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, 2002

                                       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 [ ] 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 - 4,329,727 shares as of February 18, 2003.



<PAGE>

                                      INDEX

<TABLE>
<CAPTION>

PART I - FINANCIAL INFORMATION

<S>      <C>                                                                                                      <C>

Item 1:  Financial Statements (Unaudited):
                           Condensed Consolidated Balance Sheets:
                           December 31, 2002 and September 30, 2002................................................1

                           Condensed Consolidated Statements of Operations:
                           Three Months Ended December 31, 2002 and 2001...........................................2

                           Unaudited Condensed Consolidated Statements of Cash Flows:
                           Three Months Ended December 31, 2002 and 2001...........................................3

                           Notes to Condensed Financial Statements.................................................4

Item 2:  Management's Discussion and Analysis of Financial
                           Risk Factors............................................................................6

                           Condition and Results of Operations.....................................................6

Item 3:  Quantitative and Qualitative Disclosures About Market Risk...............................................12


PART II - OTHER INFORMATION

Items 1 - 6........................................................................................................9

Signatures........................................................................................................10



</TABLE>


                                       i
<PAGE>


PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>

Item 1.  Financial Statements
Travis Boats & Motors, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
 ( in thousands, except share data )
                                                                          December 31,      September 30,
                                                                              2002              2002
                                                                          -------------    ----------------
                                                                          (unaudited)
<S>                                                                            <C>                 <C>

ASSETS:
      Current assets:
            Cash and cash equivalents                                             $887              $4,253
            Accounts receivable, net                                             7,660               9,681
            Inventories, net                                                    65,865              56,957
            Income Taxes Recoverable/Deferred tax asset                          2,378                 611
            Prepaid expenses and other                                           1,168               1,009
                                                                          -------------    ----------------
              Total current assets                                              77,958              72,511

      Property and equipment:
            Land                                                                 5,982               5,982
            Buildings and improvements                                          15,932              15,899
            Furniture, fixtures and equipment                                    9,362               9,327
                                                                          -------------    ----------------
                                                                                31,276              31,208
            Less accumulated depreciation                                     (10,321)             (9,820)
                                                                          -------------    ----------------
                                                                                20,955              21,388


      Intangibles and other assets:
            Goodwill                                                               --                   --
            Non-compete agreements, net                                          1,045               1,149
            Other assets                                                           632                 384
                                                                          -------------    ----------------
              Total assets                                                    $100,320             $95,432
                                                                          =============    ================

LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities:
            Accounts payable                                                    $4,168              $4,122
            Accrued liabilities                                                  2,201               1,439
            Floor plan and revolving line of
            credit                                                              58,984              50,949
            Current portion of notes payable and other short-term                  440               1,025
            obligations
            Notes payable in default, classified as short-term                   6,856               6,436
            obligations
                                                                          -------------    ----------------
              Total current liabilities                                         72,649              63,971

      Notes payable, less current portion                                        3,141               3,225
      Convertible Subordinated Notes                                             1,300               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,
                 4,329,727 and 4,329,727 issued and outstanding at
                 December 31, 2002 and September 30, 2002, respectively             43                  43
            Paid-in capital                                                     15,108              15,109
            Retained earnings                                                       79               3,784
                                                                          -------------    ----------------
              Total stockholders' equity                                        23,230              26,936

                                                                          -------------    ----------------
              Total liabilities and stockholders' equity                      $100,320             $95,432
                                                                          =============    ================

</TABLE>



       See notes to unaudited condensed consolidated financial statements



                                       1

<PAGE>


TRAVIS BOATS & MOTORS, INC. and SUBSIDIARIES
Unaudited Financial Highlights     (in thousands, except share and store data)



                                                    Three Months ended
                                                       December 31,
                                                    2002         2001
                                                  ----------------------

Net sales.....................................    $17,887      $20,666
Cost of goods sold............................     14,370       16,601
                                                  ----------   ---------

Gross profit..................................      3,517        4,065

Selling, general and administrative...........      7,336        7,314
Financing and board restructure expenses......        145          ---
Depreciation and amortization.................        657          627
                                                  ----------   ---------
                                                    8,138        7,941

Operating loss................................     (4,621)      (3,876)
Interest expense..............................       (812)      (1,039)
Other income..................................         20           17
                                                  ----------   ---------

Loss before income tax benefit and cumulative
effect of accounting change...................     (5,413)      (4,898)
Income tax benefit............................     (1,830)      (1,794)
                                                  ----------   ---------

Net loss before cumulative effect of
accounting change.............................    ($3,583)     ($3,104)

Cumulative effect of accounting change, net of
taxes of $2,281...............................        ---       (6,528)
                                                  ----------   ---------
Net loss......................................    ($3,583)     ($9,632)

Preferred stock dividends.....................      ($120)         ---
                                                  ----------   ---------
Net loss attributable to common shareholders..    ($3,703)     ($9,632)
                                                  ==========   =========

Basic and Diluted Loss Per Share before
dividends and cumulative effect of accounting
change, net...................................     ($0.83)      ($0.71)
    Preferred stock dividends.................      (0.03)          ---
Cumulative effect of accounting change, net...        ---        (1.50)
                                                  ----------   ---------
Basic and Diluted Loss Per Share..............     ($0.86)      ($2.21)
                                                  ==========   =========

Weighted Average Basic
  and Dilutive common shares outstanding......   4,329,727    4,355,081





                                       2
<PAGE>



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

                                                                                           Three months ended
                                                                                              December 31,

                                                                                       2002                2001
                                                                                   ----------------------------------
<S>                                                                                    <C>                <C>

Operating activities:
Net Loss                                                                                ($3,583)            ($9,632)
Adjustments to reconcile net loss to net cash used in
  Operating activities:
      Depreciation...........................................................               549                 512
      Amortization...........................................................               108                 115
      Cumlative effect of accounting change, act.............................                 0               6,528
      Changes in operating assets and liabilities
           Accounts receivable...............................................             2,021               1,227
           Prepaid expenses..................................................              (159)               (104)
           Inventories.......................................................            (8,908)             (8,795)
           Other assets......................................................                22                   0
           Accounts payable..................................................                46                 737
           Accrued liabilities...............................................               762                 (46)
           Income tax recoverable............................................            (1,767)             (1,557)
                                                                                   --------------     ---------------
      Net Cash used in operating activities..................................           (10,909)            (11,015)

      Investing Activities:
      Purchase of property and equipment.....................................              (123)                (66)
                                                                                   --------------     ---------------
      Net cash used in investing activities..................................              (123)                (66)

