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 December 31, 1995

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

                         Commission File Number 2-6806

                           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 December 31,  1995,  the  outstanding  common  equity of Concord  Energy
Incorporated comprised 3,346,071 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),
     December 31, 1995 and 1994                                         F-1


Consolidated Statements of Operations and
     Accumulated Deficit (Unaudited)
     Three and Six Months Ended December  31, 1995,  and 1994           F-2


Consolidated Statements of Cash Flows (Unaudited),
     Three and Six Months Ended December  31, 1995,  and 1994           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  100 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 six months
ended  December  31, 1995 the Company  reported  total  revenues of  $6,428,647.
Contract  revenues  during the six month period were  $5,754,550.  Rental income
during the six month period were $50,734.  Oil sales during the six month period
were $277,078 while gas sales totaled  $180,300.  The Company  reported  revenue


                                       3
<PAGE>

from its share of Integrated's  syndication  sales in the amount of $140,000 and
well operating income of $25,985 during the six months period ended December 31,
1995. By  comparison,  during the six months period ended  December 31, 1994 the
Company reported total income from operations of $924,282, oil sales of $418,941
and, gas sales of $249,210, revenue from syndication sales and revenue interests
of $223,950 and well operating income of $32,181.

     Total revenues increased by $5,504,365 during the six months ended December
31, 1995  compared to the six months ended  December 31, 1994.  This increase is
primarily due to the addition of KEMCO's operations.

     Total costs and operating expenses during the six months ended December 31,
1995  were  $9,324,389.   Cost  of  contract  revenue  during  the  period  were
$4,204,668.  Lease  operating  expenses  accounted for $369,282,  during the six
month  period.  Lease  operating  expenses as a percentage  of total oil and gas
sales were  approximately  81%. In  comparison,  during six month  period  ended
December 31, 1994 total costs and  operating  expenses  were  $1,483,959,  lease
operating expenses were $381,396 and lease operating expenses as a percentage of
oil and gas sales were  approximately  57% . Total costs and operating  expenses
increased by  $7,840,430,  and lease  operating  expenses  decreased by $12,114,
during the six month period ended December 31, 1995 as compared to the six month
period ended December 31, 1994, and lease operating  expenses as a percentage of
total oil and gas sales increased by approximately  24% . The increases in costs
and  operating  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  being  booked  at the  time  of  the  KEMCO


                                       4
<PAGE>

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 chose to take a one time
adjustment to more accurately reflect the operations of the Company.

     During  the  six  month  period   ended   December  31,  1995  general  and
administrative expenses were $1,436,340. $696,000 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 $740,340,  during the six
month period ended December 31, 1995. During the six month period ended December
31, 1994, the Company's total general and administrative expenses were $854,355.
$696,000 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 six month
period ended December 31, 1995 were $271,044.  During the six month period ended
December 31, 1994 these  expenses were $248,208.  The $22,836  increase in these
expenses  primarily result from the additional  depreciation  related to KEMCO's
property,  plant and equipment  which  totaled  $60,000 for the six month period
ended December 31, 1995.

     Interest  expense  for the six month  period  ended  December  31, 1995 was
$660,143.  During the six month  period ended  December 31, 1994 these  expenses
were  $134,430.  The  increase  of  $525,713  is  primarily  the  result  of the


                                       5
<PAGE>

additional debt obtained for KEMCO's  inventory  acquisitions  and the financing
related to the KEMCO acquisition.

     For the six months ended  December 31, 1995 the Company  reported net a net
loss of $3,533,888. For the six month period ended December 31, 1994 the Company
reported a net loss of $690,952.  The increased  net loss of $2,842,936  for the
six months ended  December 31, 1995 as compared to the six months ended December
31, 1994,  resulted  primilary  from the  inventory  restatement  of  $3,043,055
previously discussed.

Liquidity and Capital Resources

     As of December 31, 1995 the Company  reported working capital of $4,501,346
compared to working  capital of $126,706 at December  31,  1994.  Total  current
assets  increased by $7,830,544  which is the combination of an decrease in cash
and cash  equivalents of $856,601 and an increase in receivables of $761,958 and
an increase in inventories  and other current assets of $7,192,158,  as compared
to December 31, 1994. Total current liabilities  increased from $1,453,764 as of
December 31, 1994 to $4,909,668  as of December 31, 1995,  for a net increase of
$3,455,904.  The  combination  of the  foregoing  resulted in a net  increase in
working  capital of $4,374,640 from December 31, 1994 to December 31, 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.  In December 1995 the
company  sold  222,000  shares of common  stock and  realized  net  proceeds  of


                                       6
<PAGE>

$500,000.  On October 4, 1995 the  Company  completed a sale of  properties  for
approximately  $461,250.  During the six months period ending  December 31, 1995
the Company made principal payments of notes payable Totaling $942,250

     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.  On
February 6, 1996 the Company sold 63,492 shares of common stock and realized net
proceeds of approximately $178,500. 

