -              9,117            1,795         13,533

Deduct: Total stock-based employee
        compensation expense determined
        under fair value based method                     (5,193)         (24,826)         (10,386)       (36,118)

Net Income (Loss) Proforma                            $  233,866       $  466,750       $ (125,879)      $ 629,119

Basic earnings (loss) per share:     As reported      $     0.06       $     0.10       $    (0.01)      $    0.14
                                     Proforma         $     0.05       $     0.10       $    (0.02)      $    0.13

Diluted earnings (loss) per share:   As reported      $     0.06       $     0.10       $    (0.01)      $    0.14
                                     Proforma         $     0.05       $     0.10       $    (0.02)      $    0.13

</TABLE>





NOTE 2 - ACCOUNTS RECEIVABLE

As  of  December 31, 2003, accounts receivable were $2,239,123 net of  the
allowance for bad debts of $27,841. This is an increase from the  $223,752
in  net accounts receivable over the amount recorded at June 30, 2003.  Of
the  balance  at  December  31,  2003, $2,068,687  subsequently  has  been
collected as of February 12, 2004, and the remaining $198,277 is  believed
to be fully collectible.

The  Company has pledged its receivables as collateral for its  promissory
note with Bank of America.

NOTE 3 - INVENTORIES

  Inventories  at  December 31, 2003 and June 30, 2003  consisted  of  the
  following:


                                           December 31,         June 30,
                                             2003                 2003

 Parts and supplies                     $  1,721,675         $  1,593,057
 Work-in-process                           2,112,199            1,702,533
 Finished Goods                              107,590              214,696

                                        $  3,941,464         $  3,510,286

 Obselete inventory reserve                  (50,000)             (50,000)

 Total                                  $  3,891,464         $  3,460,286






The  Company has pledged its inventories as collateral for its  promissory
note with Bank of America.

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4  - LONG-TERM DEBT AND PLEDGED ASSETS

The following is a summary of long-term debt:

<TABLE>
<CAPTION>

                                                                                  December 31,           June 30,
                                                                                     2003                  2003

<S>                                                                        <C>                    <C>

 9.99% loans payable to a financial institution for
         the purchase of vehicles, monthly payments
         totaling $1,383 through August 2005, secured
         by the vehicles purchased.                                            $       25,396         $      32,224

 6.5% loan payable to a financial institution for the
         purchase of a vehicle, monthly payments of $726
         through December 2006, secured by the vehicle
         purchased.                                                                    22,159                25,306

 7.93% to 8% loans payable borrowed against
         the cash surrender value of key-man life insurance
         policies, monthly payments
         of $25,004.                                                                1,358,472             1,265,438

 $10,000,000 credit agreement with a financial
         Corporation (See Below).                                                         -               8,723,636

 $18,000,000 credit agreement with a financial
         Corporation (See Below).                                                  17,735,187                   -

                                                                                   19,141,214            10,046,604

Less: Current maturities included in current liabilities                           (1,070,916)           (1,060,444)

                                                                                $  18,070,298         $   8,986,160

</TABLE>



On  July 17, 2003, the Company obtained an $18,000,000 long-term loan from
Bank  of America.  The proceeds were used to refinance the two loans  with
General  Electric  Capital  Corporation totaling  $10,000,000  with  total
remaining balance of $8,723,636 and a variable interest rate of prime plus
2%  or 6.25% as of June 30, 2003.  Proceeds from the Bank of America  loan
were  also  used  to  pay  trade payables to current  status  and  provide
additional operating funds.  The new agreement with Bank of America has  a
$9,000,000  note with a rate that is variable with the Wall  Street  LIBOR
one  month  floating  rate as the index plus the  applicable  margin.  The
applicable margin is based on funded debt to earnings before income  taxes
and  depreciation  adjustment  (EBITDA).   The  applicable  margin  is  as
follows:

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4  - LONG-TERM DEBT AND PLEDGED ASSETS (Continued)

    Funded Debt to EBITDA ratio           Applicable Margin
    Less than or equal to 1.74 to 1.00            1.90%
    1.75 to 1.00, but less than 2.50 to 1.00      2.10%
    2.50 to 1.00, but less than 3.76 to 1.00      2.25%
    Greater than or equal to 3.76 to 1.00         2.50%

The applicable margin for the first year is deemed to be 2.25%.

