Amended Form 10-QSB -- 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 September 30, 1995

   [ ]                 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 September 30, 1995, the outstanding common equity of Concord Energy
Incorporated comprised 15,521,122 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),
     September 30, 1995 and 1994                                        F-1

Consolidated Statements of Operations and
     Accumulated Deficit (Unaudited)
     Three Months Ended September 30, 1995,  1994 and 1993              F-2

Consolidated Statements of Cash Flows (Unaudited),
     Three Months Ended September 30, 1995, 1994 and 1993               F-3

Notes to Consolidated Financial Statements                           F-4 - F-14

                                       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  125 oil and gas wells
primarily located in East Texas and the Louisiana Gulf Coast.  Concord's oil and
gas subsidiary 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  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. 

Results of Operations

     The Company's revenues are primarily  generated through the sale of oil and
gas.  The  Company  also  realizes  revenue  through  syndication  sales  by its
affiliate Integrated Energy Incorporated ("Integrated") and revenue interests in
such  syndications as well as through well  operations.  During the three months
ended  September 30, 1995 the Company  reported total income from  operations of
$3,160,628.  Contract  revenues  during the three month period were  $2,781,384.
Rental income for during the three month period were  $34,447.  Oil sales during


                                       3
<PAGE>

the three month  period  were  $155,643  while gas sales  totaled  $94,837.  The
Company reported  revenue from syndication  sales and revenue interest income of
$80,000 and well operating income of $14,317 during the three month period ended
September 30, 1995. By comparison, during the three month period ended September
30, 1994 the Company  reported  total income from  operations  of  approximately
$485,624,  oil sales of  $192,592  and,  gas  sales of  $133,524,  revenue  from
syndication sales and revenue interests of $143,950 and well operating income of
$15,558.

     Total  revenues  increased  by  $2,675,004  during the three  months  ended
September 30, 1995 compared to the three month period ended  September 30, 1994.
This increase is primarily due to the addition of KEMCO's operations.

     Total costs and expenses  during the three months ended  September 30, 1995
were  $5,725,108.  Cost of contract  revenue during the period were  $1,573,934.
Lease operating expenses accounted for $218,717,  during the three month period.
Lease  operating  expenses  as a  percentage  of total  oil and gas  sales  were
approximately 87%. In comparison,  during three month period ended September 30,
1994 total costs and expenses  were  $696,186,  lease  operating  expenses  were
$179,871 and lease operating  expenses as a percentage of oil and gas sales were
approximately 55%.  Total costs and expenses increased by $5,028,922,  and lease
operating  expenses  increased  by $38,846,  during the three month period ended
September  30, 1995 as compared to the three month  period ended  September  30,
1994,  and lease  operating  expenses as a percentage of total oil and gas sales
increased by approximately  22%.  The increases in costs and expenses  primarily
relates 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


                                       4
<PAGE>

being booked at the time of the KEMCO acquisition  rather than a wholesale value
with the  balance of the cost of  acquisition  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 three  month  period  ended  September  30,  1995  general  and
administrative  expenses were $748,358.  $348,000 of such expenses were incurred
under the Company's  management agreement with its affiliate  Integrated.  Other
general and administrative  expenses, which include KEMCO's administrative costs
as well as  professional  fees and franchise  taxes,  were $400,358,  during the
three month period ended September 30, 1995. During the three month period ended
September 30, 1994, the Company's total general and administrative expenses were
$400,180. $348,000 of such expenses 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 three month
period ended  September  30, 1995 were  $141,044.  During the three month period
ended September 30, 1994 these expenses were $116,135.  The $24,909  increase in
these  expenses  primarily  result from the additional  depreciation  related to
KEMCO's  property,  plant and equipment  which total $30,000 for the three month
period ended September 30, 1995.

