SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     For the Fiscal Year Ended June 30, 1996

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the Transition Period from _________________

                        Commission File Number 2-6806-NY

                           Concord Energy Incorporated
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

              Delaware                               22-2670198
--------------------------------------------------------------------------------
 (State or other jurisdiction of                  (I.R.S. Employer
 in corporation or organization)                 Identification No.)


1515 Simmons Street,  Jourdanton, TX                    78026
--------------------------------------------------------------------------------
      (Address of principal                           (Zip Code)
        executive offices)


                    Issuer's telephone number (210) 769-3955

         Securities registered under Section 12(b) of the Exchange Act:

                                      None


         Securities registered under Section 12(g) of the Exchange Act:

                                      None

<PAGE>

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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____

Check if there is no disclosure of delinquent  filers  contained in this form in
response to Item 405 of Regulation S-B, and no disclosure will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ X ]

Issuer's revenues for its fiscal year ended June 30, 1996:          $10,828,209
                                                                    -----------
Aggregate market value of the voting stock held
by non-affiliates as of November 18, 1996:                          $13,921,062*
                                                                    -----------
Number of shares of common stock outstanding
as of November 18, 1996:                                              5,965,061

                      Documents incorporated by reference:

                                      NONE

Transitional small business disclosure format.

                                    YES____ NO __X__

----------------
* This  valuation was arrived at by applying the $2.6875 per share bid quotation
on November  18, 1996 on the NASDAQ  Small Cap Market to the total of  5,179,930
shares held by non-affiliates

<PAGE>

                                     PART I

ITEM 1  DESCRIPTION OF BUSINESS

A.  BUSINESS DEVELOPMENT

     Concord Energy  Incorporated ( the "Company") was incorporated in the State
of Delaware in 1985 under the name  Monoclonal  International  Technology,  Inc.
("Monoclonal"). In 1986 Monoclonal conducted a public offering of its securities
and commenced its plans to engage in the research,  development,  production and
marketing of biomedical research reagents.  Monoclonal's  planned operations did
not materialize  and it ceased  research and development  activities in 1989. In
May  1993  Monoclonal  entered  into an  agreement  and  plan of  reorganization
("Agreement")  with Concord  Energy,  Inc. a privately  held Nevada  corporation
("Concord").

     Pursuant to the terms of the  Agreement,  Monoclonal  issued  approximately
10,556,000 shares of its common stock in exchange for all outstanding  shares of
Concord and Concord  became a subsidiary of  Monoclonal.  After giving effect to
the  transaction,  the  shareholders of Concord owned  approximately  95% of the
issued  and  outstanding  stock  of  Monoclonal.   Pursuant  to  the  Agreement,
Monoclonal  changed  its  name  to  Concord  Energy   Incorporated  and  all  of
Monoclonal's  prior officers and directors  resigned.  The existing officers and
directors of Concord were then appointed as  replacement  officers and directors
of the Company.

     In May of 1995  Knight  Equipment  and  Manufacturing  Corporation  and its
wholly-owned  subsidiary K & S Engineering,  Inc. ("KEMCO") were acquired by the
Company.  KEMCO  locates,  designs,  refurbishes,  and installs  gas  processing
equipment for the natural gas industry worldwide.

                                       3
<PAGE>

     In  March  1996,  the  Company  acquired   Integrated   Petroleum   Systems
Corporation ("IPS"), which has developed a unique, proprietary software which is
used to collect,  process and transmit data relative to petroleum production and
processing operations.

     The Company  also owns an interest  in  approximately  75 oil and gas wells
located primarily in Texas and Louisiana. The Company's wholly-owned subsidiary,
Concord Operating,  Inc., (COI), manages  approximately 15 producing oil and gas
wells.  The  remainder  of the wells  are  operated  by  various  nonrelated  or
affiliated  companies.  The Company's  headquarters  are located at 1515 Simmons
Street, Jourdanton, Texas 78026.

     Concord Energy Incorporated including its wholly-owned  subsidiaries KEMCO,
Concord Energy,  Inc., Concord Operating,  Inc., and Integrated Petroleum System
Corporation are collectively referred to herein as the "Company".

B.  BUSINESS OF ISSUER

     The Company is primarily a petroleum industry service company with emphasis
on locating,  designing,  refurbishing and installing gas processing  plants and
equipment  for the natural  gas  industry.  In  addition,  the Company  provides
rentals of process equipment and services  including  engineering,  procurement,
dismantling, reapplication and relocation of complete gas processing facilities.
The company also develops, installs and maintains its proprietary software, used
to  collect,   process  and  transmit   data.   The  Company  has  interests  in
approximately  75 wells  which  are  located  primarily  in East  Texas  and the
Louisiana  Gulf  Coast.  The wells range in depth from 3,500 feet to 15,000 feet
and produce oil and gas from  formations  which  historically  are known to have
quality reserves.

     In June 1996 the Company's headquarters  relocated from Bernardsville,  New
Jersey to  Jourdanton,  Texas where the  Company's  subsidiary,  KEMCO,  has its
offices and manufacturing  facilities.  The Company's  exploration and operating

                                       4
<PAGE>

office relocated from Houston,  to Jourdanton,  Texas in June 1996. Prior to the
acquisition of KEMCO,  the Company's  revenues were  primarily  derived from the
sale of oil and gas.  KEMCO's revenues from April 1, 1995 (the effective date of
the KEMCO  acquisition) are included in the Company's  financial  statements for
the year ended June 30, 1995 and contributed  approximately 41% of the Company's
revenue. KEMCO accounted for approximately 87% of the Company's revenues for the
year ended June 30, 1996.

     Approximately  5%, 26% and 42% of the Company's  revenues  during the years
ended June 30, 1996,  1995 and 1994,  respectively,  were from the sale of crude
oil.

     Natural  gas  sales  represented  approximately  6%,  14%  and  31%  of the
Company's revenues during the 1996, 1995 and 1994 fiscal years, respectively.

     Revenue derived from syndication  sales by Integrated  Energy  Incorporated
(Integrated) and related revenue  interests  accounted for approximately 1%, 17%
and 23% of total revenues during fiscal 1996, 1995 and 1994,  respectively  (see
Item 12). Revenue from well operating activities  represented  approximately 1%,
2% and 4% of total 1996, 1995 and 1994 revenues, respectively.

C.  BUSINESS STRATEGY

     The Company is committed to a strategy which  emphasizes  growth in oil and
gas service  industry.  Pursuant to this strategy the Company  acquired KEMCO in
May of 1995 and IPS in March  1996.  The  Company  intends to continue to expand
KEMCO's  manufacturing   operations  by  commencing  the  manufacturing  of  new
equipment  as well  as  expanding  KEMCO's  rental,  leasing  and  operating  of
processing  equipment  and  complete  gas  processing  plants and by  developing
processing  operation  services.  The Company intends to continue to develop and

                                       5
<PAGE>

expand  the  marketing  of  its  proprietary   software  through  the  Company's
wholly-owned  subsidiary  IPS.  COI, a  wholly-owned  subsidiary of the Company,
manages the  Company's  field oil and gas  production  operations.  By utilizing
COI's operating capabilities,  the Company has the ability to efficiently manage
the production of its wells at lower overhead and operating  expenses,  compared
to wells operated by other non-related operators.

D.  EQUIPMENT AND MANUFACTURING OPERATIONS

     The  equipment  and  manufacturing  activities  of the  Company  consist of
locating,  designing,  refurbishing  and  installing  predominately  natural gas
processing  equipment.  The  Company  also  provides  rentals of gas  processing
equipment  and services  including  engineering,  procurement,  dismantling  and
moving and erecting of gas processing  equipment at new  locations.  The Company
maintains  most of its  equipment  inventory at its  facilities  in  Jourdanton,
Texas.  These facilities  include  construction  and storage areas,  mechanical,
machine, and metal workshops as well as engineering and administrative  offices.
Within the Jourdanton  facilities is a  sandblasting  area approved by the Texas
Natural Resource Conservation Commission ("TNRCC"),  and registered for abrasive
cleaning.  KEMCO is  authorized  by the  National  Board of Boiler and  Pressure
Vessel  Inspectors  for repair and  registration  of "U" stamped  vessels and is
certified  by the  American  Society of  Mechanical  Engineers  ("ASME") for the
construction of new "U" stamped pressure  vessels.  KEMCO maintains an inventory
of gas  processing  equipment and complete gas plants and  miscellaneous  parts,
such as vessels,  valves,  pipe,  fittings and electrical  components  which are
needed  to  complete  refurbishing  projects.  KEMCO's  equipment  inventory  is

                                       6
<PAGE>

available  for sale on an "As-Is,  Where-Is"  basis,  or can be  redesigned  and
refurbished to meet a customer's  specific needs. 

E.  EXPLORATION AND PRODUCTION OPERATIONS

     The  exploration  and production  activities of the Company  consist of the
geological and  geographical  evaluation of prospective  oil and gas properties,
the  acquisition  of oil and gas leases or other  interests in prospects and the
development  and operation of properties  for the production and sale of oil and
gas. The Company  generates  most of its projects  through  outside  independent
consultants.  The Company  conducts its  development  and production  operations
primarily in East Texas and the Louisiana Gulf Coast.

     The majority of the Company's  natural gas is marketed  through third party
operators.  The majority of the  Company's  crude oil  production  is sold under
short term contracts at current posted prices for each geographic region.

     The following summarizes certain of the Company's major prospects:

THE KILGORE WATERFLOOD PROJECT

     A waterflood is an enhanced oil recovery  method in which water is injected
into an oil rich reservoir  through injection wells. The injected water "pushes"
or "sweeps" the oil toward a select pattern of collector or producer wells.  The
Kilgore Field is in excess of 400 acres in size and has one water injection well
and nine producing  wells.  Water injection  commenced in September 1993 and oil
production  commenced in November 1993. The Kilgore Field is currently producing
approximately 20 barrels per day and test results from core samples, engineering
data,  geological mapping and independent engineer reports,  indicate that there
are approximately  1,500,000 gross barrels,  in which the Company's  interest is
approximately 1,080,000 barrels. 

                                       7
<PAGE>

THE HESTER FIELD PROJECT

     The Hester  Field  Project  (the  "Hester  Field") is located in St.  James
Parish,  Louisiana.  The producing  formation present in the Hester Field is the
D-3 sand reservoir. To date the field has produced approximately 315,000 barrels
of oil. The Hester Field oil  reservoir is  approximately  140 acres in size and
has very distinct geological boundaries. The Hester Field is currently producing
approximately  65 BOPD and  bottom  hole  pressure  tests  indicate  recoverable
reserves from the existing  wells to be  approximately  219,000 gross barrels of
oil. By drilling an additional well, approximately another 238,000 gross barrels
of oil could  potentially be recovered.  The Company's share of the Hester Field
is approximately 34%.

F.  SOFTWARE DEVELOPMENT, SALES,  AND INSTALLATION OPERATIONS

     The Company's wholly owed subsidiary IPS has developed computer software to
gather and process  production data of oil and gas wells more efficiently in the
field and  transmit  the data to the home  office  of an oil or gas  development
company,  The  software  operates  on  conventional  PC  platforms  and  special
hand-held  computers.  The  information  collected  at the well can be  imported
directly into the accounting  systems typically used by the petroleum  industry.
The Company's  proprietary  software  system is called APEXTM (for "Analysis and
Production  Express") and allows  companies  to: (1) reduce field  personnel and
clerical  support;  (2) increase  productivity  and operating  efficiency in the
field;  (3) gain  access to well test and  production  data every 24 hours;  (4)
improve  the  quality  and  accuracy  of  the  client's  central  data  base  by
eliminating  errors resulting from manually  performed  calculations and copying
from  form to form;  and (5)  easily  generate  reports  involving  all types of
production data.

                                       8
<PAGE>

G. EMPLOYEES

     Prior  to  July 1,  1996,  the  Company's  management,  administrative  and
internal  accounting  functions were fulfilled by Integrated  personnel  under a
management  agreement,  (see Item 12,  Certain  Relationships  and Related Party
Transactions),  with the exception of KEMCO and IPS.  KEMCO and IPS's  employees
are  compensated  directly.  Effective  July 1,  1996 the  management  agreement
between Company and Integrated terminated.  The Company now pays its general and
administrative and all other costs directly.

     KEMCO has an average  full-time work force of approximately 60 employees in
addition  to  approximately  20  independent  contractors  who  perform  various
technical  services.  The employees include engineers,  yard supervisors,  field
supervisors,  laborers,  technical personnel and field installation and start-up
specialists.  KEMCO has eight administrative employees including its management.
IPS employs six people;  one supervising all sales and general  management,  one
administrative, and four programmers.

H. COMPETITION

     Competition in the oil and gas industry is intense.  The Company encounters
competition from numerous gas processing  equipment service companies;  however,
the Company  believes that few of its  competitors  offer the complete  range of
services provided by the Company.

     There are  numerous  oil and gas  companies  engaged in drilling and income
programs,  partnerships and other joint ventures which offer competition for oil
and gas  development.  Many  of  these  companies  are  large,  well-established
entities  with  substantially   larger  operating  staffs  and  greater  capital
resources than the Company. In addition,  many of such companies have engaged in

                                       9
<PAGE>

the  manufacturing  and energy  businesses  for a much  longer  period  than the
Company.

I. REGULATIONS

     The oil and gas exploration, production and service industry is extensively
regulated by federal,  state and local  authorities.  Legislation and regulation
affecting  the industry are under  constant  review for  amendment or expansion,
raising the  possibilities  of changes that may adversely  affect the Company in
areas such as pricing  and  marketing  of  services,  equipment  and oil and gas
production. Substantial penalties may be assessed for noncompliance with various
applicable  statutes and  regulations and the overall  regulatory  burden on the
industry increases the cost of doing business, thereby reducing profits. Federal
legislation and regulatory  control generally affect the oil and gas produced by
the  Company  and the  manner in which  such  products  are  marketed,  sold and
transported.

     The  Company is  required  to meet all the  Occupational  Safety and Health
Administration  ("OSHA")  regulations as well as those issued by Texas Workman's
Compensation;  Labor  laws,  sales  tax,  ASME  Codes,  Electrical  codes,  fire
regulations,  etc. In accordance with these regulations,  KEMCO requires each of
its employees to signify receipt,  understanding and acceptance of KEMCO's "CODE
OF ETHICS - EMPLOYEE  HANDBOOK  SAFETY  MANUAL".  All  contractors  who  perform
services for KEMCO must also signify their compliance with these regulations. In
an  attempt  to prevent  such  hazards,  KEMCO  maintains  extensive  safety and
training  programs.  The Company is required to comply with  numerous  state and
local  regulations  affecting  different aspects of the oil and gas drilling and
production activities including the drilling of wells, the spacing of wells, the
utilization or pooling of oil and gas properties,  environmental matters, safety

                                       10
<PAGE>

standards,  the  sharing  of  markets,  production  limitations,   plugging  and
abandonment, and restoration.

     Moreover,  various federal,  state and local laws and regulations cover the
discharge  of  materials  into  the  environment  or  otherwise  relate  to  the
protection of the environment.  These  regulations may affect the Company's cost
of operations.  It is not  anticipated  that the Company will be required in the
near  future  to  expend  amounts  of money in  relation  to its  total  capital
expenditure  program by reason of  environmental  laws or regulations.  However,
since such laws and  regulations  are  frequently  changed,  the Company  cannot
predict the ultimate cost of compliance therewith. 

J. INDUSTRY RISKS

     The Company's equipment and manufacturing operations are subject to all the
hazards and risks  normally  incident to  manufacturing  and working  with heavy
equipment. Employer's liability, performance liability and comprehensive general
liability   insurance  coverage  in  the  aggregate  amount  of  $10,000,000  is
maintained.

     The  Company's oil and gas  operations  are subject to all of the operating
hazards and risks  normally  incident to drilling and production of oil and gas,
such as explosions,  encountering  formations with abnormal pressure,  blowouts,
cratering and oil spills,  any of which can result in the loss of  hydrocarbons,
environmental  pollution,  personal injury claims and loss of life. Such hazards
can  also  severely  damage  or  destroy   equipment,   subsurface   structures,
surrounding  areas or  property  of  others.  The  Company  maintains  insurance
coverage in the aggregate  amount of $2,000,000,  including  physical  damage on
certain risks, employer's liability and comprehensive general liability.