      Financing activities:

      Proceeds from issuance of Convertible Subordinated Notes...............                 0               4,300
      Net increase in notes payable and other short term obligations.........             7,786               7,045
      Preferred stock dividends..............................................              (120)                  0

      Net proceeds (payments) from issuance
         (repurchase) of common stock........................................                 0                  (8)
                                                                                   --------------     ---------------
      Net cash provided by financing activities..............................             7,666              11,337

      Change in cash and cash equivalents....................................            (3,366)                256

      Cash and cash equivalents, beginning of period.........................             4,253               1,388
                                                                                   --------------     ---------------
      Cash and cash equivalents, end of  period..............................            $  887              $1,644
                                                                                   ==============     ===============


</TABLE>



      See notes to unaudited condensed consolidated financial statements


                                       3
<PAGE>




              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002


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)  without audit. 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,
2002;  and the interim  results of operations and cash flows for the three month
periods ended  December 31, 2002 and 2001.  The condensed  consolidated  balance
sheet at September  30,  2002,  presented  herein,  has been  prepared  from the
audited  consolidated  financial  statements  of the Company for the fiscal year
then ended.

Accounting  policies  followed  by the Company  are  described  in Note 2 to the
audited  consolidated  financial  statements for the fiscal year ended September
30, 2002.  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, 2002 included in the Company's annual Report on Form 10-K.

The results of operations for the three month period ended December 31, 2002 are
not  necessarily  indicative  of the results to be expected  for the full fiscal
year.

NOTE 2 - BASIC/DILUTED OUTSTANDING SHARE CALCULATION

Financial  Accounting Standards Board Statement No. 128 requires the calculation
of earnings per share to exclude common stock  equivalents when the inclusion of
such would be  anti-dilutive.  In the quarters ended December 31, 2002 and 2001,
the inclusion of common stock  equivalents would have been  anti-dilutive  based
upon the net loss posted by the Company.  As such, all common stock  equivalents
were excluded.

The  Company  had  issued and  outstanding  incentive  stock  options to certain
officers,  directors and employees  totaling  311,298  shares which had a strike
price equal to or exceeding the closing  price of the Company's  common stock on
such date.  The 311,298  option shares have a weighted  average  strike price of
$5.14 and a weighted average outstanding remaining life of 5.8 years.

Effective  as of January 7, 2003,  the  Company  cancelled  237,198  outstanding
incentive stock options with a weighted average remaining life of 5.37 years and
a weighted  average strike price of $4.78 per share. the incentive stock options
were previously held by executive  management and one independent  board member.
The  cancellatkon  of the incentive stock options was a requirement of the terms
for the $1.5 million short term financing  agreements  entered into effective as
of December 2002.

The Company also has 528,584 shares of common stock subject to issuance pursuant
to $1.3 million in  outstanding  convertible  subordinated  notes and  3,252,826
shares of common stock subject to issuance pursuant to 80,000 shares of Series A
Preferred Stock  outstanding as the conversion price of approximately  $2.46 per
share of both issuances exceeds the Company's average market price of its common
stock.



                                       4

<PAGE>

NOTE 3 - 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.

Repurchases  of shares of common stock during the  quarters  ended  December 31,
2002 and 2001 consisted of the following:

                                        3 mos ended           3 mos ended
                                        December 31, 2002     December 31, 2001
                                       -------------------   -------------------
     Shares Repurchased (000's)              --                     8.5
     Total Purchase Price (000's)            --                   $18
     Average Price per Share                 --                   $2.12

NOTE 4  - CONVERTIBLE SUBORDINATED NOTES

The Company has outstanding  Convertible  Subordinated Notes (the "Notes") in an
aggregate amount of $1.3 million  originally  issued in December 2001. The Notes
are unsecured with a term of 36 months 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.

NOTE 5 - SERIES A PREFERRED STOCK.

The  Company has issued  80,000  shares of 6% Series A  Cumulatiave  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 6 - SHORT TERM BORROWINGS

The Company  finances  substantially  all of its inventory  and working  capital
requirements  pursuant to inventory borrowing agreements entered into in January
2000 with two commercial finance  companies.  The agreements which have maturity
dates  of  April  30,  2003  (see   Management's   Discussion  and  Analysis  --
"Liquidity"), contain


                                       5

<PAGE>

substantially similar terms and financial ratio based covenant requirements. The
maximum aggregate borrowing  availability as of December 31, 2002 was limited to
a maximum  credit  limit of $70  million at various  prime  based or LIBOR based
interest  rates  (varying from 4.75% to 4.82% at December 31, 2002).  Borrowings
under the agreements  are pursuant to a borrowing  base, or specific floor plan,
advancing fomula and are used prmiarily to finance  inventory  purchases and for
general  working capital  requirements.  Substantially  all inventory,  accounts
receivable,  furniture,  fixtures, equipment and intangible assets collateralize
these  agreements.  Pursuant to certain waivers and  restructuring  of covenants
under these  inventory  borrowing  agreements  during the 2002 fiscal year,  the
Company also granted junior liens on its real estate holdings as collateral.

The Company  also has  approximately  $6.8  million in real estate  loans with a
single lender which have been  re-classified as current for financial  reporting
since (i) one loan in the amount of  approximately  $515,000 has matured and has
not been repaid or  refinanced  and (ii) the Company is out of  compliance  with
financial  loan  covenants.  The Lender has demanded the early  repayment of all
loans  effective  as of February 10, 2003.  The Company has  requested  that the
Lender  refinance the loans,  but no guarantee can be made that the request will
be  granted  or that the  Lender  will not  proceed  with the  demand  for early
repayment.  (See  Risk  Factors  - "We are Out of  Compliance  on  Certain  Loan
Agreements, Have Been Out of Compliance on Others and have a Matured Real Estate
Loan that Has Not Been Refinanced or Repaid.").

NOTE 7 - GOODWILL

The Company adopted SFAS No. 142,  Goodwill and Other  Intangible  Assets ("SFAS
142")  effective  October 1, 2001.  SFAS 142 provides that separable  intangible
assets that have finite lives will  continue to be  amortized  over their useful
lives and that goodwill and indefinite-lived intangible assets will no longer be
amortized but will be reviewed for impairment  annually,  or more  frequently if
impairment  indicators  arise.  The Company  operates as one reporting  unit for
goodwill  impairment testing.  Accordingly,  with the adoption of the Statement,
the Company ceased amortization of goodwill as of October 1, 2001.

