SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(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, 2003 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 April 30, 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 $3,209,900.

As of January 30, 2004, the  registrant  had 36,007,855  shares of common stock,
4,368,399  shares of Series C  Preferred  Stock and  134,758  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>

ITEM 1. BUSINESS.


                                  INTRODUCTION


Obsidian  Enterprises,  Inc, is a holding company headquartered in Indianapolis,
Indiana.  We have  historically  invested  in and  acquired  small  and mid size
companies in basic  industries  such as  manufacturing  and  transportation.  We
conduct business through our subsidiaries.

                       HISTORY AND DEVELOPMENT OF BUSINESS

We expanded our business and changed our management in 2001. Prior to that date,
our only subsidiary, Danzer Industries, Inc., manufactured metal parts and truck
bodies for the service and utilities markets.  In 2001, Timothy S. Durham became
our Chief Executive  Officer and Chairman of the Board and we purchased four new
businesses:

     o    Pyramid  Coach,   Inc.,   which  provides   luxury  coach  leases  for
          corporations and the entertainment industry;

     o    U.S. Rubber  Reclaiming,  Inc.,  which owns and operates  butyl-rubber
          reclaiming facilities;

     o    United  Acquisition,  Inc., which we operate as United Expressline and
          Southwest  Trailers,   manufactures  steel-framed  cargo,  racing  and
          specialty trailers; and

     o    Champion   Trailer,   Inc.,   manufacturer   of   customized   racecar
          transporters, specialty exhibits trailers and mobile hospitality units
          (we sold this company in 2003).

We acquired these companies from Mr. Durham, Obsidian Capital Partners, L.P. and
their other  owners.  Mr.  Durham is one of the  partners  of  Obsidian  Capital
Partners.  We issued  shares of our  Series C  Preferred  Stock to pay for these
companies.

In October 2001, we changed our state of incorporation from New York to Delaware
and our name from Danzer Corporation to Obsidian Enterprises, Inc.


                             DESCRIPTION OF BUSINESS

OVERVIEW

Our  headquarters are in  Indianapolis,  Indiana.  Our goals are to maximize the
profits of our  current  subsidiaries  and to acquire  additional  manufacturing
companies  of  similar  size.  We  currently   conduct   business  through  five
subsidiaries:

     o    U.S. Rubber;

     o    Pyramid Coach;

     o    Obsidian  Leasing Co., Inc., the owner of some of the coaches operated
          by Pyramid Coach;

     o    United Expressline; and

     o    Danzer Industries.

We sold Champion in January 2003.


SEGMENTS

We operate in three industry segments:

     o    butyl-rubber reclaiming;

     o    trailer and related transportation equipment manufacturing; and

     o    coach leasing

All sales are in the Western  Hemisphere,  primarily in the United  States.  For
quantitative  segment  information,  see Note 13 to the  Consolidated  Financial
Statements.


Butyl Rubber Reclaiming

Our butyl-rubber  processing facilities are in two adjacent plants in Vicksburg,
Mississippi. We collect various used and scrap butyl rubber products,  primarily
inner tubes from tires,  and then reprocess  these into  reclaimed  butyl rubber
sheets. We distribute  reclaimed butyl rubber products through an internal sales
force.

Customers  mix our  reclaimed  butyl rubber 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.  The  combination  of
reclaimed butyl rubber with virgin butyl rubber  facilitates some  manufacturing
processes,  but the primary reason  manufacturers  use reclaimed butyl rubber is
the cost savings offered compared to virgin butyl rubber.

We are the  primary  supplier  of  reclaimed  butyl  rubber  to most of the tire
industry in the United  States and we also have tire  manufacturer  customers in
Canada and Brazil.  Three other  enterprises  engaged in reclaiming butyl rubber
worldwide are:

     o    The Gujarat Company in India;

     o    Han Cook in Korea; and

     o    Vrederstein N.V. in the Netherlands.

These  enterprises  are not major  competitors  of ours for sales in the Western
Hemisphere,  because  price  is the  primary  competitive  factor  and  cost  of
transportation  increases the prices these other  enterprises  can offer.  These
enterprises do compete with us for scrap.

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

     o    Exxon Corporation; and

     o    Bayer AG.

These  enterprises  are much larger than we are, are well  capitalized  and have
larger sales staffs. The prices these enterprises charge place an upper limit on
the prices that we can charge for reclaimed butyl rubber.

We  obtain  our  supply of scrap  inner  tubes  from  approximately  1000  scrap
merchants worldwide but primarily Brazil,  Venezuela,  and India. Our 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,
we  began  experimenting  with  reclaiming  scrap  butyl  rubber  pads  from the
manufacturers  of other butyl  rubber  products.  This pad 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.  Our 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.

Although we have had long-term  relationships with our primary customers,  we do
not have  long-term  contracts  with them.  Two of our  reclaimed  butyl  rubber
customers accounted for a substantial portion of our butyl rubber sales in 2003:

     o    Michelin: 41 %

     o    Kelley Springfield: 20%

The loss of either of these customers would  materially and adversely affect our
revenues. Our reclaimed butyl rubber products are generally ordered by customers
monthly and shipped promptly after the order.  Customers  generally pay accounts
on 30 to 60 day terms.


Trailer and Related Transportation Equipment Manufacturing

We manufacture service truck bodies at our facility in Hagerstown,  Maryland. We
manufacture truck bodies to order for original equipment truck manufacturers and
under the Morrison  trademark.  We ship the finished  bodies to the customer for
installation on truck body chassis.  We sell our private label products directly
to our private label  customers and market our proprietary  "Morrison"  products
through  a  network  of  approximately   300  dealers  who,  in  turn,  sell  to
municipalities,   utility  companies,   cable  companies,  phone  companies  and
contractors. We market the truck bodies through an internal sales force.

Most truck body customers are in the East and Southeast United States.  In 2002,
our largest truck manufacturing  customer filed for reorganization under Chapter
11 of the United States  bankruptcy  code and continues to operate.  The loss of
our  relationship  with the truck  manufacturer had a material adverse effect on
our business.

A significant number of companies manufacture service truck bodies in the United
States.  While many of these  companies are relatively  small and do not possess
our technical capacity,  a number of our competitors are much larger and possess
equal or greater  technical and financial  resources.  Four of these competitors
are:

     o    Knapheide Manufacturing Co.;

     o    Omaha Standard, Inc.;

     o    Reading Body Works, Inc.; and

     o    Stahl,  a Scott  Fetzer Co.,  which is a wholly  owned  subsidiary  of
          Berkshire Hathaway, Inc.

We compete for truck body sales through price and service,  with price being the
most  important  factor.  We also offer truck  bodies  made to the  individually
specified requirements of our customers.

We began  manufacturing cargo trailers at our Hagerstown facility during 2002 to
utilize the available manufacturing capacity and meet demand for cargo trailers.

We manufacture  specialty racing, cargo and ATV trailers at facilities we own in
Bristol,  Indiana, and White Pigeon,  Michigan. To increase our capacity to meet
demands,  we also began  leasing a facility in Elkhart,  Indiana,  in 2003.  Our
trailer business is somewhat seasonal,  with fewer orders during the months from
November  through  January.  We market  our  trailers  under  the names  "United
Expressline,"  "United  Trailers,"   "Southwest   Expressline,"  and  "Southwest
Trailers."  During 2003, we began the process of  consolidating  the brand names
under one brand,  "United Trailers."  Although the prices for our trailer brands
can be as high as $75,000, the average price is approximately $3,900.

We sell our "United Trailers," "United  Expressline,"  "Southwest Trailers," and
"Southwest  Expressline"  product  lines  through two dealer  networks that have
approximately 300 dealers in the United States and Canada. Most of these dealers
are located in the Midwest  United  States.  Although we have formal  agreements
with a few of the dealers, most of the dealership  arrangements are informal and
nonexclusive. We conduct our sales through an internal sales force.

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.

A significant number of companies  manufacture  specialty racing,  cargo and ATV
carriers in the United States.  Although many of these  companies are relatively
small and do not possess our technical  capability,  a number of our competitors
are much larger and possess equal or greater technical and financial  resources.
Four of these competitors are:

     o    Haulmark Industries;

     o    Pace American;

     o    U.S. Cargo; and

     o    Wells Cargo.

We compete for specialty  racing,  cargo and ATV trailer  sales  through  price,
quality and availability, but price generally is the important factor.

We  purchase  our raw  materials  for the  trailer  and  related  transportation
equipment  segment from numerous  suppliers  and have not had any  difficulty in
obtaining  components  or raw  materials.  During  the last six months of fiscal
2003, the supply of plywood became  limited.  Although we had an adequate supply
for our production  needs, the prices nearly doubled during this period. At this
time, we cannot  estimate if or when the cost of plywood will return to historic
levels, and we are pursuing alternate material sources.

We  generally  warrant  our  product  to be free from  defects in  material  and
workmanship  and  performance  under  normal use and service for 12 months after
shipment.  Our  obligation  generally is limited to the repair or replacement of
the defective product.  Historically,  our warranty costs have not been material
to our consolidated financial statements.

At October 31,  2003,  the  backlog of our  trailer  and related  transportation
segment  was  approximately  $4,650,  composed of  approximately  $140 for truck
bodies and $4,510 for specialty  racing,  cargo and ATV  trailers.  We expect to
fill this backlog during the 2004 fiscal year.


Coach Leasing

We lease  high-end  luxury  entertainment  coaches from our facility in Joelton,
Tennessee.  We lease  coaches  for  both  short-term  (weekly  or  monthly)  and
long-term periods.

At October 31, 2003, we managed 38 coaches.  We also sometimes  sublease coaches
from other coach owners on a short-term basis.

DW Leasing,  LLC, a company Mr. Durham  controls,  transferred 22 coaches to our
subsidiary  Obsidian Leasing in 2002. DW Leasing  continues to own seven coaches
that we manage.  We also manage nine coaches  owned by DC  Investments  Leasing,
LLC, an entity controlled by Mr. Durham.

Our consolidated financial statements include the assets, liabilities and equity
of DW Leasing and DC  Investments  Leasing  and the results of their  operations
from January 1, 2001 and December 1, 2002 (inception of DC Investments Leasing),
respectively.  Both of these  entities are in the business of coach  leasing and
their coaches are leased  exclusively  through  Pyramid  Coach.  For  additional
information, see the discussion of FASB Interpretation No. 46 included in Note 2
to the Notes to Consolidated Financial Statements contained in Item 8.

We lease coaches  through an internal  sales force to the country,  rock-n-roll,
pop and traveling Broadway show entertainment  industries. We also lease coaches
to various  corporations.  During the year ended  October  31,  2003,  we leased
coaches to a number of touring groups, including Ozzy Osbourne, Brad Paisley and
the Broadway Show "Stomp." Our corporate customers include the Golf Channel.

Several other  companies lease luxury  coaches.  Some of our larger  competitors
include:

     o    Entertainer Coaches of America;

     o    Florida Coach;

     o    Senators Coach; and

     o    Hemphill Brothers.

We believe  that  amenities  are an important  factor in leasing  coaches to our
target market and we equip our coaches with a full  complement of amenities.  We
compete with other luxury coach  providers  based on a  combination  of quality,
amenities, availability and price.


GOVERNMENT REGULATION

Federal, state, and local agencies regulate areas of our business, including for
environmental  and fire hazard  control.  They also  regulate  our work place to
ensure safe working conditions for our employees.  The trailers and truck bodies
we  manufacture  must meet  standards  set by state and  federal  transportation
authorities  and the  coaches we lease must  comply  with  those  standards  and
regulations.  These  regulatory  bodies  could  take  actions  that would have a
material adverse affect on our ability to do business.


EMPLOYEES

As of October 31, 2003, we had 405 employees.  We have a labor contract  through
January 2005 with the United  Brotherhood  of Carpenters  and Joiners of America
for the  approximately  40  production  workers at our truck body  manufacturing
facility in Hagerstown,  Maryland. None of the employees at our other facilities
is  represented  by a labor union.  We believe that our employee  relations  are
satisfactory.


PATENTS AND PROPRIETARY TECHNOLOGY

We do not rely on any patents,  registered  trademarks,  or special  licenses to
give us 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

We have not incurred any material  research and development  expenses during any
of our last three fiscal years and we do not contemplate  incurring any material
research and development expenses in the 2004 fiscal year.


                           FORWARD-LOOKING STATEMENTS

In addition to historical information,  this Annual Report on Form 10-K contains
forward-looking  statements.  You can identify forward-looking statements by the
use of words  and  phrases  such as  "expects,"  "plans,"  "will,"  "estimates,"
"forecasts," "projects," "believes,"  "anticipates," "looking forward" and other
words and  phrases of similar  meaning.  You also can  identify  forward-looking
statements by the fact that they do not relate strictly to historical or current
facts.  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 Operation."  Readers should carefully review
the risks  described in this and other  documents that we file 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 2004. 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>

<TABLE>
<CAPTION>

ITEM 2.      PROPERTIES

The following describes the Company's properties:

Identification                  Location                     Ownership/Description              Segment
-------------------------------------------------------------------------------------------------------------------
<S>                             <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 aggregating    Butyl Rubber
Plants                                                       87,000 square feet, each owned    Processing
                                                             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 Fair Holdings,   equipment
                                                             Inc.                              manufacturing
United Expressline Plant        Bristol, Indiana             Several buildings aggregating      Trailer and related
                                                             49,000 square feet owned by the   transportation
                                                             Company and encumbered by a       equipment
                                                             mortgage to First Indiana Bank    manufacturing
                                                             NA
United Expressline Plant        Elkhart, Indiana             35,000 square foot plant leased    Trailer and related
                                                             by the Company                    transportation
                                                                                               equipment
                                                                                               manufacturing
United 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
                                                             Bank NA                           manufacturing
Pyramid Coach Office            Joelton, Tennessee           12,000 square feet of office       Coach Leasing
                                                             space and other facilities
                                                             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,  as further described in
Note 4 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  provided Markpoint the option to require the
Company to  repurchase  these shares at a price of $21 per share.  The Company's
repurchase  obligation was  guaranteed by Mr. Durham.  Pursuant to an Assignment
Agreement, dated May 12, 2003, the Company assigned all of its rights, title and
interest in the repurchase  option to Fair  Holdings,  Inc. in exchange for Fair
Holding,  Inc.'s  assumption  of  the  Company's  repurchase  obligations.   The
repurchase  obligation  as  of  October  31,  2003  has  been  recorded  in  the
consolidated  balance  sheet  as  mandatory  redeemable  preferred  stock.  Fair
Holdings  exercised  its options to acquire  the Series D  Preferred  Stock from
Markpoint on May 12 and November 10, 2003.


