SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K/A
                                 AMENDMENT NO. 1
(Mark One)

  [X]     ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(D)  OF THE  SECURITIES
          EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002 OR

  [ ]     TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES
          EXCHANGE  ACT OF 1934 FOR THE  TRANSITION  PERIOD FROM  __________  TO
          _______________

          0-17430
Commission File Number

                           OBSIDIAN ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                     35-2154335
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
or organization)

111 Monument Circle, Suite 4800
Indianapolis, IN                                           46204
(Address of principal executive offices)                 (Zip Code)

                                 (317) 237-4122
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None
                                                                 ----
           Securities registered pursuant to Section 12(g) of the Act:

                        Common Stock ($0.0001 par value)
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES X NO ____ - ------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of the Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes ___ No X ---

As of January 22, 2003, the aggregate market value of the Company's common stock
held by non-affiliates of the registrant, based on the average bid and ask price
on such date, was approximately $3,317,000.

As of January 22, 2003, the  registrant  had 36,007,855  shares of common stock,
4,368,399  shares of Series C  Preferred  Stock  and  88,330  shares of Series D
Preferred Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

INFORMATION REQUIRED IN PART II AND PART III HAS NOT BEEN INCORPORATED BY
REFERENCE.



<PAGE>

                                EXPLANATORY NOTE

This Amendment No. 1 amends the Registrant's  Annual Report on Form 10-K for the
fiscal year ended October 31, 2002, by amending and restating Items 6, 7, 8, 10,
12 and 14 to incorporate certain changes.

PART I


ITEM 1. BUSINESS.


                       HISTORY AND DEVELOPMENT OF BUSINESS

A change in control and  reorganization  of the Registrant  occurred on June 21,
2001. On that date,  Timothy S. Durham was elected Chief  Executive  Officer and
Chairman  of the  Board  of the  Registrant  and the  Registrant  acquired  from
Obsidian  Capital  Partners,  L.P. (the  "Partnership"),  Mr. Durham and certain
other shareholders all of the shares of the following companies:  Pyramid Coach,
Inc., a Tennessee corporation  ("Pyramid");  Champion Trailer,  Inc., an Indiana
corporation  ("Champion");   and  U.S.  Rubber  Reclaiming,   Inc.,  an  Indiana
corporation ("U.S.  Rubber"). On July 31, 2001, the Registrant acquired from the
Partnership  and  Mr.  Durham   substantially   all  of  the  assets  of  United
Acquisition,  Inc., an Indiana corporation, which the Registrant now operates as
United  Expressline,  Inc.  ("United").  All of the  acquisitions  were  made in
exchange  for shares of the  Registrant's  Series C Preferred  Stock  ("Series C
Preferred  Stock") and were  pursuant to an  Acquisition  Agreement  and Plan of
Reorganization  by and among the Registrant,  Danzer  Industries,  Inc. ("Danzer
Industries"),   Pyramid,   Champion,   United  Acquisition,   U.S.  Rubber,  the
Partnership,  Timothy S. Durham and other related parties,  dated as of June 21,
2001. Prior to the reorganization, the Registrant had engaged through its wholly
owned subsidiary, Danzer Industries, in the fabrication of metal parts and truck
bodies for the service and utility markets.

In October 2001, the Registrant's  state of  incorporation  was changed from New
York to Delaware and the Registrant's  name was changed from Danzer  Corporation
to Obsidian Enterprises,  Inc. The Registrant was originally incorporated in New
York in 1987 under the name Affiliated  National,  Inc. and subsequently changed
its name to Global Environmental Corp. and then to Danzer Corporation.

As used in this report, the term "Company" refers to Obsidian Enterprises,  Inc.
together with its consolidated subsidiaries.


                           DESCRIPTION OF THE BUSINESS


OVERVIEW

The Company is a holding company  headquartered in Indianapolis,  Indiana with a
strategic goal of maximizing  profitability of its acquired entities,  acquiring
manufacturing  companies of similar size and continuing to grow the Company. The
Company currently  conducts business through five  subsidiaries:  U.S. Rubber, a
butyl-rubber  reclaiming  operation;  Pyramid a provider of short and  long-term
luxury coach leases for corporations and the  entertainment  industry;  Obsidian
Leasing  Co.,  Inc.  ("Obsidian  Leasing"),  the owner of certain of the coaches
operated by Pyramid;  United, a manufacturer of steel-framed  cargo,  racing and
specialty trailers; and Danzer Industries, a manufacturer of service and utility
truck bodies and  accessories and cargo  trailers.  Champion,  a manufacturer of
customized   racecar   transporters,   specialty  exhibit  trailers  and  mobile
hospitality  units formerly owned by the Company has been sold subsequent to the
close of the fiscal year.
<PAGE>

The Company  operates  in three  industry  segments  comprised  of  butyl-rubber
processing;  trailer and related  transportation  equipment  manufacturing;  and
leasing of transportation. All sales are in the Western Hemisphere, primarily in
the United  States.  For  quantitative  segment  information  see Note 14 to the
Consolidated Financial Statements.


BUTYL RUBBER PROCESSING

The Company's  butyl rubber  processing  facilities  are located in two adjacent
plants in  Vicksburg,  Mississippi.  The  Company  is the sole  manufacturer  of
reclaimed  butyl  rubber in the  domestic  tire,  tape and tube  business in the
Western  Hemisphere.  The Company  collects  various used and scrap butyl rubber
products,  primarily  inner tubes from tires,  which are then  reprocessed  into
reclaimed  butyl  rubber  sheets.  Customers  mix the product  with virgin butyl
rubber and use the product  predominately  as the inner liner of tubeless tires,
and also as inner tubes for tires and for tapes and mastics for pipelines.

Reclaimed  butyl  rubber  used in  combination  with  virgin  butyl  rubber  has
properties that facilitate some manufacturing  processes.  However,  the primary
reason  manufacturers  use  reclaimed  butyl rubber is the cost savings  offered
compared to virgin butyl rubber.

The Company  distributes its reclaimed butyl rubber products through an internal
sales force.

The Company is the sole  supplier of reclaimed  butyl rubber to most of the tire
industry in the United States and has tire manufacturer  customers in Canada and
Brazil.

There are three other enterprises engaged in reclaiming butyl rubber worldwide:

o    The Gujarat Company in India;

o    Han Cook in Korea; and

o    Vrederstein N.V. in the Netherlands.

Due to the cost of transporting  reclaimed butyl rubber,  these  enterprises are
not major  competitors with the Company in the Western  Hemisphere.  The primary
competitive factor is price.

Two enterprises manufacture virgin butyl rubber for sale in the United States:

o    Exxon Corporation; and

o    Bayer AG.

Both these  enterprises are much larger than the Company,  well  capitalized and
have larger sales  staffs.  The prices  charged by these  enterprises  places an
upper limit on the prices that may be set for reclaimed butyl rubber.

The Company  obtains its supply of scrap  inner  tubes from  approximately  1000
scrap  merchants  worldwide.  The Company's  ability to produce  reclaimed butyl
rubber is  potentially  restrained  by the limited  supply of scrap butyl rubber
products. Since the introduction of tubeless tires for automobiles in the 1970s,
the number of scrap inner tubes from  sources in the United  States has declined
substantially.  In the United States,  inner tubes are now primarily  limited to
the  agricultural  and large truck tire market.  In 2001,  the Company  began to
experiment with  reclaiming  scrap butyl rubber pads from the  manufacturers  of
other  butyl  rubber  products.  This  scrap  is  created  as a  result  of  the
manufacturing  process for molded  butyl  rubber  products  and is  available at
approximately  60% of the cost of scrap inner tubes.  The Company's work to date
suggests  that pad  scrap  may be a partial  substitute  for inner  tubes as raw
material for the Company's reclaimed butyl rubber product.
<PAGE>

Although  the  Company  has  had  a  long-term  relationship  with  its  primary
customers,  it does not have long-term contracts with them. Two of its reclaimed
butyl rubber  customers  account for a substantial  portion of the sales of this
segment.  Michelin and Kelley Springfield accounted for the sales of 43% and 24%
of the sales of this  segment  in 2002.  The loss of  either of these  customers
would materially and adversely affect the Company. The Company's reclaimed butyl
rubber products are generally  ordered by customers monthly and shipped promptly
after the order. Accounts are generally paid on 30 to 60 day terms.


TRAILER AND RELATED TRANSPORTATION EQUIPMENT MANUFACTURING

The Company  manufactures  service  truck bodies at its facility in  Hagerstown,
Maryland  where the Company  produces  truck  bodies for sale under the Morrison
trademark as well as bodies built to order for other  original  equipment  truck
manufacturers.  The finished bodies are shipped to the customer for installation
on truck body  chassis.  The Company  markets  truck bodies  through an internal
sales force.  It sells its private label products  directly to its private label
customers and markets its proprietary  "Morrison"  products through a network of
approximately  300  dealers  who,  in  turn,  sell  to  municipalities,  utility
companies, cable companies, phone companies and contractors.

Most truck body customers are in the East and Southeast United States.  Slightly
less than one half of the Company's truck body revenue is accounted for by sales
to one installer. Although the Company's relationship with this manufacturer has
been long term it does not have a supply  contract and is not the sole  supplier
of  truck  bodies  to that  enterprise.  In 2002,  the  manufacturer  filed  for
reorganization  under  Chapter  11 of the  United  States  bankruptcy  code  and
continues  to operate.  The loss of the  Company's  relationship  with the truck
manufacturer could have a material adverse effect on the Company.

There are a  significant  number of  companies  engaged  in the  manufacture  of
service  truck bodies in the United  States.  While many of these  companies are
relatively small and do not possess the Company's technical  capacity,  a number
of its  competitors  are much larger and possess equal or greater  technical and
financial  resources.  Four such competitors are:  Knapheide  Manufacturing Co.,
Omaha Standard,  Inc.,  Reading Body Works, Inc., and Stahl, a Scott Fetzer Co.,
which is a wholly  owned  subsidiary  of  Berkshire  Hathaway,  Inc. The Company
competes with others for truck body sales through price and service,  with price
being  the  most  important  factor,   and  offers  truck  bodies  made  to  the
individually specified requirements of its customers.

In order to fully utilize the manufacturing  capacity  available at its facility
in Hagerstown and meet demand for cargo  trailers,  the Company  initiated cargo
trailer production in this facility during 2002.

The Company manufactures  specialty racing, cargo and ATV trailers at a facility
owned by the Company in Bristol,  Indiana and at another  facility  owned by the
Company  in White  Pigeon,  Michigan.  In  addition,  as a means  of  increasing
capacity to meet demands,  the Company also began leasing a facility in Elkhart,
Indiana.  The business is somewhat  seasonal with fewer orders during the months
from November through January. The trailers are marketed under the names "United
Expressline,"  "United  Trailers,"   "Southwest   Expressline,"  and  "Southwest
Trailers."  While the Company markets some trailers under these brands at prices
up to  $75,000.00,  the  average  price  for  these  trailers  is  approximately
$3,900.00.

The Company sells "United Trailers," "United Expressline," "Southwest Trailers,"
and "Southwest  Expressline" product lines through two dealer networks comprised
of an aggregate of  approximately  300 dealers in the United  States and Canada,
most of whom are located in the  Midwest  United  States.  The  Company's  sales
activities are conducted through an internal sales force.  While the Company has
formal agreements with a few of the dealers, most of the dealership arrangements
are informal and are nonexclusive.
<PAGE>

The trailers are built to order to dealer specifications.  The terms of sale for
the  "United  Trailers,"  "United   Expressline,"   "Southwest   Trailers,"  and
"Southwest  Expressline"  products are FOB the plant with payment  generally due
upon the dealer taking delivery of the trailer. A few dealers have 30- or 60-day
terms.

There are a  significant  number of  companies  engaged  in the  manufacture  of
specialty  racing,  cargo and ATV carriers in the United  States.  While many of
these companies are relatively small and do not possess the Company's  technical
capability,  a number of its  competitors  are much larger and possess  equal or
greater technical and financial  resources.  Four such competitors are: Haulmark
Industries, Pace American, U.S. Cargo and Wells Cargo. The Company competes with
others for specialty racing,  cargo and ATV trailer sales through price, quality
and availability, with price an important factor.

The  Company   purchases   its  raw   materials  for  the  trailer  and  related
transportation  equipment  segment from  numerous  suppliers and has not had any
difficulty in obtaining components or raw materials.

The Company  generally  warrants its product to be free from defects in material
and  workmanship  and  performance  under normal use and service for a period of
twelve months after shipment. The obligation of the Company is generally limited
to the repair or replacement of the defective product.

At October 31,  2002,  the  backlog of the  trailer  and related  transportation
segment was approximately $2,634 composed of approximately $300 for truck bodies
and $2,334 for specialty  racing,  cargo and ATV trailers.  The October 31, 2002
backlog is expected to be filled within the 2003 fiscal year.


COACH LEASING

The Company  leases  high-end  luxury  entertainment  coaches  from its facility
located in Joelton,  Tennessee.  The leases are for both  short-term  (weekly or
monthly) and long-term  periods.  The leases are generally on a net basis,  with
the customer responsible for fuel and drivers and other personnel.

At October 31, 2002,  the Company had 32 coaches in its fleet under  management.
In  addition,  the  Company  subleases  coaches  from  other  coach  owners on a
short-term basis, from time to time.

Prior to the  Reorganization all of the coaches under management by Pyramid were
owned by DW Leasing,  LLC ("DW  Leasing"),  a company  controlled by Mr. Durham.
During 2002 and as  contemplated  by the  Reorganization,  twenty-seven of these
coaches were transferred to the Company's subsidiary,  Obsidian Leasing, and the
remainder continued to be owned by DW Leasing and managed by the Company.

The Company leases the coaches through an internal sales force.  The coaches are
leased primarily to the country,  rock-n-roll,  pop and traveling  Broadway show
entertainment  industries.  The coaches are also leased to various corporations.
During the year ended October 31, 2002,  the Company  leased coaches to a number
of touring groups in connection with their tours including Ozzie Osbourne,  Brad
Paisley and the Broadway Show "Stomp." The Company's corporate customers include
the Golf Channel.

There are several other companies that lease luxury coaches.  Some of the larger
competitors  include  Entertainer  Coaches of America,  Florida Coach,  Senators
Coach  and  Hemphill  Brothers.  The  Company  believes  that  amenities  are an
important  factor in leasing coaches to its target market and equips its coaches
with a full  complement  of  amenities.  The Company  competes with other luxury
coach providers based on a combination of quality,  amenities,  availability and
price.
<PAGE>


GOVERNMENT REGULATION

The Company is subject to regulation by federal,  state, and local agencies that
have  jurisdiction  over areas such as  environmental  and fire  hazard  control
issues and  regulate the work place to insure safe  working  conditions  for the
Company's  employees.  The trailers and truck bodies manufactured by the Company
must meet standards set by state and federal transportation  authorities and the
coaches leased by the Company must comply with those standards and  regulations.
These  regulatory  bodies could take actions that would have a material  adverse
affect upon the  Company's  ability to do business.  The business of the Company
does not subject it to any special regulatory authority.


EMPLOYEES

As of October 31, 2002, the Company had 417  employees.  The Company has a labor
contract through January 2004 with United  Brotherhood of Carpenters and Joiners
of  America  for the  approximately  40  production  workers  at its truck  body
manufacturing  facility in  Hagerstown,  Maryland.  None of the employees at the
other  facilities of the Company is  represented  by a labor union.  The Company
believes its employee relations are satisfactory.


PATENTS AND PROPRIETARY TECHNOLOGY

The Company  does not rely on any  patents,  registered  trademarks,  or special
licenses  to  give  it  a  competitive  advantage.   The  "Morrison,"  "Danzer,"
"Pyramid,"  "United Trailer,"  "United  Expressline,"  "Southwest  Trailer," and
"Southwest  Expressline"  brand  names have brand  recognition  in the  relevant
market.


RESEARCH AND DEVELOPMENT

The Company did not incur,  during any of its last three fiscal years,  and does
not contemplate incurring, any material research and development expenses.


                           FORWARD-LOOKING STATEMENTS

In addition to historical information,  this Annual Report on Form 10-K contains
forward-looking statements that involve risks and uncertainties that could cause
actual results to differ  materially.  Factors that might cause or contribute to
such differences include, but are not limited to, those discussed in the section
entitled "Item 7.  Management's  Discussion and Analysis of Financial  Condition
and Results of Operations."  Readers should carefully review the risks described
in this and other  documents  that the Company  files from time to time with the
Securities and Exchange Commission, including the quarterly reports on Form 10-Q
to be filed by the  Company in 2002.  Readers are  cautioned  not to place undue
reliance on the forward-looking statements, which speak only to the date of this
Annual  Report on Form 10-K.  The Company  undertakes  no obligation to publicly
release any revisions to the  forward-looking  statements  or reflect  events or
circumstances after the date of this document.
<PAGE>


ITEM 2. PROPERTIES

The following describes the Company's properties:
<TABLE>

Identification                  Location                     Ownership/Description            Segment
------------------------------- ---------------------------- -------------------------------- ------------------------
<S>                             <C>                          <C>                              <C>
Headquarters                    111 Monument Circle, Suite   3,700 square feet leased         N/A
                                4800, Indianapolis, IN       commercial office space
                                46204
Butyl Rubber Processing         Vicksburg, Mississippi       Two adjacent plants              Butyl Rubber
Plants                                                       aggregating 87,000 square        Processing
                                                             feet, each owned by the
                                                             Company and encumbered by a
                                                             mortgage to PNC Bank
Truck Body Plant                Hagerstown, Maryland         75,000 square foot plant owned   Trailer and related
                                                             by the Company and encumbered    transportation
                                                             by a mortgage to Bank of         equipment
                                                             America Commercial Finance       manufacturing
United Expressline Plant        Bristol, Indiana             Several buildings aggregating    Trailer and related
                                                             49,000 square feet owned by      transportation
                                                             the Company and encumbered by    equipment
                                                             a mortgage to First Indiana      manufacturing
                                                             Bank NA
United Expressline Plant        Elkhart, Indiana             35,000 square foot plant         Trailer and related
                                                             leased by the Company            transportation
                                                                                              equipment
                                                                                              manufacturing
Southwest                                                    Expressline Plant
                                                             White Pigeon,
                                                             Michigan 47,000
                                                             square foot plant
                                                             owned Trailer and
                                                             related by the
                                                             Company and
                                                             encumbered
                                                             transportation by a
                                                             mortgage to First
                                                             Indiana equipment
                                                             manufacturing Bank
                                                             NA
Pyramid Coach Office            Joelton, Tennessee           12,000 square feet of office     Coach Leasing
                                                             space and other facilities
                                                             leased by the Company
Champion Facility               Lewisville, Texas            30,000 square foot plant         Discontinued operations
                                                             leased by the Company
</TABLE>

The Company believes that its property,  plant and equipment are well maintained
and adequate for its  requirements.  The Company also  believes  that all of its
assets are adequately covered by insurance.
<PAGE>


ITEM 3. LEGAL PROCEEDINGS

All dollar  amounts in Item 3 are in  thousands  (except for share and per share
information).

On April 29,  2002,  Markpoint  Equity  Fund J.V.  ("Markpoint"),  a Texas joint
venture of which The  Markpoint  Company  serves as Managing  Partner,  filed an
action in the Texas District  Court,  Dallas County,  seeking  payment of $1,250
owed by Champion,  a subsidiary  subsequently  divested,  under the subordinated
credit facility described in Note 9 to the Consolidated Financial Statements. On
January 27, 2003, the Company  reached an agreement to settle this liability for
a cash  payment  of $675 and  issuance  to  Markpoint  of  32,143  shares of the
Company's  Series  D  preferred  stock.  In  addition,  the  agreement  provides
Markpoint  the option to require the  Company to  repurchase  these  shares at a
price of $21 per share.  The  repurchase  option is  available  to  Markpoint as
follows:  16,072 shares during the period May 1, 2003 to June 1, 2003 and 16,071
shares during the period  November 1, 2003 to December 1, 2003.  The  repurchase
options  expire if not  exercised  during the specified  periods.  The Company's
repurchase obligation is guaranteed by Mr. Durham.


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

(a)  The  Company's  Annual  Meeting of  Stockholders  was held on September 27,
     2002.

(b)  The following  individuals were elected to the Company's Board of Directors
     to hold office until the next annual meeting of stockholders or until their
     successors have been duly elected and qualified:
<TABLE>

                                                       Against or                               Broker
Nominee                              For               Withhold              Abstain            Non-Votes
                                     ---              -----------            -------            ---------
<S>                                  <C>                <C>                  <C>                <C>
Timothy S. Durham                    105,816,120        0                    3,247              0
Terry G. Whitesell                   105,816,220        0                    3,147              0
Jeffrey W. Osler                     105,815,790        0                    3,577              0
Goodhue W. Smith, III                105,816,220        0                    3,147              0
John A. Schmit                       105,816,120        0                    3,147              0
D. Scott McKain                      105,816,220        0                    3,147              0
Daniel S. Laikin                     105,816,220        0                    3,147              0
</TABLE>

(c)  In  addition to the  election  of  Directors  described  in (b) above,  the
     following matters were voted upon:


<TABLE>
                                                                                                Broker
                                     For                Against              Abstain            Non-Votes
<S>                                  <C>                <C>                  <C>                <C>
Ratify the appointment of            105,773,522        680                  45,165             0
</TABLE>

McGladrey  & Pullen,  LLP as the  independent  auditors  for fiscal  year ending
October 31, 2002.
<PAGE>

PART II


ITEM 5.  MARKET  FOR THE  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
         MATTERS

The  Company's  common  stock  is  currently  traded  on  the   Over-the-Counter
Electronic  Bulletin  Board and on October 17, 2001, the symbol was changed from
"DNZR" to "OBSD." The following table sets forth the high and low bid quotations
for the common stock for the fiscal quarters indicated.
<TABLE>

                                           FISCAL 2002               FISCAL 2001
                                        High          Low         High          Low
<S>       <C>                            <C>           <C>         <C>         <C>
          1st Quarter                    $0.25         $0.12       $0.30       $0.09
          2nd Quarter                    $0.36         $0.12       $0.20       $0.0063
          3rd Quarter                    $0.27         $0.11       $0.30       $0.14
          4th Quarter                    $0.27         $0.10       $0.41       $0.08

</TABLE>

The above quotations  reflect  inter-dealer  prices,  and may not include retail
mark-up,  mark down or  commissions  and may not  necessarily  represent  actual
transactions.  At October  31,  2002,  there were  approximately  900 holders of
record of the  Company's  common  stock.  Most of the shares of common stock are
held in street  name for an unknown  number of  beneficial  owners.  To date the
Company has not paid a cash dividend on its common stock. The payment and amount
of any future cash  dividends  would be restricted by the Company's  lenders and
will  necessarily  depend  upon  conditions  such  as  the  Company's  earnings,
financial condition, working capital requirements and other factors.


ITEM 6. SELECTED FINANCIAL DATA.

The  following  table  sets  forth  certain  selected   consolidated   financial
information  concerning  the  Company.  This  information  is not covered by the
independent  auditor's  report.  For further  information,  see the accompanying
Consolidated Financial Statements of Obsidian Enterprises, Inc. and subsidiaries
for the year ended October 31, 2002, ten-month period ended October 31, 2001 and
the year  ended  December  31,  2000 and the  information  set  forth in Item 7,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations," and in Item 8, "Financial Statements and Supplementary Data" below.

The  information for the year ended December 31, 2000 is for that of U.S. Rubber
Reclaiming only, the accounting acquirer in the reverse merger further described
in Items 7 and 8.

<PAGE>


OPERATING DATA, AS RESTATED:

                  (Amounts in thousands, except per share data)
<TABLE>

                                              Year Ended     Ten Months Ended
                                              October 31,      October 31,            Year Ended December 31,
                                                                               ---------------------------------------
                                                 2002              2001            2000          1999        1998
                                            --------------------------------------------------------------------------

<S>                                            <C>                    <C>           <C>          <C>         <C>
Net sales                                      $     57,274           $ 24,689      $ 12,583     $ 11,439    $ 12,575
Income from operations                                  449                981           184          413         107
Discontinued operations, net of tax                 (1,040)            (3,376)            --           --          --
Cumulative effect of change in accounting
principle                                           (2,015)                 --            --           --          --
Net income (loss)                                   (6,330)            (4,395)            48          216          74
Basic and diluted earnings (loss) per
share:
  From continuing operations                          (.09)              (.04)            --           --          --
  Discontinued operations                             (.03)              (.13)            --           --          --
  Cumulative effect of change in
  accounting principle                                (.06)                 --            --           --          --
  Net income (loss) per share                         (.18)              (.17)            --           --          --
</TABLE>

BALANCE SHEET DATA:
<TABLE>

                                                    October 31,     October 31,               December 31,
                                                                                  -------------------------------------
                                                        2002            2001         2000         1999        1998
                                                  ---------------------------------------------------------------------

<S>                                                 <C>              <C>           <C>         <C>          <C>
Working capital (deficit)                           $      1,591     $     (2,528) $     864   $   1,896    $   2,864
Total assets                                              45,923           48,850      9,633      11,633       11,914
Long-term debt, including current portion and
mandatory redeemable preferred stock                      36,464           35,382      3,846       5,914        6,365
Stockholders' equity (deficit)                              (689)           1,331      4,939       4,890        4,674

</TABLE>

No dividends have been declared or paid in any period presented.


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

All dollar  amounts in this Item 7 are in  thousands  (except  for share and per
share information).

<PAGE>

                                  INTRODUCTION

Obsidian  Enterprises,  Inc.  ("Company"),  on June 21, 2001, closed a series of
transactions   pursuant   to  the   Acquisition   and  Plan  of   Reorganization
("Reorganization") by and among the Company,  Danzer Industries,  Inc., a wholly
owned  subsidiary,  and Obsidian Capital Partners,  LP ("Partners"),  Timothy S.
Durham,  and other individual owners of Partners  controlled  entities.  At that
time,  the Company  acquired:  all of the  outstanding  capital stock of Pyramid
Coach,  Inc., in exchange for 810,099 shares of Company Series C Preferred Stock
("Series  C  Preferred");  all of the  outstanding  capital  stock  of  Champion
Trailer,  Inc.,  for  135,712  shares  of  Company  Preferred,  and  all  of the
outstanding capital stock of U.S. Rubber Reclaiming,  Inc., for 1,025,151 shares
of  Series C  Preferred.  On July 31,  2001,  the  Company  acquired  all of the
outstanding  capital  stock  of  United  Expressline,  Inc.  from  Partners  for
2,593,099 shares of Series C Preferred.

After these transactions, the Company had the following subsidiaries:

o    U.S. Rubber Reclaiming,  Inc. ("U.S. Rubber"),  engaged in reclaiming scrap
     butyl reclaim for resale to manufacturers  of rubber  products,  located in
     Vicksburg, Mississippi.

o    Danzer Industries,  Inc. ("Danzer  Industries") then principally engaged in
     the design,  manufacture  and sale of truck bodies,  located in Hagerstown,
     Maryland.  During 2002 Danzer  Industries  has expanded its  activities  to
     include the manufacture of cargo trailers.

o    Pyramid Coach, Inc. ("Pyramid") engaged in the leasing of coaches, designed
     and  fitted for use for travel by  country,  rock bands and other  business
     enterprises,  primarily on weekly to monthly leases,  located in Nashville,
     Tennessee.

o    Champion Trailer, Inc. ("Champion"),  which manufactured and sold transport
     trailers  to be used  primarily  in the auto  racing  industry,  located in
     Lewistown, Texas. In 2002, the Company agreed to sell Champion to an entity
     owned by Messrs.  Durham and Whitesell (Officers of the Company) and closed
     the  sale in  January  2003.  Therefore,  Champion  is  accounted  for as a
     discontinued operation.

o    United  Expressline,  Inc.  ("United")  manufactures  and sells general use
     cargo trailers and specialty  trailers used for special purposes and in the
     racing industry,  located in Bristol,  Indiana; Elkhart, Indiana; and White
     Pigeon, Michigan.

During  fiscal  year  2002,  management  focused on the  process of  operational
integration  of  the  subsidiaries.   This  included  the   identification   and
implementation  of  individual   subsidiary   manufacturing  and  administrative
efficiencies as well as marketing and cross-selling opportunities.  In addition,
management  concentrated on ensuring  adequate  capital was available to operate
and that liquidity issues did not detract from the operating entities.

While each of the subsidiaries  markets its products or services  independently,
management has taken advantage of  cross-selling  opportunities  for each of the
subsidiaries,  as well as manufacturing and other operational  efficiencies that
can be achieved between the subsidiaries.  For example, Danzer Industries, which
prior to fiscal year 2002, had not  manufactured  cargo trailers  produced cargo
trailers  at the  rate  of two  per  day at  October  31,  2002,  with a goal of
producing eight per day by the end of fiscal year 2003.




