SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-Q

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

                  For the Quarterly Period Ended June 30, 2004

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                   TRANSITION PERIOD OF ________ TO ________.

                         Commission File Number 0-20757

                           TRAVIS BOATS & MOTORS, INC.

             (Exact name of registrant as specified in its charter)



            TEXAS                                        74-2024798
(State or other jurisdiction of                        (I.R.S Employer
 incorporation or organization)                     Identification Number)


               12116 Jekel Circle, Suite 102, Austin, Texas 78727
                    (Address of principal executive offices)
       Registrant's telephone number, including area code: (512) 347-8787

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  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
Common Stock as of the latest practicable date.

      Common Stock $.01 par value: 4,299,727 shares as of August 17, 2004.



<PAGE>



                                      INDEX

<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION


<S>                                                                                       <C>
Item 1.  Financial Statements
                   Consolidated Balance Sheets:
                   June 30, 2004 (unaudited) and September 30, 2003........................1
                   Consolidated Statements of Operations:
                   Three and Nine Months Ended June 30, 2004 and 2003 (unaudited)..........2
                   Consolidated Statements of Cash Flows:
                   Nine Months Ended June 30, 2004 and 2003 (unaudited)....................3
                   Notes to Unaudited Consolidated Financial Statements....................4
Item 2.  Management's Discussion and Analysis of Financial
                   Conditions and Results of Operations....................................8
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................16

PART II - OTHER INFORMATION

Item 3. Defaults Upon Senior Securities...................................................17
Item 6. Exhibits and Reports on Form 8-K..................................................17
Signatures................................................................................18
</TABLE>


                                        i


<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>
Travis Boats & Motors, Inc. and Subsidiaries
Consolidated Balance Sheets
 (in thousands, except share data)
                                                                            June 30,        September 30,
                                                                              2004              2003
                                                                          -------------    ----------------
                                                                          (unaudited)
<S>                                                                           <C>                <C>
ASSETS:
      Current assets:
            Cash and cash equivalents                                         $  3,244           $   3,414
            Accounts receivable, net                                             8,785               5,655
            Inventories, net                                                    44,009              30,970
            Prepaid expenses and other                                             980                 914
                                                                          -------------    ----------------
              Total current assets                                              57,018              40,953

      Property and equipment:
            Land                                                                 3,934               5,124
            Buildings and improvements                                          11,125              13,611
            Furniture, fixtures and equipment                                    9,151               9,134
                                                                          -------------    ----------------
                                                                                24,210              27,869
            Less accumulated depreciation                                      (11,308)            (10,634)
                                                                          -------------    ----------------
                                                                                12,902              17,235

      Intangibles and other assets:
            Non-compete agreements, net                                            448                 731
            Other assets                                                           504                 203
                                                                          -------------    ----------------
              Total assets                                                    $ 70,872           $  59,122
                                                                          =============    ================

LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities:
            Accounts payable                                                  $  4,442           $   2,258
            Accrued liabilities                                                  2,242               2,001
            Current portion of deferred gain on sale of real property              107                  87
            Floor plan and revolving line of credit                             44,130              28,658
            Current portion of notes payable, convertible subordinated
              notes and other short term obligations                             2,105               4,723
                                                                          -------------    ----------------
              Total current liabilities                                         53,026              37,727

      Deferred gain on sale of real property, net of current portion             1,016                 963
      Notes payable, less current portion                                        4,147               1,591
      Convertible subordinated notes, less current portion                         ---               1,300

      Stockholders' equity
                  Serial Preferred stock, $100 par value,
                    1,000,000 shares authorized, 80,000 shares outstanding       8,000               8,000
                  Common Stock, $.01 par value, 50,000,000 authorized,
                    4,299,727 issued and outstanding                                43                  43
                  Paid-in capital                                               15,094              15,094
                  Retained deficit                                             (10,454)             (5,596)
                                                                          -------------    ----------------
              Total stockholders' equity                                        12,683              17,541
                                                                          -------------    ----------------
              Total liabilities and stockholders' equity                      $ 70,872           $  59,122
                                                                          =============    ================
</TABLE>


See notes to unaudited consolidated financial statements


                                        1


<PAGE>


<TABLE>
<CAPTION>
Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share data and store count)
                                                            Three months ended         Nine months ended
                                                                  June 30                   June 30
                                                              2004       2003           2004        2003
                                                            ---------  ---------       ---------  ---------

<S>                                                         <C>        <C>             <C>        <C>
Net sales..............................................     $ 47,214   $ 53,129        $ 92,621   $109,149
Cost of goods sold.....................................       36,658     42,136          72,768     87,049

Gross profit...........................................       10,556     10,993          19,853     22,100

Selling, general and administrative....................        8,058      8,704          20,462     24,682
Store closing expense..................................          --         307            --          307
Depreciation and amortization..........................          496        598           1,565      1,863
                                                            ---------  ---------       ---------  ---------
                                                               8,554      9,609          22,027     26,852

Operating income/(loss)................................        2,002      1,384          (2,174)    (4,752)
Interest expense.......................................         (699)      (872)         (2,093)    (2,614)
Other income...........................................           (5)        46              72         88
Impairment on sale/leaseback of real estate............          --         --             (543)       --

Profit/(loss) before income taxes......................        1,298        558          (4,738)    (7,278)
Income tax (expense)/benefit...........................          --         --             --        2,533
                                                            ---------  ---------       ---------  ---------
Net profit/(loss)......................................        1,298        558          (4,738)    (4,745)
Preferred stock dividends..............................          120        120             360        360
                                                            ---------  ---------       ---------  ---------
Net profit/(loss) attributable to common shareholders..     $  1,178   $    438        $ (5,098)  $ (5,105)
                                                            =========  =========       =========  =========

Income/(loss) per share:
   Basic  income/(loss)  per share before  preferred
     stock dividends...................................         0.30       0.13           (1.10)     (1.10)
   Preferred stock dividends...........................        (0.03)      (.03)          (0.09)     (0.08)
                                                            ---------  ---------       ---------  ---------
Basic income/(loss) per share..........................     $   0.27   $   0.10        $  (1.19)  $  (1.18)
                                                            =========  =========       =========  =========
   Diluted  income/(loss) per share before preferred
     stock dividends...................................         0.17       0.07           (1.10)     (1.10)
   Preferred stock dividends...........................          --         --            (0.09)     (0.08)
                                                            ---------  ---------       ---------  ---------
Diluted income/(loss) per share........................     $   0.17   $   0.07        $  (1.19)  $  (1.18)
                                                            =========  =========       =========  =========

Weighted average basic common shares outstanding.......    4,299,727  4,313,243       4,299,727   4,324,232
Weighted average diluted common shares outstanding.....    8,081,137  8,094,653       4,299,727   4,324,232
</TABLE>