     The Company believes that it's insurance coverage is adequate and customary
for Companies of a similar size engaged in operations comparable to those of the

                                       11
<PAGE>

Company.  The Company also requires that all third party contract services carry
insurance which meets the Company's requirements.

     However,  there  can be no  assurance  that  losses  will  not  occur  from
uninsurable risks or in amounts in excess of existing coverage. The Company does
not carry  business  interruption  insurance due to the  prohibitive  cost.  The
occurrence  of any event that is not fully  covered by  insurance  could have an
adverse impact upon the Company's financial condition and results of operations.

ITEM 2. DESCRIPTION OF PROPERTIES

A. KEMCO PROPERTIES

     KEMCO's facilities in Jourdanton Texas include a main yard of approximately
5 acres.  Within  the main  yard  are:  an  administrative  office  building  of
approximately  4,000 square feet, a warehouse and purchasing  office building of
approximately 6,000 square feet, a mechanical workshop building of approximately
10,000 square feet,  and  instrument  and valve  storage and repair  building of
approximately  12,000  square feet.  Across from KEMCO's main yard,  the Company
owns a 6,000  square foot  building  which is  utilized  by KEMCO's  engineering
department.

     KEMCO's  two other  yards in  Jourdanton,  Texas are a 7 acre  laydown  and
dismantling yard and a 20 acre sandblasting,  painting and storage yard. Both of
these yards are in close proximity to the main yard. 

B. IPS PROPERTIES

     IPS leases 2,700  square feet of office  space at 8480 East  Orchard  Road,
Suite 4350, Englewood, Colorado 80111.

                                       12
<PAGE>

C. OIL AND GAS PROPERTIES

     The Company has an ownership  interest in  approximately 75 producing wells
primarily  located  in East  Texas and the  Louisiana  Gulf  Coast,  of which it
manages approximately 15 of said wells.

   PROVED OIL AND GAS RESERVES

     The  following  table sets forth  estimates of proved  developed and proved
undeveloped  oil and gas reserves and the present value of estimated  future net
revenues  attributable to such reserves,  based on the assumptions  that oil and
gas  prices,  and  operating  costs will remain  fixed at year end  levels.  The
present  value of the  estimated  future  net  revenues  for  proved oil and gas
reserves on the dates  indicated below was computed by discounting the aggregate
future net revenues by 10% per year.  The present  value does not  represent the
fair market value of such reserves. For the years ending June 30, 1996, 1995 and
1994,  this  information  is based upon the reserve  reports  prepared by Harris
Engineering  Services of  Houston,  Texas.  Proved  reserves  are the  estimated
quantities of oil, gas and natural gas liquids which  geological and engineering
data  demonstrate  with  reasonable  certainty to be recoverable in future years
from known  reserves under existing  economic and operating  conditions.  Proved
developed  reserves  are proved  reserves  that can be expected to be  recovered
through  existing  wells with  existing  equipment and  operating  methods.  The
estimation of reserves  requires  substantial  judgment on the part of petroleum
engineers  sometimes  resulting in imprecise  determinations,  particularly with
respect to new discoveries.  The accuracy of any reserve estimate depends on the
quality  of  available  data,  engineering  and  geological  interpretation  and
judgment.  Results of drilling, testing and production subsequent to the date of
the  estimate  may  result  in  revisions  of any  such  estimate.  Accordingly,

                                       13
<PAGE>

estimates of reserves are often materially  different from the quantities of oil
and gas that are  ultimately  recovered and such estimates will change as future
production  and  development  information  becomes  available.  The reserve data
represents estimates only and should not be construed as being exact.

         Estimates of proved  reserves at June 30, 1996 have not been previously
filed by the Company  with or included  in reports to any federal  authority  or
agency.
<TABLE>
<CAPTION>
                                                                      June 30,
                                                   ----------------------------------------------
                                                       1996             1995             1994
                                                    ---------       ----------       ------------
<S>                                                <C>              <C>               <C>        
Estimated proved developed
  and proved undeveloped oil
  and gas reserves:

       Oil (Bbls)                                    1,840,834        1,748,260         2,053,247
       Gas (Mcf)                                     1,616,990        2,369,230         2,185,352
       EQB*                                          2,110,332        2,143,130         2,417,471
Present value of future net reserves               $21,529,556      $17,581,610       $21,467,268
Present value of future net reserves
  discounted at 10%                                $12,390,060      $10,340,158       $12,565,490

Estimated proved developed oil and gas reserves:

       Oil (Bbls)                                      375,061          435,915           691,511
       Gas (Mcf)                                       924,019        1,026,085         1,544,510
       EQB                                             529,064          606,929           948,929
Present value of future net reserves               $ 4,326,975      $ 4,295,220       $ 7,233,884
Present value of future net reserves
  discounted at 10%                                $ 2,979,752      $ 2,702,211       $ 4,611,568
</TABLE>
---------------
* Equivalent  barrels (Mcf of gas is converted to equivalent barrels by dividing
by 6)

                                       14
<PAGE>

The present  value of future net reserves as stated above is determined by using
the Securities and Exchange Commission Regulations which include constant prices
of oil and gas as of the end of the fiscal year. PRODUCTIVE WELLS, DEVELOPED AND
UNDEVELOPED ACREAGE AND DRILLING ACTIVITY ACREAGE The following tables set forth
the Company's  developed  acreage and productive wells as of June 30, 1996, 1995
and 1994.  "Gross"  refers to total  acres or wells in which the  Company  has a
working  interest  and "Net"  refers to gross acres or wells  multiplied  by the
percentage of working interest owned by the Company.

                                    DEVELOPED ACREAGE
                                   -------------------
                                    GROSS         NET
                                    -----         ---
                      1996          8,160        1,377

                      1995         11,120        2,075

                      1994         13,560        2,723

<TABLE>
<CAPTION>

                                PRODUCTIVE WELLS

                               OIL                                            GAS
           ----------------------------------------     -------------------------------------------
            Gross      Net       Gross       Net         Gross      Net        Gross         Net
            Number    Number   Developed  Developed      Number    Number    Developed    Developed
           of Wells  of Wells   Acreage    Acreage      of Wells  of Wells    Acreage      Acreage
           --------  --------   -------    -------      --------  --------    -------      -------
<S>         <C>         <C>      <C>       <C>             <C>       <C>       <C>           <C> 
1996         59         16       4,080       915           18        3         4,080         462
                                                       
1995         98         25       5,920     1,482           26        4         5,200         593
                                                       
1994        122         34       7,520     2,094           29        4         6,040         629  
</TABLE>

                                       15
<PAGE>

     At June 30,  1996,  the  Company  owned the rights to 1,094 gross (792 net)
undeveloped  acres, all of which are located in the United States. The following
table sets forth the states in which such  acreage is located  and the number of
gross and net acres:

STATE                            GROSS ACRES                NET ACRES
-----                            -----------                ---------
Texas                                614                        440
Louisiana                            480                        352
                                 ----------                   -------
Total                              1,094                        792
                                 ==========                   =======   

     During the last three years,  the Company did not drill or  participate  in
the drilling of any exploratory and development wells1:

PRODUCTION, UNIT PRICES AND COSTS

     The following  sets forth the  production and average unit prices and costs
for the years ended June 30, 1996, 1995 and 1994:

                                                 YEAR ENDED JUNE 30,
                                      ----------------------------------------
                                        1996             1995            1994
                                        ----             ----            ----
Production:
Oil and condensate (Bbls)              32,815           51,257          67,280
Gas (Mcf)                             302,583          295,626         379,859

Average sales price:
Oil and condensate (per Bbl)           $17.71           $16.77          $14.85
Gas (per Mcf)                           $2.06            $1.51           $1.95
Average production costs
per EQB*                                $7.68            $7.43           $8.46

--------------
1 A majority of the  Company's  activities  since  inception  have  consisted of
upgrading service equipment and production  facilities and conducting  workovers
and recompletions.

* Production  costs  include  lease  operating  expenses,  production  taxes and
expensed workovers.

                                       16
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

     From time to time, the Company is involved in litigation relating to claims
arising out of its  operations in the normal course of business.  As of November
15,  1996,  the  Company  was not  engaged  in any  legal  proceedings  that are
expected, individually or in the aggregate, to have a material adverse effect on
the Company.  However,  the Company,  together with  Integrated,  Jerry Swon and
Bruce  Deichl,  has been named as a defendant  in a lawsuit  commenced  by three
investors in two oil and gas partnerships sponsored by Integrated,  in the Court
of Common Pleas in Philadelphia,  Pennsylvania. The plaintiffs allege in essence
that  they  were  induced  to   participate   in  the   partnerships   by  false
representations  concerning  the  safety  and  earnings  potential  of the  well
properties.  They are seeking  recovery of their  investment  which  exceeded $3
million. The Company had no dealings whatever with the plaintiffs,  and its sole
link to the operative  facts is that the Company  received 10% of invested funds
under its management  agreement with Integrated.  Plaintiffs are urging that all
defendants  must be viewed  as  intertwined  because  of the  control  allegedly
exercised  at the time by  Messrs.  Swon  and  Deichl.  In the  view of  Company
counsel,  plaintiffs'  theory  that the  Company is  indistinguishable  from its
co-defendants lacks merit.  Accordingly,  based on an assessment of its exposure
in the suit,  the Company has concluded  that the lawsuit is not material to its
financial condition and need not be disclosed here. At present,  motions seeking
dismissal  of the case for lack of  jurisdiction  in  Pennsylvania  are  pending
before the Philadelphia court.

                                       17
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the Company's  annual meeting of  shareholders on August 9, 1996 the
following matter was submitted to security holders for vote:

     1) To elect a board of five directors

        The following five individuals  were elected and received the  following
votes:

        INDIVIDUAL NAME           VOTES FOR            VOTES WITHHELD
        ---------------           ---------            --------------
        Jerry Swon                3,815,360                 10,954
        Deral Knight              3,815,357                 10,957
        Barry Laidlaw             3,806,883                 19,431
        Paul Chernis              3,806,983                 19,331
        Dr. Neal Glass            3,811,775                 14,539


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Trading in the Company's  common stock is currently  reported on the NASDAQ
Small Cap Market under the symbol CODE. The following  table sets forth the high
and low bid prices for the Company's common stock for the periods indicated. The
Company's  common  stock was not  listed on the NASDAQ  Small Cap  Market  until
January,  1996.  Thus,  prices  prior to that date are based on  trading  on the
Electronic  Bulletin  Board  operated by the National  Association of Securities
Dealers, Inc. ("Bulletin Board") under symbol CCNG.

                                       18
<PAGE>

     The following price  information has been adjusted to reflect the Company's
December 1995 one for five reverse split.

                                    HIGH BID                  LOW BID
                                    --------                  -------
          June 30, 1993               6 1/4                    3 3/4
          Sept.  30, 1993            12 1/2                    4 3/8
          Dec. 31, 1993              13 1/8                   11 7/8
          Mar 31, 1994               12 1/2                   10
          June 30, 1994               9 3/8                    5
          Sept. 30, 1994            10 5/16                    5 5/8
          Dec. 31, 1994              9 1/16                    3 1/8
          Mar. 31, 1995               6 1/4                    1 7/8
          June 30, 1995              11 1/4                    3 3/4
          Sept. 30, 1995              6 1/4                    3 1/8
          Dec. 31, 1995              5 5/16                    3 1/4
          Mar. 31, 1996               6                        3 3/4
          June 30, 1996               4 3/8                    3 1/4
          Nov. 18, 1996             2 11/16

     The above  quotations  represent  prices between dealers and do not include
retail  markups,  markdowns or  commissions.  Such quotations do not necessarily
represent actual transactions.

     APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS

     As of November 18, 1996, the  approximate  number of shareholders of record
of the  Company's  common  stock was 530.  That number was  determined  from the
Company's  transfer agent's list of shareholders and does not include beneficial
owners of the  Company's  common  stock  whose  shares  are held in the names of
various dealers and clearing agents.

                                       19
<PAGE>

     DIVIDENDS

     The Company has never paid any dividends,  whether cash or property, on its
securities. For the foreseeable future it is anticipated that any earnings which
may be  generated  from  operations  of the Company  will be used to finance the
growth of the Company and that dividends will not be paid to stockholders.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The following should be read in conjunction with the summary financial data
and the Company's  consolidated  financial  statements and related notes thereto
appearing elsewhere in this report. The financial data and information contained
in this report for fiscal 1996, 1995 and 1994  respectively,  reflect  financial
information for KEMCO for the period of April 1, 1995 through June 30, 1996, and
IPS for the period March 1, through June 30, 1996 only. 

GENERAL OPERATIONS

     In May 1993, Monoclonal consummated an Agreement and Plan of Reorganization
("Agreement")  with  Concord  pursuant  to  which  it  entered  into oil and gas
industry  (see  "Description  of  Business - Business  Development").  Under the
Agreement,  Monoclonal changed its name to Concord Energy Incorporated (referred
to herein  as the  "Company")  and  became  the  parent  of  Concord,  that owns
interests in approximately  75 oil and gas wells which are located  primarily in
East Texas and the  Louisiana  Gulf  Coast.  In June 1991  Concord was formed to
effectuate  a  consolidation  of  approximately  166 oil  and gas  partnerships.
Following  Monoclonal's  acquisition of Concord,  the Company changed its fiscal
year end to June 30.

                                       20
<PAGE>




     In  May  1995,  the  Company  acquired  KEMCO,   which  locates,   designs,
refurbishes,  and installs gas  processing  plants for the natural gas industry.
The effective date of the acquisition was April 1, 1995.

     In March 1996,  the Company  acquired  IPS,  which has  developed a unique,
proprietary  software  which  is used to  collect,  process  and  transmit  data
relative to petroleum production and processing operations.

     RESULTS OF OPERATIONS

     COMPARISON OF 1996 TO 1995:

     Historically,  the Company's  revenue was generated  primarily  through the
sale of oil and gas. With the  acquisition  of KEMCO,  effective  April 1, 1995,
approximately  87% of the Company's  revenue for the fiscal year ending June 30,
1996 was generated by KEMCO.  During the year ending June 30, 1996,  the Company
reported total revenue of $10,828,209  representing an increase of $7,555,002 or
approximately  230% from the prior fiscal year.  The Company  reported  contract
revenue during fiscal 1996 of $9,285,939  representing an increase of $7,973,546
or  approximately  608% from the  prior  fiscal  year,  which  accounts  for the
majority of the net  increase in total  revenue  from fiscal 1995 to 1996.  This
increase is attributable to the fact that in fiscal 1996,  KEMCO's  revenues are
included for a full year.

     Oil sales during  fiscal 1996  decreased by $278,200 or  approximately  32%
from the prior  fiscal  year.  This  decrease was  primarily  attributable  to a
reduction in production  volumes due to normal  production  decline of wells and
the cessation of operations of certain  unprofitable wells,  partially offset by
the increase of  approximately  $.94 in the average price per barrel received by
the  Company.   During  fiscal  1996,  gas  sales  increased  by  $176,870,   or
approximately  40% from the prior  fiscal  year.  This  increase  was  primarily

                                       21
<PAGE>

related to an increase of approximately $.55 in the average price per Mcf of gas
received by the Company.

     Syndication  sales and  revenue  interest  income  during  fiscal 1996 were
$140,000,  which represents a decrease of $412,490,  or approximately  75% below
the prior fiscal year.  During fiscal 1996, well operating  income  decreased by
$13,510 or  approximately  21% from the prior  fiscal  year.  This  decrease  is
primarily due to shutting down certain uneconomical wells for which COI had been
the operator.

     Total costs and expenses during fiscal 1996 were $16,491,510 as compared to
$4,568,661 in fiscal 1995. The increase of $11,922,849 or approximately  261% is
primarily the result of an increase in the cost of KEMCO's  contract  revenue of
$7,157,227  or  approximately  658%  from the prior  fiscal  year.  Fiscal  1995
included  KEMCO's  cost of  contract  revenue  for the  period  of April 1, 1995
through June 30, 1996. The increase in cost of contract revenue is primarily the
result of it's inclusion for an entire year.