<PAGE>



                             RESULTS OF OPERATIONS

The following table details the Company's  results of operations as a percentage
of sales:
<TABLE>

                                                     Year Ended October 31,  Ten Months Ended  Year Ended December
                                                                                October 31,            31,
                                                              2002                 2001                2000
                                                     ---------------------------------------------------------------

<S>                                                             <C>                    <C>                <C>
Net sales                                                       100.0%                 100.0%             100.0%
Cost of sales                                                    83.5                   78.8               90.5
Selling, general and administrative expenses                     15.0                   17.2                8.0
Loss on asset impairment                                          1.3                   --                 --
Loss from discontinued operations                                 1.8                   13.7               --
Interest expense                                                  6.2                    9.4                3.5
Interest income                                                  --                     --                 (2.8)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  Company  operates  in three  industry  segments,  comprised  of trailer and
related transportation  equipment  manufacturing,  butyl rubber reclaiming,  and
coach  leasing.  Trailer  and  related  transportation  equipment  manufacturing
includes the operations of United and Danzer Industries. Butyl rubber reclaiming
includes the operations of U.S. Rubber and coach leasing includes the operations
of Pyramid,  DW  Leasing,  and  Obsidian  Leasing.  The results of  discontinued
operations relate to Champion Trailer,  which the Company agreed to sell in 2002
to an entity  owned by  Messrs.  Durham  and  Whitesell  and  closed the sale in
January 2003.

The  following is a discussion  of the major  elements  impacting  the Company's
operating  results  by  segment  for the year  ended  October  31,  2002 and the
ten-month period ended October 31, 2001. The comments that follow should be read
in conjunction with the Company's  consolidated financial statements and related
notes contained in this Form 10-K.

The results of  operations  of the Company for 2001 are not  comparable  to 2002
because the results of operations in 2001 include only ten months of operations,
which affects the comparability of the two periods.

In addition,  the results of operations for the trailer manufacturing segment in
2001 do not  include  the  operations  of United and Danzer  Industries  for the
entire ten-month period.  Under accounting  principles generally accepted in the
United States of America, U.S. Rubber is treated as the acquirer in the June 21,
2001 Reorganization,  and U.S. Rubber is treated as having acquired Champion and
Pyramid at the  beginning  of 2001.  Thus,  the  results of  operations  for the
ten-month  period ended October 31, 2001 include the operations of the following
subsidiaries from the date shown below through October 31, 2001:

                  Subsidiary                         Date
                  Danzer Industries                  June 21, 2001
                  Pyramid                            January 1, 2001
                  U.S. Rubber                        January 1, 2000
                  United                             July 31, 2001

Since  Champion is accounted  for as a  discontinued  operation,  its results of
operations  and cash  flow  have  been  removed  from the  Company's  continuing
operations for all periods presented.



<PAGE>


The following table shows net sales by product segment:

<TABLE>

                                                           Ten Months Ended      Year Ended
                                   Year Ended October 31,     October 31,       December 31,
                                            2002                 2001               2000
                                  ---------------------------------------------------------------

<S>                                  <C>                     <C>                <C>
Trailer manufacturing                $        40,775         $        10,650    $            --
Butyl rubber reclaiming                       10,125                   9,874             12,583
Coach leasing                                  6,374                   4,165                 --
                                  ---------------------------------------------------------------

Total                                $        57,274         $        24,689    $        12,583
                                  ===============================================================
</TABLE>


TRAILER AND RELATED TRANSPORTATION EQUIPMENT MANUFACTURING

The following table shows sales, cost of sales and gross profit for this segment
for the periods indicated (in thousands):


                         Year Ended October    Ten Months Ended
                                31,               October 31,
                                2002                 2001
                        --------------------- --------------------

Net sales                   $     40,775          $     10,650
Cost of sales                     35,077                 8,955
                        --------------------- --------------------

Gross profit                $      5,698          $      1,695
                        ===================== ====================

Gross profit %                        14.0%                 15.9%
                        ===================== ====================


YEAR ENDED OCTOBER 31, 2002 COMPARED TO THE TEN MONTHS ENDED OCTOBER 31, 2001

For the reasons  noted above,  operating  results  between these periods are not
comparable.  During the year ended  October  31,  2002,  this  segment  has seen
increasing sales in cargo trailers due to additional  demand driven by marketing
efforts and  availability  of the product.  These  increases have been partially
offset by a continued reduction in the demand for truck bodies.

The primary reason for truck body sales at levels below historic  amounts is the
continued   depressed   condition  of  the   telecommunications   industry  that
historically  purchased a significant  volume of this product  line.  Management
anticipates that the overall general economic  conditions and the economic state
of the  telecommunications  industry will continue to adversely  impact sales of
truck bodies through the first quarter of fiscal year 2003. In addition,  future
sales may be adversely  impacted by a Chapter 11 bankruptcy  filing in 2002 by a
truck body customer,  who accounted for  approximately  $1.7 million of sales in
this segment for the year ended October 31, 2002.  Management has integrated the
production of cargo trailers into its truck body production  facility as a means
to increase  production  capacity of the cargo trailer product and absorb excess
capacity  at the truck body  facility.  As of October 31,  2002,  the truck body
facility  was  producing  two trailers per day with plans to produce up to eight
trailers per day by October 2003.
<PAGE>

Gross  profit for the year ended  October 31,  2002 was  impacted by the reduced
volume of truck bodies sold and only partially offset by reductions in personnel
at these facilities and increased volume in the cargo trailer product line.


BUTYL RUBBER RECLAIMING

The following table shows sales, cost of sales and gross profit for this segment
for the periods indicated (in thousands):

<TABLE>

                         Year Ended October    Ten Months Ended    Year Ended December
                                31,               October 31,              31,
                                2002                 2001                  2000
                        --------------------- -------------------- ---------------------

<S>                         <C>                   <C>                  <C>
Net Sales                   $    10,125           $     9,874          $    12,583
Cost of Sales                     9,407                 8,884               11,390
                        --------------------- -------------------- ---------------------

Gross Profit                $       718           $       990          $     1,193
                        ===================== ==================== =====================

Gross Profit %                        7.1%                 10.0%                 9.5%
                        ===================== ==================== =====================

</TABLE>

YEAR ENDED OCTOBER 31, 2002 COMPARED TO THE TEN MONTHS ENDED OCTOBER 31, 2001

For the reason  noted  above,  operating  results  between  fiscal year 2002 and
fiscal year 2001 are not comparable.

Net sales in this segment for the year ended October 31, 2002 as compared to the
ten-month period ended October 31, 2001 increased 2.5%.  However,  sales in this
segment were lower than anticipated for the year ended October 31, 2002 compared
to the year ended  December 31, 2000 due to damage at a  production  facility in
May 2002 as a result of a fire at an adjacent  property.  The damage  caused the
facility to be closed for  approximately  two months and resulted in the Company
being unable to fill all  outstanding  customer  orders.  This facility  resumed
production  during July 2002.  During  2002,  the Company  recorded an insurance
recovery  for  business  interruption  of $325 as a  reduction  of  general  and
administrative  costs.  In addition  to the effects of the fire,  sales for 2002
were below historical levels due to the factors enumerated below.

Significant  portions  of  sales  in  this  segment  are to  tire  manufacturing
companies.  The tire  manufacturers  have continued to see lower volumes of tire
production  during  2002.  Accordingly,  sales  to  these  customers  are  below
historical levels, and current demand does not indicate a return to sales levels
from the year ended December 31, 2000 in the immediate future.

The lack of  consistent  sources of raw  materials has also been a constraint on
generating  additional sales volume.  The primary material used in reclaiming is
scrap inner tubes.  Since the  introduction of the tubeless tire for automobiles
in the 1970s,  sources of material have declined  substantially.  Management has
been testing other materials including butyl pad scrap as a replacement material
for the past several years with some success.  In addition,  alternative sources
of  material,  including  overseas  sources,  are  being  pursued  to  provide a
consistent  supply of material in the  future.  Until such time that  consistent
sources of raw  materials  are  available,  sales growth in this segment will be
limited.
<PAGE>

Gross profit percentage  decreased from 10% for the ten months ended October 31,
2001 to 7.1% for the year ended October 31, 2002 as a result of  constraints  on
achieving operating  efficiency including lack of consistent raw material supply
and the fire discussed above.


TEN MONTHS ENDED OCTOBER 31, 2001 COMPARED TO THE YEAR ENDED DECEMBER 31, 2000

Operating results between fiscal year 2001 are not comparable as fiscal 2000 was
for a twelve-month period.

Net sales in this segment for the ten months ended  October 31, 2001 as compared
to the year ended December 31, 2001 decreased 21.5% in the amount of $2,709. The
reduction in sales is due primarily to considering  only a ten-month  period for
fiscal year 2001 and to reduced sales to tire  manufacturers and pipeline mastic
manufacturers.  The  Company  had  scheduled  a complete  renovation  of its 12"
extruder (a key element of its  manufacturing  process) that began in June 2001.
During  this time  period,  widespread  tire  recalls  increased  demand for the
Company's  reclaimed butyl products.  The 12" extruder was not fully operational
until late October 2001 after the increased demand had subsided.  Tire customers
built up large inventories in anticipation of demand under the recalls, however,
the  number of tires  submitted  by  consumers  to be  replaced  was lower  than
anticipated and, as a result,  tire manufacturers  accumulated a large inventory
of tires.  Tire  manufacturers  reduced  production in response to the inventory
problem  and this  caused a  substantial  decrease  in  reclaimed  butyl  demand
starting in September 2001.

The decline in the price of crude oil in  September  and  October  2001 caused a
decline in new oil  exploration.  As a result,  the demand for  pipeline  mastic
wraps  produced  with  reclaim  butyl  rubber  supplied by the Company also fell
dramatically beginning in October 2001.

Gross  profit  percentage  for the ten months  ended  October  31,  2001 was 10%
compared  to 9.5% for the  year  ended  December  31,  2000 as a  result  of the
improved operating efficiency. Gross profit for the year ended December 31, 2000
was slightly below historical levels as the result of an inventory  obsolescence
charge recorded in December 2000.


COACH LEASING

The following table shows sales, cost of sales and gross profit for this segment
for the periods indicated (in thousands):


                             Year Ended        Ten Months Ended
                            October 31,           October 31,
                                2002                 2001
                        --------------------- --------------------

Net Sales                  $      6,374          $      4,165
Cost of Sales                     3,357                 1,618
                        --------------------- --------------------

Gross Profit               $      3,017          $      2,547
                        ===================== ====================

Gross Profit %                       47.3%                 61.1%
                        ===================== ====================

For the reason noted above,  operating  results  between  these  periods are not
comparable.
<PAGE>


YEAR ENDED OCTOBER 31, 2002 COMPARED TO THE TEN MONTHS ENDED OCTOBER 31, 2001

Sales for the year ended October 31, 2002  increased 53% in the amount of $2,209
over the  ten-month  period  ended  October 31,  2001.  The increase in sales is
attributable to an additional two months in the period,  an increase in the size
of the coach fleet,  additional revenue from the increased use of employee coach
drivers versus independent  contractors paid directly by the customer and due to
increased  utilization of the fleet in 2002.  Management  believes the increased
utilization is a result of its marketing  efforts to rock and roll, pop, touring
Broadway shows and corporate  customers.  These customers are in addition to the
traditional  country  and western  performers  who have  historically  been this
segment's  primary  customer  base.  This  business  is  seasonal  in nature and
historically is stronger in the spring, summer and fall months.

Gross  profit for this  segment  was 47.3% for the year ended  October  31, 2002
compared to 61.l% for the  comparable  ten-month  period ended October 31, 2001.
The  reduction  is primarily  attributable  to two  factors.  First,  during the
summer,  additional  coaches were leased from  unrelated  third  parties to meet
current  demand.  The additional  lease cost has been recorded as a component of
cost of sales and represents an increase of  approximately 5% as a percentage of
sales.  This  segment  had no lease cost for outside  coaches in the  comparable
period of 2001.  Second,  additional drivers have been added as employees during
2002 adding  approximately  7% as a  percentage  of sales to the costs of direct
wages and benefits for the quarter.  In the comparable  period ended October 31,
2001, a larger  percentage of coach drivers were  independent  contractors  paid
directly by the customer. In addition, the two additional months of activity for
the year ended  October 31, 2002  include  the months of November  and  December
which are historically slower months,  resulting in lower gross profits for this
segment.


SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES

For  the  reasons  noted  above,  results  between  periods  presented  are  not
comparable.

The Company's selling,  general and  administrative  expenses are higher for the
year ended October 31, 2002 versus the  ten-month  period ended October 31, 2001
due to the  trailer  manufacturing  operations  added  in  2002,  as  previously
discussed.

In addition,  selling,  general and  administrative  expenses are higher for the
year ended October 31, 2002 than would be expected on an ongoing basis.  This is
due primarily to increased  administrative costs that were necessary to continue
the  process  of  creating  better  subsidiary  reporting,  the  use of  outside
professionals for services in assisting in post acquisition activities, the cost
to obtain prior year audits to meet regulatory filing requirements, and the cost
of providing  accounting and related services to management,  that will normally
be performed by Company personnel on a going forward basis. The additional costs
were partially  offset by a business  interruption  claim related to the fire at
the butyl rubber  reclaiming  facility in the amount of $325.  In  addition,  on
February 1, 2002, the Company  changed its estimates with regard to depreciation
of coaches owned by DW Leasing and Obsidian  Leasing by  establishing  a salvage
value of approximately 38%. The depreciable lives of the coaches of 15 years was
not changed. This change in estimate resulted in a reduction of selling, general
and  administrative  expenses in the year end October 31, 2002 of  approximately
$200.


INTEREST EXPENSE

For  the  reasons  noted  above,  results  between  periods  presented  are  not
comparable.
<PAGE>

While the interest expense increased over the prior period primarily as a result
of the  transactions  that occurred in June and July 2001,  interest expense for
the year ended  October 31, 2002 as a percentage  of average debt  borrowings of
$37,158 was 9.6%.  Interest expense for the ten months ended October 31, 2001 as
a percentage of average debt  borrowings of $24,964 was 9.3% (11.2% on an annual
basis). The decrease is primarily due to the reduction of the prime rate as well
as the refinancing  debt and equity  transactions  discussed below in "Liquidity
and  Capital   Resources,"   "Refinancing   Activities,"  and  "Partners  Equity
Transactions."


ASSET IMPAIRMENT

The  Company  adopted  the new  rules  on  accounting  for  goodwill  and  other
intangible  assets  beginning in the first  quarter of fiscal 2002.  The Company
completed its  transitional  impairment test in conjunction with the adoption of
Statement of Financial  Accounting  Standards (SFAS) No. 142, Goodwill and Other
Intangible  Assets during the quarter ended July 31, 2002. The  impairment  test
indicated  that a portion of the  goodwill of Danzer  Industries  was  impaired.
Accordingly,  $2,015  has been  recorded  as a  cumulative  effect  of change in
accounting principle.

During the fourth quarter of 2002, the Company  evaluated the  recoverability of
Danzer  Industries'  long-lived assets,  including  remaining  goodwill,  due to
Danzer  Industries'  significant  operating  loss in 2002  and  the  Chapter  11
bankruptcy filing of a significant  customer.  Danzer Industries  determined the
estimated  future  undiscounted  cash  flows were  below the  carrying  value of
certain long-lived assets. As a result, remaining goodwill was written off and a
charge of $720 as loss on asset impairment was recorded as an operating expense.


DISCONTINUED OPERATIONS

On  October  30,  2002,  the  Company's  Board  of  Directors   agreed  to  sell
substantially all assets of Champion to an entity  controlled by Messrs.  Durham
and  Whitesell  in exchange  for  assumption  of all  liabilities  of  Champion,
excluding  its  subordinated  debt. In  accordance  with  Statement of Financial
Accounting  Standards ("SFAS") No. 144,  Accounting for Impairment of Long-Lived
Assets,  the operating  results of Champion have been classified as discontinued
operations.  The losses from discontinued  operations for the year ended October
31,  2002  and  ten  months  ended  October  31,  2001  of  $1,040  and  $3,376,
respectively,  represent the losses of Champion during these periods, net of tax
benefit  of $438 and $0,  respectively.  The loss in 2001  includes a charge for
asset  impairment  of  $2,305.  Champion  was  not  included  in  the  financial
statements for the year ended  December 31, 2000.  Sales of Champion in the year
ended  October  31,  2002 were  $2,884 as  compared to $3,365 for the ten months
ended October 31, 2001. The decrease of $481 or 14.3% is  attributable  to lower
order volume during 2002.

To facilitate the sale of substantially  all assets of Champion,  on January 27,
2003,  the Company  agreed to a settlement  with  Markpoint  of its  outstanding
subordinated debt with Champion.  In return for cancellation of the indebtedness
and release of a pending  legal  action  against the Company and  Champion,  the
Company made a cash payment to Markpoint of $675 and issued to Markpoint  32,143
shares of the Company's  Series D preferred  stock.  In addition,  the agreement
provides  Markpoint the option to require the Company to repurchase these shares
at a price of $21 per share. The repurchase  option is available to Markpoint as
follows:  16,072 shares during the period May 1, 2003 to June 1, 2003 and 16,071
shares during the period  November 1, 2003 to December 1, 2003.  The  repurchase
options  expire if not  exercised  during the specified  periods.  The Company's
repurchase obligation is guaranteed by Mr. Durham.


INCOME TAX PROVISION

There was income tax  benefit of $33 for the year ended  October 31, 2002 due to
the  utilization of previously  reserved net operating loss (NOL)  carryforwards
offset by taxable gains on debt  forgiveness.  The income tax benefit is created
primarily through NOL carryforwards  recognized to the extent they are available
to offset the Company's net deferred tax liability.
<PAGE>


                        LIQUIDITY AND CAPITAL RESOURCES


LIQUIDITY AND WORKING CAPITAL

Each  of  the  subsidiaries  of  the  Company  have  separate  revolving  credit
agreements and term loan  borrowings  through which the subsidiary  finances its
operations together with cash generated from operations.  The principal balances
of some of these  loans  reflect the fact that  Partners,  from whom four of the
five subsidiaries were purchased,  entered into highly leveraged acquisitions of
Champion (subsequently divested), U.S. Rubber, Pyramid, and United.

This  high  level of debt  created  liquidity  issues  for the  Company  and the
stringent financial covenants that are common for this type of debt increase the
probability  that  the  Company's  subsidiaries  may  from  time  to  time be in
technical default under these loans. These risks are mitigated, in part, for the
Company's United and U.S. Rubber subsidiaries by the right described below under
"Guarantees  of  Partners."  They  are  also  mitigated  by the  divestiture  of
Champion,  and the completed refinancing efforts with respect to U.S. Rubber and
the coach leasing segment.

The Company's working capital position (current assets over current liabilities)
was positive at October 31, 2002 by $1,591.  At the end of fiscal year 2001, the
working  capital  position  was  $(2,528).  The  increase in working  capital is
primarily attributable to the factors below.

The Company  continues  to address  liquidity  and working  capital  issues in a
number of ways.  Management  believes that the following  steps started in early
2002  and  currently  underway  will  improve  the  Company's  working  capital,
strengthen  its equity  and place the  Company  in a  position  to  successfully
enhance its liquidity. These steps include:

o    The transactions described below under "Partners Equity Transactions" which
     converted  approximately $2,834 of long-term liabilities to equity. Of this
     amount,  $1,290 was converted to Series C Preferred Stock during the second
     fiscal  quarter of 2002.  Additionally,  $1,545 was  converted  to Series D
     Preferred Stock in October 2002.

o    The divestiture of Champion  described below under "Champion  Transactions"
     which improved the Company's overall equity and working capital position.

o    The  transactions  described  below under  "Refinancing  Activities"  which
     reduced the Company's  interest  costs and decreased the proportion of debt
     which has been classified as a current liability. The Company completed the
     refinancing of the United line of credit and reduced the principal payments
     on a term note. In addition,  refinancing  was completed at U.S. Rubber and
     on several coaches in the coach leasing group.
<PAGE>


As a result of the actions described above, Management believes that the Company
has  financing  agreements  in place to provide  adequate  liquidity and working
capital for fiscal 2003.  However,  there can be no assurance  that such working
capital and liquidity  will in fact be adequate.  Therefore,  the Company may be
required to draw upon other liquidity sources. The Company has therefore secured
an increased financial commitment from Fair Holdings, Inc. ("Fair Holdings"), an
entity controlled by the Company's Chairman,  to provide, as needed,  additional
borrowings under a $5 million line of credit agreement, which expires on January
9, 2005.  Currently,  availability  under the  agreement is  approximately  $3.2
million.


FINANCIAL COVENANTS

The Company and certain of its  subsidiaries  did not meet certain  requirements
and covenants in their debt agreements relating to maintenance of minimum ratios
and levels of  earnings  to funded  debt and fixed  charge  coverage  rate.  The
lenders have waived or modified the  covenants  not in  compliance as of October
31, 2002.

The Company has taken a number of actions which  eliminated  its defaults  under
agreements with certain of its lenders:

o    At October 31, 2002, U.S. Rubber had violated  negative  covenants with its
     primary  lender and received a waiver of the  violation and an amendment of
     the Credit Agreement.

o    Pyramid was a guarantor of DW Leasing's  debt to Regions  Bank,  Nashville,
     Tennessee.  DW Leasing and Pyramid had been in violation of the Funded Debt
     to EBITDA ratio in the Regions Bank Credit  Facility since the inception of
     the loan. At the time of the Acquisition,  Regions Bank granted a waiver of
     this  violation.  The  covenant  had not been  rewritten,  and Regions Bank
     waived the  violation as of October 31, 2001.  The Company  refinanced  the
     Regions Bank debt with a related party on December 19, 2002.

o    At October 31, 2002,  the Company was in  violation  of negative  covenants
     with   Renaissance   US  Growth  &  Income  Trust  PLC  and  BFSUS  Special
     Opportunities  Trust PLC,  the holders of  debentures  that  completed  the
     financing of United.  The Company received a waiver of the violations as of
     October 31, 2002 and  obtained  modifications  of terms with the  debenture
     holders to provide for less stringent covenants. In exchange for the waiver
     and modifications,  the Company issued warrants to the debenture holders to
     purchase up to 16,000 shares of the  Company's  common stock at an exercise
     price of $.20 per share.

o    Danzer  Industries was notified by letter dated May 28, 2002 that it was in
     technical  default of its revolving note and term note due to nonreceipt of
     certain  documentation  and  noncompliance  with the debt service  ratio. A
     forbearance  agreement  was  completed  in  October  2002.  As  part of the
     forbearance  agreement,  the Company  received a waiver  through  March 31,
     2003,  when  the  entire  debt is due.  As of  October  31,  2002,  $867 of
     long-term  debt related to these  obligations  has been  reclassified  as a
     current liability due to the forbearance agreement. Management is currently
     exploring options with regard to refinancing the outstanding debt of Danzer
     Industries,  including  extension  of the  current  agreement  with Bank of
     America. Should refinancing or an extension of the current agreement not be
     obtained by the expiration date of the forbearance agreement, the debt will
     be repaid through  current  sources of  availability  including  borrowings
     under the Company's line of credit with Fair Holdings.
<PAGE>

o    Champion has remained in default of its subordinated  debt agreement in the
     amount of $1,250,  and the subordinated  lender sued to obtain payment.  On
     January 27, 2003, the Company settled this liability in exchange for a cash
     payment of $675 and  issuance of 32,143  shares of the  Company's  Series D
     Preferred Stock.  The settlement also provides for a repurchase  obligation
     of these  shares  on the part of the  Company  at a price of $21 per  share
     within a specified period ending December 1, 2003. Accordingly,  $1,013 has
     been  classified  as a current  liability.  Champion  was sold to a company
     owned by Messrs. Durham and Whitesell on January 30, 2003.

o    At October 31, 2002,  United had violated  financial  covenants  with First
     Indiana Bank and Huntington Capital Investment Company. United has received
     waivers of these violations through November 1, 2003 from First Indiana and
     a modification of covenants with Huntington Capital Investment Corporation.

o    Various  subsidiary  companies were in violation of requirements to provide
     year-end  financial  statements  to various  lenders  within 90 days of the
     close of the 2002 year end. Management has received extensions of time from
     the lenders.


                               FUNDS AVAILABILITY


CASH AVAILABILITY

On a consolidated basis, at October 31, 2002, the Company had approximately $920
of cash and cash  equivalents.  Danzer  Industries,  U.S.  Rubber,  United,  and
Obsidian  Enterprises  each have  revolving  credit lines  available for working
capital at each individual  entity.  Borrowings under the credit  facilities are
available to the lesser of the maximum  amount or the borrowing  base as defined
in the credit agreement.  At October 31, 2002,  additional current  availability
under  these  credit  lines  and  maximum  availability  if  supported  by their
individual borrowing base are:
<TABLE>

           Company                 Current Availability            Maximum Availability
<S>                                   <C>                             <C>
Danzer Industries                     $       0                       $        0(1)
U.S. Rubber                                 701                            2,472
United                                      607                              662
Obsidian Enterprises                      3,202(2)                         3,202(2)
</TABLE>

(1)  Additional  borrowings only at the bank's  discretion under the forbearance
     agreement
(2)  Includes  additional  availability  of $2,000  from an increase in the line
     subsequent to year end

The Company  generated net cash flow of $322 from continuing  operations  during
the year ended October 31, 2002. Cash provided by operations  during the year is
primarily due to increases in accounts payable and customer deposits,  offset by
increases in inventories.


REFINANCING ACTIVITIES

Management refinanced certain of the currently outstanding debt of the Company:

o    U.S.  Rubber  refinanced  its debt with a new lender on October 24, 2002 on
     more favorable terms than the terms with the prior lender.

o    On August 28, 2002,  the Company  obtained a renewal and increased  maximum
     borrowing  limit of the  revolving  line of  credit of  United  with  First
     Indiana Bank and an  additional  one year of  amortization  of its previous
     2-year term debt.
<PAGE>

o    The  Company  refinanced  certain  coaches  transferred  from DW Leasing to
     Obsidian  Leasing with DC Investments,  LLC ("DC  Investments"),  an entity
     owned 50% by the Company's Chairman,  and its various existing lenders. Two
     senior lenders representing approximately 80% of Obsidian Leasing Company's
     debt have refinanced  their  respective  loans which included a substantial
     reduction in the interest rates and a longer  amortization of the debt. The
     debt was  refinanced by the existing  lenders for 80% of the current amount
     outstanding.  The remaining 20% was financed through a note payable to Fair
     Holdings.  In addition to the above  refinancing,  on  December  17,  2002,
     Obsidian  Leasing sold four  coaches to DC  Investments  Leasing,  LLC ("DC
     Investments  Leasing"),  a newly created  entity owned 50% by the Company's
     Chairman, in exchange for DC Investments Leasing's satisfaction of the debt
     outstanding on such coaches.  DC Investments Leasing paid this debt through
     a  refinancing  at terms that  included a reduction in interest  rates.  In
     addition, DC Investments Leasing also acquired five additional coaches that
     were  previously  to be purchased by the Company  thereby  eliminating  the
     Company's  existing  purchase  commitment for such coaches.  DC Investments
     Leasing also entered into a management  agreement  with Pyramid under which
     all nine coaches described above will be leased by Pyramid.


                          PARTNERS EQUITY TRANSACTIONS

Partners,  the major shareholder of the Company,  was required under the Plan of
Reorganization  to fund  through the  purchase  of  additional  preferred  stock
certain ongoing  administrative  expenses of the Company to complete the Plan of
Reorganization,  complete all required current and prior year audits to meet the
regulatory filing requirements,  and ensure all annual and quarterly SEC filings
are  completed  to enable the  registration  of the  preferred  stock  issued to
Partners.  Such amounts expended through October 31, 2002  approximated  $1,275.
Pursuant to the agreement with Partners,  the Company converted these amounts to
equity in exchange for issuance to Partners of  convertible  preferred  stock in
October  2002.  Additional  expenses of $270 in excess of amounts  Partners  was
obligated to pay were funded by Fair Holdings,  Inc. and subsequently  converted
to Series D Preferred  Stock.  The total liability of $1,545 converted to equity
was incurred as follows:  $364  capitalized in the reverse  merger  transaction;
$376 as expenses incurred in 2001; and $805 as expenses incurred in 2002.

In 2002,  Partners  converted  $1,290 of notes payable and accrued interest from
Partners  to the Company to 402,906  shares of Series C  Preferred  Stock of the
Company.


                             GUARANTEES OF PARTNERS

The Company has an agreement  with  Partners that gives the Company the right to
mandate a capital  contribution  from the Partners if the lenders to U.S. Rubber
or United were to declare a default.  In either of those events, the Company has
the right to enforce a capital contribution agreement with Partners up to $1,620
on U.S.  Rubber  and  $1,000  on  United  to fund  the  respective  subsidiary's
shortfall.  These  payments,  if any,  would be applied  directly  to reduce the
respective subsidiary's debt obligations to the lender.


                              CHAMPION TRANSACTIONS

In 2002,  the Board of  Directors  authorized  the  Chairman of the Board of the
Company to explore various options to divest Champion  Trailer or, at a minimum,
restructure  this  operation  of  the  business.  As a  result,  DC  Investments
negotiated the purchase of the loans of Bank One to Champion.
<PAGE>

In 2002,  Champion was also indebted to Markpoint  under a  subordinated  credit
facility  in the amount of $1,250  and was in  violation  of  certain  covenants
related to the loan.  Subsequent to DC Investments  purchasing the Bank One debt
in a  nonrecourse  assignment,  Markpoint  filed a lawsuit in Texas  state court
seeking payment in full for their subordinated debt from Champion or the Company
under a guarantee agreement.