            See notes to unaudited consolidated financial statements


                                       2


<PAGE>


<TABLE>
<CAPTION>
Travis Boats & Motors, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
                                                                                                             Nine months ended
                                                                                                                  June 30
                                                                                                         2004               2003
                                                                                                       -----------------------------
<S>                                                                                                     <C>              <C>
Operating activities:                                                                                  (unaudited)       (unaudited)
Net Loss............................ ........................................................           ($ 4,738)          ($ 4,745)
Adjustments to reconcile net loss to net cash provided by/(used in) Operating activities:
      Depreciation...........................................................................              1,274              1,549
      Amortization...........................................................................                291                314
      Amortization of deferred gain..........................................................                (62)               ---
      Impairment on sale/leaseback of real estate............................................                543                  0
      Changes in operating assets and liabilities
           Accounts receivable...............................................................             (3,130)            (3,031)
           Prepaid expenses..................................................................                (66)               (72)
           Inventories.......................................................................            (13,039)            17,694
           Other assets......................................................................               (309)               174
           Accounts payable..................................................................              2,184                195
           Accrued liabilities...............................................................                241                734
           Income tax recoverable............................................................                ---                611
                                                                                                        --------           --------
      Net Cash provided by/(used in) operating activities....................................            (16,811)            13,423

      Investing Activities:
      Purchase of property and equipment.....................................................               (731)                 0
      Proceeds from sale of property and equipment...........................................              3,382                151
                                                                                                        --------           --------
      Net cash provided by investing activities..............................................              2,651                151

      Financing activities:

      Net increase/(decrease) in floorplan, revolving and other short term obligations.......             15,270            (13,444)
      Proceeds from real estate refinance note...............................................              5,300                ---
      Payments on real estate refinance note.................................................             (6,460)               ---
      Preferred stock dividends..............................................................               (120)              (360)
      Net payments from repurchase of common stock...........................................                --                  (9)
                                                                                                        --------           --------
      Net cash provided by/(used in) financing activities....................................             13,990            (13,813)
      Change in cash and cash equivalents....................................................               (170)              (239)
      Cash and cash equivalents, beginning of period.........................................              3,414              4,253
                                                                                                        --------           --------
      Cash and cash equivalents, end of period...............................................           $  3,244           $  4,014
                                                                                                        ========           ========
</TABLE>
                See notes to unaudited consolidated financial statements


                                       3


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2004

NOTE 1 - BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
from the records of Travis Boats & Motors, Inc. and subsidiaries  (collectively,
the "Company") in accordance with auditing  standards  generally accepted in the
United States. In the opinion of management,  such financial  statements include
all  adjustments  (consisting of only recurring  accruals)  necessary to present
fairly the  financial  position at June 30,  2004,  and the  interim  results of
operations  and cash flows for the three and nine month  periods  ended June 30,
2004 and 2003. The consolidated  balance sheet at September 30, 2003,  presented
herein, has been derived from the audited  consolidated  financial statements of
the Company for the fiscal year then ended.

Certain  information and footnote  disclosures  normally  included in the annual
financial  statements  have  been  condensed  or  omitted  for  purposes  of the
condensed  consolidated interim financial  statements.  The consolidated interim
financial statements should be read in conjunction with the audited consolidated
financial  statements,  including the notes  thereto,  for the fiscal year ended
September 30, 2003 included in the Company's  annual Report on Form 10-K/A filed
with the  Securities  and Exchange  Commission  on February 2, 2004.  Accounting
policies  followed  by the  Company  are  described  in  Note  2 to the  audited
consolidated  financial  statements for the fiscal year ended September 30, 2003
included in the Company's annual report on Form 10-K/A.

The results of  operations  for the three and nine month  periods ended June 30,
2004 are not  necessarily  indicative of the results to be expected for the full
fiscal year.

Controlling Shareholder

As of January 7, 2003,  TMRC,  LLP,  ("Tracker"),  a wholly owned  subsidiary of
Tracker Marine,  LLC, pursuant to certain agreements for assistance in financing
and other matters (the "Agreements"),  assumed effective control of the Company.
Tracker and affiliated  entities have operations in marine and outdoor lifestyle
retail and  manufacturing.  Tracker  is the  manufacturer  of  various  pleasure
boatlines including:  Tracker, Mako, Nitro, ProCraft,  Fisher and numerous other
popular models.

Prior to the  Agreements,  pursuant  to its  holding  80,000  shares of Series A
Preferred Stock,  Tracker  beneficially  owned  approximately  43%, or 3,252,825
shares, of the Company's common stock on a fully-diluted, as-converted basis. As
a result of the Agreements, Tracker now has voting control of approximately 57%,
or 4,611,119 shares, on a fully-diluted,  as-converted  basis.  Tracker also has
the  right  to  designate  four of  seven  members  of the  Company's  Board  of
Directors.  Tracker currently has two  representatives on the Board of Directors
pursuant to its ownership of 80,000  shares of the Company's  Series A Preferred
Stock, and has not yet designated two additional representatives.


                                        4


<PAGE>


NOTE 2 - INCOME/(LOSS) PER SHARE

(in thousands, except share data)


<TABLE>
<CAPTION>
                                                              Three Months Ended           Nine Months Ended
                                                                    June 30,                  June 30,
                                                               2004        2003          2004        2003
                                                           ----------   ---------      ---------   ---------

<S>                                                        <C>          <C>            <C>         <C>
NUMERATOR
  Net income/(loss) before preferred stock dividends.....      1,298          558         (4,738)     (4,745)
  Preferred stock dividends..............................       (120)        (120)          (360)       (360)
  Net income/(loss) attributable to common shareholders..    $ 1,178    $     438      $  (5,098)  $  (5,105)

Weighted average basic common shares outstanding.........  4,299,727    4,313,243      4,299,727   4,324,232
Effect of assumed conversions
  Convertible subordinated notes.........................    528,584      528,584            ---         ---
  Series A preferred stock...............................  3,252,826    3,252,826            ---         ---
Weighted average diluted common shares outstanding.......  8,081,137    8,094,653      4,299,727   4,324,232

Basic income/(loss) per share before preferred
    stock dividends .....................................        .30          .13          (1.10)      (1.10)
Preferred stock dividends................................       (.03)        (.03)          (.09)       (.08)
Basic income/(loss) per share attributable                 ----------   ---------      ---------   ---------
    to common shareholders...............................    $   0.27   $    0.10      $   (1.19)  $   (1.18)
                                                           ==========   =========      ==========  ==========

Diluted  income/(loss) per share before preferred
    stock dividends......................................        0.17        0.07          (1.10)      (1.10)
Preferred stock dividends................................         --          --           (0.09)      (0.08)
                                                           ----------   ---------      ----------  ----------
Diluted income/(loss) per share..........................    $   0.17   $    0.07       $  (1.19)  $   (1.18)
                                                           ==========   =========      ==========  ==========

</TABLE>



The  foregoing  table does not  include  shares  issuable  upon the  exercise of
outstanding  stock  options.  At June 30,  2004,  the  Company  had  issued  and
outstanding  incentive stock options to certain employees totaling 56,100 shares
which  had  exercise  prices  equal to or  exceeding  the  closing  price of the
Company's  common stock on such date.  The 56,100  option shares have a weighted
average  exercise price of $6.16 and a weighted  average  outstanding  remaining
life of 6.3 years.