     Interest  expense for the three month period ended  September  30, 1995 was
$348,096.  During the three month period ended September 30, 1994 these expenses


                                       5
<PAGE>

were  $37,751.  The  increase of $310,345 is the result of the  additional  debt
obtained for KEMCO's  inventory  acquisitions  and the financing  related to the
KEMCO acquisition.

     For the three month period ended September 30, 1995 the Company  reported a
net loss of $2,906,268.  For the three month period ended September 30, 1994 the
Company  reported a net loss of $247,119.  The  increased net loss of $2,659,149
for the three months  ending  September 30, 1995 as compared to the three months
ending September 30, 1994, resulted primilary from the inventory  restatement of
$3,043,055 previously discussed.

Liquidity and Capital Resources

     As of September 30, 1995 the Company reported working capital of $3,843,101
compared to working  capital of $219,299 at September  30, 1994.  Total  current
assets  increased by $7,533,196  which is the combination of an increase in cash
and cash  equivalents  of $282,680 and an increase in  receivables of $1,251,990
and an  increase in  inventories  and other  current  assets of  $5,998,526,  as
compared to  September  30,  1994.  Total  current  liabilities  increased  from
$752,537 as of September 30, 1994 to $4,661,931 as of September 30, 1995,  for a
net increase of $3,909,394.  The combination of the foregoing  resulted in a net
increase in working  capital of $3,623,802  from September 30, 1994 to September
30, 1995. 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. During the three month


                                       6
<PAGE>

period ending  September 30, 1995 the Company made  principal  payments of notes
payable Totaling $693,750.

     On October 4, 1995 the Company completed a sale of properties for which the
Company will realize net proceeds of approximately $450,000. A majority of these
funds  will be used to meet the  obligations  represented  by the notes  payable
associated with the KEMCO acquisition. 

Capital Expenditures and Commitments

     During the three months ended  September  30,  1995,  the Company  incurred
capital expenditures of $37,601.  These capital expenditures consisted primarily
of equipment purchases by KEMCO.



                                       7
<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: December 16, 1995                Deral Knight
                                        President, Chief Executive Officer
                                        and Chairman of the Board of Directors



Dated: December 16, 1995                s\Scott Kalish
                                        ----------------------------------------
                                        Scott Kalish
                                        Treasurer (Principal Accounting Officer)





                                       8
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

<TABLE>
<CAPTION>
                                                                             (Unaudited)    (Unaudited)
                                                                            September 30,   September 30,
                                                                                1995            1994
<S>                                                                         <C>             <C>         
Assets

Current assets
   Cash and cash equivalents                                                $    791,027    $    508,347
   Costs and estimated earnings in excess
       of billings on uncompleted contracts                                      787,979            --
   Accounts receivable, net of allowance for
       doubtful accounts of $67,490 and $0                                       811,898         255,352
   Receivable due from Integrated                                                   --           208,137
   Receivable from stockholder                                                   115,602            --
   Receivable due from affiliated company                                           --              --
   Inventories                                                                 5,842,350            --
   Prepaid expenses and other assets                                             156,176            --
                                                                            ------------    ------------

       Total current assets                                                    8,505,032         971,836

Property, plant and equipment, net                                             9,029,312       8,728,359
Bond issuance costs, net                                                         494,649          70,000
Other assets                                                                      50,000            --
                                                                            ------------    ------------

       Total assets                                                         $ 18,078,993    $  9,770,195
                                                                            ============    ============


Liabilities and Stockholders' Equity
Current liabilities
   Current portion of notes payable to stockholders                         $    325,000    $    343,749
   Current portion of long-term debt                                           1,200,000            --
   Accounts payable                                                            1,196,106         329,548
   Accrued expenses                                                            1,375,882          79,240
   Payable due to Integrated, net                                                428,107            --
   Federal  income taxes payable                                                 136,836            --
                                                                            ------------    ------------

       Total current liabilities                                               4,661,931         752,537

Long term liabilities
  Notes payable to stockholders                                                     --            50,000
  Notes payable                                                                5,641,174         700,500
  Capital lease obligations                                                       46,673            --
                                                                            ------------    ------------