The agreement with Bank of America further has a $9,000,000 note under  an
interest  rate  swap to provide a fixed rate of 6.02%.  The interest  rate
swap  is  designated as a cash flow hedge and is deemed effective pursuant
to  SFAS 133. These Bank of America loans have a fifteen year amortization
with a five year balloon payment and are secured by certain assets of  the
Company  and  real  estate  of  the Company's President,  Chief  Executive
Officer  and  majority shareholder, Reginald M. Fountain, Jr.  Obligations
are guaranteed by the Company, an unlimited unconditional guarantee of Mr.
Fountain  and  by  Brunswick Corporation, pursuant  to  a  master  funding
agreement with the Company.  Combined monthly payments to Bank of  America
will be approximately $126,000.

The Company has agreed to observe certain covenants under the terms of its
note  agreements, the most restrictive of which relates to  prepayment  of
excess  earnings, the sale of assets securing the notes and key  financial
ratios.  Chief among the covenants are:

 1. Maintenance of a tangible net worth floor.
 2. A current maturity coverage ratio defined as the ratio of the current
    portion of long-term liabilities plus interest to "cash flow" which is
    defined as net income plus depreciation, amortization, interest and
    other non-cash expenditures.
 3. A funded debt to earnings before interest, taxes, depreciation and
    amortization  (EBITDA) ratio which is defined as the ratio  of  all
    outstanding debt both current and long-term to EBITDA.

As  of  December  31,  2003  the Company was in compliance  with  all  its
required covenants.

Prepayment  -  The  Company is obligated to pay in  addition  to  required
monthly principle payments an additional 50% of the excess earnings  after
debt  service within 120 days after the close of the Company's fiscal year
end.
Should  the Company prepay the balance of the note within one year of  the
date  of  the  note, the Company must pay one percent (1%) of  the  unpaid
balance  on  the date before the date of the prepayment is  made.  If  the
Company prepays the balance of the note after one year of the date of  the
note, the Company must pay a half of a percent (.5%) of the unpaid balance
on the date before the date the prepayment is made.
Should  the  Company  default  on  the provision  of  timely  payments,  a
delinquency  charge  of  four percent (4%) of the unpaid  portion  of  the
payment  that is more than fifteen days late will be applied.  Should  the
Company  remain  in  a default status, the interest rate  charged  to  the
Company  shall  be an additional two percent (2%) above the  rates  listed
above.

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4  - LONG-TERM DEBT AND PLEDGED ASSETS (Continued)

Loan  Guarantee  -  The Company entered into an agreement  with  Brunswick
Corporation,  a  division of which supplies marine  engines  used  in  the
Company's  product, wherein Brunswick Corporation agreed to guarantee  the
$18,000,000  in  debt financing, in return the Company  President  granted
Brunswick  the  option to purchase his common shares and  his  options  to
purchase  common  shares of the Company.  The Company's President  further
agreed  to  indemnify Brunswick for all amounts in excess of  $14,700,000.
The  Company issued 273,146 options to acquire common shares at  $.05  per
share that are exercisable in the event of a default by the Company on its
loan.  In the event Brunswick Corporation exercises its option to purchase
the  Company President's shares the Company has agreed to issue additional
shares  of  common stock which would result in Brunswick  owning  together
with  the  shares  purchased  from  the Company  President  50.1%  of  the
Company's outstanding shares at the weighted average market closing  price
for  the  previous 30 days.  The Company further entered into an exclusive
supply  agreement  and agreed to restrictions on the Company  issuing  any
equity  securities that would dilute Brunswick's potential equity interest
in  the  Company  upon  exercise of their options  with  the  Company  and
Company's   President  without  Brunswick's  prior  approval.    Brunswick
Corporation's  options to purchase vest upon the earlier of the  repayment
or  default  of  $18,000,000 notes payable, or July  1,  2007.   Brunswick
Corporation's option expires no earlier than approximately 180 days  after
vesting.

NOTE 5 - COMMON STOCK

During  January 2002, the Company issued 10,000 options to purchase common
stock to a consultant for services to be rendered valued at $14,254.   The
options are exercisable at $1.67 per share, vest through January 2004  and
expire  January 2009.  During the three and six months ended December  31,
2003,   the  Company  recorded  consulting  expense  of  $0  and   $1,795,
respectively.

During  July  2003, the Company issued 273,146 options to purchase  common
stock  to Brunswick Corporation as a condition of guarantying the Bank  of
America  loan.   The  options are exercisable  only  under  conditions  of
default  by  the  Company of its loan and Brunswick having  exercised  its
guarantee of the loan. Should Brunswick Corporation exercise its option to
purchase  the Company President's stock, the Company has agreed  to  issue
additional  common shares which would result in Brunswick owning  together
with  the  shares  purchased  from the Company  President,  50.1%  of  the
Company's outstanding shares at the weighted average market closing  price
for  the previous 30 days. The Company also agreed not to issue any equity
instruments without prior approval of Brunswick Corporation.

