Amended Form 10-QSB/A -- Quarterly or Transitional Report

(Mark One)

     [X]           QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 1996

     [ ]               TRANSITION REPORT UNDER SECTION 13
                      OR 15(d) OF THE EXCHANGE ACT For the
                transition period from ___________ to ___________

                         Commission File Number 0-23814

                           CONCORD ENERGY INCORPORATED
       (Exact name of small business issuer as specified in its charter)

          Delaware                                       22-2670198
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

               75 Claremont Road, Bernardsville, New Jersey 07924
                    (Address of principal executive offices)

                                  908-766-1020
                           (Issuer's telephone number)

              (Former name, former address and former fiscal year,
                         if changed since last report)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act 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 [ ]

     At March  31,  1996,  the  outstanding  common  equity  of  Concord  Energy
Incorporated comprised 4,444,350 shares of common stock, $.0001 par value.

 
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

     The following financial statements are filed as part of this report:

                                                                        Pages
                                                                        -----

Consolidated Balance Sheet (Unaudited),
     March 31, 1996 and 1995                                             F-1

Consolidated Statements of Operations and
     Accumulated Deficit (Unaudited)
     Three and Nine Months Ended March  31, 1996,  and 1995              F-2

Consolidated Statements of Cash Flows (Unaudited),
     Three and Nine Months Ended March 31, 1996,  and 1995               F-3

Notes to Consolidated Financial Statements                            F-4 - F-15



                                       2
<PAGE>



Item 2.  Management's Discussion and Analysis or Plan of Operation.
General Operations

     In  May  1993  the   Registrant   consummated  an  Agreement  and  Plan  of
Reorganization  ("Agreement")  pursuant to which it entered into the oil and gas
industry. Under the Agreement, the Registrant changed its name to Concord Energy
Incorporated  (referred to herein as the  "Company") and became the parent of an
entity which manages and owns interests in  approximately  100 oil and gas wells
primarily  located in East Texas and the Louisiana Gulf Coast. The Company's oil
and gas subsidiary Concord Energy,  Inc.  ("Concord") was formed in June 1991 in
order to effectuate a consolidation of 166 oil and gas  partnerships.  Following
Monoclonal's  acquisition of Concord, the Company changed its fiscal year end to
June 30 in order to coincide  with the fiscal year of its  operating  subsidiary
(Concord).

     In May 1995,  the  Company  acquired  Knight  Equipment  and  Manufacturing
Corporation ("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 Integrated Petroleum System Corporation
("IPS"),  which has developed a unique,  properietary  software which is used to
collect,  process  and  transmit  data  relative  to  petroleum  production  and
processing operations. Results of Operations

     The Company's  revenues are primarily derived from the buying,  selling and
renting of gas processing  equipment.  The Company also realizes revenue through
the sale of oil and gas,  sale of its  software  system as  developed by IPS, as
well as through well operations. During the nine months ended March 31, 1996 the


                                       3
<PAGE>

Company reported total revenues of $9,131,747. Contract revenues during the nine
months  period were  $8,094,810.  Rental  income for the nine months  period was
$88,101.  The  Company's  oil sales during the nine month  period were  $417,475
while gas sales totaled $348,865.  The Company reported revenue from syndication
sales of $140,000, well operating income of $39,902 and software sales of $2,594
during the nine months  period ended March 31, 1996. By  comparison,  during the
nine months period ended March 31, 1995 the Company  reported  total revenues of
$1,504,130, including oil sales of $636,577, gas sales of $351,372, revenue from
syndication sales and revenue interests of $467,075 and well operating income of
$49,106.

     Total revenues  increased by $7,627,617  during the nine months ended March
31, 1996 compared to the nine months period ended March 31, 1995.  This increase
is primarily due to the addition of KEMCO's operations.