Capital Expenditures and Commitments

     During the six months ended December 31, 1995, the Company incurred capital
expenditures of $51,194.  These capital expenditures were primarily of equipment
and the purchases of and leasehold  improvements to a approximately 6,000 square
foot building by KEMCO.  These leasehold  improvements  consisted of renovations
necessary for occupancy to 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 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  as well as  expand  to meet the
anticipated future engineering work requirements.


                                       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: February 7, 1997                Deral Knight
                                       President, Chief Executive Officer
                                       and Chairman of the Board of Directors


Dated: February 7, 1997                s\Scott Kalish
                                       ----------------------------------------
                                       Scott Kalish
                                       Treasurer (Principal Accounting Officer)



                                       8
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

<TABLE>
<CAPTION>
                                                                           (Unaudited)     (Unaudited)
                                                                           December 31     December 31
                                                                              1995            1994
                                                                          ------------    ------------
<S>                                                                       <C>             <C>         
Assets
Current assets
   Cash and cash equivalents                                              $    230,114    $  1,086,715
   Costs and estimated earnings in excess
        of billings on uncompleted contracts                                   733,029            --
   Accounts receivable, net of allowance for
       doubtful accounts of $67,490 and $0                                   1,140,636         262,700
   Receivable from stockholder                                                 115,077            --
   Receivable due from affiliated company                                         --           231,055
   Inventories                                                               7,064,331            --
   Prepaid expenses and other assets                                           127,827            --
                                                                          ------------    ------------
       Total current assets                                                  9,411,014       1,580,470

Property, plant and equipment, net                                           8,435,573       8,662,860
Bond issuance costs, net                                                       494,649         222,258
Other assets                                                                    50,000       1,625,000
                                                                          ------------    ------------
       Total assets                                                       $ 18,391,236    $ 12,090,588
                                                                          ============    ============

Liabilities and Stockholders' Equity
Current liabilities
   Current portion of notes payable to stockholders                       $    273,000    $       --
   Current portion of long-term debt                                           895,750       1,000,000
   Accounts payable                                                          1,711,963         315,003
   Accrued expenses                                                          1,655,954         138,761
   Payable due to Integrated, net                                              259,052            --
   Federal  income taxes payable                                               113,949            --
                                                                          ------------    ------------
       Total current liabilities                                             4,909,668       1,453,764

Long term liabilities
  Notes payable to stockholders                                                   --
  Notes payable                                                              5,833,300       2,500,500
  Capital lease obligations                                                     46,673            --
                                                                          ------------    ------------
     Total Long term liabilities                                             5,879,973       2,500,500
                                                                          ------------    ------------
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,  3,346,071 and 2,222,332 shares issued and outstanding          1,552           1,111
   Paid-In capital                                                          15,435,326      11,546,768
   Accumulated deficit                                                      (7,835,283)     (3,411,555)
                                                                          ------------    ------------
       Total stockholders' equity                                            7,601,595       8,136,324
                                                                          ------------    ------------
       Total liabilities and stockholders' equity                         $ 18,391,236    $ 12,090,588
                                                                          ============    ============
</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)    (Unaudited)    (Unaudited)
                                                      Quarter Ended   Six-Months    Quarter Ended   Six-Months
                                                       December 31    December 31    December 31    December 31
                                                          1995           1995           1994           1994
                                                       -----------    -----------    -----------    -----------
<S>                                                    <C>            <C>            <C>            <C>        
Revenue
  Oil sales                                            $   121,434    $   277,078    $   226,349    $   418,941
  Gas sales                                                 85,463        180,300        115,686        249,210
                                                       -----------    -----------    -----------    -----------
     Total oil and gas sales                               206,897        457,378        342,035        668,151

  Contract revenue                                       2,973,166      5,754,550           --             --
  Share of syndication sales and revenue interests          60,000        140,000         80,000        223,950
  Well operating income                                     11,668         25,985         16,623         32,181
  Rental income                                             16,287         50,734           --             --
                                                       -----------    -----------    -----------    -----------
     Total revenue                                       3,268,017      6,428,647        438,658        924,282
                                                       -----------    -----------    -----------    -----------