If  Brunswick Corporation exercised fully their options with  the  Company
and  Company President under the loan guarantee they would own 50.1  %  of
the outstanding stock of the Company.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

Manufacturer  Repurchase Agreements - The Company makes available  through
third-party  finance  companies  floor plan  financing  for  many  of  its
dealers.   Sales  to participating dealers are approved by the  respective
finance  companies.   If  a  participating dealer  does  not  satisfy  its
obligations  under the floor plan financing agreement in effect  with  its
commercial  lender(s)  and  boats  are  subsequently  repossessed  by  the
lender(s), then under certain circumstances the Company may be required to
repurchase the repossessed boats if it has executed a repurchase agreement
with  the  lender(s).   At  December 31, 2003, 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
$11,129,254.   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 December 31, 2003, the  allowance
for boat repurchases was $200,000.


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - COMMITMENTS AND CONTINGENCIES (Continued)

The  Company  vigilantly monitors all its dealers for solvency  issues  by
examining  dealer  inventory levels and amounts carried under  floor  plan
financing. At present the Company has no dealers that it believes to be at
risk of default under their floor plan arrangements.

Dealer  Interest  -  The  Company regularly pays  a  portion  of  dealers'
interest charges for floor plan financing. These interest charges amounted
to approximately $142,331 and $374,416, respectively for the three and six
months  ended  December 31, 2003 and the estimated unpaid dealer  interest
included  in  accrued dealer incentives at December 31, 2003  amounted  to
$77,432.

Interest Rate Risk - At December 31, 2003, the Company owed $17,667,394 on
a $18,000,000 credit agreement with Bank of America.  The credit agreement
has  $9,000,000 at one month LIBOR plus 2.25% or 3.77% as of December  31,
2003,  and $9,000,000 under an interest rate swap to provide a fixed  rate
of  6.02%.  An increase in the LIBOR rate would have a negative effect  on
the  results of operations of the Company.  A hypothetical 50 basis  point
increase  in  interest  rates  would result in  an  approximately  $45,000
increase in interest expense.
Engine  Supply  Agreement  - The Company entered  into  an  Engine  Supply
agreement  with Brunswick Corporation, as a condition for guarantying  the
Bank  of America loan, to purchase all marine engines from Mercury  Marine
division  of Brunswick except for products in categories in which  Mercury
does  not  manufacture or are unavailable from Mercury due  to  production
shortages.

NOTE 7 - TRANSACTIONS WITH RELATED PARTIES

At  December 31, 2003, the Company had receivables and advances  from  its
employees amounting to $19,294.

During the three and six month period ended December 31, 2003, the Company
paid  $42,625 and $123,500 respectively, for services rendered to entities
owned  or  controlled  by  the Company's Chairman,  President,  and  Chief
Executive Officer.

The  Company's  Chairman,  President,  and  Chief  Executive  Officer  has
guaranteed  and personally pledged certain of his assets as collateral  in
connection  with  the  $18,000,000 loan  with  Bank  of  America  and  the
Brunswick  Corporation agreement to guarantee said  loan.   The  president
further  agreed  to  sell  certain of his common  shares  and  options  to
purchase  common shares to Brunswick Corporation in connection with  their
guarantee (See Note 4)


NOTE 8 - INCOME TAXES

The Company has provided for deferred income taxes in accordance with SAFS
No. 109, Accounting for Income Taxes, whereby deferred income taxes are
determined based upon the enacted income tax rates for the years in which
these taxes are estimated to be payable or recoverable.  Deferred income
taxes arise from temporary differences resulting from a difference between
the tax basis of an asset or liability and its reported amount in the
financial statements.






<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8 - INCOME TAXES [Continued]

  The  components of federal income tax expense from continuing operations
  consist of the following:

                                       Six months Ended December 31,
                                       _____________________________
                                              2003         2002
                                         _____________   _____________

     (Restated)
     Current income tax expense:
          Federal                            $      -    $       -
          State                                     -            -
                                         _____________   _____________
     Net current tax (benefit)               $      -    $       -
                                         _____________   _____________