     Included  in the cost of  contract  revenue in fiscal  1996,  was a Project
Audit  settlement.  This audit resulted in a $521,500  balance due to a Customer
and represents  additional costs previously  incurred by the customer.  In March
1996,  KEMCO agreed to reimburse the  customer,  and no reserve for such expense
had been established.  Additionally,  a restatement of inventory was recorded in
the  amount of a  $3,043,055  reduction.  This was the  result of a retail  fair
market  value being  booked at the time of the KEMCO  acquisition  rather than a
wholesale value with the balance being charged to goodwill.  Current  management
has  determined  that the  allocated  costs were in error and has chosen to take
this one time  adjustment  to more  accurately  reflect  the  operations  of the
Company.

                                       22
<PAGE>

     Lease  operating  expenses  during  fiscal  1996  decreased  by $107,732 or
approximately  14% from the prior fiscal  year.  Lease  operating  expenses as a
percentage  of total oil and gas sales were 53% in fiscal 1996,  compared to 57%
in fiscal 1995.  This decrease is primarily due to the cessation of uneconomical
wells as stated above.

     Total general and  administrative  expenses during fiscal 1996 increased by
$1,799,530 or approximately 84% to $3,940,856.  Under the terms of the Company's
management  agreement with  Integrated,  $1,392,000  remained  constant from the
prior fiscal year.  General and  administrative  costs during the fiscal 1996 of
$1,284,179 are associated with the KEMCO operations. In fiscal 1995, general and
administrative expenses for KEMCO were $318,827. The increase in KEMCO's general
and  administrative  expense of $965,352 or approximately  303% is primarily the
result of its  inclusion  for the entire 1996 year.  The  Company's  general and
administrative expense for fiscal 1996 also include costs of $208,039 related to
the newly  acquired  subsidiary  IPS for the period of March 1 through  June 30,
1996.  Additionally,  included in the general and administrative expenses during
fiscal 1996 is a one time charge of $150,000 for expenses which  represent costs
incurred by Integrated which had not been previously charged to the Company.

     Depreciation,   depletion  and  amortization  expense  during  fiscal  1996
increased  by $30,769 or  approximately  5%,  compared to the prior fiscal year.
This  increase is primarily  the result of the  inclusion  for an entire year of
KEMCO's  depreciation,  depletion and amortization expense partially offset by a
decrease in oil and gas production volume as previously discussed.

                                       23
<PAGE>

     Interest  expense  during fiscal 1996  increased by $878,631 to $1,199,949.
The increase is primarily  due to interest  charges for short and long term debt
associated  with  inventory  acquisitions  for KEMCO,  and  associated  with the
acquisition cost of KEMCO.

     COMPARISON OF 1995 TO 1994:

     Historically,  the Company's  revenue was generated  primarily  through the
sale of oil and gas. With the  acquisition  of KEMCO,  effective  April 1, 1995,
approximately 40% of the Company's total revenue for the fiscal year ending June
30, 1995 was  generated  from KEMCO's  contract  revenues.  Also during the year
ending  June  30,  1995,  the  Company  reported  total  revenue  of  $3,273,207
representing an increase of $904,953 or approximately  38% from the prior fiscal
year. The Company  reported  contract  revenue during fiscal 1995 of $1,312,393,
which accounts for the increase in total revenue from fiscal 1994 to 1995.

     Oil sales during  fiscal 1995  decreased by $139,623 or  approximately  14%
from the prior  fiscal  year.  This  decrease was  primarily  attributable  to a
reduction in production  volumes due to normal  production  decline of wells and
the cessation of operations of certain  unprofitable wells,  partially offset by
the  increase in the price per barrel  received by the  Company.  During  fiscal
1995, gas sales declined by $294,229, or approximately 40% from the prior fiscal
year.  This  decrease was  primarily  related to a reduction  in the  production
volume  caused by the same  factors  that  contributed  to the  reduction in oil
production volumes as noted above, combined with a decrease of approximately 23%
in the price per Mcf of gas received by the Company.

     Syndication  sales and revenue  interests  income  during  fiscal 1995 were
$552,490,  which represents an increase of $19,416, or approximately 4% from the
prior fiscal  year.  

                                       24
<PAGE>

     During  fiscal  1995,  well  operating   income  decreased  by  $31,513  or
approximately  33% from the prior fiscal year. This decrease is primarily due to
shutting down of certain  unprofitable and uneconomical  wells for which COI had
been the operator.

     Total costs and expenses  during fiscal 1995 were $4,568,661 as compared to
$3,428,644 in fiscal 1994.  The increase of $1,140,017 or  approximately  33% is
primarily the result of inclusion of the cost of contract  revenue of $1,087,163
from KEMCO. Lease operating expenses during fiscal 1995 decreased by $357,679 or
approximately  32% from the prior fiscal  year.  Lease  operating  expenses as a
percentage  of total oil and gas sales were 57% in fiscal 1995,  compared to 64%
in fiscal 1994.  This decrease is primarily  due to the ceasing of  uneconomical
wells as stated above.

     Total general and  administrative  expenses during fiscal 1995 increased by
$454,290 to $2,141,326.  Under the terms of the Company's  management  agreement
with  Integrated,  $1,392,000  remained  constant  from the prior  fiscal  year.
General and administrative  costs associated with the newly acquired  subsidiary
KEMCO were responsible for a majority of the increase approximately 26% from the
prior fiscal year.

     Depreciation,   depletion  and  amortization  expense  during  fiscal  1995
decreased by $43,757 or approximately  7%, compared to the prior fiscal year due
to the decrease in oil and gas production volume as previously discussed.

     Interest expense during fiscal 1995 increased by $253,426 to $321,318.  The
increase  is  primarily  due to  interest  charges  for short and long term debt
associated with inventory acquisitions and the acquisition cost of KEMCO.

                                       25
<PAGE>

     LIQUIDITY AND CAPITAL RESOURCES

     As of June 30, 1996 and 1995, the Company had working capital of $1,193,748
and  $6,604,297,  respectively,  resulting  in a decrease  of  $5,410,549.  This
decrease  in  1996  is  primarily  the  result  of to  the  combination  of  the
reclassification  of  $3,145,000  from long term debt to short term debt and the
inventory restatement of $3,043,055  previously  discussed,  and the addition of
$340,196  of short  term  debt  acquired  with  IPS,  partially  offset by a net
increase in cash and accounts receivable of $1,473,300.

     During  fiscal  1996,  cash used in  operating  activities  was  $3,212,404
representing  an increase of $2,236,830 or  approximately  229% from fiscal year
1995.  This increase  primarily  resulted from the  combination of the increased
interest expenses, reduction in production revenues as previously discussed, the
inclusion of IPS for the period of March 1 through June 30, 1996,  the increased
general and administrative expenses incurred in fiscal 1996 as well as payout of
$217,000  of  the  $521,500  previously  discussed.  The  Company  is  presently
negotiating the extension of two of obligations with maturities in February 1997
and May 1997 of $600,000 and $2,920,000, respectively.

     At June 30,  1996 KEMCO had work in  progress  with  $397,369  in  revenues
remaining to be earned. Through November 18, 1996 KEMCO obtained commitments for
additional  contracts with future revenues of $6,733,225 with a total backlog at
November 18, 1996 of $7,130,594.

     CAPITAL EXPENDITURES AND COMMITMENTS

     During fiscal 1996,  the Company  completed the  acquisition of IPS for the
issuance of 600,000 shares (post split) of the Company's  common stock valued at

                                       26
<PAGE>

$3.00 per share, a commitment to fund working capital of $550,000, assumption of
$350,196  additional  notes and  $300,000  repayment  of debt to  Integrated,  a
related party.

     IPS's  president,  Richard  Barden,  continues to serve as IPS's  president
pursuant to a 9 year employment agreement, which expires in December 2000.

     During fiscal 1995, the Company  completed the acquisition of KEMCO for the
issuance of 400,000 shares (post split) of the Company's  common stock valued at
$6.25  per  share,   and  a  cash  payment  of  $4,500,000  to  KEMCO's   former
stockholders.  The funds used to make the cash payment were obtained through the
issuance of short term and long term notes and the sale of 260,000 shares of the
Company's  common  stock.  Two of the  short  term  notes  had  been  personally
guaranteed by the Company's former Chairman of the Board of Directors, President
and CEO,  Jerry  Swon.  KEMCO's  former  principal  stockholder,  Deral  Knight,
continues  to serve as KEMCO's  President  pursuant  to a  five-year  employment
agreement, which expires in May 2000.

     During fiscal 1996 and 1995,  the Company  invested  $149,581 and $56,482 ,
respectively,  in oil and gas  activities  including  acquisition  of  producing
properties, surface equipment and production facility upgrades, capitalized well
workovers and  recompletions.  The majority of these capital  expenditures  were
funded  through the issuance of 42,500 shares of the  Company's  common stock in
fiscal 1996.

     During fiscal 1996 the Company incurred additional capital  expenditures of
$317,761.  These  capital  expenditures  were  primarily  for  equipment and the
purchase and renovation of a building acquired in November 1995. The building is
located across from KEMCO's main yard and was required to consolidate and expand
KEMCO's  engineering  staff.  The total cost of the building and its renovations
were $85,844.

     Based upon the current level of operations,  the Company believes that cash
flow  from  future   operations   will  be  adequate  to  meet  its  anticipated
requirements for working capital,  capital  expenditures and scheduled  interest

                                       27
<PAGE>

payments through June 30, 1997. However,  various contingencies  including,  but
not limited to, those items previously discussed in the Industry Risk Section of
this report would, if they  materialize,  have a material  adverse effect on the
Company's  cash flow and could force the  Company to revise its planned  capital
expenditures  or to raise money through stock  issuance or to borrow  additional
funds.

                             SUMMARY FINANCIAL DATA

                                                 YEAR ENDED JUNE 30,
                                    -------------------------------------------
OPERATING DATA                           1996           1995           1994
                                         ----           ----           ----
Total oil and gas sales              $ 1,203,559     $ 1,304,889    $ 1,738,741
Contract revenue                       9,285,939       1,312,393           --
Total revenue                         10,828,209       3,273,207      2,368,254
Loss from operations                  (5,663,301)     (1,295,454)    (1,060,390)
Net loss                              (6,807,293)     (1,580,793)    (1,125,982)
Net loss per share                         (1.97)           (.67)          (.51)

                                                      JUNE, 30
                                    -------------------------------------------
BALANCE SHEET DATA                      1996            1995           1994
                                    ------------    ------------    -----------
Total current assets                 $ 8,613,615     $10,147,608     $  577,900
Total assets                          20,114,991      19,834,512      9,433,857
Working capital (deficit)              1,193,748       6,604,297       (147,931)
Notes payable, long term debt
  and capital lease obligations        7,428,361       7,124,468        466,667
Total liabilities                     10,045,905       9,199,029        919,580
Total stockholders' equity            10,069,086      10,635,483      8,514,276

     All statements  other than statements of historical  facts included in this
report  regarding  the  Company's  financial  position,  business  strategy  and
objectives of management for future  operations are  forward-looking  statements
that  involve  risks  and  uncertainties.  Although  the  Company  believes  the
expectations reflected in such forward-looking statements are reasonable, it can

                                       28
<PAGE>

give no assurance that such expectations  will prove to have been correct.  Such
forward-looking  statements are made in reliance on the "safe harbor" protection
provided under the Private  Securities  Litigation  Reform Act of 1995.  Factors
that  could  cause  actual  results  to  differ  materially  from the  Company's
expectations  include,  among others, the following:  (i) market dynamics,  (ii)
regulatory changes, (iii) competition and other economic conditions.

ITEM 7.  FINANCIAL STATEMENTS

     The following financial statements are filed with this report, beginning on
page F-1:

                                                                          Page
                                                                          ----
Report of  Independent Accountants ......................................  F-1
Report of Former Independent Accountants ................................  F-2
Consolidated Balance Sheet, June 30,  1996 and 1995 .....................  F-3
Consolidated Statement of Operations, Years Ended
   June 30, 1996, 1995 and 1994 .........................................  F-4
Consolidated Statement of Changes in Stockholders'
   Equity,  Years Ended June 30, 1996, 1995 and 1994 ....................  F-5
Consolidated Statement of Cash Flows, Years Ended
   June 30, 1996, 1995 and 1994 .........................................  F-6
Notes to Consolidated Financial Statements ..............................  F-7


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

     On  September  5,  1996,  the  Company  dismissed  its  former  independent
accountants Price Waterhouse LLP ("Price Waterhouse") and engaged Hill, Kotara &
Ford to audit the Company's consolidated  financial statements.  The decision to
change  independent  accountants  was  recommended and approved by the Company's
Board of Directors.

     Price Waterhouse  served as independent  accountants of the Company for the
years  ended June 30,  1995 and 1994.  The  reports of Price  Waterhouse  on the
Company's  financial  statements  for the  years  ended  June 30,  1995 and 1994

                                       29
<PAGE>

contained no adverse  opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty,  audit scope or accounting principle.  In connection
with its  audits  for the years  ended  June 30,  1995 and 1994,  and during the
fiscal  year 1996 prior to Price  Waterhouse's  dismissal,  the  Company  had no
disagreements  with  Price  Waterhouse  on  matters  of  accounting   principle,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreements if not resolved to the satisfaction of Price Waterhouse would have
caused  them  to  make  reference  thereto  in  their  report  on the  financial
statements for such years.

                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS


                                   MANAGEMENT

     The  following  table sets  forth the names of all  current  directors  and
officers of the Company and the positions in the Company held by them:

NAME                 AGE     POSITIONS & OFFICES       DIRECTOR OR OFFICER SINCE
----                 ---     -------------------       -------------------------
Deral Knight          55     Chairman, CEO                        1996

Barry Laidlaw         47     Director                             1996

Neal Glass            50     Director                             1993

Paul Chernis          61     Director                             1993

Todd B. Hesse         34     Secretary                            1993

Scott Kalish          37     Treasurer                            1993

                                       30
<PAGE>

     All directors and/or officers,  other than Deral Knight,  served as members
of the Board of Directors of Concord Energy,  Inc. (a Nevada corporation ) since
the time of the Agreement with Monoclonal in May, 1993 (See Item 1.  Description
of Business - Business  Development ). In December 1995,  Barry Laidlaw resigned
from the Board of  Directors  of the  Company,  but he rejoined the board in May
1996. In May of 1996, Bruce Deichl resigned from the Board of Directors,  and as
an officer of the Company. Also in May of 1996, Charles Fallon resigned from the
Board of Directors of the Company and Deral Knight joined the Board of Directors
of the  Company.  On November  22,  1996,  Jerry Swon  resigned  his position as
Director  and  Chairman  of the Board and Deral  Knight  became  Chairman of the
Board.  Directors  are  elected  to serve  until  the  next  annual  meeting  of
stockholders  and until  their  successors  have  been  elected  and  qualified.
Officers  are  appointed  to serve until the  meeting of the Board of  Directors
following the next annual  meeting of  stockholders  and until their  successors
have been elected and  qualified.  The last annual meeting was held on August 9,
1996.

DERAL KNIGHT - As part of the KEMCO  acquisition,  Mr. Knight agreed to continue
as the president of Knight Equipment and  Manufacturing  Corp. which he founded.
In May 1996 Mr.  Knight became a director of the Company and in June 1996 became
the President and CEO of the Company.  In November  1996, he became  Chairman of
the Board.  Mr.  Knight has been  involved in the oil and gas  service  industry
since  1964.  He is a graduate  of Oklahoma  University,  where he received  his
Bachelor of Science degree in Chemical Engineering.

BARRY LAIDLAW - Upon the consummation of the Monoclonal transaction, Mr. Laidlaw
became a  director  of the  Company.  Mr.  Laidlaw is the  President  of Concord
Operating,  Inc.  which was  organized  in 1990.  Prior to the  organization  of
Concord Operating, Inc. Mr. Laidlaw was president of West Gas, Inc. where he was

                                       31
<PAGE>

involved in all aspects of the oil and gas business from  negotiating  contracts
to field operations.