         Total costs and operating  expenses  during the nine months ended March
31,  1996 were  $11,983,703.  Cost of  contract  revenue  during  the period was
$5,728,799.  Lease operating  expenses  accounted for $507,641,  during the nine
months  period.  Lease  operating  expenses as a percentage of total oil and gas
sales were approximately 66%. In comparison, during the nine months period ended
March 31,  1995  total  costs and  operating  expenses  were  $2,259,626,  lease
operating expenses were $588,938 and lease operating expenses as a percentage of
oil and gas sales were  approximately  60%.  Total costs and operating  expenses
increased by  $9,724,077,  and lease  operating  expenses  decreased by $81,297,
during the nine  months  period  ended  March 31,  1996 as  compared to the nine


                                       4
<PAGE>

months period ended March 31, 1995, and lease operating expenses as a percentage
of total oil and  gas sales  increased  by  approximately  6%. The  increases in
costs  and  expenses  primarily  relate  to the  inclusion  of  KEMCO's  cost of
operations and the recording of a $3,043,055 inventory  restatement.  This was a
result  of a  retail  market  value  being  recorded  at the  time of the  KEMCO
acquisition  rather  than a  wholesale  value  with the  balance  of the cost of
acquisition  of  KEMCO  being  charged  to  goodwill  as it  should  have  been.
Management has determined  that the allocated costs were in error and has chosen
to take a one time adjustment to more  accurately  reflect the operations of the
Company.

     During  the  nine  months   period   ended  March  31,  1996   general  and
administrative  expenses  were  $2,363,424.  $1,044,000  of such  expenses  were
incurred under the Company's management agreement with its affiliate Integrated.
Other  general and  administrative  expenses,  which  include  KEMCO's and IPS's
administrative  costs as well as  professional  fees and franchise  taxes,  were
$1,319,424,  during the nine months period ended March 31, 1996. During the nine
months  period  ended  March  31,  1995,   the   Company's   total  general  and
administrative  expenses were  $1,298,785,  for which  $1,044,000  were incurred
under the Company's management  agreement with Integrated.  The primary increase
in the Company's  general and  administrative  costs are those  additional costs
associated with KEMCO.

     Depreciation,  depletion and  amortization  expenses during the nine months
period ended March 31, 1996 were  $340,784.  During the nine months period ended
March 31, 1995 these  expenses  were  $371,903.  The  $31,119  decrease in these
expenses  primarily  result  from  the  reduction  in oil  and  gas  production,
partially  offset by the additional  depreciation  related to KEMCO's  property,


                                       5
<PAGE>

plant and equipment and  amortization  of IPS goodwill which totaled $90,000 and
$14,740, respectively for the nine month period ended March 31, 1996.

     Interest  expense  for the nine  months  period  ended  March 31,  1996 was
$704,059.  During the nine months period ended March 31, 1995  interest  expense
was $272,597. The increase of $431,462 is primarily the result of the additional
debt obtained for KEMCO's  inventory  acquisitions and the financing  related to
the KEMCO acquisition.

     For the nine months period ended March 31, 1996 the Company  reported a net
loss of $3,532,241.  For the nine months period ended March 31, 1995 the Company
reported a net loss of $1,022,356.  The increased net loss of $2,509,885 for the
nine months  ended March 31, 1996 as compared to the nine months ended March 31,
1995,  resulted   primarily  from  the  inventory   restatement  of  $3,043,055
previously discussed.

Liquidity and Capital Resources

     As of March 31, 1996 the Company  reported  working  capital of  $5,113,664
compared to a working  capital  deficit of $1,278,211  at March 31, 1995.  Total
current assets  increased by $9,407,342  which is the combination of an increase
in cash  and cash  equivalents  of  $316,714,  an  increase  in  receivables  of
$2,257,772  and  an  increase  in  inventories   and  other  current  assets  of
$6,832,856,  as compared to March 31, 1995. Total current liabilities  increased
from  $1,952,371 as of March 31, 1995 to $4,967,838 as of March 31, 1996,  for a
net increase of $3,015,467.  The combination of the foregoing  resulted in a net
increase in working capital of $6,391,875 from March 31, 1995 to March 31, 1996.


                                       6
<PAGE>

This increase is primarily  related to the  acquisition of KEMCO and the related
long term debt and equity financing

     On July 7, and August 21, 1995 the Company  issued  $500,000 and  $275,000,
respectively,  of convertible notes to private  investors.  In December 1995 the
Company  sold  222,000  shares of common  stock and  realized  net  proceeds  of
$500,000.  On October 4, 1995 the  Company  completed a sale of  properties  for
approximately $461,250.