On January 27,  2003,  Markpoint  settled  their  lawsuit in exchange for a cash
payment of $675 and the issuance to Markpoint of 32,143  shares of the Company's
Series D preferred  stock.  In addition,  the agreement  provides  Markpoint the
option to require the Company to  repurchase  these shares at a price of $21 per
share. The repurchase option is available to Markpoint as follows: 16,072 shares
during  the  period  May 1, 2003 to June 1, 2003 and  16,071  shares  during the
period  November 1, 2003 to December 1, 2003. The  repurchase  options expire if
not exercised during the specified periods. The Company's repurchase  obligation
is guaranteed by Mr. Durham.  Subsequent to the settlement,  the Company's Board
of Directors  authorized the sale of Champion,  which was completed  January 30,
2003.


                               CASH FLOWS (EBITDA)

A summary of our contractual  cash  obligations for the fiscal years ending 2003
through 2006 and 2007 and thereafter at October 31, 2002 is as follows:
<TABLE>

                                                                                                           2007 and
Contractual Obligations                    Total         2003         2004         2005         2006      Thereafter
--------------------------------------- ------------ ------------- ------------ ------------ ------------ ------------

Long-term debt, with covenant
<S>                                      <C>          <C>           <C>          <C>          <C>          <C>
 violations and classified as current    $    1,863   $    1,863    $       --   $       --   $       --   $       --
Long-term debt, and all debt service
 interest payments                           45,831        7,099         6,882       15,395        8,467        7,988
Operating leases                              1,397          450           353          274          189          131
Mandatory redeemable preferred stock          1,400           --            --           --        1,400           --
                                        ------------ ------------- ------------ ------------ ------------ ------------

Total contractual cash obligations       $   50,491   $    9,412    $    7,235   $   15,669   $   10,056   $    8,119
                                        ============ ============= ============ ============ ============ ============
</TABLE>

Cash flow and liquidity are discussed  further  below,  and the footnotes to our
financial statements discuss cash flow, liquidity and the current classification
of debt due to loan covenant violations.

We also have a commercial commitment as described below:
<TABLE>

 Other Commercial Commitment      Total Amount Committed     Outstanding at October 31,       Date of Expiration
                                                                        2002
------------------------------- ---------------------------- ---------------------------- ----------------------------


<S>                                   <C>                          <C>                    <C>
Line of credit, bank                  $           1,000            $             875      March 31, 2003
Line of credit, bank                              3,750                        3,088      February 1, 2004
Line of credit, bank                              4,000                        1,528      October 1, 2005
Line of credit, related party                     5,000*                       1,798      January 1, 2005
</TABLE>

*    Credit line with Fair Holdings  increased from $3,000 to $5,000  subsequent
     to year end.

The  Company's net cash  provided by  continuing  operations  for the year ended
October  31,  2002  was  $322.  This  is  comprised  of a loss  from  continuing
operations of $4,852,  offset by noncash  depreciation and amortization and loss
on asset impairment of $3,288 and goodwill impairment loss of $2,015,  increases
in  inventories  of $1,752 and deferred  taxes of $40 and  decreases in accounts
receivable of $264 and other assets of $336,  and increases in accounts  payable
of $545,  and customer  deposits of $473,  and decreases in accrued  expenses of
$339. In addition,  the Company had noncash losses on debt refinancing,  sale of
equipment and accretion of interest of $181, $41, and $162, respectively.
<PAGE>

Net cash flow provided from financing  activities for the year ended October 31,
2002 was  $618.  This is  comprised  of  borrowings  of  long-term  debt and net
borrowings of short-term  debt of $3,583 and borrowings  from related parties of
$628,  offset by principal  repayments of long-term debt of $3,258.  The Company
also paid debt issuance costs of $248 and distributions to members of DW Leasing
of $107, offset by the exercise of warrant of $20.

Cash flow was used in investing  activities  for the year ended October 31, 2002
of $587.  This is comprised  of purchases of property and  equipment of $909 and
proceeds from the sale of property and equipment of $322.

The total increase (decrease) in cash is summarized as follows:
<TABLE>

                                                                Year Ended      Ten Months Ended      Year Ended
                                                               October 31,         October 31,       December 31,
                                                                   2002               2001               2000
                                                            ------------------- ------------------ ------------------

<S>                                                           <C>                 <C>                <C>
Net cash provided by continuing operations                    $           322     $         1,763    $           762
Net cash provided by (used in) investing activities                      (588)            (17,772)             1,156
Net cash provided by (used in) financing activities                       618              16,321             (2,186)
Net cash flow provided by discontinued operations                          39                  --                 --
                                                            ------------------- ------------------ ------------------

Increase (decrease) in cash and cash equivalents              $           391     $           312    $          (268)
                                                            =================== ================== ==================
</TABLE>

EBITDA is a measure of the Company's ability to generate cash flow and should be
considered  in  addition  to, but not as a  substitute  for,  other  measures of
financial   performance  reported  in  accordance  with  accounting   principles
generally accepted in the United States of America.

EBITDA by  business  segment  and  reconciliation  to net  income or loss  under
accounting  principles  generally  accepted  in the United  States of America by
segment for the applicable periods is as follows:
<PAGE>
<TABLE>

                                                                 Year Ended October 31, 2002
                                          --------------------------------------------------------------------------
                                                                                                         Income
                                                                       Income                            (Loss)
                                                                         Tax                              from
                                                         Interest      Expense       Depreciation      Continuing
                                             EBITDA       Expense     (Benefit)     & Amortization     Operations
                                          ------------- ------------ ------------ ------------------- --------------

Trailer and related transportation
<S>                                         <C>           <C>         <C>               <C>            <C>
 equipment manufacturing                    $     735     $   1,400   $   404           $   1,425*     $  (2,494)
Coach leasing                                   1,830        1,468        (59)                779           (358)
Butyl rubber reclaiming                           967          684       (152)              1,084           (649)
Corporate                                          --           --       (226)                 --            226
                                          ------------- ------------ ------------ ------------------- --------------
Total Company                               $   3,532     $  3,552    $   (33)          $   3,288      $  (3,275)
                                          ============= ============ ============ =================== ==============
</TABLE>

*    includes impairment charge of $720
<TABLE>


                                                              Ten Months Ended October 31, 2001
                                          --------------------------------------------------------------------------
                                                                                                         Income
                                                                       Income                            (Loss)
                                                                         Tax                              from
                                                         Interest      Expense       Depreciation      Continuing
                                             EBITDA       Expense     (Benefit)     & Amortization     Operations
                                          ------------- ------------ ------------ ------------------- --------------

Trailer and related transportation
<S>                                         <C>           <C>         <C>               <C>            <C>
 equipment manufacturing                    $     638     $    369    $    98           $     365      $    (194)
Coach leasing                                   1,481        1,266         --                 785           (570)
Butyl rubber reclaiming                           857          677       (135)                905           (590)
Corporate                                          --           --       (335)                 --            335
                                          ------------- ------------ ------------ ------------------- --------------
Total Company                               $   2,976     $  2,312    $  (372)          $   2,055      $  (1,019)
                                          ============= ============ ============ =================== ==============
</TABLE>
<TABLE>


                                                                Year Ended December 31, 2000
                                          --------------------------------------------------------------------------
                                                                                                         Income
                                                                       Income                             from
                                                         Interest        Tax         Depreciation      Continuing
                                             EBITDA       Expense      Expense      & Amortization     Operations
                                          ------------- ------------ ------------ ------------------- --------------

<S>                                         <C>           <C>         <C>               <C>            <C>
Butyl rubber reclaiming                     $   1,094     $     442   $    50           $     554      $      48
                                          ============= ============ ============ =================== ==============
</TABLE>

The  Company  allocates  selling,  general  and  administrative  expenses to the
respective  subsidiaries  primarily  based on a  percentage  of  sales.  Amounts
allocated by segment are as follows:


                                           Year Ended      Ten Months Ended
                                          October 31,         October 31,
                                              2002               2001
                                      ----------------------------------------

Trailer manufacturing                    $           934     $           245
Coach leasing                                        146                  96
Butyl rubber reclaiming                              232                 275
                                      ----------------------------------------

Total                                    $         1,312     $           616
                                      ========================================
<PAGE>

EBITDA by segment, exclusive of the allocation of the above selling, general and
administrative expenses, is as follows:


                                           Year Ended      Ten Months Ended
                                          October 31,         October 31,
                                              2002               2001
                                      ----------------------------------------

Trailer manufacturing                    $         1,669     $           883
Coach leasing                                      1,976               1,577
Butyl rubber reclaiming                            1,199               1,132
                                      ----------------------------------------

Total                                    $         4,844     $         3,592
                                      ========================================


                          CRITICAL ACCOUNTING POLICIES


Our  significant  accounting  policies are  summarized  in the  footnotes to our
financial  statements.  Some of the most  critical  policies are also  discussed
below.

As a matter of policy,  we review our major  assets  for  impairment.  Our major
operating  assets are  accounts  receivable,  inventory,  intangible  assets and
property and equipment.  We have not  historically  experienced  significant bad
debts  expense,  although the filing of Chapter 11  bankruptcy  during 2002 of a
customer resulted in a bad debt charge of $379.  However, we believe our reserve
for doubtful accounts of $495 should be adequate for any exposure to loss in our
October 31, 2002  accounts  receivable.  We have also  established  reserves for
slow-moving  and  obsolete  inventories  and  believe  the  reserve  of  $466 is
adequate.  We  depreciate  our property and  equipment  and amortize  intangible
assets  (except  for  goodwill)  over  their  estimated  useful  lives.  We have
identified items that are impaired,  and during the quarter ended July 31, 2002,
the Company  completed its transitional  impairment test in conjunction with the
adoption of SFAS 142.  The  impairment  test  indicated  that  certain  goodwill
related to the trailer  manufacturing  segment was impaired.  Accordingly $2,015
has been recorded as a cumulative effect of change in accounting principle.

During  the fourth  quarter,  an  additional  review  for asset  impairment  was
conducted  because  of  changes  in  circumstances   that  indicated   potential
impairment.  Continuing  operating losses at Danzer Industries and the filing of
Chapter 11  bankruptcy  by Danzer  Industries'  largest  customer  in the fourth
quarter resulted in an additional  impairment review. As a result, an additional
$720 of goodwill  was  determined  to be  impaired at the trailer  manufacturing
segment.

The  realization of the remaining  goodwill of $6,434 is primarily  dependent on
the future  operations of the  operating  entity where the goodwill is allocated
(primarily  United).  Historical  operating results,  current product demand and
estimated  future results indicate the results of operations at United should be
adequate to continue to realize this  amount.  However,  future  results may not
meet  expectations  due to  economic  or  other  factors,  and  failure  to meet
expectations may result in the goodwill not being fully realizable.

The initial cost of coaches acquired is depreciated  over a straight-line  basis
over  15  years  to  a  salvage  value  of  38%  of  original  cost.  Subsequent
enhancements and refurbishments of coaches are depreciated over five years using
the  straight-line  method.  The  current  depreciation  policy  is a change  in
estimate that was effective  February of 2002. Prior to this date,  coaches were
depreciated  over fifteen years on a straight line basis with no salvage  value.
Had the prior  depreciation  policy  been in effect for the entire year of 2002,
depreciation  expense would have  increased by  approximately  $200.  The age of
coaches in our fleet range from less than one year to ten years, with an average
age of  approximately  four  years.  Actual  value of coaches  after 15 years is
dependent on several  factors  including the level of maintenance and the market
conditions at the time of disposal. We have not disposed of a material number of
coaches,  and our estimate of  depreciation  is based on information  other than
actual disposal experience.  Accordingly,  we continue to evaluate our estimates
with  respect  to the  actual  depreciation  of such  vehicles  based on  market
conditions  and our  experience  in  disposals  when they occur.  Should  future
factors indicate the current depreciation policy is not adequate, we will adjust
the  depreciation  rates, and such adjustments may have an adverse impact on our
results of operations.

<PAGE>


In conjunction  with financing of the acquisition of United,  the Company issued
386,206  shares of Series C preferred  stock to  Huntington  Capital  Investment
Corporation  ("Huntington").  The note purchase  agreement  includes a provision
that gives  Huntington  the option to require  the Company to  repurchase  these
shares at 90% of market  value  upon the  earlier  of: a) fifth  anniversary  of
issuance of such shares,  b) default under the subordinated  debt agreement,  c)
other factors  related to a sale of  substantially  all assets of the Company as
defined in the  agreement.  Increases in the value of the  Company's  stock will
result in a corresponding increase to this repurchase requirement.  Accordingly,
a substantial increase in stock price at the repurchase date may have an adverse
impact on the Company's liquidity. At October 31, 2002, the Company had violated
certain  financial  covenants  defined in the  subordinated  debt agreement with
Huntington.  The Company received a waiver of these violations as of October 31,
2002 and a modification to the covenants.


                                  CONTINGENCIES

The Company is party to  ordinary  litigation  incidental  to its  business.  No
current  pending  litigation  is expected to have a material  adverse  effect on
results of operations, financial condition or cash flows.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk  related to interest  rate  changes on its
debt. The disclosures in Item 7 above are incorporated herein by reference.






<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


INDEPENDENT AUDITOR'S REPORT



To the Board of Directors
Obsidian Enterprises, Inc.
Indianapolis, Indiana

We have  audited  the  accompanying  consolidated  balance  sheets  of  Obsidian
Enterprises,  Inc.  and  Subsidiaries  as of October 31, 2002 and 2001,  and the
related  consolidated  statements of operations,  stockholders' equity (deficit)
and cash flows for the year ended  October 31,  2002,  and the ten months  ended
October  31,  2001,  and the year  ended  December  31,  2000.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in  all  material   respects,   the  financial   position  of  Obsidian
Enterprises,  Inc.  and  Subsidiaries  as of October 31, 2002 and 2001,  and the
results of their  operations and their cash flows for the year ended October 31,
2002,  the ten months ended  October 31, 2001,  and the year ended  December 31,
2000 in conformity with accounting  principles  generally accepted in the United
States of America.

As  described  in  Note 2 to  the  financial  statements,  the  Company  adopted
Statement  of  Financial  Accounting  Standards  No.  142,  Goodwill  and  Other
Intangible Assets in 2002.

Our audit of the consolidated financial statements of Obsidian Enterprises, Inc.
and  Subsidiaries  included  Schedule II, contained  herein,  for the year ended
October 31,  2002,  the ten months ended  October 31,  2001,  and the year ended
December 21, 2000. In our opinion, such schedule presents fairly the information
required to be set forth  therein,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

As described in Note 3 to the financial  statements,  the previously issued 2002
and 2001 financial  statements  have been restated for errors in the application
of accounting principles.


/s/ McGladrey & Pullen, LLP
Elkhart, Indiana
February 10, 2003, except for Note 3,
   as to which the date is August 15, 2003

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>

                                                                                 October 31,       October 31,
                                                                                     2002             2001
                                                                               ----------------------------------


Assets

Current assets:
<S>                                                                              <C>              <C>
  Cash and cash equivalents                                                      $          920   $          529
  Marketable securities                                                                     137              223
  Accounts receivable, net of allowance for doubtful accounts
   of $495 for 2002 and $80 for 2001 (Note 9)                                             3,307            3,571
  Accounts receivable, related parties (Note 16)                                            206              217
  Inventories, net (Notes 7 and 9)                                                        7,315            5,563
  Prepaid expenses and other assets                                                         384              514
  Deferred income tax assets (Note 15)                                                      665              673
                                                                               ----------------------------------

Total current assets                                                                     12,934           11,290

Property, plant and equipment, net (Notes 8 and 9)                                       23,048           23,384

Other assets:
  Intangible assets (Notes 4 and 6):
   Goodwill not subject to amortization                                                   6,434            5,829
   Goodwill, less accumulated amortization of $76                                            --            3,381
   Noncompete agreements, less accumulated amortization
     of $222 for 2002 and $44 for 2001                                                      664              842
   Trade name and customer relations, less accumulated
     amortization of $208 for 2002 and $125 for 2001                                        719              802
   Deferred debt costs, less accumulated amortization
     of $97 in 2002 and $44 in 2001                                                         470              369
   Other                                                                                    116              579
   Assets of subsidiary held for sale (Note 5)                                            1,538            2,374
                                                                               ----------------------------------

                                                                                 $       45,923   $       48,850
                                                                               ==================================
</TABLE>


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

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>

                                                                                 October 31,       October 31,
                                                                                     2002             2001
                                                                               ----------------------------------
Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
<S>                                       <C>                                    <C>              <C>
  Current portion of long-term debt (Note 9)                                     $        5,667   $        7,871
  Accounts payable, trade                                                                 3,450            3,126
  Accounts payable, related parties (Note 16)                                               668              925
  Accrued compensation                                                                      810              560
  Accrued expenses                                                                          514            1,040
  Customer deposits                                                                         234              296
                                                                               ----------------------------------

Total current liabilities                                                                11,343           13,818

Long-term debt, net of current portion (Note 9)                                          23,879           26,076

Long-term debt, related parties (Note 9 and 16)                                           5,518               --

Deferred income tax liabilities (Note 15)                                                 1,624            1,672

Accounts payable, related parties (Note 16)                                                  --            2,170

Liabilities of subsidiary held for sale (Note 5)                                          2,848            2,348

Commitments and contingencies (Note 17)

Mandatory redeemable preferred stock (Note 12):
  Class of Series C Preferred Stock: 386,206 shares outstanding                           1,400            1,435

Stockholders' equity (deficit) (Note 13):
    Common stock, par value $.0001 per share; 40,000,000 shares authorized;
    36,007,855 shares outstanding                                                             3                3
    Preferred stock, 5,000,000 shares authorized; Class of Series C Preferred
    Stock, par value $.001, 4,600,000
    authorized, 4,368,399 shares issued and outstanding in 2002 and
    3,739,169  shares issued and outstanding in 2001; 200,000 shares of
    undesignated Preferred Stock authorized                                                   5                4
    Preferred stock, 200,000 shares authorized; Class of Series D
    convertible preferred stock, par value $.001, 88,330 shares issued and
    outstanding in 2002; 0 shares issued and outstanding in 2001                             --               --
    Additional paid-in capital                                                           10,184            5,682
    Accumulated other comprehensive income (loss)                                           (49)              37
    Retained earnings (accumulated deficit)                                             (10,832)          (4,395)
                                                                               ----------------------------------

Total stockholders' equity (deficit)                                                       (689)           1,331
                                                                               ----------------------------------

                                                                                 $       45,923   $       48,850
                                                                               ==================================
</TABLE>


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

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands except per share and share data)
<TABLE>

                                                               Year Ended      Ten Months Ended      Year Ended
                                                               October 31,       October 31,
                                                                  2002               2001        December 31, 2000
                                                            --------------------------------------------------------
                                                              (as restated,
                                                               see Note 3)
<S>                                                           <C>               <C>                <C>
Net sales                                                     $       57,274    $       24,689     $       12,583

Cost of sales                                                         47,841            19,457             11,390
                                                            --------------------------------------------------------

GROSS PROFIT                                                           9,433             5,232              1,193

Selling, general and administrative expenses                          (8,589)           (4,251)            (1,009)
Loss on asset impairment (Note 4)                                       (720)               --                 --
Insurance settlement                                                     325                --                 --
                                                            --------------------------------------------------------

Income from operations                                                   449               981                184

Other income (expense):
  Interest expense (Note 9)                                           (3,552)           (2,312)              (442)
  Interest income                                                         12                --                356
  Other expense                                                         (217)              (60)                --
                                                            --------------------------------------------------------

Income (loss) before income taxes, discontinued
 operations, and cumulative effect of change in accounting
 principle                                                            (3,308)           (1,391)                98

Income tax (expense) benefit (Note 15)                                    33               372                (50)
                                                            --------------------------------------------------------

Income (loss) from continuing operations before
 discontinued operations and cumulative effect of change
 in accounting principle                                              (3,275)           (1,019)                48

Loss from discontinued operations, net of tax (Note 5)                (1,040)           (3,376)                --
                                                            --------------------------------------------------------

Income (loss) before cumulative effect of change in
 accounting principle                                                 (4,315)           (4,395)                48

Cumulative effect of change in accounting principle, net
 of tax (Note 4)                                                      (2,015)               --                  -
                                                            --------------------------------------------------------

Net income (loss)                                             $       (6,330)   $       (4,395)    $           48
                                                            ========================================================

Basic and diluted earnings (loss) per share attributable to common shareholders
 (Note 2):
  From continuing operations                                  $         (.09)   $         (.04)    $           --
  Discontinued operations, net of tax                                   (.03)             (.13)                --
  Cumulative effect of accounting change, net of tax                    (.06)               --                 --
                                                            --------------------------------------------------------

Net income (loss) per share                                   $         (.18)   $         (.17)    $           --
                                                            ========================================================

Weighted average common and common equivalent shares
outstanding, basic and diluted:                                   36,007,855        25,830,856                 --
                                                            ========================================================

</TABLE>

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

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                             (dollars in thousands)
<TABLE>

                                                                     Series C        Series D
                                                                     Convertible     Convertible       Accumulated
                                                                     Preferred       Preferred   Addi-   Other    Retained
                                       Comprehensive Common Stock    Stock           Stock       tional  Compre-  Earnings
                                          Income    -------------------------------------------- Paid-in hensive (Accumulated
                                          (Loss)    Shares   Amount  Shares Amount Shares Amount Capital Income   Deficit)    Total
                                          -----------------------------------------------------------------------------------------

<S>                                       <C>      <C>         <C>            <C>        <C>  <C>      <C>      <C>        <C>
      Balance at December 31, 1999         $   --   17,588,348  $ 1         -- $--     -- $--  $   --   $  --    $ 4,890    $ 4,891
      Issuance of stock under
        incentive plan and Parent
        note conversion                        --    1,747,946   --         --  --     --  --      --      --         --         --
      2000 net income                          --           --   --         --  --     --  --      --      --         48         48
                                           ----------------------------------------------------------------------------------------

      Balance at December 31, 2000             --   17,760,015    1         --  --     --  --      --      --      4,938      4,939
      Conversion of debt to common stock       --    1,750,000   --         --  --     --  --     355      --         --        355
        To record the effect of the
         reverse merger June 21, 2001
        (Note 6)                               --           --    1  1,970,962   2     --  --   3,760    (103)    (4,938)    (1,278)
      Conversion of Series C Preferred
         Stock to common stock                 --   16,497,840    1   (824,892) (1)    --  --      --      --         --         --
      Issuance of 2,593,099 shares of
         Series C Preferred Stock
         associated with the acquisition
         of United and capital contribution
         (Note 6)                              --           --   --  2,593,099   3     --  --   1,497      --         --      1,500
      Unrealized gain on available-for-sale
         marketable securities                140           --   --         --  --     --  --      --     140         --        140
      Fair value adjustment on redeemable
         preferred stock                       --           --   --         --  --     --  --      70      --         --         70
      2001 net loss                        (4,395)          --   --         --  --     --  --      --      --     (4,395)    (4,395)
                                           ----------------------------------------------------------------------------------------

      Total comprehensive loss            $(4,255)
                                          ==========

      Balance at October 31, 2001                   36,007,855 $  3  3,739,169   4     --  --   5,682      37     (4,395)     1,331

      Issuance of 30,000 shares of
        Series C Preferred Stock associated
        with U.S. Rubber, net of tax      $    --           --   --     30,000  --     --  --   1,017      --         --      1,016
      Issuance of 589,230 shares of
        Series C Preferred Stock associated
        with Fair Holdings and Obsidian
        Capital Partners, LP                   --           --   --    589,230   1     --  --   1,885      --         --      1,886
      Issuance of 88,330 shares of Series
        D Preferred Stock associated with
        Fair Holdings and Obsidian
        Capital Partners, LP                   --           --   --         --  -- 88,330  --   1,545      --         --      1,545
      Exercise of stock warrants in exchange
        for 10,000 shares of Series C
        Preferred Stock                        --           --   --     10,000  --     --  --      20      --         --         20
      Distributions to members of DW
        Leasing                                --           --   --         --  --     --  --      --      --       (107)      (107)
      Unrealized loss on available-for-
        sale marketable securities            (86)          --   --         --  --     --  --      --     (86)        --        (86)
      Fair value adjustment on redeemable
        preferred stock                        --           --   --         --  --     --  --      35      --         --         35
      2002 net loss                        (6,330)          --   --         --  --     --  --      --      --     (6,330)    (6,330)
                                          -----------------------------------------------------------------------------------------

      Total comprehensive loss         $   (6,416)
                                       =============

      Balance at October 31, 2002                   36,007,855  $ 3  4,368,399 $ 5 88,330 $-- $10,184   $(49)   $(10,832)   $  (689)
                                                    ===============================================================================

</TABLE>


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


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>

                                                                       Year Ended    Ten Months     Year Ended
                                                                                        Ended
                                                                      October 31,    October 31,   December 31,
                                                                          2002          2001           2000
                                                                     ---------------------------------------------

Cash flow from operating activities from continuing operations:
<S>                                                                    <C>            <C>           <C>
  Income (loss) from continuing operations                             $    (4,852)   $    (1,019)  $        48
  Adjustments to reconcile income (loss) from continuing
   operations to net cash provided by operating
   activities:
    Cumulative effect of change in accounting principle                      2,015             --            --
    Loss on asset impairment                                                   720             --            --
    Depreciation and amortization                                            2,568          2,055           554
    Loss on debt refinancing                                                   181             --            --
    Loss (gain) on sale of equipment                                            41             (4)           --
    Loss on sale of marketable securities                                       --             81            --
    Accretion of interest                                                      162             35            --
    Deferred income taxes                                                      (40)          (408)          216
    Changes in operating assets and liabilities net of
     effect of acquisitions:
      Accounts receivable, net                                                 264            767          (414)
      Inventories, net                                                      (1,752)          (630)          641
      Other assets                                                             336             71          (284)
      Accounts payable, trade                                                  545            810            --
      Accrued expenses                                                        (339)           321             1
      Customer deposits                                                        473           (316)           --
                                                                     ---------------------------------------------

Net cash provided by operating activities from continuing operations           322          1,763           762
                                                                     ---------------------------------------------

Cash flows from investing activities from continuing operations:
  Capital expenditures                                                        (910)        (1,185)       (1,052)
  Proceeds from sale of equipment                                              322          1,321            --
  Acquisition-related closing costs                                             --           (146)           --
  Purchase of marketable equity securities                                      --           (213)           --
  Cash received in reverse merger and other acquisitions                        --             26            --
  Cash payments in connection with the purchase of
    U.S. Rubber, net of cash acquired                                           --         (5,730)           --
  Cash payments in connection with the purchase of assets
    of United, net of cash acquired                                             --        (12,040)           --
  Proceeds from sale of marketable equity securities                            --            195            --
  Repayment of affiliated company payable                                       --             --         2,208
                                                                     ---------------------------------------------

Net cash provided by (used in) investing activities from continuing
 operations                                                                   (588)       (17,772)        1,156
                                                                     ---------------------------------------------

</TABLE>



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


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>


                                                                                     Ten Months
                                                                       Year Ended       Ended       Year Ended
                                                                      October 31,    October 31,   December 31,
                                                                          2002          2001           2000
                                                                     ---------------------------------------------

Cash flows from financing activities from continuing operations:
<S>                                                                            <C>           <C>         <C>
  Advances from (repayments to) related parties                                628           (238)           --
  Net borrowings on lines of credit                                          1,265          5,226            --
  Borrowings on long-term debt                                               2,318         11,220            --
  Principal repayments on long-term debt, including related parties         (3,258)        (2,255)       (2,186)
  Debt issuance costs                                                         (248)          (105)           --
  Distributions to members of DW Leasing                                      (107)            --            --
  Exercise of warrant                                                           20             --            --
  Proceeds from capital contributions and
    sale of common stock                                                        --          2,473            --
                                                                     ---------------------------------------------

Net cash provided by (used in) financing activities from continuing
 operations                                                                    618         16,321        (2,186)

Net cash flow provided by discontinued operations                               39             --            --
                                                                     ---------------------------------------------

Increase (decrease) in cash and cash equivalents                               391            312          (268)

Cash and cash equivalents, beginning of year                                   529            217           485
                                                                     ---------------------------------------------

Cash and cash equivalents, end of year                                 $       920    $       529   $       217
                                                                     =============================================

Interest paid                                                          $     3,415    $     2,241   $       485
                                                                     =============================================

Interest received                                                      $        --    $        --   $       356
                                                                     =============================================

Taxes paid                                                             $        22    $        44   $         8
                                                                     =============================================

Noncash:
  Refinancing of debt, including related-party amounts                 $    12,122    $        --   $        --
  Conversion of contributed amounts to equity                          $     5,104    $       355   $        --
  Equipment purchased with debt                                        $     1,220    $     1,059   $        95
  Fair value changes of mandatory redeemable preferred stock           $        35    $        70   $        --
  Purchase price adjustment and conversion of
   accounts payable to debt                                            $       225    $        --   $        --
  Seller note on acquisition of United                                 $        --    $     1,500   $        --
  Seller note on acquisition of U.S. Rubber                            $        --    $     2,573   $        --

</TABLE>


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

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)


1.   DESCRIPTION OF BUSINESS AND CHANGE OF NAME

Obsidian  Enterprises,  Inc. (the "Company"),  formerly named Danzer Corporation
("Danzer")  and previously  Global  Environmental  Corp.,  was  incorporated  on
October 6, 1987.  Effective  August 1, 1988,  the  Company  acquired  all of the
issued and  outstanding  common shares of Global  Environmental  Holdings,  Inc.
("Global  Holdings").  On October 7, 1999,  the  Company  changed  its name from
Global Environmental Corp. to Danzer Corporation.