NEAL GLASS - Upon the  consummation of the Monoclonal  transaction,  Dr. Neal R.
Glass,  M.D.,  became a director of the Company.  Dr. Glass is a general surgeon
who received his undergraduate  training at New York University  (1964-1968) and
his M.D. degree from the State University of New York (1968-1972), where he also
received his postgraduate surgical training  (1972-1978).  Dr. Glass has been an
assistant and then associate professor of surgery at the University of Wisconsin
(1978-1985),  and a  professor  of surgery at Texas Tech  University  in Lubbock
(1985-1989), where he initiated and directed an organ procurement and transplant
program.  From  1989-1993  he directed  organ  transplant  programs at St. Louis
University  and  subsequently  at Our Lady of Lourdes  Medical Center in Camden,
N.J. Dr. Glass is a member of numerous professional organizations, including the
American  College of Surgeons and the American  Society of Transplant  Surgeons.
During  his  academic   career,   he  published  and  lectured   extensively  in
peer-reviewed  medical journals and at peer-reviewed  national medical meetings.
Since 1993, he has been in private practice in south-central Ohio.

PAUL CHERNIS - Upon the consummation of the Monoclonal transaction,  Mr. Chernis
became a director of the  Company.  He has been a director of Concord  since its
inception in July,  1991. He has rendered  legal  services to the Company and he
has also rendered legal services to Integrated and Tucker Financial, Inc. He has
been a member of the firm of Silverman, Collura & Chernis, P.C. since June 1990,
specializing  in corporate and securities  law. Mr. Chernis is a graduate of New
York University  School of Law, and prior to entering  private practice in 1972,
he served as Assistant Regional Administrator of the New York Regional Office of
the Securities and Exchange Commission.

TODD B. HESSE - Upon the consummation of the Monoclonal  transaction,  Mr. Hesse
became the Company's  Secretary.  In 1991 Mr. Hesse became a member of Concord's

                                       32
<PAGE>

management team. Prior to that, he was a senior associate with James J. Lowery &
Co., a municipal  financial  advisory  firm. At James J. Lowery & Co., Mr. Hesse
was  involved  with the  issuance  of  tax-exempt  bonds and  notes,  as well as
developing  reinvestment  programs  for various  project  funds.  Mr. Hesse is a
graduate of Delaware Valley College.

SCOTT  S.  KALISH  - Mr.  Kalish  became  Treasurer  of  the  Company  upon  the
consummation of the Monoclonal  transaction.  Mr. Kalish has served as Concord's
Controller since 1991. Previously,  he was supervisor of financial accounting at
Elf Acquitaine  Offshore  ("Elf") in Houston where he specialized in oil and gas
accounting and taxation. Prior to his association with Elf he was an oil and gas
accounting  supervisor with Cliffs Drilling Company. Mr. Kalish is a graduate of
Roger Williams College.

ITEM 10.   EXECUTIVE COMPENSATION

     The Company's Summary  Compensation  Table is Provided herein.  The Company
has no Option/SAR  Grants,  Aggregated  Option/SAR  Exercises or Fiscal year-end
Option/SARs  for the years ended June 30, 1996,  1995, or 1994 nor are there any
long-term incentive plan ("LTIP") awards, or stock options or stock appreciation
rights.

     Non-employee  directors are not compensated for Board of Directors meetings
attended.

                                       33
<PAGE>

                           SUMMARY COMPENSATION TABLE

                For the Years Ended June 30, 1996, 1995, and 1994
<TABLE>
<CAPTION>
                                                                   Annual Compensation        Awards         Payouts
                                                               ---------------------------------------------------------------------
      (a)                  (b)         (c)            (d)       (e)           (f)         (g)         (h)              (i)
                                                                 
     Name                                                       Other 
      and                 Year                                  Annual      Restricted                              All other
   Principal              Ended     Compensation                Compen-       Stock      Options/      LTIP          Compen-    
   Position              June 30      Salary*       Bonus ($)   sation($)*  Awards ($)    SARs      Payouts ($)      sation($)*
---------------        -----------  ------------    ---------  ----------   ----------   --------   ----------   ---------------

<S>                       <C>         <C>             <C>         <C>         <C>          <C>          <C>           <C>  
Jerry Swon                1996        $150,000        None        None        None         None         None          None
   Chairman &             1995        $150,000        None        None        None         None         None          None
   Past President         1994        $150,000        None        None        None         None         None          None
                                                                                                                  
Deral Knight (1)                                                                                                  
  President               1996        $128,706        None        None        None         None         None          None
                                                                                                                  
Bruce Diechl (2)          1996        $100,000        None        None        None         None         None          None
   Executive Vice         1995        $100,000        None        None        None         None         None          None
   President              1994        $100,000        None        None        None         None         None          None
                                                                                                                  
Barry Laidlaw             1996        $ 70,000        None        None        None         None         None          None
   Director               1995        $ 70,000        None        None        None         None         None          None
                          1994        $ 70,000        None        None        None         None         None          None
                                                                                                                  
Scott S Kalish            1996        $ 70,000        None        None        None         None         None          None
   Controller             1995        $ 70,000        None        None        None         None         None          None
                          1994        $ 70,000        None        None        None         None         None          None
                                                                                                                  
Todd Hesse                1996        $ 45,000        None        None        None         None         None          None
   Secretary              1995        $ 45,000        None        None        None         None         None          None
                          1994        $ 45,000        None        None        None         None         None          None
</TABLE>
                                                                               
   *Note: Salaries shown above, with the exception of Deral Knight, have been
   allocated to listed payees out of fund paid by Concord to Integrated under
   the management agreement (see Item 12, Certain Relationships and Related
   Party Transactions, and Notes To Financial Statements.)

1- Deral Knight joined the Company's Board of Directors in May of 1996 and in
   June 1996 became President and CEO of the Company. Prior to Joining Mr.
   Knight was, and still remains, President of the Company's Subsidiary KEMCO.
   His compensation reflected above represents the total compensation he
   received from the Company from July 1, 1995 through June 30, 1996.

2- Bruce Deichl resign from the Board of Directors of the Company and as an
   officer of the Company in May 1996.

                                       34

<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table contains  information as of November 29, 1996 as to the
beneficial  ownership of shares of the Company's common stock by each person who
was the  beneficial  owner of more  than 5% of the  outstanding  shares  of that
class,  each  person who is a director or officer of the Company and all persons
as a  group  who  are  officers  and  directors  of the  Company,  and as to the
percentage of outstanding shares held.

NAME OF                      SHARES                        APPROXIMATE
BENEFICIAL OWNER             BENEFICIALLY OWNED (1)        PERCENT OF CLASS (2)
----------------             ----------------------        --------------------
Deral Knight (3)                     360,000                      6.04%
Richard Barden (4)                   177,675                      2.98%
Paul Chernis (5)                      30,044                       .50%
Dr. Neil Glass                        23,971                       .40%

Total Held by Officers
and Directors                        414,015                      6.94%

(1) As used in this section,  the term  beneficial  ownership  with respect to a
security is defined by Rule 13d-3 under the  Securities  Exchange Act of 1934 to
consist of sole or shared  voting power  (including  the power to vote or direct
the vote) and/or sole or shared investment power (including the power to dispose
or direct the disposition  with respect to the security in question  through any
contract, arrangement, understanding, relationship or otherwise).

(2) As of November 18, 1996 there were  5,965,061  shares of common stock issued
and outstanding.

                                       35

<PAGE>

(3) Mr. Knight's shares of the Company's common stock were obtained  pursuant to
the Company's acquisition of KEMCO.

(4) Mr. Barden is the President of the Company's  subsidiary  IPS. His shares of
the Company's common stock were obtained  pursuant to the Company's  acquisition
of IPS. Mr. Barden is not an officer or director of the Company and therefore is
not  included in the caption  "Total Held By  Officers  and  Directors"  in this
section.

(5) Includes 30,000 shares held by the law firm of Silverman, Collura & Chernis,
P.C.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     Jerry  Swon,  former  President  and  former  Chairman  of the Board of the
Company  owns  all of the  outstanding  stock  of  Integrated,  which  is also a
shareholder  of the Company.  Integrated  had provided  certain  services to the
Company pursuant to a management agreement (see below).

     Certain  officers and  directors of the Company own a total of 6.94% of the
Company's  outstanding  common stock as of November  18,  1996.  This total also
includes the 6.04% of the Company's common stock owned by Deral Knight,  Company
Chairman  of the  Board  and CEO and  President  of the  Company's  wholly-owned
subsidiary KEMCO.

     At June  30,  1996,  promissory  notes,  aggregating  $298,000  (originally
$400,000) are payable to Walter  Goehausen,  and Deral Knight,  both of whom are
stockholders  of the Company.  The notes bear  interest at rates of 12% - 6% per
annum,  which are generally  payable in monthly  installments  through maturity.
Approximately  $50,000  of  the  notes  are  secured  by  future  production  of
approximately  75,000 equivalent barrels of oil. The Company paid an origination
fee of 3% to Integrated for costs  associated  with obtaining the Goehausen note
which  originally  totaled  $150,000.  The notes mature at various dates through
August 1996.

                                       36
<PAGE>

     The Company and  Integrated,  entered into an agreement in June,  1991 that
required Integrated to provide certain management, administrative and accounting
services to the Company and its subsidiaries,  Concord and COI, for $116,000 per
month through June 30, 1996. While the agreement was in effect,  the Company was
also  entitled to 10%,  through  March 31, 1994 and 20%  thereafter,  of all the
syndicated  retail  partnership  gross sales made by  Integrated.  As additional
consideration for the agreement,  Integrated assigned to the Company,  effective
June 1, 1991 through March 31, 1994, its revenue sharing interest in all program
syndications.  In fiscal  1996,  the Company  recorded  $140,000 in  syndication
income. In fiscal 1995, the Company recorded $539,000 in syndication  income and
$13,490 in management fee income, compared to $522,053 in syndication income and
$11,021 in  management  fee income In fiscal  1994.  The  services  provided  by
Integrated included the receipt of cash for oil and gas sales and the payment of
operating and capital expenditures on behalf of the Company. As of July 1, 1996,
the management agreement terminated.

     In conjunction with the above referenced management agreement,  the Company
and Integrated entered into an agreement by which the associated receivables and
payables were netted.  At June 30, 1996,  the Company had a net  receivable  due
from Integrated of $236,415. At June 30, 1995, the Company had a net payable due
to Integrated of $594,685.

     As part of its ongoing  operations,  the  Company  conducts  business  with
Atascosa Electric  Services  ("AES"),  an entity which is owned by the family of
Deral Knight. At June 30, 1996, there were no receivables due from Mr. Knight or

                                       37
<PAGE>

from AES. At June 30, 1995,  the  receivables  due from Mr.  Knight and AES were
$103,619 and $15,937, respectively.

     Under the  provisions of the agreement  whereby the Company  acquired Deral
Knight's  stock in KEMCO,  Deral  Knight  has  agreed to return to the  Company,
Concord  common  stock valued at $6.25 per share to the extent that Deral Knight
owed money to the Company at June 30, 1996.  Accordingly,  in liquidation of the
receivable  balance of  $107,062.50,  17,130 shares of Company common stock have
been returned to the Company.

     In December 1994,  KEMCO (prior to its acquisition by the Company)  entered
into an agreement  with  Integrated  (the "Joint  Venture  Agreement")  in which
Integrated  agreed  to  finance  the  purchase  of  certain  gas  plant  and gas
processing equipment. Upon the sale of the equipment, KEMCO and Integrated would
equally  share in the  "Where Is - As Is"  profit or  losses.  During  the three
months ended June 30, 1995, the Company sold the related inventory, as part of a
$1,550,000 total contact,  for $900,000 which is included in contract revenue in
the accompanying statement of operations for fiscal 1995.  Integrated's share of
the  profit  totaling  $182,500  and the  $535,000  cost of the  inventory,  are
included  in the cost of  contract  revenue  in the  accompanying  statement  of
operations for fiscal 1995.

     In  August,   1995,  the  Company's  board  of  directors   considered  the
acquisition of a 63% interest in IPS. At that time, the  acquisition  involved a
cash  investment  of $1.4  million.  The  Company's  board  declined to make the
acquisition  at that time because the Company  needed to conserve its  available
cash  following the recent  acquisition  of KEMCO.  The board was also concerned
because IPS had just completed its development  stage, had no written orders and
was just  starting  to market its  products.  After the board  rejected  the IPS

                                       38
<PAGE>

transaction,  former Company president Jerry Swon disclosed to the board that he
wished to pursue the IPS venture through a company controlled by him.

     Thereafter,  on August 22, 1995,  IPS entered into an agreement with Tucker
Financial,  Inc.  ("Tucker"),  a company  controlled by former Company President
Jerry Swon, whereby Tucker provided funding to IPS in the amount of $300,000, as
part of an  agreement  that gave Tucker the right to acquire up to 63% of IPS by
furnishing a total of $1.4 million in working capital to IPS.

     On October 18, 1995 Tucker  arranged  with an entity known as the SMR Group
to provide  net equity  capital to IPS in the amount of $1.4  million  for a 25%
interest  in IPS.  That  arrangement  contemplated  combining  IPS with a public
company in which Tucker would have held a 28% interest.  The sum of $300,000 was
to be repaid by IPS to Tucker. No such repayment actually took place because the
deal between IPS and SMR Group was never finalized.

     On December 12, 1995,  Mr. Swon  recommended  that the  Company's  board of
directors  reconsider the  acquisition of IPS based on the progress made by that
company  during the second half of 1995,  and the immediate  outlook for IPS and
its principal  products.  Mr. Swon advised the board that he felt confident that
the  acquisition  could be made for stock at this time and that IPS's  agreement
with the SMR Group could be  terminated.  The board  authorized him to negotiate
with IPS and report back at a subsequent meeting.

     On December 26, 1995,  Mr. Swon  advised the  Company's  board of directors
that 100% of IPS could be purchased for 600,000  shares of the Company's  common
stock.  He also  indicated  that an additional  100,000  shares could  eliminate
$400,000 of  indebtedness  including  $300,000 in debt that IPS had  incurred in

                                       39
<PAGE>

connection  with the  financing  arranged by Tucker.  Mr. Swon advised the board
that IPS would require up to an estimated $700,000 in working capital during the
next 12 months,  and the Company would assist IPS in raising or obtaining  these
funds. The board unanimously resolved to purchase IPS on the proposed terms.

     As part of the acquisition,  Tucker  relinquished its right to purchase IPS
shares as described  above. The IPS  shareholders  receiving  Company shares for
their  IPS  holdings  included  seven   individuals   representing  55%  of  the
outstanding stock of IPS, and who had no prior interest in the Company,  and ten
shareholders   originally  introduced  to  IPS  by  Tucker,  which  shareholders
represented  45% of IPS. Eight of those  shareholders  have made  investments in
other ventures in which Mr. Swon,  Tucker,  or Integrated  had an interest,  and
presently own stock in the Company.

     At the time of the IPS acquisition  there existed a royalty  agreement with
its president for any related oil and gas industry  applications  developed from
the  original  idea  of  developing  a set  of  proprietary  software  programs.
Royalties  under this  agreement  are  calculated  as  follows:  1% of the first
$1,500,000 of gross revenue,  and 5% of gross revenue thereafter.  The agreement
expires December 31, 2015.

     In March 1996,  the Company  finalized a sale of gas processing and related
equipment to Integrated for $550,000.  The Company's profit on the sale of these
items was approximately $200,000.

     In June 1996,  Integrated  returned  124,500 shares of the Company's common
stock  to  treasury,  at a value of  $3.00  per  share  as  partial  payment  of
Integrated's intercompany debt.

                                       40
<PAGE>

     In June of 1996,  the  Company  acknowledged  $150,000  of  expenses  which
represented costs incurred by Integrated  outside of the scope of the management
contract and which costs were deemed  reimbursable  to Integrated  and thus were
credited to Integrated's intercompany obligation.

     ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     a) Exhibits

     Exhibits  marked  with an  asterisks  have been  previously  filed with the
Securities  and Exchange  Commission  by the Company,  and are  incorporated  by
reference,  as indicated.  Other exhibits, if not so designated,  are filed with
this Form 10-KSB. 


