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 December 31, 2003

                                       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

        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 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 February 17, 2004.

<PAGE>

                                      INDEX


PART I - FINANCIAL INFORMATION

Item 1:  Financial Statements (Unaudited, except as noted):

                   Condensed Consolidated Balance Sheets:
                   December 31, 2003 and September 30, 2003 (audited).........1

                   Condensed Consolidated Statements of Operations:
                   Three Months Ended December 31, 2003 and 2002..............3

                   Condensed Consolidated Statements of Cash Flows:
                   Three Months Ended December 31, 2003 and 2002..............4

                   Notes to Condensed Financial Statements....................5

Item 2:  Management's Discussion and Analysis of Financial
                   Conditions and Results of Operations......................10

Item 3: Quantitative and Qualitative Disclosures About Market Risk...........22

Item 4: Controls and Procedures..............................................23


PART II - OTHER INFORMATION

Item 1: Legal Proceedings....................................................23

Item 5: Other Information....................................................24

Item 6: Exhibits and Reports on Form 8-K.....................................25


SIGNATURE....................................................................26

EXHIBIT INDEX................................................................26


                                       i
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
 (in thousands, except share data)
<TABLE>
<CAPTION>

                                                                               December 31,           September 30,
                                                                                   2003                   2003
                                                                            -------------------     ------------------
                                                                               (unaudited)
<S>                                                                                   <C>                    <C>
ASSETS:
      Current assets:
            Cash and cash equivalents                                                   $1,035                 $3,414
            Accounts receivable, net                                                     4,366                  5,655
            Inventories, net                                                            38,242                 30,970
            Prepaid expenses and other                                                   1,031                    914
                                                                            -------------------     ------------------
              Total current assets                                                      44,674                 40,953

      Property and equipment:
            Land                                                                         4,924                  5,124
            Buildings and improvements                                                  13,477                 13,611
            Furniture, fixtures and equipment                                            9,060                  9,134
                                                                            -------------------     ------------------
                                                                                        27,461                 27,869
            Less accumulated depreciation                                              (10,871)               (10,634)
                                                                            -------------------     ------------------
                                                                                        16,590                 17,235


      Intangibles and other assets:
            Non-compete agreements, net                                                    630                    731
            Other assets                                                                   736                    203
                                                                            -------------------     ------------------
              Total assets                                                             $62,630                $59,122
                                                                            ===================     ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities:
            Accounts payable                                                            $1,834                 $2,258
            Accrued liabilities                                                          2,249                  2,001
            Current portion of deferred gain on sale of                                    107                     87
            real property
            Floor plan and revolving line of credit                                     35,116                 28,658
            Current portion of notes payable, convertible subordinated
            notes and other short-term obligations                                       2,284                  4,723
                                                                            -------------------     ------------------
              Total current liabilities                                                 41,590                 37,727

      Deferred gain on sale of real property, net of                                       937                    963
      current portion


                                       1
<PAGE>

      Notes payable, less current portion                                                6,664                  1,591
      Convertible subordinated notes, less current portion                                 ---                  1,300

      Stockholders' equity
            Serial Preferred stock, $100 par value, 1,000,000                            8,000                  8,000
              shares authorized, 80,000 shares outstanding
            Common Stock, $.01 par value, 50,000,000 authorized,
              4,299,727 and 4,299,727 issued and outstanding at
              December 31, 2003 and September 30, 2003, respectively                        43                     43
            Paid-in capital                                                             15,094                 15,094
            Retained deficit                                                            (9,698)                (5,596)
                                                                            -------------------     ------------------
              Total stockholders' equity                                                13,439                 17,541

                                                                            -------------------     ------------------
              Total liabilities and stockholders' equity                              $ 62,630               $ 59,122
                                                                            ===================     ==================
</TABLE>




              See notes to unaudited condensed consolidated financial statements


                                       2
<PAGE>

Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and store data)


                                                         Three Months Ended
                                                             December 31,
                                                          2003           2002
                                                       -------------------------

Net sales...........................................    $13,275        $17,887
Cost of goods sold..................................     10,625         14,370
                                                       ----------    -----------

Gross profit........................................      2,650          3,517

Selling, general and administrative.................      5,457          7,481
Depreciation and amortization.......................        537            657
                                                       ----------    -----------
                                                          5,994          8,138

Operating loss......................................     (3,344)        (4,621)
Interest expense....................................       (678)          (812)
Other income........................................         40             20
                                                       ----------    -----------

Loss before income taxes............................     (3,982)        (5,413)
Income tax benefit..................................        ---          1,830
                                                       ----------    -----------

Net Loss............................................    ($3,982)       ($3,583)
                                                       ----------    -----------

Preferred stock dividends...........................      ($120)         ($120)

                                                       ----------    -----------
Net loss attributable to common
shareholders........................................    ($4,102)       ($3,703)
                                                       ==========    ===========

Basic and Diluted Loss Per Share before preferred
stock dividends.....................................     ($0.93)        ($0.83)
   Preferred stock dividends........................     ( 0.03)        ( 0.03)
                                                       ----------    -----------

Basic and Diluted Loss Per Share....................     ($0.96)        ($0.86)
                                                       ==========    ===========

Weighted Average Basic and Dilutive
common shares outstanding...........................   4,299,727      4,329,727



See notes to unaudited condensed consolidated financial statements


                                       3
<PAGE>

Travis Boats & Motors, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)

<TABLE>
<CAPTION>
                                                                                           Three months ended
                                                                                              December 31,