Danzer was reorganized  through an Acquisition and Plan of  Reorganization  with
U.S. Rubber  Reclaiming,  Inc. and Related Entities ("U.S.  Rubber  Companies"),
which was consummated on June 21, 2001. In addition,  Danzer changed its name to
Obsidian  Enterprises,  Inc. However, the operating company,  Danzer Industries,
Inc.,  retained its name. The operating  company will continue to be referred to
as Danzer Industries,  Inc. The Acquisition and Plan of Reorganization of Danzer
with  U.S.  Rubber   Companies  (see  Note  6,  the  "Acquisition  and  Plan  of
Reorganization")  was accounted for as a reverse acquisition as the shareholders
of the U.S. Rubber Companies owned a majority of the outstanding stock of Danzer
subsequent  to the  Acquisition  and  Plan  of  Reorganization.  For  accounting
purposes,  U.S.  Rubber  Reclaiming,  Inc.  is deemed to have  acquired  Danzer.
Accordingly,  the fiscal 2000 financial  information presented herein represents
only the financial results of U.S. Rubber Reclaiming, Inc.

Pursuant to the Plan of Acquisition and Reorganization described further in Note
6, United Expressline, Inc. was acquired July 31, 2001.

The  resulting  entities,  considered  accounting  subsidiaries  of U.S.  Rubber
Reclaiming,  Inc. (the accounting  acquirer) and legal  subsidiaries of Obsidian
Enterprises,   Inc.   (formerly  Danzer)  after  the  Acquisition  and  Plan  of
Reorganization, are as follows:

U.S. Rubber Reclaiming,  Inc. ("U.S. Rubber", the accounting acquirer), which is
engaged in  reclaiming  scrap  butyl  rubber  into butyl  reclaim  for resale to
manufacturers of rubber products.

Obsidian  Enterprises,  Inc.  (formerly Danzer,  the legal acquirer),  a holding
company.

Danzer Industries,  Inc. ("Danzer Industries"),  which is principally engaged in
the design, manufacture and sale of truck bodies and cargo trailers.

Pyramid  Coach,  Inc.  ("Pyramid"),  which is engaged in the leasing of coaches,
designed  and  fitted out for use for  travel by  country,  rock bands and other
business  enterprises,  primarily  on weekly to monthly  leases.  The  financial
statements of Pyramid are presented on a combined basis. The combined  financial
statements of Pyramid also include the assets,  liabilities,  equity and results
of operations of DW Leasing,  LLC ("DW Leasing") and Obsidian  Leasing Co., Inc.
("Obsidian  Leasing").  DW Leasing is controlled by  individuals  which are also
controlling  shareholders  of  Obsidian  Enterprises,   Inc.  and,  accordingly,
Pyramid.  All  coaches  owned by DW Leasing are  operated  by Pyramid.  Obsidian
Leasing is also a wholly owned subsidiary of the Company. As part of the Plan of
Reorganization,  certain  assets  and  liabilities  of  DW  Leasing  were  to be
transferred to Obsidian Leasing;  however,  the transfers could not be completed
without  lender  approvals.  On November  1, 2001,  the  Company  completed  the
tax-free  exchange  contemplated  by the Acquisition  Agreement  whereby all but
seven coaches and the liabilities  thereon were transferred to Obsidian Leasing.
All intercompany transactions are eliminated in combination of this entity.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



1.   DESCRIPTION OF BUSINESS AND CHANGE OF NAME, CONTINUED

Champion  Trailer,  Inc.  ("Champion"),  which  manufactures and sells transport
trailers to be used  primarily in the auto racing  industry.  Effective  October
2002, the Company's  Board of Directors  agreed to a plan to dispose of Champion
as further  described in Note 5. The sale of Champion was completed  January 30,
2003.  Accordingly,  the operations of Champion are  classified as  discontinued
operations in the accompanying financial statements.

United  Expressline,  Inc.  ("United")  manufactures and sells general use cargo
trailers  and  specialty  trailers  used in the  racing  industry  and for other
special purposes.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


PRINCIPLES OF CONSOLIDATION:

The accompanying 2002 consolidated  financial statements present the accounts of
Obsidian Enterprises, Inc. and its wholly owned subsidiaries described in Note 1
for the fiscal year ended  October  31,  2002.  The  entities  are  collectively
referred to herein as the "Company." All significant  intercompany  transactions
and balances  have been  eliminated  in  consolidation.  The  accompanying  2001
financial  statements include the operations of U.S. Rubber,  Champion,  Pyramid
and its related  entity (DW Leasing) for the ten-month  period ended October 31,
2001.  January 1, 2001 was the beginning of the calendar year of the  accounting
acquirer U.S. Rubber.  U.S. Rubber changed its fiscal year end to adopt Danzer's
(legal acquirer and previous registrant) year end. The 2001 financial statements
also  include the  operating  results of Obsidian  Enterprises,  Inc.  (formerly
Danzer  Corporation) and Danzer  Industries,  its wholly owned subsidiary,  from
June 21, 2001 (date of acquisition) through October 31, 2001. In addition,  they
include the results of United from July 31, 2001 (date of  acquisition)  through
October 31, 2001. See Note 6 for further discussion.


BASIS OF PRESENTATION:

During  2002,  the  Company  has  undertaken  various  actions  to  improve  its
operations  and liquidity.  Such actions as described  below include the sale of
Champion,  conversion of debt to equity and  refinancing  of certain of its debt
agreements  as described  in Note 9.  Management  believes  that the Company has
financing  agreements in place to provide adequate liquidity and working capital
throughout  fiscal 2003.  However,  there can be no assurance  that such working
capital and liquidity  will in fact be adequate.  Therefore,  the Company may be
required to draw upon other liquidity sources. The Company has therefore secured
an increased financial commitment from Fair Holdings, Inc. ("Fair Holdings"), an
entity controlled by the Company's Chairman,  to provide, as needed,  additional
borrowings under a $5 million line of credit agreement, which expires January 9,
2005. Currently, availability under the agreement is approximately $3.2 million.

The  Company  incurred a net loss in 2002 of  $6,330,  which  included  an asset
impairment charge of $720,  cumulative effect of change in accounting  principle
of $2,015 and a loss from  discontinued  operations  of  $1,040.  Several of the
Company's  subsidiaries were acquired in highly leveraged  transactions and this
factor  combined  with the loss has  contributed  to its failure to meet certain
financial  covenants  required  by the  lenders.  As a result of these  covenant
violations,  $1,863  of  long-term  debt  has  been  reclassified  as a  current
liability as of October 31, 2002.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

In view of these matters  realization of assets and  satisfaction of liabilities
in the  ordinary  course of business is dependent  on the  Company's  ability to
generate  sufficient  cash flow to satisfy its  obligations  on a timely  basis,
maintain  compliance  with its  financing  agreements  and  continue  to receive
financing  support  from  Fair  Holdings,   Inc.  ("Fair  Holdings")  an  entity
controlled by the Company's Chairman, to provide liquidity if needed.

Management,  as a part of its plan towards resolving these issues and generating
positive cash flow and earnings, has taken the actions as described below during
and subsequent to the year ended October 31, 2002.  Although management believes
these actions will improve  operations and liquidity,  there can be no assurance
that such actions will sufficiently improve operations or liquidity.

o    On March 7, 2002, the Company  completed a series of transactions  with the
     subordinated lender at U.S. Rubber resulting in an increase in equity and a
     decrease in liabilities of $1,017. The subordinated  lender received 30,000
     shares of Series C Preferred Stock in this transaction.

o    On March  20,  2002,  DC  Investments  LLC ("DC  Investments"),  an  entity
     controlled by the Company's Chairman,  acquired all outstanding debt due to
     the  senior  lender of  Champion  in the  amount  of $602 in a  nonrecourse
     assignment. Under the terms of the Company's agreement with DC Investments,
     this amount has been reclassified as a long-term liability.

o    On April  30,  2002,  the  Company  converted  $1,290  of debt and  accrued
     interest due to Obsidian Capital Partners, LP ("Partners"),  majority owner
     of the  Company,  to  equity in  exchange  for  402,906  shares of Series C
     Preferred Stock.

o    On April 30, 2002, the Company  converted $596 of debt and accrued interest
     due to Fair  Holdings to equity in exchange for 186,324  shares of Series C
     Preferred Stock.

o    On August 28, 2002, the Company completed refinancing of the Line of Credit
     facility and a term loan at United. The amount of maximum borrowings on the
     line of credit  facility was  increased  and the maturity  date extended to
     February  1, 2004.  In  addition,  the  maturity  date of the term note was
     extended to July 1, 2004 and monthly  principal  payments  were  reduced by
     approximately 50%.

o    On October 24, 2002, the Company  refinanced the  outstanding  bank debt at
     U.S.  Rubber with a new lender at terms more  favorable  than the  previous
     lender.

o    During 2002, the Board of Directors authorized the Chairman of the Board to
     explore  various  options  regarding the  operations  at Champion.  Options
     included divestiture,  restructuring of operations or closing the facility.
     It was determined in the best interests of the Company to sell Champion. On
     January 30,  2003,  the Company  completed  the sale of  substantially  all
     assets of  Champion  to an entity  owned by Messrs.  Durham and  Whitesell,
     Chairman and President of the Company, respectively.

o    During  the  months  of  September   through  December  2002,  the  Company
     refinanced certain coaches of Obsidian Leasing with existing lenders and DC
     Investments at terms more favorable than the previous terms.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

o    On October 24, 2002,  the Company  converted  $1,275 of debt to Partners in
     exchange for 72,899 shares of Series D Convertible Preferred Stock.

o    On October 24, 2002, the Company converted $270 of debt to Fair Holdings in
     exchange for 15,431 shares of Series D Convertible Preferred Stock.

o    On January 2, 2003, the Company  obtained an increase in its available line
     of credit with Fair Holdings to $5,000 from $3,000.

o    During  January 2003,  United and U.S.  Rubber  obtained  modifications  to
     provide less stringent  requirements  on certain  financial  covenants with
     their respective lenders.

The  above  factors  combined  with  additional  actions  by  management  at the
operating  subsidiaries have contributed to a reduction in the Company's working
capital  deficit from $2,528 at October 31, 2001 to a positive $1,591 at October
31, 2002.


REVENUE RECOGNITION:

Sales are recorded  when title passes to the customer  (FOB  shipping  point) or
when services are performed in accordance with  agreements  with customers.  The
Company  accumulates  costs  of  trailers  in  work-in-process  inventory  until
completion.  The Company recognizes repair revenue when services are provided to
the customer. Shipping and handling charges billed to the customers are included
in net sales.  Shipping and handling  costs incurred by the Company are included
in cost of sales.

For operating  leases,  income is recognized on a  straight-line  basis over the
lease term.  Recognition of income is suspended when management  determines that
collection of future income is not probable  (generally after 90 days past due).
Recognition is resumed if the receivable becomes  contractually  current and the
collection of amounts is again considered probable. Operating lease equipment is
carried at cost less  accumulated  depreciation  and is depreciated to estimated
residual value using the  straight-line  method over the lease term or projected
economic life of the asset.


FAIR VALUE OF FINANCIAL INVESTMENTS:

The  carrying  amounts  of cash  and  cash  equivalents,  receivables,  accounts
payable,  and accrued  liabilities  approximate  fair value because of the short
maturity of these  instruments.  The carrying  amounts of long-term  receivables
approximates  fair  value as the  effective  rates  for  these  instruments  are
comparable  to market  rates at year end.  The  carrying  amount of  investments
approximates  fair market value. The carrying amount of debt  approximates  fair
value,  as a  result  of the  current  interest  rates  paid  on  the  Company's
borrowings being at market. The carrying value of mandatory redeemable preferred
stock  approximates  market value  determined  based on the  thirty-day  average
closing price of the Company's common stock.


MARKETABLE SECURITIES:

The Company  classifies  its  marketable  securities as available for sale.  The
securities  consist of equity  securities,  which are stated at fair value, with
net unrealized gains or losses on the securities  recorded as accumulated  other
comprehensive  income (loss) in stockholders'  equity (deficit).  Realized gains
and  losses  are  included  in  earnings  and are  derived  using  the  specific
identification method for determining the cost of the securities.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


PROPERTY, PLANT AND EQUIPMENT:

Building, equipment, furniture and fixtures are recorded at historical cost with
depreciation taken using primarily the straight-line method over their estimated
useful lives. Life ranges for property and equipment are as follows:

Buildings  and  improvements            30 - 39 years
Plant  machinery and equipment          5 - 7 years
Furniture  and  fixtures                5  -  7  years
Coach  fleet                            15  years
Coach refurbishments                    5 years
Vehicles                                5 - 10 years

Effective  February 1, 2002,  the Company  changed its  estimate  with regard to
depreciation of coaches owned by Obsidian Leasing and DW Leasing by establishing
a salvage  value for the  coaches of  approximately  38% of original  cost.  The
depreciable  lives of the coaches of fifteen years was not changed.  This change
in estimate  resulted in a reduced  depreciation  expense  during the year ended
October 31, 2002 of approximately $200.

The  Company's  coach  leasing  business  consists of a fleet of luxury  coaches
(generally a 45 foot bus shell  converted to a luxury  coach) that are leased to
entertainment personalities,  corporate groups and other traveling programs. The
coach fleet is  comprised  of a mixture of vehicles  ranging  from new (the most
recent acquired in December 2002) to approximately 10 years old. The average age
of the coaches is four years. They can be segregated as follows:

             Age
             1-3 years               15 coaches
             4-6 years               13 coaches
             6-10 years               9 coaches

The initial cost of coaches acquired is depreciated  over a straight-line  basis
to a  salvage  value  of 38%  of  original  cost.  Subsequent  enhancements  and
refurbishments   of  coaches   are   depreciated   over  five  years  using  the
straight-line  method.  The age of coaches in our fleet range from less than one
year to ten years, with an average age of approximately four years. Actual value
of coaches after 15 years is dependent on several factors including the level of
maintenance  and the  market  conditions  at the time of  disposal.  We have not
disposed of a material  number of coaches,  and our estimate of  depreciation is
based on information  other than actual  disposal  experience.  Accordingly,  we
continue to evaluate our estimates  with respect to the actual  depreciation  of
such vehicles  based on market  conditions  and our experience in disposals when
they occur.  Should future factors indicate the current  depreciation  policy is
not adequate,  we will adjust the  depreciation  rates, and such adjustments may
have an adverse impact on our results of operations.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


CONCENTRATION OF CREDIT RISK:

The Company maintains cash balances at a bank, which at various times throughout
the year exceeded the Federal Deposit Insurance Corporation (FDIC) limit.

Financial instruments which potentially subject the Company to concentrations of
credit risk consist  principally of trade receivables.  The Company's  customers
are not  concentrated  in any one specific  geographic  region.  The credit risk
associated with trade receivables  within the various industries may be affected
by changes in  economic or other  conditions  and may,  accordingly,  impact the
Company's  overall credit risk. The Company reviews a customer's  credit history
before extending credit.  Allowances for doubtful accounts are established based
on specific  customer risk,  historical trends and other  information.  Also see
major customers described below.

Certain of Danzer Industries' employees, which represent 10% of total employees,
are currently represented by the United Brotherhood of Carpenters and Joiners of
America,  Local Union No. 340,  whose contract is in effect to January 2004. The
contract  contains  provisions that affect  compensation to be paid to employees
included in the union.


GOODWILL, INTANGIBLE ASSETS AND DEFERRED COSTS:

Goodwill, net was $6,434 and $9,210 at October 31, 2002 and 2001,  respectively.
Accumulated amortization amounted to $76 at October 31, 2001. In accordance with
Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets, goodwill associated with acquisitions  consummated after June
30, 2001 in the amount of $5,829 was not being  amortized in the 2001  financial
statements. All other goodwill was being amortized on a straight-line basis over
15 years  through  October 31,  2001.  Effective  November 1, 2001,  the Company
adopted SFAS No. 142 and completed  transitional  impairment  testing during the
third quarter. This transitional test resulted in an impairment charge of $2,015
that has been recorded as a change in accounting  principle as discussed in Note
4.

Other  intangible  assets,  net were  $1,383 and $1,644 at October  31, 2002 and
2001,  respectively.  These amounts include trade names,  customer relations and
backlogs and other items,  which are being  amortized on a  straight-line  basis
over lives ranging from three months to 15 years.  At October 31, 2002 and 2001,
accumulated amortization amounted to $430 and $169, respectively.

Deferred  debt issuance  costs are amortized  over the term of the related debt,
primarily four to five years.

Amortization  of goodwill and other  intangible  assets  described above for the
year ended  October 31, 2002 and the ten months ended  October 31, 2001 was $440
and $303,  respectively.  Accumulated  amortization on goodwill in the amount of
$76 was written off in 2002 with the impairment discussed in Note 4.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


INCOME TAXES:

The  Company  accounts  for  income  taxes in  accordance  with  SFAS  No.  109,
Accounting  for Income  Taxes,  as  required.  Under SFAS No. 109,  deferred tax
assets and  liabilities are recorded for any temporary  differences  between the
financial  statement and tax bases of assets and liabilities,  using the enacted
tax rates and laws  expected to be in effect when the taxes are actually paid or
received. (See Note 15.)


USE OF ESTIMATES:

The  preparation  of the  financial  statements in  conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and  assumptions  that affect  reported  amounts of
assets,  liabilities,  revenues  and  expenses  and the related  disclosures  of
contingent  assets and liabilities.  Significant items subject to such estimates
and  assumptions   include   valuation   allowances  for  accounts   receivable,
inventories  and deferred tax assets,  the fair values of assets and liabilities
when  allocating the purchase price of  acquisitions,  and the carrying value of
property  and  equipment  and  goodwill.  Actual  results  may differ from those
estimates.


CASH EQUIVALENTS:

For purposes of the statement of cash flows  presentation,  cash equivalents are
unrestricted,  highly  liquid  short-term  cash  investments  with  an  original
maturity of three months or less.


IMPAIRMENT OF LONG-LIVED ASSETS, INCLUDING INTANGIBLES:

The  Company   evaluates  the  carrying  value  of  long-lived  assets  whenever
significant  events or changes in  circumstances  indicate the carrying value of
these assets may be impaired.  The Company  evaluates  potential  impairment  of
long-lived  assets by comparing the carrying value of the assets to the expected
future cash flows resulting from the use of the assets. In addition, the Company
adopted  SFAS No. 142  effective  November  1, 2001 and  completed  transitional
impairment  testing that  resulted in an impairment  charge of $2,015,  which is
recorded as a cumulative effect of change in accounting principle.  In addition,
the Company completed  additional  impairment testing in the fourth quarter,  as
further discussed in Note 4, resulting in an impairment charge of $720.


MAJOR CUSTOMERS:

The following is a list of the Company's customers that represent 10% or more of
consolidated net sales:
<TABLE>

                            Year Ended October      Ten Months Ended         Year Ended
                                    31,                October 31,          December 31,
                                   2002                   2001                  2000
                           ------------------------------------------------------------------
Butyl rubber sales:
<S>        <C>                                            <C>                     <C>
  Customer (1)                       --                   13%                     34%
  Customer (2)                       --                    8%                     22%
</TABLE>

There were no sales to individual customers in 2002 that accounted for more than
10% of consolidated net sales.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


EARNINGS PER SHARE, AS RESTATED, SEE NOTE 3:

Basic per-share amounts are computed,  generally, by dividing net income or loss
attributable  to common  shareholders by the  weighted-average  number of common
shares  outstanding.  Diluted  per-share  amounts are computed  similar to basic
per-share  amounts  except  that the  weighted-average  shares  outstanding  are
increased to include additional shares for the assumed exercise of stock options
and warrants, if dilutive.

The weighted  average common shares  outstanding for the year ended December 31,
2000 have been  reflected  as zero,  as no common  shares were  exchanged in the
reverse merger.

As  described  in Note 9, the  Company  has a note  payable  agreement  which is
convertible  by the  holder  to  common  stock  totaling  5,000,000  shares at a
conversion  rate of $0.10 per share.  In addition,  and as described in Note 13,
the  Company has options  outstanding  to purchase a total of 800,000  shares of
common stock, at a weighted  average exercise price of $0.09.  However,  because
the  Company  incurred a loss for the periods  ended  October 31, 2002 and 2001,
respectively,  the inclusion of those potential common shares in the calculation
of diluted loss per share would have an antidilutive effect.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Basic and diluted earnings (loss) per share have been computed as follows:
<TABLE>

                                                                      Year Ended      Ten Months Ended       Year Ended
                                                                   October 31, 2002   October 31, 2001   December 31, 2000
                                                                   ------------------ ------------------ -------------------

Income (loss) before discontinued operations and cumulative
<S>                                                                  <C>                <C>                <C>
 effect of accounting change                                         $       (3,275)    $       (1,019)    $           48
Change in fair value of mandatory redeemable preferred stock                     35                 70                 --
                                                                   ------------------ ------------------ -------------------

Income (loss) attributable to common shareholders before
 discontinued operations and cumulative effect of accounting
 change                                                                      (3,240)              (949)                48

Loss from discontinued operations, net of tax                                (1,040)            (3,376)                --
Cumulative effect of change in accounting principle                          (2,015)                --                 --
                                                                   ------------------ ------------------ -------------------

Net income (loss) attributable to common shareholders                $       (6,295)    $       (4,325)    $           48
                                                                   ================== ================== ===================

Weighted average common and common equivalent shares
 outstanding, basic and diluted                                          36,007,855         25,830,856         17,733,603
                                                                   ================== ================== ===================

Earnings (loss) per share, basic and diluted, attributable to common
 shareholders:
  From continuing operations                                         $       (.09)      $       (.04)      $           --
  Discontinued operations                                                    (.03)              (.13)                  --
  Cumulative effect of accounting change                                     (.06)             --                      --
                                                                   ------------------ ------------------ -------------------

Net income (loss) per share                                          $       (.18)      $       (.17)      $           --
                                                                   ================== ================== ===================
</TABLE>

The Company's Series C Preferred Stock and Series D Preferred Stock,  which have
all the rights and privileges of the Company's  common stock, are convertible at
rates of 20 to 1 and 175 to 1,  respectively.  The inclusion of these  potential
common shares in the  calculation  of loss per share would have an  antidilutive
effect.   However,   pursuant  to  the   Acquisition   Agreement   and  Plan  of
Reorganization  Agreement  entered into in  connection  with the  reorganization
described in Note 1, these shares will be converted to common stock  immediately
upon approval by the stockholders.  Accordingly, we are presenting the following
pro forma  information  to indicate  the effect on  earnings  per share had such
shares been converted to common shares for the periods presented.

Pro forma basic and diluted  loss per share have been  computed  below as if the
Series C and Series D Preferred  Stock were  converted to common stock.  For the
year  ended  October  31,  2002  and the ten  months  ended  October  31,  2001,
respectively,  the Series C  Preferred  Stock has been  reflected  on a weighted
average  basis  outstanding  as  common  shares  of  81,194,826  and  75,212,925
respectively.   There  were  no  Series  C  Preferred  Stock  shares  issued  or
outstanding  during the year ended  December  31,  2000.  The Series D Preferred
Stock has been  reflected  on a weighted  average  basis  outstanding  as common
shares of 297,264 for the year ended  October 31,  2002.  There were no Series D
Preferred Stock shares issued or outstanding during the ten months ended October
31, 2001 or the year ended December 31, 2000.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


<TABLE>


                                                                     Year Ended      Ten Months Ended       Year Ended
                                                                  October 31, 2002   October 31, 2001   December 31, 2000
                                                                 ------------------- ------------------ -------------------

Pro forma weighted average common shares outstanding, basic
<S>                                                                   <C>                  <C>           <C>
 and diluted                                                          117,499,946          73,809,790                 --
                                                                 =================== ================== ===================

Pro forma net loss per share, basic and diluted, attributable
 to common shareholders                                            $         (.05)   $           (.06)  $            (.00)
                                                                 =================== ================== ===================
</TABLE>


The pro forma net loss per share is presented  for  informational  purposes only
and is not indicative of the weighted  average common shares  outstanding or net
loss per share  presented in accordance  with  accounting  principles  generally
accepted in the United States of America.


INSURANCE RECOVERY:

On May 16, 2002, U.S. Rubber was damaged by a fire at an adjacent property.  The
Company  completed  processing its claims with its insurance carrier for damaged
equipment and  facilities and business  interruption  losses on August 16, 2002.
There was no material gain or loss on involuntary conversion as a result of this
fire. An insurance recovery related to the business  interruption  claim, net of
incurred and  anticipated  costs,  in the amount of $325 has been  recognized as
reduction of operating costs.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Comprehensive Income:

SFAS  No.  130,  Reporting  Comprehensive  Income,   establishes  standards  for
reporting and display of  comprehensive  income and its  components in financial
statements.  It requires that all items that are required to be recognized under
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial  statements.  Comprehensive  income consists of net earnings,  the net
unrealized gains or losses on  available-for-sale  marketable  securities and is
presented in the consolidated statement of stockholders' equity.


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

In June 2001, the FASB issued SFAS No. 141, Business Combinations,  and SFAS No.
142,  Goodwill and Other Intangible  Assets.  SFAS No. 141 requires all business
combinations  initiated  after  June 30,  2001 to be  accounted  for  using  the
purchase  method.  In addition,  companies  are required to review  goodwill and
intangible  assets  reported in  connection  with prior  acquisitions,  possibly
disaggregate and report separately  previously  identified intangible assets and
possibly  reclassify  certain  intangible  assets  into  goodwill.  SFAS No. 142
establishes  new guidelines  for  accounting  for goodwill and other  intangible
assets. In accordance with SFAS No. 142,  goodwill  associated with acquisitions
consummated  after June 30, 2001 is not amortized.  The Company  implemented the
remaining  provisions  of SFAS No.  142 on  November  1, 2001.  Since  adoption,
existing  goodwill  is no longer  amortized  but instead  will be  assessed  for
impairment at least  annually.  The adoption of this  pronouncement  resulted in
$5,829 of goodwill not being amortized and the elimination of approximately $225
of  amortization  annually  on  another  $3,381  of  goodwill  previously  being
amortized. The adoption of SFAS No. 142 also resulted in an impairment charge of
$2,015  recorded  as  cumulative  effect of change in  accounting  principle  as
further described in Note 4.

In June 2001,  the FASB  issued SFAS No. 143,  Accounting  for Asset  Retirement
Obligations.  SFAS No. 143 addresses  accounting  and reporting for  obligations
associated with the retirement of tangible  long-lived assets and the associated
asset retirement  costs.  This statement is effective for fiscal years beginning
after June 15, 2002.  The Company is currently  assessing the impact of this new
standard.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment of
Long-Lived  Assets,"  which  requires a single  accounting  model to be used for
long-lived  assets to be sold and  broadens  the  presentation  of  discontinued
operations  to include a  "component  of an entity"  (rather than a segment of a
business). A component of an entity comprises operations and cash flows that can
be clearly  distinguished,  operationally and for financial  reporting purposes,
from the rest of the entity. A component of an entity that is classified as held
for sale, or has been disposed of, is presented as a  discontinued  operation if
the operations and cash flows of the component will be (or have been) eliminated
from the  ongoing  operations  of the entity  and the  entity  will not have any
significant continuing involvement in the operations of the component.

The Company adopted SFAS No. 144 effective October 31, 2002.  Consequently,  the
operating results of Champion, which were held for sale at October 31, 2002, are
included as  discontinued  operations.  Assets and  liabilities  of Champion are
included  in  "Assets  of  subsidiaries  held  for  sale"  and  "Liabilities  of
subsidiaries  held for sale,"  respectively,  at October 31,  2002 and 2001,  as
discussed in Note 5.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

In April 2002, the FASB issued SFAS No. 145,  Rescission of FASB  Statements No.
4, 44, and 64,  Amendment of FASB  Statement No. 13, and Technical  Corrections.
SFAS No. 145, among other  technical  corrections,  rescinds SFAS No's. 4 and 64
which  required  gains  and  losses  from the  early  extinguishment  of debt be
classified as extraordinary items in the statement of operations. This statement
is  effective  for fiscal  years  beginning  after May 15, 2002  although  early
application is encouraged.  The Company adopted SFAS No. 145 effective August 1,
2002. Accordingly,  losses on early extinguishment of debt in the amount of $181
have been included in other expense in 2002.