In accordance with SFAS 142, the Company completed goodwill  impairment tests as
required.  The tests  involved the use of  estimates  related to the fair market
value of the business with which the goodwill is associated.  As a result of the
transitional impairment test, which considered factors including the significant
negative  industry and economic  trends  impacting  current  operations  and our
market  capitalization  relative to our net book value,  the Company  recorded a
non-cash,  after tax charge of $6.5  million  (charge of $8.8  million  less tax
effect  of $2.3  million)  as a  cumulative  effect of  accounting  change as of
October 1, 2001. The non-cash,  after tax charge  resulted in the elimination of
the entire goodwill balance from the Company's balance sheet.

Estimated  amortization  expense for the next five fiscal years is approximately
$415,000 in 2003; $385,000 in 2004; $235,000 in 2005, $118,000 in 2006 and $0 in
2007.


                                       6

<PAGE>



NOTE 9 -  COMPREHENSIVE  LOSSFor the three  months  ended  December 31, 2002 and
2001, the Company recorded no comprehensive loss items, other than the net loss.


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


                                  Risk Factors

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 risk  factors  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. You should know that if the events described in
this section and elsewhere in this Report on Form 10-Q occur,  they could have 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 filed for the fiscal year ended September 30, 2002.

We are Out of Compliance on Certain Loan Agreements, Have Been Out of Compliance
on Others and have a Matured  Real Estate Loan that Has Not Been  Refinanced  or
Repaid. We have completed the last two fiscal years with net losses. As a result
of these net  losses,  we have been out of  compliance,  at  various  times,  on
certain loan  agreement  requirments of our inventory  borrowing  agreements and
real estate loans. These have occurred because we did not have the amount of net
earnings or cash flow required  under our loan  agreements.  We have  negotiated
short  term  waivers  discussed  above  on  terms  of  our  inventory  borrowing
agreements;  however we are also  currently  not in  compliance  with  financial
covenants  of a loan  agreement  on certain  real  estate  loans  with  Hibernia
National  Bank  ("Hibernia")  requiring  (i) minimum  cash flow and (ii) minimum
tangible net worth.

The Company has a real estate loan in the amount of $515,076  with Hibernia that
matured on January 28,  2003.  the  Company has not repaid the loan,  nor has it
been  successful at  negotiating a refinance of the loan.  Hibernia has notified
the  Company by letters  dated as of January  31, 2003 that the unpaid loan is a
default  under  the loan  documents.  Additionally,  the  default  represents  a
cross-default under all of the Company's remaining loans from Hibernia. Hibernia
has demanded  repayment on that matured loan and on each of the Company's  other
loans with Hibernia by February 10, 2003. In the event of non-payment,  Hibernia
notified the Company  that it will  proceed  with any legal action  necessary to
collect all sums due.  The total  outstanding  principal  balance of the six (6)
loans upon which payment has been demanded is  approximately  $6.8 million as of
the date of this Report on Form 10-Q.

By virtue of a  cross-default  clause in the  Hibernia  loans and the  Company's
inventory  borrowing  agreements  with our Senior  Lenders,  the above  maturity
default on the $515,076  Hibernia  note  triggers a default  under the inventory
borrowing agreements as well. The Company's newly-formed Operating Committee has
been in contact with Hibernia and has arranged  meetings to review the situation
in an effort to resolve the


                                       7

<PAGE>

issue.  The  Operating  Committee  will further need to meet with the  Company's
Senior  Lenders to determine if an agreement  can be reached in order to cure or
waive the cross-default provisions related to the Hibernia loans.

Our inability to continue to (i) negotiate waivers, (ii) to restructure or renew
these loans,  or (iii) operate  without  being in  compliance  would result in a
significant and severe financial impact on our business,  operating  results and
financial  condition.  As outlined above, the default resulting from the matured
loan described above results in a concurrent default on our inventory  borrowing
agreements.  Accordingly,  the Company is seeking to (i)  refinance  these loans
with other  lenders  based upon the favorable  loan amount  (approximately  $6.8
million as of December  31,  2002) to apraised  valuation  (approximately  $12.3
million as of September 30, 2002) based on the lender's  third party  appraisals
of  the  real  estate  securing  the  loan;  (ii)  sell  the  real  estate  in a
sale/leaseback  transaction,  or (iii)  sell the real  estate and  relocate  the
effected store locations to alternative leased locations.  There is no guarantee
that the Company will be able to renegotiate these loans, to refinance the loans
or to sell the real  estate  and if such is  accomplished  that the terms of any
re-negotiations,  refinance or sale will be  acceptable to the Company or result
in proceeds  sufficient to repay the  indebtedness.  This could  jeopardize  our
financial  stability  and force us to further  restructure  our  operations,  or
possibly to suspend operations until a plan of alternative financing is achieved
and could  result in our Company  being  unable to continue as a going  concern.
(See "Item 3. Defaults Upon Senior Securities"  elsewhere in this Report on Form
10-Q).

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 requsted  the transfer  because oru 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 the 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 the Nasdaq  Small Cap  Market.  The NASDAQ
notified the Company that it can regain compliance of the Company's common stock
closes at $1.00 per share or more for a minimum of 10  consecutive  trading days
prior  to  August  13,  2003.   Otherwise,   the  NASDAQ  will  provide  written
notification  that the Company's  common stock will be delisted;  subject to the
Company's right to appeal the determination. Our continued inability to maintain
the required share price range or other  requirements  for trading on the Nasdaq
Small Cap  Market  could  result in our  common  stock  being  delisted  and not
eligible  for trading on the Nasdaq  Stock  Market.  Since we rely on the Nasdaq
Stock Market to offer trading of our common stock,  our inability to continue on
the Nasdaq Stock Market could have a material  adverse  effect on our  business,
financial condition,  the price of our common stock and the ability of investors
to purchase or sell our common stock.

Execution of Restructure  Plans.  The Company  anticipates  that it will require
additional  working  capital or financing to fund operations for certain periods
during at least the first two quarters of its fiscal 2003 year.  We believe that
our  anticipated  cash needs exceed amounts  otherwise  available  under current
inventory  borrowing  agreements or our cash balances.  This projected cash flow
shortfall  is  influenced  in  part  by  our  seasonal  trends,   which  include
historically low sales levels during the October through December periods. Also,
the  seasonal  lull  normally  experienced  at the end of a  calendar  year  was
compounded at the end of 2002 by continued economic  uncertainty,  weak industry
sales trends,  and certain revised  borrowing  terms on our inventory  borrowing
agreements which have had the effect of reducing our cash balances and borrowing
availability.