   Exhibit No.      Description of Exhibits                            Page No.
   -----------      -----------------------                            --------
      3             Certificate of Incorporation as
                        amended, and by-laws*                             N/A

     10.8            Agreement and Plan of Reorganization
                        between the Registrant and Concord
                        Energy, Inc.***                                   N/A

     10.9            KEMCO acquisition agreement**                        N/A

     10.10           KEMCO - Deral Knight employment
                        agreement**                                       N/A

     b) Reports on Form 8-K

     On May 26, 1995,  the Company  filed a Report on Form 8-K,  disclosing  the
acquisition of KEMCO and including KEMCO's  financial  statements for the period
ended June 30, 1994  together with a copy of the  acquisition  agreement and the
Deral Knight employment agreement.

     On February 7, 1996 the Company filed a Report on Form 8-K,  disclosing the
Company's  intention  to acquire IPS and included a copy of the letter of intent
with IPS.

------------- 
*    Previously filed
**   Included in the Company's Form 8-K filed on May 26, 1995
***  Filed as an exhibit to the registration statement filed with the Commission
     on Form SB-2 on August 13, 1996

                                       41
<PAGE>

     On July 17,  1996 the  Company  filed a Report  on Form 8-K,  disclosing  a
realignment of duties of the Chairman of the Board,  CEO and CFO of the Company.
Additionally,  it disclosed  that Deral  Knight  would  assume the  positions of
president and CEO of the Company,  which were  previously  held by the Company's
former Chairman of the Board, Mr. Swon.

     On September 5, 1996 the Company filed a Report on Form 8-K, disclosing the
dismissal of the Company's former  independent  accountants Price Waterhouse LLP
and the  engagement  of Hill,  Kotara & Ford as the  Company's  new  independent
accountants.

                                       42
<PAGE>

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Company has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                             CONCORD ENERGY INCORPORATED

                                             By: /s/ DERAL KNIGHT
                                                 ----------------------
                                                 DERAL KNIGHT, President
                                                 and Principal Executive Officer

                                                 Dated:  November 29, 1996

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the Company and in the capacities and on the
dates indicated.

A Majority of the Board of Directors
------------------------------------

/s/ DERAL KNIGHT                                             November 29, 1996
------------------------------------
DERAL KNIGHT
Chairman of the Board of Directors

/s/ BARRY LAIDLAW                                            November 29, 1996
------------------------------------
BARRY LAIDLAW
Director

                                                             November 29, 1996
------------------------------------
NEAL GLASS
Director

/s/  PAUL CHERNIS
------------------------------------
PAUL CHERNIS                                                 November 29, 1996
Director

/s/  SCOTT KALISH
------------------------------------
SCOTT KALISH                                                 November 29, 1996
Treasurer (Principal Accounting Officer)

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Concord Energy Incorporated

We have audited the  accompanying  consolidated  balance sheet of Concord Energy
Incorporated and subsidiaries as of June 30, 1996, and the related  consolidated
statements of operations,  changes in stockholders'  equity,  and cash flows for
the  year  then  ended.   These  consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Concord  Energy
Incorporated  and its  subsidiaries  as of June 30, 1996, and the results of its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
generally accepted accounting principles.

                                               /s/ Hill, Kotara & Ford, P.C.
                                               -----------------------------
                                                   Hill, Kotara & Ford, P.C.

San Antonio, Texas
November 18, 1996
Except for Notes 15, e. and 15, f., as to
which the date is November 22, 1996

                                                                             F-1
<PAGE>

                       Report of Independent Accountants

Board of Directors and
Stockholders of Concord Energy Incorporated

In our opinion, based upon our audits and the report of other auditors, the
accompanying consolidated balance sheet and the related consolidated statements
of operations, of changes in stockholders' equity and of cash flows present
fairly, in all material respects, the financial position of Concord Energy
Incorporated and its subsidiaries at June 30, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended June 30, 1995 in conformity with generally accepted principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the consolidated financial statements of Knight
Equipment & Manufacturing Corporation, a wholly-owned subsidiary which was
acquired by the Company during 1995 (see Note 3), which statements reflect total
assets of $1,352,370 for the period from April 1, 1995 through June 30, 1995.
Those statements were audited by other auditors whose report thereon has been
furnished to us, and our opinion expressed herein, insofar as it relates to the
amounts included for Knight Equipment & Manufacturing Corporation, is based
solely on the report of other auditors. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits and the report of
other auditors provide a reasonable basis for the opinion expressed above.


/s/ Price Waterhouse LLP
------------------------
    Price Waterhouse LLP

Morristown, NJ
October 23, 1995

                                                                             F-2
<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                                              June 30,
                                                                                                       1996            1995
                                                                                  
<S>                                                                                               <C>             <C>         
Assets
Current assets:
    Cash and cash equivalents                                                                     $   898,083     $   257,788
    Accounts receivable, net of allowance for doubtful accounts of $132,930 and $67,490             1,259,785         696,558
    Receivable due from Integrated, net                                                               236,415            --
    Receivable due from stockholder                                                                      --           103,619
    Receivable due from affiliated company                                                               --            15,937
    Costs and estimated earnings in excess of billings on uncompleted contracts                       117,095         558,861
    Inventories                                                                                     6,081,973       8,452,625
    Prepaid expenses and other current assets                                                          20,264          62,220
                                                                                                  -----------     ----------- 
        Total current assets                                                                        8,613,615      10,147,608

Property, plant and equipment, net                                                                  8,522,550       9,132,755
Goodwill, net                                                                                       2,594,248            --
Bond issue costs, net                                                                                 334,578         504,149
Other assets                                                                                           50,000          50,000
                                                                                                  -----------     ----------- 

        Total assets                                                                              $20,114,991     $19,834,512
                                                                                                  ===========     ===========

Liabilities and Stockholders' Equity
Current liabilities:
    Current portion of notes payable to stockholders                                              $   298,000     $   243,750
    Current portion of long-term debt                                                               4,481,223       1,225,000
    Current portion of capital  lease obligations                                                      23,100            --
    Accounts payable                                                                                1,332,392         858,535
    Accrued expenses                                                                                1,114,523         501,243
    Billings in excess of costs and estimated earnings on uncompleted contracts                        72,711            --
    Payable due to Integrated, net                                                                       --           594,685
    Federal income taxes payable                                                                       97,918         120,098
                                                                                               --------------   -------------
        Total current liabilities                                                                   7,419,867       3,543,311

Notes payable to stockholders                                                                            --           225,000
Long-term debt                                                                                      2,578,045       5,384,045
Capital lease obligations                                                                              47,993          46,673
                                                                                                  -----------     ----------- 
        Total liabilities                                                                          10,045,905       9,199,029
                                                                                                  -----------     ----------- 

Commitments and contingencies

Stockholders' equity:
    Preferred stock, $.01 par value, 1,000 shares authorized.
        0 shares issued and outstanding                                                                  --              --
    Common stock, $.0001 par value, 20,000,000 shares authorized,
        5,899,735 and 3,104,224 shares issued                                                             590             310
    Paid-in capital                                                                                22,514,415      14,936,568
    Accumulated deficit                                                                           (11,108,688)     (4,301,395)
                                                                                                  -----------     ----------- 
                                                                                                   11,406,317      10,635,483
    Common stock subscribed                                                                          (856,665)           --
    Cost of treasury stock                                                                           (480,566)           --
                                                                                                  -----------     ----------- 
        Total stockholders' equity                                                                 10,069,086      10,635,483
                                                                                                  -----------     ----------- 

        Total liabilities and stockholders' equity                                                $20,114,991     $19,834,512
                                                                                                  ===========     ===========
</TABLE>
 

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                                                             F-3

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Operations
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                               Years Ended June 30,
                                                                                         1996           1995          1994

<S>                                                                                <C>            <C>             <C>        
Revenue:
    Oil sales                                                                      $   581,138    $   859,338     $   998,961
    Gas sales                                                                          622,421        445,551         739,780
                                                                                   -----------    -----------     -----------

             Total  oil and gas sales                                                1,203,559      1,304,889       1,738,741

Contract revenue                                                                     9,285,939      1,312,393            --
Syndication sales and revenue interests                                                140,000        552,490         533,074
Well operating income                                                                   51,416         64,926          96,439
Rental income                                                                          125,468         38,509            --
Software sales                                                                          21,827           --              --
                                                                                   -----------    -----------     -----------

             Total revenue                                                          10,828,209      3,273,207       2,368,254
                                                                                   -----------    -----------     -----------

Costs and Operating Expenses:
    Lease operating                                                                    639,271        747,003       1,104,682
    Cost of contract revenue                                                         8,244,390      1,087,163        -
    Inventory - adjustment to lower of cost or market                                3,043,055
    General and administrative:
        Management agreement                                                         1,392,000      1,392,000       1,392,000
        Other expenses                                                               2,548,856        749,326         295,036
    Depreciation, depletion and amortization                                           623,938        593,169         636,926
                                                                                   -----------    -----------     -----------

             Total costs and operating expenses                                     16,491,510      4,568,661       3,428,644
                                                                                   -----------    -----------     -----------

Loss from operations                                                                (5,663,301)    (1,295,454)     (1,060,390)
                                                                                   -----------    -----------     -----------

Other income (expense):
    Other income                                                                        49,584         14,244           2,300
    Interest expense                                                                (1,199,949)      (321,318)        (67,892)
                                                                                   -----------    -----------     -----------

             Total other income (expense)                                           (1,150,365)      (307,074)        (65,592)
                                                                                   -----------    -----------     -----------

Loss before income taxes                                                            (6,813,666)    (1,602,528)     (1,125,982)

Income tax benefit                                                                       6,373         21,735            --
                                                                                   -----------    -----------     -----------

Net loss                                                                           $(6,807,293)   $(1,580,793)    $(1,125,982)
                                                                                  ============    ===========     =========== 

Net loss per share                                                                 $     (1.97)   $     (0.67)    $     (0.51)
                                                                                  ============    ===========     =========== 
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                                                             F-4

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                     Common Stock                                                   Treasury Stock
                                   ---------------      Paid-in       Accumulated  Subscriptions  -----------------
                                   Shares   Amount      capital         deficit     Receivable    Shares      Value       Total

<S>                             <C>        <C>        <C>           <C>             <C>           <C>       <C>         <C>        
Balance at June 30, 1993       11,111,660  $  1,111   $11,233,768   $ (1,594,620)   $    --          --     $    --     $ 9,640,259

Net loss                             --        --            --       (1,125,982)        --          --          --      (1,125,982)
                                ---------  --------   -----------   ------------    ---------     -------   ---------   -----------

Balance at June 30, 1994       11,111,660     1,111    11,233,768     (2,720,602)        --          --          --       8,514,277

Issuance of common stock        4,284,462       429     3,576,570           --           --          --          --       3,576,999

Issuance of common stock upon
    conversion of debt            125,000        12       124,988           --           --          --          --         125,000

Net loss                             --        --            --       (1,580,793)        --          --          --      (1,580,793)
                                ---------  --------   -----------   ------------    ---------     -------   ---------   -----------

Balance at June 30, 1995       15,521,122     1,552    14,935,326     (4,301,395)        --          --          --      10,635,483

1 for 5 stock reversion       (12,416,898)   (1,242)        1,242           --           --          --          --            --
                                ---------  --------   -----------   ------------    ---------     -------   ---------   -----------

Balance at June 30, 1995
    as restated                 3,104,224       310    14,936,568     (4,301,395)        --          --          --      10,635,483

Issuance of common stock        2,413,907       242     6,552,885           --       (856,665)       --          --       5,696,462

Issuance of common stock upon
    conversion of debt            381,604        38     1,024,962           --           --          --          --       1,025,000

Acquisition of treasury stock by
    increasing payable to
    Integrated                       --        --            --             --           --       124,500    (373,500)     (373,500)

Receipt of shares in lieu of
    repayment of receivable
    from stockholder                 --        --            --             --           --        17,130    (107,066)     (107,066)

Net loss                             --        --            --       (6,807,293)        --          --          --      (6,807,293)
                                ---------  --------   -----------   ------------    ---------     -------   ---------   -----------

Balance at June 30, 1996        5,899,735  $    590   $22,514,415   $(11,108,688)   $(856,665)    141,630   $ 480,566   $10,069,086
                                =========  ========   ===========   ============    =========     =======   =========   ===========
</TABLE>



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                                                            F-5

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                              Years Ended June 30,
                                                                                        1996         1995           1994

<S>                                                                                <C>             <C>             <C>         
Cash flows from operating activities
    Net loss                                                                       $(6,807,293)    $(1,580,793)    $(1,125,982)
    Adjustments to reconcile net loss to net cash (used in)
        provided by operating activities:
        Depreciation, depletion and amortization                                       788,176         593,169         636,926
        Other noncash transactions                                                   4,068,808         124,345             --
        Decrease (increase) in assets:
             Accounts receivable                                                      (538,085)        (10,755)        140,322
             Receivable due from stockholders                                           (3,447)        (93,528)            --
             Receivable due from affiliated company                                     15,937          15,352             --
             Costs and estimated earnings in excess of billings on
                 uncompleted contracts                                                 441,766        (507,427)            --
             Inventories                                                              (558,270)         34,982             --
             Deferred income taxes                                                        --           (21,735)            --
             Other assets and liabilities                                               54,903         (44,367)            --
        (Decrease) increase in liabilities:
             Accounts payable                                                          450,653        (152,596)         80,564
             Accrued expenses                                                          328,517          39,646          (1,452)
             Federal income taxes payable                                              (22,180)       (182,357)            --
             Franchise tax payable                                                        --             1,500         (32,264)
             Receivable due from/payable due to Integrated, net                     (1,504,600)        808,990          61,548
             Billings in excess of costs and estimated earnings on
                 uncompleted contracts                                                  72,711            --              --
                                                                                   -----------     -----------      ----------

             Net cash (used in) provided by operating activities                    (3,212,404)       (975,574)       (240,338)
                                                                                   -----------     -----------      ----------

Cash flows from investing activities
    Purchases of equipment, well workovers and recompletions                          (314,342)        (56,482)       (177,315)
    Acquisition of business, net of cash acquired                                         --        (3,851,523)           --
    Sale of oil and gas interests and equipment                                        468,750            --           407,134
    Other, net                                                                            --            (4,937)           (630)
                                                                                   -----------     -----------      ----------

             Net cash (used in) provided by investing activities                       154,408      (3,912,942)        229,189
                                                                                   -----------     -----------      ----------
Cash flows from financing activities
    Net proceeds from bonds payable                                                       --         3,233,134            --
    Net proceeds from notes payable                                                  1,696,065       1,150,000            --
    Net proceeds from issuance of common stock                                       3,208,602         927,749            --
    Principal  payments on notes payable and capital lease obligations              (1,206,376)       (231,180)       (100,000)
                                                                                   ------------    -----------      ----------

             Net cash flows provided by (used in) financing activities               3,698,291       5,079,703        (100,000)
                                                                                   -----------     -----------      ----------

Net increase (decrease) in cash and cash equivalents                                   640,295         191,187        (111,149)

Cash and cash equivalents at beginning of period                                       257,788          66,601         177,750
                                                                                   -----------     -----------      ----------

Cash and cash equivalents at end of period                                         $   898,083     $   257,788      $   66,601
                                                                                   ===========     ===========      ==========
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

                                                                  
                                                                             F-6
<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

1.   Organization, Recapitalization, and Operations
     Concord Energy  Incorporated  (the  "Company") is an oil and gas production
     and service company which also locates,  designs,  refurbishes and installs
     gas plants and gas  processing  equipment  for customers in the natural gas
     industry.  In addition,  the Company provides rentals of gas plants and gas
     processing   equipment   and  provides   services   such  as   engineering,
     procurement,  dismantling,  reapplication  and  relocation  of complete gas
     processing  facilities.  In  addition,  the Company has  developed  unique,
     proprietary  software  which is used to collect,  process and transmit data
     relative to petroleum production and processing operations.  The Company is
     headquartered in Jourdanton,  Texas with  substantially  all of its oil and
     gas  production in East Texas and the Louisiana  Gulf Coast.  The Company's
     wholly-owned  subsidiaries,  Concord  Operating,  Inc. ("COI"),  and Knight
     Equipment   and   Manufacturing   Corporation   ("KEMCO")  are  located  in
     Jourdanton,  Texas, and Integrated Petroleum Systems Corporation ("IPS") is
     located in Denver, Colorado.