                                                                                       2003                2002
                                                                                   ----------------------------------
<S>                                                                                  <C>                 <C>
Operating activities:
Net Loss                                                                             ($3,982)            ($3,583)
Adjustments to reconcile net loss to net cash used in
  Operating activities:
      Depreciation............................................................           434                 549
      Amortization............................................................           103                 108
      Changes in operating assets and liabilities
           Accounts receivable................................................         1,289               2,021
           Prepaid expenses...................................................          (117)               (159)
           Inventories........................................................        (7,272)             (8,908)
           Other assets.......................................................          (533)                 22
           Accounts payable...................................................          (424)                 46
           Accrued liabilities................................................           248                 762
           Deferred gain on sale of real property.............................            (6)                ---
           Income tax recoverable.............................................             0              (1,767)
                                                                                   --------------     ---------------
   Net Cash used in operating activities......................................       (10,260)            (10,909)

   Investing Activities:
      Purchase of property and equipment......................................          (166)               (123)
      Proceeds from sale of property and equipment............................           375                 ---
                                                                                   --------------     ---------------
   Net cash provided by/(used in) investing activities........................           209                (123)

   Financing activities:
      Net increase in floorplan; revolving and other short term
      obligations............................................................          6,250               7,786
      Proceeds from real estate refinance note...............................          5,300                 ---
      Repayment of real estate note..........................................         (3,758)                ---
      Preferred stock dividends..............................................           (120)               (120)
                                                                                   --------------     ---------------
   Net cash provided by financing activities.................................          7,672               7,666

      Change in cash and cash equivalents....................................         (2,379)             (3,366)
      Cash and cash equivalents, beginning of period.........................          3,414               4,253

                                                                                   --------------     ---------------
   Cash and cash equivalents, end of period..................................        $ 1,035               $ 887
                                                                                   ==============     ===============
</TABLE>



       See notes to unaudited condensed consolidated financial statements


                                       4
<PAGE>

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2003


NOTE 1 - BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared from the records of Travis Boats & Motors,  Inc. and  subsidiaries
(collectively,  the "Company") in accordance with generally accepted  accounting
principals for interim financial information. In the opinion of management, such
financial  statements  include all  adjustments  (consisting  of only  recurring
accruals)  necessary to present  fairly the  financial  position at December 31,
2003,  and the interim  results of operations and cash flows for the three month
periods ended  December 31, 2003 and 2002.  The condensed  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 financial
statements  have  been  condensed  or  omitted  for  purposes  of the  condensed
consolidated interim financial statements.  The condensed consolidated 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 month period  ended  December 31,
2003 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"),  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
(See Note 6 - Series A Preferred Stock). 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.


                                       5
<PAGE>

NOTE 2 - RECENT ACCOUNTING PRONOUNCEMENTS

     In January 2003, the FASB issued  Interpretation  No. 46,  Consolidation of
Variable  Interest  Entities  ("FIN 46"),  which  clarifies the  application  of
Accounting Research Bulletin No. 51, Consolidated  Financial Statements.  FIN 46
requires  variable  interest  entities (VIE) to be  consolidated by a company if
that  company  is  subject  to a  majority  of the  risk  of loss  from  the VIE
activities or entitled to receive a majority of the entity's residual returns or
both. A company that  consolidates  a VIE is called the primary  beneficiary  of
that entity.  FIN 46 also requires  disclosures  about VIE that a company is not
required to consolidate but in which it has a significant variable interest.  In
December  2003,  the FASB  completed  its  deliberations  regarding the proposed
modification to FIN 46 and issued  Interpretation  Number 46R,  Consolidation of
Variable  Interest  Entities - an  Interpretation of ARB No. 51 ("FIN 46R"). The
decisions  reached  included a deferral of the effective date and provisions for
additional scope exceptions for certain types of variable interests. Application
of FIN 46R is required in  financial  statements  of public  entities  that have
interests  in VIE or  potential  VIE  commonly  referred  to as  special-purpose
entities for periods  ending after  December  15,  2003.  Application  by public
entities (other than small business  issuers) for all other types of entities is
required in financial  statements for periods ending after March 15, 2004. We do
not  expect  adoption  of FIN 46R to have a  material  impact  on our  financial
position, results of operations or cash flows.

     In May  2003,  the  FASB  issued  Statement  150,  Accounting  for  Certain
Financial  Instruments  with  Characteristics  of both  Liabilities  and Equity.
Statement 150 requires that certain  financial  instruments  that are settled in
cash,  including  certain  types  of  mandatorily  redeemable   securities,   be
classified as liabilities  rather than as equity or temporary equity.  Statement
150 is effective for financial  instruments  entered into or modified  after May
31, 2003,  and  otherwise is  effective  at the  beginning of the first  interim
period after June 15, 2003.  The adoption of this  Standard had no effect on the
Company's financial position, results of operations or cash flows.

NOTE 3 - LOSS PER SHARE

(in thousands, except share)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                         December 31,
                                                                    2003            2002
                                                              ----------------- --------------
<S>                                                              <C>              <C>
NUMERATOR
   Net loss before preferred stock dividends...........          $  (3,982)       $  (3,583)
   Preferred stock dividends...........................               (120)            (120)
                                                              --------------------------------
   Net loss attributable to common shareholders........          $  (4,102)       $  (3,703)

Weighted average basic and diluted
   common shares outstanding...........................          4,299,727        4,329,727

Basic and diluted loss per share before
   preferred stock dividends...........................               (.93)            (.83)


                                       6
<PAGE>

   Preferred stock dividends...........................               (.03)            (.03)
Basic and diluted loss per share attributable                 ----------------- --------------
   to common shareholders..............................          $   (0.96)       $   (0.86)
                                                              ================= ==============
</TABLE>


     At December  31,  2003,  the Company had issued and  outstanding  incentive
stock options to certain employees  totaling 57,600 shares which had an exercise
price equal to or exceeding the closing  price of the Company's  common stock on
such date.  The 57,600 option shares have a weighted  average  exercise price of
$6.56 and a  weighted  average  outstanding  remaining  life of 6.3  years.