     Deferred tax expense (benefit)
       resulted from:
          Excess of tax over financial
            accounting depreciation          $(31,947)   $    119,529
     Donations                                 (1,043)            (96)
          Reserve for obsolete inventory            -          51,480
          Dealer incentive reserves                 -          97,945
          Accrued dealer incentive interest   (32,673)         (6,178)
          Accrued executive compensation       51,620         (32,100)
          Accrued dealer service incentives     5,460         111,159
          Inventory adjustment-Sec.263A       (13,734)        (21,375)
          Health insurance reserve             (4,680)            -
          Decrease in NOL carryforwards         6,014          62,567
          Valuations allowance                 20,983         (62,567)
                                         _____________   _____________
     Net deferred tax expense (benefit)      $    -       $    320,364
                                         _____________   _____________

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

                                        Six Months Ended December 31,
                                         __________________________
                                              2003         2002
                                         __________________________

     (Restated)
     Computed tax at the expected
       federal statutory rate                    34.00%      34.00%
     State income taxes, net of
       federal benefit                            5.00        5.00
     Valuations allowance                       (19.06)      (6.44)
     Compensation from stock options             (3.22)      (1.00)
     Officer's life insurance                    (1.04)       (.12)
     Nondeductible entertainment                 (5.56)       -
     Penalties                                  (10.12)       -
     Other                                        -           1.52
                                         __________________________
     Effective income tax rates                  0%          32.96%
                                         __________________________

<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8 - INCOME TAXES [Continued]

Significant components of the Company's deferred tax assets and
liabilities are as follows:
                                          Six Months
                                            Ended       Year Ended
                                         December 31,    June 30,
                                           __________   _____________
                                             2003          2003
                                           __________   _____________

(Restated)                     (Restated)
Deferred tax assets:
     Warranty reserve                      $ 351,000     $ 351,000
     Obsolete inventory reserve               19,500        19,500
     Accrued vacations                        73,685        73,685
     Allowance for boat repurchases           78,000        78,000
     Bad debt reserve                         10,858        10,858
     Accrued Dealer incentive interest        58,051        25,378
     Inventory adjustments - Sec. 263A       123,954       110,220
     State NOL carryforwards                 486,083       486,854
     Federal NOL carryforwards             2,251,459     2,256,701
     Alternative minimum tax credits         119,049       119,049
     Accrued executive compensation            3,764        55,384
     Donations carryforwards                   5,651         4,608
     Accrued dealer service incentives        32,662        38,122
     Health insurance reserve                 45,240        40,560
     Investment tax credits                   86,294        86,294
                                         ____________   ___________
Total deferred assets                      3,745,250     3,756,213
Less: valuation allowance
        for deferred tax assets           (2,363,896)   (2,342,912)
                                         ____________   ___________
Net deferred tax assets                    1,381,354     1,413,301

Deferred tax liabilities:
     Excess of financial accounting
      depreciation over tax                (1,381,354)   (1,413,301)
                                         _____________   __________

Net deferred tax assets (liabilities)      $       -     $       -
                                         _____________   __________








<PAGE>


            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Net deferred tax assets (liabilities) are presented as follows:

                                       Six Months
                                          Ended       Year Ended
                                       December 31,    June 30,
                                       ___________   __________

                                           2003         2003
                                       ___________   __________
                                        (Restated)   (Restated)

     Current deferred tax asset        $ 295,935     $ 303,823
     Deferred tax liabilities           (295,935)     (303,823)
                                         _________   __________
Net deferred tax assets (liabilities)  $       -     $       -
                                        __________   __________

NOTE 8 - INCOME TAXES [Continued]

The  Company  has unused federal operating loss carryforwards at  December
31,   2003   and   2002  of  approximately  $6,621,937   and   $6,108,785,
respectively, which expire in various years through 2023.  The Company has
unused state operating loss carryforwards at December 31, 2003 and 2002 of
approximately  $9,721,667 and $9,208,515, respectively,  which  expire  in
various years through 2023.


NOTE 9 - EARNINGS (LOSS) PER SHARE

The  computations  of earnings (loss) per share and diluted  earnings  per
share  amounts  are based upon the weighted average number of  outstanding
common  shares  during the periods, plus, when their effect  is  dilutive,
additional  shares assuming the exercise of certain vested stock  options,
reduced by the number of shares which could be purchased from the proceeds
from the exercise of the stock options assuming they were exercised.