     Concord  Energy,  Inc.,  (the Company's name prior to the  recapitalization
     described  below) was formed in June 1991 for the purpose of combining  the
     net  assets  and  operations  of 166  previously  independent  oil  and gas
     partnerships (the  "Partnerships") and the net assets and operations of COI
     through an exchange of  Partnership  and COI net assets for common stock in
     Concord  Energy,  Inc. The exchange was accounted  for at historical  cost.
     Certain limited partners in the  Partnerships  which did not participate in
     the  exchange  were  allocated  net  working  interests  in the  properties
     previously held by the respective Partnerships.

     Prior to the exchange,  the Partnerships were managed by Integrated Energy,
     Inc.  ("Integrated") and Tucker Financial,  Inc.,  ("Tucker") which were in
     the business of establishing and managing oil and gas limited partnerships.
     Subsequent to the exchange and through June 30, 1996,  Integrated continued
     to provide certain  management and  administrative  services to the Company
     pursuant to a  management  agreement  between  the Company and  Integrated,
     which was  terminated  on June 30,  1996.  COI  manages the  production  of
     Company-owned oil and gas properties.

     On  May  19,  1993,  Monoclonal  International  Technology,  Inc.  ("MITI")
     acquired all of the outstanding  common stock of Concord  Energy,  Inc. For
     accounting purposes, the acquisition has been treated as a recapitalization
     of  Concord  Energy,  Inc.,  with  MITI as the  acquirer  (i.e.,  a reverse
     acquisition).  In connection with the  acquisition,  MITI later changed its
     name to Concord Energy Incorporated,  approved a 1 for 230 reverse split of
     its 127,784,100  shares of common stock and issued 10,556,077 shares of its
     common  stock in exchange for all the  outstanding  common stock of Concord
     Energy, Inc.

     In December 1995,  the company  effectuated a 1 for 5 reverse split of it's
     outstanding stock.  Historical  stockholders' equity and net loss per share
     information has been  retroactively  restated for all periods  presented in
     the accompanying  consolidated financial statements to reflect this reverse
     split.

2.   Summary of Significant Accounting Policies

     Principles of consolidation
     The consolidated  financial statements are comprised of the Company and its
     wholly-owned  subsidiaries,  Concord Energy, Inc., Concord Operating, Inc.,
     Integrated   Petroleum   Systems   Corporation   and  Knight   Equipment  &
     Manufacturing   Corporation  and  its  wholly-owned   subsidiary,   K  &  S
     Engineering,  Inc. All significant  intercompany  accounts and transactions
     are eliminated in consolidation.

     Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  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
     estimates.

     Cash equivalents
     Cash and cash  equivalents  include all cash and highly liquid  investments
     with original maturities of three months or less.

                                                                             F-7

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Inventories
     Inventories  are stated at the lower of cost or market  using the  first-in
     first-out   method.   Inventory   consists   principally   of  gas  plants,
     compressors,  separators, supplies and repair parts utilized by the Company
     in  conjunction  with its  design  and  refurbishing  of gas plants and gas
     processing equipment.

     Property, plant and equipment
     Property,   plant  and  equipment  is  stated  at  cost  less   accumulated
     depreciation, depletion and amortization.

     The Company  accounts  for its oil and gas  properties  under the full cost
     method of  accounting.  Under the full cost method,  all costs  incurred in
     acquiring, exploring and developing oil and gas reserves are capitalized to
     the full  cost  pool.  When oil and gas  properties  are sold,  retired  or
     otherwise  disposed  of, any  applicable  proceeds are credited to the full
     cost pool,  with no gain or loss  recognized,  unless the sale would have a
     significant impact on the relationship between capitalized costs and proved
     reserves.  Since all of its oil and gas  operations  are  within the United
     States,  the Company  utilizes one cost pool to account for its oil and gas
     properties.  Depreciation,  depletion  and  amortization  of  oil  and  gas
     properties is computed based on the unit-of-production  method for the cost
     pool, based on estimates of proved reserves as determined by an independent
     reserve engineer.

     Other  property,  plant and equipment is recorded at cost less  accumulated
     depreciation.  Repairs and maintenance costs which do not extend the useful
     lives of the assets are expensed as incurred.  Depreciation is provided for
     on the  straight-line  method over the estimated useful lives of the assets
     which  range  from  three  to  seven  years,   except  for   buildings  and
     improvements which are depreciated over estimated useful lives ranging from
     20 to 30 years.

     Goodwill
     Goodwill recorded as a result of the acquisition of IPS is being amortized,
     straight-line,  over it's  estimated  useful life of 15 years in accordance
     with Generally Accepted Accounting Principles.

     Leases
     Leases which meet certain criteria evidencing  substantive ownership by the
     Company are  capitalized  and the related  capital  lease  obligations  are
     included in liabilities.  Amortization and interest are charged to expense,
     with  rent  payments  being  treated  as  payments  of  the  capital  lease
     obligation.  All other leases are accounted for as operating  leases,  with
     rent payments being charged to expense as incurred.

     Deferred financing and bond issuance costs
     Costs incurred in conjunction  with obtaining  financing  (including  costs
     associated   with  the   issuance  of  bonds)  are   amortized   using  the
     straight-line  method over the term of the related  financing  agreement or
     bond.  Bond  issuance  costs at June 30,  1996  and 1995 is  stated  net of
     accumulated amortization of $186,183, and $21,945, respectively.

     Revenue recognition
     Oil and gas sales
     Revenues  from oil and gas  sales  are  accrued  as  earned  based on joint
     interest billings obtained from the well operator.

     Contract revenue
     Revenues from construction contracts are recognized based on the percentage
     of completion  method,  measured on the basis of costs  incurred to date to
     estimated total costs for each contract.  Contract costs include all direct
     material and labor costs,  including  those indirect labor and repair costs
     related to contract performance.  Selling, general and administrative costs
     are charged to expense as  incurred.  Provisions  for  estimated  losses on
     uncompleted  contracts  are made in the  period in which  such  losses  are
     determined.   Changes  in  job  performance,   job  conditions,   estimated
     profitability  and final contract  settlements  are monitored on a periodic
     basis in order to determine  if revisions to the income and cost  estimates
     are necessary as a result of such changes. Revisions to the income and cost
     estimates, if any, are recognized in the period in which such revisions are
     determined  to be  necessary.  Costs and  earnings in excess of billings on
     uncompleted  contracts  represents an asset based on revenues recognized in
     excess of  amounts  billed to  customers.  Billings  in excess of costs and
     earnings on uncompleted contracts is recorded as a liability and represents
     contracts for which billings to date exceed cumulative  revenues recognized
     based on the percentage of completion method.


                                                                             F-8

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Syndication sales
     Under an agreement  between the Company and  Integrated  (see Note 13), the
     Company  was  entitled to receive  20% of all sales made by  Integrated  of
     syndicated retail partnerships. This revenue was recognized when earned.

     Well operating income
     The Company,  through its wholly owned subsidiary COI, manages and operates
     wells. The revenue generated from these services is recognized when earned.

     Rental revenue
     The Company  leases  certain gas plants and  separators to customers  under
     short term leases which are accounted for as operating  leases. At June 30,
     1996 and 1995,  there  are no  significant  future  minimum  rentals  to be
     received under these noncancelable operating leases.

     Software sales
     The Company,  through its wholly owned subsidiary IPS, sells,  installs and
     maintains  its  proprietary  software.  The  revenue  generated  from these
     services is recognized when earned.

     Income taxes
     The Company accounts for income taxes under the asset and liability method.
     Under the asset and liability  method,  deferred tax assets and liabilities
     are recognized based upon differences  arising from the carrying amounts of
     the  Company's  assets  and  liabilities  for tax and  financial  reporting
     purposes  using  enacted  tax  rates in  effect  for the year in which  the
     differences are expected to reverse.  The effect on deferred tax assets and
     liabilities  of a change in tax rates is recognized in income in the period
     when the change in tax rates is enacted.

     Net loss per share
     Net loss per  share of  common  stock is based  upon the  weighted  average
     number of shares of common  stock  outstanding  (3,454,627  in fiscal 1996,
     2,376,991  in fiscal 1995 and  2,222,330  in fiscal  1994).  The  Company's
     common stock equivalents, which consist of outstanding warrants to purchase
     the Company's  common stock,  are not  considered in the net loss per share
     calculation since their effect is anti-dilutive.

3.   Business Combinations
     KEMCO  - On May 7,  1995,  the  Company  acquired  all  of the  issued  and
     outstanding  shares of common stock of KEMCO for  $7,000,000  in a business
     combination  accounted  for under the purchase  method of  accounting.  The
     acquisition  was financed  through  400,000 shares of the Company's  common
     stock  and  $4,500,000  in  cash.  Financing  for the cash  portion  of the
     purchase  price was obtained  primarily  through the net proceeds from debt
     financings totalling approximately $3,700,000 and the net proceeds from the
     issuance  of  260,000  shares  of  the  Company's  common  stock  totalling
     approximately  $800,000.  The  results  of  operations  of  KEMCO  and  its
     wholly-owned  subsidiary,  K & S Engineering,  Inc., subsequent to April 1,
     1995,  the date effective  control of KEMCO  transferred to the Company for
     financial reporting purposes,  are included in these consolidated financial
     statements.

     Assuming  that  KEMCO had been  purchased  on July 1, 1994,  the  Company's
     consolidated  revenues,  loss  from  operations,  net loss and net loss per
     share for the fiscal year ended June 30, 1995 would have been as follows:

                                                                 1995
                                                              (unaudited)

        Revenues                                             $  8,069,302
        Loss from operations                                  (1,114,982)
        Net loss                                              (1,496,488)
        Net loss per share                                          (.63)


                                                                             F-9

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     IPS - On  March  1,  1996  the  Company  acquired  all  of the  issued  and
     outstanding  shares of the common  stock of IPS for  600,000  shares of the
     Company's  common stock,  valued at $1,800,000,  in a business  combination
     accounted  for under the  purchase  method of  accounting.  The  results of
     operations  of IPS  subsequent  to March 1,  1996,  are  included  in these
     consolidated financial statements.

     At the time of purchase,  IPS' liabilities exceeded the value of its assets
     by  $853,208,  which when added to the  $1,800,000  value  assigned  to the
     shares of common stock issued to acquire the Company,  resulted in goodwill
     of  $2,653,208  being  recorded.  Amortization  of  goodwill  of $58,960 is
     recorded as of June 30, 1996.

4.   Accounts Receivable and Concentration of Credit Risk

     Accounts receivable represent amounts due from customers who are in the oil
     and gas business throughout North and South America. Fluctuations in market
     conditions  impact the credit  worthiness of these  customers.  The Company
     reviews  the  financial   condition  of  purchasers   and  joint   interest
     participants prior to signing sales or joint interest  agreements.  Payment
     terms are on a short-term basis and in accordance with industry standards.

     The Company maintains  account balances at several financial  institutions.
     Accounts are insured by the Federal  Deposit  Insurance  Corporation  up to
     $100,000.  In the normal  course of  business,  the  Company  may  maintain
     account  balances which are generally  transient in nature in excess of the
     federally insured limits.

5.   Costs and Estimated Earnings on Uncompleted Contracts
     Information on contracts in progress at June 30 is as follows:
<TABLE>
<CAPTION>

                                                                                           1996            1995

<S>                                                                                       <C>             <C>        
     Expenditures on uncompleted contracts                                                $1,637,171      $   902,330
     Estimated earnings thereon                                                              338,164          203,135
                                                                                          ----------      -----------
                                                                                           1,975,335        1,105,465

     Less:    Billings on uncompleted contracts                                            1,930,951          546,604
                                                                                          ----------      -----------
                                                                                          $   44,384      $   558,861
                                                                                          ==========      ===========
     Included in the accompanying balance sheets under the following captions:

        Costs and estimated earnings in excess of billings on uncompleted contracts       $  117,095      $   558,861

        Billings in excess of costs and estimated earnings on uncompleted contracts          (72,711)             -0-
                                                                                          ----------      -----------

                                                                                          $   44,384      $   558,861
                                                                                          ==========      ===========
</TABLE>


6.   Inventory - Lower of Cost or Market Adjustment

     Based on a  comparison  of the  estimated  potential  sales  prices  to the
     recorded  carrying  costs of the inventory of plants  acquired in the KEMCO
     acquisition,  management  has  determined  that  the  recorded  cost of the
     inventory  of such  plants was in excess of the market  value of the plants
     which would allow a  reasonable  profit  margin on the sales of the plants.
     The recorded cost of the inventory of such plants had been determined based
     on an  appraisal  obtained  and relied upon to  establish  the value of the
     plants at the time KEMCO was acquired.  Management  subsequently determined
     that the values  assigned  to the  plants  were the  appraiser's  estimated
     retail sales price of the plants rather than a wholesale  market value that
     would allow a reasonable profit margin on the sales of the plants.

     To adjust the carrying cost of the plants to their estimated  market value,
     an adjustment of $3,043,055  was charged to expense for the year ended June
     30, 1996.

                                                                            F-10

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

7.   Property, Plant and Equipment, Net

     Significant components comprising property,  plant and equipment at June 30
     include the following:
<TABLE>
<CAPTION>

                                                                                                       1996           1995
<S>                                                                                              <C>             <C>         
     Oil and gas properties:
        Leasehold costs                                                                          $  7,495,916    $  7,368,416
        Lease well and equipment                                                                    1,836,882       1,944,882
        Intangibles                                                                                 1,904,925       1,904,925
        Property, plant and equipment                                                                 484,181         945,431
        Other                                                                                          80,632          58,551
                                                                                                 ------------    ------------

             Total oil and gas properties                                                          11,802,536      12,222,205
                                                                                                 ------------    ------------

    Other property, plant and equipment:
        Land                                                                                          185,413         159,913
        Buildings and improvements                                                                    359,535         239,675
        Machinery and equipment                                                                       244,776         149,219
        Vehicles                                                                                      237,896         218,769
        Furniture, fixtures and software                                                              187,646          81,710
                                                                                                 ------------    ------------

             Total other property, plant and equipment                                              1,215,266         849,286
                                                                                                 ------------    ------------
    Accumulated depreciation, depletion and amortization                                           (4,495,252)     (3,938,736)
                                                                                                 ------------    ------------
    Property, plant and equipment, net                                                           $  8,522,550    $  9,132,755
                                                                                                 ============    ============

    Depreciation,  depletion and  amortization  of oil and gas  properties,  and
    depreciation  of other  property,  plant and  equipment for the fiscal years
    ended June 30 is as follows:

                                                                                       1996            1995           1994

    Oil and gas properties                                                            $ 431,914      $ 544,868       $ 619,254
    Other property, plant & equipment                                                   133,064         48,301          17,672
                                                                                      ---------      ---------       ---------

                                                                                      $ 564,978      $ 593,169       $ 636,926
                                                                                      =========      =========       =========
</TABLE>

     At June 30, 1996 and 1995 vehicles  recorded under capital leases  totalled
     $105,127 and the related accumulated amortization through June 30, 1996 and
     1995 is $26,282 and $5,256.  Amortization expense related to these vehicles
     totalled $21,026, $5,256 and $0, in 1996, 1995 and 1994, respectively.