     The Company also has  excluded  528,584  shares of common stock  subject to
issuance pursuant to $1.3 million in outstanding convertible  subordinated notes
(see Note 5) and 3,252,826  shares of common stock subject to issuance  pursuant
to 80,000 shares of Series A Preferred  Stock. For the three month periods ended
December 31, 2003 and 2002,  the  conversion  price of  approximately  $2.46 per
share of both  issuances  exceeded  the  Company's  average  market price of its
common stock.

NOTE 4 - STOCKHOLDERS' EQUITY

     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.

     The Company did not  repurchase any shares of common stock during the three
months ended December 31, 2003 and 2002.

     Repurchased  shares of common stock during the three previous  fiscal years
consisted of the following:

                                           Year Ended September 30,
                                       2003           2002          2001
                                   ---------------------------------------------

     Shares Repurchased (000's)            30             29           40
     Total Purchase Price (000's)         $15            $56         $122
     Average Price per Share            $0.50          $1.90        $3.07

     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 ("Statement")148,  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.


                                       7
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    Three Months Ended Dec 31,
                                                                       2003             2002

<S>                                                                 <C>              <C>
REPORTED NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS               $ (4,102)        $ (3,703)
Add: Total stock based employee compensation                               -                -
     expense included in the determination of net
     loss as reported, net of related tax effects
Less: Total stock based employee compensation                            (29)             (58)
     expense determined under the fair value
     method for all awards, net of related tax effects
                                                                   -------------- --------------
Pro forma net loss attributable to common shareholders              $ (4,131)        $ (3,761)

BASIC AND DILUTED LOSS PER SHARE
Reported net loss per share attributable to
     common shareholders                                            $  (0.96)        $  (0.86)

Pro forma net loss per share attributable to
     common shareholders                                            $  (0.96)        $  (0.87)

</TABLE>

     The  compensation  expense  associated  with the fair value of the  options
calculated in the quarters ended  December 31, 2003 and 2002 is not  necessarily
representative  of the potential effects on reported net income/(loss) in future
periods.

NOTE 5 - CONVERTIBLE SUBORDINATED NOTES AND NOTES PAYABLE

     The Company has outstanding Convertible Subordinated Notes (the "Notes") in
the aggregate  amount of $1.3 million  originally  issued in December  2001. The
Notes,  which mature in December  2004,  are  unsecured  and accrue  interest at
10.75%,  fixed. The principal and interest amounts payable pursuant to the Notes
are  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 7 - Short Term  Borrowings).  The
principal  amount of the Notes may be converted at any time without  restriction
by the  holders  into  the  Company's  common  stock  at a  conversion  price of
approximately  $2.46 per share  provided  that the  Company has not sent a prior
notice of its intent to redeem. If not first converted into the Company's common
stock,  the  Notes  are  redeemable  by the  Company  at any time on or prior to
maturity.

     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


                                       8
<PAGE>

million and the remainder was used for transaction  expenses and general working
capital.

NOTE 6 - SERIES A PREFERRED STOCK

     The Company has issued 80,000 shares of 6% Series A Cumulative  Convertible
Preferred  Stock (the  "Preferred  Stock")  pursuant to an agreement  with TMRC,
L.L.P.  ("Tracker"),  a wholly-owned  subsidiary of Tracker Marine,  L.L.C.  The
issue  price of the  Preferred  Stock  is $100  per  share.  Each  share  may be
converted into the Company's common stock at a conversion price of approximately
$2.46 per share.  The Preferred Stock is governed by a  comprehensive  agreement
that provides,  among other components,  the right to name certain directors and
re-pricing  options in the event of the issuance of other equity  securities  or
debt with more favorable conversion prices or terms.

NOTE 7 - SHORT TERM BORROWINGS

Inventory Borrowing Agreements

     The  Company  finances  substantially  all of  its  inventory  pursuant  to
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
("DFS")).  The  agreements  contain  substantially  similar  terms and financial
covenants. As of December 31, 2003, the maximum aggregate borrowing availability
was limited to a maximum credit limit of $60.0 million at various prime based or
LIBOR based interest rates (varying from 4.12% to 4.75%) and approximately $35.1
million was outstanding. The borrowing agreements are primarily for the purchase
of inventories and, to a lesser extent,  provide  available  amounts for general
working capital requirements. As we purchase inventory, we authorize our lenders
to  remit  payment  directly  to the  manufacturers  pursuant  to our  borrowing
agreements.  Based on the terms of the  borrowing  agreements we can request for
the lenders to advance funds to manufacturers for additional inventory purchases
up to  the  remaining  available  credit  limit.  Substantially  all  inventory,
accounts receivable,  furniture, fixtures, equipment, real estate (junior liens)
and intangible assets collateralize these borrowing agreements. The terms of the
borrowing agreements also provide for fees for administrative monitoring and for
any unused portions of available credit. Also, various  manufacturers provide us
or our lenders with interest expense  assistance  under the inventory  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   limited   borrowings   under  these   agreements.
Discontinuance  of these  agreements  could  result in an  increase  to interest
expense.  Acquisitions,  the payment of common stock dividends or repurchases of
our common stock are also substantially limited without prior consent.

     The borrowing  agreements,  which originated in fiscal 2000, expired during
fiscal 2003 and were  subsequently  extended for various interim periods pending
each lender's  review of our request for a 12 month renewal term. As of the date
of this  Report on Form 10-Q,  we have been  notified  by each  lender  that our


                                       9
<PAGE>

request has been  reviewed  and  subject to  appropriate  documentation,  and no
defaults or material adverse changes prior thereto, our new expiration date will
be in October 2004.  The renewed  borrowing  agreements  are expected to include
loan agreements  containing  various loan covenants and borrowing  restrictions,
including,  but not limited to, minimum  financial  ratios  governing net worth,
inventory  turn,  accounts  receivable  turn and percentage  levels of operating
expenses.

NOTE 8 - CONTINGENCIES

     From time to time, our Company is involved in litigation relating to claims
arising  from its  normal  business  operations.  Currently,  our  Company  is a
defendant  in  several  lawsuits.  Some of these  lawsuits  involve  claims  for
substantial amounts.

