SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

                 X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                --
              OF THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)

                  For the Fiscal Year Ended September 30, 2000

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

                         Commission file number 0-20757

                           TRAVIS BOATS & MOTORS, INC.
             (Exact name of registrant as specified in its charter)

                                      TEXAS
                         (State or other jurisdiction of
                         incorporation or organization)

                                   74-2024798
                                (I.R.S. Employer
                             Identification Number)

             5000 Plaza on the Lake, Suite 250, Austin, Texas 78746
                    (Address of principal executive offices)


       Registrant's telephone number, including area code: (512) 347-8787
        Securities registered pursuant to Section 12(b) of the Act: None
                 Securities registered pursuant to Section 12(g)
                                  of the Act:

                          Common Stock, $.01 Par Value
                                (Title of class)

         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  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.      Yes       No    X
                                            ---        ---

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated by reference in Part III of this Report on Form 10-K or
any amendment to this Report on Form 10-K.   ________

         The aggregate  market value of the voting stock (which  consists solely
of  shares of Common  Stock)  held by  non-affiliates  of the  Registrant  as of
December 28, 2000,  (based upon the last reported  price of $3.00 per share) was
approximately $8,940,615 on such date.

         The number of shares of the issuer's  Common Stock,  par value $.01 per
share,  outstanding  as of December 28, 2000 was 4,381,027,  of which  2,980,205
shares were held by non-affiliates.

         Documents  Incorporated by Reference:  Portions of  Registrant's  Proxy
Statement  relating to the 2001  Annual  Meeting of  Shareholders  to be held in
February 2001, have been incorporated by reference herein (Part III).


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                  TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES

                               REPORT ON FORM 10-K

                                TABLE OF CONTENTS

                                                                                                                PAGE
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<S>                                                                                                          <C>
PART I .......................................................................................................... 6

   Item 1.  Business..............................................................................................6

   Item 2.  Properties...........................................................................................12

   Item 3.  Legal Proceedings....................................................................................14

   Item 4.  Submission of Matters to a Vote of Security Holders..................................................14

PART II  ........................................................................................................14

   Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters.................................14

   Item 6.  Selected Financial Data..............................................................................15

   Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations................16

   Item 7A  Quantitative and Qualitative Disclosures About Market Risk...........................................25

   Item 8.  Financial Statements.................................................................................25

   Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................25

PART III ....................................................................................................... 26

   Item 10.  Directors and Executive Officers....................................................................26

   Item 11.  Executive Compensation..............................................................................26

   Item 12.  Security Ownership of Certain Beneficial Owners and Management......................................26

   Item 13.  Certain Relationships and Related Transactions......................................................26

PART IV ........................................................................................................ 26

   Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.....................................26

      Travis Boats & Motors, Inc. and Subsidiaries Consolidated Financial Statements............................F-1
      Report of Independent Auditors............................................................................F-2
      Travis Boats & Motors, Inc. and Subsidiaries Consolidated Balance Sheets..................................F-3
      Travis Boats & Motors, Inc. and Subsidiaries Consolidated Statements of Income............................F-5
      Travis Boats & Motors, Inc. and Subsidiaries Consolidated Statements of Stockholders' Equity..............F-6
      Travis Boats & Motors, Inc. and Subsidiaries Consolidated Statements of Cash Flows........................F-7
      Travis Boats & Motors, Inc. and Subsidiaries Consolidated Statements of Cash Flows (continued)............F-8
      Travis Boats & Motors, Inc. and Subsidiaries Notes to Consolidated Financial Statements................F-9-23

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                                   Risk Factors

         Some  of  the   information  in  this  Report  on  Form  10-K  contains
forward-looking statements that involve substantial risks and uncertainties. You
can identify these  statements by  forward-looking  words such as "may," "will,"
"expect," "anticipate,"  "believe," "estimate," and "continue" or similar words.
You should read statements  that contain these words carefully  because they (1)
discuss our future  expectations;  (2) contain projections of our future results
of  operations  or of  our  future  financial  condition;  or  (3)  state  other
"forward-looking"  information.  We believe it is important to  communicate  our
expectations to people that may be interested.  However,  unexpected  events may
arise in the future that we are not able to predict or control. The risk factors
that we describe in this section,  as well as any other  cautionary  language in
this Report on Form 10-K, give examples of the types of  uncertainties  that may
cause our actual  performance  to differ  materially  from the  expectations  we
describe in our forward-looking  statements.  You should know that if the events
described in this section and elsewhere in this Report on Form 10-K occur,  they
could have a material  adverse  effect on our  business,  operating  results and
financial condition.

         We Depend on Strong Sales in the First Half of the Year.  Our business,
and  the  recreational  boating  industry  in  general,  is very  seasonal.  Our
strongest sales period begins in January, because many boat and recreation shows
are held in that month.  Strong sales demand  continues from January through the
summer months. Of our average annual net sales over the last three fiscal years,
over 25%  occurred in the quarter  ending  March 31 and over 40% occurred in the
quarter  ending June 30. With the  exception of our store  locations in Florida,
our sales are generally  much lower in the quarter  ending  December 31. Because
the overall sales level in the December quarter are much less than in the months
with warmer  weather,  we generally  do not make a profit in the quarter  ending
December 31.  Because of the  difference  in sales in the warm spring and summer
months  versus  the cold fall and winter  months,  if our sales in the months of
January  through June are  significantly  lower than we expect,  we may not earn
profits or we may lose money and have a net loss.  This experience may lead to a
material adverse effect on our business, our operating results and our financial
condition.  See "Our Sales Depend on Good Weather" and "Management's  Discussion
and Analysis of Financial Condition and Results of Operations."

         Our  Sales  Depend  on Good  Weather.  Our  business  also  depends  on
favorable weather conditions.  For example,  too much or too little rain, either
of which may result in dangerous or inconvenient  boating conditions,  can force
boating  areas to close and  severely  limit our sales.  A long  winter can also
reduce our selling  season.  Hurricanes  and other  storms  could  result in the
disruption  of our  operations  or  result  in  damage  to our  inventories  and
facilities.  We purchase insurance for storm damage, but the amount of insurance
purchased  or  coverages  we purchase  may not repay us for all weather  related
damages or disruptions to our operations.  Bad weather  conditions in the future
may  decrease  customer  demand for our boats,  which may decrease our sales and
could significantly lower the trading price of our common stock.

         General Economic Conditions in the United States and in the Areas Where
We  Have  Stores  Affect  Our  Sales.  Our  industry,  like  many  other  retail
industries,  depends on the local,  regional and national economy. High interest
rates,  unfavorable economic  developments,  volatility or declines in the stock
market,  changes to the tax law such as the  imposition  of a luxury  tax,  or a
major employer's decision to leave a certain city can all significantly decrease
the amount of money consumers are willing to spend. When these situations arise,
consumers often decide not to purchase relatively expensive, "luxury" items like
recreational  boats.  For  example,  from 1988 to 1990,  our  business  suffered
dramatically  because of the  declines  in the  financial,  oil and gas and real
estate  markets  in Texas.  If similar  downturns  in the  national  or in local
economies arise in the future, we may suffer significant operating losses. Also,
changes in federal and state tax laws, such as the imposition of luxury taxes on
new boat  purchases  also  could  influence  consumers'  decisions  to  purchase
products  we sell and could have a negative  effect on our sales.  For  example,
during  1991  and 1992  the  federal  government  imposed  a  luxury  tax on new


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recreational  boats with sales  prices in excess of  $100,000.  This  luxury tax
coincided  with a sharp decline in boating  industry  sales from a high of $17.9
billion in the late 1980s to a low of $10.3 billion in 1992.

         Our Growth  Depends on Our Ability to Acquire  and Open New Stores.  We
have grown primarily  through the acquisition of recreational  boat dealerships.
Our growth strategy involves significant risks. We began with one store in Texas
in 1979 and,  since  then,  have  opened or  acquired  38 new stores in Alabama,
Arkansas,  Florida, Georgia,  Louisiana,  Mississippi,  Oklahoma,  Tennessee and
Texas.  Stores that we  acquired or opened  since we went public in June of 1996
have accounted for 46.0% of our net sales in fiscal year 1998,  60.2% of our net
sales in fiscal  year 1999 and 66.6% of our net sales in fiscal  year  2000.  By
comparison,  our comparable store sales (which are sales in stores that are open
in the same location for two  consecutive  years) have  increased 6.6% in fiscal
year 1998,  1.9% in fiscal year 1999 and  decreased by 1.1% in fiscal  2000.  We
expect our  comparable  store sales to fluctuate from the impact of (i) when and
where we acquire new store locations, (ii) the number of store locations that we
remodel or relocate to superstores, and (iii) the market conditions in the areas
or cities in which our  stores are  located.  Although  we expect  our  existing
stores to have sales growth and to remain  profitable,  most of our sales growth
is from newly added store  locations  and we may not be able to continue to grow
or  purchase  new  store  locations  at the  same  rapid  pace or on  terms  and
conditions favorable to us.

         We may  continue  to make  acquisitions  depending  upon,  among  other
things, the availability of suitable  acquisition  opportunities and our ability
to finance these transactions.  Our success in these acquisitions will depend on
our  financial  strength  at the time of  acquisition,  our  ability to hire and
retain  qualified  employees and our ability to identify markets in which we can
successfully sell our products. In addition, once we identify a store that meets
our  criteria,  our  success  will  depend on our  ability  to sell the  store's
remaining  inventory,  to convert  the store to a Travis  Boating  Center and to
attract new customers to the store after the  conversion.  Our inability to meet
our planned  growth  potential  will  severely  impact our  business,  operating
results and financial condition.

         Besides  acquiring  existing  stores and  converting  them into  Travis
Boating Centers,  we plan to build new stores in certain cities or towns that do
not have other boat  retailers  that we can  purchase or would like to purchase.
Our success in building and operating new  facilities  will depend on whether we
obtain reliable  information about each potential  market,  such as how many and
what type of boats  have  previously  been sold in the  market.  We must then be
certain  that the prices of our boats are  competitive  with other boat  dealers
that sell boats in the market so that we can sell  enough  boats to operate  our
store  profitably.  We cannot promise or be certain that we will be able to open
and  operate  new  stores  in a  time  frame  that  we  are  expected  to by our
shareholders  or  that  we  can  operate  stores  on  a  profitable  basis.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations. "

         Our  Success  Will  Depend on How Well We Manage  Our  Growth.  We have
undergone a period of rapid  growth and,  consequently,  we have spent much time
and effort in  acquiring  and opening new stores.  Although we believe  that our
systems,  procedures and controls are adequate to support our growth,  we cannot
assure that this is the case.  In addition,  our growth will impose  substantial
added  responsibilities on our existing senior management  including the need to
identify, recruit and integrate new senior level managers. Management may not be
able to oversee the growth  efficiently or to implement  effectively  our growth
and operating  strategies.  Our inability to manage our growth would result in a
significant and severe financial impact on our business,  operating  results and
financial condition.

         We  Completed  Installation  of a New MIS System in Each of Our Stores,
Which May Not Operate  Effectively.  During the 1999 and 2000 fiscal  years,  we
completed the installation of a new management information system to monitor and
manage our  geographically  dispersed stores.  This system is now operational in
each of our locations. We believe that our company is among the first to install
this management  information system on a large scale, fully centralized  network
architecture.  Accordingly,  we are testing  the  continued  application  of the
system in a large scale  multiple  user  network  that will  accommodate  future
growth in the number of store  locations  we  operate.  Any  faults,  defects or


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networking  limitations  in this  system  could harm our  ability to operate our
stores  and would  result in a  significant  impact on our  business,  operating
results and financial condition.

         Our Suppliers  Could Increase the Prices They Charge Us or Could Decide
Not Sell to Us. We have entered into  non-exclusive  dealer  agreements with our
key manufacturers.  Most of these agreements are renewable each year and contain
other conditions that are standard in the industry.  Because of our relationship
with these  manufacturers  and the volumes we purchase,  we receive volume price
discounts and other favorable terms;  however,  the manufacturers may change the
prices  they  charge us for any  reason at any time or could  decide not to sell
their products to us. A change in  manufacturer's  prices or changes in industry
regulations  could have a material  adverse  effect on our  business,  financial
conditions and results of operations.

         We Rely on Two Key  Manufacturers  for Almost All of our Outboard Motor
Purchases and One of the Manufacturers has filed for Voluntary  Bankruptcy under
Chapter 11. Our success depends to a significant extent on the continued quality
and popularity of the products of our  manufacturers.  We have purchased  almost
all of our  outboard  motors from two  manufacturers.  In fiscal  year 1998,  we
purchased nearly all of the outboard motors we use on our Travis Edition line of
recreational boats from Outboard Marine Corporation ("OMC"), which makes Johnson
outboard motors. In fiscal years 1999 and 2000 we also purchased outboard motors
from Brunswick Corporation, which makes Mercury outboard motors.

         On  December  22,  2000,  OMC filed for relief  with the United  States
Bankruptcy  Court  under  Chapter  11  bankruptcy.  The  bankruptcy  filing  has
terminated our master  agreement  under which we purchased  outboard motors from
OMC, which otherwise would have expired on June 30, 2001. OMC has indicated that
it is trying to locate buyers for its assets,  but at the date of this Report on
Form 10-K, none had been obtained.  We have not received  notification  from the
Bankruptcy Court as to any terms of the bankruptcy,  including,  but not limited
to,  whether  OMC  warranty  obligations  will be  honored  or when,  if at all,
production  and shipment of outboard  engines or parts and  accessories  for the
engines will resume. As of September 30, 2000, we had approximately $6.9 million
of OMC  outboard  engines in stock.  If we cannot  find  alternative  sources of
outboard engines at similar quality and prices,  we would  experience  inventory
shortfalls  which,  if severe enough,  could cause  significant  disruptions and
delays in our sales and, therefore,  harm our financial condition.  Also, if OMC
or we are unable to secure warranty  coverage for the outboard  engines,  we may
experience  reduced  demand  for the OMC  outboard  engines  which  could  cause
significant  disruptions  and  delays  in our  sales  and,  therefore,  harm our
financial condition.

         Our  agreement  with  OMC  included  a  provision  that  OMC  would  be
responsible  for and pay interest  expense on certain of our outboard motors for
the months generally from August through June of each year. OMC also had certain
obligations  with our lenders that required them to help  re-market,  or in some
cases including if we were insolvent or bankrupt,  to repurchase  these outboard
engines.  As of  September  30,  2000,  we had  approximately  $3.3  million  in
qualifying OMC outboard  engines that OMC was paying  interest  expense,  on our
behalf,  directly  to our  lenders  as  part  of this  program.  If OMC  were to
discontinue  this program  with our lenders it could  result in higher  interest
expense  incurred by us or reduce our ability to borrow money  against these OMC
outboard engines and therefore harm our financial position.

         We also  purchase  outboard  engines from  Brunswick  Corporation.  The
purchases of outboard  engines  from this  supplier are made based on the volume
price discounts and other terms of a master agreement  expiring in June of 2001.
The  agreement  may be  canceled,  however,  if we do not  buy  certain  minimum
quantities  or if the  manufacturer  cannot  supply the quantity we need. If the
agreement were  cancelled,  modified or not renewed with similar terms, it could
result in a material  adverse  effect on our business,  financial  condition and
results of operations.  See "Part I - Operations,  Purchasing" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."


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         We  Rely  on  Several Key  Manufacturers  for  Almost All  of  our Boat
Purchases

         We also buy much of our boat inventory from Genmar Industries, Inc., or
"Genmar".  For example,  in fiscal year 1998 we purchased 17.7% of our inventory
from Genmar,  in fiscal year 1999 we purchased 12.0%, and in fiscal year 2000 we
purchased 32.7% from Genmar.  The purchases of boats from this supplier are made
based on the  volume  price  discounts  and  other  terms of a master  agreement
expiring in dates ranging from July 2001 to July 2003. In addition,  we purchase
a large percentage of the annual production of several other boat manufacturers.
See "Part I - Operations,  Purchasing" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

         If our sales  increase,  these key  manufacturers  may need to increase
their  production  or we may need to locate other  sources to purchase  outboard
motors or boats.  If our  suppliers  cannot  produce more or decide not to renew
their  contracts  with us,  and we cannot  find  alternative  sources at similar
quality and prices,  we would experience  inventory  shortfalls which, if severe
enough,  could  cause  significant  disruptions  and  delays in our  sales  and,
therefore,  harm our financial condition. In addition the timing, structure, and
amount  of   manufacturer   sales   incentives   could  impact  the  timing  and
profitability of our sales.

         Certain Laws and Contracts  May Keep Us From  Entering New Markets.  We
may be required to obtain the permission of  manufacturers to sell their product
before we enter new markets. We received permission from some key manufacturers,
including Outboard Marine Corporation,  to sell their product in the areas where
we have recently expanded. We have not, however,  received universal approval to
sell all of our products in all new markets. If our manufacturers do not give us
permission to sell their products in markets where we plan to expand, we will be
forced  to  find  alternative  supply  sources.   Besides  these  manufacturers'
restrictions,  there are also legal  restrictions on our business.  For example,
the state of Oklahoma has adopted laws that  restrict the locations of competing
boat  dealers.  While  these  types of laws are not  common,  they  could have a
significant effect on our industry if other states pass similar restrictions.

         We  May  Not  Be  Able  To  Respond   Effectively  To  The  Significant
Competition We Face. We operate in very competitive conditions.  We must compete
generally with other businesses trying to sell  discretionary  consumer products
and also face  intense  competition  from other  recreational  boat  dealers for
customers,  quality  products,  store  locations  and boat show  space.  We rely
heavily on boat shows to generate  sales. If we are limited in or prevented from
participating in boat shows in our markets or in markets we are targeting,  this
limited  participation  could have a negative effect on our business,  financial
condition and results of operation.

         Within our  industry,  our main  competitors  are single  location boat
dealers.  We  compete  with other  dealers  based on the  quality  of  available
products,  the price and value of the products and customer service. To a lesser
extent,  we  also  compete  with  national  specialty  marine  stores,   catalog
retailers,  sporting good stores and mass merchants,  especially with respect to
parts and accessories.  We face significant  competition in the markets where we
currently operate and in the markets we plan to enter. We believe that the trend
in the  boating  industry  is for  manufacturers  to include  more  features  as
standard  equipment on boats and for other dealers to offer packages  comparable
to our packages.  Some of our  competitors,  especially  those that sell boating
accessories,  are large  national  or regional  chains  that have  substantially
greater financial,  marketing and other resources than we do. We cannot give any
assurances  that we will be able to  effectively  compete in the retail  boating
industry in the future.

         Our Substantial  Indebtedness Could Restrict Our Operations and Make Us
More Vulnerable to Adverse Economic Conditions. We have had and will continue to
have a significant amount of indebtedness. Our growth strategy may require us to
secure  significant  additional  capital.  Our future capital  requirements will
depend upon the size,  timing and the structure of future  acquisitions  and our
working capital. Any borrowings to finance future operations, asset purchases or
acquisitions  could  make us more  vulnerable  to a  downturn  in our  operating
results,  a downturn in economic  conditions  or increases in interest  rates on
portions of debt that have variable interest rates.


