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FOUNTAIN POWERBOAT INDUSTRIES, INC.
FORM 10-Q
QUARTERLY REPORT
FOR THE QUARTER ENDED DECEMBER 31, 2002
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[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 from ____________ to _______________
For the Quarter Ended Commission File Number
___________________ 0-14712
FOUNTAIN POWERBOAT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Nevada 56-1774895
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Whichard's Beach Road, P.O. Drawer 457, Washington, NC 27889
(Address of principal executive offices)
Registrant's telephone no. including area code: (252) 975-2000
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 the 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 the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Class Outstanding at December 31, 2002
Common Stock, $.01 par value 4,745,108 shares
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
INDEX
Page No.
Part I Financial Information
Unaudited Condensed Consolidated Balance Sheets,
December 31, 2002 and June 30, 2002 1 - 2
Unaudited Condensed Consolidated Statements of Operations,
for the three and six months ended December 31, 2002 and 2001 3
Unaudited Condensed Consolidated Statements of Cash Flows,
for the six months ended December 31, 2002 and 2001 4 - 5
Notes to Unaudited Condensed Consolidated Financial Statements 6 - 9
Management's Discussion and Analysis of Results
of Operations and Financial Condition 10-12
Part II Other Information
Item 2, 4, & 6 12
Signatures 13
Management Certification 14-15
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, June 30,
2002 2002
_____________ _____________
CURRENT ASSETS:
Cash and cash equivalents $ 1,176,384 $ 329,640
Accounts receivable, net 710,595 3,003,992
Inventories 3,567,563 3,090,451
Prepaid expenses 566,872 328,783
Current tax assets 899,245 1,132,181
_____________ _____________
Total Current Assets 6,920,659 7,885,047
_____________ _____________
PROPERTY, PLANT AND EQUIPMENT 41,199,870 40,887,882
Less: Accumulated depreciation (24,459,738) (23,773,221)
_____________ _____________
16,740,132 17,114,661
_____________ _____________
CASH SURRENDER VALUE LIFE INSURANCE 1,280,047 1,179,223
OTHER ASSETS 324,864 355,765
_____________ _____________
Total Assets $ 25,265,702 $ 26,534,696
_____________ _____________
[Continued]
-1-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
[Continued]
December 31, June 30,
2002 2002
_____________ _____________
CURRENT LIABILITIES:
Current maturities - long-term debt $ 900,610 $ 919,182
Current maturities - capital lease 16,462 15,674
Accounts payable 6,367,018 6,877,394
Accounts payable - related party 142,895 147,234
Accrued expenses 865,792 1,193,672
Dealer incentives 431,770 921,707
Customer deposits 249,985 631,090
Allowance for boat repurchases 200,000 200,000
Warranty Reserve 870,000 870,000
_____________ _____________
Total Current Liabilities 10,044,532 11,775,953
LONG-TERM DEBT, less current maturities 9,415,718 9,791,949
CAPITAL LEASE, less current maturities 26,785 35,212
DEFERRED TAX LIABILITY 1,082,409 962,880
COMMITMENTS AND CONTINGENCIES [NOTE 5] - -
_____________ _____________
Total Liabilities 20,569,444 22,565,994
_____________ _____________
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
200,000,000 shares authorized,
4,745,108 and 4,732,608 shares
issued and outstanding, respectively 47,451 47,326
Additional paid-in capital 10,343,936 10,343,935
Accumulated earnings (5,578,769) (6,280,679)
_____________ _____________
4,812,618 4,110,582
Less: Treasury stock, at cost,
15,000 shares (110,748) (110,748)
Deferred compensation for
stock options issued (5,612) (31,132)
_____________ _____________
Total Stockholders' Equity 4,696,258 3,968,702
_____________ _____________
Total Liabilities and
Stockholders' Equity $ 25,265,702 $ 26,534,696
_____________ _____________
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
-2-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For The Three For The Six
Months Ended Months Ended
December 31 December 31
_____________________ ______________________
2002 2001 2002 2001
________ ________ ________ _________
NET SALES $ 12,941,227 $ 6,553,076 $ 25,016,213 $ 14,930,387
COST OF SALES 10,570,853 7,256,987 20,739,887 15,146,984
________ ________ ________ _________
Gross Profit 2,370,374 (595,201) 4,276,326 (216,597)
EXPENSES
Selling Expense 1,082,315 987,379 1,915,293 1,550,432
Selling Expense- - - - -
related parties
General & 406,241 475,781 815,946 963,506
Administrative
________ ________ ________ _________
Total Expenses 1,488,556 1,463,160 2,731,239 2,513,938
________ ________ ________ _________
OPERATING INCOME (LOSS) 881,818 (2,058,361) 1,545,087 (2,730,535)
NON-OPERATING INCOME
(EXPENSE)