     There is no  guarantee  that our Company  will  prevail in defense of these
lawsuits. If any lawsuit were to result in a substantial  unfavorable verdict or
resolution  for the  Company  it could  have a  material  adverse  impact on the
results of operations.

NOTE 9 - SUBSEQUENT EVENTS

     On  February  6, 2004,  the  Company  agreed to terms with its  controlling
shareholder,  TMRC,  LLP,  ("Tracker")  (See Note - 1), for a  $500,000  line of
credit.  The terms of the line of  credit  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 provides that the Company, at the discretion of the Operating Committee
of its Board of Directors,  may request  advances up to the aggregate  amount of
$500,000. Advances made pursuant to the Note will 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 received  $200,000
from Tracker under the Note.

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


                                       10
<PAGE>

"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 Risk  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.

                              RESULTS OF OPERATIONS

Overview

     Travis Boats & Motors,  Inc. 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).

     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 in length 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.


                                       11
<PAGE>

     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  $75,000  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.

     Fiscal Quarter Ended December 31, 2003. The Company reported a pre-tax loss
of  approximately  $4.0 million,  on net sales of $13.3  million,  for the three
months  ended  December  31, 2003 versus a pre-tax  loss of  approximately  $5.4
million,  on net sales of $17.9 million for the same quarter of the prior fiscal
year. Due to the seasonal nature of our business,  our sales have  traditionally
been  significantly  lower  in the  quarter  ending  December  31  and  increase
following  the  conclusion  of our boat show  season,  which  usually  begins in
January  and  continues  through  the end of  March.  In  addition,  some of the
operating  losses  experienced  during the quarter  ended  December 31, 2003 are
attributable  to  implementation  of 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 long-term positive impact on performance.

Quarter Ended December 31, 2003 Compared to the Quarter Ended December 31, 2002

     Net Sales. Net sales in the first quarter of fiscal 2004 decreased to $13.3
million, compared to net sales of $17.9 for the first quarter of fiscal 2003.

     The  decrease  in net sales  during the  quarter  ended  December  31, 2003
included  approximately  $1.1 million in reduced sales as a result of the impact
of fewer stores in operation (30 versus 34) and a decrease in  comparable  store
sales.  Comparable  store sales decreased by  approximately  21.0% (30 stores in
base) for the quarter ended December 31, 2003.  Management believes the decrease
in  comparable  store sales was related to various  factors  including,  but not
limited  to  significant  product  and  brand  transition.   This  included  the
previously  announced decision to eliminate yacht sales which reduced revenue by
approximately $1.5 million.  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  significant  initial
stocking requirements  contributed to only a limited assortment and selection of
the new boats being  received by the Company  during the quarter.  The impact to
net sales of yachts and  off-shore  fishing  boats from these and other  related
issues was a decrease  of  approximately  $3.3  million in sales for the quarter
ended  December  31,  2003  versus the same  quarter of the prior  fiscal  year.


                                       12
<PAGE>

Comparable  store sales excluding the impact of the sale of yachts and off-shore
fishing boats declined by approximately 1.6%.

     Management  believes that the impact of the  significant  product and brand
transition  on net sales will begin to diminish  in the quarter  ended March 31,
2004.  As of the date of this  Report on Form 10-Q,  the  Company  has  received
additional  stocking  levels of new products and the Company expects to continue
to receive  significant  additional  stocking  levels of these new  products  in
advance of the summer sales season.

     Gross Profit.  Gross profit, in actual dollars,  decreased to approximately
$2.7  million in the first  quarter of fiscal 2004 from $3.5 million in the same
quarter  of fiscal  2003.  However,  gross  profit,  as a percent  of net sales,
increased to 20.0% during the quarter ended December 31, 2003 from 19.7% for the
same quarter of the prior fiscal year.

     The  increase  in gross  profit  as a percent  of net  sales was  primarily
related to (i)  increases in the sale of parts and  accessories  as a percent of
net sales and (ii) increased income related to Finance and Insurance products as
a percent of net sales. We believe that gross profit, as a percent of net sales,
may continue to benefit  during fiscal 2004 from these items since the Company's
average  retail  price  of  boats  sold  is  expected  to  decline   because  of
discontinuing sales of yachts and certain similar boats (see F&I Products).

     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  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 sold.

     Net sales of F&I products contributed  approximately $313,000, or 11.8%, of
total gross profit in the first  quarter of fiscal 2004, as compared to $397,000
or 11.3%,  of total gross profit for the first quarter of the prior fiscal year.
Net sales  attributable to F&I Products are reported on a net basis,  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. Management attributes the improvement in F&I income, as
a  percentage  of  total  gross  profit,  to  (i)  improved  training  and  (ii)
implementing  processes  that  allow for remote  handling  of F&I  functions  in
several markets which had previously  under-performed relative to certain of our
Company benchmarks and goals. Additionally, in fiscal 2003, our sales of larger,
more expensive  yachts over 35 feet in length declined and we eliminated  yachts
from our  product  offering.  We  believe  this is a benefit  to F&I income as a
percent of our net sales since the  percentage of customers  buying F&I products


                                       13
<PAGE>

(which  is  referred  to  as  "penetration"),   is  historically  greater  among
purchasers of our Travis Edition boats that are less than 25 feet in length.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative expenses decreased to $5.5 million in the first quarter of fiscal
2004 from $7.5 million for the first quarter of fiscal 2003. As a percent of net
sales,  selling,  general and administrative  expenses decreased to 41.1% in the
first quarter of fiscal 2004 from 41.8% for the first quarter of fiscal 2003.