Costs and Operating Expenses
  Lease operating                                          150,564        369,282        201,525        381,396
  Cost of contract revenue                               2,630,734      4,204,668           --             --
   Inventory - adjustment to lower of cost or market          --        3,043,055           --             --
  General and administrative:
      Management agreement                                 348,000        696,000        348,000        696,000
      Other expenses                                       339,982        740,340        106,175        158,355
  Depreciation, depletion and amortization                 130,000        271,044        132,073        248,208
                                                       -----------    -----------    -----------    -----------
      Total costs and operating expenses                 3,599,280      9,324,389        787,773      1,483,959
                                                       -----------    -----------    -----------    -----------

     Income (Loss) from Operations                        (331,262)    (2,895,742)      (349,115)      (559,677)
                                                       -----------    -----------    -----------    -----------
Other income (expense)
  Other  income                                             15,688         21,997          1,960          3,154
  Interest expense                                        (312,046)      (660,143)       (96,679)      (134,430)
                                                       -----------    -----------    -----------    -----------
                                                          (296,358)      (638,146)       (94,719)      (131,276)
                                                       -----------    -----------    -----------    -----------
     Income (Loss) before income taxes                    (627,620)    (3,533,888)      (443,833)      (690,952)
                                                       -----------    -----------    -----------    -----------
          Income tax expense                                  --             --             --             --
                                                       -----------    -----------    -----------    -----------
     Net Income (Loss)                                 $  (627,620)   $(3,533,888)   $  (443,833)   $  (690,952)
                                                       ===========    ===========    ===========    ===========
Accumulated deficit, beginning of period                (7,207,663)    (4,301,395)    (2,967,721)    (2,720,602)
                                                       ===========    ===========    ===========    ===========
Accumulated deficit, end of period                     $(7,835,283)   $(7,835,283)   $(3,411,554)   $(3,411,554)
                                                       ===========    ===========    ===========    ===========
     Income (Loss) per share                           $     (0.19)   $     (1.06)   $     (0.13)   $     (0.21)
                                                       ===========    ===========    ===========    ===========
</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  Six-Months Ended   Quarter Ended  Six-Months Ended
                                                             December 31      December 31      December 31      December 31
                                                                 1995             1995             1994             1994
                                                             -----------      -----------      -----------      -----------
<S>                                                          <C>              <C>              <C>              <C>         
Cash flows from operating activities                                                                          
 Net Income (loss)                                           $  (627,620)     $(3,533,888)     $  (443,834)     $  (690,953)
 Adjustments to reconcile net income/loss to net cash                                                         
   (used in) provided by operating activities:                                                                
   Depreciation, depletion and amortization                      130,000          271,044          132,073          248,208
   Other noncash transactions                                       --          3,043,055             --               --
   Decrease (Increase)  in assets:                                                                            
      Accounts receivable                                       (328,738)        (444,079)          (7,348)          34,294
      Costs and estimated earning in excess                                                                   
           of billings on uncompleted contracts                   54,950         (174,169)                    
      Receivable From Joint Venture                                                               (150,240)        (150,240)
      Receivable due from Stockholder                                525          (11,458)                    
      Receivable due from affiliated company                        --             15,937          127,322          133,490
      Inventories                                             (1,221,981)      (1,654,761)                    
      Deferred taxes                                                                                          
      Other assets and liabilities                                28,350          (56,107)        (152,258)        (222,258)
   (Decrease)  Increase  in liabilities                                                                       
      Accounts payable                                           515,857          853,428          (14,545)          (1,812)
      Accrued expenses                                           311,073        1,189,468            1,525          (63,833)
      Federal income tax payable                                 (22,887)          (6,149)                    
      Receivable due from/payable due to Integrated, net        (169,055)        (335,633)                    
      Interest payable to Stockholders                             3,375            6,750           57,996           66,496
                                                             -----------      -----------      -----------      -----------
       Net cash provided by (used in) operating activities    (1,326,152)        (836,562)        (449,309)        (646,608)
                                                             -----------      -----------      -----------      -----------
Cash flows from investing activities                                                                          
   Purchase of propery, plant ,  oil and gas equipment,                                                       
     well workovers  and recompletions                             2,489          (51,194)         (66,574)         (71,193)
   Acquisition of business, net of cash acquired                                                              
   Sale of oil and gas interests                                 461,250          477,332             --             16,082
   Recapitalization costs                                                                                     
   Investment in Joint Venture                                                                  (1,625,000)      (1,625,000)     
   Other, net                                                       --               --               --      
                                                             -----------      -----------      -----------      -----------
       Net cash (used in) provided by investing activities       463,739          426,138       (1,691,574)      (1,680,111)
                                                             -----------      -----------      -----------      -----------
                                                                                                              