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

No  matters  were  submitted  to a vote of our  stockholders  during  the fourth
quarter of the 2003 fiscal year.

ITEM 5. MARKET FOR THE REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS
        AND ISSUER PURCHASES OF EQUITY SECURITIES

The  Company's  common  stock  is  currently  traded  on  the   Over-the-Counter
Electronic  Bulletin  Board under the symbol  "OBSD." The  following  table sets
forth  the high and low bid  quotations  for the  common  stock  for the  fiscal
quarters indicated.

                               FISCAL 2003                FISCAL 2002
                             High          Low          High          Low
     1st Quarter            $0.26         $0.15         $0.25        $0.12
     2nd Quarter            $0.25         $0.18         $0.36        $0.12
     3rd Quarter            $0.26         $0.08         $0.27        $0.11
     4th Quarter            $0.85         $0.14         $0.27        $0.10

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,  2003,  there were  approximately  871 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 years ended  October 31, 2003 and 2002 and the  ten-month  period  ended
October  31,  2001  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 years ended  December 31, 2000 and 1999 is for that of
U.S.  Rubber  Reclaiming  only,  the  accounting  acquirer in the reverse merger
further described in Items 7 and 8.
<PAGE>
<TABLE>
<CAPTION>

OPERATING DATA:

                  (Amounts in thousands, except per share data)

                                                                                Ten Months
                                                 Year Ended October 31,           Ended          Year Ended December 31,
                                            ---------------------------------   October 31,    ----------------------------
                                                 2003             2002             2001            2000          1999
                                            -------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>            <C>           <C>

Net sales                                      $     59,295     $    57,274      $   24,689     $  12,583     $  11,439
Income (loss) from operations                          (978)            449             981           184           413
Discontinued operations, net of tax                     (49)         (1,040)         (3,376)           --            --
Cumulative effect of change in accounting
 principle                                               --          (2,015)             --            --            --
Net income (loss)                                    (3,873)         (6,330)         (4,395)           48           216
Basic and diluted earnings (loss) per
 share:
  From continuing operations                           (.12)           (.09)           (.04)           --            --
  Discontinued operations                                --            (.03)           (.13)           --            --
  Cumulative effect of change in
   accounting principle                                  --            (.06)             --            --            --
  Net income (loss) per share                          (.12)           (.18)           (.17)           --            --



BALANCE SHEET DATA:


                                                                    October 31,                         December 31,
                                                  -------------------------------------------------------------------------
                                                        2003            2002            2001          2000        1999
                                                  -------------------------------------------------------------------------

Working capital (deficit)                           $   6,045        $   1,591       $  (2,528)     $   864    $   1,896
Total assets                                           45,882           45,923          48,850        9,633       11,633
Long-term debt, including current portion and
 mandatory redeemable preferred stock                  43,221           36,464          35,382        3,846        5,914
Stockholders' equity (deficit)                         (3,253)            (689)          1,331        4,939        4,890

</TABLE>

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

We adopted  Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  142,
Goodwill and Other Intangible  Assets, on November 1, 2001. SFAS No. 142 changed
the accounting for goodwill from a model that required amortization supplemented
by impairment tests to an accounting  model based solely upon impairment  tests.
The consolidated  operating data presented  includes goodwill  amortization only
for the ten months ended October 31, 2001. Had the nonamortization provisions of
SFAS No. 142 been effective prior to 2001, the net loss for the ten months ended
October  31,  2001 would have been  reduced by $76 to $4,319.  There would be no
change in earnings per share. All other periods presented would be unchanged.
<PAGE>


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).


                                  INTRODUCTION

Obsidian  Enterprises,  Inc. is a holding company headquartered in Indianapolis,
Indiana. We conduct business through our subsidiaries:

     o    Pyramid  Coach,  Inc., a leading  provider of corporate  and celebrity
          entertainer coach leases;

     o    Obsidian Leasing, Inc., owner of coaches managed by Pyramid Coach;

     o    United  Expressline,  Inc.,  and  its  division,  Southwest  Trailers,
          manufacturers  of  steel-framed   cargo,   racing  ATV  and  specialty
          trailers;

     o    U.S. Rubber Reclaiming, Inc., a butyl-rubber reclaiming operation; and

     o    Danzer  Industries,  Inc., a manufacturer of service and utility truck
          bodies and steel-framed cargo trailers.

While each of the subsidiaries  markets its products or services  independently,
our  emphasis  is to  provide  high  quality  products  and  services  by taking
advantage of cross-selling  opportunities,  manufacturing  and other operational
efficiencies through each of the subsidiaries.



                      Organization of Financial Information

The  Management's  Discussion  and Analysis  provides  material  historical  and
prospective  disclosures  intended to enable investors and other users to assess
our  financial  condition  and results of  operations.  Statements  that are not
historical are  forward-looking  and involve risks and  uncertainties  discussed
under the caption  "Forward-Looking  Statements" in Item 1 of this Annual Report
on Form 10-K.

The consolidated  financial statements and notes are presented in Item 8 of this
Annual Report on Form 10-K.  Included in the consolidated  financial  statements
are the  consolidated  statements of operations,  consolidated  balance  sheets,
consolidated   statements  of  cash  flows,  and   consolidated   statements  of
stockholders'  equity (deficit) and comprehensive  loss. The notes, which are an
integral  part of the  consolidated  financial  statements,  provide  additional
information  required to fully  understand the nature of amounts included in the
consolidated financial statements.


                  Significant Transactions and Financial Trends

Throughout   these  financial   sections,   you  will  read  about   significant
transactions  or events that materially  contribute to, or reduce,  earnings and
materially affect financial trends.  Significant  transactions discussed in this
Management's Discussion and Analysis include:

     o    a discounting program in the Trailer manufacturing segment in 2003,

     o    cost   reduction   initiatives   for  raw   materials   under   "lean"
          manufacturing concepts,

     o    an asset  impairment  charge and discontinued  operations  recorded in
          fiscal 2002,

          o    the  cumulative  effect of  accounting  principle  as a result of
               adopting  Statement of Financial  Accounting  Standard (SFAS) No.
               142 in fiscal 2002, and

These significant transactions resulted from unique facts and circumstances that
are not  expected  to recur with  similar  materiality  or impact on  continuing
operations.  While these items are  important in  understanding  and  evaluating
financial  results  and  trends,  other  transactions  or  events  such as those
discussed  later in this  Management's  Discussion  and Analysis may also have a
material impact. An understanding of these transactions is necessary in order to
estimate the  likelihood  that current trends will continue or these events will
recur.

                              RESULTS OF OPERATIONS

OVERVIEW

During 2003, we were  negatively  impacted by general  economic  conditions  and
various  company  specific  events  discussed  below.  We were  able to effect a
significant  restructuring  and refinancing of our outstanding  indebtedness and
secured new funding (see "Liquidity and Capital Resources"). As discussed below,
during 2004, we anticipate  generating  positive  cash flow and  increasing  our
working capital through improved operations and pursuing  significant  strategic
acquisition initiatives.

     o    In the  trailer  and related  transportation  equipment  manufacturing
          segment  our major  competitors  were  aggressive  in their  sales and
          marketing  approach by  offering  price  concessions  and a variety of
          special programs designed to stimulate  business.  For the first time,
          we were  forced to offer sales  promotions  and  discount  programs to
          maintain our market share.  In lieu of future  discounting to maintain
          market  share,  we have  introduced  a new  line of  trailers  that is
          offered  at  competitive  prices  while  maintaining  historic  profit
          margins.  Our  results  in this  segment  were  also  affected  by the
          significant  increase  in raw  material  prices  primarily  related to
          plywood  during  the last six months of the 2003 and the fact that the
          truck body market has been depressed for the past  twenty-four  months
          as the  telecommunications  industry  has  maintained  low  levels  of
          capital  spending.  Given the current state of the  telecommunications
          industry and  economic  conditions,  we will  continue to evaluate the
          operations  and  progress  with  the  implementation  of  the  trailer
          production in the Danzer operational  facility.  We are evaluating the
          trailer  line  implementation  and  its  impact  on  operations  on  a
          continuous basis.

          Since we expect  market  conditions  to remain  very  competitive,  we
          introduced  new  cost  reduction   initiatives,   including  combining
          operations  for United  Expressline  and  Southwest  and  coordinating
          administrative  and sales and marketing  efforts under one brand name,
          United Trailers. In addition, we are implementing programs with a goal
          of reducing  material cost as a percentage of sales by 3.0%,  since we
          believe,  compared to industry  averages,  that our cost of  materials
          percentage  appears  to be  above  the  industry  average.  Additional
          strategies in the trailer and related  transportation segment include:
          building sales growth through our expansion of production  facilities,
          market  expansion  through cross selling and  additional  geographical
          production at Danzer and other potential acquisitions.

     o    Our butyl rubber  reclaiming  segment increased sales by 8.7%. We were
          able to reduce some overall  manufacturing costs by consolidating some
          of the operational facilities. However, additional costs were incurred
          to maintain the  equipment in this very capital  intensive  operation.
          The availability of raw materials continues to be a concern as the use
          of Butyl inner tubes and reclaim  disposal has decreased over the past
          several  years.  We continue to  identify  new market  sources for raw
          material  including a new  recycling  program with the chapters of The
          National FFA Organization. A new Fine Grind process was also initiated
          in 2003 which  increases  our  ability to use other types of rubber in
          our  Butyl  reclaim  process  and  as  potential  new  natural  rubber
          products.

     o    Fiscal 2003 was a  record-setting  year for our coach leasing  segment
          for both net sales and earnings. Five additional coaches were added to
          our  fleet  at the end of the  first  quarter,  and the  entertainment
          industry and related  tours began to pick up momentum due to improving
          economic conditions and additional  marketing efforts. We were able to
          refinance  a  significant  portion of the bank debt  during the fourth
          quarter  of 2002 and the first  quarter  of 2003,  which  reduced  our
          overall  effective  rate  of  interest  paid  to  approximately  8.5%.
          Utilization of our coaches has a significant impact on the earnings of
          this  segment.  The last  six  months  of  fiscal  2003  began to show
          improvements in our operations.  We plan to leverage that momentum and
          continue to take steps to increase  productivity  and otherwise reduce
          costs to lay the groundwork for continuous improvement.

     o    As discussed  below under  "Liquidity and Capital  Resources,"  during
          2003 we began and  substantially  completed the process of refinancing
          and restructuring our outstanding  indebtedness.  At February 2, 2004,
          we had completed  negotiation of a $12.0 million financing facility of
          which  approximately  $5.9 million is available  for  borrowing by the
          Company.

     o    We commenced a strategy in late 2003 of pursuing strategic acquisition
          opportunities  that  include  targets both in our  traditional,  basic
          industries and manufacturing sectors as well as targets that possessed
          assets  (including cash) that, while outside our traditional  areas of
          focus,  were  available  on terms that our  management  believed to be
          attractive.  While no material  negotiations are currently active with
          respect to any targets  (other than Net  Perceptions,  Inc.,  which is
          discussed  below  and  with  respect  to which  we have  commenced  an
          exchange  offer),  we anticipate  that over the course of 2004 we will
          pursue acquisition  opportunities that we deem attractive in a variety
          of industry sectors.  Ultimately,  these acquisitions may (but can not
          be  guaranteed)  to result in our qualifying for listing on a national
          securities   exchange,   having  increased   financial  resources  and
          potentially  a broader  asset  base and more  diversified  sources  of
          revenue.

In addition,  we plan to eliminate waste  throughout the Company through the use
of  "lean"  manufacturing  concepts  such  as  inventory  control  and  managing
purchases.  We are  strengthening  our cultural  values by focusing on teamwork,
communication, and customer responsiveness.


Fiscal 2003 Compared with Fiscal 2002

The following table details our results of operations as a percentage of sales:

                                                    Year Ended October 31,
                                                  ----------------------------
                                                     2003            2002
                                                  ----------------------------

 Net sales                                             100.0%          100.0%
 Cost of sales                                          87.3            83.5
 Selling, general and administrative expenses           14.4            15.0
 Loss on asset impairment                               --               1.3
 Loss from discontinued operations                      --               1.8
 Interest expense                                        6.0             6.2
 Interest income                                        --              --


Net Sales

Net sales in fiscal 2003 were  $59,295  million  compared to $57,274  million in
fiscal 2002, an increase of 3.5%. Sales growth was primarily driven by our coach
leasing  segment with the addition of five new buses.  Our butyl rubber  segment
also had  increases  due to  increased  demand in the oil  exploration  and tire
industries. The trailer and related equipment manufacturing segment had a slight
increase due to the  discounting  that occurred in the industry  during 2003 and
overall reduction in the sale of truck bodies.