     Total Long term liabilities                                               5,687,847         750,500
                                                                            ------------    ------------

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,  15,521,122 and 11,111,660 shares issued and outstanding          1,552           1,111
   Paid-In capital                                                            14,935,326      11,233,768
   Accumulated deficit                                                        (7,207,663)     (2,967,721)
                                                                            ------------    ------------

       Total stockholders' equity                                              7,729,215       8,267,158
                                                                            ------------    ------------

       Total liabilities and stockholders' equity                           $ 18,078,993    $  9,770,195
                                                                            ============    ============
</TABLE>



                   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)  
                                                     Quarter Ended       Quarter Ended
                                                     September 30,       September 30,
                                                         1995                1994
<S>                                                   <C>                 <C>        
Revenue                                                                 
  Oil sales                                           $   155,643         $   192,592
  Gas sales                                                94,837             133,524
                                                      -----------         -----------
                                                                        
     Total oil and gas sales                              250,480             326,116
                                                                        
  Contract revenue                                      2,781,384                --
  Syndication sales and revenue interests                  80,000             143,950
  Well operating income                                    14,317              15,558
  Rental income                                            34,447                --
                                                      -----------         -----------
                                                                        
     Total revenue                                      3,160,628             485,624
                                                      -----------         -----------
                                                                        
                                                                        
Costs and Operating Expenses                                            
  Lease operating                                         218,717             179,871
  Cost of contract revenue                              1,573,934                --
  Inventory - adjustment to lower of cost or market     3,043,055                --
  General and administrative:                                           
      Management agreement                                348,000             348,000
      Other expenses                                      400,358              52,180
  Depreciation, depletion and amortization                141,044             116,135
                                                      -----------         -----------
                                                                        
      Total costs and operating expenses                5,725,108             696,186
                                                      -----------         -----------
                                                                        
     Income (Loss) from Operations                     (2,564,480)           (210,562)
                                                      -----------         -----------
                                                                        
Other income (expense)                                                  
  Other  income                                             6,308               1,194
  Interest expense                                       (348,096)            (37,751)
                                                      -----------         -----------
                                                                        
                                                         (341,788)            (36,557)
                                                      -----------         -----------
                                                                        
     Income (Loss) before income taxes                 (2,906,268)           (247,119)
                                                      -----------         -----------
                                                                        
          Income tax expense                                 --                  --
                                                      -----------         -----------
                                                                        
     Net Income (Loss)                                $(2,906,268)        $  (247,119)
                                                      ===========         ===========
                                                                        
Accumulated deficit, beginning of period               (4,301,395)         (2,720,602)
                                                      ===========         ===========
                                                                        
Accumulated deficit, end of period                    $(7,207,663)        $(2,967,721)
                                                      ===========         ===========
                                                                        
     Income (Loss) per share                          $     (0.19)        $     (0.02)
                                                      ===========         ===========
</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)
                                                               Quarter Ended       Quarter Ended
                                                               September 30,       September 30,
                                                                   1995                1994
<S>                                                            <C>                 <C>         
Cash flows from operating activities
   Net Income (loss)                                           $(2,906,268)        $  (247,119)
   Adjustments to reconcile net income/loss to net cash
     (used in) provided by operating activities:
     Depreciation, depletion and amortization                      141,044             116,135
     Other noncash transactions                                  3,043,055
     Decrease (Increase)  in assets:
        Accounts receivable                                       (115,340)             41,642
        Costs and estimated earning in excess
             of billings on uncompleted contracts                 (326,327)               --
        Receivable due from Stockholder                            (11,983)               --
        Receivable due from affiliated company                      15,937                --
        Inventories                                               (432,780)               --
        Deferred taxes                                              22,006                --
        Other assets and liabilities                               (77,327)            (63,832)
     (Decrease)  Increase  in liabilities
        Accounts payable                                           337,571              12,733
        Accrued expenses                                           846,264             (35,858)
        Federal income tax payable                                  16,738                --
        Franchise tax payable                                       25,000             (21,000)
        Receivable due from/payable due to Integrated, net        (166,578)               --
        Interest payable to stockholders                             3,375                --
                                                               -----------         -----------