In June 2002,  the FASB issued  Statement 146,  Accounting for Costs  Associated
with Exit or Disposal  Activities.  This Statement requires the recognition of a
liability  for a cost  associated  with an exit or  disposal  activity  when the
liability is incurred  versus the date the Company  commits to an exit plan.  In
addition,  this Statement states the liability  should be initially  measured at
fair value. The Statement is effective for exit or disposal  activities that are
initiated  after  December  31,  2002.  The Company  does not  believe  that the
adoption  of this  pronouncement  will have a material  effect on its  financial
statements.

In January  2003,  the FASB  issued  SFAS No. 148,  Accounting  for  Stock-Based
Compensation - Transition and Disclosure.  This statement  provides  alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for stock-based employee  compensation.  In addition,  this Statement
also  amends  the  disclosure  requirements  of SFAS  No.  123 to  require  more
prominent  and  frequent  disclosures  in the  financials  statements  about the
effects  of  stock-based  compensation.  The  transitional  guidance  and annual
disclosure  provisions  of this  Statement is effective for the October 31, 2003
financial  statements.  The interim  reporting  disclosure  requirements will be
effective for the Company's January 31, 2003 10-Q. Because the Company continues
to account for employee  stock-based  compensation under APB opinion No. 25, the
transitional  guidance of SFAS No. 148 has no effect on the financial statements
at this time.

3.   RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

In December 2002, the Company became aware of an error related to the accounting
for the redeemable  preferred stock issued in connection with  subordinated debt
pertaining to the United  acquisition on July 31, 2002. The Company is restating
its previously issued financial  statements for the ten months ended October 31,
2001 for this error. In addition,  we have also determined the weighted  average
common and common  equivalent shares  outstanding as previously  reported should
not have  included  Series C and Series D  preferred  stock as they have not yet
been  converted  to common  shares  and thus are  antidilutive.  The  Company is
restating its previously issued financial  statements for the year ended October
31,  2002 and the ten  months  ended  October  31,  2001 for these  errors.  The
restatements also include additional  disclosures regarding  depreciation of the
coach fleet in the significant accounting policies.

Below is a comparison of previously  reported and restated  balances included in
the Consolidated Balance Sheet and Statement of Operations as of and for the ten
months ended October 31, 2001, as well as changes in the weighted average common
shares  outstanding  and  earnings  per  share for 2002 and  2001.  The  amounts
included as previously reported exclude the effect of classification of Champion
in discontinued operations.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




3.   RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS, CONTINUED
<TABLE>

October 31, 2001                                            Previously           Change           As Restated
----------------                                             Reported
                                                        ------------------- ------------------ ------------------

Income Statement:
<S>                                                       <C>                 <C>                <C>
  Interest expense                                        $       2,277       $          35      $       2,312
  Loss from continuing operations                                  (984)                (35)            (1,019)
  Net loss                                                       (4,360)                (35)            (4,395)

 Weighted average common shares outstanding basic and
diluted                                                      63,367,140         (37,536,284)        25,830,856

  Earnings (loss) per share from continuing
    operations                                                    (.02)                (.02)              (.04)
  Net loss per share                                              (.07)                (.10)              (.17)

Balance Sheet:
  Net deferred tax assets                                           538                  14                552
  Deferred tax valuation reserve                                 (1,537)                (14)            (1,551)
  Long-term debt                                                 27,546              (1,470)            26,076
  Mandatory redeemable preferred stock                               --               1,435              1,435
  Additional paid-in capital                                      5,612                  70              5,682
  Retained earnings (deficit)                                    (4,360)                (35)            (4,395)



                                                            Previously
October 31, 2002                                             Reported            Change           As Restated
----------------                                        ------------------- ------------------ ------------------

Basic and diluted earnings (loss) per share attributable to common shareholders:
  From continuing operations                              $       (.02)       $       (.07)      $       (.09)
  Discontinued operations, net of tax                             (.01)               (.02)              (.03)
  Cumulative effect of accounting change,
    net of tax                                                    (.02)               (.04)              (.06)
                                                        ------------------- ------------------ ------------------

Net income (loss) per share                               $       (.05)       $       (.13)      $       (.18)
                                                        =================== ================== ==================

Weighted average common and common equivalent shares
outstanding, basic and diluted:                             117,499,946         (81,492,091)        36,007,855

</TABLE>





<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




3.   RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS, CONTINUED


The  restated  balances  arise from the  allocation  of the proceeds to Series C
Preferred  Stock  issued in  conjunction  with the related  debt.  The change in
interest  expense  is  related  to  accretion  of  interest  resulting  from the
allocation of the mandatory redeemable preferred stock. The change in additional
paid-in capital is the result of fair value changes on the redeemable  preferred
stock.

4.   CHANGE IN  ACCOUNTING  PRINCIPLES,  GOODWILL  AND  INTANGIBLE  ASSETS,  AND
     IMPAIRMENT OF LONG-LIVED ASSETS

As  discussed  in Note 2, the Company  adopted the new rules on  accounting  for
goodwill and other  intangible  assets  beginning in the first quarter of fiscal
2002. Accordingly, effective with the November 1, 2001 adoption of SFAS No. 142,
goodwill is no longer  amortized but is instead subject to an annual  impairment
test. The Company completed its transitional impairment test in conjunction with
the  adoption  of SFAS No. 142  during the  quarter  ended  July 31,  2002.  The
impairment test indicated that a portion of the goodwill  related to the trailer
manufacturing segment was impaired.  Accordingly,  $2,015 has been recorded as a
cumulative effect of change in accounting  principle.  This charge was reflected
in the first quarter pursuant to the implementation guidelines.

The Company  reviews the  recoverability  of the  carrying  value of  long-lived
assets,  primarily property,  plant and equipment and related goodwill and other
intangible  assets,  for impairment  whenever events or changes in circumstances
indicate  that the  carrying  amount of an asset  may not be fully  recoverable.
Impairment  losses are  recognized  when the fair value is less than the asset's
carrying value.  When indicators of impairment are present,  the carrying values
of the assets are evaluated in relation to the operating  performance and future
undiscounted  cash flows of the underlying  business.  The net book value of the
underlying  assets  is  adjusted  to fair  value if the sum of  expected  future
undiscounted cash flows is less than book value. Fair values are based on quoted
market  prices and  assumptions  concerning  the amount and timing of  estimated
future cash flows and assumed  discount  rates,  reflecting  varying  degrees of
perceived risk.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



4.   CHANGE IN  ACCOUNTING  PRINCIPLES,  GOODWILL  AND  INTANGIBLE  ASSETS,  AND
     IMPAIRMENT OF LONG-LIVED ASSETS, CONTINUED

During  October  2002,  the Company also  evaluated  the  recoverability  of the
long-lived  assets,  including the remaining  goodwill  associated  with Danzer.
Deteriorating performance, including reduced sales and the bankruptcy of a major
customer,  brought  the  recoverability  of  those  assets  into  question.  The
evaluation resulted in an additional goodwill impairment charge of $720.

During October 2001, the Company  completed an evaluation of the  recoverability
of the assets (primarily  goodwill) of Champion.  Certain events occurred during
the period ended October 31, 2001 which caused the full  recoverability of those
assets  to be  brought  into  question.  Deterioration  of  the  performance  of
Champion,  including  lower overall sales demand and  difficulties  in achieving
manufacturing  efficiencies,  resulted in the  investment  in Champion  becoming
impaired.  Accordingly,  during fiscal 2001, Champion recorded charges of $2,305
related to the  impairment  of goodwill.  This charge was based on the estimated
fair value of the  long-lived  assets of Champion.  Operations  of Champion have
been classified as discontinued operations as further described in Note 5.

The changes in the carrying amounts of goodwill related to continuing operations
are as follows:
<TABLE>

                                               Trailer            Holding
                                            Manufacturing         Company             Total
                                         --------------------- ---------------- ------------------

<S>                   <C>                  <C>                   <C>              <C>
Balance as of January 1, 2001              $           --        $          --    $           --
Goodwill arising from 2001 acquisitions             8,636                   650            9,286
2001 amortization                                     (76)                   --              (76)
                                         --------------------- ---------------- ------------------

Balance, October 31, 2001                           8,560                   650            9,210
Purchase price adjustment                             (41)                   --              (41)
Impairment charges                                   (720)                   --             (720)
Cumulative effect of change in
 accounting principle                              (2,015)                   --           (2,015)
                                         --------------------- ---------------- ------------------

Balance, October 31, 2002                  $        5,784              $   650    $        6,434
                                         ===================== ================ ==================
</TABLE>

Had SFAS No. 142 been  effective at the beginning of 2001,  the  nonamortization
provisions  would have reduced the net loss for the ten months ended October 31,
2001 by $76,  resulting  in an  adjusted  net loss of  $4,319  and no  change in
earnings per share.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




5.   DISCONTINUED OPERATIONS

On October 30, 2002, the Company's Board of Directors  agreed to sell the assets
of Champion to an entity controlled by Messrs. Durham and Whitesell (Officers of
the Company) for the  assumption of all  liabilities  of Champion  excluding its
subordinated  debt.  The  decision to divest  Champion was based on the entity's
inability to achieve  profitable  operations in the  foreseeable  future without
substantial  cash  infusion.  The Company also agreed in principal to settle the
outstanding subordinated debt of Champion in exchange for a cash payment of $675
and  issuance  to the debt  holder of 32,143  shares of the  Company's  Series D
Preferred  Stock. In addition,  the agreement  provides  Markpoint the option to
require the Company to repurchase  these shares at a price of $21 per share. The
repurchase option is available to Markpoint as follows: 16,072 shares during the
period May 1, 2003 to June 1, 2003 and 16,071 shares during the period  November
1, 2003 to December 1, 2003.  The  repurchase  options  expire if not  exercised
during the specified periods. The Company's repurchase  obligation is guaranteed
by Mr. Durham. The sale of Champion was completed on January 30, 2003.  Champion
is  accounted  for as a  discontinued  operation  and  therefore  the results of
operations  and cash  flows  have been  removed  from the  Company's  continuing
operations for all periods  presented.  In addition,  assets and  liabilities of
Champion are included in the  consolidated  balance sheet as of October 31, 2002
and 2001 as "Assets of subsidiary held for sale" and  "Liabilities of subsidiary
held for sale," respectively.

A summary of the Company's  discontinued  operations  for the year ended October
31,  2002  and  ten  months  ended  October  31,  2001  follows.  There  were no
discontinued operations for the year ended December 31, 2000.
<TABLE>

                                                                Year Ended      Ten Months Ended
                                                             October 31, 2002   October 31, 2001
                                                            ------------------- ------------------

<S>                                                           <C>                 <C>
Net sales                                                     $        2,882      $        3,365
Operating expenses                                                     4,066               4,148
Impairment loss                                                           --               2,305
Interest                                                                 290                 288
Net loss                                                              (1,040)             (3,376)
</TABLE>

A summary of assets and  liabilities of subsidiary  held for sale at October 31,
2002 and 2001 are as follows:
<TABLE>

                                                             October 31, 2002   October 31, 2001
                                                            ------------------- ------------------

Assets of subsidiary held for sale:
<S>                                                           <C>                 <C>
  Inventories                                                 $          551      $        1,131
  Other current assets                                                   177                 261
  Property and equipment, net                                            715                 848
  Other                                                                   95                 134
                                                            ------------------- ------------------

                                                              $        1,538      $        2,374
                                                            =================== ==================
</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)


5.   DISCONTINUED OPERATIONS, CONTINUED

<TABLE>

Liabilities of subsidiary held for sale
<S>                                                           <C>                 <C>
  Accounts payable and accrued expenses                       $          709      $          603
  Customer deposits                                                      313                 383
  Long-term debt                                                          --               1,362
  Long-term debt, related parties                                      1,826                  --
                                                            ------------------- ------------------

                                                              $        2,848      $        2,348
                                                            =================== ==================
</TABLE>

6.   ACQUISITIONS AND PLAN OF REORGANIZATION

As previously  discussed in Notes 1 and 2, on June 21, 2001, a change of control
of the  Registrant  occurred  through  an  Acquisition  Agreement  and  Plan  of
Reorganization  by and among  Danzer,  Danzer  Industries,  Inc., a wholly owned
subsidiary  of Danzer,  and  Partners,  Timothy  S.  Durham  (the newly  elected
Chairman of the Board of  Danzer),  and other  individual  owners of Pyramid and
Champion.  On the  Acquisition  Date,  Danzer  acquired:  all of the outstanding
capital  stock of Pyramid in  exchange  for  810,099  shares of Danzer  Series C
Preferred Stock ("Danzer  Preferred");  all of the outstanding  capital stock of
Champion  for  135,712  shares of Danzer  Preferred  and all of the  outstanding
capital stock of U.S. Rubber for 1,025,151 shares of Danzer  Preferred.  On July
31,  2001,  Danzer  acquired  all of the  outstanding  capital  stock of  United
Acquisition,  Inc.  ("UAI"),  the holding  company  formed to acquire  assets of
United, from Partners for 2,593,099 shares of Danzer Preferred.

After the series of transactions were completed on July 31, 2001, Partners owned
75.42% of the total voting, convertible capital stock (Preferred) of Danzer. The
preacquisiton  Danzer  shareholders  and their  successors  owned the  remaining
capital stock  representing  24.58% of the total voting capital stock  (Common).
Since the U.S. Rubber Companies are so much larger than Danzer, and the existing
U.S. Rubber  shareholders  obtained a majority  interest in the stock of Danzer,
they  have  been  treated,  for  accounting  purposes,  as the  acquirer  in the
Reorganization  (reverse  merger).  In  addition,  on July 31,  2001,  Partners,
through  UAI,   acquired   substantially   all  of  the  assets  of  United,  an
Indiana-based  manufacturer  of  enclosed  cargo  and  specialty  trailers,  for
approximately  $15,358.  The  purchase  price and purchase  accounting  has been
allocated  to the assets and  liabilities  of United based on their fair values.
Partners  exchanged  100% of its shares of UAI for shares of Series C  Preferred
Stock of Danzer. As a result, UAI became a wholly owned subsidiary of Danzer and
will operate under the name of "United Expressline, Inc."


ACQUISITION OF DANZER AND SUBSIDIARY:

The  purchase  price and  purchase  accounting  was  allocated to the assets and
liabilities  of Danzer based on their fair values.  The purchase price was based
on the value of Danzer's  equity  determined  by an appraisal  company of $3,257
plus acquisition costs of $964.

An appraisal  company  conducted a valuation of Danzer's  stock.  The  valuation
allocation  to tangible  assets  included  $2,300 and $1,536 of net  liabilities
assumed.  The  excess  of  the  purchase  price  over  the  fair  value  of  the
identifiable  tangible  and  intangible  net assets of $3,457 was  allocated  to
goodwill.  Of this amount,  $650 was allocated to Danzer and $2,807 allocated to
Danzer Industries, its subsidiary.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



6.   ACQUISITIONS AND PLAN OF REORGANIZATION, CONTINUED


ACQUISITION OF UNITED EXPRESSLINE, INC.:

An appraisal company conducted a valuation of United's intangible assets.  These
intangibles include existing brand name, noncompete,  and the customer base. The
valuation of intangibles included $822 for brand name, $886 for noncompete,  and
$105 for the customer base. The excess of the purchase price of $15,358 over the
fair value of the identifiable  tangible and intangible net assets of $5,821 has
been  allocated  to  goodwill.  The value  assigned to tangible  assets  totaled
$7,563.

The  following  schedule is a  description  of  acquisition  costs of Danzer and
United Expressline, Inc. and the respective purchase price allocations:
<TABLE>

                                                                  Danzer             United
                                                            ---------------------------------------

Purchase price:
<S>                                                           <C>                <C>
  Preferred stock                                             $        3,257     $           --
  Cash to seller                                                          --             11,050
  Seller note                                                             --              1,500
  Liabilities assumed                                                     --              1,670
  Acquisition costs, including amounts to related
    parties (see Note 16)                                                964              1,138
                                                            ---------------------------------------

Total purchase price                                          $        4,221     $       15,358
                                                            =======================================
</TABLE>
<TABLE>

Purchase price allocation:
  Current assets, including accounts receivable
    and inventory, net of current liabilities
<S>                                                           <C>                <C>
    assumed                                                   $          329     $        5,559
  Land, property and equipment                                         2,300              2,004
  Goodwill                                                             3,457              5,829
  Intangible assets                                                       --              1,813
  Other assets                                                            65                153
  Less debt assumed                                                   (1,930)                --
                                                            ---------------------------------------

Total purchase price allocation                               $        4,221     $       15,358
                                                            =======================================
</TABLE>


PRO FORMA INFORMATION:

The unaudited condensed  consolidated results of operations on a pro forma basis
as if the  reorganization  had  occurred  as of  the  beginning  of the  periods
projected are as follows:



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



6.   ACQUISITIONS AND PLAN OF REORGANIZATION, CONTINUED

The  unaudited  condensed  consolidated  results of  operations  shown below are
presented  on a pro forma  basis and  represent  the  results of Danzer,  Danzer
Industries,  U.S. Rubber, Pyramid, DW Leasing and Obsidian Leasing on a combined
basis.  Champion has been  excluded from the amounts  below,  as it is currently
shown as  discontinued  operations.  In  addition,  United is  treated as if the
business combinations of these entities occurred at the beginning of the periods
presented.  The schedule  below  includes  all  depreciation,  amortization  and
nonrecurring charges for all entities for the periods shown.

                                        Ten Months Ended      Year Ended
                                          October 31,        December 31,
                                              2001               2000
                                      ----------------------------------------

Net sales                                $        49,830     $        61,320

Income (loss) from continuing
 operations                              $          (491)    $           150

Income (loss) from continuing
 operations per share - basic and
 diluted                                 $         (.02)     $           .01

The pro forma financial information is presented for informational purposes only
and is not indicative of the operating  results that would have occurred had the
Reorganization  been consummated as of the above dates, nor are they necessarily
indicative of future operating results.

7.   INVENTORIES

Inventories are stated at the lower-of-cost (first-in, first-out method) or
market and are comprised of the following components:
<TABLE>

                                                                October 31,        October 31,
                                                                   2002                2001
                                                             ------------------ -------------------

<S>                                                            <C>                <C>
Raw materials                                                  $        3,655     $        3,470
Work-in-process                                                           709                604
Finished goods                                                          3,417              2,322
Valuation reserve                                                        (466)              (833)
                                                             ------------------ -------------------

Total                                                          $        7,315     $        5,563
                                                             ================== ===================
</TABLE>



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



7.   INVENTORIES, CONTINUED

The Company provides valuation reserves for inventory considered obsolete or not
currently available for use in production. Inventory reserves at U.S. Rubber are
related to excess scrap butyl  rubber not  currently  available  for use without
further processing;  therefore,  it has minimal value.  Changes in the valuation
reserve are as follows:

<TABLE>

                                            U.S. Rubber United Total
                                         ------------------ ------------------ ------------------

<S>                <C>                     <C>                <C>                <C>
Balance at January 1, 2001                 $       (1,338)    $           --     $       (1,338)
  Provision for losses                                (60)               (13)               (73)
  Use of reserved inventory                           578                 --                578
                                         ------------------ ------------------ ------------------

Balance at October 31, 2001                          (820)               (13)              (833)

  Provision for losses                                (50)                --                (50)
  Use of reserved inventory                           404                 13                417
                                         ------------------ ------------------ ------------------

Balance at October 31, 2002                $         (466)    $           --     $         (466)
                                         ================== ================== ==================
</TABLE>

8.   PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is summarized by major classification as follows:
<TABLE>

                                                                October 31,        October 31,
                                                                   2002                2001
                                                             ------------------ -------------------

<S>                                                            <C>                <C>
Land and improvements                                          $          488     $          488
Buildings and improvements                                              3,520              3,557
Plant machinery and equipment                                           9,767              8,016
Furniture and fixtures                                                    334                247
Coach fleet and vehicles                                               12,971             13,187
Coach refurbishments                                                      341                220
                                                             ------------------ -------------------

Total                                                                  27,421             25,715
Less accumulated depreciation                                          (4,373)            (2,331)
                                                             ------------------ -------------------

Net property, plant and equipment                              $       23,048     $       23,384
                                                             ================== ===================
</TABLE>

Depreciation expense of property, plant and equipment for the year ended October
31, 2002, the ten months ended October 31, 2001, and the year ended December 31,
2000  included  in  continuing   operations  was  $2,128,   $1,752,   and  $548,
respectively.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




9.   FINANCING ARRANGEMENTS

The Company has the following outstanding debt as of October 31, 2002 and 2001:
<TABLE>

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2002               2001
                                                                                ------------------ ------------------

U.S. Rubber

Line of credit to a bank, bearing interest at prime (4.75% at October 31, 2002),
 borrowings not to exceed the greater of $4,000 or the borrowing base (85% of
 eligible accounts receivable and 42% of eligible inventories), interest payable
 monthly, balance due October 2005, collateralized by
<S>                                                                               <C>                <C>
 substantially all assets of U.S. Rubber*                                         $        1,528     $           --

Note payable to a bank, interest payable monthly at prime plus .50% (5.25% at
 October 31, 2002), monthly principal payments of $48, due October 2005,
 collateralized by substantially all assets of U.S. Rubber.*                               4,000                 --

Note payable to DC Investments, LLC, interest payable monthly at 15%, balloon
 payment due March 2007, subordinate to bank debt.                                           700                 --

Other                                                                                         76                 88

Line of credit                                                                                --              1,732

Notes payable to a bank                                                                       --              2,861

Notes payable to former owner (SerVaas, Inc.)                                                 --              2,480
                                                                                ------------------ ------------------

Subtotal U.S. Rubber                                                                       6,304              7,161
                                                                                ------------------ ------------------
</TABLE>

*    U.S.  Rubber was in technical  default of a loan  covenant with its primary
     lender at  October  31,  2002.  The  Company  has  obtained a waiver of the
     violation from its lender and a modification to the covenant requirements.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



9.   FINANCING ARRANGEMENTS, CONTINUED

<TABLE>

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2002               2001
                                                                                ------------------ ------------------
Champion

Note payable to The Markpoint Company, interest payable monthly at 13.50%,
 commencing June 1, 2000, balloon payment of outstanding principal balance due
 May 2005, collateralized by substantially all assets of Champion and
<S>                                                                               <C>                <C>
 subordinate to notes payable to DC Investments LLC *                             $        1,250     $        1,250

Notes payable to DC Investments, LLC, interest payable monthly at rates
 ranging from 5.25% to 5.50%, balloon payments due January 2004 and June 2005              1,794                 --

Other                                                                                         32                 15

Line of credit, to bank                                                                       --                200

Notes payable to a bank                                                                       --              1,147
                                                                                ------------------ ------------------

Subtotal Champion                                                                          3,076              2,612
                                                                                ------------------ ------------------
</TABLE>

*    Champion  was in  technical  default  of all its debt  with  The  Markpoint
     Company in 2002.  The  Company  has reached  agreement  with The  Markpoint
     Company to settle the debt as further  discussed in Note 17. As a result of
     this  agreement,  $1,013  of the debt due The  Markpoint  Company  has been
     classified as current.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



9.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>


                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2002               2001
                                                                                ------------------ ------------------
Pyramid, DW Leasing and Obsidian Leasing

Various installment loans, repayable in monthly installments totaling $135
 including interest ranging from the three-month LIBOR rate plus .12% (1.82% at
 October 31, 2002) to 13.1% through November 2007 and applicable balloon
 payments thereafter through December 2007, less unamortized discount ($387 at
 October 31, 2002) first lien on assets financed (finance acquisition and asset
 purchases). A portion of the borrowings guaranteed by the members of
<S>                                                                               <C>                <C>
 DW Leasing.                                                                      $       10,170     $       12,929

Former shareholders of Pyramid and related companies installment loans,
 repayable in monthly installments of interest at 9% through December 2002 with
 a balloon payment in January 2003, collateralized by Security Agreements for
 Pyramid, DW Leasing and the members of DW Leasing (finance
 acquisition), refinanced subsequent to year end.                                            928                928

Note payable to Fair Holdings, Inc., repayable in monthly installments of
 interest ranging from 10% to 14% through October 2012 and applicable balloon
 payments through November 2012.                                                           2,138                 --

Other                                                                                         37                 31
                                                                                ------------------ ------------------

Subtotal Pyramid, DW Leasing, and Obsidian Leasing                                        13,273             13,888
                                                                                ------------------ ------------------

</TABLE>




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



9.   FINANCING ARRANGEMENTS, CONTINUED

<TABLE>

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2002               2001
                                                                                ------------------ ------------------

Danzer Industries

Line of credit to a bank, maximum borrowing equal to $1,000, with a base of 80%
 of eligible accounts receivable; plus 50% of raw material, work-in-process and
 finished goods inventory. Interest payable monthly at the LIBOR Daily Floating
 Rate plus 3.2% (4.94% at October 31, 2002), due March 2002, collateralized by
 substantially all assets of Danzer Industries
<S>                                                                               <C>                <C>
 and guaranteed by Obsidian Enterprises, Inc.*                                    $          875     $           75

Note payable to a bank, requires monthly principal installments of $6 plus
 interest at the LIBOR Daily Floating Rate plus 3.2% (4.94% at October 31,
 2002), due August 15, 2006. Collateralized by substantially all assets of
 Danzer Industries and guaranteed by Obsidian Enterprises, Inc.*                             917                983

Term loans payable to US Amada, Ltd. Monthly payments currently aggregating $13
 including interest at 10%, loans due January 2003, collateralized by
 equipment financed                                                                          157                285

Equipment loans payable--monthly payments currently aggregating $2 including
 interest of 9.50% to 11.30% through November 2006. Collateralized by
 equipment financed.                                                                          88                 53

Other                                                                                         27                 10
                                                                                ------------------ ------------------

Subtotal Danzer Industries                                                                 2,064              1,406
                                                                                ------------------ ------------------
</TABLE>

*    In 2002,  Danzer  Industries  was in  technical  default  of  certain  loan
     covenants,  as well as being in excess of  borrowing  base  amounts  in its
     credit  agreement  related to the line of credit and $1,000  note  payable.
     Danzer  and the  bank  have  entered  into a  forbearance  agreement  which
     requires  payment of these  amounts  by March 31,  2003.  Accordingly,  all
     related debt has been classified as current.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



9.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>


                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2002               2001
                                                                                ------------------ ------------------

United

Line of credit to a bank, maximum borrowing equal to $3,750, with a base of 80%
 of eligible accounts receivable plus 50% of raw material, work-in-process and
 finished goods inventory. Interest payable monthly at prime plus .75% (5.50% at
 October 31, 2002), due February 1, 2004. Collateralized by substantially all
 assets of United and guaranteed by
<S>                                                                               <C>                <C>
 Obsidian Enterprises, Inc.*                                                      $        3,088     $        3,111

Notes payable to a bank, requires monthly principal installments of $48 plus
 interest ranging from prime plus 1% (5.75% at October 31, 2002) to prime plus
 2% (6.75 at October 31, 2002), due through July 2006, collateralized by
 substantially all assets of United and guaranteed by Obsidian Enterprises,
 Inc.*                                                                                     2,054              2,989

Subordinated note payable to Huntington Capital Investment Company, interest
 payable quarterly at 14% per annum, balloon payment of outstanding principal
 balance due July 26, 2006, less unamortized discount ($1,309 and $1,470 at
 October 31, 2002 and 2001, respectively). Unsecured and subordinate to line
 of credit and notes payable above.*                                                       2,191              2,030

Note payable to former shareholder, interest payable monthly at 9% per annum,
 balloon payment of outstanding principal balance due July 27, 2006. Unsecured
 and subordinate to line of credit, notes payable and Huntington
 debt above.*                                                                              1,500              1,500

Note payable to Renaissance (formerly parent Danzer Corporation), interest
 payable monthly at 8% per annum, with monthly principal payments beginning July
 2004 at a rate of $10 for each $1,000 of outstanding principal, due July 2008.
 Convertible at the option of the holder to common stock of Obsidian Enterprises
 at a conversion price of $.10 per share. The loan agreement also restricts
 dividend payments without the prior consent of the
 lender.*                                                                                    500                500

Note payable to a former shareholder, requires monthly principal installments
 of $16 including interest at 9%, due March 2003*                                             77                 --

Other                                                                                         83                112
                                                                                ------------------ ------------------

Subtotal United                                                                            9,493             10,242
                                                                                ------------------ ------------------
</TABLE>



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



9.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>


                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2002               2001
                                                                                ------------------ ------------------

United, continued

*United was in technical default of certain loan covenants with its senior and
  subordinated lender at October 2002. United has obtained waivers of the
  violations from the lenders and modifications of various covenants with these
  lenders.

Obsidian Enterprises, Inc.