Other Income 1,389 5,135 29,965 4,283
Interest Expense (214,475) (262,516) (520,676) (404,365)
________ ________ ________ _________
INCOME (LOSS) BEFORE TAX 668,732 (2,315,742) 1,054,376 (3,130,617)
CURRENT TAX EXPENSE - - - -
DEFERRED TAXES (BENEFIT) 171,024 (898,091) 352,465 (1,206,323)
________ ________ ________ _________
NET INCOME (LOSS) 497,708 (1,417,651) 701,911 (1,924,293)
________ ________ ________ _________
EARNINGS (LOSS) PER SHARE .10 (.30) .15 (.41)
________ ________ ________ _________
WEIGHTED AVERAGE
SHARES OUTSTANDING 4,745,108 4,732,608 4,745,108 4,732,608
________ ________ ________ _________
DILUTED EARNINGS PER .03 N/A .07 N/A
SHARE
________ ________ ________ _________
DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING
ASSUMING DILUTION 4,825,399 N/A 4,803,886 N/A
________ ________ ________ _________
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements.
-3-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
For the Six Months Ended
December 31,
____________________________
2002 2001
___________ _______________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 701,911 $(1,924,293)
___________ _______________
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation expense 1,028,308 1,126,268
Net deferred taxes 352,465 (1,206,323)
Gain on sale of fixed asset 29,613 -
Amortization of deferred loan cost 30,900 (500,446)
Non-cash expense 8,846 -
Change in assets and liabilities:
(Increase) decrease in
accounts receivable 2,293,396 1,370,303
(Increase) decrease in
inventories (477,112) 546,938
(Increase) decrease in
prepaid expenses (238,089) (201,275)
Increase (decrease) in
accounts payable (514,714) (1,486,903)
Increase (decrease) in
accrued expenses (327,880) (111,216)
Increase (decrease) in
dealer incentives (489,937) (1,175,510)
Increase (decrease) in
customer deposits (381,106) 149,371
___________ _______________
Net Cash Provided (Used) by
Operating Activities $2,016,601 $(2,912,640)
___________ _______________
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant,
and equipment (793,891) (905,504)
Proceeds from sale of fixed assets 110,500 -
(Increase) in other assets (100,824) 172,801
___________ _______________
Net Cash Provided (Used)
by Investing Activities $(784,215) $(732,703)
___________ _______________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt $ 95,000 $3,344,344
Payments of long-term debt (497,442) (50,270)
Proceeds from common stock issuances 16,800 -
___________ _______________
Net Cash Provided (Used)
by Financing Activities $(385,642) $ 3,294,074
___________ _______________
Net increase (decrease) in cash
and cash equivalents $846,744 $ (351,269)
Cash and cash equivalents at
beginning of year $329,640 $796,606
___________ _______________
Cash and cash equivalents at
end of period $ 1,176,384 $ 445,337
___________ _______________
[Continued]
-4-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
[Continued]
For the Six Months Ended
December 31,
____________________________
2002 2001
___________ _______________
Supplemental Disclosures of Cash
Flow Information:
Cash paid during the period for:
Interest, net of amounts capitalized $ 520,677 $ 404,365
Income Taxes $ - $ -
Supplemental Disclosures of Noncash Investing and Financing Activities:
For the six month period ended December 31, 2002:
The Company recorded consulting expense of $8,846 as a result of
amortization of deferred compensation from 30,000 options issued to
purchase common stock during fiscal 2002 vesting through December
2004.
For the six month period ended December 31, 2001:
None
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
-5-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at
December 31, 2002 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles in the United States of America have been
condensed or omitted for purposes of filing interim financial
statements with the Securities and Exchange Commission. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in
the Company's June 30, 2002 audited financial statements. The results
of operations for the period ended December 31, 2002 is not necessarily
indicative of the operating results for the full year.
Principles of Consolidation: The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary,
Fountain Powerboats, Inc. All significant inter-company accounts and
transactions have been eliminated in consolidation.
Accounting Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimated by management.
Cash and Cash Equivalents: For purposes of the statement of cash flows,
the Company considers all highly liquid debt instruments with a
maturity of three months or less to be cash equivalents. At December
31, 2002 and June 30, 2002, the Company had $1,176,384 and $329,640,
respectively, in excess of federally insured amounts held in cash.
