FOUNTAIN POWERBOAT INDUSTRIES, INC.
FORM 10-Q
QUARTERLY REPORT
FOR THE QUARTER ENDED SEPTEMBER 30, 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 September 30, 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 October 15, 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,
September 30, 2002 and June 30, 2002 1 - 2
Unaudited Condensed Consolidated Statements of Operations,
for the three months ended September 30, 2002 and 2001 3
Unaudited Condensed Consolidated Statements of Cash Flows,
for the three months ended September 30, 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 - 11
Part II Other Information
Item 2, 4, 6 12
Signatures 13
Management Certifications 14
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, June 30,
2002 2002
____________ ____________
CURRENT ASSETS:
Cash and cash equivalents $ 730,491 $ 329,640
Accounts receivable, net 1,489,949 3,003,992
Inventories 3,615,862 3,090,451
Prepaid expenses 314,300 328,783
Current tax assets 1,042,188 1,132,181
____________ ____________
Total Current Assets 7,192,790 7,885,047
____________ ____________
PROPERTY, PLANT AND EQUIPMENT 40,694,752 40,887,882
Less: Accumulated depreciation (23,937,570) (23,773,221)
____________ ____________
16,757,182 17,114,661
____________ ____________
CASH SURRENDER VALUE LIFE INSURANCE 1,182,223 1,179,223
OTHER ASSETS 340,315 355,765
____________ ____________
Total Assets $ 25,472,510 $ 26,534,696
____________ ____________
[Continued]
1
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
[Continued]
September 30, June 30,
2002 2002
____________ ____________
CURRENT LIABILITIES:
Current maturities of long-term debt $ 907,320 $ 919,182
Current maturities of capital lease 16,065 15,674
Accounts payable 6,383,439 6,877,394
Accounts payable - related party 137,706 147,234
Accrued expenses 1,040,681 1,193,672
Dealer incentives 795,371 921,707
Customer deposits 272,445 631,090
Allowance for boat repurchases 200,000 200,000
Warranty reserve 870,000 870,000
____________ ____________
Total Current Liabilities 10,623,027 11,775,953
LONG-TERM DEBT, less current maturities 9,569,980 9,791,949
CAPITAL LEASE, less current maturities 31,054 35,212
DEFERRED TAX LIABILITY 1,054,328 962,880
COMMITMENTS AND CONTINGENCIES [NOTE 5] - -
____________ ____________
Total Liabilities 21,278,389 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 10,360,610 10,343,935
Accumulated earnings (6,076,476) (6,280,679)
____________ ____________
4,331,585 4,110,582
Less: Treasury stock, at cost, 15,000 shares (110,748) (110,748)
Deferred compensation for stock options issued (26,716) (31,132)
____________ ____________
Total Stockholders' Equity 4,194,121 3,968,702
____________ ____________
Total Liabilities and Stockholders' Equity $ 25,472,510 $ 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 Months Ended
September 30,
__________________________
2002 2001
____________ ____________
NET SALES $ 12,002,119 $ 8,238,779
COST OF SALES 10,096,168 7,763,307
____________ ____________
Gross Profit 1,905,951 475,472
____________ ____________
EXPENSES:
Selling expense 832,978 644,920
Selling - related parties - 15,000
General and administrative 409,705 487,725
____________ ____________
Total expenses 1,242,683 1,147,645
____________ ____________
OPERATING INCOME (LOSS) 663,268 (672,173)
____________ ____________
NON-OPERATING INCOME (EXPENSE):
Other income (expense) 28,576 10,387
Interest expense (306,201) (153,089)
____________ ____________
Total non-operating income (expense) (277,625) (142,702)
____________ ____________
INCOME (LOSS) BEFORE INCOME TAXES 385,643 (814,875)
CURRENT TAX EXPENSE - -
DEFERRED TAX EXPENSE (BENEFIT) 181,441 (308,232)
____________ ____________
NET INCOME (LOSS) $ 204,202 $ (506,643)
____________ ____________
BASIC EARNINGS (LOSS) PER SHARE $ .04 $ (.11)
____________ ____________
WEIGHTED AVERAGE SHARES
OUTSTANDING 4,732,608 4,732,608
____________ ____________
DILUTED EARNINGS PER SHARE $ .04 $ N/A
____________ ____________
WEIGHTED AVERAGE SHARES
OUTSTANDING ASSUMING DILUTION 4,782,372 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 Three Months Ended
September 30,
__________________________
2002 2001
____________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 204,202 $ (506,643)
____________ ____________
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation expense 528,770 569,226
Net deferred taxes 181,441 (308,232)
Gain on sale of assets 29,114 -
Amortization of deferred loan cost 15,450 -
Non - cash expense 4,416 -
Change in assets and liabilities:
(Increase) decrease in accounts receivable 1,514,043 1,181,807
(Increase) decrease in inventories (525,410) 47,639
(Increase) decrease in prepaid expenses 14,483 (110,225)
Increase (decrease) in accounts payable (503,483) (363,899)
Increase (decrease) in accrued expenses (152,991) (90,175)
Increase (decrease) in dealer incentives (126,336) (547,754)
Increase (decrease) in customer deposits (358,645) (152,000)
____________ ____________
Net Cash Provided (Used) by
Operating Activities 825,054 (280,256)