Line of credit to Fair Holdings, maximum borrowing equal to $5,000, interest
<S>                                                                                      <C>              <C>
 payable monthly at 10%, due January 2005                                                  1,798                 --

Note payable to Fair Holdings, interest payable monthly at 15%, balloon
 payment due March 2007                                                                      774                 --

Note payable to Fair Holdings, interest payable monthly at 5.25%, due October
 2005                                                                                        108                 --
                                                                                ------------------ ------------------

Subtotal Obsidian Enterprises, Inc.                                                        2,680                 --
                                                                                ------------------ ------------------

Total all companies                                                                       36,890             35,309

Less liabilities of subsidiary held for sale                                              (1,826)            (1,362)
Less related-party amounts presented separately                                           (5,518)                --
Less current portion                                                                      (5,667)            (7,871)
                                                                                ------------------ ------------------

                                                                                  $       23,879     $       26,076
                                                                                ================== ==================
</TABLE>

Following are the maturities of long-term debt for each of the next five years
and thereafter:


2003                                                           $      5,329***
2004                                                                  5,588
2005                                                                 11,977
2006                                                                  6,581
2007                                                                  2,050
Thereafter                                                            3,539
                                                             -------------------

                                                               $     35,064
                                                             ===================

***  The current portion of long-term debt includes $1,863 of amounts in default
     and classified as current.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



9.   FINANCING ARRANGEMENTS, CONTINUED

Various  subsidiary  companies  were in  violation  of  requirements  to provide
year-end financial  statements to various lenders within 90 days of the close of
the 2002 year end. Management received an extension of time from the lenders.

At October 31, 2002,  the Company was in violation  of negative  covenants  with
Renaissance US Growth & Income Trust PLC and BFSUS Special  Opportunities  Trust
PLC, the holders of  debentures  that  completed  the  financing of United.  The
Company  received a waiver of the violations as of October 31, 2002 and obtained
modifications of terms with the debenture  holders to provide for less stringent
covenants.  In exchange  for the waiver and  modifications,  the Company  issued
warrants  to the  debenture  holders  to  purchase  up to  16,000  shares of the
Company's common stock at an exercise price of $.20 per share.

The Company has an agreement  with  Partners that gives the Company the right to
mandate a capital  contribution  from  Partners  if the  lenders to U.S.  Rubber
and/or  United  were to declare a default.  In that  event,  the Company has the
right to enforce a capital contribution  agreement with Partners up to $1,620 on
U.S. Rubber and $1,000 on United to fund the respective  subsidiary's shortfall.
Those  payments,  if any,  would be applied  directly  to reduce the  respective
subsidiary's debt obligations to the lender.

The following details  significant changes in debt during the year ended October
31, 2002:


U.S. RUBBER:

During  February 2002,  U.S.  Rubber entered into a "Second  Amendment to Credit
Agreement"  with its then primary  lender.  The terms of the amendment  required
scheduled  debt service  payments  under  substantially  the same terms  through
November 1, 2002 when all debt outstanding with the primary lender was to become
due. The agreement also modified the terms of an operating lease with the lender
requiring  payment in full of the remaining  lease  obligation as of November 1,
2002.

During October 2002,  this debt was refinanced  with a new lender.  In addition,
the  equipment  that  related to the  operating  lease was  repurchased  and the
equipment, the unamortized loss related to the 2001 transaction, as discussed in
Note 10, and its related debt has been recorded at October 31, 2002.

On March 7, 2002,  the  Company  completed  a series of  transactions  with U.S.
Rubber,  SerVaas,  Inc.  ("SerVaas"),  the former owner of U.S.  Rubber,  and DC
Investments,  LLC ("DC  Investments"),  an entity  controlled  by the  Company's
Chairman,  whereby  certain  existing  debt of U.S.  Rubber  was  acquired  from
SerVaas. DC Investments acquired the SerVaas interest in the debt agreement with
a remaining  balance of $730,  plus  accrued  interest of $123,  for $700.  U.S.
Rubber then  acquired  this  agreement  in exchange for a new note payable to DC
Investments  with a face  amount of $700.  The note  requires  monthly  interest
payments at 15% per annum with the  principal  payable  March 2007.  The note is
subordinate to debt outstanding with the senior lender of U.S. Rubber.

The Company  also  acquired  the  SerVaas  interest  in the U.S.  Rubber  $1,750
subordinated  note payable,  plus accrued interest of $255, in exchange for $700
and  30,000  shares  of  Series  C  Preferred  Stock.  The cash  portion  of the
transaction was from the proceeds of a note payable in the amount of $700 issued
to DC Investments.  The note requires monthly interest payments at 15% per annum
with the principal payable March 2007.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



9.   FINANCING ARRANGEMENTS, CONTINUED

No gain or loss  was  recognized  in the  SerVaas  transactions  because  of the
involvement  of related  parties.  The  transaction  resulted  in an increase in
equity  of  the  Company  of  $1,016,   consisting  of  a  $1,463  reduction  of
liabilities, offset by a tax impact of $447.


CHAMPION:

After October 31, 2001,  Champion was in violation of its Senior Credit facility
with Bank One. Champion was working under a forbearance  agreement through March
15,  2002.  Champion  paid  down  the  Bank  One  debt by $570  to  Champion  as
consideration  for such agreements.  The Company made a capital  contribution of
$570 from loan proceeds from DC  Investments.  On March 20, 2002, DC Investments
acquired  the  senior  lender's  loan to  Champion  in the  amount  of $602 in a
nonrecourse assignment of the debt.


PYRAMID, DW LEASING AND OBSIDIAN LEASING:

During October 2002,  Obsidian  Leasing  refinanced debt in the amount of $4,666
with Old National Bank. The refinancing was completed  through both the existing
lender at 80% of the then-outstanding  balance and Fair Holdings.  The new terms
with the existing lender include interest at rates ranging from LIBOR plus .12 %
to LIBOR plus 5.65% and a maturity of December  2004.  The  remaining 20% of the
then-outstanding  term  notes  was paid by  borrowings  from  Fair  Holdings  of
approximately  $1,004.  The  transaction  resulted in a discount on the new term
loans in the amount of $387 and a loss on refinancing of $182.

During  October 2002,  Obsidian  Leasing also  refinanced  debt in the amount of
$2,836 with Edgar County Bank through borrowings from both Edgar County and Fair
Holdings.  Terms of the new term note with Edgar County include an 80% payoff of
the  then-outstanding  term notes,  interest at a rate of prime plus 2.75% and a
maturity of September 2007. The remaining 20% of the then-outstanding term notes
was paid by borrowings from Fair Holdings of approximately $584. The transaction
did not result in a gain or loss.


UNITED:

On  August  28,  2002,  the  agreements  for one of the  notes  payable  and the
revolving line of credit were amended to extend the final  maturities  from July
1, 2003 to July 1, 2004 for the note  payable  and July 1, 2002 to  February  1,
2004 for the  revolving  line of credit.  In  addition,  the  monthly  principal
installments  on the  note  payable  were  decreased  by $36 to $36 and  maximum
borrowings on the revolving line of credit were increased from $3,500 to $3,750.

10.  LEASING ARRANGEMENTS

In October 2001, the Company entered into a sales-leaseback  arrangement.  Under
the  arrangement,  the Company sold equipment and leased it back for a period of
five years. The leaseback has been accounted for as an operating lease. The loss
of $218  realized in the  transaction  was deferred  and was being  amortized to
income in proportion to rental expense over the term of the lease. Proceeds from
the sale of $1,050 were used to reduce borrowings under the line of credit.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



10.  LEASING ARRANGEMENTS, CONTINUED

During October 2002, in conjunction  with the  refinancing  described in Note 9,
the  Company  repurchased  the  equipment.  The  unamortized  loss of $175 as of
October  24,  2002  was  included  as  part  of  the  equipment  purchase  price
capitalized.

The Company has various  operating  lease  commitments,  principally  related to
machinery and equipment,  office  equipment,  and  facilities.  The  approximate
future  minimum  annual  rentals for the years under the terms of these  leases,
which expire on various dates through the year ending  October 31, 2008,  are as
follows:


Year Ending October 31,

2003                                      $          450
2004                                                 353
2005                                                 274
2006                                                 189
2007                                                 124
Thereafter                                             7
                                        -------------------

                                          $        1,397
                                        ===================

Rental expense under  operating  leases for the year ended October 31, 2002, ten
months ended  October 31, 2001 and year ended  December 31, 2000,  in thousands,
was $562, $514 and $130, respectively.

11.  EMPLOYEE BENEFIT PLANS

The  Company,  through  certain of its  subsidiaries,  has defined  contribution
401(k) plans which permit voluntary  contributions up to 20% of compensation and
which  provide   Company-matching   contributions  of  up  to  10%  of  employee
contributions not to exceed 6% of employee compensation. 401(k) plan expense for
the year ended October 31, 2002, the ten-month period ended October 31, 2001 and
the  year  ended  December  31,  2000  was  approximately  $148,  $35  and  $25,
respectively.

12.  MANDATORY REDEEMABLE PREFERRED STOCK

In  conjunction  with the United  acquisition  described  in Note 6, the Company
issued  386,206  shares  of  Series  C  Preferred  Stock to  Huntington  Capital
Investment Corporation ("Huntington"), the senior subordinated lender of United.
The note purchase agreement included a provision giving Huntington the option to
require the Company to repurchase the Series C Preferred Stock.  Under the terms
of the  agreement,  Huntington  has the  option  of  requiring  the  Company  to
repurchase  these shares at 90% of market value at the date of  redemption  upon
the earlier of: a) fifth  anniversary  of  issuance of such  shares,  b) default
under the  subordinated  debt  agreement,  c) other factors related to a sale of
substantially all assets of the Company as defined in the agreement.  At October
31, 2002, the Company had violated certain  financial  covenants  defined in the
subordinated  debt agreement with  Huntington.  The Company received a waiver of
these violations as of October 31, 2002 and a modification to the covenants.

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)


12.  MANDATORY REDEEMABLE PREFERRED STOCK, CONTINUED

A portion of the note purchase agreement proceeds of $3,500 was allocated to the
stock  issued  based on the thirty day average  closing  value of the  Company's
common stock prior to the transaction.  As the redemption value is variable, the
Company recognizes changes in the estimated fair value each quarter.  Changes in
fair value are adjusted through additional paid in capital. At October 31, 2002,
the estimated redemption requirement is $1,400 to be paid July 2006.

13.  STOCKHOLDERS' EQUITY

PREFERRED STOCK:

The original  capital  structure of Danzer prior to the merger was  comprised of
the following:  5,000,000  authorized shares of $.001 par value preferred stock;
10,500 shares  authorized of the Class of 10% Cumulative  Senior Preferred Stock
(Series A) with no shares  issued or  outstanding  as 7,650 shares were retired;
(Series B)  Cumulative  Convertible  Senior  Preferred  Stock with 16,000 shares
authorized and no shares issued or outstanding as 16,000 shares were retired. In
addition,  the Company had  20,000,000  authorized  shares of common  stock with
17,760,015 shares outstanding at December 31, 2000.

In June  2001,  Danzer  issued  an  aggregate  of  1,750,000  shares  of  Danzer
unregistered  common stock in  connection  with the exchange of $355 of debt. On
June 21, 2001,  Danzer amended its articles of  incorporation to authorize up to
4,500,000 shares of Series C Preferred Stock. In conjunction with the merger and
acquisitions  (described in Note 6) of June 21, the Company issued  1,970,962 of
Series C  Preferred  Stock.  The  shareholders  of  Pyramid  and  Champion  then
converted  824,892 shares of preferred  stock to 16,497,840 of common stock.  In
addition, on July 5, 2001, the Company increased the authorized shares of common
stock  by  20,000,000  to  40,000,000.  On July 31,  2001,  the  Company  issued
2,593,099  shares of additional  Series C Preferred  Stock related to the United
acquisition.

As a result of the reverse merger,  U.S.  Rubber became the accounting  acquirer
and accordingly,  under purchase accounting,  became the Registrant.  Therefore,
the 2000  financial  statements  became  those of U.S.  Rubber.  However,  under
purchase  accounting for a reverse merger,  the stockholders'  equity section of
the Registrant  (formerly  Danzer  Corporation)  became the equity of the merged
entity.  Accordingly,  the statement of changes in stockholders' equity reflects
that purchase accounting.

On October 4, 2001,  the Company  changed its name from  Danzer  Corporation  to
Obsidian Enterprises, Inc. In addition, 5,000,000 shares of Preferred Stock were
authorized with the domestication of Obsidian Enterprises,  Inc. in Delaware. On
October 9, 2001,  the  Company  filed  designation  of  preferences,  rights and
limitations of 4,600,000  shares of Series C Preferred  Stock.  This transaction
results in 400,000 shares of authorized  but  undesignated  preferred  stock and
cancellation of the Series A and B shares.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



13.  STOCKHOLDERS' EQUITY, CONTINUED

The Series C Preferred  Stock is  convertible at the option of the holder at any
time, unless previously redeemed,  into shares of common stock of the Company at
an  initial  conversion  rate of 20  shares of  common  stock for each  share of
convertible stock. However, the convertible preferred stock may not be converted
prior to the corporation filing a registration statement of such shares. Holders
of the convertible preferred stock have voting rights which entitle them to cast
on each matter submitted to a vote of the stockholders of the Company the number
of votes equal to the number of shares of common stock into which such shares of
Series C Preferred could be converted.

As  previously  discussed in Note 9, on March 7, 2002,  the Company  completed a
series of transactions with the subordinated  lender at U.S. Rubber resulting in
an increase in equity and a decrease in liabilities of $1,016.  The subordinated
lender received 30,000 shares of Series C Preferred Stock in this transaction.

On April 30, 2002,  the Company  converted  $1,290 of debt and accrued  interest
owed to Partners  and $596 of debt and accrued  interest  owed to Fair to equity
through the issuance to Partners and Fair of 402,906 shares and 186,324  shares,
respectively,  of  Series  C  Preferred  Stock  which  are  convertible  into an
aggregate of 11,784,600 shares of common stock of the Company.

In August 2002,  warrants for 10,000 shares of Series C  Convertible  Stock were
exercised. The shares were issued in exchange for a cash payment of $20.

On October 24,  2002,  the  Company  amended its  Articles of  Incorporation  to
authorize  200,000  shares of Series D Preferred  Stock.  The Series D Preferred
Stock is convertible at the option of the holder at any time,  unless previously
redeemed,  into shares of common  stock of the Company at an initial  conversion
rate of 175 shares of common  stock for each share of Series D Preferred  Stock.
However,  the  stock  may  not be  converted  prior  to  the  Company  filing  a
registration  statement for such shares. Holders of the Series D Preferred Stock
have voting rights which entitle them to cast on each matter submitted to a vote
of the  stockholders  of the  Company the number of votes equal to the number of
shares of common  stock into which such  shares of Series D  Preferred  could be
converted.

On October 24, 2002,  88,300 of the Series D Preferred Stock shares were sold in
the  transactions   described  below  which  were  exempt  from  Securities  Act
registration  under Section 4(2) of the Securities Act,  relating to sales by an
issuer not involving a public offering.

On October  24,  2002,  the  Company  converted  $1,276 of debt to  Partners  in
exchange for 72,899 shares of Series D Preferred  Stock.  The conversion was the
result of Partners' requirement under the Plan of Reorganization to fund through
the  purchase of  additional  preferred  stock  certain  ongoing  administrative
expenses of the Company to complete  the Plan of  Reorganization,  complete  all
required   current  and  prior  year  audits  to  meet  the  regulatory   filing
requirements,  and ensure all annual and  quarterly SEC filings are completed to
enable the registration of the preferred stock issued to Partners.

On October 24, 2002, the Company  converted $270 of debt to Fair in exchange for
15,431  shares of Series D Preferred  Stock.  The  conversion  was the result of
Fair's  agreement to cover  similar  expenses as Partners as described  above in
excess of the amount Partners was obligated to pay.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



13.  STOCKHOLDERS' EQUITY, CONTINUED

STOCK OPTIONS:

On May 7, 1990, Danzer's stockholders approved a stock option plan to issue both
"qualified" and "nonqualified" stock options. Under the plan, 800,000 options to
purchase shares of the Company's common stock may be issued at the discretion of
the Company's  Board of  Directors.  The option price per share is determined by
the Company's Board of Directors, but in no case will the price be less than 85%
of the fair value of the common  stock on the date of grant.  Options  under the
plan will have a term of not more than ten years  with  accelerated  termination
upon the occurrence of certain events.

In April 1998,  Danzer granted  600,000 stock  options,  exercisable at $.10 per
share,  to its  president.  The options  vest over two years and expire in April
2004. None of these options have been exercised as of October 31, 2002.

In September 1998, Danzer adopted a qualified  incentive stock option plan under
Section 422 of the Internal Revenue Code. Options granted under the plan will be
granted at prices not less than fair value of the Company's stock at the date of
grant,  have a term not more  than ten  years  and have  other  restrictions  as
determined by statute.

In September 1998, Danzer granted a total of 604,500 stock options,  exercisable
at $.10 per share, to certain employees. The options expired November 2001. As a
result of  voluntary  termination,  75,000  options  expired in 1999 and 192,000
options  expired in 2000.  The balance of 247,500  options  outstanding  expired
November 1, 2002.

On July 24,  2001,  the Board  adopted,  and on October 5, 2001,  the  Company's
stockholders  approved, the 2001 Long Term Incentive Plan (the "2001 Plan"). The
2001 Plan  authorizes  the granting to the Company's  directors,  key employees,
advisors and  consultants  of options  intended to qualify as Incentive  Options
within the  meaning of Section  422 of the  Internal  Revenue  Code of 1986,  as
amended (the "Code"), options that do not so qualify ("Non-Statutory  Options"),
restricted stock and Other Stock-Based  Awards that are not Incentive Options or
Non-Statutory  Options.  The awards are payable in Common Stock and are based on
the formula which measures performance of the company.  There was no performance
award  expense in 2002 or 2001.  No options  under this plan were granted to any
employees. Options are exercisable for up to 10 years from the date of grant.

The  Company  has  adopted  the  disclosure-only  provisions  of SFAS  No.  123,
Accounting for Stock-Based  Compensation.  Accordingly,  no compensation expense
has been recognized for the stock option plans. Had compensation expense for the
Company's  stock  option  plans been  determined  based on the fair value at the
grant  date for awards  consistent  with the  provisions  of SFAS No.  123,  the
Company's  net income  (loss) for the year ended  October 31,  2002,  ten months
ended  October 31,  2001,  and the year ended  December 31, 2000 would have been
$(6,330),  $(4,395),  and $3, respectively.  Basic and diluted net income (loss)
per share as reported  would not have changed in any period  presented  had such
compensation expense been recorded.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



13.  STOCKHOLDERS' EQUITY, CONTINUED

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions  used for grants in 2000 (no options  were  granted  during the year
ended October 31, 2002 and the ten months ended October 31, 2001), respectively:
risk-free interest rates of 6.4 and 5.5 percent;  dividend yield of 0 percent in
both years;  expected  lives of 5 years;  and volatility of 978 and 170 percent.
The estimated  weighted  average fair value of options  granted  during 2000 and
1999 were $0.10 and $0.05 per share, respectively.

Following is a summary of  transactions  of granted  shares under option for the
year ended  October 31, 2002,  the ten months ended  October 31, 2001,  and year
ended December 31, 2000:
<TABLE>


                                             2002                         2001                         2000
                                 ----------------------------- ---------------------------- ----------------------------
                                                  Weighted                      Weighted                     Weighted
                                                   Average                      Average                      Average
                                                  Exercise                      Exercise                     Exercise
                                    Shares          Price         Shares         Price         Shares         Price
                                 -------------- -------------- -------------- ------------- -------------- -------------

<S>                                <C>                  <C>      <C>                  <C>     <C>                  <C>
Outstanding, beginning of year     1,047,500            .09      1,137,500            .09     1,029,500            .09

Issued during the year                    --          --                --          --          450,000            .10
Canceled or expired during the
 year                               (247,500)           .10        (90,000)           .10      (192,000)           .09

Exercised during the year                 --          --                --          --         (150,000)           .10
                                 -------------- -------------- -------------- ------------- -------------- -------------

Outstanding, end of year             800,000            .09      1,047,500            .09     1,137,500            .09
                                 ============== ============== ============== ============= ============== =============

Eligible, end of year for
 exercise                            800,000*           .09      1,047,500            .09     1,137,500            .09
                                 ============== ============== ============== ============= ============== =============
</TABLE>

A further summary about fixed options outstanding at October 31, 2002 is as
follows:
<TABLE>

                                                            Weighted
                                                             Average        Weighted                       Weighted
                                                            Remaining       Average                        Average
                                            Number         Contractual      Exercise        Number         Exercise
                                          Outstanding         Life           Price        Exercisable       Price
                                        ---------------- ---------------- ------------- ---------------- -------------

<S>                                         <C>            <C>                  <C>        <C>                  <C>
Exercise price of $.10                       600,000*       1.5 yr.              .10        600,000              .10

Exercise price of $.05                       200,000        1.2 yr.**            .05        200,000              .05
</TABLE>

*    In accordance  with the Plan of  Reorganization  and Merger and the related
     "Letter  agreements,"  the  above  options  cannot be  exercised  until the
     Company  amends  its  articles  of  incorporation  to  authorize  shares of
     approximately 120,000,000 and has registered such shares.
**   Includes  extension of  expiration  date from December 31, 2002 to December
     31, 2003 approved by the Company's Board of Directors on December 13, 2002.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



13.  STOCKHOLDERS' EQUITY, CONTINUED


STOCK WARRANTS:

Danzer  issued  warrants  to  purchase  common  stock to  several  parties.  The
following table  summarizes the outstanding  warrants for the year ended October
31, 2002 and the ten-month period ended October 31, 2001:
<TABLE>

                                                Outstanding                                                 Outstanding
                                                  Warrants       Issued                        Warrants       Warrants
                                                October 31,    During the                      Exercised    October 31,
                                                    2001          Year       Exercise Price    in Period        2002
                                               --------------- ------------ ----------------- ------------ ---------------

Common Stock:
<S>                                               <C>              <C>              <C>          <C>              <C>
  Renaissance US Growth & Income Trust PLC               --        8,000            $.20            --            8,000
  BFSUS Special Opportunities Trust PLC                  --        8,000            $.20            --            8,000

Series C Preferred Stock:
  Duncan-Smith Co., 10,000 shares, expired
    August 31, 2002                                  10,000           --           $2.00       (10,000)              --

  Markpoint financing agreement expiring May
    2008 associated with Champion**                  Zero**           --            $.01            --           Zero**
</TABLE>

**   The number of warrants  available  under the  agreement  with  Markpoint is
     based on  twenty-five  percent of the fair  market  value of Champion to be
     determined based on a formula  including a multiple of EBITDA.  No warrants
     are currently available under this agreement based on the operating results
     and stockholder's  deficit of Champion. As discussed in Notes 5 and 17, the
     Company  has agreed to a  settlement  with  Markpoint.  Accordingly,  these
     warrants have been terminated.

In  January  2003,  the  Company  agreed  to a  modification  of terms  with the
debenture holders to provide for less stringent covenants.  In exchange for this
modification,  the Company issued  warrants to each of the debenture  holders to
purchase up to 8,000 shares of the Company's  common stock at an exercise  price
of $.20 per share.  These warrants  expire January 24, 2006. The issuance of the
warrants had no material impact on earnings.


CONVERTIBLE DEBT:

As  described  in Note 9, the  Company  has a note  payable  agreement  which is
convertible  by the  holder  to  common  stock  totaling  5,000,000  shares at a
conversion rate of $0.10 per share.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




14.  BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA

The Company operates in three industry segments comprised of trailer and related
transportation  equipment   manufacturing;   coach  leasing;  and  butyl  rubber
reclaiming.  All sales are in North and South  America  primarily  in the United
States,  Canada  and  Brazil.   Selected  information  by  segment  follows  (in
thousands):
<TABLE>

                                                                Year Ended October 31, 2002
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------

Sales:
<S>                                      <C>                 <C>                 <C>               <C>
  Domestic                               $       38,911      $       6,374       $       9,336     $       54,621
  Foreign                                         1,864                 --                 789              2,653
                                       ------------------------------------------------------------------------------

Total                                    $       40,775      $       6,374       $      10,125     $       57,274

Cost of goods sold                        $      35,077      $       3,357       $       9,407      $      47,841

Loss before taxes                         $      (2,089)     $        (417)      $        (802)     $      (3,308)

Identifiable assets                       $      20,155      $      11,760       $      11,391      $      43,306*

Depreciation and amortization expense     $         705      $         779       $       1,084      $       2,568

*Identifiable assets, as stated above                                                               $      43,306
  Assets of subsidiary held for sale                                                                        1,538
  Corporate-level goodwill                                                                                    650
  Other corporate-level assets                                                                                429
                                                                                                 --------------------

  Total assets                                                                                      $      45,923
                                                                                                 ====================
</TABLE>




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




14.  BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED
<TABLE>

                                                             Ten Months Ended October 31, 2001
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------

Sales:
<S>                                      <C>                 <C>                 <C>               <C>
  Domestic                               $       10,100      $       4,165       $       9,253     $       23,518
  Foreign                                           550                 --                 621              1,171
                                       ------------------------------------------------------------------------------

Total                                    $       10,650      $       4,165       $       9,874     $       24,689

Cost of goods sold                        $       8,955      $       1,618       $       8,884      $      19,457

Loss before taxes                         $         (96)     $        (570)      $        (725)     $      (1,391)

Identifiable assets                       $      22,941      $      13,330       $      10,205      $      46,476*

Depreciation and amortization expense     $         365      $         785       $         905      $       2,055
*Identifiable assets, as stated above                                                               $      46,476
Assets of subsidiary held for sale                                                                          2,374
                                                                                                 --------------------

Total assets                                                                                        $      48,850
                                                                                                 ====================
</TABLE>

For the calendar year ended December 31, 2000, the Company  operated in only one
segment  (butyl  rubber  reclaiming),  which was the  segment of the  accounting
acquirer U.S. Rubber. U.S. Rubber had foreign sales of $943 for 2000.

Obsidian  Enterprises,  Inc.  (legal  parent)  allocates  selling,  general  and
administrative  expenses  to  the  respective  companies  primarily  based  on a
percentage  of sales.  For the year and ten months  ended  October  31, 2002 and
2001, respectively, allocated corporate expenses by segment were as follows:

                                             Year Ended      Ten Months Ended
                                          October 31, 2002   October 31, 2001
                                         ------------------- ------------------

Trailer manufacturing                      $          934       $         245
Coach leasing                                         146                  96
Butyl rubber reclaiming                               232                 275
                                         ------------------- ------------------

                                           $        1,312       $         616
                                         =================== ==================


<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




15.  INCOME TAXES

The  Company  files a  consolidated  federal  tax  return.  The  parent and each
subsidiary  record  their  share of the  consolidated  federal  tax expense on a
separate-return basis. Any additional income tax expense on recovery realized as
a result of filing a consolidated tax return is recorded in  consolidation.  The
Company and each subsidiary file separate state income tax returns.  The Company
accounts for income taxes in compliance with SFAS No. 109, Accounting for Income
Taxes.  Under SFAS No. 109, deferred tax assets and liabilities are recorded for
any  temporary  differences  between the  financial  statement  and tax bases of
assets and  liabilities,  using the enacted tax rates and laws expected to be in
effect when the taxes are actually paid or recovered.

The provision for (expenses) benefit for income taxes consists of the following:
<TABLE>

                                                2002            2001            2000
                                           ------------------------------------------------

Current:
<S>                                          <C>             <C>             <C>
  Federal                                    $         --    $         --    $        152
  State                                               (15)            (36)             14
                                           ------------------------------------------------

                                                      (15)            (36)            166
                                           ------------------------------------------------

Deferred:
  Federal                                              41             350            (187)
  State                                                 7              58             (29)
                                           ------------------------------------------------

                                                       48             408            (216)
                                           ------------------------------------------------

Total                                        $         33    $        372    $        (50)
                                           ================================================
</TABLE>

A reconciliation of income tax benefit  (expense) from continuing  operations at
U.S. statutory rates to actual income tax benefit (expense) is as follows:
<TABLE>

                                                 2002            2001           2000
                                           ------------------------------------------------

<S>                             <C>          <C>              <C>            <C>
Benefit (tax) at statutory rate (34%)        $      1,125     $      1,609   $        (33)
Effect of nontaxable combined entity                  (18)            (166)            --
State income tax                                      (15)             (36)            (5)
Goodwill amortization                                  --              (26)            --
Non-deductible goodwill                              (245)              --             --
Valuation reserve applied to equity                (1,267)*             --             --
(Increase) decrease in valuation reserve              380           (1,038)            --
Other                                                  73               29            (12)
                                           ------------------------------------------------

                                             $         33     $        372   $        (50)
                                           ================================================
</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)


15.  INCOME TAXES, CONTINUED

*On  November  1, 2001,  27  coaches  owned by DW Leasing  were  transferred  to
Obsidian  Leasing in a tax-free  exchange,  as further  described  in Note 1. DW
Leasing  recorded a charge to equity as a deemed  distribution  of $1,590 on the
date of the transaction, representing the deferred tax liability associated with
the coaches  transferred.  A  reduction  of deferred  tax  valuation  reserve of
$(1,267)  was also  recorded  in the  consolidated  financial  statements  as an
increase in equity, as the addition of the above deferred tax liability resulted
in the  Company's  ability  to  realize  additional  deferred  tax  assets  on a
consolidated basis.