In  recognition  of this issue,  we have (i)  negotiated  interim  financing  as
discussed below, (ii) developed management plans to significantly reduce expense
levels,  (iii)  entered  into various  agreements  with a major  shareholder  as
discussed below, and (iv) formed a special  Operating  Committee of our Board of
Directors as discussed  below.  The Operating  Committee  will have authority to
oversee the overall  financial  operations of the Company  (including  all store
level and management operating expenses, employee headcount, inventory reduction
measures and other relevant  expenses or initiatives)  and to review weekly cash
flows.

We took  these  actions  to  create a plan to (i) stop,  or in the  alternative,
materially  reduce the operating losses  experienced  during the past two fiscal
years,  and (ii) to allow the Company to work  towards  building  cash  reserves
during the 2003 fiscal year that will potentially be sufficient to alleviate, or
alternatively  reduce,   similar  off-season  working  capital  shortages.   Key
components  of this plan include  interaction  with  management,  the  Operating
Committee, our lenders and our key vendors to reach plans that provide


                                       8
<PAGE>

for a  collaborative  effort  to  reach  attainable  ratio  levels  in our  debt
agreements  and to enhance  cash flow.  We plan to enhance  cash flow by,  among
other initiatives,  carefully  reducing (i) variable  expenses,  including those
expenses  related to payroll  and  benefits;  (ii)  reviewing  additional  store
locations  for closure that are not expected to  contribute to cash flows or are
in markets that can  reasonably be served by other nearby Travis  Boating Center
locations and (iii) improve sales  management to speed the pace of reductions in
both new and used aged inventories which have historically tied up our cash flow
as a result of our inability to borrow funds against those products.

The  restructure  plans,  along with  detailed  plans for our ongoing  borrowing
needs,  are to be approved  by our  Operating  Committee  and  submitted  to our
various lenders prior to April 30, 2003. Accordingly, the restructure plan is an
integral  component in improving our cash flows and in negotiating new borrowing
agreements, however there is no assurance that our plans will succeed, or in the
event  that they do  succeed,  that they will be  sufficient  to offset  our net
losses,  improve  our cash flow or provide a basis for the  continuation  of our
financing.

Operating Losses and Reduced Financing have Jeopardized our Cash Flow. As a part
of our search for additional  financing to reduce our anticipated  shortfalls in
cash flow prior to the impact of positive cash flows  historically  beginning in
March of each selling season,  we entered into a short term financing  agreement
(the "Note")  with TMRC,  L.L.P  ("TMRC" or  "Tracker")  and our current  senior
inventory  finance  lenders to provide our Company with up to an additional $1.5
million in financing  through April 30, 2003. The initial advance under the Note
was $600,000. A second advance of $645,000 was requested and received on January
16,  2003,  but  there is no  guarantee  of any  additional  funding  since  the
financing  pursuant to the Note is subject to  discontinuance at any time by any
of the  lenders.  Each of the  lenders  under  the Note has the sole  discretion
regarding any future  advancement of additional  funds under the Note. As of the
date of this Report on Form 10-Q the Company's  cash flows have been  sufficient
to preclude additional  borrowings under the Note, however there is no guarantee
that our cash  requirements  will not exceed the amount which otherwise could be
borrowed  under the Note.  As security for the Note, we have pledged our federal
income tax returns  towards the repayment of any amounts  outstanding  under the
Note.

As a condition to the Note,  we reached an agreement  with our senior  inventory
finance lenders to amend our inventory borrowing agreements to (i) waive various
current  defaults,  (ii) modify certain covenants and terms, and (iii) to extend
the maturity date under those  agreements  from the original  expiration date of
January 31, 2003 to a new expiration  date of April 30, 2003,  unless  otherwise
terminated  earlier in accordance with the terms of the  agreements.  Due to the
Company's need for ongoing  inventory  financing to support  working capital and
operations,  we will  continue  to work  towards a  long-term  extension  of the
inventory  borrowing  agreements  beyond the  maturity  date of April 30,  2003.
However,  there is no  assurance  that  negotiations  with our senior  inventory
finance lenders will result in an extension of the current  inventory  borrowing
agreements or in new  financing  arrangements.  There is also no assurance  that
these or alternative  inventory  borrowing  agreements  will be available to the
Company or that such financing,  if available,  will be in amounts or have terms
and conditions  sufficient to provide  necessary working capital to the Company.
Failure by the Company to reach an agreement with its senior  inventory  finance
lenders to extend the inventory  borrowing  agreements  could have the effect of
requiring  the  Company  to (i) seek  additional  capital;  (ii)  only  purchase
inventory from manufacturers  willing to execute repurchase  agreements with our
lenders;  (iii) reduce our inventory purchase  commitments to a level consistent
with financial accommodations available to us, (iv) sell or liquidate additional
assets to raise cash balances, or (v) secure alternative financing.  Our failure
or inability to renew or complete alternative financing  arrangements with terms
and conditions at least as favorable as currently in place for the Company could
jeopardize  our  financial  stability  and force us to further  restructure  our
operations,  or  possibly  to  suspend  operations  until a plan of  alternative
financing  is  achieved.  Accordingly,  the  lack  of  sufficient  financing  or
suspension  of our  operations  could  result in our  inability to continue as a
going concern or result in our seeking  bankruptcy  protection  while we further
restructure our operations.



                                       9
<PAGE>

General - Travis Boats & Motors, Inc. ("Travis Boats", the "Company" or "we") is
a  leading  multi-state  superstore  retailer  of  recreational  boats,  motors,
trailers and related  marine  accessories  in the southern  United  States.  Our
Company,  currently  operates 34 stores under the name Travis  Boating Center in
Texas (8), Arkansas (3), Louisiana (4), Alabama (1), Tennessee (5),  Mississippi
(1), Florida (10), Georgia (1) and Oklahoma (1).

We seek to  differentiate  ourselves from  competitors by providing  customers a
unique superstore  shopping  experience that showcases a broad selection of high
quality boats, motors,  trailers and related marine accessories at firm, clearly
posted low prices.  Each superstore also offers  complete  customer  service and
support,   including  in-house   financing  programs  and  full-service   repair
facilities staffed by factory-trained mechanics.