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         Our ability to make payments on our indebtedness depends on our ability
to  generate  cash  flow in the  future.  If our cash flow  from  operations  is
insufficient to meet our debt service requirements, we could be required to sell
additional equity securities,  refinance our obligations or dispose of assets in
order  to  meet  our  debt  service  requirements.   In  addition,   our  credit
arrangements  generally  contain  financial and operational  covenants and other
restrictions with which we must comply.  Adequate financing may not be available
if and when we need it or may not be  available on terms  acceptable  to us. Our
failure  to  achieve  required  financial  and  other  covenants  or  to  obtain
sufficient  financing on favorable  terms and  conditions  could have a material
adverse  effect on our business,  financial  condition and results of operations
and prospects.

         We May  Issue  Additional  Securities  That  Will  Dilute  Our  Current
Shareholders and Impact our Earnings Per Share. If we choose to raise additional
equity capital or to finance future acquisitions in whole or in part through the
issuance of common stock or debt instruments  convertible into our common stock,
our existing  shareholders would experience  dilution and our earnings per share
could also be impacted by the issuance of additional shares of capital stock.

         Much Of Our Income Is from  Financing,  Insurance and Extended  Service
Contracts, Which Is Dependent On Third Party Lenders and Insurance Companies. We
receive a substantial part of our income from the fees we receive from banks and
other  lending  companies.  We call this type of income  Finance  and  Insurance
income,  or F&I income.  If our customers  desire to borrow money to finance the
purchase of their boat, we help the customers  obtain the financing by referring
them to certain banks that have offered to provide financing for boat purchases.
The bank or other  lending  company pays a fee to our company for each loan that
they are able to provide as a result of our referral.

         When we sell  boats we also  offer our  customers  the  opportunity  to
purchase  (i) a Service  Contract  that  generally  provides up to four years of
additional  warranty  coverage on their  boat's  motor after the  manufacturer's
original  warranty  expires,  and (ii) various types of insurance  policies that
will  provide  money to pay a customer's  boat loan if the  customer  dies or is
physically disabled.  We sell these products as a broker for unrelated companies
that specialize in these type of issues,  and we are paid a fee for each product
that we sell.  Since we only broker these products on behalf of unrelated  third
parties, our responsibility  and/or financial risk for paying claims or expenses
that are eligible to be insured by these  Service  Contracts or other  insurance
policies is limited.

         F&I income was 3.8% and 4.3% of our net sales in fiscal  years 2000 and
1999,  respectively.  This  arrangement  carries several  potential  risks.  For
example,  the  lenders we arrange  financing  through  may decide to lend to our
customers directly rather than to work through us. If the customer goes directly
to the bank to apply for a loan to  purchase  their boat we would not  receive a
fee for referral. Second, the lenders we currently refer customers to may change
the amount of fees paid or the criteria they use to make loan  decisions,  which
could reduce the number of customers that we can refer.  Also, our customers may
use the Internet or other electronic methods to find financing alternatives.  If
either of these events occur, we would lose a significant  portion of our income
and profit.

         Our Success Depends on Our Management Team. Our company depends greatly
on our key  management,  including  Mark T.  Walton,  Chairman  of the Board and
President; Ronnie L. Spradling,  Executive Vice President-New Store Development;
Michael B. Perrine, Chief Financial Officer,  Secretary and Treasurer; and other
key employees.  We have bought and are the beneficiary of key-man life insurance
policies on Mr. Walton and Mr. Perrine in the amount of $1,000,000, each, and on
Mr. Spradling in the amount of $500,000.  However,  if any of these employees or
other  key  employees  died,  became  disabled  or left  Travis  Boats for other
reasons,  their loss could have a significant  negative effect on our operations
and our financial performance.

         If Our  Products  are  Defective,  We Could be Sued.  Because  we sell,
service and custom package boats, motors and other boating equipment,  we may be
exposed  to  lawsuits  for  personal  injury and  property  damage if any of our
products  are  defective  and  cause  personal   injuries  or  property  damage.



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Manufacturers  that we purchase  product  from  generally  maintain  product and
general  liability   insurance  and  we  carry  third  party  product  liability
insurance.  We have  avoided any  significant  liability  for these risks in the
past.  However,  if a situation arises in which a claim is not covered under our
insurance  policy or is covered under our policy but exceeds the policy  limits,
it could  have a  significant  and  material  adverse  effect  on our  financial
condition.

         Our Stock Price May be  Volatile.  The price of our common stock may be
highly  volatile for several  reasons.  First, a limited number of shares of our
stock are owned by the public.  This may effect trading patterns which generally
occur  when a  greater  number of  shares  are  traded.  Second,  the  quarterly
variations in our operating results, as discussed previously,  may result in the
increase or decrease of our stock price. Third,  independent parties may release
information  regarding  pending  legislation,  analysts'  estimates  or  general
economic  or market  conditions  that effect the price of our stock.  Also,  our
stock price may be effected by the demand and the overall market  performance of
small  capitalization  stocks.  Any of these  situations  may have a significant
effect on the  price of our  common  stock or our  ability  to raise  additional
equity.  See  "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations."

         If We Issue More  Stock,  Our Stock  Price May  Decline.  The sale of a
large  number of shares of our common  stock in the public  market  could have a
material  adverse effect on the market price of the common stock. As of December
28, 2000, we own or control,  together with our officers and directors and large
shareholders,  approximately  1,400,822  shares of common  stock.  Our sale of a
large portion of these shares may decrease the price of our common stock.

         Our  Corporate  Documents  May  Prevent or  Inhibit a  Takeover  of the
Company. Our Articles of Incorporation permit us to issue up to 1,000,000 shares
of preferred stock, either all at once or in a series of issuances. Our Board of
Directors has the power to set the terms of this preferred  stock.  If we issued
this  preferred  stock,  it could  delay or  prevent a change in  control of the
company.  Also, our Articles of  Incorporation  permit the Board of Directors to
determine  the  number of  directors  and do not  specify a maximum  or  minimum
number. Our Bylaws currently provide that the Board of Directors is divided into
three classes with staggered terms.  This arrangement  could delay  shareholders
from replacing  current board members and could delay or prevent a takeover that
you may consider to be in your best interest.

PART I

         Some  of the  information  in  this  Report  on  Form  10-K,  including
statements in "Item 1. Business," and  "Management's  Discussion and Analysis of
Financial   Condition  and  Results  of  Operations"   contain   forward-looking
statements that involve  substantial risks and  uncertainties.  You can identify
these  statements  by  forward-looking  words such as "may,"  "will,"  "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words. You should
read statements that contain these words carefully  because they (1) discuss our
future expectations; (2) contain projections of our future results of operations
or  of  our  future  financial  condition;  (3)  state  other  "forward-looking"
information.  We believe it is  important to  communicate  our  expectations  to
people  that may be  interested.  However,  unexpected  events  may arise in the
future that we are not able to predict or control.  Among the factors that could
cause actual results to differ  materially  are:  general  economic  conditions,
competition and government  regulations,  as well as the risks and uncertainties
discussed in this Report on Form 10-K, and the uncertainties set forth from time
to time in the Company's  other public reports,  filings and public  statements.
All  forward-looking  statements  in this  Report  on Form  10-K  are  expressly
qualified in their entirety by the cautionary statements in this paragraph.


                                       6

<PAGE>

Item 1.  Business

         General

         Travis Boats & Motors,  Inc. ("Travis Boats", the "Company" or "we") is
a  leading  multi-state  superstore  retailer  of  recreational  boats,  motors,
trailers and related  marine  accessories  in the southern  United  States.  Our
Company, which currently operates 39 stores under the name Travis Boating Center
in Texas, Arkansas, Louisiana, Alabama, Tennessee, Mississippi, Florida, Georgia
and  Oklahoma,  seeks to  differentiate  itself from  competitors  by  providing
customers  a  unique  superstore  shopping  experience  that  showcases  a broad
selection of high quality boats, motors, trailers and related marine accessories
at firm,  clearly  posted low  prices.  Each  superstore  also  offers  complete
customer  service  and  support,   including  in-house  financing  programs  and
full-service repair facilities staffed by factory-trained mechanics.

         History

         Travis Boats was  incorporated as a Texas  corporation in 1979. As used
herein and unless otherwise  required by the context,  the terms "Travis Boats",
the "Company" and "we" shall mean Travis Boats & Motors, Inc. and its direct and
indirect subsidiaries.

         Since its founding in 1979 as a single  retail store in Austin,  Texas,
we have grown both through  acquisitions and the opening of new "start-up" store
locations. During the 1980s, we expanded into San Antonio, Texas, purchased land
and built a new  store  facility.  After  this,  we  purchased  additional  boat
retailers  that  operated  stores in the Texas  markets of  Midland,  Dallas and
Abilene.  It was  during  this  early  period  of  store  growth  that we  began
developing  the  systems  necessary  to  manage  a  multi-store   operation  and
maximizing our inventory  purchases to obtain  increased volume  discounts.  Our
success  in  operating  numerous  stores  and  maximizing  volume  discounts  on
inventory  purchases  led to the  introduction  of our  own  proprietary  Travis
Edition  packaging  concept and our philosophy of clearly posting price signs on
each of our boats held for sale.  Since  1990,  we have  opened or  acquired  34
additional  store locations in the following  states:  Texas (3),  Arkansas (4),
Louisiana  (4),  Alabama (2),  Tennessee  (5),  Mississippi  (1),  Florida (13),
Georgia (1) and Oklahoma (1).

         We sell  approximately  75 different  types of Travis Edition models of
brand-name fishing,  water-skiing and general recreational boats, such as family
ski boats,  off-shore  fishing boats,  personal  watercraft,  cabin cruisers and
yachts up to  approximately  60 feet in length.  We also sell motors,  trailers,
accessories  and  related  equipment.  Although we sell  pleasure  boats at many
different  retail  prices,  we  attempt  to price  our  product  to  maintain  a
consistent  gross profit  percentage for each of our Travis Edition models.  See
"Business Strategy - Travis Edition Concept."

         During fiscal 2000,  substantially  all of the boat units sold range in
size from 16 to 25 feet at prices ranging from $7,500 to $25,000.

         We study sales trends from the cities and states where we operate store
locations.  We  use  the  information  from  this  data  to  custom  design  and
pre-package combinations of popular brand-name boats, such as Larson, Wellcraft,
Scarab,  Bayliner,  Trophy, Sprint, Sea Ark, Fishmaster and Ranger with outboard
motors  generally  manufactured  by Outboard  Marine  Corporation  or  Brunswick
Corporation,  along  with  trailers  and  numerous  accessories,  under  our own
proprietary Travis Edition label. These signature Travis Edition packages, which
account for the vast  majority of total new boat sales,  have been  designed and
developed   in   coordination   with  the   manufacturers   and  often   include
distinguishing  features and accessories that have historically been unavailable
to, or listed as optional by, many  competitors.  We also sell  yachts,  such as
Carver, Martinique, Cruisers and Luhrs that range in length from 25 feet to over
50 feet. By providing many different  types of boats with many types of standard
features,  we attempt to offer the customer an exceptional boat at a competitive
price that is ready for immediate use and enjoyment.

         We believe  that our  Company  offers a  selection  of boat,  motor and
trailer  packages that fall within the price range of the majority of all boats,
motors and  trailers  sold in the United  States.  Our  product  line  generally
consists of boat packages  priced from $7,500 to $45,000 with  approximate  even


                                       7

<PAGE>

distribution  within this price range.  While our sales have  historically  been
concentrated on boats with retail sales prices below $25,000, we believe that as
the Company  continues to operate in Florida and enters other  markets along the
Gulf of Mexico or other new coastal areas,  that the number of off-shore fishing
boats,  cabin  cruisers and yachts will  continue to increase as a percentage of
our net sales.  Our  management  believes that by combining  flexible  financing
arrangements  with many types of boats  having broad price  ranges,  that we are
able to offer boat packages to customers with different  purchasing  budgets and
varying income levels.

         Business Strategy

         We  have  developed  a  multi-state,   chain  superstore   strategy  to
merchandise  a wide  selection  of  recreational  boats  and  accessories  . Our
objective  is  to  continue  to  grow  as  one  of  the  dominant  retailers  of
recreational  boats,  motors,  trailers and marine  accessories  in the southern
United States.  Therefore,  our strategy includes increasing the number and size
of our store  locations in the southern  United States while also  maintaining a
focus on possible cities in other regions to which we may desire to expand.  Our
merchandising strategy is based on offering customers a comprehensive  selection
of quality,  brand name boats and boating  products in a comfortable  superstore
environment. We intend to continue to build brand identity by placing our Travis
Edition  name on the many types of boating  packages  that we sell.  We also use
advertising  , open houses and other types of  marketing  events to increase our
name  recognition and our market share.  Our business  operations  emphasize the
following key elements of our business strategy:

         Travis Boating  Center  superstore.  Travis Boating Center  superstores
have a distinctive  and stylish trade dress  accented with deep blue awnings,  a
nautical neon building decoration,  expansive glass storefronts and brightly lit
interiors.  The stores range in size from  approximately  2,000 (temporary store
locations) to over 33,000 square feet and management estimates the average store
size at  approximately  21,000 square feet.  The  superstore  locations  present
customers with a broad array of boats and often over 9,000 parts and accessories
in a clean,  well-stocked,  air-conditioned shopping environment.  All boats are
typically  displayed fully rigged with motor,  trailer and a complete  accessory
package   allowing   for   the   customer's   immediate   use   and   enjoyment.
Professionally-trained  mechanics operate service bays, providing customers with
complete maintenance and repair services.

         Travis Edition  concept.  We gather and use extensive  market research,
combined  with the design  resources  of our  manufacturers,  to develop  custom
Travis Edition boating packages. Our significant purchasing power and consequent
ability  to  coordinate  designs  with  manufacturers  has  enabled us to obtain
products directly from the factory at low prices,  along with favorable delivery
schedules  and  with   distinguishing   features  and   accessories   that  have
historically  been  unavailable  to, or  listed  for sale as  options  requiring
additional charges by many competitors. At our store locations we often also add
certain  additional  features after receipt of the product to enhance our Travis
Edition  packages.  Each  Travis  Edition is a complete,  full-feature  package,
including  the boat,  motor,  trailer and numerous  additional  accessories  and
design  features  often  not  found on  competitors'  products,  thus  providing
customers with superior value. These features often may include enhanced styling
such as additional  exterior  colors,  complete  instrumentation  in dashboards,
transoms  warranted for life, canopy tops,  trolling motors,  upgraded interiors
with stereos,  wood grain  dashboards,  in-dash depth finders,  stainless  steel
motor propellers and enhanced hull design not available on other models. Each of
our Travis  Edition boats is generally  identified  by the Company's  attractive
private label logo as well as the respective manufacturer's logo.

         Unlike most  recreational  boat dealers,  we place firm sales prices on
each of our Travis Edition  packages and generally  maintain that same price for
the entire season. Prices are advertised and clearly posted on each of our boats
so that the customer receives the same price at any Travis Boating Center.  This
selling  philosophy  is  designed to reduce  customer  anxiety  associated  with
bargaining or negotiation and to offer our customer's  prices at or below prices
that they  generally  might  receive from  competitors.  We believe this pricing
strategy and low-pressure sales style provides the customer with the comfort and


                                       8

<PAGE>

confidence of having  received a better boat with more features at a lower price
than may have been obtained  through  negotiations  at competitive  stores.  Our
management believes,  this approach has promoted good customer relationships and
enhanced our  reputation  in the  industry as a leading  provider of quality and
value.

         Acquisitions.  We completed various acquisitions during fiscal 1999 and
1998. We did not have any  acquisitions in fiscal 2000. All of the  acquisitions
were asset purchases (except for Shelby Marine,  which was a stock purchase) and
have been accounted for using the purchase  method of accounting.  The operating
results  of the  companies  acquired  have  been  included  in the  consolidated
financial   statements  from  the  respective   date  of  acquisition.   In  the
acquisitions we purchased  selected assets which generally  included boat, motor
and trailer inventory,  parts and accessories  inventory and to a lesser extent,
property and  equipment.  A summary of our  acquisitions  during fiscal 1999 and
1998 follows (in thousands):


<TABLE>
<CAPTION>

                                                                Non-compete
                             Date of     Purchase   Tangible    Agreements     Cash  Liabilities      Notes    Stock
     Name of Company       Acquisition     Price   Net Assets  and Goodwill    Paid    Assumed       Issued   Issued
     ---------------       -----------   --------  ----------  -------------   ----  -----------     ------   ------
<S>                           <C>         <C>       <C>            <C>       <C>      <C>            <C>    <C>
Fiscal 1999
-----------
Amlin, Inc. dba Magic         01/99       $1,639    $6,019         $1,090    $1,639    $5,470        $---   $  ---
Marine
Sportsman's Haven             01/99        1,748     2,624            514     1,098     1,390         650      ---
Pier 68 Marina                02/99          738     2,218            562       408     2,043         329      ---
DSA Marine Sales &            04/99        2,147     4,798          1,597     2,147     4,248         ---      ---
Service dba The Boatworks
Shelby Marine, Inc.           06/99        1,334     3,426          1,050       809     3,142         ---      525
The New 3 Seas, Inc.          09/99        1,103     1,419          1,100       ---     1,416         ---    1,100

Fiscal 1998
-----------
Southeastern Marine            11/97       1,730    $1,390         $  280    $1,606    $  ---        $124   $  ---
Worthen Marine                 12/97         287       142            145       287       ---         ---      ---
HnR Marine                     04/98         359       359            -0-       359       ---         ---      ---
Moore's Marine                 05/98         777       376            401       777       ---         ---      ---
Rodgers Marine                 09/98         677     2,093            350       327     1,766         ---      350

</TABLE>

         Boat Show  Participation.  We also  participate in numerous boat shows,
typically held in January  through March, in each of the markets that we operate
store locations and in additional certain market areas of close proximity. These
shows are normally held at convention centers,  with all area dealers purchasing
space to display their respective product offerings.  We believe that Boat shows
and other offsite  promotions  generate a significant  amount of interest in our
Travis Edition products and often have an immediate impact on sales at a nominal
incremental  cost.  Although  total  boat show  sales are  difficult  to assess,
management  attributes a significant  portion of the second fiscal quarter's net
sales to such shows.

         F&I Products. In addition to our Travis Edition boat packages, we offer
our customers the ability to purchase  extended service  contracts and insurance
coverages, including credit life and accident/disability coverages (collectively
"F&I Products").  The extended service contracts provide customers with coverage
for mechanical engine breakdown for a period (usually 36 or 48 months) beginning
after  the  stated  warranty  term of the  original  manufacturer  expires.  The
insurance coverages provide the customer with funds to repay a portion or all of
their boat loan in the event of death, disability or other covered event.

         Since we have business relationships with numerous financial lenders we
also  offer to assist  our  customers  in  obtaining  financing  for their  boat
purchase.  If the customer  purchases F&I Products or utilizes financing we have
helped arrange,  we earn commissions based upon our total volume of sales or the
amount of mark-up we charge over the cost of the products.  F&I Products account
for a substantial  portion of the our income, the most significant  component of
which  is the  income  resulting  from  our  assisting  customers  in  obtaining
financing  for  their  purchases.  Each of the F&I  Products  and the  financial


                                       9

<PAGE>

assistance is done on behalf of unrelated third parties which generally  include
large financial institutions and insurance companies.