Looking ahead, we expect  improvement of sales growth in fiscal 2004 compared to
sales growth in 2003, driven primarily by:

     o    The introduction of new products in cargo trailers,

     o    Elimination of the discounting program for cargo trailers,

     o    Increased  production  capacity  through  our new leased  facility  in
          Elkhart, Indiana,

     o    Expected improvement in economic conditions, and

     o    Strategic marketing  activities directed to expand our market share of
          cargo  trailers  on the East Coast  through  our  Hagerstown  Maryland
          facilities  which  is in its  second  year  of  production  for  cargo
          trailers.


Gross Profit

Gross profit as a percentage of sales decreased 3.8 percentage  points from 16.5
percent in fiscal 2002 to 12.7 percent in fiscal  2003.  The decrease was mainly
the result of:

     o    The sales discount  program for cargo trailers that took place in 2003
          which lowered our gross margin by $1,511 million or 2.6%.

     o    Increased raw material costs in our trailer  segment of 1%,  primarily
          related to plywood which is a  significant  total of our raw materials
          used in production.

     o    Purchases of raw materials in our rubber reclaim  segment from foreign
          sources thus increasing the cost.

Looking  ahead,  gross  profit is  expected  to  improve  by  discontinuing  our
discounting  program for cargo  trailers,  implementation  of our cost reduction
initiatives, continued development of our fine grind production and the roll out
of The National FFA Organization recycling project to find additional sources of
butyl and other rubber sources.


Selling, General And Administrative (SG&A) Expenses

Our selling,  general and  administrative  expenses decreased $53 or .6% for the
year ended October 31, 2003 compared to 2002. The decrease is related  primarily
to the overall  decrease in  professional  fees for services in  assisting  with
creating better subsidiary reporting and post acquisition  activities,  the cost
to obtain prior year audits to meet regulatory filing  requirements and the cost
of using  outside  consultants  to provide  accounting  and related  services to
management.

Looking ahead, SG&A expense is expected to stay the same or increase slightly as
we expect to grow our  company  through  mergers  and  acquisitions  which  will
include additional legal, accounting and regulatory filing expenses.


Interest Expense

Interest  expense for the year ended October 31, 2003 as a percentage of average
debt borrowings of $39,819 was 8.9%. Interest expense for the year ended October
31, 2002 as a percentage  of average debt  borrowings  of $35,923 was 9.6%.  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."


Income Tax Provision

The income tax benefit for the year October 31, 2003  increased by $904 compared
to the year ended  October 31, 2002 The income tax benefit is created  primarily
through  net  operating  loss  carryforwards  recognized  to the extent they are
available to offset the Company's net deferred tax liability.


Discontinued Operations

On October 30, 2002,  our 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,  other  than  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, 2003 and
2002 represent the losses of Champion  during these periods,  net of tax benefit
of $25 and $0, respectively. The loss from discontinued operations for the years
ended October 31, 2003 and 2002 were $49 and $1,040, respectively.

Substantially  all assets of Champion  subject to its  liabilities  were sold on
January 30, 2003. No gain or loss was recognized in the  consolidated  statement
of  operations  due to the  involvement  of related  parties.  This  transaction
resulted in an increase in equity of $1,142.


Fiscal 2002 Compared with Fiscal 2001

The following table details our results of operations as a percentage of sales:

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

 Net sales                                             100.0%       100.0%
 Cost of sales                                          83.5         78.8
 Selling, general and administrative expenses           15.0         17.2
 Loss on asset impairment                                1.3         --
 Loss from discontinued operations                       1.8         13.7
 Interest expense                                        6.2          9.4

Our  results of  operations  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 our  continuing  operations for
all periods presented.


Net Sales

As noted above,  net sales for the period is not comparable due to the timing of
the  acquisitions  and combining  the  operations.  Net sales  increased in 2002
primarily in cargo trailers due to additional  demand driven by marketing effort
and our Coach Leasing  segment which  increased sales due to the addition of two
new coaches,  increase in our  utilization  and marketing  efforts to rock, pop,
touring Broadway shows and corporate  customers.  These increases were partially
offset by a  continued  reduction  in the  demand for truck  bodies and  reduced
manufacturing  capacity at the butyl  rubber  reclaiming  facility due to a fire
that closed a portion of the facility for approximately two months.


Gross Profit

Gross profit as a percentage  of net sales was 16.5% in fiscal 2002  compared to
21.2% in 2001.  The decrease was mainly a result of the reduced  volume of truck
bodies,  and  operational  inefficiencies  in the butyl rubber  segment due to a
fire.  The coach  leasing  segment also had reduced gross margins as a result of
leasing third-party buses for part of the year to meet current demand.


Selling, General And Administrative (SG&A) Expenses

As noted above, our selling, general and administrative expenses for the periods
presented are not comparable.  Our selling,  general and administrative expenses
decreased as a percentage  of sales by 2.2% for the year ended  October 31, 2002
versus the  ten-month  period ended  October 31,  2001.  although the change was
affected by the integration of operations as noted above.

In addition,  selling,  general and administrative  expenses were 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 our 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,  we changed  our  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 ended October 31, 2002
of approximately $200.


Interest Expense

As discussed above, results between periods presented are not comparable.  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."


Cumulative Effect of Change in Accounting Principle

We adopted the new rules on accounting for goodwill and other intangible  assets
beginning in the first  quarter of fiscal 2002.  We completed  our  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, we recorded $2,015
as a cumulative effect of change in accounting principle.

During the fourth  quarter of 2002,  we 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.   We  determined  the  estimated   future
undiscounted  cash  flows were below the  carrying  value of certain  long-lived
assets.  As a result,  we wrote off the  remaining  goodwill  and recorded as an
operating expense a charge of $720 as loss on asset impairment.


Discontinued Operations

On October 30, 2002,  our 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, we
classified the operating  results of Champion 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, we 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 us and  Champion,  we made a cash payment to
Markpoint  of $675  and  issued  to  Markpoint  32,143  shares  of our  Series D
preferred  stock.  In  addition,   we  agreed  to  repurchase  these  shares  at
Markpoint's  option at a price of $21 per share.  Our repurchase  obligation was
guaranteed by Mr. Durham. Fair Holdings,  Inc. assumed the repurchase obligation
in 2003. See Note 11 to the consolidated financial statements.  In calendar 2003
Markpoint  exercised its option to require the  repurchase of the shares and the
shares were purchased by Fair Holdings, Inc. The shares issued to Markpoint have
been  recorded  in  the  consolidated  balance  sheet  as  mandatory  redeemable
preferred  stock. An amount of $338 was  reclassified to equity in May 2003 when
Fair  Holdings  acquired  16,072  shares  of the  Series D  Preferred  Stock for
Markpoint  and the  repurchase  requirement  for those  shares  was  eliminated.
Subsequent to year end, Fair  Holdings  acquired the remaining  16,071 shares of
Series D Preferred  Stock from  Markpoint  canceling  the  remaining  repurchase
obligation.  The balance of  mandatory  redeemable  Series D Preferred  Stock at
October 31, 2003 of $337 was reclassified to equity subsequent to year end.


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 our net deferred tax liability.


                                BUSINESS SEGMENTS

The following  information  provides perspective on our business segments' sales
and operating  results by segment for the year ended October 31, 2003,  2002 and
the ten-month  period ended October 31, 2001. The comments that follow should be
read in conjunction with our consolidated financial statements and related notes
contained in this Form 10-K.

The following table shows net sales by product segment:


                                                             Ten Months Ended
                                Year Ended October 31,         October 31,
                           ---------------------------------
                                 2003            2002              2001
                           -----------------------------------------------------

Trailer manufacturing         $    41,009     $    40,775     $        10,650
Butyl rubber reclaiming            11,005          10,125               9,874
Coach leasing                       7,281           6,374               4,165
                           -----------------------------------------------------
Total                         $    59,295     $    57,274     $        24,689
                           =====================================================


We allocate  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 October 31,        Ten Months Ended
                                                                 October 31,
                           ---------------------------------
                                  2003             2002            2001
                           -----------------------------------------------------

Trailer manufacturing         $      1,174     $        934    $           245
Coach leasing                          200              146                 96
Butyl rubber reclaiming                317              232                275
                           -----------------------------------------------------
Total                         $      1,691     $      1,312    $           616
                           =====================================================



TRAILER AND RELATED TRANSPORTATION EQUIPMENT MANUFACTURING

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


                          Year Ended October 31,        Ten Months Ended
                                                          October 31,
                       ------------------------------
                           2003            2002               2001
                       -------------- --------------- ---------------------

Net sales                $  41,009      $  40,775         $    10,650
Cost of sales               37,704         35,077               8,955
                       -------------- --------------- ---------------------

Gross profit             $   3,305      $   5,698         $     1,695
                       ============== =============== =====================
Gross profit %                 8.1%          14.0%                15.9%
                       ============== =============== =====================


Sales in this segment  increased $234 or .6% over the comparable period of 2002.
The increase was primarily related to the following factors.  The sales of cargo
trailers increased approximately $1,600 for the year ended October 31, 2003 as a
result of additional  production  facilities.  We added a new leased facility in
Elkhart,  Indiana, and production at our Danzer facility.  We also made sales to
existing customers in new markets. We also began a sales discount/rebate program
to stimulate sales.  While this program did increase the units sold, it resulted
in a lower average price per unit.

The increase in cargo trailer sales was offset by the decrease in sales of truck
bodies of  approximately  $1,375  for the year  ended  October  31,  2003.  This
reduction   was   related  to  the   continued   depressed   condition   of  the
telecommunications  industry which has historically been a significant  consumer
of truck bodies,  as well as the bankruptcy  filing of a significant  truck body
customer in late 2002.

Looking ahead, sales for the trailer and related equipment manufacturing segment
are  expected to grow in fiscal 2004  compared to fiscal 2003  because we expect
our new product  line for cargo  trailers,  which has been well  received,  will
eliminate the need for a discounting program. We also have additional production
capacity in our new leased  facility  and at Danzer.  We believe  sales of truck
bodies will continue at about the same level as 2003 unless a replacement market
can be developed.

Gross profit  decreased 5.9%  primarily as a result of our  discounting of cargo
trailers that  decreased our gross margin by 2.6 %. The sales  discounts/rebates
offered during 2003 have ended as of July 31, 2003 with the  introduction of new
product  lines to  compete  in the  market  at  higher  gross  margins  than the
discounted cargo trailers.  Gross profits were also impacted by the rising costs
of raw materials,  primarily plywood which is a significant portion of materials
in our cargo trailers.  Plywood costs have nearly doubled in the last quarter of
fiscal  2003 and  reduced  our  overall  gross  margin  by 1%. In  addition  the
decreased  volume at our truck body plant  resulted  in an  inability  to absorb
fixed overhead  costs.  To offset these costs,  management  began  production of
cargo trailers in this facility during late 2002. Inefficiencies in the start up
of this operation and additional production facilities in Elkhart, Indiana, have
also had a negative impact in gross profit margins as compared to the year ended
October 31, 2002.

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:


                           Year Ended October 31,        Ten Months Ended
                                                           October 31,
                        ------------------------------
                            2003            2002               2001
                        -------------- --------------- ---------------------

Net Sales                 $  11,005      $  10,125         $     9,874
Cost of Sales                 9,972          9,407               8,884
                        -------------- --------------- ---------------------

Gross Profit              $   1,033      $     718         $       990
                        ============== =============== =====================

Gross Profit %                  9.4%           7.1%               10.0%
                        ============== =============== =====================


Net sales in this  segment  for the year ended  October  31, 2003 as compared to
2002 increased 8.7% in the amount of $880.  Sales in this segment were higher in
2003 because of increased  demand from our tire  manufacturing  customers and an
increase  in  pricing.  Net sales also  increased  due to  increased  demand for
pipeline  mastic wraps  produced with  reclaimed  butyl rubber.  Demand for this
product fell dramatically  beginning in October 2001 as a result of a decline in
the  price  of  crude  oil in late  2001,  which  caused  a  decline  in new oil
exploration.  As the price of crude oil has increased, the demand for those uses
has also increased.

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 ten months ended October 31, 2001 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 our being
unable to fill all outstanding customer orders. This facility resumed production
during July 2002.  During 2002,  we 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  continued  to see  lower  volumes  of tire
production  during  2002.  Accordingly,  sales  to  these  customers  are  below
historical levels.

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.

Looking  ahead,  sales are  expected to grow in fiscal  2004  compared to fiscal
2003.  Sales  growth will depend  greatly on  successful  implementation  of our
recycling program with the chapters of The National FFA Organization and finding
other sources of material. In addition, the continued implementation of our Fine
Grind  process will increase the our ability to utilize some  additional  rubber
products in our Butyl reclaim process and add potential new products.

Gross profit as a percentage sales increased 2.3% for the year ended October 31,
2003 compared to 2002. The primary reason for this increase is due to efficiency
gains with the consolidation of our plant operations in 2003. Although we gained
some efficiency in consolidating  plant operations,  our reclaim process is most
efficient  when raw material  consists of primarily road worn inner tubes with a
mix of other butyl rubber. During 2003 we were also able to utilize raw material
previously subject to valuation  allowances in the amount of approximately $145.
However,  the  benefit  of this  usage is  partially  offset  by the  additional
processing and labor costs involved in its usage.  Since the introduction of the
tubeless tire for  automobiles  in the 1970s,  sources of material have declined
substantially and the cost of available raw materials has increased. As a result
of having to use less than optimum raw material mix in the  reclaiming  process,
additional  processing time is incurred to ensure  delivery of quality  product.
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.