The   weighted   average  common  shares  and  common  equivalent   shares
outstanding  for the three month and six month periods ended December  31,
2003  and  2002  for purposes of calculating earnings  per  share  was  as
follows:


<TABLE>
<CAPTION>

                                                         For the Three Months Ended             For the Six Months Ended
                                                         December 31,     December 31,          December 31,      December 31,
                                                             2003             2002                  2003              2002

<S>                                                   <C>              <C>                    <C>              <C>

Weighted average common shares outstanding
used in basic earnings per share for the three
and six months ending                                     4,757,608        4,745,108              4,757,608        4,745,108

Effect of dilutive stock options                             62,027           80,291                 64,254           58,778

Weighted average common shares and potential
dilutive common equivalent shares outstanding
used in dilutive earnings per share                       4,819,635        4,825,399              4,821,862        4,803,886



</TABLE>


<PAGE>

            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 9 - EARNINGS (LOSS) PER SHARE [Continued]


At  December  31,  2003 there were 610,000 unexercised stock  options,  of
which 480,000 were held by officers and directors of the Company at prices
ranging  from  $3.58  to $4.67 per share that were  not  included  in  the
computation of earnings per share because the effect is anti-dilutive.


NOTE 10 - VALUATION AND QUALIFYING ACCOUNTS

The balance in the following valuation and qualifying accounts at December
31, 2003 and change from the year ended June 30, 2003 are as follows:

<TABLE>

<S>                                               <C>              <C>              <C>             <C>
Valuation and Qualifying                              June 30,          Expense         and Other       December 31,
Account Description                                     2003          Adjustments       Reductions          2003
                                                     (Restated)                         (Restated)       (Restated)
Allowance for doubtful accounts                         27,841                 -                -           27,841
Inventory valuation reserve                             50,000                 -                -           50,000
Deferred tax valuation allowance                     2,342,913                 -           20,983        2,363,896
Warranty reserve                                       900,000           638,018         (638,018)         900,000
Allowance for boat repurchases                         200,000                 -                -          200,000



</TABLE>
















<PAGE>



            FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY

    NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - RESTATEMENT OF FINANCIAL STATEMENTS

The accompanying financial statements have been restated to reflect an
increase in the deferred tax asset valuation allowance.  The valuation
allowance was increased by $20,983 for the six months ended December 31,
2003 to compensate for deferred tax liabilities that are available for
offsetting against the tax assets, thus reducing the amount of allowance
needed.

The Company's financial statements for the three months and the six months
ended December 31, 2003 have been restated as follows :

<TABLE>
<CAPTION>
                                           Three Months Ended             Six Months Ended
                                            December 31, 2003            December 31,  2003
                                       --------------------------     --------------------------
                                       As Reported    As Restated     As Reported    As Restated
                                       -----------    -----------     -----------    -----------
<S>                                  <C>           <C>             <C>            <C>
Statement of Operations Data:
   Deferred tax expense                 $( 15,659)    $     -0-       $( 26,997)     $       -0-
   Net income (loss)                    $ 254,718     $ 239,059       $( 90,291)     $ (117,288)
   Basic earnings (loss) per share      $     .05     $     .05       $(    .01)     $ (    .02)
   Diluted earnings (loss) per share    $     .05     $     .05       $(    .01)     $ (    .02)

Balance Sheet Data:
   Current tax assets                                                $    802,366    $    295,935
   Total current assets                                              $ 11,766,561    $ 11,260,130
   Total assets                                                      $ 29,571,864    $ 29,065,433
   Deferred tax liability                                            $  1,176,012    $    295,935
   Total liabilities                                                 $ 25,152,695    $ 24,272,618
   Retained earnings (deficit)                                       $( 5,891,617)   $( 5,517,971)
   Stockholders' equity                                              $  4,419,169    $  4,792,815
   Total liabilities &
     stockholders' Equity                                            $ 29,571,864    $29,065,433

</TABLE>



<PAGE>


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

Results of Operations

The following tables should be read in conjunction with management's
discussion and set forth, for the periods and dates indicated, certain
financial, operating and balance sheet data including, as applicable, the
percentages of net sales:

<TABLE>
<CAPTION>

                                                       For the Three Months Ended                         Change over the
                                               December 31, 2003             December 31, 2002             Prior Period
                                           _________________________     _________________________     _________________________
                                                (Restated)                                                  (Restated)

<S>                                      <C>               <C>        <C>                <C>        <C>                <C>

 Net sales                                 $   13,361,811     100.0%     $   12,941,227     100.0%     $      420,584       3.2%

 Cost of sales                                 11,334,711      84.8%         10,570,853      81.7%            763,858       7.2%

 Gross profit                              $    2,027,100      15.2%     $    2,370,374      18.3%     $     (343,274)    -14.5%

 Selling expense                           $    1,050,694                $    1,082,315                $      (31,621)
 General and administrative                $      519,353                $      431,241                $       88,112
 Interest expense                          $      216,032                $      214,475                $        1,557