         Operations

         Purchasing.  It is our  belief  that we are  among the  largest  volume
buyers of outboard  motors in the United  States.  Until  fiscal  year 1999,  we
purchased  substantially  all  of  our  outboard  motors  from  Outboard  Marine
Corporation ("OMC"),  which is the manufacturer of Johnson and Evinrude outboard
motors.  Beginning  with the 1999 fiscal year, we chose to decrease our reliance
on OMC and to further  diversify  the selection of outboard  motors  offered for
sale on our Travis Edition boats.  Accordingly,  we entered into an agreement to
purchase Mercury outboard motors from Brunswick  Corporation  ("Brunswick").  We
are also among the largest  domestic volume buyer of boats from many of the boat
manufacturers that we represent.  As a result, we have built close relationships
with our  manufacturers.  Our relationships  have allowed us to have substantial
input  into the design  process  for the new boats  that are  introduced  in our
markets each year by these  manufacturers.  This design  input and  coordination
with our  manufacturers is a primary factor in the pricing,  selection and types
of the  Travis  Edition  boating  packages  that we offer  for sale in our store
locations.

         We  typically  deal  with  each  of  our  manufacturers  pursuant  to a
non-exclusive dealer agreement.  These dealer agreements are usually for one (1)
year in term  and they  typically  do not  contain  any  contractual  provisions
concerning product pricing or purchasing levels. The wholesale prices charged to
us by our  manufacturers  are  generally set each year for the entire model year
(usually  summer to  summer),  but may be  changed  at the  manufacturer's  sole
discretion.  Unlike most of our other  dealer  agreements,  we have a multi-year
term  agreement  expiring in June,  2001 with  Brunswick  to  purchase  outboard
motors, and we have agreements  expiring in dates ranging from July 2001 to July
2003 with Genmar  Industries,  Inc.  ("Genmar") to purchase  boats.  The current
agreements  with these  manufacturers  include  volume  discounts  from the then
prevailing  dealer net price over the entire term of each respective  agreement.
Although these dealer agreements have multi-year terms, each agreement generally
may be canceled by either  party for various  reasons  including  our failure to
purchase  a certain  amount of product or the  failure  by the  manufacturer  to
provide a certain amount of product that we desire to purchase.

         Approximately  32.7% and 12% of our net  purchases in fiscal years 2000
and 1999,  respectively,  were products manufactured by boat manufacturers owned
by Genmar.  The increase in purchases  from Genmar was primarily  related to the
additional  store  locations  that we opened or acquired  in Florida  which sell
Genmar's Wellcraft and Carver products. Other Genmar boat lines that we purchase
include the brands Larson,  AquaSport,  Scarab,  Logic, and Ranger. OMC supplied
products that  represented  approximately  $17.0  million,  or 10.8%,  and $13.3
million,  or 14.0%,  of our net  purchases  during  fiscal  years 2000 and 1999,
respectively.  Brunswick  supplied  Mercury  outboard  motors  that  represented
approximately  $17.6 million,  or 11.2% and $20.3 million,  or 21.4%, of our net
purchases  during fiscal years 2000 and 1999,  respectively.  The  reductions in
purchases  of outboard  motors from OMC and Mercury  have been the result of our
arranging  just in time  deliveries  of  outboard  motors  in an effort to lower
overall  inventory levels and decrease the number of days on hand that inventory
is held.

         The Company's right to display, advertise or sell some product lines in
certain markets,  including the Internet, may be restricted by arrangements with
certain manufacturers.  (See Risk Factors - We Rely on Two Key Manufacturers for
Almost All of our Outboard  Motor  Purchases  and One of the  Manufacturers  has
filed for Voluntary Bankruptcy under Chapter 11).

         Floor plan and other  short term  financing.  We  purchase  most of our
inventory by borrowing money from floor plan and other financing agreements. The
seasonal  nature of the  recreational  boating  industry  impacts the production
schedules of the  manufacturer's  that produce marine products.  During the fall
and winter months, retail sales of recreational boats diminish  significantly as
compared  to  sales  during  the warm  spring  and  summer  months.  To  provide
recreational  boating  retailers,  such as  Travis  Boats,  extra  incentive  to
purchase boating products in the  "off-season,"  manufacturer's  typically offer


                                       10

<PAGE>

product for sale at a price that includes an interest subsidy. Since retail boat
dealers  typically  utilize floor plan financing to provide  working  capital to
purchase inventory, the interest subsidy is intended to assist the retail dealer
in stocking  the product  until the selling  season.  The terms of the  interest
subsidy or assistance vary by manufacturer,  with virtually all manufacturers in
the marine industry offering such programs.  Management  believes that the types
of financing  arrangements  we utilize are standard  within the industry.  As of
September  30,  2000,  the Company and its  subsidiaries  owed an  aggregate  of
approximately  $73.3  million to our  lenders for our floor plan and other short
term financing agreements.

         Competition.  We  operate  in  a  highly  competitive  environment.  In
addition to facing  competition  generally from many other businesses seeking to
attract discretionary spending dollars, the recreational boat industry itself is
highly  fragmented,  resulting in intense  competition for customers,  access to
quality  products,  access  to boat  show  space in new  markets  and  access to
suitable store  locations.  Our Company relies heavily on boat shows to generate
sales.  If, for any reason,  we were unable to  participate in boat shows in our
existing or targeted  markets,  it could have a material  adverse  effect on our
business, financial condition and results of operations.

         Our  primary  competition  is from  boat  dealers  operating  a  single
location or several  locations in a single state and, to a lesser  degree,  with
national specialty marine stores,  catalog retailers,  sporting goods stores and
mass  merchants,  particularly  with  respect to parts and  accessories.  Dealer
competition,  which includes one other publicly traded  multi-state  retailer of
recreational  boats,  continues  to increase  based on the quality of  available
products, the price and value of the products and heightened attention levels to
customer service. There is significant competition both within markets currently
being  served by the  Company  and in new  markets  into which we plan to enter.
While we generally  compete in each of our markets  with  retailers of brands of
boats not sold by the Company in that market, it is common for other competitive
retailers to sell the same brands of outboard motors. Management believes that a
trend in the industry is for independent dealers to attempt to form alliances or
buyer's groups, for manufacturers to include more features as standard equipment
on boats  and  consequently,  and for  competitive  dealers  to  offer  packages
comparable  to those that we offer as our Travis  Edition  lines.  In  addition,
several of our competitors,  especially those selling boating  accessories,  are
large national or regional chains that may have substantially greater financial,
marketing and other resources than we may deploy. There can be no assurance that
we will be able to compete  successfully  in the retail  marine  industry in the
future.

         Impact of  Environmental  and Other Regulatory  Issues.  On October 31,
1994,  the U.S.  Environmental  Protection  Agency  ("EPA")  announced  proposed
emissions regulations for outboard marine motors. The proposed regulations would
require a 75% average reduction in hydrocarbon emissions for outboard motors and
set standards for carbon  monoxide and nitrogen oxide  emissions as well.  Under
the proposed regulations,  manufacturers began phasing in low emission models in
1998 and had  approximately  nine  years to  achieve  full  compliance.  Certain
states,  such as California,  are proposing and adopting  legislation that would
require low emission  outboards and other engines on certain  bodies of water or
more aggressive  phase-in schedules than the EPA. Based on these regulations and
public demand for cleaner burning motors,  our primary outboard motor suppliers,
Outboard Marine  Corporation  ("OMC") and Brunswick each have begun the phase-in
process for the new EPA compliant outboard motors.  However,  in fiscal 2000 and
1999, we only  purchased  minimal  quantities of the new EPA compliant  outboard
motors  as a  result  of a  lack  of  supply  of the  new  product  since  these
manufacturers are still in the initial stages of the new product's release.  The
boat models we sold with the new EPA compliant outboards in fiscal 2000 and 1999
generally were priced  approximately  $2,000 higher than those with  traditional
outboard motors.  Management anticipates retail prices to generally be from $500
to $1,500  higher for the new EPA compliant  outboards  depending on the motor's
horsepower.  Management, based upon discussions with OMC and Brunswick, believes
that the higher  retail  costs will be offset by enhanced  fuel  efficiency  and
acceleration  speed,  as  well  as  reduced  maintenance  costs  of the  new EPA
compliant  outboard motors.  Costs of comparable new models,  if materially more
expensive  than  previous  models,  or the  manufacturer's  inability to deliver
responsive,  fuel efficient  outboard motors that comply with EPA  requirements,
could have a material  adverse effect on our business,  financial  condition and
results of operations.


                                       11

<PAGE>

         In the ordinary  course of our business,  we are required to dispose of
certain waste  products that are regulated by state or federal  agencies.  These
products include waste motor oil, tires, batteries and certain paints. It is our
policy to use appropriately licensed waste disposal firms to handle this refuse.
If there were improper disposal of these products,  it could result in us facing
potential liability,  fees, fines or other penalties.  Although we do not own or
operate any  underground  petroleum  storage tanks,  we currently  lease several
properties  containing  above-ground  tanks,  which are subject to registration,
testing and governmental regulation.

         Additionally, certain states have required or are considering requiring
a license in order to operate a recreational boat or personal watercraft.  While
such  licensing   requirements  are  not  expected  to  be  unduly  restrictive,
regulations may discourage potential first-time buyers,  thereby limiting future
sales,  which could have a material  adverse  effect on our business,  financial
condition and results of operations.

         Trademarks  and service  marks.  We have received a registered  federal
trademark for our corporate logo, which includes the name Travis Boating Center.
We also have trademark  applications  pending with the U.S. Patent and Trademark
Office for the names "Travis  Edition" and for the overall  appearance and trade
dress of our Travis  Boating Center  superstore.  There can be no assurance that
any of these applications will be granted.  However,  based on a number of years
of use,  we believe  that we have  certain  common law rights to these  marks at
least in our  current  market  areas.  Notwithstanding  the  foregoing,  we have
entered  into an agreement  with a marine  dealership  operating  in  Knoxville,
Tennessee  not to use the names  "Travis,"  "Travis  Boating  Center" or "Travis
Edition" in certain types of uses or situations within Knoxville,  Tennessee and
a 50 mile radius therefrom.

         Web    site.    We    operate    a   Web    site    under    the   name
"travisboatingcenter.com"   and   own  the  URL  for   this   name,   the   name
"boatorder.com" and numerous derivations of these names.

         Employees.  As of  September  30,  2000,  our  staff  consisted  of 701
employees,  665 of whom are full time.  The  full-time  employees  include 39 in
store level management and 48 in corporate  administration  and management.  The
Company is not a party to any collective  bargaining agreements and is not aware
of any efforts to unionize its  employees.  We consider the  relations  with our
employees to be good.

Item 2.           Properties

         We lease our  corporate  offices which are located at 5000 Plaza on the
Lake, Suite 250, Austin, Texas. We also own numerous other Travis Boating Center
locations.  The remaining facilities are leased under leases with original lease
terms  generally  ranging  from five to ten  years  with  additional  multi-year
renewal  options.  Our leases  typically call for payment of a fixed rent and in
most of the leases we are also responsible for the payment of real estate taxes,
insurance, repairs and maintenance.


                                       12

<PAGE>

<TABLE>
<CAPTION>

         The chart below reflects the status and approximate size of the various
Travis Boating Center locations operated as of December 28, 2000.

                                          Building
                                           Square      Land        Owned or          Year of Market
             Location                     Footage*    Acreage*      Leased                Entry
             --------                     --------    --------     --------          --------------
<S>                                       <C>          <C>          <C>                   <C>
Austin, Texas(1)..................        20,000       3.5           Owned                1979
San Antonio, Texas(1).............        34,500       6.5           Owned                1999
Midland, Texas(1).................        18,750       3.8           Owned                1982
Dallas, Texas(1)..................        20,000       4.2           Owned                1983
Abilene, Texas(2).................        24,250       3.7           Owned                1989
Houston, Texas(2).................        15,100       3.0          Leased                1991
Baton Rouge, Louisiana(2).........        33,200       7.5           Owned                1992
Beaumont, Texas(2)................        25,500       6.5           Owned                1994
Arlington, Texas(2)...............        31,000       6.0          Leased                1995
Heber Springs, Arkansas(2)........        26,000       9.0          Leased                1995
Hot Springs, Arkansas(2)..........        20,510       3.0           Owned                1995
New Iberia, Louisiana(4)..........        24,000       3.3          Leased                1995
Florence, Alabama(2)..............        22,500       6.0          Leased                1996
Huntsville, Alabama(3)............         2,000       3.0          Leased                1996
Winchester, Tennessee(2)..........        28,000       3.5          Leased                1996
St. Rose, Louisiana(2)............        30,000       3.5          Leased                1997
Pascagoula, Mississippi(2)........        28,000       4.1           Owned                1997
Key Largo, Florida(4).............         3,000       4.2           Owned                1997
Key Largo, Florida(4).............         3,000       2.4           Owned                1999
Ft. Walton Beach Fl. - Sales(4)...         7,000       2.9          Leased                1997
Ft. Walton Beach Fl. - Sales(4)...         7,000       2.9          Leased                1999
Ft. Walton Beach Fl.- Service(4)..         7,500       2.0          Leased                1997
Hendersonville, Tennessee(2)......        31,320       3.6          Leased                1997
Gwinnett, Georgia (1).............        25,000       5.0           Owned                1997
Claremore, Oklahoma (4)...........        15,000       2.0           Owned                1998
Bossier City, Louisiana(2)........        30,000       8.6           Owned                1998
Knoxville, Tennessee(2)...........        30,000       6.5          Leased                1998
Little Rock, Arkansas(4)..........        16,400       3.0           Owned                1999
Pine Bluff, Arkansas(4)...........        16,812       2.91         Leased                1999
Longwood, Florida(4)..............        10,000       3.1          Leased                1999
Clearwater, Florida(2)............        21,000       5.0           Owned                1999
Clearwater, Florida(4)............         9,000       3.7          Leased                1999
Jacksonville, Florida(4)..........         8,000       1.5          Leased                1999
Miami, Florida(3).................        12,000       1.0          Leased                1999
Bradenton, Florida(4).............        20,000       5.0          Leased                1999
Englewood, Florida(4).............         3,000       4.5          Leased                1999
Memphis, Tennessee(2).............        24,000       4.3          Leased                1999
Pickwick Dam, Tennessee(2)........        48,000       5.0          Leased                1999
Ft. Myers, Florida(4).............         6,000       4.0          Leased                1999
Stuart, Florida(2)................        29,000       4.0          Leased                2000
Pompano, Florida(4)...............         6,000       1.0          Leased                2000
<FN>
--------------------------
*  Square footage and acreage are approximate.
(1)       Newly constructed store.
(2)       Facility acquired/leased and converted to superstore.
(3)       Temporary facility. To be relocated.
(4)       Acquired/leased facility
</FN>
</TABLE>

                                       13
<PAGE>

Item 3.           Legal Proceedings

         The Company is not a party to any material legal  proceedings.  We are,
however,  involved in various legal proceedings arising out of our operations in
the  ordinary  course of  business.  We  believe  that the  outcome  of all such
proceedings,  even if determined  adversely,  would not have a material  adverse
effect on our business, financial condition or results of operations.

Item 4.           Submission of Matters to a Vote of Security Holders

         No matter was  submitted  to a vote of security  holders of the Company
during the fourth quarter of the fiscal year ended September 30, 2000.

PART II

Item 5.           Market for Registrant's Common Stock and Related Stockholder
                  Matters

         Our common  stock  trades on the Nasdaq  Stock Market under the symbol:
TRVS. As of December 28, 2000, we believe our shares are  beneficially  owned by
more than 400 shareholders.  On December 28, 2000, the last reported sales price
of the common stock on the NASDAQ National Market System was $3.00 per share.

         The following table sets forth for the period indicated, on a per share
basis, the range of high and low sales prices for our common stock during fiscal
years 2000 and 1999 as quoted by the  NASDAQ.  These  price  quotations  reflect
inter-dealer  prices,  without  adjustment  for retail  mark-ups,  mark-downs or
commissions and may not necessarily represent actual transactions:

<TABLE>
<CAPTION>

                                     Fiscal 2000 Sales Price               Fiscal 1999 Sales Price
                                     -----------------------               -----------------------
        Quarter Ended              High         Low        Ending       High         Low        Ending
        -------------              ----         ---        ------       ----         ---        ------

<S>                              <C>           <C>         <C>         <C>          <C>         <C>
December 31....................  $12.00        $8.75       $12.00      $20.50       $12.25      $20.50
March 31.......................  $13.50        $9.375      $13.25      $23.00       $16.50      $18.00
June 30........................  $12.6875      $5.125      $ 5.50      $18.00       $14.00      $14.50
September 30...................  $ 5.5625      $3.50       $ 3.6875    $16.25       $ 9.625     $ 9.625
</TABLE>


         We have never  declared or paid cash  dividends on our Common Stock and
presently  have no plans to do so. Any change in our dividend  policy will be at
the  sole  discretion  of  the  Board  of  Directors  and  will  depend  on  our
profitability,  financial  condition,  capital  needs,  future  loan  covenants,
general economic conditions,  future prospects and other factors deemed relevant
by the Board of Directors. We currently intend to retain earnings for use in the
operation  and  expansion  of our  business  and do not  anticipate  paying cash
dividends in the foreseeable  future.  Certain  covenants  contained in our loan
agreements also  effectively  restrict the payment of any dividends  without the
lender's prior consent.

