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, 2001

                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 X   No
                                         ---    ---

         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, 2001,  (based upon the last reported  price of $2.00 per share) was
approximately $5,879,410 on such date.

         The number of shares of the issuer's  Common Stock,  par value $.01 per
share,  outstanding  as of December 28, 2001 was 4,350,527,  of which  2,939,705
shares were held by non-affiliates.

         Documents  Incorporated by Reference:  Portions of  Registrant's  Proxy
Statement  relating to the 2002  Annual  Meeting of  Shareholders  to be held in
February 2002, have been incorporated by reference herein (Part III).





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                  TRAVIS BOATS & MOTORS, INC. AND SUBSIDIARIES

                               REPORT ON FORM 10-K
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                                TABLE OF CONTENTS
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<S>         <C>                                                                                              <C>

PART I .......................................................................................................... 7

   Item 1.  Business..............................................................................................7

   Item 2.  Properties...........................................................................................13

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

   Item 4.  Submission of Matters to a Vote of Security Holders..................................................15

PART II  ........................................................................................................15

   Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters.................................15

   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.................................................................................27

   Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................27

PART III ....................................................................................................... 27

   Item 10.  Directors and Executive Officers....................................................................27

   Item 11.  Executive Compensation..............................................................................27

   Item 12.  Security Ownership of Certain Beneficial Owners and Management......................................27

   Item 13.  Certain Relationships and Related Transactions......................................................27

PART IV ........................................................................................................ 28

   Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.....................................28

PART V ..........................................................................................................32

   Item 15.  Exhibit 23.1, Consent of Independent Auditors.......................................................32



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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 26%  occurred in the quarter  ending  March 31 and over 38% 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 levels (in the various  stores) 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 Risk  Factors - "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
shorten 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 weather  related damages
or disruptions to our sales levels or store 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,  high fuel  prices,  unfavorable  economic  developments,  volatility  or
declines in the stock market or consumer  confidence levels,  changes to the tax
law such as the  imposition  of a luxury  tax,  or (with  respect  to a specific
region)  a  major   employer's   decision  to  reduce  its   workforce  can  all
significantly  decrease  the amount of money  consumers  are willing to spend on
discretionary  activities.  When these situations arise,  consumers often decide
not to purchase  relatively  expensive,  "luxury" items like recreational boats.
For  example,  our  Company's  sales levels  declined  and our Company  posted a
significant  net loss  during  the 2001  fiscal  year due in part to the  United
States  experiencing  weak  economic  conditions  (such as  rising  unemployment
levels,  reduced consumer  confidence and volatile stock markets).  From 1988 to
1990, our business also suffered dramatically

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<PAGE>

because of the declines in the financial, oil and gas and real estate markets in
Texas. If the current economic downturn continues or if similar downturns in the
national or in local  economies arise in the future,  we may suffer  significant
operating losses.

         Changes in federal and state tax laws, such as the imposition of luxury
or excise 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
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.

         We have not opened New Stores  Recently and Much of our Past Growth has
been the result of  Acquiring  and Opening New Stores.  We have grown  primarily
through the  acquisition of  recreational  boat  dealerships.  We began with one
store in Texas in 1979  and,  from  that date  through  March  2000 we opened or
acquired  new  stores  in  Alabama,  Arkansas,   Florida,  Georgia,   Louisiana,
Mississippi,  Oklahoma,  Tennessee  and  Texas.  However,  we have not opened or
acquired  any new store  locations  since March 2000.  As of December  2001,  we
operate 37 store  locations  compared to 39 store locations as of December 2000.
During the summer of 2001, we decided to close certain store locations in Miami,
Florida and  Huntsville,  Alabama  because  the stores had weak sales,  expiring
leases and  overlapping  sales  territories  with other store  locations that we
operate.

         Our comparable  store sales (which are sales in stores that are open in
the same location for at least two consecutive  years)  increased 1.9% in fiscal
year 1999 and decreased by 1.1% and 11.6% in fiscal 2000 and 2001, respectively.
We expect our comparable  store sales to continue to fluctuate from the unstable
market  conditions  which  impacted  the United  States and the marine  industry
during our 2001 fiscal year. See Risk Factors - "General Economic  Conditions in
the United States and in the Areas Where We Have Stores Affect Our Sales."

         Our  borrowing  agreements  also require us to receive  approvals  from
certain  of our  lenders  prior to  opening or  acquiring  new store  locations.
Therefore,  we may continue to make  acquisitions  depending  upon,  among other
things,  our financial  strength at the time of a proposed  acquisition  and our
ability  to  finance  these  transactions  within  the  terms  of our  borrowing
agreements.  In the  event  that we  complete  acquisitions  or open  new  store
locations,  our success will depend on our  financial  strength,  our ability to
hire and retain qualified employees and our ability to identify markets in which
we can  successfully  sell our  products.  Our  success  will also depend on our
ability to liquidate the acquired store's  remaining  inventory,  to convert the
store  facility  to a  Travis  Boating  Center  superstore  and to  attract  new
customers to the store after the conversion.  See  "Management's  Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity."

         Besides  acquiring  existing  stores and  converting  them into  Travis
Boating  Centers,  we may build new  stores in 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 we when will open or acquire new stores or that
we will receive  approval from our lenders.  See  "Management's  Discussion  and
Analysis of Financial Condition and Results of Operations - Liquidity. "

         Our Success Will Depend on How Well We Manage Our Inventory and Product
Growth. We have previously completed a period of rapid growth and, consequently,
we have spent much time and effort in developing  new systems and  procedures to
monitor  and  control  our  inventory  levels.  We have  developed  consolidated
purchase  orders  and a  business  plan for  inventory  that we call our  Master
Business Plan. These procedures were designed to closely regulate and coordinate
our inventory levels and to improve  inventory  turns.  Although we believe that
our systems,  procedures  and controls are adequate to support this process,  we
cannot assure that this is the case. Our inability to manage our inventory would

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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  EffectiveDuring  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 continue to test the application of the system in
a large scale multiple user network  configuration  that will accommodate future
growth in the number of store  locations  we  operate.  Any  faults,  defects or
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  dealer   agreements  with  our  key
manufacturers.   Most  of  these   agreements   are  renewable  each  year,  are
non-exclusive  and contain other  conditions  that are standard in the industry.
Because of our relationship with these  manufacturers and the significant amount
of product 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, their decisions not to sell to us or changes in industry
regulations  could have a material  adverse  effect on our  business,  financial
conditions and results of operations.

         We Rely on a Few  Manufacturers  for Almost All of our  Outboard  Motor
Purchases and One of the Manufacturers has filed Bankruptcy and Liquidated.  Our
success depends to a significant  extent on the continued quality and popularity
of the  products  we sell.  We have  historically  purchased  almost  all of our
outboard  motors  from two  manufacturers.  In fiscal  years  2000 and 2001,  we
purchased nearly all of the outboard motors we use on our Travis Edition line of
recreational boats from Brunswick Corporation ("Brunswick"), which makes Mercury
outboard motors. In fiscal year 1999, we also purchased outboard motors from the
former Outboard Marine Corporation ("OMC"),  which then manufactured Johnson and
Evinrude outboard motors.

         In  December  2000,  OMC  filed  for  relief  with  the  United  States
Bankruptcy Court under Chapter 11 bankruptcy.  The bankruptcy  filing terminated
our master agreement (which otherwise would have expired on June 30, 2001) under
which we purchased  outboard  motors from OMC.  Certain of the former OMC engine
brands,  including the Johnson and Evinrude lines,  were purchased from the U.S.
Bankruptcy court by Bombardier  Corporation.  Bombardier is active in the marine
industry and is the manufacturer of the Sea Doo line of personal watercraft.  As
of September  30, 2001,  we have not  purchased a material  amount of Johnson or
Evinrude  product from  Bombardier.  Also, we have "offset" certain amounts that
were owed to the Company from OMC against  certain  amounts that the Company had
payable  to OMC.  However,  as of the date of this  Report  on Form 10-K the OMC
Bankruptcy has been converted to Chapter 7 ("liquidation")  and the case has not
been finalized by the courts. Until the case is finalized, an unfavorable ruling
could result in the Company's failure to collect,  through offset,  amounts owed
by OMC and therefore, harm our financial condition.

         Our purchases of outboard engines from Brunswick have been based on the
volume price  discounts and other terms of a master  agreement  which expired in
October  2001.  The  Company  and  Brunswick  are  negotiating  terms  of a  new
agreement.  However,  if the  agreement is not renewed or extended  with similar
terms, or 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,  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."

         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  1999 we  purchased  12.0% of our

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inventory  from Genmar,  in fiscal year 2000 we purchased  32.7%,  and in fiscal
year 2001 we  purchased  41.6% from  Genmar.  The  purchases  of boats from this
supplier  are based on the volume  price  discounts  and other  terms of various
agreements expiring on dates within our 2002 and 2003 fiscal years. 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, decide not to renew their
contracts with us or decide to stop  production  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 or
Selling  New  Products.   We  may  be  required  to  obtain  the  permission  of
manufacturers  to sell their  product  before we enter new  markets or before we
sell new products in our existing  markets.  If our manufacturers do not give us
permission  to sell  their  products  in  markets  where we  operate  or plan to
operate,  we may be forced to find alternative  supply sources or to abandon our
plan.  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,  it could have a negative  effect on our business,
financial condition and results of operations.