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

Since our founding in 1979 as a single  retail store in Austin,  Texas,  we have
grown  both  through  acquisitions  and  the  opening  of new  "start-up"  store
locations. During the 1980s, we expanded into San Antonio, Texas, purchased land
and built a new  store  facility.  After  this,  we  purchased  additional  boat
retailers  that  operated  stores in the Texas  markets of  Midland,  Dallas and
Abilene.  It was  during  this  early  period  of  store  growth  that we  began
developing  the  systems  necessary  to  manage  a  multi-store   operation  and
maximizing our inventory  purchases to obtain  increased volume  discounts.  Our
success  in  operating  numerous  stores  and  maximizing  volume  discounts  on
inventory  purchases  led to the  introduction  of our  own  proprietary  Travis
Edition  packaging  concept and our philosophy of clearly posting price signs on
each of our Travis Edition boats held for sale.

We sell  approximately 75 different types of Travis Edition models of brand-name
fishing,  water-skiing and general recreational boats, such as family ski boats,
off-shore fishing boats,  personal  watercraft,  cabin cruisers and yachts up to
approximately 50 feet in length. We also sell motors, trailers,  accessories and
related  equipment.  Although we sell pleasure  boats at many  different  retail
prices,  we attempt to price our product to maintain a  consistent  gross profit
percentage  for each of our Travis  Edition  models.  See  "Business  Strategy -
Travis Edition Concept."

We study  sales  trends  from the  cities  and  states  where we  operate  store
locations.  We  use  the  information  from  this  data  to  custom  design  and
pre-package combinations of popular brand-name boats, such as Larson, Wellcraft,
Scarab,  Bayliner,  Fisher,  ProCraft,  Fishmaster,  Ranger 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  and often include  distinguishing  features
and  accessories  that  have  historically  been  unavailable  to,  or listed as
optional, by many of our competitors. We also sell yachts, such as Carver,


                                       10

<PAGE>

Crownline and  Martinique  that range in length from 25 feet to over 50 feet. By
providing many different types of boats with many types of standard features, we
attempt to offer the customer an exceptional boat at a competitive price that is
ready for immediate use and enjoyment.

We believe  that our  Company  offers a  selection  of boat,  motor and  trailer
packages  that fall within the price range of the majority of all boats,  motors
and  trailers  sold in the  United  States.  Our  Travis  Edition  product  line
generally  consists  of  boat  packages  priced  from  $7,500  to  $75,000  with
approximate  even  distribution  within  this price  range.  Our yachts can have
prices  above  $500,000.   While  most  of  our  sales  have  historically  been
concentrated  on boats with retail  sales  prices  from  $7,500 to  $75,000,  we
believe  that as the Company  continues  to operate in Florida and enters  other
markets along the Gulf of Mexico or other new coastal areas,  that the number of
off-shore fishing boats,  cabin cruisers and yachts will continue to increase as
a  percentage  of our net  sales.  Our  management  believes  that by  combining
flexible  financing  arrangements  with many types of boats  having  broad price
ranges,  that we are able to offer boat  packages to  customers  with  different
purchasing budgets and varying income levels.

Results of Operations

Quarter  Ended,  December 31, 2002 Compared to the Quarter  Ended,  December 31,
2001.

Net sales.  Net sales in the first  quarter of fiscal  2003  decreased  to $17.9
million,  compared to net sales of $20.7 for the first  quarter of fiscal  2002.

The decrease in net sales during the quarter  ended  December 31, 2002  included
approximately  $1.1 million in reduced  sales as a result of the impact of fewer
stores in operation (34 versus 37) and a decrease of approximately  $1.7 million
in comparable  store sales.  Comparable store sales decreased by 8.4% (34 stores
in base) for the quarter ended December 31,2002. Management believes the decline
in net sales and the decrease in  comparable  store sales was related to various
factors  including,  but not limited to,  fewer stores in  operation,  prolonged
erratic levels of consumer confidence and employment uncertainty,  combined with
persistent weak economic and industry conditions.  The decrease in net sales for
the quarter ended  December 31, 2002 incouded $1.1 million in reduced sales as a
result of the impact of fewer stores in operation (34 versus 37).

Gross profit.  Gross profit decreased by approximately $3.5 million in the first
quarter of fiscal  2003 from $4.1  million in the same  quarter of fiscal  2002.
Gross  profit,  as a percent of net  sales,  remained  flat at 19.7%  during the
quarter ended December 31, 2002 and 2001, respectively.

The decrease in total gross profit in actual  dollars was  primarily  related to
(i) the decline in net sales  during the periods and (ii) also,  in an effort to
stimulate  sales,  we have  continued  to offer  certain  sales  incentives  and
participated  in  manufacturer  sponsored  rebate  programs  in an effort (i) to
reduce  certain  non-current  inventory  levels and (ii) to  stimulate  sales in
response  to weak  economic  and  industry  conditions.  We believe  that we may
continue to experience erratic levels of overall gross profit margins during the
remainder of the 2003 fiscal year  resulting,  in part, to (i) a continued  weak
and uncertain ecnoomic  environment and (ii) introductions of certain new Travis
Edition product lines and (iii)  continued  emphasis on incentives and marketing
promotions  to  stimulate  sales of both  current  and  non-current/discontinued
inventory models.

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.



                                       11


<PAGE>

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  $397,000,  or 11.3%, of
total gross profit in the first  quarter of fiscal 2003, as compared to $550,000
or 13.5%,  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 reduced sales of F&I Products
due  primarily to the  reduction in overall net sales and lower  overall  yields
paid by lenders for  originating  customer  finance  contracts  and  competitive
pressures on finance rates (which resulted in lower net spreads  achieved in the
placement  of customer  financing).  Decreases  in the  percentage  of customers
buying these products (which is referred to as "sell-through"),  particularly by
purchasers of the larger,  more expensive boats and reduced  customer demand for
certain insurance products have also been limiting factors.

Selling,   general   and   administrative   expenses.   Selling,   general   and
administrative  expenses  increased to $7.5  million in first  quarter of fiscal
2003 from $7.3 million for the first quarter of fiscal 2002. As a percent of net
sales,  selling,  general and administrative  expenses increased to 41.8% in the
first quarter of fiscal 2003 from 35.4% for the first quarter of fiscal 2002.

The increase in selling, general and administrative expenses, in actual dollars,
for the quarter  ended  December  31, 2002 versus the same  quarter of the prior
year was  primarily  attributable  to increases in certain  expenses,  primarily
insurance  expense  and  promotion  and  advertising  expenses.  The Company has
experienced   significant   increases   in   premiums   related   to  both   its
property/casualty  and its  employee  health  insurance  coverages.  during  the
quarter ended December 31, 2002, the Company also incurred  expenses of $145,000
related to the legal and administrative  costs associated witht he restructuring
of its Board of Directors.  The Board  restructuring  was related to the Company
securing  additional  financing  and  certain  modifications  in  its  inventory
borrowing agreements (se Management's Discussion and analysis -- "Liquidity").