Operating  results  between  fiscal  year  2002  and  fiscal  year  2001 are not
comparable, because the results of operations in 2001 include only ten months of
operations.  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,  the fire  discussed  above,  and reduced use of raw materials
previously subject to valuation allowances.  During 2002 we were able to utilize
raw  material  previously  subject  to  valuation  allowances  in the  amount of
approximately $404 as compared to $578 in 2001.

Looking  ahead,  our segment  earnings are expected to improve,  but will depend
greatly on the  success  of  finding  consistent  sources  of raw  material  and
improved efficiencies in our operations.


COACH LEASING

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


                            Year Ended October 31,        Ten Months Ended
                                                            October 31,
                         ------------------------------
                             2003            2002               2001
                         -------------- --------------- ---------------------

Net Sales                   $  7,281       $  6,374        $      4,165
Cost of Sales                  4,060          3,357               1,618
                         -------------- --------------- ---------------------

Gross Profit                $  3,221       $  3,017        $      2,547
                         ============== =============== =====================
Gross Profit %                  44.2%          47.3%               61.1%
                         ============== =============== =====================



Sales for year ended October 31, 2003 increased 14.2% in the amount of $907 over
2002.  The  increase  in sales is  attributable  to  marketing  efforts  and the
addition of five coaches during the first quarter of 2003. Our marketing efforts
on  specialized  tour  groups  such as golf  course  trips,  Broadway  musicals,
corporate  customers,  and rock and pop bands have expanded our customer base as
these  customers are in addition to the country and western  performers who have
traditionally  been this segment's  primary  customer base. The additional  five
coaches  plus an  additional  coach  purchased  in the  fourth  quarter  of 2003
increase  the  average  number of  coaches in the fleet to 38 for the year ended
October 31, 2003, compared to 32 for the year ended October 31, 2002.

Operating results are not comparable for the year ended October 31, 2002 and the
ten months ended  October 31, 2001,  because the results of  operations  in 2001
include only ten months of operations. 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 and  additional  revenue  from the  increased  use of employee  coach
drivers  versus  independent  contractors  paid directly by the customer.  These
factors were partially  offset by a decrease in utilization  from 75% in 2001 to
69% in 2002.  The average  fleet size in 2002 of 32 was  comparable  to 2001. We
believe the increased  revenue 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.

Looking  ahead,  we expect  segment  sales in fiscal 2004 to  increase  with the
full-year  impact increase in the total number of coaches added to our fleet. We
are also working to continually  improve our utilization  percentage.  Our total
utilization  rate was  approximately  69% for 2003 and 2002, which indicates the
period of time the coach is being leased.

Gross profit  percentage  for this segment was 44.2% for the year ended  October
31, 2003 compared to 47.3% for the year ended October 31, 2002. The reduction is
attributable  primarily  to the need to  sublease  additional  buses  from third
parties to meet current demand during peak periods and increased operating costs
for insurance.

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.

Looking  ahead,  we expect  fiscal 2004 gross profit to be higher than 2003 with
the additional sales related to the six new coaches added which reduces the need
to sublease from third parties.


                        LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

In June  2001,  we  purchased  four new  businesses  and began  operations  as a
consolidated holding company with multiple operating subsidiaries. In the period
since June 2001, we have incurred  losses and  reductions in our equity.  During
this period we have financed our losses and have been able to refinance  certain
third  party  obligations  with DC  Investments,  LLC and  its  subsidiary  Fair
Holdings and other third parties. Our borrowings from Fair Holdings have been on
terms that may not have been  available  from other  sources.  As of October 31,
2003, our total debt outstanding to Fair Holdings was $14,158.

We are continuing to address our liquidity and working  capital  through various
means including  operational  changes and financing  matters which are discussed
below.  During the period  these plans are put in place,  we have  continued  to
receive  financing,  and  have  in  place  arrangements  to  receive  additional
financial support from Fair Holdings if necessary.


WORKING CAPITAL

Our businesses are working  capital  intensive and require funding for purchases
of production  inventory,  capital  expenditures  and expansion and upgrading of
facilities.  Each of our subsidiaries have separate  revolving credit agreements
and term loan  borrowings  through which the subsidiary  finances its operations
together with cash  generated  from  operations.  Our working  capital  position
(current  assets over current  liabilities)  was positive at October 31, 2003 by
$6,045. At the end of fiscal year 2002, our working capital position was $1,591.
The  increase in working  capital is  primarily  attributable  to our ability to
finance working capital and financial losses through long-term borrowings from a
related party under a line of credit  agreement.  The following table highlights
several key measures of our working capital performance:

                                                2003                2002
                                          ------------------ -------------------

Average cash and cash equivalents             $     1,034        $       725
Average short-term debt                             4,023              6,769
Average inventories, net                            7,385              6,439
Average receivables, net                            3,486              3,439
Average days receivables outstanding                 21.9               21.1
Inventory turnover                                    7.0                7.4

Average  short-term  debt  decreased  in fiscal  2003  compared  to fiscal  2002
primarily due to the timing of  maturities on certain line of credit  facilities
and  refinancing  certain  debt with a related  party on a long term basis.  The
increased average inventories, net was primarily due to additional purchases for
expected  sales volumes and additional  production  capacity to build more cargo
trailers.  These factors also affected our inventory  turnover  which  decreased
from  7.4 in 2002 to 7.0 in  2003.  Our  average  days  receivables  outstanding
increased  slightly to 21.9 in 2003  compared to 21.1 in 2002 but are low due to
the prepayment of our tours for coach leasing and good  collection  efforts with
customers.

We expect that  average  receivables  and  inventory  levels in fiscal 2004 will
increase  slightly  compared to fiscal 2003 due to higher planned sales volumes.
We also anticipate  both average days  outstanding for receivables and inventory
turnover  to be about  the same in fiscal  2004  compared  to fiscal  2003 as we
continue efforts to improve asset utilization.

We continue to address liquidity and working capital issues in a number of ways.
In fiscal 2003, net cash used in continuing  operations  was $2,604.  The use of
cash and working capital was primarily  related to the  discounting  program and
overall economic conditions as described above. In 2004 we expect our operations
to generate  positive  cash and increase  our overall  working  capital  through
improved operations by;

     o    Discontinuing the cargo trailer discounting program that ended in July
          2003 with the  introduction  of a new product line to replace the need
          to provide  discounts to maintain  market share.  The new product line
          has a competitive  price,  while  providing  gross profits at historic
          levels.

     o    Cost  reduction  initiatives  for raw  materials  in the  trailer  and
          related  transportation  manufacturing segment with the implementation
          of alternative materials and additional discounts through purchasing.

     o    Implementation  of the new fine grind production  process in the butyl
          rubber  reclaiming  segment.  The new process will maximize the use of
          the existing raw materials in the existing  butyl  reclaim  production
          and also provide potential additional production of natural rubber.

     o    Capitalize on the trailer  production  line put in place in the fourth
          quarter  of 2002 that  provides  a new  product  line to the  existing
          customers of Danzer.  This  production  line and related  sales effort
          have allowed us to enter a new market along the East coast of the U.S.
          Our ability to  capitalize on this  opportunity  will be a determining
          factor  on our  ability  to reduce  this  operation's  use of  working
          capital resources. Management will continue to evaluate the operations
          on a continuous basis.

     o    We continue to look for ways to strengthen our  liquidity,  equity and
          working capital through ongoing  evaluations of merger and acquisition
          candidates.  As fully described in the Registration  Statement on Form
          S-4 and the other  filings we have made with the SEC, on December  15,
          2003 we commenced an exchange offer for all of the outstanding  shares
          of Net  Perceptions,  Inc., a developer  of software  products for the
          retail  industry  which has been winding down its operations and whose
          assets are predominately  cash or cash equivalents.  We cannot predict
          whether  we  will  be  successful  in  acquiring  some  or  all of the
          outstanding  shares of Net  Perceptions  in  exchange  for our  common
          shares due to the fact that several  important  conditions  are in the
          control  of the  Board  of  Directors  of Net  Perceptions.  If we are
          successful in acquiring all of the  outstanding  shares based upon our
          latest   proposal,   the  effect  of  the  transaction   would  be  to
          substantially   increase  our  working   capital  and  equity  and  to
          substantially increase the number of our outstanding common shares. If
          we are  unsuccessful  in  acquiring  Net  Perceptions,  we  will  have
          incurred  substantial expenses which will impact our operating results
          and available working capital.

     o    Overall improvements in economic conditions

In addition,  management believes that the following steps started in early 2003
and currently underway will continue to improve our working capital,  strengthen
our equity and place us in a position to  successfully  enhance  our  liquidity.
These steps include:

     o    The  divestiture of Champion in the first quarter of 2003 as described
          below under  "Champion  Transactions"  which  improved  the  Company's
          overall equity and working capital position.

     o    Our  refinancing  activities  in the fourth  quarter of 2002 and first
          quarter  of  2003  reduced  our  interest   costs  and  decreased  the
          proportion of debt which has been  classified as a current  liability.
          We refinanced certain coaches  transferred from DW Leasing to Obsidian
          Leasing  with various  existing  lenders and with Fair  Holdings.  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 financing 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 us thereby  eliminating  our existing
          purchase  commitment  for the  coaches.  DC  Investments  Leasing also
          entered into a management  agreement with Pyramid under which all nine
          coaches described above will be leased by Pyramid.

     o    On  January  3,  2003,  Obsidian  Leasing  repaid  debt due to  former
          shareholders  in the amount of $928 with a loan from Fair  Holdings at
          terms  further  described  in  Note  8 to the  consolidated  financial
          statements.  The  loan  with  Fair  Holdings  provided  funds to repay
          maturing notes with proceeds from a long-term obligation without using
          operating capital.

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

     o    On March 28, 2003, Fair Holdings  acquired the line of credit and term
          debt due to the senior  lender of Danzer in the amount of $1,488 under
          an assignment and assumption agreement.  The maturity date of the line
          of credit  included in the  assignment  and  assumption  agreement was
          extended to April 2006, increased maximum borrowings under the line of
          credit  from $1,000 to $1,500 and the debt  covenants  required by the
          senior lender were waived through the end of the term. All other terms
          of the assumed notes remain the same.

     o    During March 2003,  United completed a compensation  review and update
          and  provided a revised pay scale which  realigns the Company with its
          industry  and reduces  compensation  costs.  United also  continues to
          develop its new production facility to increase productivity and plant
          efficiency.

     o    During  2003,  U.S.  Rubber has  continued  to  consolidate  its butyl
          reclaiming  operations  from two plants to one to maximize  production
          and efficiently utilize equipment. The consolidation has provided some
          pieces of equipment to be at times  temporarily idle until the Company
          completes its  implementation  of a new  production  process for "fine
          grind rubber." Existing and new equipment will be required to complete
          the "fine grind" production line.

     o    In October  2003,  we received  $250 in proceeds  from the issuance of
          14,285  shares  of  Series  D  Preferred  Stock to  Partners  under an
          existing  capital  contribution   agreement  further  described  under
          "Guarantee of Partners." The proceeds were used to maintain compliance
          with certain debt covenants with the senior lender of U.S. Rubber.

     o    We secured an additional  financial  commitment  from Fair Holdings to
          provide,  as needed,  additional  borrowings  under a $12,000  line of
          credit  agreement,  which  expires  on  January  1,  2007.  Currently,
          approximately $5,955 is available to us under the agreement.

Management  believes the steps taken to improve our operations  will  positively
impact our liquidity and working  capital for fiscal 2004.  However,  success is
dependent on our ability to restore  gross  profits and  capitalize on potential
new markets in the trailer and  related  transportation  manufacturing  segment,
obtain  consistent  material supply in the butyl rubber  reclaiming  segment and
continue to grow the coach leasing  segment.  If our operating  results are less
than  expected,  the  increased  commitment  from  Fair  Holdings  will  provide
additional liquidity in 2004.


FINANCIAL COVENANTS

Significant  financial covenants in our credit agreements are the maintenance of
minimum  ratios,  levels of earnings to funded  debt and fixed  charge  coverage
rate. We did not meet requirements and covenants in certain debt agreements.  At
October 31, 2003,  United had violated  financial  covenants  with First Indiana
Bank and Huntington Capital Investment  Company.  United has received waivers of
these  violations  through  November  1,  2004 from  First  Indiana  along  with
modifications  to its  covenants.  Huntington  Capital  Investment  Company also
waived their covenant  violations and we are currently in discussions  regarding
modifications to the covenants.

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 2003 year end. Management has received extensions of time from the lenders.

Our  high  level  of debt  creates  liquidity  issues  for us and the  stringent
financial  covenants  that  are  common  for  this  type  of debt  increase  the
probability that our subsidiaries may from time to time be in technical  default
under these loans.  These risks are mitigated,  in part, for our 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.


Long-Term Assets

Long-term  assets as of October 31, 2003 were $32,300  compared to $32,900 as of
October 31, 2002. The net decrease was $600 and primarily due to amortization of
intangible  assets and the disposal of assets held for sale related to Champion.
Net  property  and  equipment  increased  due to higher  spending on  production
equipment and new coaches.
<PAGE>

Capital Structure

The following table details our total capitalization components:

                                                           2003           2002
                                                         ---------     ---------

Short-term debt                                          $  2,379      $  5,667
Long-term debt, including Redeemable Preferred Stock       40,842        30,797
Stockholders' deficit                                    $ (3,253)     $   (689)

Total debt  increased  in fiscal  2003 by $6,757  compared to fiscal  2002.  The
increase  relates  primarily to the increase in working capital needs by funding
operational  losses,  financing  of  operational  equipment  and  coaches and an
increase in the valuation of Mandatory Redeemable Preferred Stock.  Shareholders
equity decreased as a result of the current year loss.