         Within our industry,  our competitors include many single location boat
dealers and several  large  dealer  groups.  We compete  based on the quality of
available products, the price and value of the products we sell and our 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  Travis  Edition  boat  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 general working capital needs and
borrowing  agreement  covenants (such as maximum  debt/worth ratio's and minimum
net worth levels) may require us to secure significant  additional capital.  Any
borrowings to finance future working capital requirements,  capital expenditures
or  acquisitions  could make us more  vulnerable to a sustained  downturn in our
operating results,  a sustained downturn in economic  conditions or increases in
interest rates on portions of our debt that have variable interest rates.

         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 or working capital requirements,  we could
be  required  to sell  additional  equity  or  debt  securities,  refinance  our
obligations or dispose of assets in order to meet our debt service requirements.

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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  in  our  borrowing  agreements  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.
See "Management's  Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity."

         We May Issue  Securities That Will Dilute Our Current  Shareholders and
Impact  our  Earnings  Per  Share.   On  December  14,  2001,  we  entered  into
Subordinated  Convertible loan transactions  totaling $4,300,000.  The loans are
unsecured  with a term of 36 months and have interest rates ranging from prime +
2%, adjusted  quarterly,  to 10.75%,  fixed.  The principal and interest amounts
payable on the loans is subordinated,  in most  circumstances,  to the Company's
borrowing  agreements  with certain of its lenders.  The loans are redeemable by
the  Company,  and if not  redeemed  may be  converted  by the holders  into the
Company's common stock at a conversion price of approximately $2.46 per share.

         If we choose to raise  additional  equity  capital or to finance future
working  capital  requirements,  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 would 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,
other lending  companies,  insurance  companies and vendors  providing  extended
service contracts.  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 3.3% and 3.8% of our net sales in fiscal  years 2001 and
2000,  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. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

         Our Success Depends on Our Management Team. Our company depends greatly
on  our  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  purchased  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

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other  reasons,  their  loss  could have a  significant  negative  effect on our
operations and our financial performance.

         In addition, we have identified  opportunities to recruit and integrate
additional senior managers in sales management,  inventory  management and store
level operations.  Our inability to recruit individuals with necessary skills or
to  successfully  integrate  these  individuals  could  have a  significant  and
material adverse effect on our financial condition.

         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.
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,  2001,  we own or control,  together  with our officers  and  directors  and
certain founding shareholders,  approximately  1,410,822 shares of common stock,
excluding  shares which would be  convertible  into common stock pursuant to the
transaction  discussed  above.  Our sale of a large  portion of these shares may
decrease  the  price of our  common  stock.  (See  Risk  Factors - "We May Issue
Additional  Securities That Will Dilute Our Current  Shareholders and Impact our
Earnings Per Share")

         We Must Evaluate our Goodwill for Impairment. Goodwill in an intangible
asset that  represents the difference  between the aggregate  purchase price for
the net assets  acquired and the amount of such purchase price allocated to such
net assets for  purposes  of our  balance  sheet.  Through our fiscal year ended
September  30, 2001, we were  required to amortize  goodwill  from  acquisitions
accounted for as purchases over a period of time, with the amount amortized in a
particular  period  constituting  an expense  that  reduced our earning for that
period.  As of September 30, 2001, our acquisitions that have been accounted for
as purchases have a remaining  goodwill balance of  approximately  $8.8 million,
which we have been amortizing over a period of 25 years.

In June 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Accounting  Standards No. 142 "Goodwill and Other Intangible  Assets".  SFAS 142
provides that goodwill and certain intangibles will no longer be amortized,  but
instead will be tested for impairment at least annually. SFAS 142 is required to
be applied  starting with fiscal years  beginning  after December 15, 2001, with
early application permitted in certain  circumstances.  However, the Company has
not yet  determined  whether it will early adopt the new rules  beginning in the
first  quarter  of  fiscal  2002 as  allowed  by the  SFAS  142.  In the year of
adoption, we will perform the first of the required impairment tests of goodwill
and indefinite lived  intangible  assets as of the beginning of that fiscal year
and therefore we have not yet determined  what the effect of these tests will be
on the results of operations and financial position of the Company.

                                       6
<PAGE>

         Reductions  in  earning  resulting  from  the  impairment  of  goodwill
resulting  from SFAS 142 may have an adverse impact upon the market price of our
common stock.  Also,  the  impairment of our goodwill or regulatory  action that
changes the impairment testing procedures, requires other types of amortization,
or a write-off of goodwill may  materially  and  adversely  affect the financial
position of our Company.

         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.

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,  currently  operates 37 stores under the name Travis Boating Center
in  Texas  (8),  Arkansas  (4),  Louisiana  (4),  Alabama  (1),  Tennessee  (5),
Mississippi (1), Florida (12), Georgia (1) and Oklahoma (1).

We seek to  differentiate  ourselves 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 our 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

                                       7
<PAGE>

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 Travis Edition boats held for sale.

         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 exceeding 50 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."

         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, Sea Ark,  Fishmaster and Ranger with outboard motors
generally  manufactured  by  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 of our
competitors.  We also sell yachts,  such as Carver and Martinique  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 Travis Edition  product line
generally  consists  of  boat  packages  priced  from  $7,500  to  $45,000  with
approximate  even  distribution  within  this price  range.  Our yachts can have
prices  above  $500,000.   While  most  of  our  sales  have  historically  been
concentrated  on boats with retail  sales  prices  from  $7,500 to  $45,000,  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  offer  for  sale  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 sales and
profits at existing store locations and further expansion of 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,  our web site and other types of marketing  events to
increase our name  recognition and our market share. See Risk Factors - "We have
not opened New Stores  Recently  and Much of our Past Growth has been the result
of Acquiring and Opening New Stores".

         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 34,000 square feet and management estimates the average store

                                       8
<PAGE>

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   purchase  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 our 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 as optional 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 our customers with superior value. These features often
may include  enhanced  styling  such as  additional  exterior  colors,  complete
instrumentation  in  dashboards,  transoms  warrantied  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.  We
believe  this  selling  philosophy  reduces  customer  anxiety  associated  with
bargaining or negotiation  and offers our  customer's  prices at or below prices
that they generally might receive from our competitors.  We believe this pricing
strategy and low-pressure sales style provides the customer with the comfort and
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. We
did  not  have  any  acquisitions  in  fiscal  years  2001 or  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 each 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
follows (in thousands):


<TABLE>
<CAPTION>


                                                    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 Marine   01/99       $1,639    $6,019        $ 1,090   $ 1,639     5,470      $  ---   $  ---
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

</TABLE>


                                       9
<PAGE>

         Boat Show  Participation.  We also  participate in numerous boat shows,
typically  held in January  through  March,  in each of the  markets in which we
operate and in certain other  markets near our stores.  These shows are normally
held at convention  centers on at on the water locations,  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 fees  earned  assisting  our  customers  in
obtaining  financing  for  their  purchases.  Each of the F&I  Products  and the
financial  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 the former  Outboard
Marine  Corporation  ("OMC"),  which  then  manufactured  Johnson  and  Evinrude
outboards.

Beginning  with the 1999 fiscal year 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 utilized a multi-year
term agreement with Brunswick to purchase  outboard  motors.  Our agreement with
Brunswick  expired  in  November  2001 and we are  currently  negotiating  a new
contract. We also have agreements to purchase boats with Genmar Industries, Inc.
expiring on dates within our 2002 and 2003 fiscal  years.  The  agreements  with
these manufacturers  generally 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

                                       10
<PAGE>

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 41.6% and 32.7% of our net purchases in fiscal years 2001
and 2000,  respectively,  were products manufactured by boat manufacturers owned
by Genmar.  The  increase in purchases  from Genmar is primarily  related to the
store  locations  that we operate in Florida which sell  Genmar's  Wellcraft and
Carver  products.  Other  Genmar boat lines that we purchase  include the brands
Larson,  AquaSport,  Scarab,  Triumph,  and Ranger.  Brunswick  supplied Mercury
outboard motors that represented  approximately $22.9 million or 20.5% and $17.6
million,  or 11.2%,  of our net  purchases  during  fiscal  years 2001 and 2000,
respectively.

         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 Few  Manufacturers  for
Almost All of our Outboard  Motor  Purchases  and One of the  Manufacturers  has
filed Bankruptcy and Liquidated" and "We Rely on Several Key  Manufacturers  for
Almost All of our Boat Purchases").

         Floor plan  financing.  We purchase  most of our inventory by borrowing
money from floor plan and other borrowing 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 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,
2001, the Company and its subsidiaries owed an aggregate of approximately  $58.9
million to our lenders under our floor plan financing  agreements.  At September
30,  2001  and  2000,  the  Company  had  non-interest   bearing  borrowings  of
approximately $5,370,000 and $5,795,000 under these arrangements.






                                       11
<PAGE>
         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.  Private sales of used boats
also represent a source of  competition.  There can be no assurance that we will
be able to compete successfully in the retail marine industry in the future. See
Risk  Factors - "We May Not Be Able To Respond  Effectively  To The  Significant
Competition We Face".

         Impact of Environmental and Other Regulatory Issues. Our operations are
subject to  regulation,  reporting and licensing by various  federal,  state and
local  governmental  agencies and we are subject to their  respective  statutes,
ordinances and regulations. The failure to satisfy these requirements could have
a material  adverse effect on our business,  financial  condition and results of
operations.

          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,
outboard motor manufacturers, such as Brunswick, have begun the phase-in process
for the new EPA compliant outboard motors.  However, in fiscal 2001 and 2000, 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 2001 and 2000 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  Brunswick,  believes that the higher
retail  costs  will  be  somewhat   offset  by  enhanced  fuel   efficiency  and
acceleration  speed, as well as possible  reductions of 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.

         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

                                       12
<PAGE>

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,  2001,  our  staff  consisted  of 623
employees,  594 of whom are full time.  The  full-time  employees  include 35 in
store level management and 47 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.