For the nine months ended June 30, 2004 and 2003, the weighted  average dilutive
share  calculation  excludes  the  528,584  shares of common  stock  subject  to
issuance pursuant to $1.3 million in outstanding convertible  subordinated notes
(see Note 4) and 3,252,826  shares of common stock subject to issuance  pursuant
to 80,000 shares of Series A Preferred Stock. The shares were excluded since the
Company had a net loss in both periods.


                                        5


<PAGE>


NOTE 3 - STOCKHOLDERS' EQUITY

The  Company  accounts  for its  employee  stock-based  compensation  using  the
intrinsic value method in accordance with  Accounting  Principles  Board Opinion
No. 25, Accounting for Stock Issued to Employees,  and related  Interpretations.
The Company makes disclosures regarding employee stock-based  compensation using
the fair value method in  accordance  with  Statement  of  Financial  Accounting
Standards 148 ("SFAS"),  Accounting for Stock-Based  Compensation-Transition and
Disclosure.  The Company  has  calculated  the fair value of options  granted in
these periods using the  Black-Scholes  option-pricing  model and has determined
the pro forma impact on net loss.

The  following  table  illustrates  the  effect  on net  income/(loss)  and  net
income/(loss)  loss  per  share  if the  Company  had  applied  the  fair  value
recognition  provisions of SFAS 123 to stock-based  compensation for all periods
presented (in thousands, except per share data):


<TABLE>
<CAPTION>
                                                                 Three months ended       Nine months ended
                                                                     June 30,                June 30,
                                                                  2004       2003        2004        2003
                                                               -----------------------------------------------
<S>                                                             <C>         <C>        <C>          <C>
Net income/(loss) attributable to common
     shareholders as Reported                                   $  1,178    $    438   $ (5,098)    $ (5,105)
Add: Total stock based employee compensation
     expense included in the determination of net
     income/(loss) as reported, net of tax effects                   ---         ---        ---          ---
Less: Total stock based employee compensation
     expense determined under the fair value                         (29)        (33)       (87)        (126)
     methods for all awards, net of related tax effects
                                                               -----------------------------------------------
Proforma net income/(loss) attributable to common shareholders   $ 1,149    $    405   $ (5,185)    $ (5,231)
                                                               -----------------------------------------------
Basic and Diluted Income/(Loss) Per Share
Reported basic net income/(loss) per share attributable         $    .27    $    .10   $  (1.19)    $  (1.18)
     to common shareholders
Reported dilutive net income/(loss) per share attributable      $    .17    $    .07   $  (1.19)    $  (1.18)
     to common shareholders

Proforma basic net income/(loss) per share attributable         $    .27    $    .09   $  (1.21)    $  (1.21)
     to common shareholders
Proforma dilutive net income/(loss) per share attributable      $    .16    $    .05   $  (1.21)    $  (1.21)
     to common shareholders
</TABLE>



The  compensation  expense  associated  with  the  fair  value  of  the  options
calculated in the quarter and nine month periods ended June 30, 2004 and 2003 is
not  necessarily  representative  of  the  potential  effects  on  reported  net
income/(loss) in future periods.


                                        6


<PAGE>


NOTE 4 - NOTES PAYABLE

The Company entered into a real estate loan during November 2003 in the original
principal amount of $5.3 million.  The loan has a three year maturity.  Interest
payments  are due monthly  based upon  interest  at 12%,  and all  principal  is
repayable  at maturity.  Proceeds of the loan were used to refinance  other real
estate indebtedness maturing December 31, 2003 in the approximate amount of $3.7
million and the remainder was used for transaction  expenses and general working
capital.

On  February  6,  2004,  the  Company  agreed  to  terms  with  its  controlling
shareholder,  Tracker, for a $500,000,  non-revolving,  loan. The note is due on
demand at any time on or after May 5, 2004 (the "Note").  The Note provided that
the  Company,  at the  discretion  of the  Operating  Committee  of its Board of
Directors,  could  request  advances  at any time prior to May 5, 2004 up to the
aggregate  amount of $500,000.  Advances made pursuant to the Note bear interest
at a rate of 10% until the  earlier of the date  demand is made by  Tracker  for
repayment or January 5, 2005 at which time the rate will  increase to 18% on any
unpaid  principal  and  accrued,  but  unpaid,  interest  amounts.  The  Note is
generally unsecured, subject to Tracker retaining a right of offset with respect
to any cash, credits, rebates,  deposits,  accounts,  securities,  and any other
property of the Company in Tracker's possession, custody or control.

As of the date this report on Form 10-Q, the Company has borrowed $340,000 under
the Note and has made  payments  to reduce the  current  outstanding  balance to
approximately $53,000.

NOTE 5 - SHORT TERM BORROWINGS

Inventory Borrowing Agreements

The Company finances  substantially  all of its inventory  pursuant to borrowing
agreements (the "Borrowing Agreements") with two commercial finance companies --
Transamerica   Commercial  Finance   Corporation   ("TCFC")  and  GE  Commercial
Distribution  Finance  Corporation  ("GE") (formerly known as Deutsche Financial
Services  Corporation).  During  the  quarter  ended  March 31,  2004,  TCFC was
acquired by GE. The Borrowing Agreements contain substantially similar terms and
financial  covenants,  however the Company's  agreements with GE and TCFC remain
separate. As of June 30, 2004, the maximum aggregate borrowing  availability was
limited to a maximum  seasonal  credit limit of $50.0  million at various  prime
based or LIBOR  based  interest  rates  (varying  from  4.12% to 4.75%) of which
approximately  $44.1  million was funded,  and an  additional  $4.5  million was
allocated  for  inventory  orders  in  process.  The  Borrowing  Agreements  are
primarily for the purchase of inventories  and, to a far lesser extent,  provide
available amounts for general working capital  requirements based upon levels of
certain used inventory,  parts inventory and accounts receivable. As of June 30,
2004, the Company could request  advances for  additional new  inventories up to
its $50 million credit limit, but did not have additional  material amounts that
could be advanced solely for general working capital uses.

The Borrowing  Agreement with TCFC expires on October 15, 2004 and the Borrowing
Agreement with GE expires on October 31, 2004.  Effective with the submission of
its results for the periods ended March 31, 2004 and June 30, 2004,  the Company
was out of compliance  with several  financial  covenant terms and conditions of
the Borrowing Agreements.  Additionally, while the Company had an aggregate loan
balance below the  aggregate  credit  limits of the  Borrowing  Agreements,  the
Company's balance outstanding on the GE Borrowing Agreement exceeded a scheduled
seasonal reduction in the available credit line occurring on July 31, 2004.