CASH AVAILABILITY

On a consolidated  basis,  at October 31, 2003, we had  approximately  $1,100 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, 2003,  additional  current  availability  under these
credit lines and maximum availability if supported by their individual borrowing
base are:

      Company                 Current Availability       Maximum Availability
Danzer Industries (1)             $     200                   $      200
U.S. Rubber                             344                        1,941
United                                   --                          150
Obsidian Enterprises (1)              5,955                        5,955

(1)  Additional borrowings only through Fair Holdings, Inc., a Related Party


                          PARTNERS EQUITY TRANSACTIONS

Partners,  our major shareholder,  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.
The amounts expended through October 31, 2002 approximated  $1,275.  Pursuant to
the agreement  with Partners,  we 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 us
to Partners to 402,906 shares of our Series C Preferred Stock.

In October 2003,  Partners  acquired  14,285  shares of the  Company's  Series D
Preferred  Stock for $250 under the  capital  contribution  agreement  described
under "Guarantee of Partners" below.


                             GUARANTEES OF PARTNERS

We have an agreement  with Partners that gives us 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 $1,370 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.  During 2003  Partners  acquired
14,285  shares of Series D Preferred  stock for $250 under the above  agreement.
The proceeds were loaned to U.S.  Rubber to keep the Company in compliance  with
its fixed charge coverage ratio for its revolving line of credit agreement.


                              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.

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.

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 us and  Champion,  we 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,  we agreed to repurchase these
shares at a price of $21 per share. Our repurchase  obligation was guaranteed by
Mr. Durham. Fair Holdings,  Inc. assumed the repurchase obligation.  See Item 13
"Certain  Relationships  and Related  Transactions."  In calendar 2003 Markpoint
exercised its option to require the repurchase of the shares and the shares were
purchased by Fair Holdings,  Inc.  Subsequent to the  settlement,  the Company's
Board of Directors authorized the sale of Champion,  which was completed January
30, 2003.


Off-Balance Sheet Arrangements and Contractual Obligations

It  is  not  our  usual  business  practice  to  enter  into  off-balance  sheet
arrangements,  except for off-balance  sheet  arrangements  related to operating
lease commitments described below in the table of contractual obligations.


                                   CASH FLOWS

A summary of our contractual  cash  obligations for the fiscal years ending 2004
through 2007 and 2008 and thereafter at October 31, 2003 is as follows:

<TABLE>
<CAPTION>


                                                                                                           2008 and
Contractual Obligations                    Total         2004         2005         2006         2007      Thereafter
--------------------------------------- ------------ ------------- ------------ ------------ ------------ ------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Long-term debt, and all debt service
 interest payments                       $   51,616   $    5,182    $   17,563   $   11,377   $   10,226   $    7,268
Operating leases                              1,177          452           314          220          173           18
Mandatory redeemable preferred stock          2,140          337            --        1,803           --           --
                                        ------------ ------------- ------------ ------------ ------------ ------------

Total contractual cash obligations       $   54,933   $    5,971    $   17,877   $   13,400   $   10,399   $    7,286
                                        ============ ============= ============ ============ ============ ============
</TABLE>


Cash flow and liquidity are discussed further below, and in the footnotes to our
consolidated financial statements.

We also have commercial commitments as described below:

<TABLE>
<CAPTION>

 Other Commercial Commitment      Total Amount Committed     Outstanding at October 31,       Date of Expiration
                                                                        2003
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Line of credit, related party         $           1,500            $           1,300      April 1, 2006
Line of credit, bank                              4,400                        4,250      February 1, 2004
Line of credit, bank                              4,000                        2,059      October 1, 2005
Line of credit, related party                    12,000                        6,045      January 1, 2007

</TABLE>

Our net cash used in continuing  operations  for the year ended October 31, 2003
was $2,604.  This is comprised of a loss from  continuing  operations of $3,824,
offset by noncash depreciation and amortization of $2,850, increases in accounts
receivable  of $357,  inventories  of $140,  other  assets of $54,  and customer
deposits of $51 and decreases in deferred taxes of $1,003,  accounts  payable of
$709 and accrued expenses of $96. In addition,  we had noncash losses on sale of
equipment of $10, loss on marketable  securities  of $72,  minority  interest of
$172, accretion of interest of $394 and stock-based compensation of $30.

Net cash flow provided from financing  activities for the year ended October 31,
2003 was $6,496.  This is comprised  of  borrowings  of  long-term  debt and net
borrowings of short-term debt of $11,091 and proceeds from capital contributions
of $250, offset by principal repayments of long-term debt of $3,865 and payments
to related parties of $885. We also paid debt issuance costs of $95.

Cash flow was used in investing  activities  for the year ended October 31, 2002
of $3,623.  This is comprised  of purchases of property and  equipment of $3,654
and proceeds from the sale of property and equipment of $31.
<PAGE>
<TABLE>
<CAPTION>

The total increase in cash is summarized as follows:

                                                                                                   Ten Months Ended
                                                                   Year Ended October 31,             October 31,
                                                            ------------------- ------------------
                                                                   2003               2002               2001
                                                            ------------------- ------------------ ------------------
<S>                                                           <C>                 <C>                <C>
Net cash provided by (used in) continuing operations          $      (2,604)      $         322      $       1,763
Net cash provided by (used in) investing activities                  (3,623)               (588)           (17,772)
Net cash provided by financing activities                             6,496                 618             16,321
Net cash flow provided by (used in) discontinued
operations                                                              (41)                 39                 --
                                                            ------------------- ------------------ ------------------
Increase in cash and cash equivalents                         $         228       $         391      $         312
                                                            =================== ================== ==================

</TABLE>

Inflation

We are subject to the effects of inflation and changing prices.  In our opinion,
changes in net sales and net earnings that have resulted from inflation have not
been  material to the fiscal  years  presented  but there is no  assurance  that
inflation and changing  prices will not materially  affect us in the future.  We
attempt  to deal with these  inflationary  and  pricing  pressures  by  actively
pursuing  internal cost reduction  efforts and introducing  corresponding  price
increases.


Market Risk

Due to the  nature  of our  operations  and the  highly  leveraged  acquisitions
incurred  with  variable  debt we are  subject  to  exposures  that  arise  from
fluctuations  in  interest  rates.  To manage the  volatility  relating  to this
exposure, we evaluate our exposures and attempt to minimize any negative effects
by refinancing.


                          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 $496 should be adequate for any exposure to loss in our
October 31, 2003  accounts  receivable.  We have also  established  reserves for
slow-moving  and  obsolete  inventories  and  believe  the  reserve  of  $321 is
adequate.  We  depreciate  our property and  equipment  and amortize  intangible
assets (except for goodwill)  over their  estimated  useful lives.  Property and
equipment are reviewed for  impairment  when events and  circumstances  indicate
impairment  factors may be present.  Currently,  operating  results at our truck
body  manufacturing  facility,  including the bankruptcy of a significant  truck
body  customer,  indicate  the assets of this  facility  may  become  subject to
impairment.  Accordingly,  we are  analyzing  these  assets  for  impairment  in
conjunction with our analysis of the continuing  operations of this facility. In
addition,  consolidation of facilities at our butyl rubber reclaiming  operation
has  resulted in some  equipment at the facility  being  temporarily  idle as we
implement a new production line for "fine grind" rubber. Should this new process
not  utilize all of the idle  equipment,  we will  analyze  such  equipment  for
impairment.  As of October 31, 2003, we determined there is no impairment of our
property and equipment.

Goodwill and intangibles are reviewed annually for impairment or more frequently
when events and circumstances indicate potential impairment factors are present.
We have  established  the first day of the  fourth  quarter  as the date for our
annual  goodwill  impairment  test.  In  assessing  the  recoverability  of  our
goodwill, we must make various assumptions regarding estimated future cash flows
and other factors in determining  the fair values of the respective  assets.  If
these  estimates or their related  assumptions  change in the future,  we may be
required to record impairment charges for these assets in future periods.  Based
on the annual  goodwill and  intangibles  test for  impairment as of October 31,
2003, we determined there is no impairment of our goodwill and intangibles.

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.  Depreciation  expense  related to the  coaches  for the year ended
October 31, 2003 was  approximately  $575. If future  factors  indicate that our
salvage  value on the  coaches  should be reduced to 20%,  depreciation  expense
would have to be increased  approximately $166 to $741. If it is determined that
the  coaches  have no salvage  value,  estimated  depreciation  expense  for the
coaches for the year ended October 31, 2003 would have approximated $927.

In conjunction  with financing of the  acquisition of United,  we issued 386,206
shares of Series C preferred  stock to  Huntington  Capital  Investment  Company
("Huntington").  The note  purchase  agreement  includes a provision  that gives
Huntington the option to require us 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 of our assets as defined in the agreement.  Increases
in the  value of our  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 our liquidity.  At October 31,
2003, we had violated certain  financial  covenants  defined in the subordinated
debt agreement with Huntington. We received a waiver of these violations and are
negotiating an amendment to the agreement as of October 31, 2003.


                                  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.

<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



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, 2003 and 2002,  and the
related  consolidated  statements of operations,  stockholders' equity (deficit)
and comprehensive  loss, and cash flows for the years ended October 31, 2003 and
2002 and the ten months ended October 31, 2001.  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, 2003 and 2002,  and the
results of their operations and their cash flows for the years ended October 31,
2003 and 2002 and the ten months ended  October 31,  2001,  in  conformity  with
accounting principles generally accepted in the United States of America

As discussed in Note 8 and Note 15 to the financial statements,  the Company has
borrowings  totaling  $14,158,000  from DC Investments,  LLC and its subsidiary,
Fair Holdings, LLC, entities controlled by the Company's chairman.

Our audit of the consolidated financial statements of Obsidian Enterprises, Inc.
and Subsidiaries  included  Schedule II, contained  herein,  for the years ended
October  31,2003  and 2002 and the ten months  ended  October 31,  2001.  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.

                                            /s/ McGladry & Pullen, LLP

Elkhart, Indiana
February 2, 2004

<PAGE>

<TABLE>
<CAPTION>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                                                                 October 31,      October 31,
                                                                                     2003             2002
                                                                               ----------------------------------
<S>                                                                              <C>              <C>
Assets

Current assets:
  Cash and cash equivalents                                                      $        1,148   $          920
  Marketable securities                                                                     114              137
  Accounts receivable, net of allowance for doubtful accounts
   of $496 for 2003 and $495 for 2002 (Note 8)                                            3,665            3,307
  Accounts receivable, related parties (Note 15)                                             52              206
  Inventories, net (Notes 6 and 8)                                                        7,455            7,315
  Prepaid expenses and other assets                                                         531              384
  Deferred income tax assets (Note 14)                                                      550              665
                                                                               ----------------------------------

Total current assets                                                                     13,515           12,934

Property, plant and equipment, net (Notes 7 and 8)                                       24,480           23,048

Other assets:
  Intangible assets (Notes 3 and 5):
   Goodwill not subject to amortization                                                   6,434            6,434
   Noncompete agreements, less accumulated amortization
     of $399 for 2003 and $222 for 2002                                                     487              664
   Trade name and customer relations, less accumulated
     amortization of $290 for 2003 and $208 for 2002                                        637              719
   Deferred debt costs, less accumulated amortization
     of $218 for 2003 and $97 in 2002                                                       320              470
   Other                                                                                      9              116
   Assets of subsidiary held for sale (Note 4)                                               --            1,538
                                                                               ----------------------------------

                                                                                 $       45,882   $       45,923
                                                                               ==================================

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

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                                                                 October 31,      October 31,
                                                                                     2003             2002
                                                                               ----------------------------------
<S>                                                                              <C>              <C>

Liabilities and Stockholders' Deficit

Current liabilities:
  Current portion of long-term debt (Note 8)                                     $        2,379   $        5,667
  Accounts payable, trade                                                                 2,742            3,450
  Accounts payable, related parties (Note 15)                                               837              668
  Accrued compensation                                                                      666              810
  Accrued expenses                                                                          560              514
  Customer deposits                                                                         286              234
                                                                               ----------------------------------

Total current liabilities                                                                 7,470           11,343

Long-term debt, net of current portion (Note 8)                                          24,765           23,879

Long-term debt, related parties (Note 8 and 15)                                          13,937            5,518

Deferred income tax liabilities (Note 14)                                                   651            1,624

Liabilities of subsidiary held for sale (Note 4)                                             --            2,848

Commitments and contingencies (Note 16)

Minority interest                                                                           172               --

Mandatory redeemable preferred stock (Note 11):
  Class of Series C Preferred Stock: 386,206 shares outstanding for
   2003 and 2002 (Note 11)                                                                1,803            1,400
  Class of Series D Preferred Stock: 16,071 shares outstanding for
   2003 (Note 11)                                                                           337               --

Stockholders' deficit (Note 12):
    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, 3,982,193 shares issued and
    outstanding in 2003 and 2002; 200,000 shares of undesignated Preferred
    Stock authorized                                                                          5                5
    Preferred stock, 200,000 shares authorized; Class of Series D
    convertible preferred stock, par value $.001, 118,687 and 88,330 shares
    issued and outstanding in 2003 and 2002                                                  --               --
    Additional paid-in capital                                                           11,743           10,184
    Accumulated other comprehensive loss                                                     --              (49)
    Accumulated deficit                                                                 (15,004)         (10,832)
                                                                               ----------------------------------

Total stockholders' deficit                                                              (3,253)            (689)
                                                                               ----------------------------------