         Net cash provided by (used in) operating activities       414,388            (197,299)
                                                               -----------         -----------

Cash flows from investing activities
     Purchase of propery, plant ,  oil and gas equipment,
       well workovers  and recompletions                            37,601              (4,619)
     Sale of oil and gas interests                                    --                16,082
                                                               -----------         -----------


         Net cash (used in) provided by investing activities        37,601              11,463
                                                               -----------         -----------

Cash flows from financing activities
      Proceeds from bonds payable                                     --               700,500
      Net proceeds from note payable                               775,000                --
      Principal payment of notes payable                          (693,750)            (72,918)
                                                               -----------         -----------

        Net cash flows provided by (used in)
           financing activities                                     81,250             627,582
                                                               -----------         -----------

Net increase (decrease) in cash and cash equivalents               533,238             441,746
                                                               -----------         -----------

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

Cash and cash equivalents at end of period                     $   791,027         $   508,347
                                                               ===========         ===========
</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 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.  The Company
is headquartered in Bernardsville,  New Jersey with substantially all of its oil
and gas  operations  in East  Texas and  Louisiana  Gulf  Coast.  The  Company's
wholly-owned subsidiaries,  Concord Operating, Inc. ("COI") and Knight Equipment
and  Manufacturing  Corporation  ("KEMCO")  are  located in  Houston,  Texas and
Jourdanton, Texas, 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
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


                                     F - 4
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

paid-in capital. Costs incurred in connection with the recapitalization totaling
$45,000 were recorded as a reduction in paid-in capital during 1993.


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
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.

                                     F - 5
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

Other  property,  plant and  equipment  is  recorded  at lost  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.

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.

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 earning 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



                                     F - 6
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

represents  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  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  (15,521,122 in fiscal 1996 and 11,111,650 in
both  fiscal 1995 and 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 Combination

On May 7, 1995, the company acquired all of the issued and outstanding shares of
commons stock of KEMCO for  $7,000,000 in a business  combination  accounted for
under the purchase method of accounting.  The  acquisition was financed  through
2,000,000  shares  of the  Company's  commons  stock  and  $4,500,000  in  cash.
Financing  for the cash  portion of the purchase  price was  obtained  primarily



                                     F - 7
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

through the net proceeds from debt financing totaling  approximately  $3,700,000
and the net  proceeds  from the issuance of  1,300,000  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.


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.


5.   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 sale 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 quarter ended  September
30, 1995.


5.   Property, Plant and Equipment, Net

Significant components comprising property,  plant and equipment at September 30
include the following:


                                     F - 8
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Concord Energy Incorporated and Subsidiaries

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

                                                      1995              1994

Oil & gas properties:
         Leasehold costs                         $  7,368,416      $  7,368,416
         Lease well & equipment                     1,944,882         1,944,882
         Intangibles                                1,904,925         1,904,925
         Property, plant & equipment                  945,431           913,407
         Other                                         58,551            22,630
                                                 ------------      ------------
                                                   12,222,205        12,154,260
                                                 ------------      ------------

Other property, plant & equipment
         Land                                         159,913              --
         Buildings & improvements                     239,675              --
         Machinery & equipment                        186,820              --
         Vehicles                                     218,769              --
         Furniture, fixtures & software                81,710            53,016
                                                 ------------      ------------
                                                      886,887            53,016
                                                 ------------      ------------

Accumulated depreciation,
depletion and amortization                         (4,079,780)       (3,478,917)
                                                 ------------      ------------

Property, plant and equipment, net               $  9,029,312      $  8,728,359
                                                 ------------      ------------