     The decrease in selling,  general and  administrative  expenses,  in actual
dollars,  for the quarter ended December 31, 2003 versus the same quarter of the
prior  year  was  primarily  attributable  to  decreases  in  certain  expenses,
including  wages,  rents,  taxes  insurance  and  advertising  expenses.   These
reductions in expenses were generally related to operating fewer store locations
(30 vs. 34) and the  expense  containment  strategies  adopted in fiscal 2003 in
conjunction  with the business plan implemented by the Company to (i) eliminate,
or in the alternative, materially reduce the operating losses experienced during
the past  several  fiscal  years,  and (ii) to allow  the  Company  to  generate
additional  cash reserves.  Although rent expenses  declined in actual  dollars,
this was somewhat offset by increased rents resulting from new leases on two (2)
stores pursuant to sale/leaseback  transactions completed in September 2003 (see
Depreciation and Amortization Expenses).

     Depreciation  and  Amortization  Expenses.  Depreciation  and  amortization
expenses decreased to $537,000 in the first quarter of fiscal 2004 from $657,000
for the first quarter of fiscal 2003. Depreciation and amortization expenses, as
a  percentage  of net sales,  were 4.0% for the first  quarter  of fiscal  2004,
compared to 3.7% in the same quarter of the prior fiscal year.

     The decrease in depreciation and amortization  expenses, in actual dollars,
was primarily  attributable to reductions in fixed assets (buildings) related to
the sale of two (2) stores pursuant to sale/leaseback  transactions effective in
September 2003 (see Selling, General and Administrative Expenses).

     Interest  Expense.  Interest  expense  decreased  to  $678,000 in the first
quarter  of fiscal  2004 from  $812,000  in the first  quarter  of fiscal  2003.
Interest expense, as a percent of net sales,  increased to 5.1% from 4.5% of net
sales in the same periods.

     The decreased interest expense, in actual dollars, 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 and the  product
transition  discussed  in  Net  Sales.  The  Company  has  successfully  reduced
inventory  levels to reflect sales trends and as a result of 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


                                       14
<PAGE>

previously paid by our Company. Beginning with the quarter ended March 31, 2003,
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 month period  ended  December 31,
2003.

     Net Loss.  For the quarter  ended  December  31, 2003,  the Company,  after
preferred stock  dividends,  reported a net loss of $4.1 million ($.96 per basic
and diluted share). Comparatively,  for the quarter ended December 31, 2002, the
Company,  after inclusion of an income tax benefit of $1.8 million and preferred
stock dividends, reported a net loss of $3.7 million ($.86 per basic and diluted
share).

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").

     On December  31, 2003,  we had  approximately  $1.0  million in cash,  $4.4
million in  accounts  receivable  (primarily  contracts  in transit  from sales,
manufacturer  rebates  receivable and other amounts due from  manufacturers) and
$38.2 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  $4.1
million of accounts payable and accrued  liabilities,  $35.1 million outstanding
under our  Borrowing  Agreements  and  approximately  $2.3 million in short-term
indebtedness  including  current  maturities of notes  payable of  approximately
$984,000 and convertible  subordinated promissory notes in the $1.3 million (see
also Contractual Commitments and Commercial Commitments).

     On December 31, 2003, we had working capital of approximately $3.1 million.
Working  capital,  as of that date, was negatively  impacted by the net loss and
the aforementioned $2.3 million in short-term indebtedness.

     For the three months ended December 31, 2003, operating activities utilized
cash flows of $10.3  million due  primarily  to an  increase of $7.3  million in
inventories.  The Company  historically  builds  inventory  balances  during the
quarter ended December 31, 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.  Inventories generally fall to a
seasonal low in the September quarter.

     For the three months ended December 31, 2003, investing activities provided
cash flows of $209,000.  This was primarily a result of the Company  selling the
land and buildings  associated with a location in Little Rock, Arkansas that had
been closed during the prior 2003 fiscal year.


                                       15
<PAGE>

     Financing  activities  during the quarter ended  December 31, 2003 provided
cash flows of $7.7 million  primarily  from the net  proceeds of funds  borrowed
under our inventory borrowing  agreements for the purchase of our off-season and
boat show inventories.  Our primary financing agreements are for the purchase of
our boat, motor and trailer inventories.

     Inventory  Borrowing  Agreements.  We  finance  substantially  all  of  our
inventory pursuant to 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  ("DFS")).  The agreements contain  substantially  similar
terms and financial  covenants.  As of December 31, 2003, the maximum  aggregate
borrowing availability was limited to a maximum credit limit of $60.0 million at
various prime based or LIBOR based  interest rates (varying from 4.12% to 4.75%)
and approximately  $35.1 million was outstanding.  The borrowing  agreements are
primarily  for the  purchase of  inventories  and, to a lesser  extent,  provide
available amounts for general working capital  requirements.  Based on the terms
of the borrowing agreements we could request for the lenders to advance funds to
manufacturers for additional  inventory  purchases up to the remaining available
credit  limit.  As we  purchase  inventory,  we  authorize  our lenders to remit
payment  directly to the  manufacturers  pursuant to our  borrowing  agreements.
Substantially  all  inventory,   accounts   receivable,   furniture,   fixtures,
equipment,  real estate (junior liens) and intangible assets collateralize these
borrowing  agreements.  The terms of the borrowing  agreements  also provide for
fees for  administrative  monitoring  and for any unused  portions of  available
credit.  Also,  various  manufacturers  provide us or our lenders with  interest
expense  assistance  under  the  inventory  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
limited  borrowings under these  agreements.  Discontinuance of these agreements
could result in an increase to interest  expense.  Acquisitions,  the payment of
common stock dividends or repurchases of our common stock are also substantially
limited without prior consent.