                                                                                 $       45,882   $       45,923
                                                                               ==================================

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

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

                                                                   Year Ended October 31,         Ten Months Ended
                                                                                                    October 31,
                                                            -------------------------------------
                                                                  2003               2002               2001
                                                            --------------------------------------------------------
<S>                                                           <C>               <C>                <C>
Net sales                                                     $       59,295    $       57,274     $       24,689

Cost of sales                                                         51,736            47,841             19,457
                                                            --------------------------------------------------------

GROSS PROFIT                                                           7,559             9,433              5,232

Selling, general and administrative expenses                          (8,537)           (8,589)            (4,251)
Loss on asset impairment (Note 3)                                         --              (720)                --
Insurance settlement                                                      --               325                 --
                                                            --------------------------------------------------------

Income (loss) from operations                                           (978)              449                981

Other income (expense):
  Interest expense (Note 8)                                           (3,547)           (3,552)            (2,312)
  Other income                                                            17                12                 --
  Other expense                                                          (81)             (217)               (60)
                                                            --------------------------------------------------------

Loss before income taxes, discontinued operations, and
 cumulative effect of change in accounting principle                  (4,589)           (3,308)            (1,391)

Income tax benefit (Note 14)                                             937                33                372
                                                            --------------------------------------------------------

Loss from continuing operations before discontinued
 operations and cumulative effect of change in accounting
 principle                                                            (3,652)           (3,275)            (1,019)

Loss from discontinued operations, net of tax (Note 4)                   (49)           (1,040)            (3,376)
                                                            --------------------------------------------------------

Loss before cumulative effect of change in accounting
 principle                                                            (3,701)           (4,315)            (4,395)

Cumulative effect of change in accounting principle, net
 of tax (Note 3)                                                          --            (2,015)                --
                                                            --------------------------------------------------------

Loss before minority interest                                         (3,701)           (6,330)            (4,395)

Minority interest                                                       (172)               --                 --
                                                            --------------------------------------------------------

Net loss                                                      $       (3,873)   $       (6,330)    $       (4,395)
                                                            ========================================================

Basic and diluted loss per share attributable to common shareholders (Note 2):
  From continuing operations                                  $         (.12)   $         (.09)    $         (.04)
  Discontinued operations, net of tax                                  --                 (.03)              (.13)
  Cumulative effect of accounting change, net of tax                   --                 (.06)                --
                                                            --------------------------------------------------------

Net loss per share                                            $         (.12)   $         (.18)    $         (.17)
                                                            ========================================================

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

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

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                              OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE LOSS
                                                          (dollars in thousands)


                                                     Comprehensive                      Series C Convertible  Series D Convertible
                                                        Income         Common Stock        Preferred Stock       Preferred Stock
                                                                   -----------------------------------------------------------------
                                                        (Loss)       Shares     Amount     Shares     Amount     Shares     Amount

                                                     -------------------------------------------------------------------------------

<S>                 <C> <C>                                         <C>               <C>
Balance at December 31, 2000                                   --   17,760,015        1           --       --           --       --
Conversion of debt to common stock                             --    1,750,000       --           --       --           --       --
To record the effect of the reverse merger June 21,
 2001 (Note 6)                                                 --           --        1    1,970,962        2           --       --
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)                             --           --       --    2,206,893        3           --       --
Unrealized gain on available-for-sale marketable
 securities                                                   140           --       --           --       --           --       --
Fair value adjustment on redeemable preferred stock            --           --       --           --       --           --       --
2001 net loss                                              (4,395)          --       --           --       --           --       --
                                                     -------------------------------------------------------------------------------

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

Balance at October 31, 2001                                         36,007,855        3    3,352,963        4           --       --
Issuance of 30,000 shares of Series C Preferred
 Stock associated with U.S. Rubber, net of tax         $       --           --       --       30,000       --           --       --
Issuance of 589,230 shares of Series C Preferred
 Stock associated with Fair Holdings and Obsidian
 Capital Partners, LP                                          --           --       --      589,230        1           --       --
Issuance of 88,330 shares of Series D Preferred
 Stock associated with Fair Holdings and Obsidian
 Capital Partners, LP                                          --           --       --           --       --       88,330       --
Exercise of stock warrants in exchange for 10,000
 shares of Series C Preferred Stock                            --           --       --       10,000       --           --       --
Distributions to members of DW Leasing                         --           --       --           --       --           --       --
Unrealized loss on available-for-sale marketable
 securities                                                   (86)          --       --           --       --           --       --
Fair value adjustment on redeemable preferred stock            --           --       --           --       --           --       --
2002 net loss                                              (6,330)          --       --           --       --           --       --
                                                     -------------------------------------------------------------------------------

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

Balance at October 31, 2002                                         36,007,855        3    3,982,193        5       88,330       --

Contribution to capital from sale of Champion to
 related party                                                              --       --           --       --           --       --
Tax effect of sale of coaches to DC Investments
 Leasing, LLC                                                               --       --           --       --           --       --
Extension of stock options                                                  --       --           --       --           --       --
Assignment of 16,072 shares of Series D mandatory
 redeemable Preferred Stock                                                 --       --           --       --       16,072       --
Issuance of 14,285 shares of Series D Preferred
 Stock associated with Obsidian Capital Partners, LP                        --       --           --       --       14,285       --
Loss on available-for-sale marketable securities               --           --       --           --       --           --       --
Fair value adjustment on redeemable Preferred Stock                         --       --           --       --           --       --
2003 net loss                                              (3,873)          --       --           --       --           --       --
                                                     -------------------------------------------------------------------------------

Total comprehensive loss                               $   (3,873)
                                                     ==============


Balance at October 31, 2003                                         36,007,855        3    3,982,193        5      118,687       --
                                                                   =================================================================

[Remainder of table on following page]
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

[Remainder of table on previous page]

                                                     Additional    Other       Earnings
                                                      Paid-in   Comprehensive(Accumulated

                                                      Capital      Income      Deficit)     Total
                                                                   (Loss)
                                                     -----------------------------------------------
<S>                 <C> <C>                                                        <C>        <C>
Balance at December 31, 2000                                 --          --        4,938      4,939
Conversion of debt to common stock                          355          --           --        355
To record the effect of the reverse merger June 21,
 2001 (Note 6)                                            3,760        (103)      (4,938)    (1,278)
Conversion of Series C Preferred Stock to common
 stock                                                       --          --           --         --
Issuance of 2,593,099 shares of Series C Preferred
 Stock associated with the acquisition of United
 and capital contribution (Note 6)                        1,497          --           --      1,500
Unrealized gain on available-for-sale marketable
 securities                                                  --         140           --        140
Fair value adjustment on redeemable preferred stock          70          --           --         70
2001 net loss                                                --          --       (4,395)    (4,395)
                                                     -----------------------------------------------

Total comprehensive loss


Balance at October 31, 2001                               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            1,017          --           --      1,017
Issuance of 589,230 shares of Series C Preferred
 Stock associated with Fair Holdings and Obsidian
 Capital Partners, LP                                     1,885          --           --      1,886
Issuance of 88,330 shares of Series D Preferred
 Stock associated with Fair Holdings and Obsidian
 Capital Partners, LP                                     1,545          --           --      1,545
Exercise of stock warrants in exchange for 10,000
 shares of Series C Preferred Stock                          20          --           --         20
Distributions to members of DW Leasing                       --          --         (107)      (107)
Unrealized loss on available-for-sale marketable
 securities                                                  --         (86)          --        (86)
Fair value adjustment on redeemable preferred stock          35          --           --         35
2002 net loss                                                --          --       (6,330)    (6,330)
                                                     -----------------------------------------------

Total comprehensive loss


Balance at October 31, 2002                              10,184         (49)     (10,832)      (689)

Contribution to capital from sale of Champion to
 related party                                            1,142          --           --      1,142
Tax effect of sale of coaches to DC Investments
 Leasing, LLC                                               (96)         --           --        (96)
Extension of stock options                                   30          --           --         30
Assignment of 16,072 shares of Series D mandatory
 redeemable Preferred Stock                                 337          --           --        337
Issuance of 14,285 shares of Series D Preferred
 Stock associated with Obsidian Capital Partners, LP        250          --           --        250
Loss on available-for-sale marketable securities           --            49                      49
Fair value adjustment on redeemable Preferred Stock        (104)         --         (299)      (403)
2003 net loss                                              --            --       (3,873)    (3,873)
                                                     -----------------------------------------------

Total comprehensive loss

Balance at October 31, 2003                            $ 11,743      $   --     $(15,004)  $ (3,253)
                                                     ===============================================
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)


                                                                        Year Ended October 31,      Ten Months
                                                                                                  Ended October
                                                                                                       31,
                                                                     -----------------------------
                                                                          2003          2002           2001
                                                                     --------------------------------------------

Cash flow from operating activities from continuing operations:
<S>                                                                    <C>            <C>           <C>
  Loss from continuing operations                                      $    (3,824)   $    (5,290)  $    (1,019)
  Adjustments to reconcile loss from continuing operations
   to net cash provided by (used in) operating activities:
    Cumulative effect of change in accounting principle                         --          2,015            --
    Loss on asset impairment                                                    --            720            --
    Depreciation and amortization                                            2,850          2,568         2,055
    Loss on debt refinancing                                                    --            181            --
    Loss (gain) on sale of equipment                                            10             41            (4)
    Loss on marketable securities                                               72             --            81
    Stock-based compensation                                                    30             --            --
    Minority interest                                                          172             --            --
    Accretion of interest                                                      394            162            35
    Deferred income taxes                                                   (1,003)           (40)         (408)
    Changes in operating assets and liabilities net of
     effect of acquisitions:
      Accounts receivable, net                                                (357)           264           767
      Inventories, net                                                        (140)        (1,752)         (630)
      Other assets                                                             (54)           336            71
      Accounts payable, trade                                                 (709)           545           810
      Accrued expenses                                                         (96)          (339)          321
      Customer deposits                                                         51            473          (316)
                                                                     --------------------------------------------

Net cash provided by (used in) operating activities from continuing
 operations                                                                 (2,604)          (116)        1,763
                                                                     --------------------------------------------

Cash flows from investing activities from continuing operations:
  Capital expenditures                                                      (3,654)          (910)       (1,185)
  Proceeds from sale of equipment                                               31            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
                                                                     --------------------------------------------

Net cash used in investing activities from continuing operations            (3,623)          (588)      (17,772)
                                                                     --------------------------------------------

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                                                                                    Ten Months
                                                                                                  Ended October
                                                                        Year Ended October 31,         31,
                                                                     -----------------------------
                                                                          2003          2002           2001
                                                                     --------------------------------------------
<S>                                                                           <C>           <C>            <C>

Cash flows from financing activities from continuing operations:
  Advances from (repayments to) related parties                               (885)         1,066          (238)
  Net borrowings on lines of credit                                          1,352          1,265         5,226
  Borrowings on long-term debt, including related parties                    9,739          2,318        11,220
  Principal repayments on long-term debt, including related parties         (3,865)        (3,258)       (2,255)
  Debt issuance costs                                                          (95)          (248)         (105)
  Distributions to members of DW Leasing                                        --           (107)           --
  Exercise of warrant                                                           --             20            --
  Proceeds from capital contributions and
    sale of common stock                                                       250             --         2,473
                                                                     --------------------------------------------

Net cash provided by financing activities from continuing operations         6,496          1,056        16,321

Net cash flow provided by (used in) discontinued operations                    (41)            39            --
                                                                     --------------------------------------------

Increase in cash and cash equivalents                                          228            391           312

Cash and cash equivalents, beginning of year                                   920            529           217
                                                                     --------------------------------------------

Cash and cash equivalents, end of year                                 $     1,148    $       920   $       529
                                                                     ============================================

Interest paid                                                          $     2,956    $     3,415   $     2,241
                                                                     ============================================

Taxes paid                                                             $        96    $        22   $        44
                                                                     ============================================

Noncash:
  Contribution to capital from sale of Champion to related party       $     1,142    $        --   $        --
  Issuance of mandatory redeemable preferred stock in conjunction
 with the sale of Champion                                             $       675    $        --   $        --
  Assignment and assumption of mandatory redeemable preferred stock
 to Fair Holdings                                                      $       337    $        --   $        --
Tax effect of sale of coaches to a related party recorded as a
 reduction of equity                                                   $        96    $        --   $        --
Reclassification of debt due to assumption of credit agreement by
 Fair Holdings                                                         $     1,488    $        --   $        --
  Refinancing of debt, including related-party amounts                 $        --    $    12,122   $        --
  Conversion of contributed amounts to equity                          $        --    $     5,104   $       355
  Coaches and equipment purchased with debt                            $       221    $     1,220   $     1,059
  Fair value changes of mandatory redeemable preferred stock           $       403    $        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

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

</TABLE>
<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.   ("Obsidian   Enterprises"),   formerly   Danzer
Corporation,  was reorganized (the "Reorganization")  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  (the
"Effective  Date").  The  Acquisition  and Plan of  Reorganization  of  Obsidian
Enterprises   with  U.S.  Rubber  Companies  was  accounted  for  as  a  reverse
acquisition as the shareholders of the U.S. Rubber Companies owned a majority of
the outstanding stock of Obsidian Enterprises  subsequent to the Acquisition and
Plan of Reorganization. For accounting purposes, U.S. Rubber Reclaiming, Inc. is
deemed to have acquired Obsidian Enterprises.