                                       14
<PAGE>




Item 6.           Selected Financial Data

         The following  selected  consolidated  financial  information should be
read in  conjunction  with and is  qualified in its entirety by reference to the
consolidated  financial  statements  of the Company and the notes  thereto,  and
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations, included elsewhere in this Report on Form 10-K:

<TABLE>
<CAPTION>

                                                   FISCAL YEAR ENDED SEPTEMBER 30,

                                           1996(1)(5)   1997(1)(5)    1998(1)(5)    1999(1)(5)   2000(1)(5)
                                           ----------   ----------    ----------    ----------   ----------
                                              (in thousands, except store, per store and per share data)
<S>                                        <C>          <C>           <C>           <C>          <C>
Consolidated Statement of
  Operations Data:
  Net sales..........................      $  64,555    $  91,309     $  131,740    $  182,259   $  217,718
  Gross profit.......................         16,483       23,955         34,901        46,634       53,309
  Selling, general and
     Administrative expense..........         10,857       15,562         22,630        30,978       42,326
  Operating income...................          5,061        7,480         11,011        13,689        8,338
  Interest expense...................          1,289        1,354          2,310         3,808        6,848
  Net income.........................          2,383        3,982          5,563         6,573          897
  Basic earnings per share...........      $    0.78    $    0.96     $     1.31    $     1.53   $      .20
  Diluted earnings per share.........      $    0.78    $    0.94     $     1.26    $     1.49   $      .20
  Weighted avg. common
     shares outstanding - basic......          3,043        4,137          4,250         4,291        4,403
  Weighted avg. common
     shares outstanding - diluted....          3,043        4,252          4,417         4,409        4,446
Store Data:
  Stores open at period end..........             12           19             24            38           39
  Average sales per store(2).........      $   5,617    $   5,775     $    6,383    $    6,055   $    5,630
Percentage increase (decrease) in
  comparable store sales(3)..........            4.3%         5.7%           6.6%          1.9%        (1.1%)

</TABLE>



<TABLE>
<CAPTION>

                                                                      SEPTEMBER 30,
                                                1996        1997         1998          1999         2000
                                                ----        ----         ----           ----         ----
                                                                        (In Thousands)
<S>                                           <C>          <C>         <C>           <C>          <C>
Consolidated Balance Sheet Data:
  Cash and cash equivalents............       $ 1,533      $ 5,816     $ 4,618       $  4,125     $  2,971
  Working capital(4)...................        15,263       14,806      16,392         12,117       10,948
  Total assets.........................        31,350       59,121      69,116        125,931      129,647
  Short-term debt, including current
    maturities of notes payable........         4,661       21,447      26,105         69,547       77,895
  Notes payable less current maturities.        4,334        5,145       4,980          6,897        6,015
  Stockholders' equity.................        18,598       24,058      30,433         37,592       39,552

<FN>

(1)  The Consolidated  Statement of Operations Data and the Consolidated Balance
     Sheet Data for the fiscal years ended September 30, 1996,  1997, 1998, 1999
     and  2000  has  been  derived  from  the  audited  consolidated   financial
     statements  of the Company.  Store data has been derived from the Company's
     internal operating statements.
(2)  Includes only those stores open for the entire preceding 12-month period.
(3)  New stores or upgraded facilities are included in the comparable store base
     at the beginning of the store's thirteenth complete month of operations.
(4)  Included in the current  liabilities,  which reduce  working  capital,  are
     balloon  payments due pursuant to the terms of two real estate loans,  with
     one payment of  approximately  $3.0 million due in  November,  2000 and one
     payment  of  $597,000  due in June,  2001  (see  Subsequent  Events  in the
     consolidated financial statements of the Company and notes thereto included
     elsewhere in this Report on Form 10-K).
(5)  Includes the  operations of  acquired store  locations from each respective
     date of acquisition. See "Management's Discussion and Analysis of Financial
     Condition and Results of Operations."

</FN>
</TABLE>


                                       15



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

         The  following  discussion  should  be read  in  conjunction  with  the
consolidated  financial statements of the Company and the notes thereto included
elsewhere in this Report on Form 10-K.  The  discussion  in this section of this
Report on Form 10-K contains  forward-looking  statements that involve risks and
uncertainties.  The Company's actual results could differ  materially from those
discussed  herein.  Factors that could cause or contribute  to such  differences
include,  but are not  limited  to,  those  discussed  in  this  section,  those
discussed in "Risk Factors" and those discussed elsewhere in this Report on Form
10-K.

         Overview

         The following discussion compares fiscal years 2000 and 1999 and fiscal
years 1999 and 1998,  which  reflects the inclusion of the audited  consolidated
financial  statements  for the fiscal years ended  September 30, 2000,  1999 and
1998,  respectively.  The results of the acquisitions listed in the chart below,
from their respective dates of acquisition, are included in the discussion below
of  the  fiscal  year  in  which  such  acquisition  occurred.   There  were  no
acquisitions in fiscal 2000.

<TABLE>
<CAPTION>

         A summary of the Company's acquisitions follows (in thousands):

                                                   Tangible   Non-compete
                              Date of    Purchase     Net     Agreements     Cash   Liabilities  Notes     Stock
     Name of Company        Acquisition    Price    Assets   and Goodwill    Paid     Assumed   Issued    Issued
     ---------------        -----------  --------  --------  ------------    ----   ----------- ------    ------
<S>                           <C>          <C>      <C>          <C>         <C>        <C>       <C>     <C>
Fiscal 1999
-----------
Amlin, Inc. dba Magic         01/99        $1,639   $6,019       $1,090      $1,639     $5,470    $ --    $   --
Marine
Sportsman's Haven             01/99         1,748    2,624          514       1,098      1,390     650        --
Pier 68 Marina                02/99           738    2,218          562         408      2,043     329        --
DSA Marine Sales &            04/99         2,147    4,798        1,597       2,147      4,248      --        --
Service dba The Boatworks
Shelby Marine, Inc.           06/99         1,334    3,426        1,050         809      3,142      --       525
The New 3 Seas, Inc.          09/99         1,103    1,419        1,100         -0-      1,416      --     1,100

Fiscal 1998
-----------
Southeastern Marine           11/97        $1,730   $1,390       $  280      $1,606     $   --     $124   $   --
Worthen Marine                12/97           287      142          145         287         --       --       --
HnR Marine                    04/98           359      359           --         359         --       --       --
Moore's Marine                05/98           777      376          401         777         --       --       --
Rodgers Marine                09/98           677    2,093          350         327      1,766       --      350

</TABLE>

                                       16

<PAGE>


The following table sets forth for the periods  indicated certain financial data
as a percentage of net sales:

                         FISCAL YEAR ENDED SEPTEMBER 30,

                                       1998           1999         2000
                                       ----           ----         ----
Net sales......................        100.0%         100.0%       100.0%
Costs of goods sold............         73.5           74.4         75.5
                                       -----          -----        -----
Gross profit...................         26.5           25.6         24.5
Selling, general and
   Administrative expenses.....         17.2           17.0         19.4
Operating income...............          8.4            7.5          3.8
Interest expense...............          1.8            2.1          3.1
Other income (expense).........          0.1            0.3          0.0
                                       -----          -----        -----
Income before income taxes.....          6.7            5.7          0.7
Income tax expense.............          2.5            2.1          0.3
                                       -----          -----        -----
Net income.....................          4.2%           3.6%         0.4%
                                       =====          =====        =====


                                       17
<PAGE>


Results of Operations

Fiscal Year Ended September 30, 2000 Compared to the Fiscal Year Ended September
30, 1999

         Net sales.  Net sales  increased  by 19.4% to $217.7  million in fiscal
2000 from $182.3 million in fiscal 1999.  The primary  component of the increase
in net sales  during the 2000 fiscal  year has been the result of the Ft.  Myers
store  location  which was opened in  September,  1999 and the two newly  opened
store  locations  in Pompano and Stuart,  Florida  during the 2000 fiscal  year.
Accordingly,  of the increase in net sales of $35.4 million  during fiscal 2000,
$17.0 million, or 48.0%, is related to these three recent store locations.

         During  fiscal  2000,  the increase in net sales  included  incremental
revenues related to sales of parts/accessories, service labor and used boats, as
a result of newly added or expanded  parts/accessory  and service departments in
various  store  locations  and  the  increased  number  of  store  locations  in
operation.  Parts/accessory  sales  increased to $18.0  million,  or 8.3% of net
sales, from $15.6 million,  or 8.6% of net sales, in fiscal years 2000 and 1999,
respectively.  Service  labor sales  increased to $8.8  million,  or 4.0% of net
sales,  from $6.9 million,  or 3.8% of net sales, in fiscal years 2000 and 1999,
respectively.  Used boat sales increased to $13.9 million,  or 6.4% of net sales
in fiscal  2000,  from  $11.1  million,  or 6.1% of net  sales in  fiscal  1999.
Included in the used boat sales for fiscal 2000 are  approximately  $4.1 million
in wholesale  transactions,  some of which were related to the Company's planned
reduction in overall  inventory  levels  primarily  occurring  during the fiscal
quarter ended September 30, 2000.

          During fiscal 2000,  comparable store sales decreased by 1.1%, or $1.2
million,  (18 stores in base) versus an increase of 1.9%, or $1.5  million,  (14
stores in base) during  fiscal 1999.  Management  believes  that the  comparable
store sales  decrease was related to various  factors  including  poor  weather,
higher overall  interest  rates,  erratic levels of consumer  confidence and the
number  of  stores   eligible  for  inclusion  in  the  comparable   store  base
calculations.  The  Company  relocated  or  renovated  six  stores and opened or
acquired an additional  15 stores  during  fiscal years 2000 and 1999  rendering
such  locations to be excluded  from the  comparable  store base.  The Company's
planned acquisition  strategy and subsequent  renovation of stores to superstore
standards  is expected to  continue  to  negatively  impact the number of stores
eligible in comparable  store base  calculations  in  relationship  to the total
number of store locations operated. See "Risk Factors--Our Growth Depends on Our
Ability to Acquire and Open New Stores." As such,  comparable store  performance
is expected to remain  unstable  until a greater  number of store  locations  is
eligible in the  comparable  store base  calculations  and  factors  potentially
influencing  consumer  demand  (such as weather and consumer  confidence)  trend
favorably within our market areas.

         Included  within net sales is revenue that the Company earns related to
F&I Products. The Company, through relationships with various national and local
lenders, is able to place financing for its customers' boating purchases.  These
lenders  allow the  Company to "sell" the loan at a rate  higher  than a minimum
rate  established  by each such lender,  and the Company earns fees based on the
percentage  increase in the loan rate over the  lender's  minimum rate (the rate
"spread").  The  Company  sells  these loans  without  recourse,  except that in
certain instances the Company must return the fees earned if the customer repays
the loan or defaults in the first  120-180  days.  The Company also sells,  as a
broker, certain types of insurance (property/casualty,  credit life, disability)
and  extended  service  contracts.  The Company may also sell these  products at
amounts  over a minimum  established  cost and earn income based upon the profit
over the minimum established cost.

         Net  sales   attributable   to  F&I  Products   increased  by  6.4%  to
approximately  $8.3 million in fiscal 2000 from $7.8 million in fiscal 1999.  In
fiscal 2000, F&I income as a percentage of net sales decreased to 3.8% from 4.3%
in fiscal  1999 due  primarily  to lower  overall  yields  paid by  lenders  for
originating  customer  finance  contracts and  competitive  pressures on finance
rates (which resulted in lower net spreads achieved in the placement of customer
financing).  Decreases  in the  percentage  of customers  buying these  products
(which is referred to as  "sell-through"),  particularly  by  purchasers  of the
larger,  more expensive boats and reduced customer demand for certain  insurance
products have also been limiting factors.


                                       18

<PAGE>

         Gross profit.  Gross profit increased by 14.4% to  approximately  $53.3
million in fiscal  2000 from $46.6  million in fiscal  1999.  Gross  profit as a
percent of sales  decreased  to 24.5% in fiscal 2000 from 25.6% in fiscal  1999.
The Company  generally  seeks to maintain a gross profit margin of 21% to 23% on
its  boating  packages  and to  further  leverage  the margin  through  sales of
parts/accessories,  service  labor  and F&I  Products,  all of  which  generally
produce gross profit margins in excess of 25%.  During the 2000 fiscal year, the
gross profit  margin was  negatively  impacted by certain  events  including the
establishment of reserve  allowances on inventory in the amount of approximately
$1.3  million,  including  a reserve  of  approximately  $443,000  related to an
alleged theft and other fraudulent  activities of a single former store manager.
The Company also undertook a summer sales  campaign to reduce overall  inventory
levels to improve inventory turn and reduce carrying costs. Management estimates
the incremental expense to the gross profit to facilitate these sales promotions
and retail price reductions on inventory sold to be approximately $1.2 million.

         Net sales attributable to F&I Products, which have a significant impact
on the gross profit margin,  contributed $8.3 million,  or 15.6%, of total gross
profit in fiscal 2000,  as compared to $7.8  million,  or 16.7%,  of total gross
profit for fiscal 1999. Net sales attributable to F&I Products are reported on a
net basis and therefore all of such sales  contribute  directly to the Company's
gross profit. The costs associated with the sale of F&I Products are included in
selling, general and administrative expenses.

         Selling,  general and  administrative  expenses.  Selling,  general and
administrative  expenses increased by 36.5% to $42.3 million in fiscal 2000 from
$31.0 million for fiscal 1999. Selling,  general and administrative expenses, as
a percent of net sales,  increased to 19.4% in fiscal 2000 from 17.0% for fiscal
1999.  The increase,  both in terms of absolute  dollars and as a percent of net
sales,  was  primarily  attributable  to  increased  lease  and  other  expenses
associated  with  the  operation  of a  larger  store  network,  growth  in  the
corporate-office staffing infrastructure and increased advertising and insurance
costs associated with introducing Travis stores into new geographically  diverse
regions.

         Interest expense.  Interest expense, in absolute dollars,  increased by
81.6% to $6.9 million in fiscal 2000 from $3.8 million in fiscal 1999.  Interest
expense as a percent of net sales, increased to 3.1% in fiscal 2000 from 2.1% in
fiscal 1999. The Company's  capital  expenditures and growth in operating assets
(primarily inventory) have been financed with borrowings from various commercial
banks and finance companies. The growth in assets is the result of the Company's
larger store network,  continued  implementation  of its management  information
system,  the construction of new superstore  facilities in Atlanta,  Georgia and
San Antonio,  Texas and renovations of other store locations to conform with its
superstore standards. The higher debt levels and significantly higher short term
borrowing rates (relative to the increases in the prime rate during fiscal 2000)
have also negatively  impacted interest expense.  The Company's weighted average
interest rate on its  inventory  financing  was  approximately  6.9% and 5.5% in
fiscal years 2000 and 1999, respectively.  The Company anticipates continuing to
utilize third party financing  sources to support the growth in assets necessary
to operate a larger store network and  accordingly,  the resulting  increases in
interest  expense  associated  with  such  borrowings.  See  "Risk  Factors--Our
Substantial  Indebtedness  Could  Restrict  Our  Operations  and  Make  Us  More
Vulnerable to Adverse  Economic  Conditions" and  "Quantitative  and Qualitative
Disclosures About Market Risk."

         Net income. Net income decreased by 86.4% to approximately  $897,000 in
fiscal 2000 from $6.6 million in fiscal 1999.  While the Company  experienced an
increase in net sales during fiscal 2000, the reduction in gross profit margins,
higher levels of S,G,A expenses and the increase in interest expense  negatively
impacted net income.

Fiscal Year Ended September 30, 1999 Compared to the Fiscal Year Ended September
30, 1998

         Net sales.  Net sales  increased  by 38.4% to $182.3  million in fiscal
1999 from $131.7 million in fiscal 1998.  The primary  component of the increase
in net  sales  during  the 1999 and 1998  fiscal  years  has been the  result of
newly-opened  or  acquired  store  locations.  Accordingly,  of the fiscal  1999
increase  in net  sales,  $39.7  million,  or 78.5%,  is related to the 14 store


                                       19

<PAGE>

locations  that were newly opened or acquired.  The Company also  benefited from
growth in  comparable  store sales.  During fiscal year 1999,  comparable  store
sales  increased by 1.9%, or $1.5  million,  (14 stores in base) versus 6.6%, or
$3.7  million,  (9 stores in base) during  fiscal 1998.  See "Risk Factors - Our
Growth Depends on Our Ability to Acquire and Open New Stores."

         Growth in overall sales volume  resulted,  in part, from additional new
Travis Edition boating  packages  introduced  during fiscal 1999 and 1998. These
new additions included the Pro-Line and Polar brand boats in 1998 and Wellcraft,
Bayliner and Fishmaster boat models in fiscal 1999, as well as Mercury Motors in
November 1999.

         During fiscal 1999, the Company experienced increased parts/accessories
and  service  labor  sales of 38% and 45%,  respectively,  primarily  through an
increased store network.  Parts/accessory  sales increased to $15.6 million,  or
8.6% of net sales,  from $11.3  million,  or 8.6% of net sales,  in fiscal years
1999 and 1998,  respectively.  Service labor sales increased to $6.9 million, or
3.8% of net sales, from $4.7 million, or 3.6% of net sales, in fiscal years 1999
and 1998, respectively.  Net sales also benefited from increased used boat sales
in both dollars and as a percentage of sales. Used boat sales increased by 52.5%
to $11.1 million  (6.1% of total sales) in fiscal 1999,  from $7.3 million (5.5%
of total sales) in fiscal 1998.

         Net sales from comparable  stores in fiscal 1999 and 1998, which had 14
and 9 stores  respectively,  included in the base for calculation,  increased by
1.9% and 6.6% in fiscal 1999 and 1998,  respectively.  The Company  relocated or
renovated  three stores and opened or acquired an  additional  12 stores  during
fiscal years 1999 and 1998  rendering  such  locations  to be excluded  from the
comparable store base. The Company's planned acquisition strategy and subsequent
renovation  of stores  to  superstore  standards  is  expected  to  continue  to
negatively  impact  the number of stores  includable  in  comparable  store base
calculations in  relationship  to the total number of store locations  operated.
See "Risk  Factors--Our  Growth  Depends on Our  Ability to Acquire and Open New
Stores." As such, comparable store performance is expected to remain unstable.

         Included  within net sales is revenue that the Company earns related to
F&I Products. The Company, through relationships with various national and local
lenders, is able to place financing for its customers' boating purchases.  These
lenders  allow the  Company to "sell" the loan at a rate  higher  than a minimum
rate  established  by each such lender,  and the Company earns fees based on the
percentage increase in the loan rate over the lender's minimum rate. The Company
sells these loans without recourse, except that in certain instances the Company
must return the fees earned if the  customer  repays the loan or defaults in the
first  120-180  days.  The Company  also sells,  as a broker,  certain  types of
insurance  (property/casualty,  credit life,  disability)  and extended  service
contracts.  The Company may also sell these  products at amounts  over a minimum
established  cost  and  earn  income  based  upon the  profit  over the  minimum
established cost.

         Net  sales   attributable   to  F&I  Products   increased  by  9.2%  to
approximately  $7.8 million in fiscal 1999 from $7.1 million in fiscal 1998,  In
fiscal 1999,  F&I income as a  percentage  of net sales  decreased  from 5.4% in
fiscal 1998 to 4.3% in fiscal 1999 due to competitive pressures on finance rates
(which  resulted in lower net  spreads  achieved  in the  placement  of customer
financing),  as well as overall  decreases in the percentage of customers buying
these products (which is referred to as "sell-through"), and a reduced demand in
certain insurance products.

         Gross profit.  Gross profit increased by 33.6% to  approximately  $46.6
million in fiscal  1999 from $34.9  million in fiscal  1998.  Gross  profit as a
percent of sales  decreased  to 25.6% in fiscal 1999 from 26.5% in fiscal  1998.
The Company  generally  seeks to maintain a gross profit margin of 21% to 23% on
its boating packages and is able to further leverage the margin through sales of
parts/accessories,  service  labor  and F&I  Products,  all of  which  generally
produce gross profit margins in excess of 25%. During fiscal 1999, the Company's
gross profit margin was negatively  impacted by a temporary  reduced revenue mix
in its boating  package  margins as a result of acquisition  boat inventory that
liquidated at below Company standard  margins,  thus,  driving the Company's new
boating  package  margins down to 20.7% and used margins down to 13.4%  (Company

                                       20

<PAGE>

standard of 18-20%).  This,  combined with the 110 basis point reduction in high
yielding  F&I income,  as a percentage  of net sales,  caused the 90 basis point
drop in gross profit margin as a percentage of sales.

         Net sales attributable to F&I Products, which have a significant impact
on the gross profit margin,  contributed $7.8 million,  or 16.7%, of total gross
profit in fiscal 1999,  as compared to $7.1  million,  or 20.3%,  of total gross
profit for fiscal 1998. Net sales attributable to F&I Products are reported on a
net basis and therefore all of such sales  contribute  directly to the Company's
gross profit. The costs associated with the sale of F&I Products are included in
selling, general and administrative expenses.