     On January  31, 1996 the Company  agreed to issue  24,000  shares of common
stock in exchange  for the  retirement  of  approximately  $100,000 of debt.  In
January  1996 the  Company  sold  114,943  shares  of  common  stock to  private
investors  and realized net proceeds of $250,000.  In February  1996 the Company
sold  123,158  shares of common  stock  privately  and  realized net proceeds of
$350,428.  In March  1996 the  Company  sold  175,000  shares  of  common  stock
privately and realized net proceeds of $589,302.  In April 1996 the Company sold
103,800 shares of common stock and realized net proceeds of $298,500.

Capital Expenditures and Commitments

     During the nine months ended March 31, 1996, the Company  incurred  capital
expenditures of $162,762. These capital expenditures were primarily of equipment
and the purchase of and  improvements  to a 6,000 square foot building by KEMCO.
These  improvements  consisted of  renovations  necessary  for  occupancy of the
building which was acquired in November, 1995. The building, located across from
KEMCO's main yard, will be used for KEMCO's  engineering  department.  The total


                                       7
<PAGE>

cost of the  building  and  improvements  will  be  approximately  $75,000.  The
expansion of the  engineering  department  will allow KEMCO to  consolidate  the
engineering  staff and expand to meet the anticipated  future  engineering  work
requirements.



                                       8
<PAGE>

                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        CONCORD ENERGY INCORPORATED
                                        (Registrant)

                                        s\Deral Knight
                                        --------------------------------------
Dated: February 28, 1997                Deral Knight
                                        President, Chief Executive Officer
                                        and Chairman of the Board of Directors

Dated: February 28, 1997                s\Scott Kalish
                                        --------------------------------------
                                        Scott Kalish
                                        Treasurer (Principal Accounting Officer)

                                       9
<PAGE>

Concord Energy Incorporated and Subsidiaries

Consolidated Balance Sheet
--------------------------------------------------------------------------------

                                                   (Unaudited)     (Unaudited)
                                                     March 31        March 31
                                                       1996            1995
                                                   ------------    ------------
Assets

Current assets
   Cash and cash equivalents                       $    432,494    $    115,780
   Costs and estimated earnings in excess
        of billings on uncompleted contracts            363,937            --
   Accounts receivable, net of allowance for
       doubtful accounts of $67,490 and $0            1,555,707         205,377
   Receivable from stockholder                          106,636            --
   Receivable due from affiliated company               789,872         353,003
   Inventories                                        6,743,501            --
   Prepaid expenses and other assets                     89,355            --
                                                   ------------    ------------
       Total current assets                          10,081,502         674,160

Property, plant and equipment, net                    8,547,141       8,548,874
Goodwill, net                                         2,638,468            --
Bond issuance costs, net                                494,649         222,258
Other assets                                             50,012       2,125,000
                                                   ------------    ------------
       Total assets                                $ 21,811,772    $ 11,570,292
                                                   ============    ============


Liabilities and Stockholders' Equity

Current liabilities
   Current portion of long-term debt               $  1,768,750    $  1,468,750
   Accounts payable                                   1,843,688         282,794
   Accrued expenses                                   1,233,118         200,827
   Payable due to Integrated, net                          --              --
   Federal  income taxes payable                        122,282            --
                                                   ------------    ------------
       Total current liabilities                      4,967,838       1,952,371

Long term liabilities
  Notes payable                                       6,193,362       1,813,000
  Capital lease obligations                              46,673            --
                                                   ------------    ------------
     Total Long term liabilities                      6,240,035       1,813,000
                                                   ------------    ------------

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,  4,444,350 and 2,292,854
    (post-split) shares issued and outstanding              444           1,111
   Paid-In capital                                   18,437,091      11,546,768
   Accumulated deficit                               (7,833,636)     (3,742,958)
                                                   ------------    ------------
       Total stockholders' equity                    10,603,899       7,804,921
                                                   ------------    ------------
       Total liabilities and stockholders' equity  $ 21,811,772    $ 11,570,292
                                                   ============    ============


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

                                      F - 1


<PAGE>

Concord Energy Incorporated and Subsidiaries

Consolidated Statement of Operations
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                              (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
                                             Quarter Ended    Nine-Months    Quarter Ended    Nine-Months
                                               March 31,       March 31,       March 31,       March 31,
                                                 1996            1996            1995            1995
<S>                                          <C>             <C>             <C>             <C>         
Revenue

  Oil sales                                  $    140,397    $    417,475    $    217,636    $    636,577
  Gas sales                                       168,565         348,865         102,161         351,372
                                             ------------    ------------    ------------    ------------
     Total oil and gas sales                      308,962         766,340         319,797         987,949