Pursuant to the Plan of Acquisition and Reorganization described further in Note
5, 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 coach leasing
segment also includes the assets, liabilities,  equity and results of operations
of DW Leasing,  LLC ("DW Leasing"),  Obsidian Leasing Company,  Inc.  ("Obsidian
Leasing"),  formed  November  1,  2001  and DC  Investments  Leasing,  LLC  ("DC
Investments  Leasing),  formed  December 13, 2002. DW Leasing and DC Investments
Leasing are controlled by individuals who are also  controlling  shareholders of
Obsidian  Enterprises,  Inc.  and,  accordingly,  Pyramid.  In  addition,  these
entities meet the requirements for consolidation  under FASB  Interpretation No.
46 (FIN No. 46),  Consolidation of Variable Interest Entities, an interpretation
of  Accounting  Research  Bulletin  No. 51, as further  discussed  in Note 2. DW
Leasing,  Obsidian  Leasing and DC Investments  Leasing also own the majority of
the coaches operated by Pyramid. All intercompany transactions are eliminated in
consolidation.

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

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 4. The sale of Champion was completed  January 30,
2003.  Accordingly,  the operations of Champion are  classified as  discontinued
operations in the accompanying financial statements.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION:

The  accompanying  consolidated  financial  statements  present the  accounts of
Obsidian Enterprises, Inc. and its wholly owned subsidiaries described in Note 1
for the  periods  ended  October  31,  2003,  2002 and 2001.  The  entities  are
collectively  referred to herein as the "Company." All significant  intercompany
transactions  and  balances  have been  eliminated  in  consolidation.  The 2003
results of  operations  include the  operations of DC  Investments  Leasing from
December 2002 (its  inception).  The  accompanying  2001 statement of operations
includes  the  operations  of U.S.  Rubber,  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 5 for further discussion.
<PAGE>

BASIS OF PRESENTATION:

In the period since June 2001, the Company has incurred losses and reductions in
equity.  During this period losses and certain third party debt  repayments have
been financed with Fair Holdings,  Inc. ("Fair Holdings"),  an entity controlled
by the Company's Chairman. Borrowings from Fair Holdings have been on terms that
may not have been available from other  sources.  As of October 31, 2003,  total
debt  outstanding to DC  Investments, LLC  and its subsidiary  Fair Holdings was
$14,158.

The Company has  continued  to address  liquidity  and working  capital  through
various means  including  operational  changes and  financing  matters which are
discussed  below.  During the period these plans were put in place,  the Company
received financial support from Fair Holdings.

During 2003 and 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 8.  Management  believes  that the Company has
financing  agreements in place to provide adequate liquidity and working capital
throughout  fiscal 2004.  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 to provide,  as needed,
additional  borrowings  under a $12  million  line of  credit  agreement,  which
expires  January  1,  2007.  Currently,  availability  under  the  agreement  is
approximately $5,995.

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 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.
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    During fiscal 2003:

     o    Refinancing  activities have reduced  interest costs and decreased the
          proportion of debt that had been  classified  as a current  liability.
          Certain coaches  transferred  from DW Leasing to Obsidian Leasing were
          financed with Fair Holdings and 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 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 us thereby  eliminating  our existing  purchase  commitment for the
          coaches.  DC  Investments  Leasing  also  entered  into  a  management
          agreement  with Pyramid under which all nine coaches  described  above
          will be leased by Pyramid.

     o    On  January  3,  2003,  Obsidian  Leasing  repaid  debt due to  former
          shareholders in the amount of $928 with proceeds from a loan from Fair
          Holdings  at terms  further  described  in Note 8. The loan  with Fair
          Holdings  provided  funds to repay maturing notes with proceeds from a
          long term obligation without using operating capital.

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

     o    On March 28, 2003, Fair Holdings  acquired the line of credit and term
          debt due to the senior  lender of Danzer in the amount of $1,488 under
          an assignment and assumption agreement.  The maturity date of the line
          of credit  included in the  assignment  and  assumption  agreement was
          extended to April 2006, and the debt covenants  required by the senior
          lender were waived through the end of the term. All other terms of the
          assumed notes remain the same.

     o    During March 2003,  United completed a compensation  review and update
          and  provided a revised pay scale which  realigns the Company with its
          industry  and reduces  compensation  costs.  United also  continues to
          develop its new production facility to increase productivity and plant
          efficiency.

     o    During 2003, U.S. Rubber continued to consolidate its butyl reclaiming
          operations  from  two  plants  to  one  to  maximize   production  and
          efficiently  utilize  equipment.  The  consolidation has provided some
          pieces of equipment to be at times  temporarily idle until the Company
          completes its  implementation  of a new  production  process for "fine
          ground  rubber".  Existing  and  new  equipment  will be  required  to
          complete  the "fine  grind"  production  line.  The new  process  will
          maximize  the  use of the  existing  raw  materials  in the  Company's
          existing butyl reclaim production and also provide additional products
          of natural rubber.

     o    The Company's  truck body  division at Danzer  continues to negatively
          impact the Company's cash flows.  The trailer  production line was put
          in place in the fourth quarter of 2002 to support the production needs
          at  United  and  also  provide  a new  product  line  to the  existing
          customers of Danzer, allowing us to enter a potential new market along
          the East coast of the U.S. The Company needs to capitalize on this new
          market  opportunity  to reduce the use of  working  capital at Danzer.
          Management will continue to evaluate the operations throughout 2004.

     o    In October  2003,  we received  $250 in proceeds  from the issuance of
          14,285  shares  of  Series  D  Preferred  Stock  to  Obsidian  Capital
          Partners,  LP  ("Partners")  under an  existing  capital  contribution
          agreement   further  described  under  "Guarantee  of  Partners."  The
          proceeds were used to maintain  compliance with certain debt covenants
          with the senior lender of U.S. Rubber.

     o    We secured an additional  financial  commitment  from Fair Holdings to
          provide,  as needed,  additional  borrowings  under an $12,000 line of
          credit  agreement,  which  expires  on  January  1,  2007.  Currently,
          approximately $5,955 is available to us under the agreement.

o    During fiscal 2002:

     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 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, as described in Note 4.

     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.

The  above  factors  combined  with  additional  actions  by  management  at the
operating  subsidiaries  have  contributed to the Company's  working  capital of
$6,045 at October 31, 2003 and $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.
<PAGE>

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 INSTRUMENTS:

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 variable rate debt and
fixed rate debt to unrelated parties approximates fair value, as a result of the
current  interest rates paid on the Company's  borrowings  being at market.  The
fair value of fixed rate debt to related  parties is  impractical  to  determine
based on the nature of the obligations and the  relationship to the lender.  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.  Decreases in
the market value of the  securities  considered  to be other than  temporary are
recorded in earnings.  For the year ended October 31, 2003, the Company recorded
$72 in the statement of operations  related to the permanent decline in the fair
value of the marketable  securities.  This amount includes a reclassification of
$49 from accumulated other comprehensive income for unrealized losses previously
recorded.


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

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 September 2003) to  approximately  10 years old. The average
age of the coaches is four years. They can be segregated as follows:

                        Age
                    1-3 years              20 coaches
                    4-6 years              10 coaches
                    7-10 years              8 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.  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>

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.


ORGANIZED LABOR:

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 2005. The
contract  contains  provisions that affect  compensation to be paid to employees
included in the union.


ALLOWANCE FOR DOUBTFUL ACCOUNTS.

The Company  records an allowance for doubtful  accounts  based on  specifically
identified  amounts  that  are  believed  to  be  uncollectible.  An  additional
allowance is recorded based on certain  percentages of aged  receivables,  which
are  determined  based on historical  experience  and  assessment of the general
financial   conditions   affecting  the  Company's   customer  base.  If  actual
collections experience changes,  revisions to the allowance may be required. The
Company has a limited number of customers with individually large amounts due at
any  given  balance  sheet  date.  Any  unanticipated  change  in one  of  those
customer's credit  worthiness or other matters  affecting the  collectibility of
amounts  due from such  customers  could  have a  material  affect on results of
operations  in the  period in which  such  changes  or events  occur.  After all
attempts to collect a receivable  have  failed,  the  receivable  is written off
against the allowance.


GOODWILL, INTANGIBLE ASSETS AND DEFERRED COSTS:

Goodwill,  net was $6,434 at  October  31,  2003 and 2002.  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
in 2002 that has been recorded as a change in accounting  principle as discussed
in Note 3. There were no impairment charges recorded in 2003.

Other  intangible  assets,  net were  $1,124 and $1,383 at October  31, 2003 and
2002,  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 10 years.  At October 31, 2003 and 2002,
accumulated amortization amounted to $689 and $430, respectively.

Amortization  of goodwill and other  intangible  assets  described above for the
years ended  October 31, 2003 and 2002 and the ten months ended October 31, 2001
was $259, $440 and $303,  respectively.  Estimated amortization expense for each
of the ensuing years through  October 31, 2008, is,  respectively,  $259,  $259,
$215, $82 and $82. Accumulated amortization on goodwill in the amount of $76 was
written off in 2002 with the impairment discussed in Note 3.

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


STOCK-BASED COMPENSATION:

The Company  accounts for stock-based  compensation  under the provisions of APB
No. 25. The Company has adopted the disclosure-only  provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Accordingly, no compensation expense is
recognized if the exercise  price of stock options  equals the fair market value
of the underlying stock at the date of grant.  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  basic and  diluted  net income  (loss)  per share  would have been as
follows:
<PAGE>
<TABLE>
<CAPTION>
                                              Year Ended          Year Ended      Ten Months Ended
                                           October 31, 2003    October 31, 2002   October 31, 2001
                                           ------------------ ------------------- ------------------
<S>                                          <C>                <C>                 <C>

Net income (loss) as reported                $       (3,873)    $       (6,330)     $       (4,395)
Deduct total stock-based employee
 compensation expense determined under
 fair value methods                                      --                 --                  --
                                           ------------------ ------------------- ------------------

Pro forma net income (loss)                  $       (3,873)    $       (6,330)     $       (4,395)
                                           ================== =================== ==================
Income (loss) per share:
  As reported:
    Basic and diluted                        $          (.12)   $          (.18)    $          (.17)

  Pro forma:
    Basic and diluted                        $          (.12)   $          (.18)    $          (.17)

</TABLE>

There were no stock options issued for the years ended October 31, 2003 and 2002
and the ten month period ended  October 31, 2001.  During the year ended October
31, 2003,  certain  options were extended.  Their effect on pro forma net income
was immaterial.


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 14.)


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 2002. In
addition,  the Company  completed  additional  impairment  testing in the fourth
quarter of 2002,  as further  discussed in Note 3,  resulting  in an  impairment
charge of $720. There were no impairment charges recorded during 2003.


MAJOR CUSTOMERS:

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

                                                             Ten Months Ended
                                 Year Ended October 31,         October 31,
                           -----------------------------------
                                   2003           2002             2001
                           -----------------------------------------------------
Butyl rubber sales:
  Customer (1)                       --             --             13%
  Customer (2)                       --             --              8%

<PAGE>

EARNINGS PER SHARE:

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.

As  described  in Note 8, 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 12,
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.  The Company also
has  outstanding  Series C and Series D Preferred  Stock that are convertible by
the  holders  into  common  shares at a  conversion  rate of  twenty-to-one  and
one-hundred-seventy-five-to-one,   respectively,  as  further  described  below.
However,  because the Company  incurred a loss for all  periods  presented,  the
inclusion of those  potential  common shares in the  calculation of diluted loss
per share would have an antidilutive effect.
<PAGE>
<TABLE>
<CAPTION>


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Basic and diluted loss per share have been computed as follows:

                                                                                                          Ten Months Ended
                                                                          Year Ended October 31,            October 31,
                                                                   -------------------------------------
                                                                         2003               2002                2001
                                                                   ------------------ ------------------ -------------------
<S>                                                                  <C>                <C>                <C>

Loss before discontinued operations and cumulative effect of
 accounting change                                                   $       (3,824)    $       (3,275)    $       (1,019)
Change in fair value of mandatory redeemable preferred stock                   (403)                35                 70
                                                                   ------------------ ------------------ -------------------

Loss attributable to common shareholders before discontinued
 operations and cumulative effect of accounting change                       (4,227)            (3,240)              (949)

Loss from discontinued operations, net of tax                                   (49)            (1,040)            (3,376)
Cumulative effect of change in accounting principle                              --             (2,015)                --
                                                                   ------------------ ------------------ -------------------

Net loss attributable to common shareholders                         $       (4,276)    $       (6,295)    $       (4,325)
                                                                   ================== ================== ===================

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

Loss per share, basic and diluted, attributable to common shareholders:
  From continuing operations                                         $       (.12)      $       (.09)      $       (.04)
  Discontinued operations                                                        --             (.03)              (.13)
  Cumulative effect of accounting change                                         --             (.06)             --
                                                                   ------------------ ------------------ -------------------

Net loss per share                                                   $       (.12)      $       (.18)      $       (.17)
                                                                   ================== ================== ===================

</TABLE>
<PAGE>

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

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. The Company's  stockholders have approved  amendments to our Certificate
of Incorporation  and the Certificates of Designation for the Series C Preferred
Stock and Series D Preferred  Stock that will allow the holders of the preferred
stock to convert their shares into common stock.  We expect that the  conversion
of the shares will occur in February  2004.  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.