While  not  waiving  compliance,  TCFC and GE have  agreed to  forbearance  with
respect to both the  non-compliance  and the overline  subject to the following:
(i) the Company committing no additional defaults, (ii) TCFC and GE implementing
reductions in the maximum aggregate  outstanding  credit limits of the Borrowing
Agreements from $42.5 million to $38.0 million on August 31, 2004, then to $33.0
million on  September  30, 2004 and to $31.0  million on October 31,  2004,  and
(iii)  implementing a formula requiring payments of $2 for each additional $1 of
new loan advances requested by the Company under the Borrowing Agreements.


                                        7


<PAGE>


NOTE 6 - SALE/LEASEBACKS

In March of 2004,  the Company  completed a  sale/leaseback  transaction  of its
store location in San Antonio,  Texas.  The property was sold at a price of $2.5
million and leased back by the Company  pursuant to a ten-year  operating lease.
The sales  price  included a $1.5  million  cash down  payment  and a short term
promissory note of $1.0 million. Accordingly, the transaction had been accounted
for as a financing  transaction and the $1.5 million cash down payment  received
had been  accounted as a deposit  liability.  During the quarter  ended June 30,
2004, the transaction was  re-classified as a  sale/leaseback  pursuant to SSFAS
No. 98 as a result of the  Company's  receipt of payment of the  remaining  $1.0
million amount outstanding under the short term promissory note.

In April of 2004,  the Company  completed a  sale/leaseback  transaction  of its
store  location in  Claremore,  Oklahoma.  The  property  was sold at a price of
$560,000  and leased back by the Company  pursuant to an  operating  lease.  The
transaction has been accounted for as a sale/leaseback  pursuant to SFAS No. 98.
The gain of approximately  $135,000 resulting from the sale of the property will
be classified  as a Deferred  Gain and will be amortized  ratably over the lease
period which is 5 years.

NOTE 7 - SUBSEQUENT EVENTS

In July of 2004, the Company completed a sale/leaseback transaction of its store
location  in  Clearwater,   Florida.  The  property  was  sold  at  a  price  of
approximately $2.3 million and leased back by the Company pursuant to a two-year
operating  lease. The sales price included a $2.05 million cash down payment and
a  long  term  promissory  note  of  approximately  $230,000.  Accordingly,  the
transaction  will be  accounted  for as a  financing  transaction  and the $2.05
million cash down payment received will be accounted as a deposit liability. The
transaction will be  re-classified  as a sale/leaseback  pursuant to SFAS No. 98
upon the Company's  receipt of the remaining  $230,000 amount  outstanding under
the long term promissory note.

In August of 2004,  the Company  completed a  sale/leaseback  transaction of its
store location in Pascagoula,  Mississippi.  The  transaction has been accounted
for as a  sale/leaseback  pursuant  to SFAS No. 98. The  property  was sold at a
sales price of $750,000 and leased back by the Company  pursuant to an operating
lease.

Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF
"SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Some of the  information  in this Report on Form 10-Q  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  information  that we
describe  in this  section,  as well as any other  cautionary  language  in this
Report on Form 10-Q, 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 and therefore result in a material adverse effect
on  our  business,  operating  results  and  financial  condition.  For  a  more
comprehensive  discussion of these and the numerous other factors  affecting our
business and  operations  see the Company's  Report on Form 10-K/A filed for the
fiscal year ended  September 30, 2003, and other  documents filed of record with
the Securities and Exchange Commission.

OVERVIEW

Travis  Boats &  Motors,  Inc.  ("Travis  Boats,"  the  "Company"  or "we") is a
multi-state  superstore  retailer of recreational  boats,  motors,  trailers and
related marine  accessories in the southern United States. Our Company currently
operates 30 stores under the name Travis Boating  Center in Texas (8),  Arkansas
(2),  Louisiana (4), Alabama (1),  Tennessee (3),  Mississippi (1), Florida (9),
Georgia (1) and Oklahoma (1).


                                        8


<PAGE>


The Company was incorporated as a Texas  corporation in 1979. Since our founding
as a  single  retail  store  in  Austin,  Texas,  we  have  grown  both  through
acquisitions and the opening of new "start-up"  store  locations.  It was during
the early period of store growth that we began developing the systems  necessary
to manage a multi-store  operation  and  maximizing  our inventory  purchases to
obtain  increased  volume   discounts.   Our  significant   inventory   stocking
requirements  for  multi-stores  allowed us to  maximize  volume  discounts  and
introduce  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.

Based  on sales  trends  from the  cities  and  states  where we  operate  store
locations,  we design and pre-package  combinations of popular brand-name boats,
such as Mako, Cobalt, Ranger, Caravelle, Bayliner, Fisher, ProCraft, Fishmaster,
Sea Pro and Starcraft with outboard motors  generally  manufactured by Suzuki or
Brunswick Corporation,  along with trailers and numerous accessories,  under our
own proprietary  Travis Edition label.  These signature Travis Edition packages,
which account for the vast majority of total new boat sales,  have been designed
and  developed  in  coordination   with  the   manufacturers  to  often  include
distinguishing  features/branded  models and accessories  within the base Travis
Edition price. It is the Company's belief that these features/branded models and
accessories have  historically  been  unavailable to, or listed as optional,  by
many of our competitors.  We also sell small cruisers,  such as Crownline,  that
range to over 25 feet in length. 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.
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.  We also sell  motors,  trailers,  accessories  and
related equipment.

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  $150,000  with
approximate even distribution  within this price range. Our management  believes
that by  combining  flexible  financing  arrangements  with many  types of boats
having broad price ranges,  we are able to offer boat packages to customers with
different purchasing budgets and varying income levels.

The  Company  seeks  to  provide  customers  with 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.

QUARTER ENDED JUNE 30, 2004.  The Company  reported net income of  approximately
$1.2 million, on net sales of $47.2 million, for the three months ended June 30,
2004 versus net income of approximately $438,000, on net sales of $53.1 million,
for the same  quarter  of the  prior  fiscal  year.  The  decrease  in net sales
relative to the same quarter last year was related to various factors including,
but not  limited  to, the  continued  impact of  significant  product  and brand
transition whereby the Company eliminated yacht sales and began the introduction
of new models of  off-shore  fishing  boats to replace  its  previously  carried
comparable product line.  Significant initial stocking  requirements resulted in
limited  product  assortment  and  availability  of this new product in the nine
months ended June 30, 2004.  The increase in net income was primarily the result
of the Company generating higher gross profit margins on its boat sales compared
to the prior fiscal year's quarter.  As previously  disclosed,  results in prior
fiscal year periods were adversely  impacted by the substantial  sell-through of
certain aged and discontinued inventories. To improve operating performance, the
Company has also implemented a number of key initiatives  designed to ultimately
improve the Company's financial  condition.  These initiatives  include, but are
not  limited  to,  the  consolidation  of our  vendor  relationships  to improve
inventory turns,  assortments and product consistency in our stores.  Management
is optimistic  that the Company's  recent  efforts  related to product and brand
transition,  reductions in obsolete  inventory,  and improved  supply chain will
have a long-term positive impact on performance.