  Contract revenue                              2,340,260       8,094,810            --              --
  Share of syndication sales and
   revenue interests                                 --           140,000         243,125         467,075
  Well operating income                            13,916          39,902          16,925          49,106
  Rental income                                    37,367          88,101            --              --
  Software Sales                                    2,594           2,594            --              --
                                             ------------    ------------    ------------    ------------
     Total revenue                              2,703,099       9,131,747         579,847       1,504,130
                                             ------------    ------------    ------------    ------------

Costs and Operating Expenses
  Lease operating                                 138,359         507,641         207,540         588,938
  Cost of contract revenue                      1,524,131       5,728,799            --              --
   Inventory - adjustment to lower
    of cost or market                                --         3,043,055            --              --
  General and administrative:
      Management agreement                        348,000       1,044,000         348,000       1,044,000
      Other expenses                              579,084       1,319,424          96,430         254,785
  Depreciation, depletion and amortization         69,740         340,784         123,694         371,903
                                             ------------    ------------    ------------    ------------
      Total costs and operating expenses        2,659,314      11,983,703         775,664       2,259,626
                                             ------------    ------------    ------------    ------------
     Income (Loss) from Operations                 43,785      (2,851,956)       (195,817)       (755,496)
                                             ------------    ------------    ------------    ------------
Other income (expense)
  Other  income                                     1,778          23,774           2,583           5,737
  Interest expense                                (43,916)       (704,059)       (138,168)       (272,597)
                                             ------------    ------------    ------------    ------------
                                                  (42,138)       (680,285)       (135,585)       (266,860)
                                             ------------    ------------    ------------    ------------
     Income (Loss) before income taxes              1,647      (3,532,241)       (331,402)     (1,022,356)
                                             ------------    ------------    ------------    ------------
          Income tax expense                         --              --              --              --
                                             ------------    ------------    ------------    ------------
     Net Income (Loss)                       $      1,647    $ (3,532,241)   $   (331,402)   $ (1,022,356)
                                             ============    ============    ============    ============
Accumulated deficit, beginning of period       (7,835,283)     (4,301,395)     (3,411,556)     (2,720,602)
                                             ============    ============    ============    ============
Accumulated deficit, end of period           $ (7,833,636)   $ (7,833,636)   $ (3,742,958)   $ (3,742,958)
                                             ============    ============    ============    ============
     Income (Loss) per share                 $       0.00    $      (0.79)   $      (0.07)   $      (0.23)
                                             ============    ============    ============    ============
</TABLE>

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

                                      F - 2
<PAGE>

Concord Energy Incorporated and Subsidiaries

Consolidated Statement of Cash Flows
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                (Unaudited)      (Unaudited)        (Unaudited)      (Unaudited)
                                                               Quarter Ended   Nine-Months Ended   Quarter Ended   Nine-Months Ended
                                                                 March 31          March 31          March 31          March 31    
                                                                   1996              1996              1995              1995
<S>                                                            <C>               <C>               <C>               <C>         
Cash flows from operating activities                                                                               
   Net Income (loss)                                           $     1,647       $(3,532,241)      $  (331,402)      $(1,022,356)
   Adjustments to reconcile net income/loss to net cash                                                            
     (used in) provided by operating activities:                                                                   
     Depreciation, depletion and amortization                       69,740           340,784           123,694           371,903
     Other noncash transactions                                        519         3,043,055                       
     Decrease (Increase)  in assets:                                                                               
        Accounts receivable                                       (415,071)         (859,150)           57,323            91,617
        Costs and estimated earning in excess                                                                      
             of billings on uncompleted contracts                  369,092           194,924              --                --
        Receivable From Joint Venture                             (150,240)                                        
        Receivable due from Stockholder                              8,441            (3,017)             --       
        Receivable due from affiliated company                    (789,872)         (773,935)         (121,948)           11,542
        Inventories                                                320,830        (1,333,931)             --                --
        Other assets and liabilities                                37,940           (17,648)             --                --
     (Decrease)  Increase  in liabilities                                                                          
        Accounts payable                                           141,725         1,030,154           (24,709)          (40,022)
        Accrued expenses                                          (432,836)          686,875            54,566            70,729
        Federal income tax payable                                   8,333             2,184              --                --
        Receivable due from/payable due to Integrated, net        (259,052)         (594,685)             --                --
                                                               -----------       -----------       -----------       -----------
                                                                                                                   