 Net income                                $      239,059                $      482,459                $     (243,400)

 Boat shipments (Units shipped)                        94                           103                            (9)


</TABLE>

<TABLE>
<CAPTION>

                                                          For the Six Months Ended                        Change over the
                                               December 31, 2003             December 31, 2002             Prior Period
                                           _________________________     _________________________     _________________________
                                                (Restated)                                                  (Restated)

<S>                                     <C>                <C>        <C>                <C>        <C>                 <C>
 Net sales                                 $   26,247,043     100.0%     $   25,016,213     100.0%     $    1,230,830       4.9%

 Cost of sales                                 22,187,762      84.5%         20,739,887      82.9%          1,447,875       7.0%

 Gross profit                              $    4,059,281      15.5%     $    4,276,326      17.1%     $     (217,045)     -5.1%

 Selling expense                           $    2,406,264                $    1,915,293                $      490,971
 General and administrative                $    1,085,212                $      898,254                $      186,958
 Interest expense                          $      686,190                $      520,676                $      165,514

 Net income                                $     (117,288)               $      651,704                $     (768,992)

 Boat shipments (Units shipped)                       205                           188                            17

</TABLE>


Net  Sales  - The increase in net sales of $420,584 and $1,230,830  during
the  three and six months ended December 31, 2003, respectively,  from the
comparable periods during the previous year was primarily attributable  to
increases in the unit selling price of the boats produced by the Company.

Gross  Profit - The decrease in gross profit of $343,274 and $217,045  for
the  three  and  six  months  ended December 31,  2003,  respectively,  as
compared  to  the  comparable periods in the previous  year  is  primarily
attributable to the mix of boats sold by the Company. During  the  current
quarter and six month period the Company sold smaller boats (which have  a
lower  gross margin per sales dollar) in greater numbers than  during  the
comparable period in the previous year.

Selling  Expenses - Selling expenses for the three months  ended  December
31, 2003 were $31,621 less than the amounts incurred during the comparable
period  in  the previous year and represent normal expenditures for  sales
and  marketing  activities of the Company. The  increase  of  $490,971  in
selling  expenses during the six months ended December 31, 2003  over  the
comparable  six  months in the previous year is primarily attributable  to
higher racing, fish team and magazine advertising expenses incurred during
the first three months of the Company's fiscal year.

General  and  Administrative  Expenses  -  The  increase  in  general  and
administrative  expenses of $88,112 and $186,958 for  the  three  and  six
months  ended December 31, 2003, respectively, over the comparable periods
in  the previous year is primarily attributable to increases in accounting
department expenditures relating to compliance with certain provisions  of
the  Sarbanes - Oxley Act and increased travel costs consistent  with  the
acquisition of additional dealers during the period.

Interest  Expense  -  The interest expense during the three  months  ended
December 31, 2003 of $216,032 was $1,557 greater than the interest expense
during  the comparable quarter in the previous year and represents  normal
debt  service  for the Company. The $165,514 increase in interest  expense
during  the six months ended December 31, 2003 over the comparable  period
in  the  previous year is primarily attributable to the write-off  of  the
unamortized closing costs of a loan with G. E. Capital that was paid  with
a  partial  amount of the proceeds of the Bank of America loan during  the
quarter ended September 30, 3003.

Net  Income  - The decrease in net income of $243,400 and $768,992  during
the  three  and  six  months  ended December 31,  2003,  respectively,  as
compared  to the comparable periods during the previous year, is primarily
attributable to the mix of units sold in the first and second quarters  of
this  year  and  the  increased  selling and  general  and  administrative
expenses  experienced  in the first three months of the  Company's  fiscal
year.

Income Tax - Current tax expense is $0 and $0 for the three months and the
six months ended December 31, 2003, respectively.  Current tax expense  is
$0 and $0 for the three months and the six months ended December 31, 2002,
respectively.  Deferred tax expense is $0 and $0 for the three months  and
the  six  months  ended  December 31, 2003,  respectively.   Deferred  tax
expense  is $161,273 and $320,364 for the three months and the six  months
ended December 31, 2002, respectively.  Current tax expense of $0 for  the
quarter  and $0 for the six months ended December 31, 2003 and 2002  is  a
result  of the net operating loss carryovers from the year ended June  30,
2002.   There remains $6,637,357 for Federal and $9,737,087 for State  tax
purposes  of net operating loss carryovers available till the  years  2022
and 2023, to offset current tax expenses.  The deferred tax charge for the
quarter  and the six months ended December 31, 2002 resulted from  changes
to  the  various  temporary timing differences between  book  and  tax  as
outlined in Note 7 to the financial statements.