                                        9


<PAGE>


RESULTS OF OPERATIONS

QUARTER ENDED,  JUNE 30, 2004 COMPARED TO THE QUARTER  ENDED,  JUNE 30, 2003 AND
NINE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2003.
--------------------------------------------------------------------------------

NET SALES.  Net sales in the third  quarter of fiscal  2004  decreased  to $47.2
million,  compared to net sales of $53.1 for the third  quarter of fiscal  2003.
For the nine months ended June 30, 2004,  net sales  decreased to $92.6 million,
compared to $109.1 million during the same period of the prior fiscal year.

The decrease in net sales during the quarter  ended June 30, 2004 was the result
of a 10% decrease in  comparable  store sales.  Management  believes  comparable
store sales continued to be negatively  impacted by several  factors  including,
but not limited to, the significant  product and brand transitions  initiated on
or about the  commencement of the 2004 fiscal year. This included the previously
announced   decision  to  eliminate  yacht  sales,   which  reduced  revenue  by
approximately  $3.5  million  and $6.5  million  for the quarter and nine months
ended June 30, 2004,  respectively.  Additionally,  during the fall of 2003, the
Company  began the  introduction  of new models of  off-shore  fishing  boats to
replace its previously  carried  comparable  product line. The Company's initial
stocking requirements  contributed to only a limited assortment and selection of
the new boats being available  during the quarter and nine months ended June 30,
2004.  The impact on net sales of yachts and off-shore  fishing boats from these
and other related issues was a decrease of approximately  $7.7 million and $14.7
million  in  sales  for the  quarter  and  nine  months  ended  June  30,  2004,
respectively, versus the same periods of the prior fiscal year. Comparable store
sales  excluding  the impact of the sale of yachts and  off-shore  fishing boats
increased by 5% for the quarter ended June 30, 2004.

Management  believes  that the  impact  of the  significant  product  and  brand
transition on net sales will be offset by improved  gross profit  margins on the
newly stocked products.

GROSS PROFIT.  Gross profit decreased by 3.6% to approximately  $10.6 million in
the third  quarter  of fiscal  2004 from $11.0  million  in the same  quarter of
fiscal 2003.  Gross profit,  as a percent of net sales,  increased to 22.4% from
20.7% during the same  periods.  For the nine months ended June 30, 2004,  gross
profit  decreased  10% to $19.9 million from $22.1 million in the same period of
the prior year.  Gross  profit,  as a percent of sales,  increased to 21.4% from
20.2% during the same periods.

The increase in gross profit as a percent of net sales was primarily  related to
(i)  increases in the sale of parts,  accessories  and labor as a percent of net
sales and (ii)  improved  margins on the sales of our new and used boat,  motor,
and  trailer  inventory.  The  Company's  gross  profit in fiscal  year 2003 was
adversely impacted by its aggressive sell-through of substantial amounts of aged
and discontinued inventories at reduced sales prices and margins.


                                       10


<PAGE>


F&I PRODUCTS.  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 equipment
manufacturer  ("OEM") 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 sold.

Net sales of these products  contributed  approximately $1.5 million,  or 14.2%,
and $2.8  million,  or 14.1%,  of total  gross  profit for the  quarter and nine
months ended June 30, 2004, respectively, as compared to $2.0 million, or 18.2%,
and $3.8  million,  or 17.2%,  of total gross profit for the same periods of the
prior fiscal year.  Management  believes  that the decrease in F&I income is the
result of  several  factors  including  (i) the sale of fewer  extended  service
contracts  during  the  quarter  ended  March 31,  2004 as a result  of  certain
original  equipment  manufacturers  ("OEM") increasing the terms of original OEM
warranty  coverage periods as marketing  incentives to retail  purchasers during
the boat show season and (ii) the change in the year to date sales mix resulting
in  increases  in the sale of parts,  accessories  and labor as a percent of net
sales, but in fewer boats sold in the Company's bay boat and off-shore models.

Net sales  attributable to F&I Products are reported on a net basis,  therefore,
all such sales contribute directly to the Company's gross profit.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative expenses decreased to $8.1 million in the third quarter of fiscal
2004 from $9.0 million for the third quarter of fiscal 2003. As a percent of net
sales,  selling,  general and administrative  expenses increased to 17.1% in the
third  quarter of fiscal 2004 from 17.0% for the third  quarter of fiscal  2003.
For the nine months ended June 30,  2004,  selling,  general and  administrative
expenses were $20.5 million,  or 22.1% of net sales,  versus $25.0  million,  or
22.9% of net sales, in the same period of the prior fiscal year.

The reductions in actual dollars of expenses were generally related to operating
fewer store locations,  the absence of store closing costs incurred in the prior
period and the expense  containment  strategies adopted in fiscal 2003. Although
rent  expenses  declined in actual  dollars,  this has been  somewhat  offset by
increased   rents   resulting  from  new  leases  on  four  stores  pursuant  to
sale/leaseback   transactions   completed   beginning  in  September  2003  (see
"Depreciation and Amortization Expenses").

DEPRECIATION AND AMORTIZATION  EXPENSES.  Depreciation and amortization expenses
decreased to $496,000 in the third  quarter of fiscal 2004 from $598,000 for the
third quarter of fiscal 2003. Depreciation and amortization expenses declined to
approximately  $1.6  million for the nine  months  ended June 30, 2004 from $1.9
million for the same period of the prior fiscal year.


                                       11


<PAGE>


The  decrease  in   depreciation   and   amortization   expenses  was  primarily
attributable  to reductions in fixed assets (real estate) related to the sale of
four stores  pursuant to  sale/leaseback  transactions  effective  beginning  in
September 2003 (see "Selling, General and Administrative Expenses").

INTEREST EXPENSE. Interest expense decreased to $699,000 in the third quarter of
fiscal 2004 from $872,000 in the third quarter of fiscal 2003.

The decreased  interest expense was primarily the result of significantly  lower
balances  on our  inventory  based  lines  of  credit  due  to  the  significant
reductions in the levels of inventory held. The Company has successfully reduced
inventory levels due to improved supply chain management and the sell-through of
aged and discontinued inventories during fiscal 2003.

Although  our  strategy  is to  maintain  lower  inventory  levels  and  improve
inventory  turns,  we anticipate  continuing to utilize  significant  amounts of
third party  financing  sources to support  our  inventories  and other  assets.
Accordingly,  we are subject to the impact of increases in interest expenses and
other costs associated with such borrowings.