         Net cash provided by (used in) operating activities      (938,564)       (1,816,631)         (242,476)         (666,827)
                                                               -----------       -----------       -----------       -----------
Cash flows from investing activities                                                                               
     Purchase of propery, plant ,  oil and gas equipment,                                                          
       well workovers  and recompletions                          (111,568)         (162,762)           (9,709)          (80,902)
     Acquisition of business, net of cash acquired                (897,280)         (897,280)         (500,000)         (500,000)
     Sale of oil and gas interests                                    --             477,332              --              16,082
     Investment in Joint Venture                                      --                --                --          (1,625,000)
                                                               -----------       -----------       -----------       -----------
                                                                                                                   
         Net cash (used in) provided by investing activities    (1,008,848)         (582,710)         (509,709)       (2,189,820)
                                                               -----------       -----------       -----------       -----------
Cash flows from financing activities                                                                               
      Net proceeds from bonds payable                                 --                --             275,000         2,228,242
      Net proceeds from note payable                             1,054,000         1,879,000          (425,000)          275,000
      Net proceeds from issuance of common stock                      --                --                --             250,000
      Net proceeds from sale of common stock                     1,189,730         1,689,730              --             313,000
      Net decrease in notes payable                                (93,938)         (994,683)          (68,750)         (160,417)
                                                               -----------       -----------       -----------       -----------
        Net cash flows provided by (used in)                                                                       
           financing activities                                  2,149,792         2,574,047          (218,750)        2,905,825
                                                               -----------       -----------       -----------       -----------
Net increase (decrease) in cash and cash equivalents               202,380           174,706          (970,935)           49,179
                                                               -----------       -----------       -----------       -----------
Cash and cash equivalents at beginning of period                   230,114           257,788         1,086,715            66,601
                                                               -----------       -----------       -----------       -----------
Cash and cash equivalents at end of period                     $   432,494       $   432,494       $   115,780       $   115,780
                                                               ===========       ===========       ===========       ===========
</TABLE>

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

                                      F - 3
<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 exploration and
production  company which also locates,  designs,  refurbishes  and installs gas
plants and gas  processing  equipment for customers in the natural gas industry.
The Company also 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,
analyze and  transmit  data  relative to  petroleum  production  and  processing
operations.  The  Company is  headquartered  in  Bernardsville,  New Jersey with
substantially  all of its oil and gas operations in East Texas and the Louisiana
Gulf Coast. The Company's  wholly-owned  subsidiaries,  Concord Operating,  Inc.
("COI"),   Knight  Equipment  and  Manufacturing   Corporation  ("KEMCO"),   and
Integrated Petroleum Systems Corporation ("IPS") are located in Houston,  Texas,
Jourdanton, Texas, and Denver, Colorado, respectively.

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,  Integrated continues to provide certain management and administrative
services to the Company pursuant to a management  agreement  between the Company
and  Integrated.  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.,  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.  Historical  stockholders  equity has been  retroactively
restated for all periods  presented in the accompanying  consolidated  financial



                                      F-4
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

statements  to  account  for the  equivalent  number of shares  received  in the
acquisition totaling 11,111,660 shares, after giving effect to the difference in
par value of  Concord  Energy,  Inc.  and MITI  stock with the offset to paid-in
capital. Costs incurred in connection with the recapitalization totaling $45,000
were recorded as a reduction in paid-in capital during 1993.

In  December  1995,  the  company  effectuated  a 1 for 5  reverse  split of its
outstanding stock.

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., and
Knight Equipment & Manufacturing  Corporation and its wholly-owned subsidiary, K
& S Engineering, Inc. All significant intercompany accounts and transactions are
eliminated in consolidation.

Cash equivalents

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

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


                                      F-5
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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  expenses 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 charges 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 charges
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.

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.



                                      F-6
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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  budgeted  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 represent an asset based on revenues
recognized in excess of amounts billed to customers. Billings in excess of costs
and earnings on uncompleted  contracts are recorded as a liability and represent
contracts for which billings to date exceed cumulative revenues recognized based
on the percentage of completion method.

Syndication sales

Under an agreement between the company and Integrated (see Note 12), the Company
is entitled to receive 20% of all sales made by Integrated of syndicated  retail
partnerships. This revenue is 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, 1995, there
are  no  significant   future  minimum   rentals  to  be  received  under  these
noncancelable operating leases.