8.   Debt and Capital Lease Obligations

     Debt
     Notes payable and long-term debt includes the following at June 30:
<TABLE>
<CAPTION>

<S>                                                                                      <C>             <C> 
     Bond payable,  dated May 1995,  with  interest at 10% per annum,  requiring         1996            1995
     semi-annual  interest payments through maturity on May 1, 1997. The bond is
     secured by the assets of KEMCO.  As additional  consideration,  the Company
     issued 90,000 shares of common stock to the lenders.                            $ 2,920,000     $ 2,920,000
</TABLE>


                                                                            F-11

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                         1996            1995
<S>                                                                                    <C>             <C>      
     Secured notes payable, dated December 1994, with a face value of $2,500,000
     issued at a $750,000 discount. The notes bear interest at 9% per annum with
     an effective interest rate of 15% per annum.  Semi-annual interest payments
     of $112,500 are required  through  maturity in January 2010.  The notes are
     secured by certain gas plants and equipment and a guarantee of the Company.       1,774,601       1,757,634

     Secured  notes  payable,  dated  September  1994,  with  a  face  value  of
     $1,400,000 issued at a $699,500 discount. The notes bear interest at 6% per
     annum payable  semi-annually  with an effective interest rate of 14.02% per
     annum.  Annual  principal  payments of $140,000 are  required  beginning in
     August  2005  through  maturity  in August  2009.  The notes are secured by
     certain oil and gas property owned by the Company.                                  723,412         706,411

     Acquisition bridge financing evidenced by notes payable which bear interest
     at 12% per annum.  The  interest and related  principal  are due at various
     maturity  dates  through  November  25,  1996.  The notes are  secured by a
     personal  guarantee from Jerry Swon, the chairman of the board of directors
     and a shareholder of the Company.                                                   180,000         800,000

     Unsecured  note  payable,  bearing  interest at 7% per annum.  Interest and
     principal are due at various dates through August 1995.                                --           300,000

     12%  convertible  notes,  dated October 1994,  convertible at maturity into
     shares of Company's common stock at $5 per share.  During 1995, $125,000 of
     these notes matured and were  converted into 25,000 shares of the Company's
     common  stock.  Upon the  conversion,  an  additional  3,000  shares of the
     Company's  common stock was issued as  consideration  for accrued  interest
     expense through the date of conversion  totalling $15,000. The remainder of
     the notes mature  November  17, 1996.  The notes are secured by certain oil
     and gas property owned by the Company.                                              125,000         125,000

     Secured note payable  dated  January  1996,  with interest at 9% per annum.
     Interest and principal of $1,271 are due monthly  through January 2000. The
     note is secured with certain equipment owned by the Company.                         46,559            --

     Unsecured  non-interest  bearing note  payable  dated March 1996 payable in
     monthly installments of $43,599 through maturity on December 15, 1996.              304,500            --

     Secured note payable dated February  1996,  with interest at 12% per annum.
     Principal  and interest are due at maturity on February 28, 1997.  The note
     is secured by a certain gas plant owned by the Company.                             600,000            --

     6% convertible note, dated April 1996,  convertible at maturity into shares
     of the  Company's  common  stock.  The note  matures  in April  1999,  with
     interest payable quarterly in shares of the Company's common stock.                  45,000            --

     Various unsecured notes payable, bearing interest of 4.5% to 12% per annum.
     The interest and  principal are due at various  maturity  dates through May
     1997.                                                                               340,196            --
                                                                                      ----------      ----------

     Total debt outstanding                                                            7,059,268       6,609,045

     Less:    current portion                                                          4,481,223       1,225,000
                                                                                      ----------      ----------

     Long-term debt                                                                   $2,578,045      $5,384,045
                                                                                      ==========      ==========
</TABLE>


                                                                            F-12


<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     As of June 30, 1996,  maturities  and scheduled  payments for the next five
     fiscal  years and  thereafter  are  $4,481,223  in 1997,  $12,608  in 1998,
     $58,790 in 1999, $8,635 in 2000; and the remainder after fiscal year 2001.

     Capital lease Obligations

     In conjunction  with its acquisition of KEMCO, the Company acquired certain
     leased  equipment  which is accounted for as capital  leases.  Prior to the
     acquisition,   the  leases  were  prepaid  at   inception.   Capital  lease
     obligations recorded in the accompanying  consolidated financial statements
     represent  the  present  value of the  lease  purchase  options  which  are
     exercisable at the end of the lease term, discounted at an interest rate of
     16%, and the future  payments due on a lease of a yard facility  discounted
     at 12%.

     Capital lease obligations as of June 30 consist of the following:

                                                          1996            1995

      Total future minimum lease payments              $  85,106       $  67,106
      Less:    amounts representing interest              14,013          20,433
                                                       ---------       ---------

      Present value of minimum lease payments          $  71,093       $  46,673
                                                       =========       =========

     The obligations  under capital leases mature as follows;  $23,100 in fiscal
     1997 and $47,993 in fiscal 1998.

9. Commitments and Contingencies

    Minimum Rental Commitments

    The Company has several noncancelable  operating leases,  primarily for yard
    and office  equipment,  that expire over the next five years.  These  leases
    generally  are for periods  ranging from three to five years and require the
    Company to pay all executory costs such as maintenance  and insurance.  Rent
    expense for the year ended June 30, 1996, 1995 and 1994 was $62,567, $11,633
    and $0, respectively.

     Future minimum lease payments under  noncancelable  operating  leases as of
     June 30, 1996 are as follows:

                 Fiscal Year

                   1997                            $   43,998
                   1998                                20,465
                   1999                                 9,666
                   2000                                 3,600
                   2001                                 3,600
                                                   ----------
                     Total minimum lease payments  $   81,329                   
                                                   ==========                  

     Legal Matters

     As of June 30, 1996, the Company was involved in various litigation matters
     which it considers to be in the normal  course of business.  In the opinion
     of  management,  based upon  consultation  with legal  counsel,  the claims
     either lack merit,  or the potential  liability,  if any, upon the ultimate
     disposition  of  these  lawsuits  will not have a  material  effect  on the
     Company's financial position or results of operations.

     During the year ended June 30, 1996 the Company  agreed to a project  audit
     settlement related to a claim on a contract performed by KEMCO prior to its
     acquisition  by  the  Company.  The  $521,500  cost  of the  project  audit
     settlement  is recorded as a component of cost of contract  revenue for the
     year ended June 30, 1996.
 
                                                                            F-13

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

10.Outstanding Warrants

    Warrants  outstanding  as  of  June  30,  1996  to  purchase  shares  of the
    Company's common stock are summarized as follows:

<TABLE>
<CAPTION>
    Date of Issuance      Number of Shares       Exercise Price/Share        Expiration Date

<S>                            <C>                     <C>                   <C> 
    November 1994                1,500                  $7.50                November 1997
    June 1995                  100,000                   2.90                November 1996
    June 1995                  100,000                   7.50                  July 1997
    August 1995                 27,500                   7.50                 August 1996
    November 1995               20,000                   5.00                November 1998
    February 1996               25,000                   4.00                 January 1999
    February 1996              175,000                   4.50                November 1996
    February 1996              103,800                   4.50                 October 1996
    February 1996              100,000                   5.00                 October 1996
    May 1996                    25,000                   3.00                November 1996
    May 1996                    20,000                   3.75                  June 1998
    May 1996                   100,000                   3.75                  June 1999
    May 1996                    15,000                   4.00                January 1998
    May 1996                   100,000                   4.50                  June 1999
    May 1996                   200,000                   2.625                 July 1999
</TABLE>

     The Company has sufficient  shares authorized but not issued for use in the
     event these warrants are exercised.

11.Supplementary Cash Flow Information

     Supplementary cash flow information for the fiscal year ended June 30 is as
     follows:
<TABLE>
<CAPTION>
                                                                                     1996           1995          1994
<S>                                                                                <C>          <C>          <C>       
    Interest paid                                                                  $  697,031   $  483,092   $   67,892
    Taxes paid                                                                         39,482      213,519       82,264
    Noncash investing and financing activities:
        Issuance of common stock to acquire business and goodwill                   2,653,208    2,500,000          -
        Issuance of common stock to convert notes payable                           1,025,000      125,000          -
        Issuance of common stock in exchange for services                             560,360      149,250          -
        Issuance of common stock for subscription receivable                          856,665          -            -
        Issuance of common stock to acquire property, plant and equipment             127,500          -            -
        Property, plant and equipment transferred to inventory                        108,186          -            -
        Land acquired by capital lease                                                 25,500          -            -
        Treasury stock acquired by incurring payable to Integrated                    373,500          -            -
        Treasury stock acquired in lieu of collection of stockholder receivable       107,666          -            -

    Other noncash  transactions  for the year ended June 30, 1996 is composed of
    the following:

        Lower of cost or market adjustment to inventory                            $3,043,055
        Expenses paid by issuance of common stock                                     560,360
        Expenses paid by issuance of debt                                             421,500
        Amortization on bond and lease discounts                                       42,008
        Loss on sale of equipment                                                       1,885
                                                                                   ----------

             Total                                                                 $4,068,808
                                                                                   ==========
</TABLE>

                                                                            F-14
<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

12.Income Taxes

     For the year ended June 30, 1996,  the income tax benefit of $6,373 results
     from the adjustment of federal income taxes payable to the amount currently
     due. For the year ended June 30, 1995, the income tax benefit of $21,735 is
     comprised  of federal and state  deferred  tax  benefits  of  $562,395  and
     $2,637,  respectively,  offset by an  increase  in the  deferred  tax asset
     valuation  allowance  of  $543,297.  For the year ended June 30,  1994,  no
     income  tax  provision  (benefit)  for  federal or state  income  taxes was
     recorded.

     The provision (benefit) for income taxes differs from the statutory federal
     rate for the fiscal years ended June 30 as follows:
                                           1996          1995          1994

    Federal statutory rate                (34.0%)       (34.0%)       (34.0%)
    Valuation allowance of 
       deferred income tax asset           34.0          33.9          34.0
    Other                                   0.0            .1          (0.0)
                                        -------       -------       -------
    Effective tax rate                      0.0%          0.0%          0.0%
                                        =======       =======       =======

     The  components  of the net deferred  income tax asset as of June 30 are as
     follows:

                                                       1996          1995
Temporary differences:
    Depreciation, depletion and amortization       
      of intangible drilling costs                 $  (976,118)   $(1,067,999)
    Book vs. tax treatment of 
      acquisition of subsidiaries                    1,015,928            -
    Other                                               57,815        153,244
                                                   -----------    -----------

         Total                                          97,625       (914,755)

    Tax credit carryforward                             55,017            -
    Operating loss carryforward                      5,097,314      3,428,367
                                                   -----------    -----------

    Deferred income tax asset                        5,249,956      2,513,612

    Valuation allowance                             (5,249,956)    (2,513,612)
                                                   -----------    -----------

    Deferred income tax asset, net                 $         0    $         0
                                                   ===========    ===========

     The  significant  items included in the company's  noncurrent  deferred tax
     asset  result  from  differences   between  the  rates  used  in  computing
     depreciation,  depletion and amortization of intangible  drilling costs for
     book  and tax  purposes,  and the  different  accounting  treatment  of the
     acquisitions  of KEMCO  and IPS for book and tax  purposes.  The  Company's
     valuation  allowance  increased  $2,736,344  in fiscal 1996 and $543,297 in
     fiscal 1995.

     As of June 30, 1996, the Company had a net operating loss  carryforward  of
     approximately  $14,992,000  for  regular  tax  purposes.  Of these  losses,
     approximately  $4,772,000 were incurred by Concord Energy,  Inc.,  prior to
     its acquisition by MITI, and $1,114,000  (and the tax credit  carryforward)
     were incurred by IPS prior to its  acquisition by the Company,  and will be
     subject to the  separate  return  limitation  years  rules of the  Internal
     Revenue Code.  These losses will expire,  if not utilized,  in fiscal years
     ending June 30, 2007 through 2011.

13.Transactions with Related Parties

     Related Party Ownership Interests

     The former  chairman of the Company's  board of directors,  personally  and
     through  Integrated and Tucker,  which are companies that he owns own 2.61%
     of the Company's  common stock as of June 30, 1996.  Additionally,  certain
     officers and  directors of the Company,  together  with the chairman of the
     board own or control  7.02% of the  Company's  common  stock as of June 30,
     1996.

                                                                            F-15


<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Receivables from Related Parties/Affiliated Company

     Integrated  and the  Company  have an  agreement  by which  the  associated
     receivables and payables may be netted. At June 30, 1996, the Company has a
     net  receivable  due from  Integrated  of $236,415.  At June 30, 1995,  the
     Company had a net payable due to Integrated of $594,685.

     As part of its ongoing  operations,  KEMCO conducts  business with Atascosa
     Electric Services  ("AES"),  an entity which is owned and controlled by the
     family of Deral Knight,  the president of KEMCO, who is also CEO,  director
     and a stockholder of the Company.  For the year ended June 30, 1996,  KEMCO
     subcontracted  $283,400 in electrical work to AES and at June 30, 1996 owed
     AES $37,040 which is included in accounts payable.  At June 30, 1996, there
     was  no  receivable  due  from  stockholder  (Deral  Knight)  or  due  from
     affiliated  company  (AES).  At June  30,  1995,  the  receivable  due from
     stockholder  (Deral  Knight)  and due from  affiliated  company  (AES) were
     $103,619 and $15,937, respectively.

     Under the  provisions of the agreement  whereby the Company  acquired Deral
     Knight's stock in KEMCO,  Deral Knight has agreed to return to the Company,
     Concord Energy  Incorporated  common stock valued at $6.25 per share to the
     extent  that  Deral  Knight  owed money to the  Company  at June 30,  1995.
     Accordingly,  in liquidation of the  receivable  balance,  17,130 shares of
     Company  common stock issued to Deral Knight as part of the purchase  price
     of his KEMCO stock are reflected as having been returned to the Company and
     are recorded as treasury stock at June 30, 1996.

     Other Payables to Related Parties

     At June 30, 1996,  $270,227 is owed to Richard D. Barden,  the president of
     IPS, and his wife June Barden.  The balance  generally  consists of accrued
     compensation  and  expense  reimbursements  due to them and is  included in
     accrued expenses in the accompanying balance sheet.

     Notes Payable to Stockholders

     Notes Payable to stockholders bear interest at rates ranging from 6% to 12%
     per  annum  which are  generally  payable  at  maturity.  Interest  expense
     incurred on these notes during fiscal 1996,  1995, and 1994 totals $26,000,
     $42,661  and  $67,892,  respectively.  The notes  mature at  various  dates
     through  August 1996.  Approximately  $50,000 of the notes at June 30, 1996
     are secured by future production of approximately 75,000 equivalent barrels
     of oil.

     Additionally,  $230,000 of the $340,196 recorded as various unsecured notes
     at Note 8 represents  notes payable to the former  stockholders  of IPS who
     became  stockholders of the Company when the Company acquired IPS. Interest
     expense on these stockholder notes from March 1, 1996 through June 30, 1996
     was $6,775.

     Joint Venture Agreement with Integrated

     In December 1994,  KEMCO (prior to its acquisition by the Company)  entered
     into an agreement with Integrated (the "Joint Venture  Agreement") in which
     Integrated  agreed to finance  the  purchase  of certain  gas plant and gas
     processing  equipment,  which was sold by KEMCO, in exchange for 50% of the
     profit  realized  by KEMCO on the sale of the  inventory.  During the three
     months ended June 30, 1995, the Company sold part of the related  inventory
     for  $900,000  which is included in  contract  revenue in the  accompanying
     statement of operations for fiscal 1995.  Integrated's  share of the profit
     totalling $182,500 and the $535,000 cost of the inventory,  are included in
     cost of contract  revenue in the  accompanying  statement of operations for
     fiscal  1995.  During the year  ended June 30,  1996,  KEMCO  acquired  the
     remaining  inventory from the joint venture.  The resulting  $50,000 profit
     paid to  Integrated  is  recorded  as a cost  of  contract  revenue  in the
     statement of operations for fiscal 1996.

     Acquisition of IPS

     In  March  1996,  the  Company  acquired  IPS,  which  at the  time  of the
     acquisition,  had among its shareholders ten shareholders  representing 45%
     of IPS's outstanding  stock who were introduced to IPS by Tucker,  eight of
     whom have made investments in the past in other ventures in which Mr. Swon,
     Tucker,  Integrated  and/or  KEMCO  had an  interest,  and  eight  of which
     shareholders had owned stock in the Company.  Included with the acquisition
     of IPS was a $300,000  liability from IPS to Tucker,  for funds  previously
     advanced to IPS from Tucker.  This $300,000 was applied to, and is included
     in the net  receivable  balance due from  Integrated to the Company at June
     30, 1996.