     The borrowing  agreements,  which originated in fiscal 2000, expired during
fiscal 2003 and were subsequently  renewed through October 15, 2003 pending each
lender's review of our request for a 12-month  renewal term. In January 2004, we
were notified by each lender that,  subject to appropriate  documentation and no
defaults or material adverse changes prior thereto, our new expiration date will
be in October 2004.  The renewed  borrowing  agreements  are expected to include
loan agreements  containing  various loan covenants and borrowing  restrictions,
including,  but not limited to, minimum  financial  ratios  governing net worth,
inventory  turn,  accounts  receivable  turn and percentage  levels of operating
expenses.  The Company believes that it will  successfully  complete and execute
renewed inventory borrowing  agreements that will provide financing amounts that
are sufficient for the Company's  planned level of operations and with terms and
conditions that are acceptable to the Company. However there can be no assurance
that such agreements will be completed or if completed that they will have final
terms acceptable to the Company. Also, any material shortfalls or variances from
anticipated  performance  or the timing of certain  expenses or  revenues  could
require us to seek further  amendment to our  borrowing  agreements,  additional
equity capitalization or alternate sources of financing.


                                       16
<PAGE>

     As of the date of this report on Form 10-Q, management believes the Company
to be in compliance with all terms and conditions of its borrowing agreements.

     During the quarter  ended  December 31, 2003 and in the period prior to the
date of this Report on Form 10-Q, the Company also entered into  additional note
payable transactions.

     $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.

     $500,000 Line of Credit From Tracker. Due in part to the additional working
capital requirements needed to facilitate the Company's  significant product and
brand transition  (primarily the  introduction of off-shore  fishing boat models
and  elimination  of  its  yacht  sales)  and  the  seasonal  decline  in  sales
experienced  during the quarter  ended  December  31, 2003,  management  and the
Company's  controlling  shareholder  determined that additional  working capital
financing  was  necessary  to  enhance  general  working  capital  prior  to the
Company's  historic  seasonal volume  increases in net sales from the boat shows
beginning in January and also to adequately prepare the Company for the increase
in demand traditionally associated with the spring and summer months.

     Thus, on February 6, 2004, the Company agreed to terms with its controlling
shareholder,  TMRC,  LLP,  ("Tracker")  (See Note - 1), for a  $500,000  line of
credit.  The terms of the line of  credit  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 provides that the Company, at the discretion of the Operating Committee
of its Board of Directors,  may request  advances up to the aggregate  amount of
$500,000. Advances made pursuant to the Note will 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 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 that the dividend in the aggregate amount of $240,000 to the holder
     of the  Corporation's  6% Series A Cumulative  Convertible  Preferred Stock
     (Tracker) with respect to the regular quarterly  dividends for the quarters
     ended  September 30, 2003,  and December 31, 2003,  will be a cash dividend
     payable, together with interest accrued thereon, on or before May 5, 2004.


                                       17
<PAGE>

o    Re-establish  the  Operating  Committee  of its  Board  of  Directors.  The
     Operating Committee,  which consists of Kenneth N. Burroughs,  Robert Ring,
     and Richard Birnbaum,  is to: (i) determine whether  additional  borrowings
     are necessary  pursuant to the Note; and with respect thereto to review the
     overall  financial  operations and expenses of the Company,  and (ii) carry
     out such duties without the necessity of further actions or approval by the
     entire Board of Directors.

     As of the date of this  report  on Form  10-Q,  the  Company  has  received
$200,000 from Tracker under the Note.

     As evidenced by management's  decision to seek additional  financing in the
form of the Note, material 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.

Contractual Commitments and Commercial Commitments

     The  following  table  sets  forth a summary  of our  material  contractual
obligations and commercial commitments as of December 31, 2003:

<TABLE>
<CAPTION>
Year Ended September 30,    Line of      Long-Term       Convertible      Operating         Total
(000's)                      Credit         Debt            Notes           Leases
------------------------   ---------   --------------   -------------   --------------   ------------

<S>                        <C>           <C>              <C>              <C>             <C>
2004                       $ 35,116(1)   $    902                          $  2,201        $ 38,219
2005                                          251         $  1,300(2)         2,378           3,929
2006                                          656                             1,952           2,608
2007                                        5,687                             1,406           7,093
2008                                           44                               932             976
Thereafter                                    108                             2,177           2,285
                           ---------   --------------   -------------   --------------   ------------
Total                      $  35,116     $  7,648         $  1,300         $ 11,046        $ 55,110
                           =========   ==============   =============   ==============   ============

</TABLE>

     (1) Our inventory  Borrowing  Agreement  matured in October 2003. As of the
date of this  Report on Form 10-Q,  we have been  notified  by each  lender that
subject to appropriate  documentation our new expiration date will be in October
2004.

     (2)  Convertible  promissory  notes  mature  in  December  2004.  The Notes
originated  in 2001 and accrue  interest at 10.75%,  fixed.  The  principal  and
interest   amounts  payable   pursuant  to  the  Notes  are   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.  The Notes are  redeemable by the Company,  and if not redeemed
the  principal  amount of the Notes may be  converted  by the  holders  into the
Company's common stock at a conversion price of approximately $2.46 per share.


                                       18
<PAGE>

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 quarter ended December 31, 2003
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
Management's Discussion and Analysis - Net sales).

                          CRITICAL ACCOUNTING POLICIES

     We  have  identified  the  policies  below  as  critical  to  our  business
operations and the  understanding  of our results of operations.  The impact and
any  associated  risks related to these  policies on our business  operations is
discussed throughout Management's Discussion and Analysis of Financial Condition
and Results of Operations  when such  policies  affect our reported and expected
financial results.

     In the ordinary course of business,  we have made a number of estimates and
assumptions  relating to the  reporting of results of  operations  and financial
condition in the  preparation  of our financial  statements  in conformity  with
accounting  principles  generally  accepted  in the United  States.  We base our
estimates on  historical  experience  and on various other  assumptions  that we
believe are reasonable under the  circumstances.  The results form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not  readily   apparent  from  other   sources.   Actual  results  could  differ


                                       19
<PAGE>

significantly  from those estimates under different  assumptions and conditions.
We believe that the following  discussion addresses our most critical accounting
policies,  which are  those  that are most  important  to the  portrayal  of our
financial  condition and results of operations  and require our most  difficult,
subjective,  and  complex  judgments,  often  as a  result  of the  need to make
estimates about the effect of matters that are inherently uncertain.