         Selling,  general and  administrative  expenses.  Selling,  general and
administrative  expenses increased by 36.9% to $31.0 million in fiscal 1999 from
$22.6 million for fiscal 1998. Selling, general and administrative expenses as a
percent of net sales  decreased by 18 basis points to 17.00% in fiscal 1999 from
17.18% for fiscal 1998. In absolute  dollars,  the increase in selling,  general
and  administrative  expenses was primarily  attributable to increased  expenses
associated  with  the  operation  of a  larger  store  network,  growth  in  the
corporate-office staffing infrastructure and increased advertising and insurance
costs associated with introducing Travis stores into new geographically  diverse
regions.

         Interest expense.  Interest expense, in absolute dollars,  increased by
64.9% to $3.8 million in fiscal 1999 from $2.3 million in fiscal 1998.  Interest
expense as a percent of net sales, increased to 2.1% in fiscal 1999 from 1.8% in
fiscal 1998.  Subsequent to the  Company's  Initial  Public  Offering in June of
1996, capital expenditures and growth in operating assets (primarily  inventory)
have been financed with  borrowings  from various  commercial  banks and finance
companies.  The growth in assets is the  result of the  Company's  larger  store
network,  continued  implementation of its management information system and its
planned renovation of store locations to conform with its superstore  standards.
The higher  debt levels have  resulted  in the  increase in interest  expense in
actual  dollars and as a percentage of sales in fiscal years 1999 and 1998.  The
Company  anticipates  continuing to utilize bank financing to support the growth
in assets  necessary  to operate a larger  store  network and  accordingly,  the
resulting  increases in interest expense  associated with such  borrowings.  See
"Risk  Factors--Our  Substantial  Indebtedness Could Restrict Our Operations and
Make Us More Vulnerable to Adverse Economic  Conditions" and  "Quantitative  and
Qualitative Disclosures About Market Risk."

         Net income. Net income increased by 18.1% to approximately $6.6 million
in fiscal 1999 from $5.6 million in fiscal 1998. While the Company  continued to
benefit  from  increased  sales and  controlled  SG&A  expenses in fiscal  1999,
reduced margins,  as a percentage of sales, and the increase in interest expense
both in actual dollars and as a percent of net sales resulted in net income as a
percent of sales decreasing to 3.6% from 4.2% during the same periods.

         Quarterly Data and Seasonality

         The following table sets forth certain  unaudited  quarterly  financial
data for each of the Company's  last eight quarters and such data expressed as a
percentage  of  the  Company's  net  sales  for  the  respective  quarters.  The
information has been derived from unaudited  financial  statements  that, in the
opinion  of  management,  reflect  all  adjustments  (consisting  only of normal
recurring  adjustments)  necessary  for a fair  presentation  of such  quarterly
information.   The  operating  results  for  any  quarter  are  not  necessarily
indicative of the results to be expected for any future period.

                                       21

<PAGE>

<TABLE>
<CAPTION>
                                                                         Quarter Ended
                                           --------------------------------------------------------------------
                                           Fiscal Year 1999                                    Fiscal Year 2000

                                 Dec. 31   March 31   June 30  Sept. 30    Dec. 31     March 31     June 30     Sept.30
                                 -------   --------   -------  --------    -------     --------     -------     -------
                                                                        (In thousands)
<S>                              <C>       <C>        <C>       <C>        <C>         <C>          <C>         <C>
Net sales...................     $12,097   $43,965    $74,890   $51,307    $23,627     $57,385      $82,872     $53,904
Gross profit................       2,941    11,359     18,909    13,425      5,974      14,836       20,810      11,689
Selling, general and
   administrative expenses.        4,505     7,252     10,129     9,092      7,651      10,567       12,942      11,166
Operating income (loss).....      (1,979)    3,703      8,202     3,763     (2,301)      3,640        7,176        (177)
Interest expense............         555       948      1,170     1,135      1,374       1,768        1,902       1,804
Net income (loss)...........      (1,600)    1,777      4,459     1,936     (2,323)      1,190        3,343      (1,314)
Basic  earnings  (loss)  per        (.37)      .41       1.04       .45       (.53)        .27          .76        (.30)
share.......................

Diluted earnings (loss)             (.37)      .40       1.01       .44       (.53)        .27          .75        (.30)
per  share..................

Wtd. Avg. common shares            4,286     4,288      4,290     4,300      4,377       4,412        4,414       4,410
   outstanding - basic......
Wtd. Avg. common shares
   outstanding - diluted....       4,286     4,430      4,402     4,391      4,377       4,487        4,451       4,410

                                                               As a Percentage of Net Sales
                                            -------------------------------------------------------------------
Net sales...................       100.0%    100.0%     100.0%    100.0%     100.0%      100.0%       100.0%      100.0%
Gross profit................        24.3      25.8       25.3      26.2       25.3        25.8         25.1        21.7
Selling, general and
   administrative expenses..        37.2      16.5       13.5      17.7       32.4        18.4         15.6        20.7

Operating income (loss).....       (16.4)      8.4       11.0       7.3       (9.8)        6.3          8.7        (0.3)
Interest expense............         4.6       2.2        1.6       2.2        5.8         3.1          2.3         3.4
Net income (loss)...........       (13.2)      4.0        6.0       3.8       (9.8)        2.1          4.0        (2.4)

</TABLE>


         The Company's  business,  as well as the sales demand for various types
of boats,  tends to be highly seasonal.  Strong sales typically begin in January
with the onset of the public boat and  recreation  shows,  and continue  through
July. Over the previous three fiscal years, the average annual net sales for the
quarterly  periods ended March 31 and June 30  represented  in excess of 25% and
40%, respectively, of the Company's annual net sales. With regard to net income,
the Company  historically  generates profits in three of its fiscal quarters and
experiences  operating  losses in the quarter  ended  December 31 due to a broad
seasonal  slowdown in sales.  During the quarter ended  September 30,  inventory
typically  reaches its lowest levels and  accumulated  cash  reserves  reach the
highest  levels.  During the quarter  ended  December 31, the Company  generally
builds  inventory  levels in preparation  for the upcoming  selling season which
begins with boat and recreation  shows occurring during January through March in
certain  market  areas in which the Company  conducts  business.  Travis  Boats'
operating  results would be materially and adversely  affected if net sales were
to fall  significantly  below  historical  levels  during  the months of January
through June.

         The  Company's  business  is also  significantly  affected  by  weather
patterns.  Weather  conditions  that are  unseasonable  or unusual may adversely
affect the Company's results of operations.  For example,  drought conditions or
merely  reduced  rainfall  levels,  as well as  excessive  rain,  may affect the
Company's sale of boating  packages and related  products and  accessories.  See
"Risk Factors -We Depend on Strong Sales in the First Half of the Year" and "Our
Sales Depend on Good Weather."

         Quarterly results may fluctuate as a result of the expenses  associated
with new store openings or acquisitions.  The Company, prior to fiscal 1997, had
attempted  to  concentrate  expansion  during the  seasonal  slowdown  generally
occurring in the quarter  ending  December 31. During  fiscal 1997,  the Company
modified its  acquisition  strategy to acquire store  locations  through-out the
fiscal  year.  This was done to allow  the  Company  the  opportunity  to derive
in-season  sales from the  acquisitions as well as to provide a longer period in
which to integrate the acquired store's operations. Accordingly, the results for
any quarterly period may not be indicative of the expected results for any other
quarterly period.

                                       22

<PAGE>

          The  results  for the  quarter  ended  June 30,  2000 were  negatively
impacted  by  certain  events  including  the  establishment  of  a  reserve  of
approximately  $443,000  related  to  an  alleged  theft  and  other  fraudulent
activities of a single former store manager. In addition to this reserve amount,
the gross  profit  margin for the  quarter  ended June 30,  2000 was  negatively
impacted by sales at the same store  location  which were  transacted at amounts
equal to or below  the  Company's  actual  cost of such  products.  The  Company
believes these sales to have occurred as part of the same alleged activities.

         The results for the quarter ended  September  30, 2000 were  negatively
impacted by certain events including the establishment of reserve  allowances on
inventory in the amount of  approximately  $750,000 and the expenses of a summer
sales campaign to reduce overall  inventory  levels,  improve inventory turn and
reduce carrying costs. Management estimates the incremental expense to the gross
profit to  facilitate  these sales  promotions  and retail price  reductions  on
inventory sold during the quarter to be approximately $1.2 million.

         Liquidity and Capital Resources

         The Company's  short-term  cash needs are primarily for working capital
to support operations,  including inventory  requirements,  off-season liquidity
and store expansion. These short-term cash needs have historically been financed
with cash from  operations  and  borrowings  under the Company's  floor plan and
revolving credit lines (collectively the "borrowing  agreements").  At September
30, 2000, the Company had  approximately  $3.0 million in cash, $11.6 million in
accounts  receivable  (primarily  contracts in transit from sales,  manufacturer
rebates  receivable and other amounts due from  manufacturers) and $78.1 million
in inventories. Contracts in transit are amounts receivable from a customer or a
customer's financial  institution related to that customer's purchase of a boat.
These asset  balances  were  offset by  approximately  $6.2  million of accounts
payable and accrued  liabilities,  $73.3 million outstanding under its borrowing
agreements  and  $4.6  million  in  other  current  liabilities  and  short-term
indebtedness including current maturities of notes payable.  Included within the
current  maturities  of notes  payable are balloon  payments due pursuant to the
terms of two real estate loans,  with one payment of approximately  $3.0 million
due in  November,  2000 and one  payment  of  $597,000  due in June,  2001  (see
Subsequent  Events  in the  consolidated  audited  financial  statements  of the
Company and notes thereto included elsewhere in this Report on Form 10-K). As of
September 30, 2000, the aggregate  maximum  borrowing limits under its borrowing
agreements was $110.0 million.

         At September 30, 2000 the Company had working capital of  approximately
$11.0  million.  Working  capital,  as of September 30, 2000, was reduced by the
aforementioned balloon payments of approximately $3.6 million, which pending the
refinances  thereof are classified as a current liability (see Subsequent Events
in the  consolidated  audited  financial  statements  of the  Company  and notes
thereto included elsewhere in this Report on Form 10-K).

         In  fiscal  2000,  operating  activities  utilized  cash  flows of $2.8
million due  primarily to an increase of $2.4 million in  inventories  and a net
decrease  in  accounts  payable,  accrued  liabilities  and income  taxes in the
aggregate of $4.9 million.  These  amounts were offset  partially by net income,
before  depreciation and  amortization,  of $3.5 million,  decreases in accounts
receivable and prepaid expenses of $1.0 million, in the aggregate.

         In fiscal  1999,  operating  activities  utilized  cash  flows of $13.3
million  due  primarily  to an increase  of $18.0  million  and $7.3  million in
inventories  and accounts  receivable,  respectively.  These amounts were offset
partially by net income, before depreciation and amortization,  of $8.5 million,
an increase  in accrued  liabilities  of $456,000  and an increase in income tax
payables of $3.2 million.

         Investing  activities utilized cash flows of $5.8 million due primarily
to the 2 new store locations, newly opened in fiscal 2000, plus the construction
of a new superstore facilities in Atlanta, Georgia and San Antonio, Texas. These
activities were funded through the Company's borrowing agreements, mortgage debt
and internal cash flows.


                                       23

<PAGE>


         Financing activities in fiscal 2000 provided $7.4 million of cash flows
primarily from additional  borrowings under the Company's borrowing  agreements.
The borrowing  agreements include,  include borrowing agreements entered into in
January,  2000 with  Transamerica  Distribution  Finance  ("TDF")  and  Deutsche
Financial  Services ("DFS") in the principal  amounts of $50.0 million and $60.0
million,  respectively.  The borrowing  agreements,  which contain substantially
similar  terms and have maturity  dates of January 2003,  provide for a combined
borrowing at various  sub-prime based or LIBOR based interest rates.  Borrowings
are  pursuant to a borrowing  base  formula  and are used  primarily  to finance
inventory purchases and for general working capital requirements.  Substantially
all inventory,  accounts  receivable and intangible assets  collateralize  these
borrowing  agreements.  The terms of the borrowing  agreements also provide for:
(i)  fees for  administrative  monitoring,  (ii)  fees for  unused  portions  of
available  credit,  and (iii)  pre-payment  fees in the  event of the  Company's
termination of such floor plans prior to their stated maturity dates in January,
2003.  The  borrowing   agreements  also  include  restrictive  loan  agreements
containing various loan covenants and borrowing restrictions,  including minimum
financial ratios (governing net worth, current assets, debt to worth percentages
and cash flow  coverage  requirements  based upon  interest  expense and monthly
principal  and  interest  payments  on  debts).  The  payment  of  dividends  or
repurchases of the Company's common stock are also substantially limited.

         Effective  with the  company's  financial  results for the period ended
September  30, 2000,  the Company was in violation  of several  financial  ratio
covenants with TDF and DFS.  However,  on January 16, 2001, the Company received
written  waivers from each  lender,  and,  accordingly  amended and restated the
borrowing  agreements  to provide for modified  ratio levels for each  quarterly
period  through  and  including   September  30,  2001.  The  amended  borrowing
agreements,  which  mature in January  2003,  continue to provide for a total of
$110 million in inventory floor plan financing and working  capital  borrowings.
Interest on the borrowing  agreements  ranges from the lender's prime rate minus
0.25% to LIBOR plus 3.0%.  The Company  believes  that the  financial  covenants
established in the amended borrowing  agreements will be achieved based upon the
Company's current and anticipated  performance.  Based upon management's  Fiscal
2001  operating  plan,  including the  sale/leaseback  or refinancing of certain
assets,  if necessary,  and  availability  under the borrowing  agreements,  the
Company  believes  that  there  is  adequate  liquidity  to fund  the  Company's
operations  and to make  required  principal  payments  under the two  borrowing
agreements and other outstanding debt. However, material shortfalls or variances
from anticipated performance could require the Company to seek further amendment
to the amended borrowing agreements or alternate sources of financing.

         Management believes the  Company to be  in compliance  with  all  other
terms  and  conditions  of its  loan  agreements  and  all  proposed  terms  and
conditions  established  pursuant  to the  aforementioned  waivers of  financial
covenants.

         As of December  19,  2000,  $91.3  million  was drawn on the  borrowing
agreements and the Company could borrow an additional  $18.7  million,  of which
approximately  $2.9 million was  immediately  available for borrowing based upon
the borrowing formula. As the Company purchases inventory,  the amount purchased
increases  the  borrowing  base  availability  and typically the Company makes a
determination to borrow depending upon anticipated working capital requirements.
Various  manufacturers provide the Company interest expense assistance under the
borrowing  agreements  in order to  subsidize  the carrying  cost of  inventory.
Accordingly,  no  interest  expense  is  recorded  during  portions  of the year
(generally August through May) for certain borrowings under these  arrangements.
At September 30, 2000 and 1999, the Company had non-interest  bearing borrowings
of $5,795,000 and $9,896,000 under these  arrangements.  Discontinuance of these
agreements could result in an increase to interest expense.  (See Risk Factors -
We Rely on Two Key  Manufacturers for Almost All of our Outboard Motor Purchases
and One of the  Manufacturers  has filed for Voluntary  Bankruptcy under Chapter
11).

         Merchandise  inventories  were $78.1  million  and $75.7  million as of
September  30, 2000 and 1999,  respectively.  Accounts  receivable  decreased by
approximately  $800,000  to $11.6  million at the end of fiscal 2000 from a year
earlier.  Costs in excess of net  assets  acquired  decreased  by  approximately
$300,000 to $11.3  million in fiscal 2000 due to the scheduled  amortization  of
this asset.

         The Company had capital  expenditures of approximately  $4.8 million in
fiscal 2000 and approximately $7.7 million in fiscal 1999. Capital  expenditures
during fiscal 2000 and 1999  included the  acquisitions  of the store  locations
discussed  previously  in  the  section  Overview,  the  renovation  of  several
facilities to the Company's superstore standards and expenditures related to the
roll-out  of the  Company's  management  information  systems in  certain  store
locations.  The Company also  acquired  real estate in San Antonio,  Texas,  Key
Largo,  Florida,  Clearwater,  Florida and completed the  construction  of a new
superstores  in  Atlanta,   Georgia  and  San  Antonio,   Texas.  These  capital
expenditures were funded through the Company's  borrowing  agreements,  mortgage
debt and internal cash flows.

                                       24

<PAGE>


         The Company's  borrowing  agreements and internally  generated  working
capital should be sufficient to meet the Company's cash requirements in the near
future.

         New Accounting Standards

         In  September  1998,  the FASB  issued  SFAS No.  133,  Accounting  for
Derivative  Instruments and Hedging  Activities  ("SFAS No. 133").  SFAS No. 133
establishes  accounting and reporting  standards requiring that every derivative
instrument   (including  certain  derivative   instruments   embedded  in  other
contracts)  be  recorded in the  balance  sheet as either an asset or  liability
measured  at  its  fair  value.  SFAS  No.  133  requires  that  changes  in the
derivative's  fair value be  recognized  currently in earnings  unless  specific
hedge  accounting  criteria are met.  Special  accounting for qualifying  hedges
allows a derivative's  gains and losses to offset related  results on the hedged
item  in the  income  statement,  and  requires  that a  company  must  formally
document,  designate,  and assess the effectiveness of transactions that receive
hedge accounting.  Because of the Company's minimal use of derivative  financial
instruments,  management  does not anticipate  that the adoption of SFAS No. 133
will have a material impact on the Company's consolidated results of operations,
financial position or cash flows.

In December  1999, the SEC staff issued Staff  Accounting  Bulletin 101 "Revenue
Recognition  in  Financial   Statements"  which  provides  guidance  on  revenue
recognition issues. The Company is required to implement SAB 101 in fiscal 2001,
but  management  does not believe  the  adoption of SAB 101 will have a material
impact on the Company's financial position or results of operations.

In March 2000, the FASB issued  Interpretation  No. 44,  "Accounting for Certain
Transactions Involving Stock Compensation",  which further clarifies APB Opinion
No. 25, "Accounting for Stock Issued to Employees".  This interpretation did not
have a material  impact on the  Company's  financial  position or its results of
operations.

         Inflation

         The Company  believes that  inflation  generally has not had a material
impact on its operations or liquidity to date.

Item 7A.  Quantitative And Qualitative Disclosures About Market Risk

         At  September  30, 2000,  approximately  92.4% of the  Company's  notes
payable  and other short term  obligations  bear  interest  at  variable  rates,
generally tied to a reference rate such as the prime rate of interest of certain
banks.  During the fiscal year ended  September  30,  2000,  the average rate of
interest of such variable  rates was 6.93%.  Increases in the variable  interest
rates result in increased  interest expense and decreased earnings and cashflow.
Assuming the same level of  borrowings  for the year ended  September  30, 2000,
which averaged approximately $94,700,000,  an increase of 2% in the average rate
of interest  would  result in an increase  in fiscal  2000  interest  expense of
approximately  $1,900,000 and a decrease in fiscal 2000 net income and after-tax
cashflow of approximately $1,200,000.  Similarly, a decrease in the average rate
of interest  would  result in a decrease in interest  expense and an increase in
net income and after-tax cashflow.