                                                                            F-16

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Management Agreement

     The Company and Integrated  had entered into an agreement (the  "Management
     Agreement") which was terminated on June 30, 1996, that required Integrated
     to provide certain  management,  administrative and accounting  services to
     the Company and certain  subsidiaries  for $116,000 per month. The services
     provided by  Integrated  included the receipt of cash for oil and gas sales
     and the  payment of  operating  and capital  expenditures  on behalf of the
     Company.  In  accordance  with the original  provisions  of the  Management
     Agreement,  the Company was also entitled to 10% of all  syndicated  retail
     partnership gross sales made by Integrated. As additional consideration for
     the Management  Agreement,  Integrated  assigned to the Company,  effective
     June 1, 1991 through March 31, 1994, its revenue  sharing in future program
     syndications.  Effective  March 31,  1994,  the  Management  Agreement  was
     modified  to  provide  the  Company  with  20%  of  all  syndicated  retail
     partnership gross sales made by Integrated. During fiscal 1994, the Company
     sold to Integrated all of its revenue  sharing  interests which were earned
     under the Management  Agreement,  aggregating  $363,266.  Revenue  interest
     income earned was also remitted to Integrated in connection  with the sale.
     The proceeds  from the sale were  recorded as a reduction to the  Company's
     full-cost oil and gas  properties  pool. In the fiscal years ended June 30,
     the company recorded income from Integrated as follows:

                                  1996              1995                1994

    Syndication income         $ 140,000           $ 539,000          $ 522,053
    Revenue interest income         -                  -                  -
    Management fee income           -                 13,490             11,021
                               ---------          ----------         ----------
                               $ 140,000           $ 552,490          $ 533,074
                               =========           =========          =========

     Employment Agreements

     On November  1, 1991 IPS  entered  into an  employment  agreement  with its
     president,  Richard D. Barden. The agreement as modified on October 4, 1994
     provides for him to receive an annual base salary of $96,200 per year.  The
     agreement also provides for certain fringe benefits and bonuses and expires
     December 31, 2000.

     On November 9, 1994 KEMCO  entered into an  employment  agreement  with its
     president,  Deral Knight.  The agreement provides for him to receive a base
     salary of  $125,000  per annum plus a bonus  consisting  of ten  percent of
     KEMCO's  pre-tax net profits  from  $1,500,000  to  $2,000,000  and fifteen
     percent of pre-tax net profits which exceed $2,000,000.  The agreement also
     provides for certain fringe benefits and expires May 7, 2000.

     Royalty Agreement

     In March,  1992 IPS entered into a royalty  agreement  with its  president,
     Richard  D.  Barden,  for any  related  oil and gas  industry  applications
     developed  from  the  original  idea  of  developing  a set of  proprietary
     software  programs.  Royalties  under  this  agreement  are  calculated  as
     follows:  1% of the first  $1,500,000  of annual gross  revenue,  and 5% of
     annual gross revenue thereafter. The agreement expires December 31, 2015.

     Other Related Party Transactions

     The two  automobiles  held under capital lease are to be  transferred to an
     officer and an employee of KEMCO,  respectively  upon the  execution of the
     lease purchase options at the expiration of the lease terms.

     In March 1996 the Company  finalized a sale of gas  processing  and related
     equipment to Integrated for $550,000.  The Company's  profit on the sale of
     these  items was  approximately  $250,000.  The plant was leased to a third
     party by KEMCO, which billed and collected the rentals and remitted them to
     Integrated.
          
                                                                            F-17


<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     In June 1996 the Company  accepted  124,500 shares of the Company's  common
     stock  from  Integrated,  at a value  of $3.00  per  share  which  has been
     recorded in fiscal 1996 as a reduction  of the net  receivable  balance due
     from  Integrated  as of June  30,  1996.  This  stock  is  included  in the
     accompanying   consolidated   financial  statement  as  treasury  stock  in
     stockholders' equity.

     In June  1996,  in  conjunction  with  the  termination  of the  management
     agreement  between  the  Company and  Integrated,  the  Company  recognized
     $150,000  of expenses  from  Integrated.  These  expenses  represent  costs
     incurred by Integrated between March 1994 and June 30, 1996, outside of the
     scope of the management  contract which had not been previously  charged to
     the Company.  These costs were  included in the  accompanying  consolidated
     financial  statement within other expense in the consolidated  statement of
     operations.

14.Supplemental Oil and Gas Information

    The following tables set forth  information  about the Company's oil and gas
    producing activities.  All of the Company's activities are within the United
    States.

     a) Oil and Gas  Reserves  (Unaudited)  - The  following  table of estimated
     proved  developed and proved  undeveloped  reserves of oil and gas has been
     prepared by the Company utilizing  estimates of year-end reserve quantities
     provided  by  independent  petroleum  consultants.  Reserve  estimates  for
     producing oil and gas  properties  and for new  discoveries  are inherently
     imprecise and are expected to change as additional performance data becomes
     available.

     Proved developed and proved undeveloped reserves:
                                      Oil          Gas          Total
                                     (bbls)       (Mcf)       (EQB) (1)

Balance at June 30, 1993           2,023,547     1,999,359     2,356,772
Revisions of previous estimates      110,306       406,222       178,010
Extensions and discoveries             1,691       241,640        41,964
Production                           (67,280)     (379,859)     (130,590)
Sales of minerals in place           (15,017)      (82,010)      (28,685)
                                  ----------    ----------    ----------

Balance at June 30, 1994           2,053,247     2,185,352     2,417,471
Revisions of previous estimates     (573,450)     (223,880)     (610,763)
Extensions and discoveries           319,720       703,384       436,951
Production                           (51,257)     (295,626)     (100,528)
Sales of minerals in place               -             -             -
                                  ----------    ----------    ----------

Balance at June 30, 1995           1,748,260     2,369,230     2,143,131
Revisions of previous estimates      175,439      (258,528)      132,351
Extensions and discoveries               -             -             -
Production                           (32,815)     (302,583)      (83,246)
Sales of minerals in place           (50,050)     (191,129)      (81,904)
                                  ----------    ----------    ----------

Balance at June 30, 1996           1,840,834     1,616,990     2,110,332
                                  ==========    ==========    ==========

Proved developed reserves:

     June 30, 1994                   691,511     1,544,510       948,929
     June 30, 1995                   435,915     1,026,085       606,929
     June 30, 1996                   375,061       924,019       529,064


     (1)  Equivalent  barrels (Mcf of gas is converted to equivalent  barrels by
     dividing by six).

 
                                                                            F-18


<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     b) Capitalized Costs Relating to Oil and Gas Producing  Activities - are as
     follows: 
<TABLE>
<CAPTION>
                                                                 June 30  
                                                 1996             1995           1994
<S>                                          <C>             <C>             <C>
Proved and unproved oil and gas properties   $ 11,802,536    $ 12,222,205    $ 12,165,723

Accumulated depletion and valuation
     allowances                                (4,287,790)     (3,855,255)     (3,310,387)
                                             ------------    ------------    ------------

Net capitalized costs                        $  7,514,746    $  8,366,950    $  8,855,336
                                             ============    ============    ============

Depletion, depreciation and amortization
     per equivalent barrel of production     $       5.19    $       5.43    $       4.74
                                             ============    ============    ============
</TABLE>

     c). Costs incurred in Oil and Gas Property  Acquisition,  Exploration,  and
     Development Activities are as follows:

                                                   Year Ended June 30,
                                         1996             1995            1994

        Property acquisition costs     $ 22,081         $10,754         $ 34,093
        Development costs               127,500          45,728          143,222
                                       --------         -------         --------
              Total                    $149,581         $56,482         $177,315
                                       ========         =======         ========

     The Company has no  unevaluated  capitalized  costs which are not currently
     subject to depletion.

     d). Results of Operations for Oil and Gas Producing  Activities  (excluding
     corporate overhead and interest costs) are as follows:

                                                  Year Ended June 30,
                                       1996            1995            1994
 
        Oil and gas sales           $1,203,559      $1,304,889       $1,738,741
        Production Costs              (639,271)       (747,003)      (1,104,682)
        Depreciation, depletion 
          and amortization            (431,914)       (544,868)        (619,254)
                                    ----------      ----------       ----------
                                       132,374          13,018           14,805
        Income tax expense                  -               -                -
                                    ----------      ----------       -----------

        Results of operations for
         oil and gas producing 
         activities (excluding    
         corporate overhead and 
         interest costs)            $  132,374      $   13,018       $    14,805
                                    ==========      ==========       ===========
                                 
     e).  Standardized  Measure of Discounted  Future Net Cash Flows and Changes
     Therein Relating to Proved Oil and Gas Reserves (Unaudited) - The following
     table presents a standardized  measure of future net cash inflows  relating
     to proved oil and gas  reserves.  Future  cash  inflows  were  computed  by
     applying  year-end  prices of oil and gas relating to the Company's  proved
     reserves to the estimated  year-end  quantities of those  reserves.  Future
     production   and   development   costs  were  computed  by  estimating  the
     expenditures expected to be incurred in developing and producing the proved
     oil and gas  reserves at the end of the year,  based on year-end  costs and
     assuming  continuation of existing economic  conditions.  Future income tax
     expenses  were  computed  by  applying  year-end  statutory  tax rates with
     consideration of future tax rates already legislated, to the future pre-tax
     net cash flows relating to the Company's proved oil and gas reserves,  less
     the tax basis of the  properties  involved.  The future  income tax expense
     gives effect to tax credits and allowances relating to the Company's proved
     oil and gas reserves.  Because of the imprecise nature of reserve estimates
     and the  unpredictable  nature of the other variables  used,  actual future
     cash inflows may vary  considerably and the  standardized  measure does not
     necessarily  represent  the fair market value of the  company's oil and gas
     reserves.

                                                                            F-19
<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                Year Ended June 30,
                                                                     1996            1995            1994
<S>                                                              <C>             <C>             <C>         
Future cash inflows                                              $ 38,952,790    $ 33,376,800    $ 40,221,450
Future production and development costs                           (17,423,234)    (15,795,180)    (18,754,182)
Future income tax (expense) benefit                                   707,514        (473,342)     (1,646,771)
                                                                 ------------    ------------    ------------

Future net cash flows                                              22,237,070      17,108,278      19,820,497
10% annual discount for estimated timing of cash flows             (9,139,496)     (7,241,460)     (8,901,778)
                                                                 ------------    ------------    ------------
Standardized measure of discounted future net cash flows           13,097,574       9,866,818      10,918,719
at  the end of the year
Standardized measure of discounted future net cash flows            9,866,818      10,918,719      10,974,401
                                                                 ------------    ------------    ------------
at the beginning of the year
      Total change in standardized measure during the year       $  3,230,756    $ (1,051,901)   $    (55,682)
                                                                 ============    ============    ============
</TABLE>

The  following  table sets forth an analysis of changes in the  standardized
measure  of  discounted  future  net  cash  flows  from  proved  oil and gas
reserves:
<TABLE>
<CAPTION>

                                                                                 Year Ended June 30,
                                                                         1996            1995            1994
<S>                                                              <C>             <C>             <C>          
Sales of oil and gas produced, net of production costs           $   (564,290)   $   (557,886)   $   (634,059)
Net changes in price and production costs                           2,198,328         306,084        (706,812)
Extensions, discoveries, and improved recovery, less related
      costs                                                               -         2,118,471         204,643
Development costs incurred during the year                           (127,500)        (45,728)       (143,222)
Revisions of previous quantity estimates                            2,989,749      (3,873,137)        291,731
Accretion of discount                                               1,758,162       2,146,727       2,074,013
Net change in income taxes                                          1,180,856       1,173,428          94,963
Sales of reserves in place                                           (468,513)            -           407,134
Other                                                              (3,736,036)     (2,319,860)     (1,644,073)
                                                                 ------------    ------------    ------------
      Total change in standardized measure during the year       $  3,230,756    $ (1,051,901)   $    (55,682)
                                                                 ============    ============    ============
</TABLE>

                                                                            F-20

<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Average sales price and  production  costs per unit of  production  were as
     follows:
                                                        Year Ended June 30
                                               1996           1995         1994
    Average sales price:

        Crude oil, per barrel               $  17.71       $  16.77     $  14.85
        Natural gas, per thousand 
          cubic feet                            2.06           1.51         1.95
    Average crude oil and gas 
      sales, per equivalent  barrel             4.46          12.98        13.31
    Average production costs, per 
      equivalent barrel                         7.68           7.43         8.46

15.Events Subsequent to Date of Balance Sheet

     a. In August 1996, a 6% convertible  note payable for $45,000 was converted
     to 22,557 shares of the Company's common stock by the note-holder. Upon the
     conversion,  an  additional  226 shares of the  Company's  common stock was
     issued as  consideration  for accrued  interest expense through the date of
     conversion totaling $451.

     b. In August 1996,  various notes which totaled  $87,696 were  converted to
     14,616  shares of the  Company's  common  stock.  Upon the  conversion,  an
     additional  560  shares  of  the  Company's  common  stock  was  issued  as
     consideration  for accrued  interest expense through the date of conversion
     totaling $3,362. This stock was converted under agreements that require the
     Company to pay the difference  between the price of the Company's  stock on
     July 1, 1997 and $6 per share.

     c.  In July  1996,  the  stock  subscription  receivable  of  $856,665  was
     collected in full.

     d. Through  November 18, 1996,  warrants to purchase  231,300 shares of the
     Company's  common stock expired  unexercised.  These included a warrant for
     100,000 shares that was replaced by a 50,000 share warrant which expires in
     February 1998.

     e. On November 22, 1996 the Company  repurchased from Integrated plants and
     related  equipment for $361,415.  The purchase price was netted against the
     net  receivable  due from  Integrated  at June 30, 1996 of  $236,415  which
     resulted in a net payment to Integrated of $125,000.

     f. On November  22, 1996 Jerry Swon  resigned as chairman of the  Company's
     board of  directors.  In  conjunction  with his  resignation,  the board of
     directors  approved a severence payment of six months of his current salary
     totalling $75,000.

16. Business Segments

     The  Company's  operations  are  classified  into  two  principal  industry
     segments:  oil and  gas  exploration  and  production  (oil  and  gas)  and
     locating,  designing,  refurbishing  and installation of gas plants and gas
     processing equipment,  including rentals  (contracting).  Prior to 1996 the
     Company  operated  primarily  in the oil and gas  industry.  Following is a
     summary of segmented information for 1996.
                                                                  1996
     Net sales to unaffiliated customers:

        Oil and gas                                          $  1,203,559
        Contracting                                             9,411,407
        All other segments as reported in 
          the accompanying statement
          of operations                                           213,243
                                                              -----------
                                                              $10,828,209
                                                              ===========
                                                                            
                                                                            F-21
<PAGE>

CONCORD ENERGY INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------


                                                                      1996
Income (loss) from operations:

    Oil and gas                                                  $    132,374
    Contracting                                                    (1,932,348)
    All other segments                                                200,577
                                                                 ------------
                                                                   (1,599,397)

Other income                                                           49,584
Other expenses                                                     (2,671,904)
Management agreement                                               (1,392,000)
Interest expense                                                   (1,199,949)
                                                                 ------------
    Loss before income tax as reported in the accompanying
         statement of operations                                 $ (6,813,666)

Identifiable assets:
    Oil and gas                                                  $  7,812,111
    Contracting                                                     7,652,392
    All other segments                                                    -
                                                                 ------------
                                                                   15,464,503

General corporate assets                                            4,650,488
                                                                 ------------
    Total assets as reported in the accompanying balance sheet   $ 20,114,991
                                                                 ============

Capital expenditures:
    Oil and gas                                                  $    130,365
    Contracting                                                       149,581
    All other segments                                                    -
    Corporate                                                         188,071
                                                                 ------------
         Total capital expenditures                              $    468,017
                                                                 ============

Depreciation, Depletion and Amortization:
    Oil and gas                                                  $    431,914
    Contracting                                                        68,576
    All other segments                                                    -
    Corporate                                                         123,448
                                                                 ------------
         Total depreciation depletion and amortization           $    623,938
                                                                 ============

     In 1996 net sales to two  customers of the  Company's  contracting  segment
     amounted  to  $3,418,778  and  $3,103,783  accounting  for 60% of the total
     revenues of the Company.

     The loss from  operations of the  contracting  segment  includes a lower of
     cost or  market  writedown  of  inventory  of  $3,043,055  and a charge  of
     $521,500 for settlement of claim on a contract completed in a prior year as
     more fully discussed in notes 6 and 9, respectively.