Revenue Recognition

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

     We  refer  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, we receive
a fee.  Revenue  that we earn 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,  we 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. We record 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  we  sell  such   policies   on  behalf  of  third   party   vendors  or
administrators.  At the time of sale, we record a fee for insurance and extended
service  agreements  net of the  related  fee  that is  paid to the  third-party
vendors or administrators.  Since our inception,  we have 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.

Allowance for Doubtful Accounts

     Accounts  receivable  consist  primarily  of  amounts  due  from  financial
institutions  upon sales contract  funding,  amounts due from  manufacturers  or
vendors under rebate programs,  amounts due from  manufacturers or vendors under
warranty  programs  and amounts due from  customers  for  services.  The Company
routinely  evaluates  the  collectibility  of  accounts  receivable  focusing on
amounts due from  manufacturers,  vendors  and  customers.  If events  occur and
market  conditions  change,   causing  collectibility  of  outstanding  accounts
receivable to become unlikely,  the Company records an increase to its allowance
for doubtful  accounts.  The Company  evaluates the probability of collection of
outstanding  accounts  receivable based on several factors which include but are
not limited to the following: 1) age of the outstanding accounts receivable,  2)
financial condition of the manufacturer,  vendor or customer, and 3) discussions
or  correspondence  with the  manufacturer,  vendor  or  customer.  The  Company
determines  the  allowance  for  doubtful  accounts  based  upon  both  specific
identification and a general allowance for accounts  outstanding for a specified
period of time.


                                       20
<PAGE>

Inventory Valuation

     Our 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. If the carrying amount of our inventory exceeds its
fair  value,  we write down our  inventory  to its fair  value.  We utilize  our
historical  experience  and current  sales  trends as the basis for our lower of
cost or market  analysis.  Changes in market  conditions,  lower  than  expected
customer demand,  closing of additional store locations and changing  technology
or features could result in additional  obsolete inventory that is unsaleable or
only  saleable at reduced  prices,  which  could  require  additional  inventory
reserve provisions.

     Additional events and market conditions  include but are not limited to the
following: 1) deteriorating financial condition of the manufacturer resulting in
discontinuance and lack of manufacturer's  warranty for certain boats, motors or
other products,  2) introduction of new models or product lines by manufacturers
resulting  in less  demand  for  previous  models or product  lines,  3) Company
initiatives  to promote  unit sales and reduce  inventory  levels for new and/or
used  inventory by reducing  sales prices,  and 4) Competing  boat  retailers in
various markets in which the Company operates may offer sales incentives such as
price reductions.

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. The Company routinely evaluates its
recorded  deferred  tax assets to  determine  whether it is more likely than not
that such  deferred  tax  assets  will be  realized.  During the  quarter  ended
September  30, 2002,  the Company  determined  that for deferred tax assets that
could not be  realized by  carryback  to prior tax years it was more likely than
not that such  deferred tax assets would not be realized and  accordingly a full
valuation  allowance has been recorded for these  deferred tax assets since that
time.

Impairment of Long-lived Assets

     Long-lived   assets  consist   primarily  of  property  and  equipment  and
intangible  assets.  Property  and  equipment  and other  intangible  assets are
carried  on  the  Company's  financial  statements  based  on  their  cost  less
accumulated  depreciation or amortization.  The Company  evaluates  property and
equipment  and  other  intangible  assets  held  and  used  by the  Company  for
impairment  whenever events or changes in circumstances  indicate that their net
book value may not be recoverable.  When such factors and  circumstances  exist,
the Company  compares the projected  undiscounted  future cash flows  associated
with the  future use and  disposal  of the  related  asset or group of assets to
their respective carrying amounts. Impairment, if any, is measured as the excess
of the  carrying  amount  over  the  fair  value,  based on  market  value  when
available,  or discounted expected cash flows of those assets and is recorded in
the period in which the determination is made.


                                       21
<PAGE>

Other

     For a more comprehensive list of our accounting  policies,  including those
which involve varying  degrees of judgment,  see Note 2, "Summary of Significant
Accounting  Policies" in the consolidated  audited  financial  statements of the
Company and notes thereto  included in the Company's Report on Form 10-K/A filed
for the fiscal year ended September 30, 2003.

                           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 February 14, 2003 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.  Later,  by letter dated as
of December 2, 2003 we were notified by Nasdaq that we had regained compliance.

     By letter dated as of January 15, 2004 we were  notified by Nasdaq that the
closing  price for our  common  stock for the 30 days  prior  thereto  had again
fallen  below the  minimum  $1.00 bid price  required  by the  Nasdaq  Small Cap
Market.  Nasdaq  notified the Company that it can regain  compliance  if the bid
price for the  Company's  common  stock  closes at $1.00 per share or more for a
minimum of 10  consecutive  trading days prior to July 13, 2004.  Alternatively,
Nasdaq has  notified the Company that in the event it meets the Nasdaq Small Cap
Market initial listing criteria that Nasdaq will grant the Company up to two (2)
grace periods of 180 additional days each to regain  compliance with the minimum
bid price.

     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

     Changes in short-term  interest rates on loans from financial  institutions
could  materially  affect the  Company's  earnings  because the  interest  rates
charged on certain underlying obligations are variable.

     At December  31, 2003,  a  hypothetical  100 basis point change in interest
rates on the Company's Floor Plan and Revolving Line of Credit obligations would


                                       22
<PAGE>

result in a change of  approximately  $351,000 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  variable rate Floor Plan and Revolving  Line of Credit
obligations  and assumes no change in the volume or  composition of such debt at
December 31, 2003.