The  ultimate realization of the benefits from the deferred tax assets  is
dependent  upon  the  Company's future earnings, the future  tax  laws  in
effect,  and other unknown factors; all of which are uncertain. For  these
reasons  and  because the Company has generated operating  tax  losses  in
recent years, the Company has elected to provide for a tax asset valuation
allowance  of $2,363,896 at December 31, 2003 and $2,342,912 at  June  30,
2003.

     Management is of the opinion the tax asset valuation allowance will
not be required in its entirety in the coming years.  Management
estimates, based on the Company's increased backlog of orders, that sales
volumes will continue to improve in the near future thus resulting in
improved earnings and partial absorption of the net operating tax loss
carryovers.  However, at this time the Company has chosen not to reduce
the tax asset valuation allowance for the following reasons: 1.) with the
exception of order backlog, it is very difficult to predict future sales
volumes in an uncertain economy that exists at the present time; and 2.)
the Company's inconsistent earnings history in recent years, which
includes significant losses in fiscal 2001 and 2002, as well as a first
quarter loss in fiscal year 2004. Currently, the tax asset valuation
allowance is adjusted to the extent that total deferred tax assets exceed
total deferred tax liabilities.  As operating results and the economy
stabilize and future sales volumes increase, consideration will be given
to reducing or eliminating the valuation allowance.












Liquidity and Capital Resources

The  following table sets forth certain items relating to the  measurement
of   liquidity   and  capital  resources  from  the  Company's   condensed
consolidated financial statements for the dates indicated:


<TABLE>
<CAPTION>


                                                 Balances as of
                                                  December 31,              June 30,               Increase
                                                      2003                    2002                (Decrease)
                                                   (Restated)                                     (Restated)

<S>                                           <C>                    <C>                      <C>

 Cash and cash equivalents                          3,995,211               1,224,935             2,770,276

 Working capital                                    5,374,994              (3,493,945)            8,868,939

 Current Ratio                                    1.91 to 1.00            .070 to 1.00

 Quick Ratio                                      1.25 to 1.00            0.11 to 1.00


</TABLE>





Cash  increased  by $2,770,276 to $3,995,211 during the six  months  ended
December 31, 2003 from $1,224,935 at June 30, 2003. The increase  in  cash
can  generally be attributed to financing activities which arose from  the
Bank  of  America loan of $18,000,000, less $8,980,049 which was  used  to
reduce existing long-term debt, $6,065,742 which was used to reduce  trade
payables and $592,126 which was used to construct additional molds for the
new 38' express fish boat and other miscellaneous tooling projects.

Cash  used  by operations for the six months ended December 31,  2003  was
$5,436,421  and was primarily attributable to the use of loan proceeds  to
reduce  trade payables as outlined in the immediately preceding  paragraph
and   to  finance  the  increase  in  trade  receivables  and  inventories
consistent with the improvement in the Company's sales.

Management is of the opinion that cash flows will be sufficient to satisfy
its  current and future liquidity demands because of the increase in sales
volumes  and sales backlogs at the date of this filing. Subsequent  events
related to the senior debt placement strengthens the Company's ability  to
pay  off  all  the outstanding current debt and existing long-term  debts.
Additionally the Company has maintained a historical sales backlog through
the date of this report.

As  described  in  Note  4  of  the notes to  the  condensed  consolidated
financial  statements,  the  Company  is  required  to  maintain   certain
covenants  with its senior lender, Bank of America. On February  10,  2004
the  Company  renegotiated  certain of these  covenants  as  described  in
Exhibit  10 of this quarterly report. As of December 31, 2003 the  Company
was  in compliance with all covenants required by its loan agreement  with
Bank of America.

Cautionary  Statement  for  Purposes of "Safe Harbor"  Under  the  Private
Securities Reform Act of 1995.

The  Company  may  from  time  to  time make  forward-looking  statements,
including  statements projecting, forecasting, or estimating the Company's
performance  and  industry trends.  The achievement  of  the  projections,
forecasts,  or  estimates  contained in these  statements  is  subject  to
certain risks and uncertainties, and actual results and events may  differ
materially from those projected, forecasted, or estimated.
The  applicable  risks  and  uncertainties include  general  economic  and
industry  conditions that affect all businesses, as well as, matters  that
are  specific to the Company and the markets it serves.  For example,  the
achievement  of  projections, forecasts, or  estimates  contained  in  the
Company's  forward-looking  statements may be  impacted  by  national  and
international economic conditions; compliance with governmental  laws  and
regulations;  accidents  and acts of God; and all  of  the  general  risks
associated with doing business.