                                       13
<PAGE>



         The chart below reflects the status and approximate size of the various
Travis Boating Center locations operated as of December 28, 2001.

<TABLE>
<CAPTION>

                                     Building         Land          Owned or       Year of Market
             Location             Square 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                1982
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
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(3)............           3,000      4.2           Owned                1997
Key Largo, Florida(3)............           3,000      2.4           Owned                1999
Ft. Walton Beach Fl. - Sales(3)             7,000      2.9          Leased                1997
Ft. Walton Beach Fl. - Sales(3)             7,000      2.9          Leased                1999
Ft. Walton Beach Fl.- Service(3)            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 (3)..........          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(3).........          16,400      3.0           Owned                1999
Pine Bluff, Arkansas(3)..........          16,812      2.91         Leased                1999
Longwood, Florida(3).............          10,000      3.1          Leased                1999
Clearwater, Florida(2)...........          21,000      5.0           Owned                1999
Clearwater, Florida(3)...........           9,000      3.7          Leased                1999
Jacksonville, Florida(3).........           8,000      1.5          Leased                1999
Bradenton, Florida(3)............          20,000      5.0          Leased                1999
Englewood, Florida(3)............           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(3)............           6,000      4.0          Leased                1999
Stuart, Florida(2)...............          29,000      4.0          Leased                2000
Pompano, Florida(3)..............           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)       Acquired/leased facility
</FN>
</TABLE>

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

                                       14
<PAGE>

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, 2001.



                                    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, 2001, we believe our shares are  beneficially  owned by
more than 400 shareholders.  On December 28, 2001, the last reported sales price
of the common stock on the NASDAQ National Market System was $2.00 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 2001 and 2000 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 2001 Sales Price               Fiscal 2000 Sales Price
                                     -----------------------               -----------------------
        Quarter Ended             High        Low        Ending         High         Low        Ending
        -------------            -------      -----     --------       ------       -----      -------
<S>                                <C>         <C>         <C>         <C>          <C>         <C>

December 31....................    $3.75       $2.50       $2.75       $12.00       $8.75       $12.00
March 31.......................    $4.125      $2.375      $3.375      $13.50       $9.375      $13.25
June 30........................    $3.50       $2.16       $2.70       $12.6875     $5.125      $5.50
September 30...................    $2.90       $1.96       $2.20       $5.5625      $3.50       $3.6875

</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.



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

                                       15
<PAGE>

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,


                              1997(1)(6)  1998(1)(6)     1999(1)(6)    2000(1)(6)   2001(1)(6)
                              ----------  ----------     ----------    ----------   ----------
                                (in thousands, except store, per store and per share data)
<S>                              <C>       <C>            <C>           <C>          <C>

Consolidated Statement of
  Operations Data:
  Net sales......................$91,309   $  131,740     $  182,259    $  217,718   $  198,539

  Gross profit................... 23,955       34,901         46,634        53,309       46,379
  Selling, general and
     Administrative expense...... 15,562       22,630         30,978        42,326       41,492
  Store Closing Costs............      -            -              -             -          321
  Operating income...............  7,480      11,011          13,689         8,338        1,660
  Interest expense...............  1,354       2,310           3,808         6,848        6,533
  Net income/(loss)..............  3,982       5,563          6,573            897       (3,281)
  Basic earnings/(loss) per
   share.........................$   .96   $    1.31      $    1.53     $      .20   $     (.75)
  Diluted earnings/(loss) per
   shares........................$   .94   $    1.26      $    1.49     $      .20   $     (.75)
  Weighted avg. common
   Shares outstanding -
   basic.........................  4,137       4,250          4,291          4,403        4,375
  Weighted avg. common
   Shares outstanding
   -diluted......................  4,252       4,417          4,409          4,446        4,375
Store Data:
  Stores open at period end......     19          24             38             39           37
  Average sales per store(2).....$ 5,775    $  6,383      $   6,055     $    5,630   $    5,252
    Percentage increase
   (decrease) in comparable
     store sales(3)..............    5.7%        6.6%           1.9%         (1.1%)      (11.6%)

</TABLE>

<TABLE>
<CAPTION>
                                                                                               SEPTEMBER 30,

                                              1997            1998        1999       2000 (4)     2001 (5)
                                            --------      ----------    ---------   ---------    ---------
                                                                     (In Thousands)
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Consolidated Balance Sheet Data:
  Cash and cash equivalents............       $ 5,816      $ 4,618     $ 4,125        $ 2,971      $ 1,388
  Working capital......................        14,806       16,392      12,117         10,948       11,958
  Total assets.........................        59,121       69,116     125,931        129,647      113,680
  Short-term debt, including current
    maturities of notes payable........        21,447       26,105      69,547         77,895       61,078
  Notes payable less current maturities         5,145        4,980       6,897          6,015        9,375
  Stockholders' equity.................        24,058       30,433      37,592         39,552       36,149

<FN>

(1)  The Consolidated  Statement of Operations Data and the Consolidated Balance
     Sheet Data for the fiscal years ended September 30, 1997,  1998, 1999, 2000
     and  2001  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.
(5)  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 $577,000 due in December, 2001 and one payment
     of $584,000 due in January, 2002.
(6)  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>

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

                                       16
<PAGE>

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 2001 and 2000
and fiscal  years 2000 and 1999,  which  reflects  the  inclusion of the audited
consolidated financial statements for the fiscal years ended September 30, 2001,
2000 and 1999, 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.  The
Company did not have acquisitions in fiscal years 2001 or 2000.

         A summary of the Company's acquisitions 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 Marine  01/99        $1,639   $6,019       $1,090      $1,639     $5,470     $ --      $  --
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


</TABLE>

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

                         FISCAL YEAR ENDED SEPTEMBER 30,


                                       1999          2000          2001
                                       ------        ----          ----
Net sales.........................     100.0%        100.0%       100.0%
Costs of goods sold...............      74.4          75.5         76.6
                                       ------        ------       ------

Gross profit......................      25.6          24.5         23.4
Selling, general and
   Administrative expenses........      17.0          19.4         20.9
Operating income..................       7.5           3.8          0.8
Interest expense..................       2.1           3.1          3.3
Other income/ (expense)...........       0.3           0.0          0.0
                                       ------        ------       -------
Income/(loss) before income taxes.       5.7           0.7         (2.4)
Income tax expense/(benefit)......       2.1           0.3         (0.8)
                                       ------        ------       -------
Net income/(loss).................       3.6           0.4         (1.7%)
                                       ======        ======       =======



                                       17
<PAGE>

Fiscal Year Ended

September 30, 2001 Compared to the Fiscal Year Ended September 30, 2000

Net sales.  Net sales for the fiscal year ended  September  30, 2001 were $198.5
million, a decrease of approximately $19.2 million or 8.8% from the net sales of
$217.7 million for the fiscal year ended September 30, 2000.

Comparable store sales declined by 11.6% (32 stores in base) for the fiscal year
ended  September  30,  2001  compared  to a decrease of 1.1% (18 stores in base)
during the prior fiscal year.  Management  believes the decline in net sales and
the decrease in comparable store sales was related to various factors including,
but not  limited to,  erratic  levels of consumer  confidence,  persistent  weak
economic and industry  conditions and high fuel prices. In certain markets these
factors have been exaggerated by weather conditions related to the severe impact
of tropical  storm Allison along the Texas and Louisiana  coastlines.  Net sales
were  also  impacted  by (i) a  significant  percentage  decline  in  net  sales
specifically  during the month of  September  2001 and (ii) the closing of store
locations in Miami, Florida and Huntsville,  Alabama during the Company's fourth
quarter of fiscal 2001.  Prior to their closing,  the Miami and Huntsville store
locations had combined  sales of  approximately  $4.2 million during fiscal 2001
compared to net sales of $7.5  million in the prior  fiscal  year.  In reviewing
these  store  locations,  the  Company  determined  that each  store had a sales
overlap with certain other Travis Boating Center  locations and that the Company
could likely more cost  effectively  serve its customers  through such alternate
store locations.

         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   decreased  by  20.5%  to
approximately  $6.6 million in fiscal 2001 from $8.3 million in fiscal 2000.  In
fiscal 2001, F&I income as a percentage of net sales also decreased to 3.3% from
3.8% in  fiscal  2000  due  primarily  to (i)  lower  overall  net  sales,  (ii)
reductions in overall yields paid by lenders for  originating  customer  finance
contracts, (iii) competitive pressures on finance rates (which resulted in lower
net spreads  achieved in the  placement  of  customer  financing)  and (iv) with
regard to our store locations in Arkansas,  certain "caps" or limits on interest
rates allowed to be charged by lenders in Arkansas.  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.
Based on these  circumstances  and recent attempts by certain  manufacturers  to
enhance certain  manufacturer  warranty products,  the Company believes that net
sales of F&I  products  may  continue to decline  somewhat  prior to  ultimately
stabilizing.

Gross  profit.  For the fiscal year ended,  September  30,  2001,  gross  profit
decreased  13.0% to $46.4  million from $53.3  million in the prior fiscal year.
Gross  profit,  as a percent of sales,  decreased to 24.5% from 23.4% during the
same period.