Item 4.  Controls and Procedures

     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 Chief Executive Officer and Chief
Financial  Officer,  of the  effectiveness  of the design and  operation  of the
Company's  "disclosure  controls and  procedures,"  which are defined  under SEC
rules as controls and other  procedures of a company that are designed to ensure
that  information  required to be  disclosed by a company in the reports that it
files under the  Exchange Act is recorded,  processed,  summarized  and reported
within required time periods.  Based upon that  evaluation,  the Company's Chief
Executive  Officer and the Company's  Chief  Financial  Officer  concluded that,
while the Company's  disclosure  controls and procedures are effective in timely
alerting  them to material  information  relating to the Company  required to be
included in the Company's periodic SEC filings,  further efforts need to be made
to ensure that such  filings are made within the time  periods  specified by the
SEC's  rules and  forms.

     The  Company's  management,  including  the  Company's  Chairman  and Chief
Executive Officer and its Executive Vice President and Chief Financial  Officer,
has  evaluated  any changes in the  Company's  internal  control over  financial
reporting that occurred during the quarterly period covered by this report,  and
has concluded that there was no change during the Company's first quarter of its
2004  fiscal  year that has  materially  affected,  or is  reasonably  likely to
materially affect, the Company's internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

     From time to time, our Company is involved in litigation relating to claims
arising  from its  normal  business  operations.  Currently,  our  Company  is a
defendant in several lawsuits.

     In January 2003, the Company received notice of a lawsuit filed in the U.S.
Bankruptcy  Court  for the  Northern  District  of  Illinois  on  behalf  of the
bankruptcy  estate for  Outboard  Marine  Corporation  ("OMC").  The Company has
denied the  allegations in this lawsuit and finds them without merit.  OMC was a
primary supplier of outboard engines to our Company prior to OMC's bankruptcy in
December of 2000. The suit alleges that the Company  received  payments from OMC
that were are deemed to be  preferential  payments under  applicable  bankruptcy
law, and demands the repayment thereof.

     The  Company,  based  upon  review of the case and  discussions  with legal
counsel, believes the lawsuit to be similar to numerous filed against former OMC
dealers and that it is without  merit.  There is no  guarantee  that our Company
will prevail in defense of this or other lawsuits. If any lawsuit were to result
in a substantial unfavorable verdict or resolution for the Company it could have
a material  adverse  impact on the  results of  operations.


                                       23
<PAGE>

Item 2. Changes in Securities

     None.

Item 3.  Defaults Upon Senior Securities

     None.

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

     Not applicable.

Item 5.  Other Information

     $500,000 Line of Credit From Tracker. Due in part to the additional working
capital requirements needed to facilitate the Company's  significant product and
brand transition  (primarily the  introduction of off-shore  fishing boat models
and  elimination  of  its  yacht  sales)  and  the  seasonal  decline  in  sales
experienced  during the quarter  ended  December  31, 2003,  management  and the
Company's  controlling  shareholder  determined that additional  working capital
financing  was  necessary  to  enhance  general  working  capital  prior  to the
Company's  historic  seasonal volume  increases in net sales from the boat shows
beginning in January and also to adequately prepare the Company for the increase
in demand traditionally associated with the spring and summer months.

     Thus, on February 6, 2004, the Company agreed to terms with its controlling
shareholder,  TMRC,  LLP,  ("Tracker")  (See Note - 1), for a  $500,000  line of
credit.  The terms of the line of  credit  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 provides that the Company, at the discretion of the Operating Committee
of its Board of Directors,  may request  advances up to the aggregate  amount of
$500,000. Advances made pursuant to the Note will 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 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 that the dividend in the aggregate amount of $240,000 to the holder
     of the  Corporation's  6% Series A Cumulative  Convertible  Preferred Stock
     (Tracker) with respect to the regular quarterly  dividends for the quarters
     ended  September 30, 2003,  and December 31, 2003,  will be a cash dividend
     payable, together with interest accrued thereon, on or before May 5, 2004.

o    Re-establish  the  Operating  Committee  of its  Board  of  Directors.  The
     Operating Committee,  which consists of Kenneth N. Burroughs,  Robert Ring,
     and Richard Birnbaum,  is to: (i) determine whether  additional  borrowings
     are necessary  pursuant to the Note; and with respect thereto to review the
     overall  financial  operations and expenses of the Company,  and (ii) carry
     out such duties without the necessity of further actions or approval by the
     entire Board of Directors.


                                       24
<PAGE>

     As of the date this report on Form 10-Q, the Company has received  $200,000
from Tracker under the Note.

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibit Number            Description          Incorporated by Reference to:

       10.91           Line of Credit Promissory            Included herein.
                       Note from Travis Boats &
                       Motors, Inc. to TMRC, L.L.P.,
                       in the amount of $500,000,
                       dated February 2, 2004

        32.1           Certification Pursuant to            Not applicable.
                       Section 906 of the
                       Sarbanes-Oxley Act of 2002

        32.2           Certification Pursuant to            Not applicable.
                       Section 906 of the
                       Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

     During the quarter ended  December 31, 2003 through the date of this Report
on Form 10-Q, the Company filed the following Reports on Form 8-K:

     January 12, 2004 Report on Form 8-K for financial  statements  and exhibits
including  incorporation of press releases dated May 6, 2003; August 4, 2003 and
December 2, 2003 issued by the Company.

     February 3, 2004 Report on Form 8-K for financial  statements  and exhibits
including  incorporation  of press releases dated February 3, 2004 issued by the
Company.


                                       25
<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: February 17, 2004         TRAVIS BOATS & MOTORS, INC.

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



                                 EXHIBIT INDEX

The following exhibits are filed with this report.

Exhibit No.      Exhibit Description

10.91            Line of Credit Promissory Note from Travis Boats & Motors,
                 Inc. to TMRC, L.L.P., in the amount of $500,000 dated
                 February 2, 2004

32.1             Certification Pursuant to Section 906 of the Sarbanes-Oxley
                 Act of 2002

32.2             Certification Pursuant to Section 906 of the Sarbanes-Oxley
                 Act of 2002


                                       26