INCOME TAXES. Our federal income tax return for the 12 months ended December 30,
2002 fully  exhausted all available  refunds of federal income taxes  previously
paid by our Company. Accordingly,  pursuant to SFAS No. 109, the Company has not
recognized  any income tax benefits on our books from operating  losses,  due to
uncertainties   associated   with  the   utilization   of  the  operating   loss
carry-forwards  in future  periods.  Accordingly,  the Company did not record an
income tax benefit for the three or nine month periods ended June 30, 2004.

For the three  months  ended June 30,  2004,  the  Company  reported  net income
attributable to common shareholders of $1.2 million ($.27 per basic and $.17 per
diluted share) versus net income attributable to common shareholders of $438,000
($.10 per basic and $.07 per  diluted  share)  for the same  period of the prior
fiscal year.

For the nine  months  ended  June 30,  2004,  the  Company  reported  a net loss
attributable to common shareholders of $5.1 million ($1.19 per basic and diluted
share) versus a net loss  attributable  to common  shareholders  of $5.1 million
($1.18  per basic and  diluted  share) for the same  period of the prior  fiscal
year.  However,  the prior year net loss was reduced from a pre-tax loss of $7.3
million as a result of the recognition of an income tax benefit of approximately
$2.5 million.

LIQUIDITY AND CAPITAL RESOURCES

Our  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 our floor plan
and revolving credit lines  (collectively  the "Borrowing  Agreements")  with GE
Commercial  Distribution Finance Corporation ("GE") and Transamerica  Commercial
Financial Corporatino ("TCFC").

On June 30, 2004,  we had  approximately  $3.2 million in cash,  $8.8 million in
accounts   receivable   (primarily   contracts   in  transit  from  boat  sales,
manufacturer  rebates  receivable and other amounts due from  manufacturers) and
$44.0 million in inventories. Contracts in transit are amounts receivable from a
customer  or a  customer's  financial  institution  related  to that  customer's
purchase of a boat.  These asset  balances  were  offset by  approximately  $6.7
million of accounts payable and accrued  liabilities,  $44.1 million outstanding
under our  Borrowing  Agreements  and  approximately  $2.1 million in short-term
indebtedness  including  current  maturities of notes  payable of  approximately
$744,000,  approximately $60,000 payable under a short term note to Tracker, and
convertible subordinated promissory notes of $1.3 million.


                                       12


<PAGE>


On June 30, 2004, we had working capital of approximately $4.0 million.  Working
capital,  as of that date,  benefited  from the net income in the quarter  ended
June 30, 2004, but was negatively offset by the  aforementioned  $2.1 million in
short-term indebtedness.

For the nine months  ended June 30, 2004,  operating  activities  utilized  cash
flows of $16.8  million  due  primarily  to an  increase  of  $13.0  million  in
inventories.  The Company  historically  builds  inventory  balances during each
fiscal year in the periods in advance of the seasonal boat shows. The boat shows
generally  begin  during  January  and  continue  through  March  of each  year.
Historically, inventory continues to increase through the March quarter based on
boat show volumes and seasonal  sales  increases.  In the nine months ended June
30, 2004, the Company had higher average inventory levels than in the prior year
as a  result  of the  inventory  reductions  from the  sell-through  of aged and
discontinued  inventory during fiscal 2003. Although inventory during the period
ended June 30,  2004  increased,  the  Company's  significant  initial  stocking
requirements of newly introduced models of bay boats and off-shore fishing boats
contributed to only a limited  assortment and selection of these new boats being
received in the current fiscal year by the Company.  Inventories  generally fall
to a seasonal low in the September quarter.

For the nine months  ended June 30, 2004,  investing  activities  provided  cash
flows of $2.7 million.  This was primarily a result of the Company's  completion
of sale/leaseback  transactions on its store locations in San Antonio, Texas and
Claremore, Oklahoma. Additional cash flow from investing activities was provided
by the sale of the land and buildings associated with a location in Little Rock,
Arkansas  that had been  closed  during the 2003  fiscal  year.  Cash flows from
investing  activities  were  offset by  capital  expenditures  of  approximately
$731,000 related to various assets  including,  but not limited to, vehicles and
equipment.

Financing  activities during the quarter ended June 30, 2004 provided cash flows
of $14.0 million  primarily  from the net proceeds of funds  borrowed  under our
inventory   Borrowing   Agreements   for  the  purchase  of  our  seasonal  boat
inventories.  Our primary financing agreements are for the purchase of our boat,
motor and trailer  inventories.  During the fiscal year ended June 30, 2004, the
Company also  obtained  additional  financing  from the refinance of real estate
debt. A significant  portion of the refinanced debt has subsequently been repaid
from the net  proceeds  of the  completed  sales/leaseback  transactions  in San
Antonio, Texas and Claremore, Oklahoma.

BORROWING  AGREEMENTS.  The Company finances  substantially all of its inventory
pursuant to its Borrowing  Agreements with GE and TCFC. During the quarter ended
March 31,  2004,  TCFC was  acquired  by GE. The  Borrowing  Agreements  contain
substantially  similar  terms and  financial  covenants,  however the  Company's
borrowing agreements with GE and TCFC remain separate.  As of June 30, 2004, the
maximum  aggregate  borrowing  availability  was  limited to a maximum  seasonal
credit  limit of $50.0  million at various  prime based or LIBOR based  interest
rates  (varying  from 4.12% to 4.75%) of which  approximately  $44.1 million was
funded and $4.5 million allocated for inventory orders in process. The Borrowing
Agreements  are primarily for the purchase of  inventories  and, to a far lesser
extent, provide available amounts for general working capital requirements based
upon levels of certain used inventory,  parts inventory and accounts receivable.
As of June 30, 2004,  the Company  could  request  advances for  additional  new
inventories  up to its $50 million  credit  limit,  but did not have  additional
material amounts that could be advanced solely for general working capital uses.


                                       13


<PAGE>


Effective  with the  submission  of its results for the periods  ended March 31,
2004 and June 30, 2004, the Company was out of compliance with several financial
covenant terms and conditions of its Borrowing Agreements.  Additionally,  while
the Company had an aggregate  loan balance below the aggregate  credit limits of
the Borrowing  Agreement,  the Company's balance outstanding on the GE Borrowing
Agreement  exceeded a scheduled  seasonal reduction in the available credit line
occurring on July 31, 2004.  This has resulted in an overline  balance on the GE
Borrowing  Agreement.  The Borrowing  Agreement with TCFC expires on October 15,
2004 and the Borrowing Agreement with GE expires on October 31, 2004.

While not waiving  non-compliance,  TCFC and GE have agreed to forbearance  with
respect to both the  non-compliance  and the overline  subject to the following:
(i) the Company committing no additional defaults, (ii) TCFC and GE implementing
reductions in the maximum aggregate  outstanding  credit limits of the Borrowing
Agreements from $42.5 million to $38.0 million on August 31, 2004, then to $33.0
million on  September  31, 2004 and to $31.0  million on October 31,  2004,  and
(iii)  implementing a formula requiring payments of $2 for each additional $1 of
new loan advances requested by the Company under the Borrowing Agreements.