The  decrease in gross  profit,  both in actual  dollars and as a percent of net
sales,  was  primarily  related to the Company and certain of its  manufacturers
offering  additional  incentives  and  rebates  on  various  models of boats and
outboard engines. The manufacturer  incentives and rebates were developed by the
manufacturers  as part of an  effort to  stimulate  sales  due to  overall  weak
industry sales performance. Additionally, the Company developed other incentives

                                       18
<PAGE>

as part of its ongoing  inventory  reduction plan implemented  previously during
the  summer of the prior  2000  fiscal  year.  Management  believes  that  these
programs or similar  levels of additional  incentives  and rebates will continue
for at least the first and second  quarters of fiscal 2002 or until economic and
industry  conditions  improve.  While these programs have impacted gross profit,
the Company  has been  successful  in reducing  overall  inventory  levels.  The
Company's  inventory levels were approximately $65.2 million as of September 30,
2001 versus $78.1 million as of September 30, 2000.  See  "Liquidity and Capital
Resources."

         The decline in net sales attributable to F&I Products has also impacted
the  gross  profit  margin.  Net  sales  of these  F&I  Products,  which  have a
significant  impact on the gross profit  margin,  contributed  $6.6 million,  or
14.2%,  of total gross profit in fiscal 2001,  as compared to $8.3  million,  or
15.6%,  of total gross profit for fiscal  2000.  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  decreased  to $41.5  million in fiscal 2001 from $42.3
million in the prior  fiscal  year.  During  fiscal  2001 the  Company  also had
expenses of approximately  $321,000 related to closing of the store locations in
Miami,  Florida and Huntsville,  Alabama.  Selling,  general and  administrative
expenses,  as a percent of net sales,  were 20.9% in fiscal  2001,  compared  to
19.4% in fiscal 2000.

The decrease in selling,  general and administrative  expenses in actual dollars
for the fiscal year ended  September  30, 2001 versus the prior  fiscal year was
primarily   attributable   to  the   reduction   in   wages,   commissions   and
travel/entertainment  expenses.  The  Company has  reduced  headcount  primarily
through attrition and selective position consolidation. The reduction in overall
expenses  was  offset  by  increases  in  certain  expenses  such as  utilities,
insurance,  fuel  costs,  rent/lease  expense  and bad debt  expense  related to
reserves on certain accounts receivable.

         Depreciation and Amortization  Expenses.  Depreciation and amortization
expenses  increased  to $2.9  million in fiscal  2001 from $2.6  million for the
prior fiscal year.  Depreciation and amortization  expenses, as a percent of net
sales, increased to 1.5% in fiscal 2001 from 1.2% for prior fiscal year.

The increase in depreciation and amortization  expenses,  both in actual dollars
and as a percent of net sales,  was primarily  attributable to the  depreciation
expenses of the Company's recently completed superstore location in San Antonio,
Texas,  substantial  renovations to the  Clearwater,  Florida store location and
other improvements to its asset infrastructure.

         Interest expense.  Interest expense decreased to $6.5 million in fiscal
2001 from $6.8  million in the prior  fiscal  year.  However,  interest  expense
increased  to 3.3% from 3.1% of net sales in fiscal  years 2001 and fiscal 2000,
respectively,  primarily as a result of the overall decline in net sales for the
2001 fiscal year.

Interest expense, in actual dollars, was positively impacted by decreases in the
Company's  short term borrowing  rates and inventory debt levels relative to the
prior fiscal year. The decrease in interest  expense was somewhat  offset by the
incremental  interest  expense incurred on the additional long term debt related
to the  Company's  new  superstore  in San Antonio,  Texas and other real estate
holdings.

The Company anticipates continuing to utilize significant amounts of third party
financing sources to support its inventories and other assets. Accordingly,  the
Company is subject to the impact of  increases  in interest  expenses  and other
costs  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."


                                       19
<PAGE>

Net  income/(loss).  The Company posted a net loss of approximately $3.3 million
for fiscal  2001  versus a net income of  approximately  $897,000 in fiscal 2000
primarily  due to the above  described  declines  in net  sales and total  gross
profit margins.

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 was the result of the Ft.  Myers store
location  opened in September,  1999 and store  locations in Pompano and Stuart,
Florida opened 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 store locations opened during the discussed periods.

         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.

         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.

         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

                                       20
<PAGE>

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.

         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 2000                                     Fiscal Year 2001
                               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...................  $23,627     $57,385       $82,872      $53,904       $24,084       $57,521      $73,455  $ 543,479
Gross profit................    5,974      14,836        20,810       11,689         5,778        13,998       17,620     8,983
Selling, general and
   administrative expenses.     7,651      10,567        12,942       11,166         8,379        10,264       11,984    10,865
Operating income (loss).....   (2,301)      3,640         7,176         (177)       (3,301)        3,010        4,916    (2,965)
Interest expense............    1,374       1,768         1,902        1,804         1,847         1,926        1,619     1,141
Net income (loss)...........   (2,323)      1,190         3,343       (1,314)       (3,256)          790        2,096    (2,911)
Basic earnings (loss) per
share.......................     (.53)        .27           .76         (.30)         (.74)          .18          .48      (.67)
Diluted earnings (loss)
per  share..................     (.53)        .27           .75         (.30)         (.74)          .18          .48      (.67)
Wtd. Avg. common shares
   outstanding - basic......    4,377       4,412         4,414        4,410         4,387         4,378        4,371     4,363
Wtd. Avg. common shares
   outstanding diluted......    4,377       4,487         4,451        4,410         4,387         4,378        4,373     4,363


                                                                         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................     25.3        25.8          25.1         21.7          24.0          24.3         24.0      20.7
Selling, general and
   administrative expense...     32.4        18.4          15.6         20.7          34.8          17.8         16.3      25.0
Operating income (loss).....     (9.8)        6.3           8.7         (0.3)        (13.7)          5.2          6.7      (6.8)
Interest expense............      5.8         3.1           2.3          3.4           7.7           3.3          2.2       2.6
Net income (loss)...........     (9.8)        2.1           4.0         (2.4)        (13.5)          1.4          2.9      (6.7)

</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 26% and
38%, 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."



                                       22
<PAGE>

         Quarterly  results may  fluctuate  due to many  factors.  Some of these
factors  include,  weather  conditions,  timing of special  events  such as boat
shows,  availability  of product and the opening or closing of store  locations.
Accordingly,  the results for any quarterly  period may not be indicative of the
expected results for any other quarterly period.

         The results for the quarter ended  September  30, 2001 were  negatively
impacted by certain events  including the expenses related to the closing of two
(2) store  locations  and the  establishment  of reserve  allowances  on certain
inventories  and  accounts   receivable.   Management   estimates  the  expenses
associated with these to be approximately $1.3 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  infrastructure.  These short-term cash needs have  historically  been
financed with cash from operations and further  supplemented by borrowings under
the Company's floor plan and revolving credit lines (collectively the "borrowing
agreements").  At September 30, 2001, the Company had approximately $1.4 million
in cash, $11.4 million in accounts  receivable  (primarily  contracts in transit
from  sales,   manufacturer  rebates  receivable  and  other  amounts  due  from
manufacturers)  and $65.2  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  $7.1 million of accounts payable and accrued  liabilities,  $58.9
million  outstanding  under  its  borrowing   agreements  and  $2.2  million  in
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
$577,000 due in December, 2001 and one payment of $584,000 due in January, 2002.
As of September 30, 2001 and December 14, 2001, the aggregate  maximum borrowing
limits under its  borrowing  agreements  was $110.0  million and $90.0  million,
respectively  (see  Subsequent  Events  in the  consolidated  audited  financial
statements of the Company and notes thereto included elsewhere in this Report on
Form 10-K).

         At September 30, 2001 the Company had working capital of  approximately
$12.0  million.  Working  capital,  as of September 30, 2001, was reduced by the
Company's net loss and the aforementioned balloon payments of approximately $1.2
million,  which  pending  the  refinances  thereof are  classified  as a current
liability.

         In fiscal  2001,  operating  activities  provided  cash  flows of $13.5
million due  primarily to the  decrease of $12.9  million in  inventories  (as a
result of the Company's  inventory  reduction  strategies)  and net increases in
accounts  payable and the  collection  of the income  taxes  recoverable.  These
amounts  were offset  partially  by the net loss of $3.3  million,  decreases in
accrued liabilities and prepaid expenses.




                                       23
<PAGE>

         In  fiscal  2000,  operating  activities  utilized  cash  flows of $2.8
million  due  primarily  to an  increase  of $2.4  million  and $4.2  million in
inventories  and income taxes payable,  respectively.  These amounts were offset
partially by net income of $897,000.

         Investing  activities utilized cash flows of $1.5 million due primarily
to the  purchase  and  replacement  of assets  used in  operations  of the store
locations.   These  activities  were  primarily  funded  through  the  Company's
borrowing agreements and internal cash flows.

         Financing  activities  in  fiscal  2001  utilized  cash  flows of $13.6
million primarily from the repayment of amounts  outstanding under the Company's
borrowing  agreements.  These repayments were generally from the proceeds of the
Company's  net  reduction in overall  inventory  levels  during the period.  The
Company  finances  substantially  all  of  its  inventory  and  working  capital
requirements  pursuant to borrowing agreements entered into in January 2000 with
two commercial  finance companies -- Transamerica  Distribution  Finance ("TDF")
and Deutsche  Financial  Services ("DFS").  The agreements,  which have maturity
dates of January 2003, contain  substantially  similar terms and financial ratio
based covenant requirements.  The maximum aggregate borrowing availability as of
September  30, 2001 was  limited to a maximum  credit  limit of $110  million at
various  sub-prime  based or LIBOR based  interest  rates (varying from 5.75% to
7.0% at September 30, 2001).  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 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).  Acquisitions,  the payment of dividends or repurchases of the Company's
common  stock  are also  substantially  limited  without  prior  consent.  As of
September  30, 2001,  the Company was in violation  of several  financial  ratio
covenants.  However,  the Company has entered into amended loan  agreements with
both lenders  dated as of December 14, 2001.  Concurrent  with  execution of the
amended loan agreements, the Company received waivers on all financial covenants
that were then in  non-compliance  with the prior  agreements.  The amended loan
agreements also provide for certain  revisions to (i) future  financial  ratio's
and (ii) the maximum amount which the Company may borrow from the initial amount
of $110  million  to  varying  reduced  amounts  through  July of 2002 when such
maximum  amount will be  established  at $70 million until the expiration of the
borrowing   agreements  in  January  of  2003  (see  Subsequent  Events  in  the
consolidated  audited  financial  statements  of the Company  and notes  thereto
included elsewhere in this Report on Form 10-K).