Item 8.  Financial Statements

         For the financial  statements and  supplementary  data required by this
Item 8, see the Index to Consolidated Financial Statements and Schedules.

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

         Not applicable.

                                       25

<PAGE>


                                    PART III

Item 10.  Directors and Executive Officers

         There is incorporated herein by reference that portion of the Company's
proxy  statement  for the 2001  Annual  Meeting of  Shareholders  which  appears
therein  under the captions  "Item 1: Election of  Directors"  and  "Information
Concerning Directors."

Item 11.  Executive Compensation

         There is  incorporated in this Item 11 by reference that portion of the
Company's definitive proxy statement for the 2001 Annual Meeting of Shareholders
which appears under the caption "Executive Compensation."

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         There is  incorporated in this Item 12 by reference that portion of the
Company's definitive proxy statement for the 2001 Annual Meeting of Shareholders
which appears under the caption "Securities Holdings of Principal  Shareholders,
Directors, Nominees and Officers."

Item 13.  Certain Relationships and Related Transactions

         There is  incorporated in this Item 13 by reference that portion of the
Company's definitive proxy statement for the 2001 Annual Meeting of Shareholders
which   appears   under  the  captions   "Certain   Relationships   and  Related
Transactions" and "Compensation Committee Interlocks and Insider Participation."

                                    PART IV

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

(a) 1.   Financial Statements

         The  following  consolidated  financial  statements  of the Company are
included following the Index to Consolidated  Financial Statements and Schedules
on page F-1 of this Report.

     Report of Independent Auditors....................           F-2
     Consolidated Balance Sheets.......................           F-3
     Consolidated Statements of Income.................           F-5
     Consolidated Statements of Stockholder's Equity...           F-6
     Consolidated Statements of Cash Flows.............           F-7
     Notes to Consolidated Financial Statements........           F-9

                                       26

<PAGE>

(a) 2.   Financial Statement Schedules

         All schedules have been omitted  because they are not  applicable,  not
required under the  instructions,  or the information  requested is set forth in
the consolidated financial statements or related notes thereto.

(a) 3.   Exhibits

         The following  Exhibits are  incorporated by reference to the filing or
are included following the Index to Exhibits.

                                INDEX TO EXHIBITS

(a)      Exhibits:

          3.1     --Restated Articles of Incorporation  of  the  Registrant,  as
               amended.(1)
          3.2     --Restated Bylaws of the Registrant, as amended.(1)
          10.2(a) --[Intentionally left blank]
          10.2(b) --Dealer  Agreement dated as of October 13, 1995,  between the
               Company and Outboard Marine Corporation.(1)
          10.3    --[Intentionally left blank]
          10.4    --[Intentionally left blank]
          10.5(a) --[Intentionally left blank]
          10.5(b) --[Intentionally left blank]
          10.6(a) --[Intentionally left blank]
          10.6(b) --[Intentionally left blank]
          10.7(a) --[Intentionally left blank]
          10.7(b) --[Intentionally left blank]
          10.8(a) --[Intentionally left blank]
          10.8(b) --[Intentionally left blank]
          10.8(c) --[Intentionally left blank]
          10.8(d) --[Intentionally left blank]
          10.8(e) --[Intentionally left blank]
          10.8(f) --[Intentionally left blank]
          10.8(g) --[Intentionally left blank]
          10.8(h) --[Intentionally left blank]


                                       27

<PAGE>


          10.8(i) --[Intentionally left blank]
          10.9(a) --[Intentionally left blank]
          10.9(b) --[Intentionally left blank]
          10.9(c) --[Intentionally left blank]
          10.10(a)--[Intentionally left blank]
          10.10(b)--[Intentionally left blank]
          10.11   --[Intentionally left blank]
          10.12   --[Intentionally left blank]
          10.13   --[Intentionally left blank]
          10.14   --[Intentionally left blank]
          10.15--Asset  Purchase  Agreement  dated as of September  20, 1995, by
               and among Red River Marine,  Inc., Red River Marine, Inc. #2, and
               TBC Arkansas, Inc.(1)
          10.16--Promissory  Note dated  September  20,  1995,  in the  original
               principal  amount of $800,000,  Payable by TBC Arkansas,  Inc. to
               Benny Hargrove.(1)
          10.17(a)  --Promissory  Note dated as of September  20,  1995,  in the
               original   principal  amount  of  $462,145.53,   payable  by  TBC
               Arkansas, Inc. to Red River Marine, Inc. #2.(1)
          10.17(b) --Mortgage  With Power of Sale (Realty)  dated  September 20,
               1995, from TBC Arkansas, Inc. to Red River Marine, Inc. #2.(1)
          10.18--Promissory  Note dated  September  20,  1995,  in the  original
               principal amount of $230,177.16, payable by TBC Arkansas, Inc. to
               Red River Marine, Inc. and Red River Marine, Inc. #2.(1)
          10.19--Promissory  Note dated  September  20,  1995,  in the  original
               principal  amount of $108,750,  Payable by TBC Arkansas,  Inc. to
               Red River Marine, Inc. and Red River Marine, Inc. #2.(1)
          10.20 --Travis Boats and Motors, Inc. 1995 Incentive Plan.(1)
          10.21 ----[Intentionally left blank]
          10.22--Form  of  Option  Agreement  dated May 17,  1995,  between  the
               Company and Michael B. Perrine,  Ronnie L.  Spradling and Mark T.
               Walton.(1)
          10.23--Form of  Indemnification  Agreement  for Directors and Officers
               of the Company.(1)
          10.24--Management Agreement dated December 14, 1995, by and among TBC
               Management, Ltd., the Company and its
               subsidiaries.(1)
          10.25 --[Intentionally left blank]
          10.26(a) --[Intentionally left blank]
          10.26(c) --[Intentionally left blank]
          10.27(a) --Second Modification and Extension Agreement dated April 26,
               1994, between the Company and NationsBank of Texas, N.A.(1)
          10.27(b) --"504" Note dated April 28, 1994, in the original  principal
               amount of $454,000,  payable by the Company to Cen-Tex  Certified
               Development Corporation.(1)
          10.27(c) --[Intentionally left blank]
          10.27(d) --Deed of Trust dated April 28, 1994, from the Company to Wm.
               H. Harrison, Jr., Trustee.(1)
          10.28--[Intentionally left blank]


                                       28


<PAGE>

          10.29(a) --[Intentionally left blank]
          10.29(b) --[Intentionally left blank]
          10.29(c) --[Intentionally left blank]
          10.29(d) --[Intentionally left blank]
          10.30--Asset  Purchase  Agreement dated as of November 1, 1996 between
               Travis  Boating  Center  Tennessee,  Inc. and  Tri-Lakes  Marine,
               Inc.(2)
          10.31--Asset  Purchase  Agreement dated as of November 1, 1996 between
               Travis Boating Center Alabama, Inc. and Tri-Lakes Marine, Inc.(2)
          10.32--Asset Purchase  Agreement dated as of February 19, 1997 between
               Travis Boating Center Louisiana, Inc. and Bent's Marine, Inc.(3)
          10.33--Asset  Purchase  Agreement  dated as of August 1, 1997  between
               Travis  Boating  Center  Mississippi,  Inc.  and  McLeod  Marine,
               Inc.(4)
          10.34--Stock  Purchase  Agreement dated as of September 30, 1997 among
               Travis Boating Center Florida, Inc. and Frederic D. Pace and John
               W.  Reinhold  providing  for the  purchase  of 100% of the common
               stock of Adventure Boat Brokerage, Inc. (4)
          10.35--Stock  Purchase  Agreement dated as of September 30, 1997 among
               Travis  Boating  Center  Florida,   Inc.  and  John  W.  Reinhold
               providing  for  the  purchase  of  100% of the  common  stock  of
               Adventure Marine & Outdoors, Inc.(4)
          10.36--Stock  Purchase  Agreement dated as of September 30, 1997 among
               Travis Boating Center Florida, Inc. and Frederic D. Pace and John
               W.  Reinhold  providing  for the  purchase  of 100% of the common
               stock of Adventure Marine South, Inc.(4)
          10.37--[Intentionally left blank]
          10.38--Asset Purchase  Agreement dated as of November 20, 1997 between
               Travis Boating Center  Tennessee,  Inc. and  Southeastern  Marine
               Group, Inc.(4)
          10.39 --Travis Boats & Motors, Inc. 1995 Incentive Plan.(5)
          10.40--Employment  Agreement  dated  November  16,  1999  between  TBC
               Management, Ltd. and Mark T. Walton.(7)
          10.41--Employment  Agreement  dated  November  16,  1999  between  TBC
               Management, Ltd. and Michael B. Perrine.(7)
          10.42--Employment  Agreement  dated  November  16,  1999  between  TBC
               Management, Ltd. and Ronald L. Spradling.(7)
          10.43--Wellcraft Master Dealer Agreement  effective September 29. 1998
               between the Company and Wellcraft Marine Corp. (7)
          10.44--Aquasport Master Dealer Agreement  effective September 29, 1998
               between the Company and Aquasport, a division of Wellcraft Marine
               Corp. (7)
          10.45--Outboard  Marine   Corporation   Private   Label/Retail   Store
               Agreement  dated  November  13,  1998  between  the  Company  and
               Outboard Marine Corporation.(7)
          10.46--Product  Supply  Agreement  dated  June 29,  1999  between  the
               Company,  its  subsidiaries  and  Mercury  Marine,  a division of
               Brunswick Corporation. (7)
          10.47--Larson  Master Dealer  Agreement  effective  September 29, 1999
               between the Company and Larson/Glastron Boats, Inc. (7)
          10.48--Loan and  Security  Agreement,  dated as of January  31,  2000,
               between  Travis Boats & Motors,  Inc.,  along with certain of its
               subsidiaries, and Deutsche Financial Services corporation related
               to a Credit Facility of up to $60,000,000.00. (6)


                                       29

<PAGE>

          10.49--Loan and Security  Agreement  dated as of January 31, 2000,  by
               and between  Transamerica  Commercial  Finance  Corporation along
               with certain of its  subsidiaries,  and  Transamerica  Commercial
               Finance  Corporation  related to a line of credit  with a maximum
               credit amount of $50,000,000.00 (6)
          10.50--First Amendment to Loan and Security  Agreement,  dated January
               31, 2000, by and between Deutsche Financial Services  Corporation
               and  Travis  Boats & Motors,  Inc.,  along  with  certain  of its
               subsidiaries. (6)
          10.51--Letter,  dated December 29, 2000, to TBC Management,  Inc. from
               Transamerica Commercial Finance Corporation. (6)
          21.1 --List of Subsidiaries of Registrant.(7)
          23.1 --Consent of Independent Auditors of Registrant, dated January
               22, 2000.
          27.1 --Financial Data Schedule

---------------------------

(1)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 effective June 26, 1996 (File No. 333-03283).
(2)  Incorporated by reference to the Company's Annual Report on Form 10-K filed
     with the Commission on December 31, 1996 (File No. 000-20757).
(3)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     filed May 15, 1997 (File No. 000-20757).
(4)  Incorporated by reference to the Company's Annual Report on Form 10-K filed
     December 29, 1997 (File No. 000-20757).
(5)  Incorporated by reference to the Company Registration Statement on Form S-8
     (File No. 333- 41981).
(6)  Portions  of  this  exhibit  have  been  omitted  and  are  subject  to  an
     application  for   confidential   treatment   filed   separately  with  the
     Commission.
(7)  Incorporated  by reference to the  Company's  Annual  Report on Form 10-K/A
     filed with the Commission on January 13, 2000 (File No. 600-20757).

         No annual report or proxy material has been sent to security holders as
of the date of this Form 10-K;  however,  the  Company  anticipates  sending the
annual report and proxy  materials on or before any applicable  deadlines.  When
such a report and proxy  materials are furnished,  the  Registrant  will furnish
copies of such materials to the Commission.

                      [THIS SPACE INTENTIONALLY LEFT BLANK]

                                       30

<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934,  the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                TRAVIS BOATS &
                                                MOTORS, INC.



Date:  January 23, 2001.                         By: /s/ Mark T. Walton
                                                     ---------------------------
                                                     Mark T. Walton
                                                     Chairman of the Board
                                                     And President


                      POWER OF ATTORNEY TO SIGN AMENDMENTS

         KNOW ALL BY THESE PRESENTS,  that each person whose  signature  appears
below does  hereby  constitute  and  appoint  Mark T. Walton his true and lawful
attorney-in-fact  and agent for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments to the Travis Boats & Motors, Inc.
Annual Report on Form 10-K for the year ending  September 30, 2000,  and to file
the  same,  with  all  exhibits  thereto,  and  other  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorney-in-fact  and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully,  to all intents and purposes,  as they
or he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or any of them, may lawfully do or cause to be done
by virtue  hereof.  This Power of Attorney  been signed  below by the  following
persons in the capacities and on the dates indicated.

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


<TABLE>
<CAPTION>


Name                                   Title                                       Date Signed
----                                   -----                                       ------------


<S>                                    <C>                                         <C>
/s/ Mark T. Walton                     Chairman of the Board, President and        January 23, 2001
--------------------------             Director (Principal Executive Officer)
Mark T. Walton


/s/ Michael B. Perrine                 Chief Financial Officer, Secretary and      January 23, 2001
--------------------------             Treasurer (Principal Financial and
Michael B. Perrine                     Accounting Officer)


/s/ Ronnie L. Spradling                Executive Vice President-New Store          January 23, 2001
--------------------------             Development Director
Ronnie L. Spradling


                                       Director                                    January ____, 2001
--------------------------
Steven W. Gurasich, Jr.

                                       Director                                    January ____, 2001
--------------------------
Zach McClendon, Jr.


/s/ Robert C. Siddons                  Director                                    January 23, 2001
--------------------------
Robert C. Siddons


/s/ Joseph E. Simpson                  Director                                    January 23, 2001
--------------------------
Joseph E. Simpson

</TABLE>

                                       31

<PAGE>



                  Travis Boats & Motors, Inc. and Subsidiaries

                        Consolidated Financial Statements

                  Years ended September 30, 2000, 1999 and 1998

                                    Contents

Report of Independent Auditors...............................................F-2

Audited Consolidated Financial Statements

Consolidated Balance Sheets..................................................F-3
Consolidated Statements of Income............................................F-5
Consolidated Statements of Stockholders' Equity..............................F-6
Consolidated Statements of Cash Flows........................................F-7
Notes to Consolidated Financial Statements...................................F-9


                                      F-1

<PAGE>




                         Report of Independent Auditors

The Board of Directors

Travis Boats & Motors, Inc. and Subsidiaries

We have audited the accompanying  consolidated  balance sheets of Travis Boats &
Motors, Inc. and Subsidiaries as of September 30, 2000 and 1999, and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three years in the period  ended  September  30,  2000.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of Travis Boats &
Motors,  Inc.  and  Subsidiaries  as of  September  30,  2000  and  1999 and the
consolidated  results of their  operations  and their cash flows for each of the
three  years  in the  period  ended  September  30,  2000,  in  conformity  with
accounting principles generally accepted in the United States.

                                           /s/  Ernst & Young LLP

November 29, 2000, except for Notes 2 and 10 as to which the date is
January 16, 2001


                                      F-2

<PAGE>


<TABLE>
<CAPTION>


                                        Travis Boats & Motors, Inc. and Subsidiaries

                                                 Consolidated Balance Sheets

                                              (in thousands, except share data)



                                                                                  September 30,
                                                                              2000             1999
                                                                     -----------------------------------
<S>                                                                        <C>              <C>
Assets
Current assets:
   Cash and cash equivalents                                               $    2,971       $    4,125
   Accounts receivable, net of allowance for doubtful accounts of $278
     in 2000 and $247 in 1999                                                  11,616           12,421
   Prepaid expenses                                                               923            1,177
   Income taxes recoverable                                                     1,368              ---
   Inventories                                                                 78,079           75,700
   Deferred tax asset                                                              71              136
                                                                        -----------------------------------
Total current assets                                                           95,028           93,559

Property and equipment:
   Land                                                                         5,819            5,819
   Buildings and improvements                                                  14,713           11,069
   Furniture, fixtures and equipment                                            8,262            8,056
                                                                        -----------------------------------
                                                                               28,794           24,944
   Less accumulated depreciation                                               (5,878)          (4,529)
                                                                        -----------------------------------
                                                                               22,916           20,415

Deferred tax asset                                                                204              121

Goodwill, net of accumulated amortization of $986 in 2000 and $591 in
   1999                                                                         9,185            9,110
Noncompete agreements, net of accumulated amortization of $1,162 in
   2000 and $703 in 1999                                                        2,068            2,527

Other assets                                                                      246              199
                                                                        -----------------------------------
Total assets                                                               $  129,647       $  125,931
                                                                        ===================================

</TABLE>

                                      F-3

<PAGE>



<TABLE>
<CAPTION>

                                                                                  September 30,
                                                                              2000             1999
                                                                        -----------------------------------
<S>                                                                     <C>                <C>
Liabilities
Current liabilities:

   Accounts payable                                                     $     4,359        $   3,613
   Accrued liabilities                                                        1,826            3,328
   Amounts due for purchase of businesses                                       ---            2,134
   Income taxes payable                                                         ---            2,820


<PAGE>



   Floor plan and revolving line of credit payable                           73,282           68,558

   Current portion of notes payable and other short-term obligations          4,613              989
                                                                        -----------------------------------
   Total current liabilities                                                 84,080           81,442

         Notes payable, less current portion                                  6,015            6,897




Stockholders' equity:
   Serial preferred stock, $.01 par value, 1,000,000 shares
     authorized, no shares issued or outstanding                                  -                -
   Common stock, $.01 par value, 50,000,000 shares authorized,
     4,399,027 and 4,326,022 shares issued and outstanding at
     September 30, 2000 and 1999, respectively

                                                                                 44               43
   Paid-in capital                                                           15,464           14,402
   Retained earnings                                                         24,044           23,147
                                                                        -----------------------------------
Total stockholders' equity                                                   39,552           37,592
                                                                        -----------------------------------
Total liabilities and stockholders' equity                                $ 129,647        $ 125,931
                                                                        ===================================

</TABLE>

See accompanying notes.

                                      F-4
<PAGE>

<TABLE>
<CAPTION>


                                        Travis Boats & Motors, Inc. and Subsidiaries

                                             Consolidated Statements of Income

                                              (in thousands, except share data)



                                                                 Year ended September 30,
                                                        2000               1999                1998
                                                 ----------------------------------------------------------
<S>                                                  <C>                <C>                 <C>
Net sales                                            $ 217,718          $ 182,259           $ 131,740

Cost of sales                                          164,409            135,625              96,839
                                                 ----------------------------------------------------------
Gross profit                                            53,309             46,634              34,901


Selling, general and administrative expenses            42,326             30,978              22,630
Depreciation and amortization                            2,645              1,967               1,260
                                                 ----------------------------------------------------------
                                                        44,971             32,945              23,890

Operating income                                         8,338             13,689              11,011

Interest expense                                        (6,848)            (3,808)             (2,310)

Gain on sale of asset                                      ---                457                 ---

Other income (expense)                                     (26)                81                  80
                                                 ----------------------------------------------------------

Income before income taxes                               1,464             10,419               8,781

Income taxes                                               567              3,846               3,218
                                                 ----------------------------------------------------------

Net income                                           $     897          $   6,573           $   5,563
                                                 ==========================================================

Earnings per share:
   Basic                                             $     .20          $    1.53           $    1.31
                                                 ==========================================================
   Diluted                                           $     .20          $    1.49           $    1.26
                                                 ==========================================================
</TABLE>

See accompanying notes.