Recently Enacted Accounting Standards: During quarter ended September
30, 2002, the Company adopted Emerging Issue Task Force 01-9
"Accounting for Consideration Given by a Vendor to a Customer
(including a Reseller of the Vendor's Products)", requiring the Company
to reclassify dealer incentive interest paid to resellers from Selling
Expense to Net Sales. Prior year financial statements have been
reclassified to reflect the change in accounting principle.
Reclassifications: The financial statements for years prior to
December 31, 2002 have been reclassified to conform with headings and
classifications used in the December 31, 2002 financial statements.
Fair Value of Financial Instruments: Management estimates the carrying
value of financial instruments on the consolidated financial statements
approximates their fair values.
-6-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION [Continued]
Revenue Recognition: The Company generally sells boats only to
authorized dealers and to the U.S. Government. A sale is recorded when
a boat is shipped to a dealer or to the Government, legal title and all
other incidents of ownership have passed from the Company to the dealer
or Government, and an accounts receivable is recorded or payment
received from the dealer, the Government, or the dealer's third-party
commercial lender. This is the method of sales recognition in use by
most boat manufacturers.
The Company has developed criteria for determining whether a shipment
should be recorded as a sale or as a deferred sale (a balance sheet
liability). The criteria for recording a sale are that the boat has
been completed and shipped to a dealer or to the Government, that title
and incidents of ownership have passed to the dealer or to the
Government, and that there is no direct or indirect commitment to the
dealer or to the Government to repurchase the boat.
The sales incentive interest payment program for each boat sale is
accrued for the entire interest period in the same fiscal accounting
period that the related sale is recorded. The amount of interest
accrued is subsequently adjusted to reflect the actual number of days
of remaining liability for floor plan interest for each individual boat
remaining in the dealer's inventory and on floor plan.
NOTE 2 - ACCOUNTS RECEIVABLE
As of December 31, 2002, accounts receivable were $710,595 net of the
allowance for bad debts of $27,841. This is a decrease from the
$3,003,992 in net accounts receivable recorded at June 30, 2002. Of
the balance at December 31, 2002, $8,352 subsequently has been
collected as of January 22, 2003, and the remaining $702,243 is
believed to be fully collectible.
NOTE 3 - INVENTORIES
Inventories at December 31, 2002 and June 30, 2002 consisted of the
following:
December 31, June 30,
2002 2002
__________ __________
Parts and supplies $2,106,588 $2,071,709
Work-in-process 1,500,222 1,047,154
Finished goods 136,146 278,981
Obsolete inventory reserve (175,393) (307,393)
__________ __________
Total $3,567,563 $3,090,451
__________ __________
-7-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4- COMMON STOCK
During September 2002, a director of the Company exercised his option
to purchase 12,500 shares of the Company's common stock at $1.344 per
share.
During December 2001, the Company issued 10,000 options to purchase
common stock to a consultant for services to be rendered valued at
$12,342. The options are exercisable at $1.45 per share, vest through
December 2004 and expire December 2009. During the six months ended
December 31, 2002, the Company recorded consulting expense of $1,996.
During January 2002, the Company issued 20,000 options to purchase
common stock to a consultant for services to be rendered valued at
$27,953. The options are exercisable at $1.67 per share, vest through
January 2004 and expire January 2009. During the six months ended
December 31, 2002, the Company recorded consulting expense of $6,850.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Manufacturer Repurchase Agreements - The Company makes available
through third-party finance companies floor plan financing for many of
its dealers. Sales to participating dealers are approved by the
respective finance companies. If a participating dealer does not
satisfy its obligations under the floor plan financing agreement in
effect with its commercial lender(s) and boats are subsequently
repossessed by the lender(s), then under certain circumstances the
Company may be required to repurchase the repossessed boats if it has
executed a repurchase agreement with the lender(s). At December 31,
2002, the Company had a total contingent liability to repurchase boats
in the event of dealer defaults and if repossessed by the commercial
lenders amounting to approximately $22,760,059. The Company has
reserved for the future losses it might incur upon the repossession and
repurchase of boats from commercial lenders. The amount of the
allowance is based upon probable future events which can be reasonably
estimated. At December 31, 2002, the allowance for boat repurchases
was $200,000.
Dealer Interest - The Company regularly pays a portion of dealers'
interest charges for floor plan financing. These interest charges
amounted to approximately $443,942 and the estimated unpaid dealer
interest included in accrued expenses amounted to $221,013 for the
first six months ended December 31, 2002.