Deferred  income taxes  represent  the net tax effects of temporary  differences
between the carrying amount of assets and  liabilities  for financial  reporting
purposes and for income tax  purposes.  Significant  components of the Company's
deferred tax assets and liabilities are as follows:
<TABLE>

                                                2002            2001            2000
                                           ------------------------------------------------

Deferred tax assets (liabilities):
<S>                                          <C>             <C>             <C>
  Accounts receivable                        $        199    $         32    $         --
  Inventories                                         307             472             517
  Accrued expenses                                    158             117              15
  Intangibles                                       1,004             791              --
  Operating loss carryforwards                      2,961           1,474              --
  Property and equipment                           (4,497)         (2,267)           (171)
  Other                                                80             (81)             --
                                           ------------------------------------------------

                                                      212             538             361
Less valuation reserves                            (1,171)         (1,537)             --
                                           ------------------------------------------------

Deferred tax assets (liabilities), net       $       (959)   $       (999)   $        361
                                           ================================================

Included in the accompanying balance sheet under the following:

                                                2002            2001            2000
                                           ------------------------------------------------

Deferred tax assets                          $        665    $        673    $        532
Deferred tax liabilities                           (1,624)         (1,672)           (171)
                                           ------------------------------------------------

                                             $       (959)   $       (999)   $        361
                                           ================================================
</TABLE>

The amount of federal tax net operating loss carryforwards  available at October
31, 2002 was  $8,100.  Certain of these loss  carryforwards  were  generated  by
certain  subsidiaries  prior to the reverse merger  transaction in June 2001 and
have expiration dates through the year 2021. The use of preacquisition operating
losses  is  subject  to  limitations  imposed  by  the  Internal  Revenue  Code.
Utilization  of  these  loss  carryforwards  is  impacted  by such  limitations.
Accordingly,  the deferred tax assets related to premerger operating losses have
been  reserved  with a valuation  allowance to the extent they are not offset by
deferred liabilities.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




15.  INCOME TAXES, CONTINUED

Federal tax net operating loss  carryforwards and expiration dates as of October
31, 2002 are as follows:

<TABLE>

                                             Premerger        Expiration Dates       Postmerger     Expiration Dates
                                          ---------------- ----------------------- ---------------- ------------------

<S>                                          <C>             <C>          <C>          <C>          <C>          <C>
                                             $  3,105        2008 through 2021         $  4,995     2021 through 2022
                                          ================                         ================
</TABLE>

Cash  payments of income taxes for the year ended  October 31, 2002,  ten months
ended October 31, 2001 and for the year 2000 were $22, $44 and $8, respectively.

16.  RELATED PARTIES

The  Company  makes  advances,   receives  loans  and  conducts  other  business
transactions with affiliates  resulting in the following amounts for the periods
ended:
<TABLE>

                                                                                    October 31,        October 31,
                                                                                       2002               2001
                                                                                 ------------------ ------------------
Balance sheets:
  Current assets:
<S>                                                                                <C>                <C>
    Accounts receivable, Obsidian Capital Partners                                 $        181       $         --
    Accounts receivable, Obsidian Capital Company                                            13                217
    Accounts receivable, other affiliated entities                                           12                 --
  Long-term portion:
    Investment banking fees, purchase accounting*                                            --              1,960
                                                                                 ------------------ ------------------

Total assets                                                                       $        206       $      2,177
                                                                                 ================== ==================

  Current liabilities:
    Accounts payable, Obsidian Capital Company                                     $        279       $        625
    Accounts payable, stockholders                                                          338                300
    Accounts payable, DC Investments and Fair Holdings                                       42                 --
    Accounts payable, other affiliated entities                                               9                 --
  Long-term portion:
    Accounts payable, Obsidian Capital Partners                                              --              2,170
  Notes payable, DC Investments                                                             700                 --
  Notes payable, Fair Holdings                                                            3,020                 --
  Line of credit, Fair Holdings                                                           1,798                 --
                                                                                 ------------------ ------------------
Total liabilities                                                                  $      6,186       $      3,095
                                                                                 ================== ==================

Statements of Operations:
  Interest expense, DC Investments and Fair Holdings                               $        322       $         --
  Interest expense, Obsidian Capital Partners                                                58                 --
  Rent expense, Obsidian Capital Company                                                     56                 15

</TABLE>


<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)



16.  RELATED PARTIES, CONTINUED

Related-party  amounts classified as current reflect those portions of the total
receivable or payable that were currently due in accordance  with the terms,  or
were collected or paid subsequent to year end.  Amounts  classified as long term
represent  amounts not  currently  due or amounts that were  converted to equity
subsequent to year end as discussed in Note 18.

On February  13, 2002,  DC  Investments,  LLC, a related  party 50% owned by Mr.
Durham (Chairman of the Company), purchased accounts receivable from DW Leasing,
recorded  by DW Leasing as  deposits on  trailers,  in the amount of $1,051.  DW
Leasing used the proceeds  from the purchase of the accounts  receivable  to pay
off the accounts  payable due Obsidian Capital Company in the amount of $624 and
the amount due shareholders and other related parties in the approximate  amount
of $300.

The Company was obligated to the stockholders  and certain  employees (that were
formerly  stockholders of subsidiary  companies)  under note payable  agreements
acquired as part of the acquisitions.  In addition, the Company has entered into
note payable  agreements with other  affiliated  entities.  The details of these
notes payable are included in Note 9.

*Subsidiaries of the Company paid Obsidian Capital Company, an entity controlled
by Mr. Durham (Chairman of the Company), investment banking fees associated with
the acquisitions and related  financing on the Danzer and U.S. Rubber merger and
the United acquisition.  Amounts paid by U.S. Rubber, United, and Danzer in 2001
were $760, $600, and $600, respectively. 17. COMMITMENTS AND CONTINGENCIES

On April 29,  2002,  Markpoint  Equity  Fund J.V.  ("Markpoint"),  a Texas joint
venture for which The Markpoint  Company serves as Managing  Venturer,  filed an
action in the Texas District Court, Dallas County seeking payment of $1,250 owed
by Champion  under the  subordinated  credit  facility  described  in Note 9. On
January 27, 2003, the Company  reached an agreement to settle this liability for
a cash  payment in the amount of $675 and the  issuance to  Markpoint  of 32,143
shares of the Company's  Series D Preferred  Stock.  In addition,  the agreement
provides  Markpoint the option to require the Company to repurchase these shares
at a price of $21 per share. The repurchase  option is available to Markpoint as
follows:  16,072 shares during the period May 1, 2003 to June 1, 2003 and 16,071
shares during the period  November 1, 2003 to December 1, 2003.  The  repurchase
options  expire if not  exercised  during the specified  periods.  The Company's
repurchase  obligation  is guaranteed  by Mr.  Durham.  The sale of Champion was
completed on January 30, 2003.

It is customary  practice for companies in the cargo  trailer  industry to enter
into  repurchase  agreements  with  lending  institutions  which  have  provided
wholesale  floor-plan  financing to dealers. A portion of the wholesale sales of
United are made  pursuant  to these  agreements,  which  generally  provide  for
purchase of United's products from the lending  institutions for the balance due
them in the  event of  repossession  upon a  dealer's  default.  The  contingent
liability is spread over many dealers and financial  institutions and is reduced
by the resale  value of the  products,  which are  required  to be  repurchased.
Expenses incurred in connection with these agreements have been immaterial.  The
maximum  potential  repurchase  commitment at October 31, 2002 was approximately
$2,000.

In the normal course of business,  the Company is liable for contract completion
and product performance. In the opinion of management, such obligations will not
significantly affect the Company's financial position or results of operations.
<PAGE>

18.  SUBSEQUENT EVENTS

On October 30, 2002, the Company's Board of Directors  agreed to sell the assets
of Champion to an entity  controlled  by Messrs.  Durham and  Whitesell  for the
assumption of all liabilities of Champion. The sale of Champion was completed on
January 30, 2003.

Subsequent  to  year  end,  United  amended  its  credit  agreement  to  provide
additional  working capital during the winter months.  The amendment  included a
"temporary  overline"  line of credit with maximum  borrowings not to exceed the
lesser of $650 or the  remainder  of the  borrowing  base  less the  outstanding
principal amount of the revolving line of credit. Interest is payable monthly at
a rate of prime plus 3/4%.  The  temporary  overline  line of credit  matures on
March 31, 2003.

During January 2003,  Obsidian Leasing  refinanced debt in the amount of $928 to
former shareholders of Pyramid and related companies. Terms of the new note with
Fair  Holdings  include  monthly  interest  payments  of 13% of the  outstanding
principal amount and a balloon principal  payment in January 2006.  Accordingly,
this debt has been classified as long term at October 31, 2002.

On December 17,  2002,  Obsidian  Leasing  sold four  coaches to DC  Investments
Leasing, LLC ("DC Investments Leasing"), a newly created entity owned 50% by Mr.
Durham  (Chairman  of the  Company) in  exchange  for DC  Investments  Leasing's
satisfaction  of  the  debt  outstanding  on  such  coaches.  In  addition,   DC
Investments  Leasing also acquired five additional  coaches that were previously
to be  purchased  by the Company  thereby  eliminating  the  Company's  existing
purchase commitment for such coaches. DC Investments Leasing also entered into a
management  agreement with Pyramid under which all nine coaches  described above
will be leased by Pyramid.

On  January 2,  2003,  Obsidian  Enterprises,  Inc.'s  line of credit  with Fair
Holdings was amended. Maximum borrowings were increased from $3,000 to $5,000.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




19.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED), AS RESTATED, SEE NOTE 3

     (dollars in thousands, except per share amounts)

YEAR ENDED OCTOBER 31, 2002
<TABLE>

                                          First Qtr. Ended   Second Qtr. Ended   Third Qtr. Ended      Fourth Qtr.
                                               1/31/02            4/30/02             7/31/02        Ended 10/31/02
                                          ------------------ ------------------- ------------------ ------------------

<S>                                         <C>                <C>                 <C>                <C>
Net sales                                   $       11,466     $       15,598      $       15,239     $     14,971

Gross profit                                         1,518              2,625               2,839            2,653

Income (loss) from continuing
 operations***                                      (1,207)              (570)                471           (1,531)**

Income (loss) from continuing
 operations per basic common and common
 equivalent share***                                  (.03)              (.02)                .00             (.04)

TEN MONTHS ENDED OCTOBER 31, 2001

                                             First Qtr.*     Second Qtr. Ended   Third Qtr. Ended      Fourth Qtr.
                                            Ended 1/31/01         4/30/01             7/31/01        Ended 10/31/01
                                          ------------------ ------------------- ------------------ ------------------

Net sales                                   $        3,626     $        4,014      $        4,685     $     14,474

Gross profit                                           408                911               1,260            2,764

Loss from continuing operations***                    (218)              (408)               (196)            (541)

Loss from continuing operations per
 common and common equivalent share***                (.01)              (.02)               (.01)          (.02)


</TABLE>




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
           (all amounts in thousands, except per share and share data)




YEAR ENDED DECEMBER 31, 2000
<TABLE>

                                          First Qtr. Ended   Second Qtr. Ended   Third Qtr. Ended      Fourth Qtr.
                                               3/31/00            6/30/00             9/30/00        Ended 12/31/00
                                          ------------------ ------------------- ------------------ ------------------

<S>                                         <C>                <C>                 <C>                <C>
Net sales                                   $        3,059     $        3,024      $        3,233     $        3,267

Gross profit (loss)                                    301                372                 373                147

Net income (loss)                                       86               (118)                146                (66)

Net income (loss) per common and common
 equivalent share                                    --                 --                  --                    --
</TABLE>

*    The first  quarter  for U.S.  Rubber  includes  the first and second  month
     (November and December) of 2000.
**   The fourth  quarter  includes the charge for the  impairment of goodwill of
     $720 for October 31, 2002.
***  Income (loss) from continuing  operations for the quarter ended October 31,
     2001 and for the quarters ended January 31, 2002,  April 30, 2002, and July
     31, 2002 have been restated due to factors  discussed in Note 3. Changes in
     the  income  (loss)  in each of  these  quarters  ranged  from  $33 to $42.
     Earnings per share have been restated for each of the quarters in the years
     ended October 31, 2002 and 2001 as a result of changes discussed in Note 3.


<PAGE>

                SCHEDULE II--VALUATION AND QUALIFYING OF ACCOUNTS

                           Year Ended October 31, 2002
                                 (in thousands)
<TABLE>

                                                       Column C--Additions
                                               -----------------------------------
    Column A--Description          Column        (1)--Charged to    (2)--Charged to        Column            Column
                               B--Balance at                                                         r
                               Beginning of       Costs and           Other                          ibE--Balance at
                                  Period           Expenses      Accounts--Describe D--Deductions--Desc  End of Period
----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------

Allowance for doubtful
<S>                             <C>              <C>               <C>                 <C>             <C>
 accounts                       $       80       $      415        $       --          $   --          $      495
                              ================ ================= ================= ================= =================

Inventory valuation
 allowances                     $      833       $       50        $       --          $ 417*          $      466
                              ================ ================= ================= ================= =================

Deferred tax valuation
 reserve                        $    1,551       $       --        $       --          $ 380***        $    1,171
                              ================ ================= ================= ================= =================
</TABLE>


                        Ten Months Ended October 31, 2001
                                 (in thousands)
<TABLE>

                               Column C--Additions
                                                 ---------------------------------
    Column A--Description      Column B--Balance    (1)--Charged     (2)--Charged to        Column            Column
                               at Beginning of    to Costs and        Other                         ribE--Balance at
                                   Period           Expenses     Accounts--Describe D--Deductions--Desc  End of Period
----------------------------- ------------------ --------------- ----------------- ----------------- -----------------

Allowance for doubtful
<S>                             <C>                <C>             <C>               <C>               <C>
 accounts                       $       --         $       80      $       --        $       --        $       80
                              ================== =============== ================= ================= =================

Inventory valuation
 allowances                     $    1,338         $       73      $       --        $      578*       $      833
                              ================== =============== ================= ================= =================

Deferred tax valuation
 reserve                        $       --         $    1,038      $      513**      $       --        $    1,551
                              ================== =============== ================= ================= =================
</TABLE>


*    Use of inventory previously reserved.
**   Valuation reserve of acquired companies recorded in purchase accounting.
***  Realization of operating losses against deferred tax liabilities.




<PAGE>


ITEM 9. CHANGES AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE

As previously  reported in a Current Report Form 8-K filed on November 13, 2001,
the Audit Committee of the Company's  Board of Directors  decided on November 7,
2001,  to  dismiss  Linton,  Shafer & Company,  P.A.  ("Linton  Shafer")  as the
Company's  independent  auditors.  The audit  reports  of  Linton  Shafer on the
consolidated  financial  statements of the Company as of and for the years ended
October 31, 2000 and 1999 did not contain any adverse  opinion or  disclaimer of
opinion,  nor were they qualified or modified as to uncertainty,  audit scope or
accounting  principles.  During the fiscal years ended October 31, 2000 and 1999
and the period following  October 31, 2000, there were no disagreements  between
the Company and Linton Shafer on any matter regarding  accounting  principles or
practices,  financial statement  disclosure,  or auditing scope or procedure.  A
letter from Linton Shafer confirming the statements set forth in this Item 9 was
attached as Exhibit 16 to the Current  Report on Form 8-K filed on November  13,
2001.

On November 7, 2001,  the Board of  Directors  engaged  McGladrey & Pullen,  LLP
("McGladrey") as the Company's new independent auditors. During the fiscal years
ended  October  31,  2000 and 1999 and during the period  following  October 31,
2000, the Company did not consult McGladrey regarding either (i) the application
of  accounting  principles  to a  specified  transaction,  either  completed  or
proposed,  or the type of audit  opinion that might be rendered on the Company's
financial  statements,  and neither a written report was provided to the Company
nor oral advice  provided  that  McGladrey  concluded  was an  important  factor
considered by the Company in reaching a decision as to an  accounting,  auditing
or financial  reporting issue; or (ii) any matter that was either the subject of
a disagreement or a reportable event.


PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth  information with respect to all Directors of the
Company,  including their ages,  present principal  occupations,  other business
experience during the last five years, membership on committees of the Board and
directorships in other publicly held companies.
<TABLE>

               Name                  Age                         Position                           Director Since

<S>                                  <C>                                                                 <C>
Timothy S. Durham                    40    Chief Executive Officer and Chairman of the Board             2001
Terry G. Whitesell                   63    President, Chief Operating Officer and Director               2001
Jeffrey W. Osler                     34    Executive Vice President, Secretary, Treasurer and            2001
                                           Director
Goodhue W. Smith, III+               51    Director                                                      1997
John A. Schmit*+                     33    Director                                                      2001
D. Scott McKain*                     47    Vice Chairman and Director                                    2001
Daniel S. Laikin+                    40    Director                                                      2001
Barry S. Baer                        59    Executive Vice President and Chief Financial Officer          N/A
</TABLE>


*Members of the Compensation Committee
+Members of the Audit Committee
<PAGE>

Mr. Durham has served as the Chief  Executive  Officer and Chairman of the Board
and as a director  of the Company  since June 2001.  He has served as a Managing
Member and Chief Executive Officer of Obsidian Capital Company LLC, which is the
general partner of Obsidian Capital Partners LP, since April 2000.  Beginning in
1998,  Mr.  Durham  founded and  maintained  a  controlling  interest in several
investment  funds,  including  Durham  Capital  Corporation,   Durham  Hitchcock
Whitesell and Company LLC, and Durham  Whitesell & Associates  LLC. From 1991 to
1998,  Mr. Durham served in various  capacities at Carpenter  Industries,  Inc.,
including as Vice Chairman,  President and Chief Executive  Officer.  Mr. Durham
also serves as a director of National  Lampoon,  Inc. Mr. Durham is Mr.  Osler's
brother-in-law.

Mr.  Whitesell has served as the President and Chief Operating  Officer and as a
director  of the  Company  since  June  2001.  Prior to that time he  co-founded
several  entities with Mr. Durham,  including  Obsidian  Capital  Company,  LLC,
Durham  Hitchcock  Whitesell  and Company LLC and Durham  Whitesell & Associates
LLC. Mr.  Whitesell also is a Managing  Member of Obsidian  Capital Company LLC.
From April 1992 until  September  1998, Mr.  Whitesell  served as Executive Vice
President of Carpenter Industries, Inc.

Mr. Osler has served as the Executive  Vice  President,  Secretary and Treasurer
and as a director of the Company since June 2001.  He also is a Managing  Member
of Obsidian  Capital  Company  LLC.  and has served as Senior Vice  President at
Durham Whitesell & Associates LLC and Durham Capital Corporation since September
1998. Prior to that time, Mr. Osler served as the General Manager of Hilton Head
National Golf Club. Mr. Osler is Mr. Durham's brother-in-law.

Mr.  Smith has been a director of the  Company  since 1997.  Mr.  Smith  founded
Duncan-Smith Investments, Co., an investment banking firm in San Antonio, Texas,
in 1978 and since that time has served as its Secretary and Treasurer. Mr. Smith
also is a director of Citizens  National Bank of Milam  County,  and Ray Ellison
Mortgage Acceptance Co.

John  A.  Schmit  has  been a  director  since  July  2001.  Mr.  Schmit  joined
Renaissance  Capital Group,  Inc. in 1997 and is a Vice  President--Investments.
Prior to joining  Renaissance  Capital Group,  Mr. Schmit practiced law with the
law firm of Gibson,  Ochsner & Adkins in Amarillo,  Texas from September 1992 to
September 1994. Between August 1994 and May 1996, Mr. Schmit attended Georgetown
University where he earned his L.L.M. in International and Comparative Law.

Mr.  McKain has been a director  of the Company  since  September  2001.  He has
served as the Chairman of McKain  Performance  Group since 1981. Mr. McKain also
has been the Vice Chairman of Durham Capital  Corporation  since 1999. From 1983
to 1998, Mr. McKain was a broadcast journalist and television  commentator.  Mr.
McKain has also  authored  several  books and is a keynote  speaker who presents
high content workshops across the nation.

Mr. Laikin has served as a director of the Company  since  September  2001.  Mr.
Laikin is Chief Operating Officer and a director of National Lampoon,  Inc., the
owner of the  "National  Lampoon"  trademark  and  engaged in the  entertainment
business. He has been a Managing Member of Fourleaf Management LLC, a management
company of an investment fund that invests in technology related entities, since
1999. Mr. Laikin served as the Chairman of the Board of Biltmore Homes from 1993
to 1998.

Mr. Baer has served as the Executive Vice President and Chief Financial  Officer
of the Company since April 2002. From August 2000 to December 2001, he served as
Executive Vice President and Chief Financial  Officer of Apex  Industries,  Inc.
Prior to August  2000,  he had  served as Vice  President  and Chief  Operations
Officer of Pharmaceutical Corporation of America.
<PAGE>


EXECUTIVE OFFICERS

The  Company's  executive  officers are  appointed by the Board of Directors and
hold office at the pleasure of the Board until successors are appointed and have
qualified.  Compliance with Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors,  executive officers,  and persons who own more
than ten percent of the  Company's  Common  Stock ("10%  Shareholders")  to file
reports of ownership and reports of changes in ownership of the Company's Common
Stock with the Securities Exchange Commission ("SEC").  Officers,  Directors and
Shareholders  are required by SEC  regulation to furnish the Company with copies
of all forms they file under  Section 16 (a).  Based solely on its review of the
copies of such  forms  received  by it with  respect  to its  fiscal  year ended
October 31, 2002, and written  representations  from certain  reporting  persons
that no other reports were required to those persons,  the Company believes that
its  officers,  directors  and 10%  Shareholders  have complied with all Section
16(a) requirements,  except that Mr. Smith was late in reporting the exercise of
a warrant.


ITEM 11. EXECUTIVE COMPENSATION


                           SUMMARY COMPENSATION TABLE

The following table sets forth certain  information  concerning the compensation
paid or accrued by the Company for services  rendered  during the Company's past
three fiscal years ended October 31, 2001 by the CEO and executive officers.
<TABLE>

                                                                                   Long-Term
                                      Annual Compensation                       Compensation Awards
--------------------------------------------------------------------------------------------------------------------
        Name and                                                                  Securities          All Other
                                                                                  Underlying
   Principal Position       Year           Salary               Bonus            Options/SARs        Compensation
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
<S>                          <C>            <C>                     <C>                <C>                  <C>
Timothy S. Durham,           2002           $75,000                 $0                 $0                   $0
Chief Executive              2001           $27,404                 $0                 $0                   $0
Officer(1)                   2000               N/A                N/A                N/A                  N/A
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
M. E. Williams,              2002               N/A                N/A                 $0                   $0
Chief Executive              2001          $110,000            $12,824                 $0                   $0
Officer(2)                   2000          $107,609             $9,375                 $0               $3,125
------------------------- ---------- ------------------- -------------------- -------------------- -----------------
</TABLE>

(1)  Mr. Durham was elected Chief Executive Officer and Chairman of the Board on
     June 21, 2001.
(2)  Mr. Williams resigned as Chief Executive Officer on June 21, 2001.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

No grants were made  during  fiscal 2002  pursuant to the  Company's  1999 Stock
Option Plan or the Company's 2002 Long Term Incentive Plan.

On December 13, 2002, the Company's Board of Directors approved the extension of
options to acquire  200,000  shares of common  stock from  December  31, 2002 to
December 31, 2003.
<PAGE>


             AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                        FISCAL YEAR-END OPTION/SAR VALUES

The following  table sets forth  information for 2002 with respect to Option/SAR
exercises by the executive officers named in the Summary  Compensation Table and
the value of unexercised options and SARs as of October 31, 2002.
<TABLE>

                                                                                Number of        Value of Unexercised
                                                                               Unexercised           In-the-Money
                               Shares Acquired on                             Options/SARs at       Options/SARs at
                                  Exercise (#)       Value Realzed ($)      Fiscal Year-End (#)   Fiscal Year-End ($)
----------------------------- --------------------- ---------------------- --------------------- ---------------------
            Name                                                               Exercisable/          Exercisable/
                                                                              Unexercisable         Unexercisable
----------------------------- --------------------- ---------------------- --------------------- ---------------------
<S>                                  <C>                    <C>                  <C>     <C>            <C>     <C>
M. E. Williams                      -0-                    -0-                   725,000/0              $78,750/01
----------------------------- --------------------- ---------------------- --------------------- ---------------------
</TABLE>

                            COMPENSATION OF DIRECTORS

Directors  who are not  employees of the Company are entitled to a board meeting
attendance fee of $750 plus reimbursement of expenses.


                   EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS

The Company  currently does not have any employment  agreements  with any of the
Company's executive officers.


           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information with respect to beneficial  ownership
of common stock as of January 22, 2003,  by (i) all persons known to the Company
to be the  beneficial  owner of five percent or more of the common  stock,  (ii)
each director of the Company,  (iii) the chief executive officer and each of the
Company's other most highly  compensated  executive  officers whose total annual
compensation  for 2002 based on salary and bonus  earned  during  2002  exceeded
$100,000 (the "named executive officers");  (iv) the current executive officers;
and (v) all Company directors and executive officers as a group. This table does
not include shares of common stock that may be purchased pursuant to options not
exercisable  within 60 days of the record  date.  All  persons  listed have sole
voting and  investment  power  with  respect to their  shares  unless  otherwise
indicated.
<TABLE>

                                     Common Stock           Series C Preferred Stock      Series D Preferred Stock
                                     ------------           ------------------------      ------------------------
                               Number of     Percentage of   Number of   Percentage of   Number of     Percentage of
                                Shares          Shares         Shares        Shares        Shares          Shares
    Name and Address of      Beneficially    Beneficially   Beneficially  Beneficially  Beneficially    Beneficially
                                         -
     Beneficial Owner            Owned           Owned         Owned         Owned         Owned           Owned
     ----------------            -----           -----         -----         -----         -----           -----
Executive Officers and
Directors:
<S>                              <C>            <C>            <C>          <C>              <C>          <C>
Timothy S. Durham (1)            103,755,219    79.6%          3,942.193    90.2%            88,330       100.0%
                                           0
D. Scott McKain                      810,10      2.2%           --           --                  --           --
Jeffrey W. Osler (2)              87,874,705    71.6%          3,755,869    86.0%            72,899        82.5%
                                           0
John A. Schmit (3)                 5,000,00     13.9%           --           --                  --           --
Goodhue W. Smith, III (4)            298,334     *                 5,000      *                  --           --
Terry G. Whitesell (5)            94,787,685    76.5%          3,755,869    86.0%            72,899        82.5%
All current officers and                   3
directors as a group (8
persons)                         117,576,69     90.2%          3,947,193    90.4%            88,330       100.0%
Other 5% Owners:
Fair Holdings, Inc.(6)             6,426,905    15.1%            186,324     4.3%            15,431        17.5%
Huntington Capital                         -
Investment Company (7)                    -      --             386,206      8.8%                --          --
Obsidian Capital Partners,                 5
L.P. (8)                          87,874,70     70.9%          3,755,869    86.0%            72,899        82.5%
                                           7
Richard W. Snyder                  1,946,66      5.4%            --          --                  --          --
</TABLE>

The number of shares of common  stock above also  includes the  preferred  stock
converted to common equivalents.

*less than one percent

(1)  Includes  7,338,103  shares of common stock  directly  owned by Mr. Durham;
     2,088,366  shares held by Diamond  Investments,  LLC, for which Mr.  Durham
     serves as Managing  Member and for which shares Mr. Durham may be deemed to
     share voting and dispositive power;  3,755,869 shares of Series C preferred
     stock and 72,899  shares of Series D preferred  stock over which Mr. Durham
     shares  voting  and  dispositive  power  and  that  may  be  deemed  to  be
     beneficially  owned by Mr. Durham due to his position as a managing  member
     of Obsidian Capital Company,  LLC, which is the general partner of Obsidian
     Capital  Partners,  LP, which directly owns such shares;  186,324 shares of
     Series C preferred stock and 15,431 shares of Series D preferred stock over
     which Mr. Durham shares voting and dispositive power and that may be deemed
     to be beneficially  owned by Mr. Durham due to his position as an executive
     officer and  shareholder  of Fair  Holdings,  Inc. which directly owns such
     shares;  and 27,140  shares of common  stock over which Mr.  Durham  shares
     voting  and  dispositive  power and that may be  deemed to be  beneficially
     owned by Mr.  Durham due to his  position  as a  managing  member of Durham
     Whitesell and Associates, LLC, which directly owns such shares. The address
     of Mr. Durham is 111 Monument  Circle,  Suite 4800,  Indianapolis,  Indiana
     46204.

(2)  Includes  827,200 shares of common stock  directly owned by Mr. Osler;  and
     3,755,869  shares of Series C preferred stock and 72,899 shares of Series D
     preferred  stock over which Mr. Osler shares voting and  dispositive  power
     and that may be deemed  to be  beneficially  owned by Mr.  Osler due to his
     position as a managing member of Obsidian  Capital  Company,  LLC, which is
     the general partner of Obsidian Capital  Partners,  LP, which directly owns
     such shares.  The address of Mr. Osler is 111 Monument Circle,  Suite 4800,
     Indianapolis, Indiana 46204.