         Effective  December  14, 2001 the  Company  entered  into  Subordinated
Convertible loan  transactions in the aggregate amount of $4,300,000.  The loans
are  unsecured  with a term of 36 months and have rates ranging from prime + 2%,
adjusted quarterly, to 10.75%, fixed. The principal and interest amounts payable
pursuant to the loans is  subordinated,  in substantially  all respects,  to the
Company's borrowing  agreements with TDF and DFS providing inventory and working
capital financing for the Company.  The loans are redeemable by the Company, and
if not redeemed may be converted by the holders into the Company's  common stock
at a conversion price of approximately $2.46 per share (see Subsequent Events in
the consolidated  audited financial  statements of the Company and notes thereto
included elsewhere in this Report on Form 10-K).

         Based upon  management's  Fiscal 2002  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.


                                       24
<PAGE>

         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  21,  2001,  $65.7  million  was drawn on the  borrowing
agreements  and the Company  could borrow (i) zero for general  working  capital
purposes,   and  (ii)  an  additional   $24.3  million   solely  for  additional
inventories.  As the Company purchases inventory, the amount purchased increases
the borrowing base  availability and typically the Company makes a determination
to borrow. 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, 2001 and 2000,  the  Company had  non-interest
bearing  borrowings  of $ 5,370,000  and  $5,795,000  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 $65.2  million  and $78.1  million as of
September 30, 2001 and 2000, respectively.  Accounts receivable, on a net basis,
decreased by  approximately  $265,000 to $11.4 million at the end of fiscal 2001
from a year  earlier.  Costs in  excess  of net  assets  acquired  decreased  by
approximately  $837,000  to $10.4  million in fiscal  2001 due to the  scheduled
amortization of this asset.

         The Company had capital  expenditures of approximately  $1.5 million in
fiscal 2001 and approximately $4.8 million in fiscal 2000. Capital  expenditures
during  fiscal 2001 were  primarily  used for the  purchase and  replacement  of
assets used in operations of the store  locations.  Capital  expenditures in the
prior 2000  fiscal  year  included  expenditures  related to 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.

         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 June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141, "Business  Combinations",  and SFAS No. 142, "Goodwill and Other Intangible
Assets", effective for fiscal years beginning after December 15, 2001. Under the
new rules,  goodwill and intangible  assets deemed to have indefinite lives will
no  longer be  amortized  but will be  subject  to  annual  impairment  tests in
accordance  with the  Statements.  Other  intangible  assets will continue to be
amortized  over their  useful  lives.  The  Company  must apply the new rules on
accounting  for  goodwill  and other  intangible  assets  beginning in the first
quarter of fiscal 2003.  However,  the Company has not yet determined whether it
will early adopt the new rules  beginning in the first quarter of fiscal 2002 as
allowed by the Statement.  Application of the nonamortization  provisions of the
Statement  is expected  to result in an increase in net income of  approximately
$265,000 in the year of  adoption.  In the year of  adoption,  the Company  will
perform the first of the required  impairment  tests of goodwill and  indefinite
lived  intangible  assets as of the beginning of the fiscal year and has not yet
determined  what the effect of these tests will be on the results of  operations
and financial position of the Company.


In August 2001, the FASB issued SFAS No. 143,  "Accounting for Asset  Retirement
Obligations".  SFAS 143  establishes  accounting  standards for  recognition and
measurement of a liability for an asset retirement obligation and the associated
asset retirement cost. SFAS 143 is effective for financial  statements  relating

                                       25
<PAGE>

to fiscal years beginning  after June 15, 2002.  Management does not expect SFAS
143 to have a material effect on the Company's financial statements.

In September 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment
or  Disposal  of  Long-Lived  Assets".  SFAS No.  144  addresses  the  financial
accounting  and reporting for the impairment of long-lived  assets.  SFAS 144 is
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001. Management has not yet determined what the effect of SFAS 144
will be on the results of operations and financial position of the Company.

         Inflation

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











                                       26
<PAGE>


Item 7A.  Quantitative And Qualitative Disclosures About Market Risk

         At  September  30, 2001,  approximately  91.4% 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,  2001,  the average rate of
interest of such variable  rates was 6.79%.  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, 2001,
which averaged approximately $87,685,000,  an increase of 2% in the average rate
of interest  would  result in an increase  in fiscal  2001  interest  expense of
approximately  $1,753,700  and an increase in fiscal 2001 net loss and after-tax
cashflow of approximately $1,107,600.  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.

                                    PART III



Item 10. Directors and Executive Officers

         There is incorporated herein by reference that portion of the Company's
proxy  statement  for the 2002  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 2002 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 2002 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 2002 Annual Meeting of Shareholders
which   appears   under  the  captions   "Certain   Relationships   and  Related
Transactions" and "Compensation Committee Interlocks and Insider Participation."



                                       27
<PAGE>

                                    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 Operations..............F-5
     Consolidated Statements of Stockholders' Equity....F-6
     Consolidated Statements of Cash Flows..............F-7
     Notes to Consolidated Financial Statements.........F-9

(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
<TABLE>
<CAPTION>

(a)      Exhibits:
<S>                <C>

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,b)          --[Intentionally left blank]
10.6(a,b)          --[Intentionally left blank]
10.7(a,b)          --[Intentionally left blank]
10.8(a - i)        --[Intentionally left blank]
10.9(a,b,c)        --[Intentionally left blank]
10.10(a,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)

                                       28
<PAGE>

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,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]
10.29(a - 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)

                                       29
<PAGE>

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)
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)
10.52              --TBC Management Ltd. Part I Amendment to Employment Agreement with Mark T. Walton.(8)
10.53              --TBC Management Ltd. Part I Amendment to Employment Agreement with Ronnie L. Spradling.(8)
10.54              --TBC Management Ltd. Part I Amendment to Employment Agreement with Michael B. Perrine.(8)
10.55              --Consent and Waiver by and between Travis Boats & Motors, Inc. and Brunswick Corporation
                     (Re: Deutsche Financial Services Corporation), dated as of December 14, 2001.
10.56              --Consent and Waiver by and between Travis Boats & Motors, Inc. and Brunswick Corporation
                     (Re: Transamerica Commercial Finance Corporation), dated as of December 14, 2001.
10.57              --Amended and Restated Loan and Security Agreement between Travis Boats & Motors, Inc. and
                     Deutsche Financial Services Corporation, dated as of December 10, 2001.
10.58              --Amendment No. 2 to Travis Boats & Motors, Inc. Loan and Security Agreement by and
                     between  the Company and  Transamerica  Commercial  Finance
                     Corporation, dated as of December 14, 2001.
10.59              --Subordination Agreement - Travis Boats & Motors, Inc. Indebtedness to Brunswick
                     Corporation by and between those parties (Re:  Transamerica Commercial Finance
                     Corporation), dated as of December 14, 2001.
10.60              --Subordination Agreement - Travis Boats & Motors, Inc. Indebtedness to Brunswick
                     Corporation  by and between  those  parties  (Re:  Deutsche
                     Financial Corporation), dated as of December 14, 2001.
10.61              --Subordination Agreement - Travis Boats & Motors, Inc. Indebtedness to Shareholder
                     Purchasers  by and between  those  parties  (Re:  Brunswick
                     Corporation), dated as of December 14, 2001.
10.62              --Subordination Agreement - Travis Boats & Motors, Inc. Indebtedness to Shareholder
                     Purchasers by and between those parties (Re:  Transamerica Commercial Finance
                     Corporation), dated as of December 14, 2001.
10.63              --Subordination Agreement - Travis Boats & Motors, Inc. Indebtedness to Shareholder
                     Purchasers by and between those parties (Re:  Deutsche Financial Services Corporation),
                     dated as of December 14, 2001.
10.64              --Convertible Subordinated Promissory Note by and between those parties (Travis Boats &
                     Motors, Inc. to Brunswick Corporation), dated as of December 14, 2001.
10.65              --Travis Boats & Motors, Inc. Subordinated Note Purchase Agreement between Travis Boats &
                     Motors, Inc. and Brunswick Corporation, dated as of December 14, 2001.
10.66              --Travis Boats & Motors, Inc. Subordinated Note Purchase Agreement between Travis Boats &
                     Motors, Inc. and Shareholder Purchasers, dated as of December 14, 2001.
10.67              --Form of Convertible Subordinated Promissory Note (Travis Boats & Motors, Inc. to
                     Shareholder Purchaser), dated as of December 14, 2001.
21.1               --List of Subsidiaries of Registrant.(7)
23.1               --Consent of Independent Auditors.
-------------------------------------
<FN>

(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).
(8)  Incorporated  by reference  to the  Company's  Annual  Report on Form 10-Q
     filed with the Commission on August 14, 2001 (File No. 000-20757).

</FN>
</TABLE>

         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.