The Company and GE have discussed the provision of a new credit  facility to the
Company beyond the current scheduled maturity dates of the existing  facilities.
GE has notified the Company of general  terms by which a one year  discretionary
credit  facility  might be  contemplated.  GE has also  raised  questions  as to
whether any such new  facility  would  include a component  for working  capital
financing.  However,  the  lenders  have agreed to allow the Company to complete
certain proposed sale/leaseback  transactions and permit the Company to retain a
portion of the net proceeds up to approximately $2.8 million as working capital.
At this time the  Company is  reviewing  the  general  terms with its  financial
advisor,  Davenport  & Company,  LLC,  and  assessing  the  sufficiency  of such
contemplated  terms in  conjunction  with the  continued  implementation  of its
business  plan.  There can be no  assurance  that GE will  continue  to  provide
financing for the Company at the expiration of the Borrowing  Agreements or that
if such  financing  is provided by GE or an  alternate  source that it will have
terms and conditions  acceptable to the Company.  There also can be no assurance
that the Company can close all of the  sale/leaseback  transactions  as planned.
Our failure to achieve  required  financial and other covenants in our Borrowing
Agreements or to obtain sufficient  financing on acceptable terms and conditions
would have a material  adverse effect on our business,  financial  condition and
results of operations and require us to obtain additional equity  capitalization
or  alternate  sources  of  financing.  If such  additional  equity  capital  or
alternative financing cannot be obtained, the ability of the Company to continue
as a going  concern  would be in doubt and the  Company  may be required to seek
relief under debtor protection laws.

$5,300,000  REAL ESTATE LOAN. The Company entered into a real estate loan during
November 2003 in the original  principal amount of $5.3 million.  The loan has a
three year  maturity.  Interest  payments are due monthly based upon interest at
12%, and all principal is repayable at maturity.  Proceeds of the loan were used
to refinance other real estate  indebtedness  maturing  December 31, 2003 in the
approximate  amount of $3.7 million and the remainder  was used for  transaction
expenses and general working capital. The loan is secured by a first lien on the
land and  buildings  of the  Company's  store  locations  in  Atlanta,  Georgia;
Clearwater,  Florida,  San  Antonio,  Texas,  Claremore,  Oklahoma,  Pascagoula,
Mississippi,  and Bossier City, Louisiana and Baton Rouge,  Louisiana. As of the
date of this report on Form 10-Q, the outstanding  principal balance on the loan
has been reduced to $850,000 as a result of payments  related to  sale/leaseback
transactions in San Antonio, Texas, Claremore, Oklahoma and Clearwater, Florida.

$500,000 LOAN FROM  TRACKER.  On February 6, 2004,  the Company  agreed to terms
with its controlling shareholder, Tracker, for a $500,000, non-revolving,  loan.
The terms of the loan are set forth in a  promissory  note payable to Tracker on
demand at any time on or after May 5, 2004 (the "Note").  The Note provided that
the  Company,  at the  discretion  of the  Operating  Committee  of its Board of
Directors,  could  request  advances  at any time prior to May 5, 2004 up to the
aggregate  amount of $500,000.  Advances made pursuant to the Note bear interest
at a rate of 10% until the  earlier of the date  demand is made by  Tracker  for
repayment or January 5, 2005 at which time the rate will  increase to 18% on any
unpaid  principal  and  accrued,  but  unpaid,  interest  amounts.  The  Note is
generally unsecured, subject to Tracker retaining a right of offset with respect
to any cash, credits, rebates,  deposits,  accounts,  securities,  and any other
property of the Company in Tracker's possession, custody or control.

As of the date this report on Form 10-Q, the Company has borrowed $340,000 under
the Note and has made  payments  to reduce the  current  outstanding  balance to
approximately $53,000.


                                       14


<PAGE>


As a  pre-condition  to the Note,  Tracker  required  that the Company  take the
following  actions,  all of  which  were  approved  by the  Company's  board  of
directors on February 6, 2004:

o    Declare a cash dividend, payable on or before May 5, 2004, in the aggregate
     amount of $240,000 to Tracker as the holder of all of the  Corporation's 6%
     Series  A  Cumulative  Convertible  Preferred  Stock  with  respect  to the
     quarters ended September 30, 2003, and December 31, 2003.

o    Re-establish  the  Operating  Committee  of our  Board  of  Directors.  The
     Operating Committee,  which consists of Kenneth N. Burroughs,  Robert Ring,
     and Richard  Birnbaum,  is to determine whether  additional  borrowings are
     necessary  pursuant  to the Note,  and with  respect  thereto,  review  the
     overall financial  operations and expenses of the Company.  Such duties may
     be performed  without the  necessity of further  actions or approval by the
     entire Board of Directors.

As of the date this report on Form 10-Q, the Company has borrowed $340,000 under
the Note and has made  payments  to reduce the  current  outstanding  balance to
approximately  $50,000. The Company has also declared and paid the cash dividend
in the aggregate amount of $240,000 with respect to the quarters ended September
30 and December 31, 2003.

As evidenced by management's  decision to seek additional  financing in the form
of the Note, further shortfalls or variances from anticipated performance or the
timing of certain  expenses or revenues  may result in an adverse  impact on our
business,  financial  condition and results of  operations  requiring us to seek
additional  equity  capitalization,  borrowings  or other  alternate  sources of
financing.

EXPLORATION OF STRATEGIC BUSINESS FINANCIAL  ALTERNATIVES.  In June of 2004, the
Company  announced  that a special  committee of its Board of Directors had been
formed to explore  strategic  business  and  financial  alternatives  focused on
maximizing  shreholder  value.  The Company engaged  Davenport & Company LLC, an
investment  banking  firm based in Richmond,  Virginia as  financial  advisor to
assist the Company with this process.

SEASONALITY

Our business,  as well as the sales demand for various types of boats,  tends to
be highly seasonal.  Our strongest sales period  historically 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 27%  occurred in the quarter
ending  March 31 and over 37%  occurred in the quarter  ending June 30. With the
exception  of  our  store   locations  in  Florida,   our  sales  are  generally
significantly lower in the quarter ending December 31. Because the overall sales
levels (in most stores) in the December quarter are much less than in the months
with warmer  weather,  we generally  have a  substantial  operating  loss in the
quarter  ending  December 31.  Because of the  difference in sales levels 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 weak as a result of  lackluster
consumer demand,  timing of boat shows, bad weather or lack of inventory we will
likely suffer significant additional operating losses.

Our  business  is also  significantly  affected  by  weather  patterns.  Weather
conditions that are  unseasonable or unusual may adversely affect our results of
operations.  For example,  drought conditions or merely reduced rainfall levels,
as well as excessive  rain, may affect our sale of boating  packages and related
products and accessories.