                                      F-5

<PAGE>

<TABLE>
<CAPTION>


                                             Travis Boats & Motors, Inc. and Subsidiaries

                                            Consolidated Statements of Stockholders' Equity

                                                               (in thousands)


                                                         Common Stock        Paid-in       Retained
                                                       --------------
                                                    Shares       Amount     Capital        Earnings         Total
                                              ------------------------------------------------------------------------
<S>                                                  <C>          <C>     <C>            <C>            <C>
Balance at September 30, 1997                        4,225        $ 42    $   13,004     $   11,011     $   24,057

    Issuance of common stock                            40           1           462              -            463
   Issuance of common stock in purchase of
     business                                           20           -           350              -            350
   Net income                                            -           -             -          5,563          5,563
                                              ------------------------------------------------------------------------
Balance at September 30, 1998                        4,285          43        13,816         16,574         30,433

    Issuance of common stock                             5           -            61              -             61
   Issuance of common stock in purchase of
     business                                           36           _           525              -            525
   Net income                                            -           -             -          6,573          6,573
                                              ------------------------------------------------------------------------
Balance at September 30, 1999                        4,326          43        14,402         23,147         37,592

    Issuance of common stock                             2           -            22              -             22
   Issuance of common stock in purchase of
     business                                           86           1         1,099              -          1,100
     Repurchase and cancellation of common
        Stock                                          (15)          -           (59)             -            (59)
   Net income                                            -           -             -            897            897
                                              ------------------------------------------------------------------------
Balance at September 30, 2000                        4,399        $ 44    $   15,464     $   24,044     $   39,552
                                              ========================================================================

</TABLE>


See accompanying notes.

                                      F-6
<PAGE>

<TABLE>
<CAPTION>



                                   Travis Boats & Motors, Inc. and Subsidiaries

                                       Consolidated Statements of Cash Flows

                                                   (in thousands)


                                                                 Year ended September 30,
                                                        2000               1999                1998
                                                  ----------------------------------------------------
<S>                                                  <C>                <C>                 <C>
Operating activities
Net income                                           $    897           $  6,573            $  5,563
Adjustments to reconcile net income to net cash
   provided by (used in) operating activities:
     Depreciation                                       1,791              1,359                 807
     Amortization                                         854                608                 453
     Deferred income taxes                                (18)                19                  17
     Changes in operating assets and
       liabilities:
         Accounts receivable                              805             (7,315)               (978)
         Prepaid expenses                                 254               (132)               (674)
         Inventories                                   (2,379)           (17,990)               (416)
         Other assets                                     (47)              (123)                105
         Accounts payable                                 746                925                (570)
         Accrued liabilities                           (1,502)              (456)                 61
         Income taxes recoverable/ income tax
           payable                                     (4,188)             3,245              (1,506)
                                                 ----------------------------------------------------------
Net cash provided by (used in) operating
   activities                                          (2,787)           (13,287)              2,862

Investing activities

Purchase of businesses                                 (1,034)            (6,101)             (4,522)
Purchase of property and equipment                     (4,762)            (7,725)             (4,301)
                                                 ----------------------------------------------------------
Net cash used in investing activities                  (5,796)           (13,826)             (8,823)



</TABLE>


                                      F-7





<PAGE>

<TABLE>
<CAPTION>

                                   Travis Boats & Motors, Inc. and Subsidiaries

                                 Consolidated Statements of Cash Flows (continued)

                                                                 Year ended September 30,
                                                        2000               1999                1998
                                                 ----------------------------------------------------------
<S>                                                  <C>               <C>                  <C>
Financing activities

Net increase in notes payable and other
   short-term obligations                            $  7,466          $  26,559            $  4,300
Net proceeds (payments) from issuance
   (repurchase) of common stock                           (37)                61                 463
                                                 ----------------------------------------------------------

Net cash provided by financing activities               7,429             26,620               4,763

Change in cash and cash equivalents                    (1,154)              (493)             (1,198)
Cash and cash equivalents, beginning of year
                                                        4,125              4,618               5,816
                                                 ----------------------------------------------------------

Cash and cash equivalents, end of year               $  2,971          $   4,125            $  4,618
                                                 ==========================================================


Supplemental Disclosure of Debt and Stock Issued in Purchase of Businesses
--------------------------------------------------------------------------

                                                                  Year ended September 30,
                                                         2000              1999                1998
                                                 ----------------------------------------------------------
Debt issued in purchase of businesses                $    ---          $   2,082            $    124
Stock issued in purchase of
   Businesses                                           1,100                525                 350

</TABLE>


See accompanying notes.

                                      F-8
<PAGE>


                  Travis Boats & Motors, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

1.  Summary of Significant Accounting Policies

Description of Business and Consolidation

Travis  Boats & Motors,  Inc.  (the  "Company")  based in  Austin,  Texas,  is a
retailer of boats,  motors,  trailers and related  watersport  accessories.  The
Company operates, in one reportable segment, at locations in the southern region
of the United States. The consolidated financial statements include the accounts
of the Company and its wholly-owned  subsidiaries.  All significant intercompany
accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The Company records  revenue on sales of boats,  motors,  trailers,  and related
watersport  parts and accessories upon delivery to or acceptance by the customer
at the closing of the  transaction.  The Company  records  revenues from service
operations at the time repair or service work is completed.

The Company refers  customers to various  financial  institutions  to assist the
customers  in obtaining  financing  for their boat  purchase.  For each loan the
financial institutions are able to fund as a result of the referral, the Company
receives  a fee.  Revenue  earned by the  Company  for  financing  referrals  is
recognized when the related boat sale is recognized. The fee amount is generally
based on the loan  amount and the term.  Generally,  the  Company  must return a
portion of the fee amount  received if the customer  repays the loan or defaults
on the loan  within a period of up to 180 days from the initial  loan date.  The
Company records such refunds,  which are not significant,  in the month in which
they occur.

Revenues from insurance and extended service agreements are recorded at the time
such agreements are executed which  generally  coincides with the date the boat,
motor and trailer is  delivered.  Such  revenues are not deferred and  amortized
over the life of the insurance or extended service agreement  policies,  because
the  Company   sells  such   policies  on  behalf  of  third  party  vendors  or
administrators. At the time of sale, the Company records a fee for insurance and
extended  service  agreements  net  of the  related  fee  that  is  paid  to the
third-party  vendors or  administrators.  Since its  inception,  the Company has
incurred no additional costs related to insurance or extended service agreements
beyond the fees paid to the third party vendors at the time of sale.

Cash and Cash Equivalents

The Company  considers all  investments  with  maturities of ninety days or less
when purchased to be cash equivalents.

Fair Value of Financial Instruments

The carrying amount of the Company's financial  instruments,  including cash and
cash  equivalents,  accounts  receivable,  accounts  payable  and notes  payable
approximates fair value.


                                      F-9

<PAGE>


Accounts Receivable

Accounts  receivable  potentially expose the Company to concentrations of credit
risk,  as defined by the  Statement of Financial  Accounting  Standards No. 105,
Disclosure of Information  about Financial  Instruments with  Off-Balance  Sheet
Risk and Financial  Instruments  with  Concentrations  of Credit Risk.  Accounts
receivable  consist  primarily of amounts due from financial  institutions  upon
sales contract funding and amounts due from vendors under rebate programs.


                                      F-10

<PAGE>


1.  Summary of Significant Accounting Policies (continued)

The accounts  receivable balances consisted of the following as of September 30,
2000 and 1999 (in thousands):

                                                          2000          1999
                                                     ------------- -------------

Trade receivables....................                   $   5,540     $   7,654
Amounts due from manufacturers.......                       5,511         4,593
Other receivables....................                         843           421
Allowance for doubtful accounts......                        (278)         (247)
                                                     ------------- -------------

                                                       $   11,616    $   12,421
                                                     ============= =============



Activity in the  Company's  allowance  for  doubtful  accounts is as follows (in
thousands):

Balance at September 30, 1997.......                  $        -0-
         Additions charged to costs
             and expenses...........                           -0-
         Write-offs of uncollectible
             accounts...............                           -0-
                                         --------------------------------------
Balance at September 30, 1998.......                           -0-
         Additions charged to costs
              and expenses..........                           247
         Write-offs of uncollectible
              accounts...............                          -0-
                                         --------------------------------------
Balance at September 30, 1999........                          247
         Additions charged to costs
              and expenses...........                          187
         Write-offs of uncollectible
              accounts...............                         (156)
                                         --------------------------------------
Balance at September 30, 2000........                 $        278
                                         ======================================


Inventories

Inventories consist of boats, motors,  trailers and related watersport parts and
accessories.  Inventories  are carried at the lower of cost or market.  Cost for
boats,  motors and  trailers is  determined  using the  specific  identification
method.  Cost for parts  and  accessories  is  determined  using  the  first-in,
first-out method.

Inventories  consisted of the  following  as of September  30, 2000 and 1999 (in
thousands):

                                                           2000          1999
                                                     ------------- -------------

New boats, motors and trailers.......                   $  65,333     $  63,874
Used boats, motors and trailers......                       5,653         4,932
Parts, accessories and other.........                       7,510         7,273
Valuation allowance..................                        (417)         (379)
                                                     ------------- -------------

                                                       $   78,079    $   75,700
                                                     ============= =============


                                      F-11

<PAGE>


1.  Summary of Significant Accounting Policies (continued)

Activity  in the  Company's  inventory  valuation  allowance  is as follows  (in
thousands):

Balance at September 30, 1997.......                  $           74
         Additions charged to costs
              and expenses..........                             199
         Inventory write-offs.......                             -0-
                                         --------------------------------------
Balance at September 30, 1998.......                             273
         Additions charged to costs
              and expenses..........                             106
              Inventory write-offs..                             -0-
                                         --------------------------------------
Balance at September 30, 1999.......                             379
         Additions charged to costs
              and expenses..........                              38
              Inventory write-offs..                             -0-
                                         --------------------------------------
Balance at September 30, 2000.......                  $          417
                                         ======================================



Property and Equipment

Property and  equipment  are stated at cost.  Provisions  for  depreciation  are
determined using the  double-declining  balance and straight-line  methods.  The
Company  uses  estimated  useful  lives  of  5 -  20  years  for  buildings  and
improvements and 5 - 10 years for furniture, fixtures and equipment.

Income Taxes

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  109,
Accounting  for Income Taxes,  deferred  income taxes are provided for temporary
differences  between the basis of assets and liabilities for financial reporting
purposes and for income tax return purposes.

Intangible Assets

Amounts  assigned  to  intangible  assets  are  amortized  over  the  respective
estimated useful lives using the straight-line method as follows:

Noncompete agreements                         5 to 7 years
Goodwill                                      15 to 25 years

Statement of Financial  Accounting  Standards  (SFAS) No. 121,  "Accounting  for
Impairment  of  Long-Lived  Assets and  Long-Lived  Assets to be  Disposed  of,"
requires that  long-lived  assets be reviewed for impairment  whenever events or
changes  in  circumstances  indicate  that the  carrying  amount of the asset in
question may not be recoverable.  The Company groups  long-lived assets by store
location for  purposes of assessing  the  recoverability  of carrying  value and
measuring  potential  impairment.  To date, the Company has not  experienced any
events or changes in circumstances  that indicate that the recoverability of the
carrying amount of an individual store should be assessed.

Goodwill and other  intangible  assets are recorded at the lower of  unamortized
cost or fair  value.  Management  reviews  the  valuation  and  amortization  of
intangible assets on a periodic basis,  taking into  consideration any events or
circumstances  which  might  result in  diminished  fair  value.  If this review
indicates  goodwill will not be recoverable,  as determined by the  undiscounted
cash flows of the entity acquired over the remaining  amortization  period,  the
carrying  value  of the  goodwill  is  reduced  by the  estimated  shortfall  of
discounted cash flows.

                                      F-12
<PAGE>



1.  Summary of Significant Accounting Policies (continued)

Pre-opening Costs

Pre-opening costs related to new store locations are expensed as incurred.

Significant Suppliers

The Company  purchased  substantially  all of its new outboard motors for use on
its Travis Edition boat packages from two outboard motor manufacturers, Outboard
Marine Corporation and the Brunswick  Corporation,  in fiscal 2000 and 1999, and
from a single  outboard motor  manufacturer,  Outboard  Marine  Corporation,  in
fiscal year 1998.

Approximately 33%, 12% and 18% of the Company's net purchases (including product
purchased in  acquisitions)  in fiscal 2000, 1999 and 1998,  respectively,  were
manufactured by boat suppliers with common ownership.

Advertising Costs

Advertising  costs are expensed as incurred and were  approximately  $2,618,000,
$1,192,000 and $643,000  during the fiscal years ended  September 30, 2000, 1999
and 1998, respectively.

Reclassifications

Certain amounts in the 1999 and 1998 financial statements have been reclassified
to conform with the  classifications  in the 2000 financial  statements  with no
effect on previously reported net income or stockholders' equity


<TABLE>
<CAPTION>

Net Income Per Common Share

                                                                          Year Ended September 30,
                                                                      2000          1999          1998
                                                                  ------------- ------------- -------------
                                                                   (in thousands, except per share data)
<S>                                                                <C>           <C>           <C>
Numerator:
   Net income                                                      $     897     $   6,573     $   5,563
                                                                  ============= ============= =============
Denominator:
   Denominator for basic earnings per share - weighted average
     shares                                                            4,403         4,291         4,250
Effect of dilutive securities:
   Employee stock options                                                 43           118           168
                                                                  ------------- ------------- -------------
Denominator for diluted earnings per share - adjusted weighted
   average shares and assumed conversions                              4,446         4,409         4,418
                                                                  ============= ============= =============

Basic earnings per share                                           $     .20     $    1.53     $    1.31
Diluted earnings per share                                         $     .20     $    1.49     $    1.26

</TABLE>

                                      F-13

<PAGE>


Options to purchase the following  shares of common stock were excluded from the
computation  of  diluted  EPS for the  periods  ended  September  30,  since the
exercise  price of the options was greater than the average  market price of the
Company's common stock during the respective fiscal year.

------------------------------------------------------------------------------
                                                             Weighted Avg.
                                           Weighted Avg.    Contractual Life
     Fiscal Year       Excluded Options  Exercises Prices       in Years
------------------------------------------------------------------------------
         2000                 164,766         $14.40              6.93
         1999                  97,500         $21.18              7.79
         1998                       0           n/a               n/a


                                      F-14

<PAGE>



2. Notes Payable and Other Short-Term Obligations

In  January  2000,  the  Company  executed  new  borrowing  agreements  with two
commercial  finance  companies  providing for inventory floor plan financing and
working capital borrowings. The agreements,  which contain substantially similar
terms and have maturity dates of January 2003,  provide for a combined borrowing
availability of $110 million at various  sub-prime based or LIBOR based interest
rates (varying from 8.13% to 8.43% at September 30, 2000).  Borrowings under the
agreements  are pursuant to a borrowing  base formula and are used  primarily to
finance  inventory  purchases  and for  general  working  capital  requirements.
Substantially   all  inventory,   accounts   receivable  and  intangible  assets
collateralize these borrowing agreements.  The terms of the borrowing agreements
also provide for: (i) fees for administrative  monitoring,  (ii) fees for unused
portions of available  credit,  and (iii)  pre-payment  fees in the event of the
Company's  termination of such floor plans prior to their stated  maturity dates
in January 2003. The borrowing  agreements  also contain  various loan covenants
and  borrowing   restrictions,   including  minimum  ratios  and  a  substantial
limitation as to payment of dividends or  repurchases  of the  Company's  common
stock.  Effective  with the  company's  financial  results for the period  ended
September  30, 2000,  the Company was in violation  of several  financial  ratio
covenants with TDF and DFS.  However,  on January 16, 2001, the Company received
written  waivers  from each lender and,  accordingly  amended and  restated  the
borrowing  agreements  to provide for modified  ratio levels for each  quarterly
period  through  and  including   September  30,  2001.   The  amended   borrinw
gagreements,  which mature in January  2003,  continue to provide for a total of
$110 million in inventory floor plan financing anad working capital  borrowings.
Interest on the borrowing  agreements  ranges from the lender's prime rate minus
0.25% to LIBOR plus 3.0%.  The Company  believes  that the  financial  covenants
established in the amended borrowing  agreements will be achieved based upon the
Company's current and anticipated  performance.  Based upon manangement's Fiscal
2001  operating  plan,  including the  sale/leaseback  or refinancing of certain
assets,  if necessary,  and  availability  under the borrowing  agreements,  the
Company  believes  that  there  is  adequate  liquidity  to fund  the  Company's
operations  and to make  required  principal  payments  under the two  borrowing
agreements and other outstanding debt. However, material shortfalls or variances
from  anaticipated  performance  could  require  the  Company  to  seek  further
amendment to the amended borrowing agreements or alternate sources of financing.

Various  manufacturers provide the Company interest expense assistance under the
borrowing  agreements  in order to  subsidize  the carrying  cost of  inventory.
Accordingly, no interest expense is recorded during portions of the year (August
through May) for certain borrowings under these  arrangements.  At September 30,
2000 and 1999, the Company had non-interest bearing borrowings of $5,795,000 and
$9,896,000 under these  arrangements.  Discontinuance  of these agreements could
result in an increase to interest expense.

<TABLE>
<CAPTION>

Notes  payable and other  short-term  obligations  consist of the  following (in
thousands):

                                                                         September 30,

                                                                    2000              1999
                                                               -----------------------------------
                                                                        (in thousands)
<S>                                                                <C>                 <C>
Notes payable to commercial finance companies under revolving
   and floor plan line of credit agreements with interest
   ranging from 0% to prime minus .75% with a stated maturity
   date of January 31, 2003.                                       $  73,282              ---

Floor plans payable to commercial finance companies under
   revolving line of credit agreements.  Repaid January 2000.            ---           35,408

Note payable to bank under a $55 million revolving line of
   credit agreement.  Repaid January, 2000.                              ---           33,150

Notes payable (see terms below)                                       10,628            7,886
                                                               -----------------------------------
Total notes payable and other short-term obligations                  83,910           76,444

Less current portion                                                 (77,895)         (69,547)
                                                               -----------------------------------
Total notes payable, less current portion                             $6,015           $6,897
                                                               ===================================

</TABLE>

The weighted average  interest rate on the borrowing  arrangements and the floor
plan payables  outstanding  as of September 30, 2000 and 1999 was 6.9% and 5.5%,
respectively.