                                   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:  December 28, 2001                    By:  /s/ MARK T. WALTON
                                               -------------------------------
                                               Mark T. Walton
                                               Chairman of the Board and
                                               President



                                       30
<PAGE>

                      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, 2001,  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        December 28, 2001
------------------                    Director (Principal Executive Officer)
Mark T. Walton

/S/ MICHAEL B. PERRINE                Chief Financial Officer, Secretary and      December 28, 2001
----------------------                Treasurer (Principal Financial and
Michael B. Perrine                    Accounting Officer)


/S/ RONNIE L. SPRADLING               Executive Vice President-New Store          December 28, 2001
-----------------------               Development Director
Ronnie L. Spradling


/S/ STEVEN W. GURASICH, JR            Director                                    December 28, 2001
--------------------------
Steven W. Gurasich, Jr.

/s/ ZACH MCCLENDON, JR.               Director                                    December 28, 2001
-----------------------
Zach McClendon, Jr.


/S/ ROBERT C. SIDDONS                 Director                                    December 28, 2001
---------------------
Robert C. Siddons

/S/ JOSEPH E. SIMPSON                 Director                                    December 28, 2001
---------------------
Joseph E. Simpson

/S/ RICHARD BIRNBAUM                  Director                                    December 28, 2001
--------------------
Richard Birnbaum


</TABLE>



                                       31

<PAGE>
                  Travis Boats & Motors, Inc. and Subsidiaries

                        Consolidated Financial Statements



                  Years ended September 30, 2001, 2000 and 1999




                                    Contents

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

Audited Consolidated Financial Statements

Consolidated Balance Sheets.................................................F-3
Consolidated Statements of Operations.......................................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, 2001 and 2000, and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the three years in the period ended September 30, 2001.  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,  2001  and  2000 and the
consolidated  results of their  operations  and their cash flows for each of the
three  years  in the  period  ended  September  30,  2001,  in  conformity  with
accounting principles generally accepted in the United States.


                                          /s/  Ernst & Young LLP





November 27, 2001,
except for Notes 1, 2 and 10, as to which the date is December 14, 2001
Austin, Texas







                                       F-2
<PAGE>



                  Travis Boats & Motors, Inc. and Subsidiaries

                           Consolidated Balance Sheets
                        (in thousands, except share data)

<TABLE>
<CAPTION>


                                                                                  September 30,
                                                                              2001             2000
                                                                        -----------------------------------
<S>                                                                        <C>              <C>
Assets
Current assets:
   Cash and cash equivalents                                               $    1,388       $    2,971
   Accounts receivable, net of allowance for doubtful accounts of $527
     in 2001 and $278 in 2000                                                  11,351           11,616
   Prepaid expenses                                                               779              923
   Income taxes recoverable and deferred tax asset                              1,432            1,439
   Inventories                                                                 65,164           78,079

                                                                        -----------------------------------
Total current assets                                                           80,114           95,028

Property and equipment:
   Land                                                                         5,982            5,819
   Buildings and improvements                                                  15,485           14,713
   Furniture, fixtures and equipment                                            8,762            8,262

                                                                        -----------------------------------
                                                                               30,229           28,794
   Less accumulated depreciation                                               (7,887)          (5,878)

                                                                        -----------------------------------
                                                                               22,342           22,916

Deferred tax asset                                                                488              204

Goodwill, net of accumulated amortization of $1,396 in 2001 and $986
   in 2000                                                                      8,809            9,185
Noncompete agreements, net of accumulated amortization of $1,603 in
   2001 and $1,162 in 2000                                                      1,607            2,068

Other assets                                                                      320              246

                                                                        -----------------------------------
Total assets                                                               $  113,680       $  129,647
                                                                        ===================================

</TABLE>

                                       F-3


<PAGE>
<TABLE>
<CAPTION>

                                                                                  September 30,
                                                                              2001             2000
                                                                        -----------------------------------
<S>                                                                     <C>            <C>
Liabilities
Current liabilities:

   Accounts payable                                                     $     5,875    $       4,359

   Accrued liabilities                                                        1,203            1,826

   Floor plan and revolving lines of credit payable                          58,874           73,282

   Current portion of notes payable and other short-term obligations          2,204            4,613
                                                                        -----------------------------------
   Total current liabilities                                                 68,156           84,080

         Notes payable, less current portion                                  9,375            6,015




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,
     4,359,027 and 4,399,027 shares issued and outstanding at
     September 30, 2001 and 2000, respectively                                   44               44

   Paid-in capital                                                           15,342           15,464

   Retained earnings                                                         20,763           24,044

                                                                        -----------------------------------
Total stockholders' equity                                                   36,149           39,552
                                                                        -----------------------------------
Total liabilities and stockholders' equity                                $ 113,680        $ 129,647
                                                                        ===================================

</TABLE>

See accompanying notes.


                                       F-4


<PAGE>


                  Travis Boats & Motors, Inc. and Subsidiaries

                      Consolidated Statements of Operations
                        (in thousands, except share data)

<TABLE>
<CAPTION>


                                                                 Year ended September 30,
                                                        2001               2000                1999
                                                 ----------------------------------------------------------

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

Net sales                                         $    198,539      $     217,718        $    182,259

Cost of sales                                          152,160            164,409             135,625
                                                 ----------------------------------------------------------
Gross profit                                            46,379             53,309              46,634


Selling, general and administrative expenses            41,492             42,326              30,978
Store closing costs                                        321                ---                 ---
Depreciation and amortization                            2,906              2,645               1,967
                                                 ----------------------------------------------------------
                                                        44,719             44,971              32,945

Operating income                                         1,660              8,338              13,689

Interest expense                                        (6,533)            (6,848)             (3,808)

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

Other income (expense)                                      43                (26)                 81
                                                 ----------------------------------------------------------

Income before income taxes                              (4,830)             1,464              10,419

Income tax expense (benefit)                            (1,549)               567               3,846
                                                 ----------------------------------------------------------

Net income (loss)                                 $     (3,281)     $         897        $      6,573
                                                 ==========================================================

Earnings per share:
   Basic                                          $       (.75)     $         .20        $       1.53
                                                 ==========================================================
   Diluted                                        $       (.75)     $         .20        $       1.49
                                                 ==========================================================


</TABLE>

See accompanying notes.




                                       F-5

<PAGE>


                  Travis Boats & Motors, Inc. and Subsidiaries

                 Consolidated Statements of Stockholders' Equity
                                 (in thousands)

<TABLE>
<CAPTION>

                                                             Common Stock               Paid-in    Retained
                                                           --------------
                                                    Shares       Amount        Capital        Earnings        Total
                                                ------------------------------------------------------------------------

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

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/(loss)                                      -           -             -           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/(loss)                                       -           -             -             897            897
                                                ------------------------------------------------------------------------
Balance at September 30, 2000                          4,399          44        15,464          24,044         39,552

    Repurchase and cancellation of common
        stock                                            (40)          -          (122)              -           (122)
   Net income/(loss)                                       -           -             -          (3,281)        (3,281)
                                                ------------------------------------------------------------------------
Balance at September 30, 2001                          4,359     $    44      $ 15,342       $  20,763       $ 36,149
                                                ========================================================================


</TABLE>

See accompanying notes.


                                       F-6



<PAGE>




                  Travis Boats & Motors, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                 Year ended September 30,
                                                        2001               2000                1999
                                                 ----------------------------------------------------------

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

Operating activities
Net income/(loss)                                    $ (3,281)          $    897            $  6,573
Adjustments to reconcile net income/(loss) to
   net cash provided by (used in) operating
   activities:
     Depreciation                                       2,018              1,791               1,359
     Amortization                                         888                854                 608
     Deferred income taxes                               (320)               (18)                 19
     Changes in operating assets and
       liabilities:
         Accounts receivable                              265                805              (7,315)
         Prepaid expenses                                 144                254                (132)
         Inventories                                   12,915             (2,379)            (17,990)
         Other assets                                     (74)               (47)               (123)
         Accounts payable                               1,516                746                 925
         Accrued liabilities                             (623)            (1,502)               (456)
         Income taxes recoverable/income tax
           payable                                         43             (4,188)              3,245
                                                 ----------------------------------------------------------
Net cash provided by (used in) operating
   activities                                          13,491             (2,787)            (13,287)

Investing activities
Purchase of businesses                                     -0-            (1,034)             (6,101)
Purchase of property and equipment                     (1,495)            (4,762)             (7,725)
                                                 ----------------------------------------------------------
Net cash used in investing activities                  (1,495)            (5,796)            (13,826)



</TABLE>




                                       F-7



<PAGE>


                  Travis Boats & Motors, Inc. and Subsidiaries

                Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>



                                                                 Year ended September 30,
                                                        2001               2000                1999
                                                 ----------------------------------------------------------
<S>                                                <C>                  <C>                <C>

Financing activities

Net increase (decrease) in notes payable and
   other short-term obligations                    $  (13,457)          $  7,466           $  26,559
Net proceeds (payments) from issuance
   (repurchase) of common stock                          (122)               (37)                 61
                                                 ----------------------------------------------------------

Net cash provided by (used in) financing
   activities                                         (13,579)             7,429              26,620

Change in cash and cash equivalents                    (1,583)            (1,154)               (493)
Cash and cash equivalents, beginning of year            2,971              4,125               4,618
                                                 ----------------------------------------------------------

Cash and cash equivalents, end of year             $    1,388           $  2,971           $   4,125
                                                 ==========================================================

<CAPTION>

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

                                                                      Year ended September 30,
                                                         2001               2000                 1999
                                                   --------------------------------------------------------
<S>                                                <C>                  <C>                <C>

Debt issued in purchase of businesses              $       ---          $    ---           $   2,082
Stock issued in purchase of
   businesses                                      $       ---          $  1,100           $     525


</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

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.