Cash flows from financing activities                                                                          
    Proceeds from bonds payable                                     --               --          1,750,000        2,450,500
    Net proceeds from note payable                                50,000          825,000                     
    Net proceeds from issuance of common stock                                                                
    Proceeds from sale of common stock                           500,000          500,000          313,000          313,000
    Principal payment of notes payable                          (248,500)        (942,250)         656,251          583,333
                                                             -----------      -----------      -----------      -----------
      Net cash flows provided by (used in)                                                                    
         financing activities                                    301,500          382,750        2,719,251        3,346,833
                                                             -----------      -----------      -----------      -----------
Net increase (decrease) in cash and cash equivalents            (560,913)         (27,674)         578,368        1,020,114
                                                             -----------      -----------      -----------      -----------
Cash and cash equivalents at beginning of period                 791,027          257,788          508,347           66,601
                                                             -----------      -----------      -----------      -----------
Cash and cash equivalents at end of period                   $   230,114      $   230,114      $ 1,086,715      $ 1,086,715
                                                             ===========      ===========      ===========      ===========
</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.
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.

In  December  1995,  the  company  effectuated  a 1 for 5 reverse  split of it's
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
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.

Share of syndication sales

Under an agreement  between the Company and Integrated (see Note 9), the Company
is entitled to receive 20% of all sales made by Integrated of syndicated  retail
partnership interests. 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 income (loss) per share

Net loss per share of common  stock is based upon the number of shares of common
stock outstanding  (3,346,071 at December 31, 1995 and 2,222,332 at December 31,
1994  (post-split)).  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 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
through the net proceeds from debt financing totaling  approximately  $3,700,000
and the net 


                                      F-7
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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 aquired.  Management
subsequently  determined  that  the  values  assigned  to the  plants  were  the
appraiser's  estimated  retail slaes 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.


6.   Property, Plant and Equipment, Net

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


                                      F-8
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

                                                      1995              1994

Oil & gas properties:
         Leasehold costs                         $  6,799,166      $  7,368,416
         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
                                                 ------------      ------------
                                                   11,652,955        12,219,594
                                                 ------------      ------------
Other property, plant & equipment
         Land                                         159,913              --
         Buildings & improvements                     345,186              --
         Machinery & equipment                        186,820              --
         Vehicles                                     218,769              --
         Furniture, fixtures & software                81,710            53,016
                                                 ------------      ------------
                                                      992,398            53,016
                                                 ------------      ------------

Accumulated depreciation,
depletion and amortization                         (4,209,780)       (3,609,750)
                                                 ------------      ------------
Property, plant and equipment, net               $  8,435,573      $  8,662,860
                                                 ------------      ------------

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

                                      1995          1994

Oil and gas properties              $211,044      $247,587
Other property, plant
   and equipment                      60,000           621
                                    --------      --------

                                    $271,044      $248,208
                                    --------      --------


                                      F-9
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

7.   Debt and Capital Lease Obligations

Debt

Long-term debt includes the following at December 31:

                                                                    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.                          1,760,263


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


                                    F-10
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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.                   390,000


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 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

                                    F-11
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

$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                                             6,729,050

Less: current portion                                                895,750
                                                                  ----------

Long-term debt                                                    $5,833,300
                                                                  ----------

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 December 31, 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
                                                        -------

8.   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.


                                      F-12
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

9.   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
December 31, 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 December 31, 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 December 31, 1995, the Company has a net payable
due to  Integrated  of $259,052.  At December  31,  1994,  the Company had a net
receivable due from Integrated of $231,055.

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 $115,077 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  $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 


                                      F-13
<PAGE>

Concord Energy Incorporated and Subsidiaries

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

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 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 December 31, the Company recorded income from
Integrated as follows:


                                                     1995       1994

Share of syndication income                        $140,000   $219,000
Revenue interest income                                --         --
Management fee income                                  --        4,950
                                                   --------   --------
                                                   $140,000   $223,950
                                                   --------   --------

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.


10.  Events Subsequent to Date of Balance Sheet

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.

On February 6, 1996 the Company sold 63,492  shares of common stock and realized
net proceeds of approximately $178,500.


                                      F-14