                                      F-15

<PAGE>



2. Notes Payable and Other Short-Term Obligations (continued)

<TABLE>
<CAPTION>

Notes Payable consist of the following:                                  September 30,
                                                                     2000             1999
                                                               -----------------------------------
                                                                         (in thousands)
<S>                                                                <C>               <C>
Mortgage notes payable to various banks, organizations and
     individuals secured by deeds of trust with interest
     ranging from 6.0% to prime plus .25%, floating, due in
     monthly principal and interest installments ranging from
     $1,899 to $10,289, maturing beginning in January 2002.        $ 5,410           $6,045

Mortgage notes payable to various banks under deeds of trust
     with balloon payments due in November 2000 of $2,987,000
     and June 2001 of $597,000 with interest ranging from prime
     to prime plus .75%, floating.                                   3,584               --

Notes payable to various banks and a corporation secured by
     vehicles, equipment and leasehold improvements with
     interest ranging from 7.5% to 11.0%, due in monthly
     principal and interest installments ranging from $362 to
     $3,106, maturing beginning in June 2004.                          233              757

Acquisition related notes payable to individuals and
     corporations with interest ranging from 8.0% to 9.5%,
     due in monthly principal and interest installments
     ranging from $291 to $12,770, maturing beginning in
     February 2002.  These notes are unsecured.                      1,401            1,084
                                                               -----------------------------------
Total notes payable                                                $10,628           $7,886
                                                               ===================================
</TABLE>


Certain notes payable are secured by assets of the Company including  equipment,
leasehold improvements, vehicles, land and buildings.

At September 30, 2000 and 1999,  approximately  92.4% and 84.5%  respectively of
the Company's notes payable and other  short-term  obligations  bear interest at
variable  rates,  generally  tied to a reference  rate such as the prime rate of
interest of certain banks.  Accordingly,  the Company believes that the carrying
amount of the notes payables and other short term obligations approximates their
fair value.

Interest paid approximates interest expense during 2000, 1999 and 1998.

Aggregate annual maturities  required on notes payable at September 30, 2000 are
as follows (in thousands):

Year ending

September 30

     2001                                                          $   4,613
     2002                                                              1,441
     2003                                                                440
     2004                                                               1331
     2005                                                                309
     Thereafter                                                        2,494
                                                              ------------------
                                                                   $  10,628

                                                              ==================

                                      F-16


<PAGE>

3.  Leases

The Company leases various  facilities,  vehicles,  and computer  software under
third party operating  leases.  In October 1999, the Company entered into a sale
leaseback  transaction with a leasing company covering  substantially all of its
motor vehicle fleet. Vehicle leases generally range from 24 to 60 months in term
and provide for various residual  balances of  approximately  20% of the initial
lease  amount.  Lease  expense was  $3,524,000  in 2000,  $2,031,000 in 1999 and
$1,188,000 in 1998.

Future minimum payments under  non-cancelable  operating leases at September 30,
2000 are as follows for each of the years ending September 30 (in thousands):

2001                                     $    3,189
2002                                          2,509
2003                                          1,887
2004                                          1,287
2005                                            690
Thereafter                                    1,486
                                     -----------------
                                          $  11,048
                                     =================

Generally, the leases for facilities provide for renewals for various periods at
stipulated rates.

4. Acquisitions

The Company made various  acquisitions  during fiscal 1999 and 1998.  All of the
acquisitions  were asset  purchases  (except for Shelby Marine which was a stock
purchase) and have been  accounted for using the purchase  method of accounting.
The  operating  results of the  companies  acquired  have been  included  in the
consolidated  financial statements from the respective date of acquisition.  The
assets acquired generally include boat, motor and trailer  inventory,  parts and
accessories inventory and to a lesser extent, property and equipment.

<TABLE>
<CAPTION>

A summary of the Company's acquisitions follows (in thousands):


                                                              Non-compete
                              Date of   Purchase   Tangible    Agreements    Caah  Liabilities  Notes    Stock
     Name of Company        Acquisition   Price   Net Assets  and Goodwill   Paid    Assumed    Issued   Issued
--------------------------- ----------- ---------- ---------- ------------- -------- ---------- ------- ---------
<S>                           <C>        <C>        <C>             <C>     <C>         <C>        <C>    <C>
Fiscal 1999

Amlin, Inc. dba Magic         01/99      $1,639     $6,019          $1,090  $1,639      $5,470     $---   $  ---
Marine
Sportsman's Haven             01/99       1,748      2,624             514   1,098       1,390     650       ---
Pier 68 Marina                02/99         738      2,218             562     408       2,043     329       ---
DSA Marine Sales &            04/99       2,147      4,798           1,597   2,147       4,248      --       ---
Service dba The Boatworks
Shelby Marine, Inc.           06/99       1,334      3,426           1,050     809       3,142      --       525
The New 3 Seas, Inc.          09/99       1,103      1,419           1,100       3       1,416      --     1,100

Fiscal 1998
-----------
Southeastern Marine           11/97      $1,730     $1,390          $  280  $1,606      $    -     $124   $  ---
Worthen Marine                12/97         287        142             145     287           -        -        -
HnR Marine                    04/98         359        359               -     359           -        -        -
Moore's Marine                05/98         777        376             401     777           -        -        -
Rodgers Marine                09/98         677      2,093             350     327       1,766        -      350

</TABLE>

                                      F-17

<PAGE>

4. Acquisitions (continued)

Pursuant to the purchase terms of The New 3 Three Seas acquisition,  the Company
agreed to issue 86,005 shares of its common stock valued at  approximately  $1.1
million upon the  registration  of such shares with the  Securities and Exchange
Commission  pursuant to the  Securities  Act of 1933. At September 30, 1999, the
value of this stock was accrued as a payable on the balance sheet. The shares of
common stock were registered in November 1999 and accordingly  issuance of these
shares has been reflected in fiscal 2000.

The Company  determined the valuation of the  securities  issued in its purchase
transactions in accordance with Emerging Issues Task Force 95-19.

The  Company's  unaudited   consolidated  results  of  operations  assuming  all
acquisitions  accounted for under the purchase method of accounting had occurred
on October 1, 1997 are as follows for the fiscal years ended  September 30, 1999
and 1998:

                            Year Ended September 30,

                                       1999                          1998
                                       ----                          ----
Net Sales                          $206,994,000                  $197,365,000
Net Income                            7,668,000                     7,183,000
Diluted earnings per share                 1.74                          1.63

The unaudited pro forma  results of operations  are presented for  informational
purposes  only  pursuant  to APB 16 and may not  necessarily  reflect the future
results of operations  of the Company or what results of  operations  would have
been had the Company owned and operated the business as of October 1, 1997.

5. Income Taxes

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows (in thousands):

                                                         September 30,
                                                    2000             1999
                                             -----------------------------------
                                             -----------------------------------

Deferred tax assets:
   Book over tax depreciation                       $ 204            $ 121

   Accrued salaries and wages                          71              136
                                             -----------------------------------

Total deferred tax assets                             275              257
Valuation allowance for deferred tax assets             -                -
                                             -----------------------------------
Net deferred tax assets                             $ 275            $ 257
                                             ===================================

                                      F-18


<PAGE>


5. Income Taxes (continued)

<TABLE>
<CAPTION>

Significant components of the provisions for income taxes are as follows (in thousands):

                                                                 Year ended September 30,
                                                        2000               1999                1998
                                                 ----------------------------------------------------------
<S>                                                       <C>              <C>                 <C>
Current expense:
         Federal                                          $507             $3,424              $2,791
         State                                              79                403                 410
                                                 ----------------------------------------------------------
Total current expense                                      586              3,827               3,201

Deferred expense (benefit):
         Federal                                           (19)                19                  17
         State                                               -                  -                   -
                                                 ----------------------------------------------------------
Total deferred expense (benefit)                           (19)                19                  17
                                                 ----------------------------------------------------------

Total provision for income taxes                          $567             $3,846              $3,218
                                                 ==========================================================

</TABLE>


The differences  between the effective tax rate and the U.S.  federal  statutory
rate of 34% are reconciled as follows (in thousands):

<TABLE>
<CAPTION>
                                                                 Year ended September 30,
                                                        2000               1999                1998
                                                 ----------------------------------------------------------

<S>                                                       <C>              <C>                 <C>
Income tax expense at the federal statutory rate
                                                          $498             $3,542              $2,986
State income taxes                                          79                403                 410
Other                                                      (10)               (99)               (178)
                                                 ----------------------------------------------------------
                                                          $567             $3,846              $3,218
                                                 ==========================================================

</TABLE>

Income taxes paid were  approximately  $1,850,000;  $1,563,000 and $4,207,000 in
the fiscal years ended September 30, 2000, 1999 and 1998, respectively.

6.  Stockholders' Equity

The Company has an Incentive  Stock Option Plan (the  "Plan")  which  originally
provided for the issuance of up to 200,000 shares of the Company's common stock.
The Plan  provides  for the  granting  of options  (incentive  stock  options or
non-statutory), stock appreciation rights and restricted shares to officers, key
employees,  non-employee  directors and  consultants  to purchase  shares of the
Company's common stock. No stock  appreciation  rights or restricted shares have
been issued under the Plan.  Options vest  generally over a five year period and
expire in ten years from the date of grant.

In March 1998, the Company amended the Plan to provide that the aggregate number
of shares of common stock that may be issued or  transferred  pursuant to awards
under  the  Plan  shall  increase  automatically  effective  on  April 1 of each
calendar  year for the  duration  of the Plan so that the  aggregate  number  of
shares of common  stock  that may be issued or  transferred  pursuant  to awards
under  the Plan is equal to 10% of the total  number  of shares of common  stock
issued and outstanding on April 1 of that year.  Notwithstanding this provision,
the amendment  provides that (i) the aggregate  number of shares of common stock
that may be issued or transferred pursuant to awards under the Plan shall not be
reduced in the event the total number of shares issued and outstanding decreases
in any year, or (ii) the aggregate  number of shares of common stock that may be

                                      F-19

<PAGE>

issued or  transferred  pursuant  to  awards  under  the Plan  shall not  exceed
1,000,000 shares of common stock over the life of the Plan.

<TABLE>
<CAPTION>


Total option activity for the years ended September 30, 2000, 1999 and 1998:

                                                                                              Weighted
                                                                        Range of Exercise      Average
                                                      Number of Shares        Prices       Exercise Price
                                                      -----------------------------------------------------

<S>                                                          <C>           <C>                 <C>
Outstanding at September 30, 1997                            265,033       $ 5.25 - $17.00     $ 7.58
   Granted                                                   100,750       $15.00 - $22.50     $20.83
   Exercised                                                 (36,200)      $ 5.25 - $13.125    $ 6.42
   Forfeited                                                  (6,300)      $ 9.00 - $13.125    $12.76
                                                      ------------------
Outstanding at September 30, 1998                            323,281       $ 5.25 - $22.50     $11.75
   Granted                                                     7,500       $14.50 - $20.00     $18.60
   Exercised                                                  (5,000)           $9.00          $ 9.00
   Forfeited                                                  (6,500)      $13.125- $19.00     $17.93
                                                      ------------------
Outstanding at September 30, 1999                            319,281       $ 5.25 - $22.50     $11.84
   Granted                                                   161,900       $3.1825- $9.375     $ 6.22
   Exercised                                                  (2,000)         $9.00            $ 9.00
   Forfeited                                                 (88,050)      $ 4.00 - $22.50     $13.19
                                                      ------------------
Outstanding at September 30, 2000                            391,131       $3.8125- $22.50     $ 9.20
                                                      ==================

Exercisable at September 30, 2000                            190,398       $ 5.25 - $22.50     $ 8.72
                                                      ==================

Options available for grant at September 30, 2000             50,072
                                                      ==================
Common stock reserved for issuance at September 30,
   2000                                                      441,203
                                                      ==================
</TABLE>



The weighted-average remaining contractual life of options at September 30, 2000
and 1999 is approximately 7.08 and 6.94 years, respectively.

<TABLE>
<CAPTION>

Options outstanding at September 30, 2000, are comprised of the following:

                                    Outstanding                                         Exercisable
                           -----------------------------------                  -------------------
                                                           Weighted Avg.
                   Range of Exercises    Weighted Avg.    Contractual Life  Number of Options    Weighted Avg.
      Options            Prices        Exercises Prices       in Years                          Exercise Price
------------------------------------------------------------------------------------------------------------------
<S>   <C>           <C>                     <C>                 <C>              <C>                <C>
      226,365       $3.8125 - $ 5.75        $ 5.36              7.20             108,865            $ 5.25
       86,266       $ 8.875 - $10.50        $ 9.10              6.69              49,233            $ 9.11
       11,000       $11.50 -  $15.00        $12.59              6.70               5,800            $12.28
       67,500       $20.00 -  $22.50        $21.48              7.26              26,500            $21.50
------------------------------------------------------------------------------------------------------------------
      391,131       $3.8125 - $22.50        $ 9.20              7.08             190,398            $ 8.72
==================================================================================================================
</TABLE>

The Company has elected to follow Accounting Principles Board No. 25, Accounting
for  Stock  Issued  to  Employees  (APB  25),  and  related  interpretations  in
accounting  for its employee  stock options  because,  as discussed  below,  the
alternative  fair value  accounting  provided for under FASB  Statement No. 123,
Accounting for Stock-Based  Compensation (Statement 123), requires use of option
valuation  models  that were not  developed  for use in valuing  employee  stock
options.  Under APB 25,  because the exercise  price of the  Company's  employee
stock  options  equals the market price of the  underlying  stock on the date of
grant, no compensation expense is recognized.


                                      F-20

<PAGE>

6.  Stockholders' Equity (continued)

The  assumptions  used by the  Company to  determine  the pro forma  information
regarding net income and earnings per share required by Statement No. 123 are as
follows using the Black-Scholes model:

                                             Year Ended September 30,
                                     2000             1999             1998
                               --------------- ---------------- ----------------

     Risk-free interest rate            6.50%            6.00%            6.00%
     Dividend yield                       0%               0%               0%
     Expected life                     5 years          5 years          5 years
     Volatility                         64.5%            39.3%            39.3%

     The pro forma amounts under Statement No. 123 are as follows:

                                             Year Ended September 30,
                                      2000             1999             1998
                                   -----------      -----------      -----------

     Net income as reported (000's)   $897             $6,572           $5,563
     Pro forma net income (000's)     $738             $6,467           $5,467
     Diluted EPS - as reported        $0.20            $1.49            $1.26
     Pro forma - Diluted EPS          $0.17            $1.47            $1.24

The  compensation  expense  associated  with  the  fair  value  of  the  options
calculated  in  2000,  1999 and 1998 is not  necessarily  representative  of the
potential effects on reported net income in future years.

During fiscal 2000, the Company established a program to repurchase  outstanding
shares of its common stock in the open market from time to time. The Company has
made  purchases of its common stock pursuant to this program and has retired all
such common shares repurchased.  Repurchased shares of common stock consisted of
the following for the years ended September 30:

                                              Year Ended September 30,
                                      2000               1999           1998
                                   -----------      ------------     -----------

     Shares Repurchased (000's)        15                -  0 -          - 0 -
     Total Purchase Price (000's)     $59                 n/a            n/a
     Average Price per Share          $3.92               n/a            n/a


7. Commitments and Contingencies

The  Company is  currently  involved  in several  matters  regarding  pending or
threatened  litigation  in the normal  course of business.  Management  does not
expect the  ultimate  resolution  of these  matters  to have a material  adverse
effect on the Company's consolidated financial statements.


                                      F-23

<PAGE>

8.  Benefit Plan

The Company has a 401(k)  retirement  plan which is available  to all  full-time
employees. The Company may, in its discretion,  make matching contributions into
the plan.  Expenses  related to the plan were not significant in the years ended
September 30, 2000, 1999 and 1998.

9.       New Accounting Pronouncements

In  September  1998,  the FASB issued SFAS No. 133,  Accounting  for  Derivative
Instruments and Hedging  Activities  ("SFAS No. 133").  SFAS No. 133 establishes
accounting and reporting  standards  requiring that every derivative  instrument
(including  certain  derivative  instruments  embedded  in other  contracts)  be
recorded in the balance  sheet as either an asset or  liability  measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value be
recognized  currently in earnings unless specific hedge accounting  criteria are
met. Special  accounting for qualifying  hedges allows a derivative's  gains and
losses to offset related results on the hedged item in the income statement, and
requires  that a company  must  formally  document,  designate,  and  assess the
effectiveness  of  transactions  that receive hedge  accounting.  Because of the
Company's minimal use of derivative financial instruments,  the adoption of SFAS
No. 133 is not expected to have a material impact on the Company's  consolidated
results of operations, financial position or cash flows.

In December  1999, the SEC staff issued Staff  Accounting  Bulletin 101 "Revenue
Recognition  in  Financial   Statements"  which  provides  guidance  on  revenue
recognition issues. The Company is required to implement SAB 101 in fiscal 2001,
but  management  does not believe  the  adoption of SAB 101 will have a material
impact on the Company's financial position or results of operations.

In March 2000, the FASB issued  Interpretation  No. 44,  "Accounting for Certain
Transactions Involving Stock Compensation",  which further clarifies APB Opinion
No. 25, "Accounting for Stock Issued to Employees".  This interpretation did not
have a material  impact on the  Company's  financial  position or its results of
operations.

10.       Subsequent Events

Loan Transactions
-----------------

Effective  December 15, 2000 the Company entered into a loan  transaction in the
amount of $641,250 with a commercial  bank.  The loan is secured by certain real
estate and improvements in Midland,  Texas and has monthly payments of principal
and interest of  approximately  $6,447.  The loan has a fixed  interest  rate of
8.85% and matures in December, 2005.

Effective  December 26, 2000 the Company entered into a loan  transaction in the
amount of $4,450,000 with a commercial bank. The loan is secured by certain real
estate and  improvements  in Atlanta,  Georgia,  Dallas,  Texas and San Antonio,
Texas.  The loan has monthly payments of principal and interest of approximately
$39,745.15.  The loan has a variable  interest rate  initially set at 9.654% and
matures in  December,  2005.  The proceeds of this loan were used,  in part,  to
repay in full the mortgage  note  payable to bank with a balloon  payment due in
November,  2000 of  $2,987,000.  See Footnote #2 "Notes  Payable and Other Short
Term Obligations".

 The chart below  reflecting the aggregate annual  maturities  required on notes
payable has been revised to reflect the impact of the two  aforementioned  loans
(in thousands):

                                      F-22

<PAGE>

Year ending
September 30 - Proforma to Reflect effect of Subsequent Loan
transactions

     2001                                                          $   1,153
     2002                                                              1,630
     2003                                                                629
     2004                                                              1,539
     2005                                                                537
     Thereafter                                                        7,244
                                                              ------------------
                                                                   $  12,732

                                                              ==================



10.  Subsequent Events (continued)

Business Matters
----------------

On December  22,  2000,  one of the  Company's  primary  supplier's  of outboard
motors,  Outboard Marine  Corporation  ("OMC") filed a voluntary  petition under
Chapter 11 of the United States  Bankruptcy  Code. The Company,  in the ordinary
course of its  operations,  has  certain  amounts  due from and due to OMC.  The
Company  believes  that it has the benefit of certain  rights of "off-set"  that
when  implemented  will  result in the  elimination  of such  amounts  without a
detrimental effect on its financial operations.

The Company also maintains a contract with an  alternative  supplier of outboard
engines,  Brunswick Corporation,  covering the terms for the purchase of Mercury
outboard motors.


                                  F-23