Depreciation and Amortization  Expenses.  Depreciation and amortization expenses
increased to  $657,000in  the first quarter of fiscal 2003 from $627,000 for the
first  quarter of fiscal 2002.  Depreciation  and  amortization  expenses,  as a
percentage  of net  sales,  were 3.7% for the  first  quarter  of  fiscal  2003,
compared to 3.0% in the same quarter of the prior fiscal year.

The increase in depreciation and amortization  expenses,  both in actual dollars
and as a percent  of net  sales,  was  primarily  attributable  to the net fixed
assets associated with the capital expenditures made by the Company.

Interest expense. Interest expense decreased to $812,000 in the first quarter of
fiscal  2003 from $1.0  million in the first  quarter of fiscal  2002.  Interest
expense, as a percent of net sales,  decreased to 4.5% from 5.3% of net sales in
the same periods.


                                       12


<PAGE>

The decreased  interest expense,  both in actual dollars and as a percent of net
sales, was primarily the result of significantly lower balances on the Company's
inventory based lines of credit due to the significant  reductions in the levels
of inventory held by the Company. The Company has successfully reduced inventory
levels to reflect sales trends and as a result of its prior  implementation of a
Master  Business  Plan  that  requires  pre-approved  purchase  orders  for  all
inventory  purchases.  Interest expense also benefited  from the decrease in the
Company's variable borrowing rates relative to the same period of the prior year
resulting  from the  numerous  reductions  in the  prime  rate.

Net loss. The Company, prior to preferred stock dividends of $120,000,  reported
a net loss  attributable to common  shareholders of $3.7 million ($.86 per basic
and  diluted  share) for the quarter  ended  December  31,  2002.  the  Company,
excluding the  cumulative  effect of accounting  change,  reported a net loss of
$3.1  million  ($.71 per basic and  diluted  share) for the same  quarter of the
prior fiscal year.

The Company,  after preferred  stock dividends of $120,000,  reported a net loss
attributable to common  shareholders of $3.7 million ($.86 per basic and diluted
share) for the quarter ended December 31, 2002.

Inclusive  of the impact of the  cumulative  effect of  accounting  change,  the
Company  reported a net loss of $9.6 million ($2.21 per basic and diluted share)
for the same quarter of the prior fiscal year.

As previously  reported,  the net loss from the cumulative  effect of accounting
change  is  from  the  Company's  adoption  of SFAS  142,  "Goodwill  and  Other
Intangible  Assets" as of October 1, 2001.  The  application  of the  transition
provisions  of SFAS 142 required the Company to take a non-cash,  non-recurring,
after-tax charge of approximately $6.5 million effective as of October 2001. The
charge eliminated the Company's goodwill accounts.

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").

At December 31, 2002,  we had  approximately  $900,000 in cash,  $7.7 million in
accounts  receivable  (primarily  contracts in transit from sales,  manufacturer
rebates  receivable and other amounts due from  manufacturers) and $65.9 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  $6.4  million of accounts
payable and accrued  liabilities,  $59.0 million outstanding under our borrowing
agreements  and $7.3 million in  short-term  indebtedness  including (i) current
maturities of notes  payable of $440,000;  (ii) a real estate loan in the amount
of $515,076 with a balloon  payment which matured in January 2003 (which has not
been  refinanced  and remains unpaid as of the date of this Report on Form 10-Q)
and (iii)  approximately  $6.3 million in real estate loans with a single lender
which have been  re-classified  as current for financial  reporting since we are
out of  compliance  with certain  financial  loan  covenants  and the lender has
demanded  early  repayment.  (See Risk  Factors - "We are Out of  Compliance  on
Certain  Loan  Agreements,  Have Been Out of  Compliance  on  Others  and Have a
Matured Real Estate Loan that has not been Refinanced or Repaid").

As of December  31,  2002,  the  aggregate  maximum  borrowing  limits under our
borrowing agreements was $70.0 million, respectively.


                                       13


<PAGE>


At December 31, 2002,  we had working  capital of  approximately  $5.3  million.
Working  capital,  as of that date, was negatively  effected by our net loss and
the  aforementioned  $6.8 million,  in short term  indebtedness  classified as a
current liability.

For the quarter ended December 31, 2002, operating activities used cash flows of
$10.9 million due primarily to the  pre-season  and boat shows  increase of $8.9
million in inventories  and the increase of the income taxes  recoverable due to
the net loss.  These amounts were offset  partially by the $2.0 million decrease
in accounts receivable;  however the majority of this decrease was the result of
the Company writing off certain accounts receivable to bad debts.

For the quarter  ended  December 31, 2002,  investing  activities  utilized cash
flows of $123,000.  These activities were primarily funded through our borrowing
agreements and internal cash flows.

For the quarter  ended  December 31, 2002,  financing  activities  provided cash
flows of $7.7 miollion  primarily  from the net proceeds of funds borrowed under
our inventory  borrowing  agreements for the purchase of our off-season and boat
show  inventories.  We finance  substantially  all of our  inventory and working
capital  requirements  pursuant to borrowing  agreements entered into in January
2000 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, which currently have maturity dates of April 2003, have been amended
numerous times. The agreements contain substantially similar terms and financial
ratio based covenant requirements.  The maximum aggregate borrowing availability
as of December 31, 2002 was limited to a maximum  credit limit of $70 million at
various prime based or LIBOR based  interest  rates (varying from 4.75% to 8.75%
at  December  31,  2002).  Borrowings  under the  agreements  are  pursuant to a
borrowing base, or specific floor plan, advancing formula and are used primarily
to finance  inventory  purchases and for general working  capital  requirements.
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:
(i)  fees for  administrative  monitoring,  (ii)  fees for  unused  portions  of
available credit,  and (iii) pre-payment fees in the event of our termination of
such floor plans prior to their stated original  maturity  dates.  The borrowing
agreements  also include  restrictive  loan agreements  containing  various loan
covenants  and  borrowing  restrictions,   including  minimum  financial  ratios
(governing net worth,  current assets,  debt to worth  percentages and cash flow
coverage  requirements  based upon  interest  expense and monthly  principal and
interest payments on debts). Acquisitions, the payment of common stock dividends
or repurchases of our common stock are also substantially  limited without prior
consent.

Effective on December 30th and 31st,  2002, we entered into Amended and Restated
borrowing  agreements  (the  "Amended  Agreements")  with our  senior  inventory
lenders, TCFC and GE, (formerly "DFS").