Description of 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 Company finances  substantially  all of its inventory  purchases and working
capital  requirements  through  its  borrowing  agreements  with two  commercial
finance  companies  (see Notes 2 and 10).  Although  the  Company  has  violated
certain debt covenants  pursuant to such agreements in the past, the Company has
obtained  waivers  for  such  violations  and it  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  2002  operating  plan,  including  cost  reduction  initiatives  and 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 other outstanding debt. However,
material  shortfalls from anticipated  performance  could require the Company to
seek  further  amendment  to the amended  borrowing  agreements  or  alternative
sources of financing.  Description of Consolidation  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.

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 due to either their short-term nature or their variable
interest rate.

                                       F-9

<PAGE>

1.  Summary of Significant Accounting Policies (continued)

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,  amounts due from vendors  under  rebate  programs and
amounts due from vendors for services provided under warranty programs.

The accounts  receivable balances consisted of the following as of September 30,
2001 and 2000 (in thousands):

                                                       2001          2000
                                                   ------------- -------------

Trade receivables............................       $   4,584     $   5,540
Amounts due from manufacturers...............           6,691         5,511
Other receivables............................             603           843
Allowance for doubtful accounts..............            (527)         (278)
                                                   ------------- -------------

                                                    $  11,351     $  11,616
                                                   ============= =============


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

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
         Additions charged to costs and expenses.........               479
         Write-offs of uncollectible accounts............              (230)
                                                                 ---------------
Balance at September 30, 2001............................         $     527
                                                                 ===============


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, 2001 and 2000 (in
thousands):

                                                       2001          2000
                                                  ------------- -------------

New boats, motors and trailers.................    $  53,596     $  65,333
Used boats, motors and trailers................        5,330         5,653
Parts, accessories and other...................        6,722         7,510
Valuation allowance............................         (484)         (417)
                                                  ------------- -------------

                                                   $  65,164    $   78,079
                                                  ============= =============

                                      F-10

<PAGE>


1.  Summary of Significant Accounting Policies (continued)

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

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
         Additions charged to costs and expenses.................        67
              Inventory write-offs...............................       -0-
                                                                   -------------
Balance at September 30, 2001....................................  $    484
                                                                   =============


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                   7 years
           Goodwill                               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.

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. To date, the Company has not assessed that goodwill will
not be recoverable as determined by the  undisclosed  cash flow of an individual
store location.

Pre-opening Costs

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

                                      F-11

<PAGE>

1.  Summary of Significant Accounting Policies (continued)


Significant Suppliers

The Company  purchased  substantially  all of its new outboard motors for use on
its Travis  Edition boat packages  from a single  outboard  motor  manufacturer,
Brunswick Corporation,  in fiscal year 2001. During the 2000 and the 1999 fiscal
years the Company  purchased  substantially  all outboard  motors from Brunswick
Corporation and the former Outboard Marine Corporation.

Approximately 42%, 33% and 12% of the Company's net purchases (including product
purchased in  acquisitions)  in fiscal 2001, 2000 and 1999,  respectively,  were
manufactured by boat suppliers owned by Genmar Holdings.

Advertising Costs

Advertising  costs are expensed as incurred and were  approximately  $2,295,000,
$2,618,000 and $1,192,000 during the fiscal years ended September 30, 2001, 2000
and 1999, respectively.

Reclassifications

Certain amounts in the 2000 and 1999 financial statements have been reclassified
to conform with the  classifications  in the 2001 financial  statements  with no
effect on previously reported net income or stockholders' equity

Net Income/(Loss) Per Common Share
<TABLE>
<CAPTION>

                                                                          Year Ended September 30,
                                                                      2001          2000          1999
                                                                  ------------- ------------- -------------
                                                                   (in thousands, except per share data)
<S>                                                                <C>           <C>           <C>
Numerator:
   Net income/(loss)                                               $  (3,281)    $     897     $   6,573
                                                                  ============= ============= =============
Denominator:
   Denominator for basic earnings per share - weighted average
     shares                                                            4,375         4,403         4,291
Effect of dilutive securities:
   Employee stock options                                                 --            43           118
                                                                  ------------- ------------- -------------
Denominator for diluted earnings per share - adjusted weighted
   average shares and assumed conversions                              4,375         4,446         4,409
                                                                  ============= ============= =============

Basic earnings per share                                           $    (.75)    $     .20     $    1.53
Diluted earnings per share                                         $    (.75)    $     .20     $    1.49

</TABLE>

Options to purchase the following  shares of common stock were excluded from the
computation of diluted EPS for the years ended September 30, 2001 as such shares
would be  anti-dilutive  and for the periods  ended  September 30, 2000 and 1999
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.
                          Excluded        Exercises       Contractual
     Fiscal Year           Options          Prices        Life in Years
------------------------------------------------------------------------------
         2001                 404,964      $  6.80            6.67
         2000                 164,766      $ 14.40            6.93
         1999                  97,500      $ 21.18            7.79


                                      F-12

<PAGE>

2. Notes Payable and Other Short-Term Obligations

The Company  finances  substantially  all of its inventory  and working  capital
requirements  pursuant to borrowing agreements entered into in January 2000 with
two commercial finance companies.  The agreements,  which have maturity dates of
January 2003,  contain  substantially  similar  terms and financial  ratio based
covenant  requirements.  The  maximum  aggregate  borrowing  availability  as of
September  30, 2001 was  limited to a maximum  credit  limit of $110  million at
various  sub-prime  based or LIBOR based  interest  rates (varying from 5.75% to
7.0% at September 30, 2001).  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  acquisitions,  payment of
dividends or significant repurchases of the Company's common stock without prior
consent.  As of  September  30,  2001,  the Company was in  violation of several
financial ratio covenants.  However,  written waivers have been obtained and the
Company has entered into amended loan  agreements  with both lenders dated as of
December 14, 2001. (See Note 10)

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,
2001 and 2000, the Company had non-interest  bearing borrowings of approximately
$5,370,000  and $5,795,000  under these  arrangements.  Discontinuance  of these
agreements could result in an increase to interest expense.

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

                                                                         September 30,
                                                                    2001              2000
                                                               -----------------------------------
                                                                        (in thousands)

<S>                                                             <C>              <C>

Notes payable to commercial finance companies under revolving   $    58,874      $   73,282
   and floor plan line of credit agreements with interest
   ranging from 0% to prime minus .25% with a stated maturity
   date of January 31, 2003.

Notes payable (see terms below)                                      11,579          10,628
                                                               -----------------------------------
Total notes payable and other short-term obligations                 70,453          83,910
Less current portion                                                (61,078)        (77,895)
                                                               -----------------------------------
Total notes payable, less current portion                       $     9,375      $    6,015
                                                               ===================================

</TABLE>

The weighted average  interest rate on the borrowing  arrangements and the floor
plan payables  outstanding  as of September 30, 2001 and 2000 was 6.8% and 6.9%,
respectively.



                                      F-13



<PAGE>


2. Notes Payable and Other Short-Term Obligations (continued)
<TABLE>
<CAPTION>


Notes Payable consist of the following:                                  September 30,
                                                                     2001             2000
                                                               -----------------------------------
                                                                         (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 8.85%, due in monthly principal and interest
   installments ranging from $1,899 to $39,745, maturing
   beginning in April 2004.                                     $    9,530       $    5,410

Mortgage notes payable to various banks under deeds of
   trust with balloon payments due in December 2001 of
   $577,000 and January 2002 of $584,000 with interest
   ranging from 30 day LIBOR +.375% to prime plus .25%,
   floating.                                                         1,161            3,584

Notes payable to various banks and a corporation secured by
   certain vehicles, equipment and leasehold improvements
   with interest ranging from 7.5% to 11.0%, due in monthly
   principal and interest installments ranging from $209
   to $3,106, maturing beginning in June 2004.                         196              233

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.                                   692            1,401
                                                               -----------------------------------
Total notes payable                                             $   11,579       $   10,628
                                                               ===================================

</TABLE>

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

At September 30, 2001 and 2000,  approximately  91.4% and 92.4%  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 2001, 2000 and 1999.

Aggregate annual maturities  required on notes payable at September 30, 2001 are
as follows (in thousands):

               Year ending
              September 30

               2002                                  $    2,204
               2003                                         635
               2004                                       1,553
               2005                                         547
               2006                                       3,932
               Thereafter                                 2,708
                                                   ------------------
                                                     $   11,579
                                                   ==================

                                      F-14

<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  $3,841,000  in 2001,  $3,524,000 in 2000 and
$2,031,000 in 1999.

Future minimum payments under  non-cancelable  operating leases at September 30,
2001 are as follows for each of the years ending September 30 (in thousands):



                2002                                     $    3,178
                2003                                          2,451
                2004                                          1,791
                2005                                          1,085
                2006                                            690
                Thereafter                                    1,010
                                                       -----------------
                                                         $   10,205
                                                       =================

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

4. Acquisitions

The  Company  made  various   acquisitions   during  fiscal  1999.  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.


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

<TABLE>
<CAPTION>



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

Fiscal 1999
Amlin, Inc. dba Magic Marine   01/99     $1,639     $6,019       $1,090   $1,639      $5,470     $---     $---
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 & Service     04/99      2,147      4,798        1,597    2,147       4,248      --       ---
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

</TABLE>


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.

                                      F-15
<PAGE>

4. Acquisitions (continued)

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, 1998 are as follows for the fiscal year ended September 30, 1999:


                       Net Sales                               $206,994,000
                       Net Income                                 7,668,000
                       Diluted earnings per share                      1.74

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, 1998.