NOTE 6 - TRANSACTIONS WITH RELATED PARTIES
At December 31, 2002, the Company had receivables and advances from its
employees amounting to $11,874.
During the six month period ended December 31, 2002, the Company paid
$6,400 for services rendered to entities owned or controlled by the
Company's Chairman, President, and Chief Executive Officer.
The Company paid $28,000 during the six month period ended December 31,
2002 for advertising services received from an entity owned by a
Company director.
During September 2002, a director of the Company exercised options to
purchase 12,500 shares of common stock at $1.344 per share.
-8-
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7- INCOME TAXES
For the six month period ended December 31, 2002 and 2001, the Company
paid $0 and $0 for current income taxes and incurred a tax
expense/(benefit) for deferred income taxes of $352,465 and
$(1,206,323), respectively.
NOTE 8 - EARNINGS (LOSS) PER SHARE
The computations of earnings (loss) per share and diluted earnings per
share amounts are based upon the weighted average number of outstanding
common shares during the periods, plus, when their effect is dilutive,
additional shares assuming the exercise of certain vested stock
options, reduced by the number of shares which could be purchased from
the proceeds from the exercise of the stock options assuming they were
exercised. Diluted earnings per share for the six month period ended
December 31, 2001, was not presented as its effect was anti-dilutive.
The weighted average common shares and common equivalent shares
outstanding for the six month period ended December 31, 2002 and 2001
for purposes of calculating earnings per share was as follows:
December 31, December 31,
2002 2001
__________ ___________
Weighted average common shares
outstanding used in basic
earnings per share for the six
months ending 4,738,858 4,732,608
Effect of dilutive stock options 65,028 -
__________ ___________
Weighted average common shares
and potential dilutive common
equivalent shares outstanding
used in dilutive earnings
per share 4,803,886 4,732,608
__________ ___________
At December 31, 2002 there were 480,000 unexercised stock options, of
which 480,000 were held by officers and directors of the Company at
prices ranging from $3.94 to $5.00 per share that were not included in
the computation of earnings per share because the effect is anti-
dilutive.
NOTE 9 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles of the United States which
contemplate continuation of the Company as a going concern. However,
the Company has current liabilities in excess of current assets which
raises substantial doubt about the ability of the Company to continue as
a going concern. In this regard, management has accelerated efforts to
introduce new products, has executed plans and actions that reduce
expenses through direct labor and overhead cost cuts, and has
implemented significant reductions to selling and general and
administrative expenses. Management believes it could raise additional
funds through debt or equity financing. There is no assurance that the
Company will be successful in raising this additional capital or
achieving sustained profitable operations. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
-9-
Management's Discussion and Analysis of Results of Operations
and Financial Condition
Results of Operations.
The operating income for the three months ended December 31, 2002 was
$881,818 or $.18 per share and compares to the operating loss of
$(2,058,361) or $(.43) per share for the three months ended December 31,
2001. The net income for the three months ended December 31, 2002 was
$497,708 or $.10 per share as compared to a net loss for the three months
ended December 31, 2001 of $(1,417,651) or $(.30) per share. The net
income for the six months ended December 31,2002 was $701,911 or $.15 per
share as compared to a net loss for the six months ended December 31, 2001
of $(1,924,293) or $(.41) per share.
Net sales were $12,941,227 for the second quarter of Fiscal 2003. Net
sales were $6,553,076 for the second quarter of Fiscal 2002. During the
second quarter of Fiscal 2003, unit volumes doubled from the same period
of the prior year, with sales volume for three months ended December 31,
2002 at 101 units compared to 50 units for the prior year. Fiscal 2003
net sales for the six months ended December 31, 2002 were $25,016,213,
compared to net sales of $14,930,387 for the same six months period of the
prior year.
Gross margin on sales for the three months ended December 31, 2002 was
$2,370,374 as compared to the gross margin of $(595,201) for the three
months ended December 31, 2001. Gross margin for the six months ended
December 31, 2002 was $4,276,326 compared to the gross margin of
$(216,597) for the same period of the previous year. The improvement in
margin resulted from improved unit sales for the period, and improved
product sales mix.
Selling expenses were $1,082,315 for the three months ended December 31,
2002 as compared to $987,379 for the three months ended December 31, 2001.
Increased selling expense resulted from higher sales salaries and
commissions, directly associated with the improvement in net sales from
the same period for the previous year.