The  Amended  Agreements  included,  but  were not  limited  to,  the  following
components:

1. Extension of the maturity date of the respective  borrowing  agreements  from
   January 31, 2003 to April 30, 2003.
2. Waiver of certain financial, reporting and payment defaults as of the date of
   the  Amended   Agreements.   The  financial   default  waivers  included  the
   re-establishment  and  modification  of new financial ratio levels based upon
   our current and anticipated  financial  performance through the maturity date
   of April 30,  2003.  The waived  reporting  requirements  provided us time to
   finalize  our audit  report and report on Form 10-K for the fiscal year ended
   September  30,  2002.  The  waived  payment  defaults  were the result of our
   failure to repay certain amounts  scheduled to be paid according to the terms
   of the borrowing agreements, including the timely payment of amounts for sold
   inventory and scheduled amounts for certain matured inventory. The waivers of
   the payment  defaults  were  accommodated  by the lenders  revising the terms
   under the Amended  Agreements to temporarily  advance  certain funds to us on
   inventory  assets  (primarily  certain  new and used aged  inventories)  that
   previously  were not  eligible  assets  upon  which we  could  borrow  funds.
   Repayment of the amounts  resulting from the payment default


                                       14

<PAGE>

   is required upon the earlier of, (i) the sale of such inventory providing the
   basis for the temporary advance,  (ii) the receipt by the Company of its pro-
   jected calendar year 2002 federal income tax refund, or (iii) April 30, 2003.
3. An  "Intercreditor  Agreement"  by and among TCFC, GE and TMRC,  L.L.P.  (the
   owner of the  Company's  outstanding  shares of Series A Preferred  Stock) to
   each,  individually,  provide  the  Company up to an  additional  $500,000 of
   conditional funding (collectively $1.5 million). The requirement of any party
   to advance  funds  under this  agreement  is at each  participant's  sole and
   individual  discretion.  Accordingly,  the  Company  is  not  guaranteed  any
   advances;  or to the  extent  advances  are made;  any  future or  additional
   advances.  Funds may only be used for the general working capital expenses of
   the  Company.  As of the date of this  Report on Form 10-Q,  the  Company has
   received  $415,000  from  each of TCFC,  GE and  TMRC,  L.L.P.  (collectively
   $1,245,000) as advances pursuant to this agreement.

We pursued this transaction and financing because of our belief that current and
anticipated cash needs through April, 2003 exceed amounts otherwise available to
be borrowed under our current credit facilities with TCFC and GE. This projected
shortfall  is  influenced   in  part  by  our  seasonal   trends  which  include
historically low sales levels during the October through December  periods.  The
seasonal lull normally  experienced at the end of a calendar year was compounded
at the  end of  calendar  year  2002 by  continued  economic  uncertainty,  weak
industry sales trends,  and certain  revised  borrowing terms which have had the
effect of reducing our borrowing base during this period.

Based upon  management's  initial Fiscal 2003 operating plan,  including the (i)
sale/leaseback or refinancing of certain assets,  (ii) closing  additional store
locations, (iii) further reducing staff levels and, if necessary, benefits, (iv)
reducing  expenses or renegotiating  fixed payments plus the availability  under
its borrowing agreements and the additional $1.5 million in conditional funding,
management believes that there is potential liquidity to fund our operations and
to make required principal payments under the two borrowing agreements and other
outstanding debt through the maturity date of April 30, 2003. However,  material
shortfalls or variances  from  anticipated  performance or the timing of certain
expenses or revenues  could require us to seek further  amendment to the amended
borrowing agreements or alternate sources of financing.

During this period prior to the expiration of our inventory borrowing agreements
on April 30, 2003, we will be revising our business plan to support our required
financing  arrangements  for the remainder of fiscal 2003 and beyond either with
our current lenders or from other sources. There is no assurance that renewal of
the borrowing agreements will be possible, that further amendments are available
to the Company or that we will be  successful  in obtaining  adequate  financing
arrangements from these or alternate sources.


                                       15
<PAGE>

Contractual Commitments and Commercial Commitments
--------------------------------------------------

The following table sets forth a summary of our material contractual obligations
and commercial commitments as of December 31, 2002:

<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>
2003                            $ 58,894(1)     $  7,296(2)                     $  2,259        $ 68,539
2004                                               1,247                           2,353           3,600
2005                                                 301        $  1,300           1,663           3,264
2006                                                 227                           1,232           1,459
2007                                                 482                             343             825
Thereafter                                           884                             277           1,161
                                ------------------------------------------------------------------------
Total                           $ 58,984        $ 10,437        $  1,300        $  8,127        $ 78,848
                                ========================================================================

<FN>

(1)      Our inventory borrowing  agreements,  which originated in January 2000,
         mature in April 2003.

(2)      Approximately  $6.8 million of real estate  loans with a single  lender
         have been  re-classified  as current for financial  reporting since (i)
         one loan in the amount of  approximately  $515,000  has matured and has
         not been repaid or refinanced and (ii) the Company is out of compliance
         with  financial  loan  covenants.  The  Lender has  demanded  the early
         repayment of all loans  effective as of February 15, 2003.  The Company
         has requested that the Lender refinance the loans, but no guarantee can
         be made that the  request  will be granted or that the Lender  will not
         proceed  with the demand for early  repayment.  (See Risk Factors - "We
         are Out of  Compliance  on Certain  Loan  Agreements,  Have Been out of
         Compliance  on Others and have a Matured  Real Estate Loan that Has Not
         Been Refinanced or Repaid. ...").

</FN>
</TABLE>

Seasonality

Our business,  as well as the sales demand for various types of boats,  tends to
be highly seasonal.  Our strongest sales period begins in January,  because many
boat and recreation shows are held in that month.  Strong sales demand continues
from January through the summer months. Of our average annual net sales over the
last three fiscal  years,  over 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
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.
Accordingly,  the results for any quarterly  period may not be indicative of the
expected results for any other quarterly period.

Cautionary  Statement for purposes of the Safe Harbor  Provisions of the Private
Securities Litigation Reform Act of 1995.