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

                                          1995               1994

Oil and gas properties                  $111,044           $115,514
Other property, plant
and equipment                             30,000                621
                                        --------           --------

                                        $141,044           $116,135



6.   Debt and Capital Lease Obligations

Debt

Long-term debt includes the following at September 30:


                                     F - 9
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Concord Energy Incorporated and Subsidiaries

Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------
                                                               1995

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 450,000 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.
                                                             1,762,387

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 1995.
Approximately $500,000 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.             500,000


                                     F - 10
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Concord Energy Incorporated and Subsidiaries

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

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 at $1.00 per
shares. The note matures on August 21, 1996.                   275,000

Unsecured note payable, originally in the amount
of $300,000 bearing interest at 7% per annum.
Principal and interest are due at various dates
through fiscal 1996.                                            50,000

12% convertible notes, dated October 1994,
convertible at maturity into shares of Company's
common stock at $1 per share. During 1995,
$125,000 of these notes matured and were converted
into 125,000 shares of the Company's common stock.
Upon the conversion, an additional 15,000 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
                                                            ----------

Total debt outstanding                                       6,841,174

Less: current portion                                        1,200,000
                                                            ----------

Long-term debt                                              $5,641,174
                                                            ----------


As of September 30, 1995,  maturities  and scheduled  payments for the next five
fiscal years and thereafter are: $1,200,000 in 1996; $3,695,000 in 1997; and the
remainder after fiscal year 2001.



                                     F - 11
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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 September 30, 1995 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 1.81% and 1.73%, respectively,  of the Company's common stock as of
September 30, 1995. Additionally, certain officers and directors of the Company,
together with Integrated own or control 26.03% of the Company's  common stock as
of September 30, 1995.

Receivables from Related Parties/Affiliated Company

Integrated and the Company have an agreement by which the associated receivables
and payables may be netted. At September 30, 1995, the Company has a net payable
due to  Integrated  of $428,107.  At September  30, 1994,  the Company had a net
receivable due from Integrated of $208,137.



                                     F - 12
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Concord Energy Incorporated and Subsidiaries

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

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
September 30, 1995, the receivable due from  stockholder  (Deral Knight) and due
from affiliated company (AES) were $115,602 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 $1.25 per  shares to the
extent  that  Deral  Knight  owes  money  to  the  Company  at  June  30,  1995.
Accordingly,  in  liquidation of the receivable  balance,  approximately  83,000
shares of Company  common  stock  issued to Deral Knight as part of the purchase
price of his KEMCO stock will be 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 $100,000 of the notes at September 30,
1995 are secured by future production of approximately 75,000 equivalent barrels
of oil.

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 is to be 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 the related  inventory  for $900,000  which was
included in contract revenue for fiscal 1995.  Integrated's  share of the profit
totaling $182,500 and the $535,000 cost of the inventory,  were included in cost
of contract revenue for fiscal 1995.

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 $116,00 per month through June 30, 1996. The services provided by Integrated
include the  receipt of cash for oil and gas sales and the payment of  operating
and  capital  expenditures  of 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



                                     F - 13
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Concord Energy Incorporated and Subsidiaries

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

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 reduction
to the  Company's  full-cost  oil and gas  properties  pool.  The  period  ended
September 30, the Company recorded income from Integrated as follows:


                                                 1995              1994

Syndication income                             $ 80,000          $139,000
Revenue interest income                            --                --
Management fee income                              --               4,950
                                               --------          --------

                                               $ 80,000          $143,950
                                               --------          --------

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 August 9, 1995 a warrant  was issued for the  purchase  of 100,000  shares of
common stock at the price of $1.125 per share. This warrant's expiration date is
contingent upon the market price of the stock.

On October 4, 1995,  the Company  completed a sale of oil and gas properties for
which the Company will realize net proceeds of approximately $450,000.

On October  28,  1995,  the Company  issued  98,125  shares of common  stock for
services rendered.


                                     F - 14