Risks that are specific to the Company and its markets include but are not
limited  to compliance with increasingly stringent environmental laws  and
regulations; the cyclical nature of the industry; competition  in  pricing
and  new  product  development  from  larger  companies  with  substantial
resources; the concentration of a substantial percentage of the  Company's
sales  with a few major customers, the loss of, or change in demand  from,
any  of  which  could  have  a material impact  upon  the  Company;  labor
relations  at  the  Company and at its customers and  suppliers;  and  the
Company's  single-source supply and just-in-time inventory strategies  for
some  critical boat components, including high performance engines,  which
could  adversely affect production if a single-source supplier  is  unable
for any reason to meet the Company's requirements on a timely basis.

ITEM 3: Quantitative and Qualitative Disclosures about Market Risk.

Interest  Rate Risk - At December 31, 2003, the Company owed   $17,667,394
on   a  $18,000,000  credit agreement with Bank  of  America.   The credit
agreement has  $9,000,000 at one month LIBOR plus 2.25% or 3.77%   as   of
December 31, 2003, and $9,000,000 under an interest rate swap to   provide
a   fixed   rate   of  6.02%. A hypothetical 100 basis point  increase  in
interest  rates  would  result in an approximately   $90,000  increase  in
interest  expense,  resulting  in  a  negative  impact  on  the  Company's
liquidity and results of operations.

ITEM 4: Controls and Procedures

On December 31, 2003 an evaluation was performed under the supervision and
with  the  participation of the Company's management, including the  Chief
Executive Officer and Chief Financial Officer,  of the effectiveness    of
the   design   and  operation    of   the   company's disclosure  controls
and   procedures  pursuant to  Exchange Act Rule  13a-14.  Based  on  that
evaluation,  the Chief Executive Officer and Chief Financial Officer  have
concluded  that the design and operation of these disclosure controls  and
procedures   were  effective.   Management's  review  and  evaluation   of
disclosure  and  internal  controls  and  procedures  is  an  ongoing  and
continual  process.   There  have  been  no  significant  changes  in  the
Company's  internal controls or in other factors that could  significantly
affect these controls subsequent to the date of their evaluation.

PART II.  OTHER INFORMATION.

ITEM 1:   Legal Proceedings.

There  were  no legal proceedings of a material nature during the  quarter
ending December 31, 2003

ITEM 2:   Change in Securities.

There  was no change in securities during the quarter ending December  31,
2003.

Item 3:   Defaults Upon Senior Securities.

There  were  no defaults upon senior securities during the quarter  ending
December 31, 2003.
















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

The  Company's  Annual Meeting of Shareholders was held  on  November  18,
2003.  Each  person  who  was then serving as a member  of  the  Board  of
Directors  was  re-elected for another one year term. The votes  for  each
nominee were cast as follows:



                                    Shares Voting
                                         For         Against      Withheld

Reginald M. Fountain, Jr.            3,972,730          -            535
A. Myles Cartrette                   3,972,730          -            535
George L. Deichmann, III             3,972,730          -            535
Guy L. Hecker, Jr.                   3,972,730          -            535
David C. Miller                      3,972,730          -            535
Mark L. Spencer                      3,972,730          -            535
Robert L. Stallings, III             3,972,730          -            535
David L. Woods                       3,972,730          -            535




The   shareholders  ratified  the  Board  of  Directors'  appointment   of
Pritchett,  Siler & Hardy, PA as independent certified public  accountants
for  the  Company.  The appointment was ratified by a  vote  of  3,973,099
shares  for  and  0  shares against or withheld, with 166  abstentions  or
broker nonvotes.

ITEM 5:   Other Information.

None.

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

  (1). Exhibits:
    (a). Exhibit 10, Agreement dated February 10, 2004 between Fountain
         Powerboat Industries, Inc. and Bank of America amending the covenant
         ratios contained in the original loan agreement between the parties
         executed on July 17. 2003

         Exhibit 31.1, Certification pursuant to Rule 13a-14(a)  by
         the Chief Executive Officer

         Exhibit 31.2, Certification pursuant to Rule 13a-14(a)  by
         the Chief Financial Officer

         Exhibit  32, Certifications Pursuant to 18 U.S.C.  Section 1350

    (b). No Current Reports on Form 8-K were filed by the Registrant during
         the quarter for which this report was filed.





                                 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/ Irving L. Smith
__________________________
Date:  August 09, 2004
    Irving L. Smith
    Chief Financial Officer