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,
                                             2001             2000
                                       -----------------------------------

Deferred tax assets:
   Book over tax depreciation              $ 488            $ 204
   Accruals and valuation reserves           107               71
                                       -----------------------------------
Net deferred tax assets                    $ 595            $ 275
                                       ===================================







                                      F-16



<PAGE>



5. Income Taxes (continued)

Significant  components  of the  provisions  (benefit)  for income  taxes are as
follows (in thousands):
<TABLE>
<CAPTION>

                                                                 Year ended September 30,
                                                        2001               2000                1999
                                                 ----------------------------------------------------------
<S>                                                 <C>                   <C>               <C>

Current expense (benefit):
         Federal                                    $   (1,100)           $   507           $   3,424
         State                                            (129)                79                 403
                                                 ----------------------------------------------------------
Total current expense (benefit)                         (1,229)               586               3,827

Deferred expense (benefit):
         Federal                                          (320)               (19)                 19
         State                                               -                  -                   -
                                                 ----------------------------------------------------------
Total deferred expense (benefit)                          (320)               (19)                 19
                                                 ----------------------------------------------------------

Total provision/(benefit) for income taxes          $   (1,549)           $   567           $   3,846
                                                 ==========================================================

</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,
                                                        2001               2000                1999
                                                 ----------------------------------------------------------
<S>                                                 <C>                   <C>               <C>

Income tax expense/(benefit) at the federal
   statutory rate                                   $   (1,642)           $   498           $   3,542
State income taxes                                        (129)                79                 403
Other                                                      222                (10)                (99)
                                                 ----------------------------------------------------------
                                                    $   (1,549)           $   567           $   3,846
                                                 ==========================================================

</TABLE>

Income taxes  paid/(received)  were approximately  ($1,200,000);  $1,850,000 and
$1,563,000  in the  fiscal  years  ended  September  30,  2001,  2000 and  1999,
respectively. The Company believes that its Tax Benefit as of September 30, 2001
is  recoverable  from  federal  income  taxes paid in prior years  eligible  for
carry-back.

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.

                                      F-17
<PAGE>

6.  Stockholders' Equity (continued)

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 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.

Total option activity for the years ended September 30, 2001, 2000 and 1999:
<TABLE>
<CAPTION>


                                                                                              Weighted
                                                                        Range of Exercise      Average
                                                      Number of Shares        Prices       Exercise Price
                                                      -----------------------------------------------------
<S>                                                          <C>          <C>                  <C>

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
   Granted                                                    82,333        $2.70-$4.00        $ 3.07
   Exercised                                                     ---           ---               ---
   Forfeited                                                 (68,500)      $4.00-$22.50        $16.00
                                                      ------------------
Outstanding at September 30, 2001                            404,964      $2.70-$22.375        $ 6.80
                                                      ==================

Exercisable at September 30, 2001                            308,764      $2.70-$22.375        $ 6.60
                                                      ==================

Options available for grant at September 30, 2001             36,239
                                                      ==================
Common stock reserved for issuance at September 30,
   2001                                                      441,203
                                                      ==================

</TABLE>

The weighted-average remaining contractual life of options at September 30, 2001
and 2000 is approximately 6.67 and 7.08 years, respectively.

Options outstanding at September 30, 2001, are comprised of the following:
<TABLE>
<CAPTION>


                                    Outstanding                                              Exercisable
                           -----------------------------------                     -------------------------------
                                                                Weighted Avg.
    Range of Exercise                        Weighted Avg.    Contractual Life      Number of     Weighted Avg.
         Prices               Options      Exercise Prices       in Years            Options      Exercise Price
------------------------------------------------------------------------------------------------------------------
     <S>                     <C>              <C>                <C>                <C>              <C>

      $2.70 - $4.00           92,333          $  3.17            9.40                80,933          $  3.10
      $5.25 - $5.75          206,865          $  5.49            5.96               139,865          $  5.36
     $8.875 - $11.50          73,766          $  9.37            5.45                66,966          $  9.33
     $15.00 - $22.375         32,000          $ 19.87            6.28                21,000          $ 19.69
------------------------------------------------------------------------------------------------------------------
      $2.70 - $22.375        404,964          $  6.80            6.67               308,764          $  6.60
==================================================================================================================

</TABLE>


                                      F-18



<PAGE>


6.  Stockholders' Equity (continued)

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.

The  FASB  recently  issued  Interpretation  No.  44,  "Accounting  for  Certain
Transactions  Involving  Stock  Compensation",   (the  "Interpretation"),   that
provides guidance related to the implementation of APB 25. The Interpretation is
to be applied  prospectively  to all new awards,  modifications  to  outstanding
awards and changes in employee  status on or after July 1, 2000.  After December
15,  1998,  for  changes to awards that affect  exercise  prices of awards,  the
Company must prospectively account for the impact of those changes. The adoption
of the Interpretation did not have a material impact on the Company's  financial
condition or results of operations.


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:
<TABLE>
<CAPTION>

                                                       Year Ended September 30,
                                                2001             2000             1999
                                           --------------------------------------------------
     <S>                                         <C>              <C>              <C>

     Risk-free interest rate                    3.00%            6.50%            6.00%
     Dividend yield                              0%               0%               0%
     Expected life                             5 years          5 years          5 years
     Volatility                                 65.2%            64.5%            39.3%

</TABLE>

     The pro forma amounts under Statement No. 123 are as follows:
<TABLE>
<CAPTION>

                                                           Year Ended September 30,
                                                    2001           2000            1999
                                                ---------------------------------------------
     <S>                                           <C>             <C>             <C>

     Net income/loss as reported (000's)           ($3,281)        $897            $6,572
     Pro forma net income/loss (000's)             ($3,460)        $738            $6,467
     Diluted EPS - as reported                     ($0.75)         $0.20           $1.49
     Pro forma - Diluted EPS                       ($0.79)         $0.17           $1.47
</TABLE>

The  compensation  expense  associated  with  the  fair  value  of  the  options
calculated  in  2001,  2000 and 1999 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:
<TABLE>
<CAPTION>


                                                         Year Ended September 30,
                                                2001             2000             1999
                                           --------------------------------------------------
     <S>                                        <C>              <C>                 <C>

     Shares Repurchased (000's)                   40              15                 -0-
     Total Purchase Price (000's)               $122             $59                 n/a
     Average Price per Share                    $3.08            $3.92               n/a

</TABLE>

                                      F-19
<PAGE>

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.

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, 2001, 2000 and 1999.

9.       New Accounting Pronouncements

In June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141, "Business  Combinations",  and SFAS No. 142, "Goodwill and Other Intangible
Assets", effective for fiscal years beginning after December 15, 2001. Under the
new rules,  goodwill and intangible  assets deemed to have indefinite lives will
no  longer be  amortized  but will be  subject  to  annual  impairment  tests in
accordance  with the  Statements.  Other  intangible  assets will continue to be
amortized  over their  useful  lives.  The  Company  must apply the new rules on
accounting  for  goodwill  and other  intangible  assets  beginning in the first
quarter of fiscal 2003.  However,  the Company has not yet determined whether it
will early adopt the new rules  beginning in the first quarter of fiscal 2002 as
allowed by the Statement.  Application of the nonamortization  provisions of the
Statement  is expected  to result in an increase in net income of  approximately
$265,000 in the year of  adoption.  In the year of  adoption,  the Company  will
perform the first of the required  impairment  tests of goodwill and  indefinite
lived  intangible  assets as of the beginning of the fiscal year and has not yet
determined  what the effect of these tests will be on the results of  operations
and financial position of the Company.


In August 2001, the FASB issued SFAS No. 143,  "Accounting for Asset  Retirement
Obligations".  SFAS 143  establishes  accounting  standards for  recognition and
measurement of a liability for an asset retirement obligation and the associated
asset retirement cost. SFAS 143 is effective for financial  statements  relating
to fiscal years beginning  after June 15, 2002.  Management does not expect SFAS
143 to have a material effect on the Company's financial statements.

In September 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment
or Disposal of Long-Lived Assets".  SFAS 144 addresses the financial  accounting
and reporting for the impairment or disposal of long-lived  assets.  SFAS 144 is
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001. Management has not yet determined what the effect of SFAS 144
will be on the results of operations and financial position of the Company.

10.       Subsequent Events

Loan Transactions

Effective  December  14,  2001 the Company  entered  into  amended and  restated
borrowing agreements (the "Amended  Agreements") with its two commercial finance
companies  which provide  substantially  all of the Company's  financing for its
inventory and working capital  requirements  (see Footnote #2 "Notes Payable and
Other  Short  Term  Obligations").  Concurrent  with  execution  of the  Amended
Agreements,  the Company received  waivers on all financial  covenants that were
then in non-compliance  with the prior agreements.  The Amended  Agreements also
provide  for  certain  revisions  to (i) future  financial  ratio's and (ii) the
maximum  amount  which the Company  may borrow  from the initial  amount of $110
million to varying reduced amounts through July of 2002 when such maximum amount
will be  established  at $70  million  until  the  expiration  of the  borrowing
agreements in January of 2003.



                                      F-20

<PAGE>



Subordinated Convertible Loan Transactions

Effective  December 14, 2001 the Company entered into  Subordinated  Convertible
loan transactions in the aggregate amount of $4,300,000. The loans are unsecured
with a term of 36  months  and have  rates  ranging  from  prime + 2%,  adjusted
quarterly, to 10.75%, fixed. The principal and interest amounts payable pursuant
to the loans is subordinated,  in substantially  all respects,  to the Company's
borrowing  agreements with the commercial finance companies  providing inventory
and  working  capital  financing  for the  Company  (see Note 2).  The loans are
redeemable  by the Company,  and if not redeemed may be converted by the holders
into the Company's common stock at a conversion price of approximately $2.46 per
share.















                                      F-21