General and administrative expenses were $406,241 for the three months
ended December 31, 2002 compared to $475,781 for the three months ended
December 31, 2001. A decrease in executive salaries during Fiscal 2003,
when the Company's CEO took a temporary reduction in pay, created the
savings as compared to the same period for the prior year.
Interest expense for the three months ended December 31, 2002 was $214,475
as compared to $262,516 for the three months ended December 31, 2001.
Other non-operating (income)/expense for the three months December 31,
2002 was $(1,389) as compared to $(5,135) for the three months ended
December 31, 2001.
-10-
Financial Condition.
The Company's summary cash flows for the six months ended December 31,
2002 are:
Net cash provided by operating activities $ 2,016,601
Net cash used in investing activities (784,215)
Net cash used in financing activities (385,642)
Net increase in cash $ 846,744
This net increase in cash and cash equivalents compares to a net decrease
of $351,269 for the six months ended December 31, 2001.
Cash used in the six months ended December 31, 2002 to acquire additional
property, plant, and equipment (investing activity) amounted to $793,891
which was invested in tooling changes to the new 48' Express Cruiser, a
new style 38' fish boat deck, and other miscellaneous tooling projects.
Cash used by financing activities were largely due to principal reductions
of long term debt.
The first six months of fiscal 2003 shows significant improvement in sales
and profit. This improvement provides the Company with a basis for
expecting continued success in the remaining six months of this fiscal
year. Continued success will provide sufficient cash flow to meet the
Company's needs and obligations.
Cautionary Statement for Purposes of "Safe Harbor" Under the Private
Securities Reform Act of 1995.
The Company may from time to time make forward-looking statements,
including statements projecting, forecasting, or estimating the Company's
performance and industry trends. The achievement of the projections,
forecasts, or estimates contained in these statements is subject to
certain risks and uncertainties, and actual results and events may differ
materially from those projected, forecasted, or estimated.
The applicable risks and uncertainties include general economic and
industry conditions that affect all businesses, as well as, matters that
are specific to the Company and the markets it serves. For example, the
achievement of projections, forecasts, or estimates contained in the
Company's forward-looking statements may be impacted by national and
international economic conditions; compliance with governmental laws and
regulations; accidents and acts of God; and all of the general risks
associated with doing business.
Risks that are specific to the Company and its markets include but are not
limited to compliance with increasingly stringent environmental laws and
regulations; the cyclical nature of the industry; competition in pricing
and new product development from larger
-11-
Cautionary Statement for Purposes of "Safe Harbor" Under the Private
Securities Reform Act of 1995. (continued)
companies with substantial resources; the concentration of a substantial
percentage of he Company's sales with a few major customers, the loss of,
or change in demand from, any of which could have a material impact upon
the Company; labor relations at the Company and at its customers and
suppliers; and the Company's single-source supply and just-in-time
inventory strategies for some critical boat components, including high
performance engines, which could adversely affect production if a single-
source supplier is unable for any reason to meet the Company's
requirements on a timely basis.
PART II. Other Information.
ITEM 2: Change in Securities.
There was no change in securities during the quarter
ending December 31, 2002
ITEM 6: Exhibits and Reports on Form 8 and Form 8-K.
(1) Exhibits: None.
(a) No Amendments on Form 8 were filed by the Registrant during
the second three months of Fiscal 2002.
(b) No Current Reports on Form 8-K were filed by the Registrant
during the first six months of Fiscal 2002.
-12-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOUNTAIN POWERBOAT INDUSTRIES, INC.
(Registrant)
By: /s/ Reginald M. Fountain, Jr. Date: February 10, 2003
Principal Financial Officer
-13-
CERTIFICATION
I, Reginald M. Fountain, Jr., certify that:
1. I have reviewed this quarterly report on Form 10Q of Fountain
Powerboat Industries, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosures
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date");
and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: February 10, 2003 /s/ Reginald M. Fountain, Jr.
Reginald M. Fountain, Jr.
President/CEO/Principal Financial Officer
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(Certification Pursuant to 18 U.S.C. Section 1350)
The undersigned hereby certifies that (i) the foregoing quarterly
report on Form 10-Q filed by Fountain Powerboat Industries, Inc. (the
"Company") for the quarter ended December 31, 2002, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, and (ii) the information contained in that Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.
Date: February 10, 2003 /s/ Reginald M. Fountain, Jr.
Reginald M. Fountain, Jr.
President and Chief Executive Officer
Date: February 10, 2003 /s/ Reginald M. Fountain,Jr.
Reginald M. Fountain, Jr.
Principal Financial Officer
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