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 of amounts of the
Company's assets and liabilities for tax and financial  reporting purposes using
enacted tax rates in effect for



                                      F-7
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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 income (loss) per share

Net loss per share of common  stock is based upon the number of shares of common
stock outstanding  (4,444,350) . The Company's common stock  equivalents,  which
consist of outstanding  warrants to purchase the Company's common stock, are not
considered in the net income (loss) per share  calculation since their effect is
anti-dilutive.

3. Business Combinations

On May 7, 1995, the company acquired all of the issued and outstanding shares of
the common stock of KEMCO for $7,000,000 in a business combination accounted for
under the  purchase  method of  accounting.  The  acquisition  was  financed  by
issuance of 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 financing totaling  approximately  $3,700,000
and the net proceeds from the issuance of 260,000 shares of the Company's common
stock totaling  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.

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 $14,740 is recorded as of March 31,
1996.



                                      F-8
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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 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.

5. Property, Plant and Equipment, Net

Significant  components  comprising  property,  plant and  equipment at March 31
include the following:

                                                      1996            1995

     Oil & gas properties:
         Leasehold costs                      $  6,806,177    $  7,378,124
         Lease well & equipment                  1,944,882       1,944,882
         Intangibles                             1,904,925       1,904,925
         Property, plant & equipment               945,431         942,820
         Other                                      58,551          58,551
                                              ------------    ------------
                                                11,659,966      12,229,302
                                              ------------    ------------

     Other property, plant & equipment
         Land                                      159,913            --
         Buildings & improvements                  374,719            --
         Machinery & equipment                     234,921            --
         Vehicles                                  218,769            --
         Furniture, fixtures & software            163,633          53,016
                                              ------------    ------------
                                                 1,151,955          53,016
                                              ------------    ------------
     Accumulated depreciation,
     depletion and amortization                 (4,264,780)     (3,733,444)
                                              ------------    ------------
     Property, plant and equipment, net       $  8,547,141    $  8,548,874
                                              ------------    ------------



                                      F-9
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

Depreciation,  depletion  and  amortization  of  oil  and  gas  properties,  and
depreciation of other property,  plant and equipment for the periods ended March
31 is as follows:

                                                       1996            1995

     Oil and gas properties                        $236,044        $371,281
     Other property, plant
     and equipment                                   90,000             621
                                                   --------        --------
                                                   $326,044        $372,102
                                                   --------        --------

6. Debt and Capital Lease Obligations

Debt

Long-term debt includes the following at March 31:

                                                                 1996

Bond payable, dated May 1995, with interest at 10%
per annum, requiring 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 shares to the lender.                                    $2,920,000

Secured notes payable, dated December 1994, with a
face value of $2,500,000 issued at $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.                        1,760,263



                                      F-10
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

Secured notes payable, dated September 1994, with
a face value of $1,400,000 issued at a $604,500
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.                                              708,787

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 1996.
Approximately $530,000 of the notes at September
30, 1995 are secured by a personal guarantee from
Jerry Swon, the Chief Executive Officer of the
Company, who is also a shareholder of the Company.                 270,000

In July, 1995 issued $500,000 of 12% convertible
notes. Upon maturity, or any time prior thereto,
each $250,000 portion of the obligation is
convertible into additional shares of common
stock. The notes mature, one half each July 7,
1996 and August 7, 1996, respectively.                             500,000

On August 21, 1995, the Company issued $275,000 of
12% convertible notes. Upon maturity, or any time
prior thereto, the obligation is convertible into
additional shares of common stock. The note
matures on August 21, 1996.                                        275,000



                                      F-11
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

Unsecured notes payable, originally in the amount
of $450,000 bearing interest at 7% to 7.5% per
annum. Principal and interest are due at various
dates through fiscal 1996.                                         450,000

12% convertible notes, dated October 1994,
convertible at maturity into shares of Company's
common stock. $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 consideration for accrued interest expense
through the date of conversion totaling $15,000.
The remainder of the notes mature in October 1996.
The notes are secured by certain oil and gas
property owned by the Company.                                     125,000

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

Various convertible notes payable assumed from IPS
which have interest rates of 10% to 12%.                           123,062

Various notes payable assumed from IPS which have
interest rates of 4.5% to 10%.                                     230,000
                                                                ----------

Total debt outstanding                                           7,962,112

Less: current portion                                            1,768,750

Long-term debt                                                  $6,193,362
                                                                ----------

                                      F-12
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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 in December 1997, discounted at an interest rate of 16%.