____________ ____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in property, plant, and equipment (310,405) (441,790)
Proceeds from sale of property plant and
equipment 110,000 -
(Increase) in other assets (3,000) (55,698)
____________ ____________
Net Cash Provided (Used) by Investing
Activities (203,405) (497,488)
____________ ____________
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt - 492,329
Payments of long-term debt (237,598) (183,897)
Increase in stockholders' equity 16,800 -
____________ ____________
Net Cash Provided (Used) by Financing
Activities (220,798) 308,432
____________ ____________
Net increase (decrease) in cash and cash
equivalents 400,851 (469,312)
Cash and cash equivalents at beginning of year 329,640 796,606
____________ ____________
Cash and cash equivalents at end of period $ 730,491 $ 327,294
____________ ____________
[Continued]
4
FOUNTAIN POWERBOAT INDUSTRIES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
[Continued]
For the Three Months Ended
September 30,
__________________________
2002 2001
____________ ____________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 275,042 $ 80,334
Income Taxes $ - $ -
Supplemental Disclosures of Noncash Investing and Financing Activities:
For the three month period ended September 30, 2002:
The Company recorded consulting expense of $4,416 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 three month period ended September 30, 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
September 30, 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 September 30, 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 September
30, 2002 and June 30, 2002, the Company had $630,491 and $229,640 ,
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
September 30, 2002 have been reclassified to conform with headings and
classifications used in the September 30, 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 September 30, 2002, accounts receivable were $1,489,949 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 September 30, 2002, $815,346 has subsequently been
collected as of October 11, 2002, and the remaining $674,603 is
believed to be fully collectible.
NOTE 3 - INVENTORIES
Inventory is carried at the lower of cost or market with cost being
determined on a first in first out method and consisted of the
following at September 30, 2002 and June 30, 2002:
September 30, June 30,
2002 2002
____________ ____________
Parts and supplies $ 2,058,272 $ 2,071,709
Work-in-process 1,555,704 1,047,154
Finished goods 177,279 278,981
Obsolete inventory reserve (175,393) (307,393)
____________ ____________
Total $ 3,615,862 $ 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 quarter ended
September 30, 2002, the Company recorded consulting expense of $991.
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 quarter ended
September 30, 2002, the Company recorded consulting expense of $3,425.
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 September 30,
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 $17,676,647. 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 September 30, 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 $237,574 and the estimated unpaid dealer
incentive interest included in accrued expenses amounted to $295,222
for the first three months ended September 30, 2002.
NOTE 6 - TRANSACTIONS WITH RELATED PARTIES
At September 30, 2002, the Company had receivables and advances from
employees of the Company amounting to $12,506.
During the three month period ended September 30, 2002, the Company
paid $4,300 for services rendered to entities owned or controlled by
the Company's Chairman, President, and Chief Executive Officer.
The Company paid $4,000 during the three month period ended September
30, 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 three month period ended September 30, 2002 and 2001, the
Company paid $0 and $9,785 for current income taxes and incurred a tax
expense/(benefit) for deferred income taxes of $181,441 and ($308,232),
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 three month period ended
September 30, 2001, was not presented as its effect was anti-dilutive.
The weighted average common shares and common equivalent shares
outstanding for purposes of calculating earnings per share was as
follows:
September 30, September 30,
2002 2001
____________ ____________
Weighted average common shares outstanding
used in basic earnings per share for the
three months ending 4,732,608 4,732,608
Effect of dilutive stock options 49,764 -
____________ ____________
Weighted average common shares and potential
dilutive common equivalent shares outstanding
used in dilutive earnings per share 4,782,372 4,732,608
____________ ____________
At September 30, 2002 there were 516,000 unexercised stock options, of
which 480,000 were held by officers and directors of the Company at
prices ranging from $3.58 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 Financial Condition and
Results of Operations
Results of Operations.