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.  The
Company  also  believes  that the net sales for the three and nine months  ended
June 30, 2004 were  impacted by the  significant  product and brand  transition.
This included the  elimination of yacht sales and the Company's  introduction of
new  models  of  off-shore  fishing  boats.  Accordingly,  the  results  for any
quarterly  period may not be  indicative  of the expected  results for any other
quarterly period (see "Net sales").


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<PAGE>


NASDAQ LISTING REQUIREMENTS

We must  comply  with  listing  requirements  for the Nasdaq  Stock  Market.  We
transferred  our common  stock to the Nasdaq  Small Cap Market  effective  as of
October 25, 2002. We requested  the transfer  because our Company did not comply
with all of the  requirements  for  trading on the Nasdaq  National  Market.  By
letter  dated as of June 16,  2004 we were  notified  by Nasdaq that the closing
price for our common  stock for the 30 days prior  thereto was below the minimum
$1.00 bid price required by Nasdaq Small Cap Market. NASDAQ notified the Company
that it can regain  compliance if the Company's common stock closes at $1.00 per
share or more for a minimum of 10 consecutive trading days prior to December 13,
2004.  Alternatively,  if the Company meets the initial listing  criteria of the
Nasdaq Small Cap Market on December  13, 2004,  Nasdaq will grant the Company an
additional  grace period of 180 days to regain  compliance  with the minimum bid
price.  If at the  expiration of the second 180 day grace period the Company has
not regained  compliance,  but still meets the initial listing criteria,  Nasdaq
will grant the Company an  additional  grace  period  until June 16, 2006 during
which time the Company would commit to seek  shareholder  approval for a reverse
stock split.

In addition,  Nasdaq recently adopted a number of corporate  governance  listing
standards  that must be  satisfied  to maintain  listing on the Nasdaq Small Cap
Market.  These  standards  require,  among other things,  that a company's audit
committee (i) have only "independent" members, and (ii) adopt a qualifying audit
committee charter.  While the Company is exempt under Nasdaq Rule 4350(c)(5) and
Nasdaq IM-4350-4 from many of the new governance  standards due to its status as
a "controlled  company," it will  nevertheless need to assess the need to comply
with  certain  other  material  requirements  in advance  of  issuing  its proxy
statement for the next annual meeting.

Failure to  maintain  the  listing of our common  stock on the NASDAQ  Small Cap
Market would adversely impact the liquidity of the Company's common stock.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We do not utilize financial  instruments for trading purposes and we do not hold
any derivative financial  instruments that could expose us to significant market
risk.  Our  exposure  to market  risk for  changes  in  interest  rates  relates
primarily to our obligations under our Borrowing  Agreements,  which are subject
to variable interest rates.

At June 30, 2004, a hypothetical 100 basis point change in interest rates on the
Company's  Borrowing  Agreements  would  result  in a  change  of  approximately
$441,000 in annual  pre-tax  expenses of the Company.  The  estimated  change in
expenses is based upon the change in interest expense of the Company's Borrowing
Agreements  and assumes no change in the volume or  composition  of such debt at
June 30, 2004.

Item 4. Controls and Procedures

(a)  An evaluation as of the end of the period covered by this quarterly  report
     was carried out under the  supervision  and with the  participation  of the
     Company's management, including the Company's President and Chief Financial
     Officer,  of the effectiveness of the design and operation of the Company's
     "disclosure  controls and  procedures"  (as defined in Rules  13a-15(e) and
     15d-15(e) under the Securities  Exchange Act of 1934 (the "Exchange  Act").
     Based  on that  evaluation,  the  President  and  Chief  Financial  Officer
     concluded  that our  disclosure  controls and  procedures  are effective in
     timely making known to them material  information  required to be disclosed
     in our reports filed or submitted under the Exchange Act. There has been no
     change in our internal control over financial  reporting during the quarter
     ended June 30, 2004 that has materially  affected,  or is reasonably likely
     to affect, our internal control over financial reporting.

(b)  The Company's Series A Preferred Stock has a cumulative  dividend of 6% per
     annum,  to be declared and paid  quarterly on the last day of March,  June,
     September and December of each year. The Statement of  Designations  of the
     Series A Preferred  Stock affords the Company the  opportunity  to elect to
     pay the  dividends  in cash or in  additional  shares of Series A Preferred
     Stock. In the event that additional  shares of Series A Preferred Stock are
     issued,  the issue price would be approximately  $2.45 per share,  which is
     the  conversion  price of the Series A  Preferred  Stock  outstanding.  The
     Company  has not  declared,  nor paid  dividends  of  $120,000  due for the
     quarters  ended March 31, 2004 and June 30,  2004.  The Board of  Directors
     will  determine  the date upon which the  dividends  will be  declared  and
     whether  they will be  payable  in cash or by the  issuance  of  additional
     preferred shares.


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<PAGE>


                           PART II. OTHER INFORMATION

Item 3. Defaults Upon Senior Securities

Effective  with the  submission  of its results for the periods  ended March 31,
2004 and June 30, 2004, the Company was out of compliance with several financial
covenant terms and conditions of its Borrowing Agreements.  Additionally,  while
the Company had an aggregate  loan balance below the aggregate  credit limits of
the Borrowing  Agreement,  the Company's balance outstanding on the GE Borrowing
Agreement  exceeded a scheduled  seasonal reduction in the available credit line
occurring on July 31, 2004.  This has resulted in an overline  balance on the GE
Borrowing  Agreement.  The Borrowing  Agreement with TCFC expires on October 15,
2004 and the Borrowing Agreement with GE expires on October 31, 2004.

While not waiving non-compliance,  TCFC and GE have agreed not to take action at
this time with respect to the non-compliance or the overline,  provided that the
Company: (i) commits no further defaults under the Borrowing Agreements and (ii)
has aggregate  obligations  outstanding  on the Borrowing  Agreements of no more
than $38 million on August 31, 2004;  $33 million on September  30, 2004 and $31
million on October 31, 2004.


Item 6. Exhibits and Reports on Form 8-K


(a) Exhibits

31.1 Certification of Chief Executive  Officer Pursuant to Rule 13a-14(a) of the
     Exchange Act

31.2 Certification of Chief Financial  Officer Pursuant to Rule 13a-14(a) of the
     Exchange Act

32.1 Certification  of Chief  Executive  Officer  and  Chief  Financial  Officer
     Pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C.  Section 1350,
     as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

During the quarter  ended June 30, 2004  through the date of this Report on Form
10-Q, the Company filed the following Reports on Form 8-K:

August  17,  2004  Report  on Form 8-K for  financial  statements  and  exhibits
including  incorporation  of press  releases dated August 17, 2004 issued by the
Company.


                                       17


<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant has caused this report to be signed on its behalf by the  undersigned
thereto duly authorized.





Date: August 20, 2004                  Travis Boats & Motors, Inc.

                            By:            /s/ Michael B. Perrine
                                ------------------------------------------------
                                               Michael B. Perrine
                                Chief Financial Officer, Treasurer and Secretary
                                (Principal Accounting and Financial Officer)


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