(3)  Represents shares that may be acquired  pursuant to convertible  debentures
     issued  by the  Registrant  on July 19,  2001,  to  Renaissance  US  Growth
     Investment Trust PLC ("RUSGIT") and BFSUS Special  Opportunities  Trust PLC
     ("BFS").  Mr. Schmit is Vice President of Renaissance  Capital Group, Inc.,
     the investment  manager of RUSGIT and BFS. Mr. Schmit disclaims  beneficial
     ownership  as to the  shares  beneficially  owned by  RUSGIT  and BFS.  The
     address of Mr. Schmit is 8080 North Central Expressway,  Suite 210, Dallas,
     Texas 75206.

(4)  Includes  81,667  shares  of  common  stock  and  5,000  shares of Series C
     Preferred  Stock directly  owned by Mr. Smith.  The address of Mr. Smith is
     711 Navarro, San Antonio, Texas 78205.
<PAGE>

(5)  Includes  6,885,840 shares of common stock directly owned by Mr. Whitesell;
     3,755,869  shares of Series C preferred stock and 72,899 shares of Series D
     preferred  stock over which Mr.  Whitesell  shares  voting and  dispositive
     power and that may be deemed to be beneficially  owned by Mr. Whitesell due
     to his  position as a managing  member of Obsidian  Capital  Company,  LLC,
     which is the  general  partner of  Obsidian  Capital  Partners,  LP,  which
     directly owns such shares; and 27,140 shares of common stock over which Mr.
     Whitesell shares voting and dispositive  power and that may be deemed to be
     beneficially  owned by Mr.  Whitesell  due to his  position  as a  managing
     member of Durham  Whitesell and  Associates,  LLC, which directly owns such
     shares.  The address of Mr. Whitesell is 111 Monument  Circle,  Suite 4800,
     Indianapolis, Indiana 46204.

(6)  Consists of 186,324 shares of Series C preferred stock and 15,431 shares of
     Series D preferred stock directly owned by Fair Holdings, Inc.

(7)  Based on the  information  reported in a Schedule 13G filed with the SEC on
     August 6, 2001.

(8)  Consists of 3,755,869  shares of Series C preferred stock and 72,899 shares
     of Series D preferred  stock directly owned by Obsidian  Capital  Partners,
     L.P. Voting and dispositive  power over the shares may be deemed to be held
     by Obsidian Capital  Partners,  LP, Obsidian  Capital Company,  LLC and the
     managing  members of Obsidian  Capital  Company LLC, which include  Messrs.
     Durham, Whitesell and Osler.

                      Equity Compensation Plan Information

The  following  table  presents  information  regarding  grants under all equity
compensation plans of the Company through October 31, 2002.


<TABLE>

                                                                                             Number of securities
                                                                                            remaining available for
                                                                                             future issuance under
                                Number of securities to be    Weighted-average exercise    equity compensation plans
                                  issued upon exercise of       price of outstanding         (excluding securities
                                   outstanding options,         options, warrants and       reflected in the first
Plan Category                       warrants and rights                rights                       column)
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                                        <C>                          <C>                        <C>
Equity compensation plans                  800,000                      $0.09                      2,150,000
approved by security
holders(1)
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not
approved by security holders                     0                       0                                 0
------------------------------- ---------------------------- ---------------------------- ----------------------------
Total                                      800,000                      $0.09                      2,150,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>


(1)  The grants were made pursuant to the  Company's  1990 Stock Option Plan and
     1999 Stock  Compensation  Plan ("1999 Plan").  Shares remain  available for
     grant under the 1999 Plan and the Company's 2001 Long Term Incentive Plan.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

All dollar amounts in this Item 13 are in thousands (except for share and per
share information).

A number of related party transactions occurred in connection with the change in
control  and   reorganization  of  the  Company  in  2001.  The   reorganization
transactions occurred in two parts:

o    On June 21, 2001,  the Company  acquired  from Obsidian  Capital  Partners,
     L.P.,  Mr.  Durham  and  certain  other  shareholders  all of the shares of
     Pyramid Coach,  Inc.("Pyramid");  Champion Trailer,  Inc.  ("Champion") and
     U.S. Rubber Reclaiming, Inc. ("U.S. Rubber").

o    On July 31, 2001, the Company acquired from Obsidian Capital Partners, L.P.
     and Mr. Durham substantially all of the assets of United Acquisition, Inc.,
     which the Company now operates as United Expressline, Inc. ("United").
<PAGE>

Prior to these transactions,  DW Leasing, LLC ("DW Leasing"), a company owned by
Messrs.  Durham and  Whitesell  had entered into a number of  transactions  with
Pyramid  whereby  coaches  owned by DW Leasing were  operated by Pyramid and the
debt on these coaches were cross guaranteed by DW Leasing and Pyramid.  Although
the Company does not own any interest in DW Leasing,  the accounts of DW Leasing
are  included in the  financial  statements  of the  Company  (see Note 1 to the
Company's Financial Statements).

The agreements entered into at the time of the Reorganization  contemplated that
the coaches and related debt would be promptly  transferred by DW Leasing to the
Company's subsidiary,  Obsidian Leasing Co., Inc. ("Obsidian  Leasing").  Twenty
seven  coaches were  transferred  by DW Leasing to Obsidian  Leasing in November
2001 in consideration of the assumption of the related debt.  Pyramid  continues
to operate the remaining  seven coaches for DW Leasing  pursuant to a management
agreement.  Prior to the Reorganization  described above, DW Leasing and Pyramid
were privately  owned and structured in a tax-efficient  manner.  Because of the
nature of this  structure,  transfer of the remaining  seven coaches owned by DW
Leasing  would have adverse tax  consequences  to the owners of DW Leasing which
were not contemplated in the Reorganization. Accordingly, the Company has agreed
to continue  to operate  these  coaches  through DW Leasing.  During  2002,  the
Company  received gross revenue of $674 from the coaches operated by Pyramid for
DW Leasing and paid fees of $538 to DW Leasing for the use of the coaches.

During 2002 and 2001, Obsidian Capital Partners, LP, the majority shareholder of
the Company,  advanced  funds to the Company.  These funds were advanced to fund
losses of Champion and to fund the professional fees with respect to the filings
with  the   Securities   and  Exchange   Commission  in   connection   with  the
reorganization in 2001, and closing costs in connection with the  reorganization
and the closing of the purchase of United. The maximum amount outstanding during
2002,  related to funding of Champion losses and funding  professional  fees was
$1,290  and  $1,275,  respectively.  On April 25,  2002,  $1,290 of the  amounts
advanced was converted to Series C Preferred Stock. On October 24, 2002,  $1,275
of the amounts  advanced  was  converted to Series D Preferred  Stock.  Advances
during 2002 were as follows:
<TABLE>

                                             Balance at          Additional           Amounts          Balance at
                                                                                   Converted to
                                                                Advances and        Equity for
                                          October 31, 2001    Interest Accrued    Preferred Stock   October 31, 2002
                                          ------------------ ------------------- ------------------ ------------------

<S>                                         <C>                <C>                 <C>                <C>
Advances to fund Champion                   $      1,222       $         68        $     (1,290)      $         --

Advances to fund professional fees          $        948       $        327        $     (1,275)      $         --
</TABLE>
<PAGE>

During 2002,  Fair Holdings,  Inc.  advanced funds to the Company to fund a debt
reduction at Champion and to fund certain  professional fees with respect to the
filing  with  the  Securities  and  Exchange  Commission.   The  maximum  amount
outstanding in 2002 to Fair Holdings  related to debt  restructuring at Champion
and funding certain professional fees was $596 and $270, respectively.  On April
25,  2002,  $596 of the amounts  advanced  was  converted  to Series C Preferred
Stock. On October 24, 2002, $270 of the amounts advanced was converted to Series
D Preferred Stock. Advances during 2002 were as follows:
<TABLE>

                                                                                      Amounts
                                                                 Additional        Converted to
                                             Balance at         Advances and        Equity for         Balance at
                                          October 31, 2001    Interest Accrued    Preferred Stock   October 31, 2002
                                          ------------------ ------------------- ------------------ ------------------

<S>                                         <C>                <C>                 <C>                <C>
Advances for debt reduction                 $         --       $        596        $       (596)      $         --

Advances for professional fees              $         --       $        270        $       (270)      $         --
</TABLE>

In addition to the advances,  Fair Holdings,  Inc. has provided a $5,000 line of
credit to the Company.  The maximum amount  outstanding in 2002 was $1,798.  The
line of credit is  unsecured,  bears  interest  at 10% per annum and  matures in
January 2005.

Fair Holdings, Inc. has also leased certain computer equipment to the Company on
a short-term basis commencing on August 1, 2002. The rental paid in 2002 was $1.

Fair Holdings,  Inc. lent Obsidian  Leasing an aggregate of $1,588 in connection
with the refinancing of coaches.  The maximum amount outstanding during 2002 for
this  refinancing  was  $1,588.  The loans are ten year,  interest  only  loans,
subordinate to the bank debt on the coaches and bear interest at 14% per annum.

The Company  subleases its headquarters  space from Fair Holdings,  Inc. under a
sublease with a monthly  rental of $3,675.  Prior to the sublease with Fair, the
Company  sublet  space from  Obsidian  Capital  Company and paid $56 to Obsidian
Capital Company for its space in 2002.

Fair Holdings,  Inc. leased certain computer  equipment to Danzer under a twelve
month lease effective  August 1, 2002. The aggregate rental due under the twelve
month lease is $8.

DW  Trailer,  a company  owned by  Messrs.  Durham and  Whitesell,  has leased a
forklift to Danzer under a 38 month lease at $1 per month.

United advanced  Obsidian  Capital Company $216, as a part of the closing of the
purchase of the United transaction. The amount was paid back to United in 2002.

DC  Investments,  a company  controlled  by Mr.  Durham,  lent U.S.  Rubber $700
pursuant to a  subordinated  note which bears interest at 15% per annum with the
principal  payable in March  2007.  The loan was made to permit  the  Company to
complete the elimination of the interest of SerVass, Inc. in U.S. Rubber.

During 2002 DC  Investments  purchased the senior secured loans to Champion from
the bank which held them.  The maximum  amount  outstanding to DC Investments in
2002 was $602. The loans bear interest at 5.5%.

On October 30, 2002,  the Company  entered into a Memorandum  of Agreement  with
Messrs.  Durham and Whitesell  pursuant to which Champion  agreed to sell all of
its assets to an entity to be designated by Messrs. Durham and Whitesell subject
to the payment by Messrs.  Durham and  Whitesell of $1.00 and the  assumption by
the entity acquiring the assets of all of the liabilities of Champion except for
the liability of Champion to Markpoint  Equity Growth Fund IV, which was settled
by the Company. This transaction closed on January 30, 2003.
<PAGE>

Management  believes that the transactions  described in this Item were on terms
no less favorable to the Company and its  subsidiaries  than would have been the
case for transactions with unrelated third parties.

<PAGE>

PART IV


ITEM 14. CONTROLS AND PROCEDURES.

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that information required to be disclosed in the reports we file pursuant
to the Securities  Exchange Act of 1934 is recorded,  processed,  summarized and
reported  within the time periods  specified in the SEC's rules and forms.  Such
information  is  accumulated  and  communicated  to  the  Company's  management,
including  its  Chief  Executive  Officer  and  Chief  Financial   Officer,   as
appropriate,  to allow  timely  decisions  regarding  required  disclosure.  The
Company's  management  recognizes  that,  because  the  design of any  system of
controls  is based in part upon  certain  assumptions  about the  likelihood  of
future events and also is subject to other  inherent  limitations,  any controls
and  procedures,  no matter how well  designed  and  operated,  can provide only
reasonable, and not absolute, assurance of achieving the desired objectives. The
Company's management believes,  however,  that the Company's disclosure controls
and procedures  provide  reasonable  assurance that the disclosure  controls and
procedures are effective.

Within the 90 days prior to the filing of this report,  the Company  carried out
an evaluation, under the supervision and with the participation of the Company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls  and  procedures.  Based  on  this  evaluation,  the  Chief
Executive  Officer and Chief  Financial  Officer  concluded  that the  Company's
disclosure   controls  and  procedures  were  effective.   There  have  been  no
significant  changes in the Company's internal controls or in other factors that
could significantly  affect internal controls subsequent to the date of the most
recent evaluation.


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

               (a)  Documents filed as part of this Annual Report on Form 10-K:

                    (1)  Financial Statements.

                    See the Financial Statements included in Item 8.

                    (2)  Financial  Statement  Schedules Required to be Filed by
                         Item 8 on this Form.

                    See Item 8

                    (3)  Exhibits.

                    The  exhibits  filed as part of this  Annual  Report on Form
                    10-K are  identified  in the Exhibit  Index,  which  Exhibit
                    Index  specifically  identifies those exhibits that describe
                    or evidence all management  contracts and compensating plans
                    or  arrangements  required  to be filed as  exhibits to this
                    Report.   Such  Exhibit  Index  is  incorporated  herein  by
                    reference.

               (b)  Reports on Form 8-K
<PAGE>

               The  following  Reports  on Form 8-K were  filed  during the last
               quarter of the fiscal year ended October 31, 2001:

                    (1)  Report on Form 8-K regarding July 31, 2001  acquisition
                         of   substantially   all  of  the   assets   of  United
                         Expressline, Inc. (filed August 15, 2001).

                    (2)  Report  on Form 8-K  regarding  change  in  independent
                         auditors (filed November 13, 2001).



<PAGE>


                                   Signatures

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

Dated:  August 25, 2003                OBSIDIAN ENTERPRISES, INC.


                                       By: /s/ Timothy S. Durham
                                          -----------------------------
                                          Timothy S. Durham
                                          Chief Executive Officer



<PAGE>



                                  EXHIBIT INDEX
<TABLE>

<S>               <C>                                                           <C>
  Exhibit No.                            Description                             Incorporated by Reference/Attached

2.1              Acquisition Agreement and Plan of Reorganization, dated      Incorporated by reference to Exhibit
                 June 21, 2001, by and among Registrant, Danzer Industries,   2.1 to the Registrant's Report on Form
                 Inc., Pyramid Coach, Inc., Champion Trailer, Inc., United    8-K filed on August 15, 2001
                 Acquisition, Inc., U.S. Rubber Reclaiming, Inc., Obsidian
                 Capital Partners, L.P. and Timothy S. Durham
2.2              Memorandum of Agreement between Champion Trailer, Inc. and   Incorporated by reference to Exhibit
                 Timothy S. Durham and Terry G. Whitesell                     2.1 to the Registrant's Report on Form
                                                                              8-K filed on November 6, 2002
3.1              Certificate of Incorporation (filed with Delaware            Incorporated by reference to Exhibit
                 Secretary of State on October 4, 2001)                       3.1 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001
3.2              Certificate of Designations, Preferences, Rights and         Incorporated by reference to Exhibit
                 Limitations of Series C Preferred Stock                      3.2 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001
3.3              Bylaws  of  the  Registrant   (Restated   Effective  as  of  Attached
                 September 27, 2002)
3.4              Certificate  of  Designations,   Preferences,   Rights  and  Attached+
                 Limitations of Series D Preferred Stock
4.1              Registration Rights Agreement, dated June 21, 2001           Incorporated by reference to Exhibit
                                                                              4.1 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001
4.2              Amendment  and Joinder to  Registration  Rights  Agreement,  Incorporated by reference to Exhibit
                 dated July 27, 2001                                          4.2 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001
</TABLE>

<PAGE>
<TABLE>

<C>              <C>                                                          <C>                                     <C>
4.3              8.00% Convertible Debenture Issued by Registrant on July     Incorporated by reference to Exhibit 2
                 19, 2001 to HSBC Global Custody Nominee Due July 19, 2008    to Schedule 13D filed September 20,
                                                                              2001 by Russell Cleveland, Renaissance
                                                                              Capital Group, Inc.
4.4              8.00% Convertible Debenture Issued by Registrant on July     Incorporated by reference to Exhibit 3
                 19, 2001 to Renaissance US Growth & Income Trust PLC Due     to Schedule 13D filed September 20,
                 July 19, 2008                                                2001 by Russell Cleveland, Renaissance
                                                                              Capital Group, Inc.
4.5              Convertible Loan Agreement, dated July 19, 2001, Among       Incorporated by reference to Exhibit
                 Registrant, BFSUS Special Opportunities Trust PLC,           4.5 to the Registrant's Annual Report
                 Renaissance US Growth & Income Trust PLC and Renaissance     on Form 10-K for the Year Ended
                 Capital Group, Inc.                                          October 31, 2001
10.1             2001 Long Term Incentive Plan*                               Incorporated by reference to Appendix
                                                                              E to the Registrant's Proxy Statement
                                                                              filed on September 18, 2001
10.2             Asset Purchase Agreement, dated April 20, 2000, between      Incorporated by reference to Exhibit
                 Champion Trailer Company, L.P. and Harold Peck, Mary Peck,   10.2 to the Registrant's Annual Report
                 Champion Trailer, Ltd. (f/k/a) Champion Trailer, LLC,        on Form 10-K for the Year Ended
                 Champion Collision, Ltd. (f/k/a) Champion Collision,         October 31, 2001
                 L.L.C. and Brandonson, Inc.
10.3             Stock and Asset Purchase Agreement, dated December 20,       Incorporated by reference to Exhibit
                 1999, among Timothy S. Durham, Terry Whitesell, DW           10.3 to the Registrant's Annual Report
                 Leasing, LLC, Bobby Michael, Becky Michael, Jennifer         on Form 10-K for the Year Ended
                 George, Pyramid Coach, Inc., Precision Coach, Inc.,          October 31, 2001
                 American Coach Works, Inc., Transport Trailer Service,
                 Inc., Rent-A-Box, Inc. and LBJ, LLC
10.4             Assumption Agreement and Second Amendment to Credit          Incorporated by reference to Exhibit
                 Agreement, dated June 18, 2001, among Bank One, Indiana,     10.4 to the Registrant's Annual Report
                 N.A., Champion Trailer, Inc. and Champion Trailer Company,   on Form 10-K for the Year Ended
                 L.P.                                                         October 31, 2001
10.5             Credit Agreement, dated December 29, 2000, between USRR      Incorporated by reference to Exhibit
                 Acquisition Corp. and Bank One, Indiana, N.A.                10.5 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001
</TABLE>
<TABLE>

<S>             <C>                                                           <C>
10.6             First Amendment to Credit Agreement, dated June 20, 2001,    Incorporated by reference to Exhibit
                 between U.S. Rubber Reclaiming, Inc. and Bank One,           10.6 to the Registrant's Annual Report
                 Indiana, N.A.                                                on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.7             Note Purchase Agreement, dated May 2, 2000, between          Incorporated by reference to Exhibit
                 Champion Trailer, Inc. and Markpoint Equity Growth Fund,     10.7 to the Registrant's Annual Report
                 J.V., and Related Documents                                  on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.8             Warrant, dated May 2, 2000, from Champion Trailer Company,   Incorporated by reference to Exhibit
                 LP to Markpoint Equity Growth Fund, J.V.                     10.8 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.9             Management Agreement, dated December 29, 2000, between       Incorporated by reference to Exhibit
                 Obsidian Capital Company, LLC and USRR Acquisition Corp.     10.9 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.10            Management Agreement, dated June 16, 2001, between           Incorporated by reference to Exhibit
                 Pyramid, Inc. and D.W. Leasing                               10.10 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.11            Promissory Note, dated June 1, 2001, from Obsidian Capital   Incorporated by reference to Exhibit
                 Company, LLC to U.S. Rubber Reclaiming, Inc.                 10.11 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.12            Promissory Note, dated June 11, 2001, from Champion          Incorporated by reference to Exhibit
                 Trailer, Inc. to Obsidian Capital Partners, LP               10.12 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
</TABLE>

<PAGE>
<TABLE>

<S>             <C>                                                          <C>
10.13            Purchase Agreement, dated June 5, 2001, between United       Incorporated by reference to Exhibit
                 Expressline, Inc., United Acquisition, Inc., J.J.M.          10.13 to the Registrant's Annual
                 Incorporated and the Shareholders of United Expressline,     Report on Form 10-K for the Year Ended
                 Inc. and J.J.M. Incorporated                                 October 31, 2001
10.14            Promissory Note, dated July 27, 2001, from United            Incorporated by reference to Exhibit
                 Acquisition, Inc. to United Expressline, Inc.                10.14 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.15            Credit Agreement, dated July 27, 2001, between United        Incorporated by reference to Exhibit
                 Acquisition, Inc. and First Indiana Bank                     10.15 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.16            Loan and Security Agreement, dated January 21, 2000,         Incorporated by reference to Exhibit
                 between Danzer Industries, Inc. and Banc of America          10.16 to the Registrant's Annual
                 Commercial Finance Corp.                                     Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.17            Warrant, dated August 1997, by Danzer Corp. to               Incorporated by reference to Exhibit
                 Duncan-Smith Co. and Letter Agreement, dated June 21,        10.17 to the Registrant's Annual
                 2001, between Danzer Corp. and Duncan-Smith Co.              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.18            Stock Purchase Agreement, dated December 29, 2000, between   Incorporated by reference to Exhibit
                 USRR Acquisition Corp. and SerVaas, Inc.                     10.18 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.19            Subordinated Secured Promissory Note, dated December 29,     Incorporated by reference to Exhibit
                 2000, from USRR Acquisition Corp. to SerVaas, Inc.           10.19 to the Registrant's Annual

10.20            Supply and Consignment Agreement, dated December 29, 2000,   Incorporated by reference to Exhibit
                 between U.S.R.R. Acquisition and SerVaas, Inc.               10.20 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.21            Form of Installment Loan from Edgar County Bank & Trust      Incorporated by reference to Exhibit
                 Co. to DW Leasing Company, LLC, Related Documents and        10.21 to the Registrant's Annual
                 Schedule Identifying Material Details                        Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
</TABLE>
<PAGE>
<TABLE>

<S>             <C>                                                          <C>
10.22            Loan Agreement, dated December 10, 1999, between Old         Incorporated by reference to Exhibit
                 National Bank and DW Leasing Company, LLC, and Related       10.22 to the Registrant's Annual
                 Documents                                                    Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.23            Form of Promissory Note from DW Leasing Company, LLC, to     Incorporated by reference to Exhibit
                 Former Shareholders of Pyramid Coach, Inc., Related          10.23 to the Registrant's Annual
                 Security Agreement, and Schedule Identifying Material        Report on Form 10-K for the Year Ended
                 Details                                                      October 31, 2001
10.24            Form of Promissory Note from DW Leasing Company, LLC to      Incorporated by reference to Exhibit
                 Star Financial Bank, Related Documents and Schedule          10.24 to the Registrant's Annual
                 Identifying Material Details                                 Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.25            Form of Lock-Up Agreement, dated July 19, 2001, and          Incorporated by reference to Exhibit
                 Schedule Identifying Material Details                        10.25 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.26            Master Lease Agreement, dated May 17, 2000, between Old      Incorporated by reference to Exhibit
                 National Bank and DW Leasing Company, LLC, and Related       10.26 to the Registrant's Annual
                 Documents                                                    Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.27            Loan Agreement, dated June 1, 2000, between DW Leasing       Incorporated by reference to Exhibit
                 Company LLC and Regions Bank and Security Agreement          10.27 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.28            Business Loan Agreement (Asset Based), dated August 15,      Incorporated by reference to Exhibit
                 2001, between Danzer Industries, Inc. and Bank of America,   10.28 to the Registrant's Annual
                 N.A.                                                         Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.29            1999 Stock Option Plan*                                      Incorporated by reference to Exhibit
                                                                              10.29 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
</TABLE>
<PAGE>
<TABLE>

<S>             <C>                                                           <C>
10.30            Amendment to Acquisition Agreement and Plan of               Incorporated by reference to Exhibit
                 Reorganization, dated December 28, 2001, between             10.30 to the Registrant's Annual
                 Registrant and Obsidian Leasing Company, Inc.                Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.31            Agreement and Plan of Reorganization and Corporate           Incorporated by reference to Exhibit
                 Separation, dated December 28, 2001, between DW Leasing      10.31 to the Registrant's Annual
                 LLC and Obsidian Leasing Company, Inc.                       Report on Form 10-K for the Year Ended
                                                                              October 31, 2001
10.32            Assignment and Assumption Agreement, dated February 19,      Incorporated by reference to Exhibit
                 2002, between Champion Trailer, Inc. and DW Leasing, LLC     10.1 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2002
10.33            Assignment and Assumption Agreement, dated February 20,      Incorporated by reference to Exhibit
                 2002, between DW Leasing, LLC and Fair Holdings, Inc.        10.2 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2002
10.34            Agreement to Purchase Subordinated Secured Promissory Note   Incorporated by reference to Exhibit
                 and Supply and Consignment Agreement, dated February 26,     10.3 to the Registrant's Quarterly
                 2002, among SerVaas, Inc., the Beurt SerVaas Revocable       Report on Form 10-Q for the Quarter
                 Trust, U.S. Rubber Reclaiming, Inc., Obsidian Enterprises,   Ended April 30, 2002
                 Inc. and DC Investments, LLC
10.35            Replacement Promissory Note, dated February 26, 2002, from   Attached+
                 Obsidian Enterprises, Inc. to Fair Holdings, Inc. in the
                 principal amount of $700,000 due March 1, 2007
10.36            Promissory Note from Obsidian Enterprises, Inc. in favor     Incorporated by reference to Exhibit
                 of Fair Holdings, Inc. in the principal amount of $570,000   10.5 to the Registrant's Quarterly
                 due February 1, 2007                                         Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2002
10.37            Subscription Agreement of Fair Holdings, Inc. for 186,324    Incorporated by reference to Exhibit
                 shares of Series C Preferred Stock                           10.6 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2002
</TABLE>
<PAGE>
<TABLE>

<S>             <C>                                                           <C>
10.38            Subscription Agreement of Obsidian Capital Partners, LP      Incorporated by reference to Exhibit
                 for 402,906 shares of Series C Preferred Stock               10.7 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2002
10.39            Second Amendment to Credit Agreement, dated August 28,       Incorporated by reference to Exhibit
                 2002, between United Expressline, Inc. and First Indiana     10.1 to the Registrant's Quarterly
                 Bank, N.A.                                                   Report on Form 10-Q filed for the
                                                                              Quarter Ended July 31, 2002
10.40            Promissory Note, dated January 17, 2002, from DW Leasing     Attached+
                 Company, LLC, to Fair Holdings, Inc.
10.41            Promissory Note, dated September 3, 2002, from Obsidian      Attached+
                 Enterprises, Inc., to Fair Holdings, Inc.
      10.42 Promissory Note, dated January 9, 2002, from Obsidian Attached
                    Enterprises, Inc. to Fair Holdings, Inc.
10.43            Credit Agreement, dated October 31, 2002, between Obsidian   Attached+
                 Leasing Company, Inc. and Old National Bank, N.A. and
                 Related Documents
10.44            Stock Purchase Agreement, dated July 27, 2001, between       Incorporated by reference to Exhibit A
                 Danzer Corporation and The Huntington Capital Investment     to the Schedule 13G filed by The
                 Company.
 10.45            Loan Agreement, dated September 24, 2002, between Edgar     Attached+
                 County Bank & Trust Co. and Obsidian Leasing Company, Inc.
10.46            Term Promissory Note, dated September 26, 2002, from         Attached+
                 Obsidian Leasing Company, Inc. to Fair Holdings, Inc.
10.47            Note Purchase Agreement, dated July 27, 2001, between        Attached+
                 United Acquisition, Inc. and The Huntington Capital
                 Investment Company.
10.48            Limited Forbearance Agreement, dated October 14, 2002,       Attached+
                 among Danzer Industries, Inc., Obsidian Enterprises, Inc.
                 and Bank of America, N.A.
10.49            Revolving Credit, Term Loan and Security Agreement, dated    Attached+
                 October 25, 2002, between PNC Bank, N.A. and U.S. Rubber
                 Reclaiming, Inc. and Related Documents
</TABLE>
<PAGE>
<TABLE>

<S>             <C>                                                         <C>
10.50            Term Promissory Note, dated October 31, 2002, from DW        Attached+
                 Leasing Company, LLC to Fair Holdings, Inc.
10.51            Rental Agreement, dated October 1, 2002, between DW          Attached+
                 Trailer, LLC and Danzer Industries, Inc.
10.52            Commercial Equipment Lease Agreement, dated August 1,        Attached+
                 2002, between Fair Holdings, Inc. and Danzer Industries,
                 Inc.
10.53            Commercial Equipment Lease Agreement, dated August 1,        Attached+
                 2002, between Fair Holdings, Inc. and Obsidian
                 Enterprises, Inc.
21               List of Subsidiaries                                         Attached+
31.1             Sarbanes-Oxley Act Section 302 Certification                 Attached
31.2             Sarbanes-Oxley Act Section 302 Certification                 Attached
32.1             Sarbanes-Oxley Act Section 906 Certification                 Attached
32.2             Sarbanes-Oxley Act Section 906 Certification                 Attached
</TABLE>

*    Indicates  Exhibits  that  describe or  evidence  management  contracts  or
     compensatory plans or arrangements required to be filed as Exhibits to this
     Annual Report on Form 10-K.

+    Previously filed.