Other than  statements  of historical  fact,  all  statements  contained in this
Report  on  Form  10-Q,  including   statements  in  "Item  1.  Business",   and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations",  are forward-looking  statements as that term is defined in Section
27A of the Securities Act of 1933, as

                                       16

<PAGE>

amended,  and  Section  21E of  the  Securities  Exchange  Act  of  1934.  These
forward-looking statements involve a number of uncertainties. The actual results
of the future events described in the forward-looking  statements in this Report
on Form 10-Q could differ  materially from those stated in such  forward-looking
statements.  Among  the  factors  that  could  cause  actual  results  to differ
materially  are:  the  impact  of  seasonality  and  weather,  general  economic
conditions,  competition and government regulations,  the level of discretionary
consumer spending,  national or local catastrophic  events, as well as the risks
and  uncertainties  discussed  in this  Report on Form 10-Q,  including  without
limitation,  the matters  discussed in "Risk Factors" and the  uncertainties set
forth from time to time in the  Company's  other  public  reports,  filings  and
public  statements,  including the Company's  Report on Form 10-K for the Fiscal
Year ended September 30, 2002. All forward-looking  statements in this Report on
Form 10-Q are expressly qualified in their entirety by the cautionary statements
in this paragraph.

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, 2002, a hypothetical  100 basis point increase in interest rates
on the  Company's  Floor Plan and  Revolving  Line of Credit  obligations  would
result in an increase of  approximately  $590,000 in annual pre-tax  expenses of
the  Company.  The  estimated  increase in expenses is based upon the  increased
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, 2002.

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.  Some of these  lawsuits  involve  claims  for
substantial amounts.

In January 2003, the Company received notice of a lawsuit filed on behalf of the
bankruptcy  estate for Outboard Marine  Corporation  ("OMC").  OMC was a primary
supplier  of  outboard  engines  to our  Company  prior to OMC's  bankruptcy  in
December of 2000.  The suit alleges that we received  approximately  $700,000 in
cash payments from OMC that were are deemed to be  preferential  payments  under
applicable  bankruptcy law, and hence demands the repayment thereof. The Company
believes  that the  lawsuit is  without  merit and that the cash  payments  were
received in the ordinary course of business  pursuant to the Company's  contract
with OMC.

There is no guarantee that our Company will prevail in defense of lawsuits filed
against it. Lawsuits  resulting in an unfavorable  verdict or settlement for the
Company could have the effect of jeopardizing the Company's financial stability.
This financial  instability could result in our Company being unable to continue
as a going concern.


Item 2.  Changes in Securities
None

Item 3.  Defaults Upon Senior Securities

I.  The  Company's  operating  results  as of  December  31,  2002  were  out of
compliance  with two (2) ratio  covenants  of its Loan  Agreement on real estate
indebtedness with Hibernia National Bank:

-        Modified Fixed Charge  Coverage Ratio With respect to the Hibernia Loan
Agreement:  the Modified Fixed Charge  Coverage Ratio requires  Travis Boats' to
maintain a Fixed Charge  Coverage Ratio, on a rolling four (4) quarter basis, of
not less than 1.50 to 1.00.  Travis Boats'  Modified Fixed Charge Coverage Ratio
for the 12 months ended December 31, 2002 was less than 1.50 to 1.10 and as such
Travis Boats was not in compliance with the Loan Agreement.


                                       17

<PAGE>


-        Minimum Tangible Net Worth With respect to the Hibernia Loan Agreement:
the Minimum  Tangible Net Worth  Provision  requires  Travis Boats to maintain a
minimum  tangible  net  worth of $27.5  million.  As of  December  31,  2002 the
Company's  tangible  net worth was less than $27.5  million  and as such  Travis
Boats was not in compliance with the Loan Agreement.

II. The Company's has a real estate loan in the amount of $515,076 with Hibernia
National  Bank that matured on January 28, 2003.  The Company has not repaid the
loan,  or been  successful  at  negotiating  a refinance  of the loan.  Hibernia
National  Bank has notified the Company by letters  dated as of January 31, 2003
that the unpaid loan is a default of the loan documents and  consequently,  they
have demanded  repayment on that matured loan and on each of the Company's other
loans with the Bank by February 10, 2003. In the event of non-payment,  the Bank
notified the Company  that it will  proceed  with any legal action  necessary to
collect all sums due.  The total  outstanding  principal  balance of the six (6)
loans upon which payment has been demanded is  approximately  $6.8 million as of
the date of this Report on Form 10-Q.

III.  As more  fully  described  in the Risk  Factors  above,  the  demands  for
repayment of the real estate loans in "Iten 3. Defaults Upon Senior  Securities"
(II)  above also  constitutes  a  cross-default  under the  Company's  borrowing
agreements with its Senior Inventory Lenders. As such, the Company is in default
of its borrowing agreements with its Senior Inventory Lenders. (See Risk Factors
- "We are Out of  Compliance  on  Certain  Loan  Agreements,  Have  Been  out of
Compliance  on Others  and have a  Matured  Real  Estate  Loan that Has Not Been
Refinanced or Repaid".)

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

Not applicable

Item 5.  Other Information

Not applicable

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibit Number          Description            Incorporated by Reference to:
    --------------          -----------            -----------------------------
       99.1           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, 2002 the Company  filed a report on Form
8-K pertaining to the agreement with Tracker, as follows:

         Form 8-K, Current Report of Unscheduled  Material Events, filed on June
         10, 2002, describing the transaction of June 10, 2002, in which Tracker
         exercised a warrant  and was issued  30,000  shares of newly  issued 6%
         Series A Cumulative Convertible Preferred Stock (the "Preferred Stock")
         in the Company. As a condition to exercise of the warrant, the proceeds
         of $3.0  million  were  required  to be used by the Company to prepay a
         $3.0 million  convertible  promissory  note payable to an  unaffiliated
         third party.

         The warrant was  previously  granted on March 13, 2002 when the Company
         entered into an agreement with Tracker,  a  wholly-owned  subsidiary of
         Tracker  Marine,  L.L.C.,  whereby  Tracker  agreed to purchase  50,000
         shares of Preferred Stock.

Subsequent  to December 31,  2002,  but prior to the date of this Report on Form
10-Q, the Company filed a report on Form 8-K/A  pertaining to the agreement with
Tracker, as follows:

         Form 8-K, Current Report of Unscheduled  Material Events, filed on June
         12, 2002,  incorporating a copy of the Tracker/Travis Boats Master Deal
         Agreement  (Master Dealer Supply agreement) dated as of March 13, 2002,
         by and between the Company and Tracker.

Subsequent  to December 31,  2002,  but prior to the date of this Report on Form
10-Q,  the Company filed a report on Form 8-K  pertaining to the agreement  with
Tracker, as follows:


         Form 8-K,  Current  Report of  Unscheduled  Material  Events,  filed on
         January 15, 2003,  incorporating  copies of various  agreements between
         the  Company and its Senior  Lenders,  the  Company  and  Tracker,  and
         various insider shareholders of the Company and Tracker.

                                       18



<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 19, 2003             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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