Capital lease obligations as of March 31, 1996 consist of the following:

     Total future minimum lease payments due
     in fiscal 1998                                  $67,106
     Less: amounts representing interest              20,433
                                                     -------
                                                    
     Present value of minimum lease payments         $46,673
                                                     -------
                                              

7. Commitments and Contingencies

Minimum Rental Commitments

The Company has several  noncancelable  operating  leases,  primarily for office
equipment,  that expire over the next five years. These leases generally contain
renewal  options  for periods  ranging  from three to five years and require the
Company to pay all executory costs such as maintenance and insurance.

8. Transactions with Related Parties

Related Party Ownership Interests

Integrated  and  Tucker,  which  are owned by an  officer  and  director  of the
Company, own 1.36% and 1.30%, respectively,  of the Company's common stock as of
March 31, 1996.  Additionally,  certain  officers and  directors of the Company,
together with Integrated own or control 19.60% of the Company's  common stock as
of March 31, 1996.

Receivables from Related Parties/Affiliated Company

Integrated and the Company have an agreement by which the associated receivables
and payables may be netted.  At March 31, 1996, the Company has a net receivable
due from  Integrated  of  $789,872.  At March 31,  1995,  the  Company had a net
receivable  due from  Integrated of $353,003.  


                                      F-13
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

At March 31, 1996 The Company  finalized  a sale of gas  processing  and related
equipment to Integrated  for $550,000,  which is included in the net  receivable
balance as of March 31, 1996. The Company's profit on the sale of these items is
approximately $250,000.

As part of its ongoing  operations,  the Company conducts business with Atascosa
Electric  Services  ("AES"),  an entity which is owned and  controlled  by Deral
Knight,  the president of KEMCO,  who is also a stockholder  of the Company.  At
March 31, 1996, the receivable due from stockholder  (Deral Knight) and due from
affiliated company (AES) were $106,636 and $0, 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  shares to the
extent  that  Deral  Knight  owed  money  to  the  Company  at  June  30,  1995.
Accordingly,  in  liquidation of the receivable  balance,  approximately  17,062
shares of Company  common  stock  issued to Deral Knight as part of the purchase
price of his KEMCO stock have been returned to the Company.

Notes Payable to Stockholders

Notes payable to  stockholders  bear interest at rates ranging from 5 to 12% per
annum which are  generally  payable in monthly  installments  through  maturity.
Interest  expense  incurred on these notes  during  fiscal  1995,  1994 and 1993
totals $42,661, $67,892 and $74,029,  respectively.  The notes mature at various
dates through  August 1996.  Approximately  $50,000 of the notes at December 31,
1995 are secured by future production of approximately 75,000 equivalent barrels
of oil.

Management Agreement

The Company and  Integrated  have  entered into an  agreement  (the  "Management
Agreement")   that   requires   Integrated   to  provide   certain   management,
administrative and accounting  services to the Company and certain  subsidiaries
for $116,000 per month  through  June 30, 1996,  subject to automatic  extension
under certain  circumstances.  The services  provided by Integrated  include 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 is 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 



                                      F-14
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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 reduction of the  Company's
full-cost oil and gas properties  pool.  During the periods ended March 31, 1995
and 1996 the Company recorded income from Integrated as follows:

                                                1996            1995

Syndication income                            $140,000        $459,000
Revenue interest income                           --              --
Management fee income                             --             8,075
                                              --------        --------
                                              $140,000        $467,075
                                              --------        --------

Other Related Party Transactions

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

9. Events Subsequent to Date of Balance Sheet

On April 3, 1996 the  Company  sold  103,800  shares of common  stock in private
transactions and realized net proceeds of $298,500.

On April 29, 1996 the Company  completed a private placement of convertible debt
and realized  net proceeds of $179,000.  The face amount of the debt is $200,000
with a 3-year maturity and a 6% annual interest rate, payable quarterly.

On May 10, 1996 the Company  received a  confirmation  from a  convertible  note
holder to the effect that it had elected to convert its $275,000  note to common
stock at $3.00 per share.

                                      F-15