Net sales were $12,002,119 for the first quarter ended September 30, 2002,
an increase of over 45% from the same period last year which had net sales
of $8,238,779. Unit sales volume for three months ended September 30,
2002 was 85 boats versus 59 boats for the three months ended September 30,
2001.
Gross margin on sales for the three months ended September 30, 2002 was
$1,905,951 or 15.9% compared to $475,472 or 5.8% gross margin for the same
period of the previous year. Margins improved as a result of increased
sales volume, with model mix for those sales improving over previous
periods, and cost savings in factory overhead.
The operating income for the quarter ended September 30, 2002 was $663,268
or $.14 per share compared to an operating loss for the first quarter
ended September 30, 2001 of ($672,173) or ($.14) per share. The operating
income as a percent of sales for the three months ended September 30, 2002
was 5.53% versus (8.16%) for the three months ended September 30, 2001.
Net earnings for the three months ended September 30, 2002 were $204,202
or $.04 per share up from a net loss of ($506,643) or ($.11) per share for
the three months ended September 30, 2001.
Selling expenses were $832,978 for the three months ended September 30,
2002 as compared to $659,920 for the three months ended September 30,
2001. Selling expenses increased due to higher sales salaries,
commissions, and consulting fees resulting from the improvement in sales
between the years. Race expenses and advertising also rose from the prior
year as the Company promoted their new products and their improved pricing
structure.
General and administrative expenses were $409,705 or 3.4% of net sales for
the three months ended September 30, 2002 compared to $487,727 or 5.9% of
net sales for the three months ended September 30, 2001. Decrease in
expenses resulted from a temporary pay decrease of over 70% taken by the
Company's President and Chief Executive Officer. Other cost savings were
improvements in legal expenses and depreciation.
Interest expense for the three months ended September 30, 2002 was
$306,201 and compared to $153,089 for the three months ended September 30,
2001.
Other non-operating income/(expense) for the three months September 30,
2002 was $28,576 compared to $10,387 for the three months ended September
30, 2001.
10
Financial Condition.
The Company's cash flows for the three months ended September 30, 2002 are
summarized as follows:
Net cash provided by operating activities $ 825,054
Net cash provided by investing activities (203,405)
Net cash used in financing activities (220,798)
Net increase in cash $ 400,851
This net increase compares to a ($469,312) decrease for the three months
ended September 30, 2001. Cash provided by operating activities during
the three months ended September 30, 2002 was largely generated by
decrease in accounts receivable balances since June 30, 2002. Accounts
payable decreased over $500,000 for the three months ended September 30,
2002.
For the next fiscal quarter and for the remainder of the year ending June
30, 2003 the Company believes that it will continue to improve upon prior
years operating results. Management has developed a plan that budgets
expenses and clearly outlines certain sales goals and expectations for the
remainder of the fiscal year. After surpassing this plan in the first
quarter of Fiscal 2003, management anticipates that continued operations
under this plan will result in a profitable and successful year.
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 companies with substantial
resources; the concentration of a substantial percentage of the 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.
11
PART II. Other Information.
ITEM 2: Change in Securities.
There was no change in securities during the first quarter ending
September 30, 2002.
ITEM 4: Submission of Matters to A Vote of Security Holders.
There were no matters submitted for a vote of security holders during the
first quarter ending September 30, 2002.
ITEM 6: Exhibits and Reports on Form 8 and Form 8-K.
(a) No Amendments on Form 8 were filed by the Registrant during the
first three months of Fiscal 2002.
(b) No Current Reports on Form 8-K were filed by the Registrant
during the first three 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/ Hannah Hale Date: October 17, 2002
Chief 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: October 17, 2002 /s/ Reginald M. Foutain, Jr.
Reginald M. Fountain, Jr.
President and Chief Executive Officer
14
CERTIFICATION
I, Hannah Hale, 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: October 17, 2002 /s/ Hannah Hale
Hannah Hale
Chief Financial Officer
15
(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 September 30, 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: October 17, 2002 /s/ Reginald M. Foutain,Jr.
Reginald M. Fountain, Jr.
President and Chief Executive Officer
Date: October 17, 2002 /s/ Hannah Hale
Hannah R. Hale
Chief Financial Officer
16