On December 3, 2003, the stockholders and Board of Directors  approved a 50-to-1
reverse  stock split.  The reverse  stock split will be  effective  February 16,
2004.  As a  result  of  the  reverse  stock  split  and  the  amendment  to the
Certificate of Incorporation  described above,  approximately  720,151 shares of
our common  stock will be  outstanding  and the number of  authorized  shares of
common stock will be reduced to 10,000,000. 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 years ended October 31, 2003 and 2002
and the ten months ended October 31, 2001, the Series C Preferred Stock has been
reflected  on  a  weighted  average  basis   outstanding  as  common  shares  of
87,367,980, 81,194,826 and 75,212,925 respectively. The Series D Preferred Stock
has been reflected on a weighted  average basis  outstanding as common shares of
19,930,630  and  297,264  for  the  years  ended  October  31,  2003  and  2002,
respectively.   There  were  no  Series  D  Preferred  Stock  shares  issued  or
outstanding during the ten months ended October 31, 2001.

<TABLE>
<CAPTION>



                                                         Year Ended October 31,           Ten Months Ended
                                                                                            October 31,
                                                  --------------------------------------
                                                         2003               2002                2001
                                                  ------------------- ------------------ -------------------
<S>                                                    <C>                 <C>                 <C>
Pro forma weighted average common shares
 outstanding, basic and diluted                        143,306,465         117,499,946         73,809,790
                                                  =================== ================== ===================

Pro forma net loss per share, basic and
 diluted, attributable to common shareholders        $        (.03)   $            (.05) $            (.06)
                                                  =================== ================== ===================
</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  costs,  in the  amount of $325 has been  recognized  as  reduction  of
operating costs in 2002.


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 January 2003, the Financial  Accounting Standards Board (FASB) issued FIN No.
46.  This  Interpretation  addresses  the  application  of  Accounting  Research
Bulletin No. 51, Consolidated Financial Statements, to certain entities in which
equity  investors do not have the  characteristics  of a  controlling  financial
interest or do not have sufficient  equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
DW Leasing and DC  Investments  Leasing,  which are  included  in the  Company's
consolidated financial statements,  are subject to the provisions of FIN No. 46.
Historically,  these entities have generated  negative operating results and the
operating  model did not  anticipate  income  in  excess  of  losses  previously
recognized in the consolidated  financial statements.  However,  during 2003, DW
Leasing and DC Investments  Leasing reported positive  operating  results.  As a
result, minority interest related to the income of DC Investments Leasing in the
amount of $172 has been recorded as a charge in the 2003 consolidated  statement
of operations and has been recognized on the consolidated  balance sheet. Future
operating results of DC Investments  Leasing,  if positive,  will continue to be
charged to minority  interest.  In addition,  should DW Leasing  generate future
income in excess of previously  recognized losses, such amounts would be charged
to minority interest in the consolidated  statement of operations and recognized
as minority interest on the consolidated  balance sheet. During 2003, DW Leasing
recorded  income of $210.  As of  October  31,  2003,  accumulated  losses of DW
Leasing recognized in consolidated  statements of operations  exceeded income by
approximately $331.

In December 2003, the FASB issued FIN 46R,  Consolidation  of Variable  Interest
Entities,  which supercedes FIN 46. Application of the revised interpretation is
required in the financial statements of companies that have interests in special
purpose  entities for periods ending after December 15, 2003 The adoption of FIN
46R will not have a  material  impact  on our  financial  statements  due to the
previous combination of these entities under EITF 90-15.

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative  Instruments and Hedging Activities,  which amends SFAS No. 133. This
statement amends and clarifies financial accounting and reporting for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts and for hedging  activities  under FASB Statement No. 133,  Accounting
for Derivative  Instruments and Hedging Activities.  This statement is effective
for contracts entered into or modified after June 30, 2003. We do not anticipate
that the  adoption  of this  statement  will  have a  significant  impact on our
financial statements.

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity.  The standard
further defines the accounting for certain  financial  instruments  that,  under
previous  guidance,  issuers could  account for as equity or report  between the
liability and equity  section of the balance sheet.  The standard  requires that
those  instruments  be  classified  as  liabilities  in  statements of financial
position.  This standard is effective for interim  periods  beginning after June
15, 2003 except for certain  provisions  which are  deferred  indefinitely.  The
adoption  of this  standard  did not have a  material  impact  on the  Company's
financial position, results of operations, cash flows, or its debt covenants, as
the Company's mandatory  redeemable  preferred stock does not include redemption
provisions under an event certain to occur.


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

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 in 2002.  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.

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. There
were no goodwill impairment charges recorded in 2003.

The Company's truck body division at Danzer  continues to negatively  impact the
Company's cash flows. The trailer production line was put in place in the fourth
quarter of 2002 to support the production needs at United and also provide a new
product line to the existing customers of Danzer and open a potential new market
along   the  East   coast  of  the  U.S.   Given  the   current   state  of  the
telecommunications industry and economic conditions, management will continue to
evaluate the  operations  and progress  with the  implementation  of the trailer
production.  In  conjunction  with the  analysis of the Danzer  operations,  the
Company has  continued  to analyze the  potential  for asset  impairment  at the
Danzer  operation.  Total  assets of Danzer as of October 31, 2003 were  $3,198,
which  consists  of $1,260 of  current  assets and  $1,938 of net  property  and
equipment,  and represents  approximately 7% of total  consolidated  assets. The
analysis has not resulted in an impairment charge.

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

<TABLE>
<CAPTION>
                                               Trailer         Holding Company         Total
                                            Manufacturing
                                         --------------------- ---------------- ------------------

<S>              <C> <C>                   <C>                   <C>              <C>
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 and 2003         $        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.


4.   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 due to Markpoint Equity Fund J.V.  ("Markpoint")
from  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 provided Markpoint the option to require the Company to repurchase
these shares at a price of $21 per share.  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  included in the sale have been  removed  from the
consolidated  balance  sheet as of  October  31,  2003 and are  included  in the
consolidated  balance sheet as of October 31, 2002 as "Assets of subsidiary held
for sale" and "Liabilities of subsidiary held for sale," respectively.

The sale of Champion resulted in an increase in equity of the Company of $1,142,
net of tax of $97.  No gain or loss was  recognized  on the sale  because of the
involvement of related parties.
<PAGE>

A summary of the Company's discontinued operations for the years ended October
31, 2003 and 2002, and ten months ended October 31, 2001 follows.

                                    Year Ended October 31,     Ten Months Ended
                                                                  October 31,
                              -------------------------------- ---------------
                                    2003            2002            2001
                              ---------------- --------------- ---------------

Net sales                      $       170      $     2,882     $     3,365
Operating expenses                    (286)          (4,066)         (4,148)
Impairment loss                         --               --          (2,305)
Other income (expense)                 127               (4)             --
Interest expense                       (85)            (290)           (288)
Net loss                               (49)          (1,040)         (3,376)


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



Assets of subsidiary held for sale:
  Inventories                                                 $    551
  Other current assets                                             177
  Property and equipment, net                                      715
  Other                                                             95
                                                            -------------

                                                               $ 1,538
                                                            =============



Liabilities of subsidiary held for sale:
  Accounts payable and accrued expenses                       $    709
  Customer deposits                                                313
  Long-term debt                                                    --
  Long-term debt, related parties                                1,826
                                                            -------------

                                                               $ 2,848
                                                            =============

5.   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
operates 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 to be $3,257 plus acquisition  costs
of $964.

The 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.


ACQUISITION OF UNITED EXPRESSLINE, INC.:

The  allocation of purchase price to  intangibles  include  existing brand name,
noncompete,  and the customer  base.  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>
<CAPTION>

                                                                  Danzer             United
                                                            ---------------------------------------
<S>                                                           <C>                <C>

Purchase price:
  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 15)                                                964              1,138
                                                            ---------------------------------------

Total purchase price                                          $        4,221     $       15,358
                                                            =======================================

Purchase price allocation:
  Current assets, including accounts receivable
    and inventory, net of current liabilities
    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:

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 period shown.
<PAGE>

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

Net sales                                   $        49,830

Loss from continuing operations             $          (491)

Loss from continuing operations per
 share - basic and diluted                  $         (.02)

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.

6.   INVENTORIES

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

                                         October 31,        October 31,
                                            2003                2002
                                      ------------------ -------------------

Raw materials                           $        4,647     $        3,655
Work-in-process                                    499                709
Finished goods                                   2,630              3,417
Valuation reserve                                 (321)              (466)
                                      ------------------ -------------------

Total                                   $        7,455     $        7,315
                                      ================== ===================
<PAGE>

6.  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:


Balance at October 31, 2001                $         (833)

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

Balance at October 31, 2002                          (466)

  Use of reserved inventory                           145
                                         ------------------

Balance at October 31, 2003                $         (321)
                                         ==================



7.   PROPERTY, PLANT AND EQUIPMENT

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

                                       October 31, 2003      October 31,
                                                                 2002
                                       ------------------ -------------------

Land and improvements                    $          497     $          488
Buildings and improvements                        3,436              3,520
Plant machinery and equipment                    10,497              9,767
Furniture and fixtures                              326                334
Coach fleet and vehicles                         15,982             12,971
Coach refurbishments                                474                341
                                       ------------------ -------------------

Total                                            31,212             27,421
Less accumulated depreciation                    (6,732)            (4,373)
                                       ------------------ -------------------

Net property, plant and equipment        $       24,480     $       23,048
                                       ================== ===================

Depreciation  expense  of  property,  plant and  equipment  for the years  ended
October 31, 2003 and 2002, and the ten months ended October 31, 2001 included in
continuing operations was $2,401, $2,128, and $1,752, respectively.
<PAGE>
<TABLE>
<CAPTION>

8.   FINANCING ARRANGEMENTS

The Company has the following outstanding debt as of October 31, 2003 and 2002:

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2003               2002
                                                                                ------------------ ------------------
<S>                                                                               <C>                <C>

U.S. Rubber

Line of credit to a bank, bearing interest at prime (4.00% at October 31, 2003),
 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
 substantially all assets of U.S. Rubber                                          $        2,059     $        1,528

Note payable to a bank, interest payable monthly at prime plus .50% (4.50% at
 October 31, 2003), monthly principal payments of $48, due October 2005,
 collateralized by substantially all assets of U.S. Rubber.                                3,476              4,000

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

Other                                                                                         50                 76
                                                                                ------------------ ------------------

Subtotal U.S. Rubber                                                                       6,285              6,304
                                                                                ------------------ ------------------


</TABLE>
<PAGE>
<TABLE>
<CAPTION>

8.   FINANCING ARRANGEMENTS, CONTINUED

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2003               2002
                                                                                ------------------ ------------------
<S>                                                                               <C>                <C>
Pyramid, DW Leasing, Obsidian Leasing and DC Investments Leasing

Various installment loans, repayable in monthly installments totaling $135
 including interest ranging from the three-month LIBOR rate plus .12% (1.24% at
 October 31, 2003) to 13.1% through November 2007 and applicable balloon
 payments thereafter through December 2007, less unamortized discount ($212 at
 October 31, 2003) first lien on assets financed (finance acquisition and asset
 purchases). A portion of the borrowings guaranteed by the members of
 DW Leasing.                                                                      $       11,186     $       10,170

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).                                                                                --                928

Notes 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.                                                           4,056              2,138

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

Subtotal Pyramid, DW Leasing, Obsidian Leasing and DC Investments Leasing                 15,273             13,273
                                                                                ------------------ ------------------



</TABLE>
<PAGE>
<TABLE>
<CAPTION>

8.  FINANCING ARRANGEMENTS, CONTINUED

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2003               2002
                                                                                ------------------ ------------------
<S>                                                                               <C>                <C>

Danzer Industries

Line of credit to Fair Holdings, maximum borrowing equal to $1,500, interest
 payable monthly at the LIBOR Daily Floating Rate plus 3.2% (4.32% at October
 31, 2003), due April 2006. Collateralized by substantially all assets of
 Danzer and guaranteed by Obsidian Enterprises.                                   $        1,331     $           --

Note payable to Fair Holdings, requires monthly principal installments of $6,
 interest accrues at the LIBOR Daily Floating Rate plus 3.2% (4.32% at October
 31, 2003), due April, 2006. Collateralized by substantially all
 assets of Danzer and guaranteed by Obsidian Enterprises.                                    961                 --

Line of credit to a bank                                                                      --                875

Note payable to a bank                                                                        --                917

Term loans payable to US Amada, Ltd. Monthly payments currently aggregating $13
 including interest at 10%, loans due January 2003, collateralized by
 equipment financed                                                                           14                157

Equipment loans payable--monthly payments currently aggregating $2 including
 interest of 9.50% to 11.30% through November 2006. Collateralized by
 equipment financed.                                                                          85                 88

Other                                                                                         19                 27
                                                                                ------------------ ------------------

Subtotal Danzer Industries                                                                 2,410              2,064
                                                                                ------------------ ------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

8.  FINANCING ARRANGEMENTS, CONTINUED

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2003               2002
                                                                                ------------------ ------------------
<S>                                                                               <C>                <C>

United

Line of credit to a bank, maximum borrowing equal to $4,000, 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 prime plus .75% (4.75% at
 October 31, 2003), due November 1, 2004. Collateralized by substantially all
 assets of United and guaranteed by
 Obsidian Enterprises, Inc.*                                                      $        4,000     $        3,088

Temporary overline of credit with bank, interest payable monthly at prime plus
 .75% (4.75% at October 31, 2003), due on demand, collateralized by
 substantially all assets of United and guaranteed by Obsidian Enterprises,
 Inc. *                                                                                      250                 --

Notes payable to a bank, requires monthly principal installments of $48 plus
 interest ranging from prime plus 1% (5.00% at October 31, 2003) to prime plus
 2% (6.00% at October 31, 2003), due through July 2006, collateralized by
 substantially all assets of United and guaranteed by Obsidian
 Enterprises, Inc.*                                                                        1,484              2,054

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 ($1,091 and $1,309 at
 October 31, 2003 and 2002, respectively). Unsecured and subordinate to line
 of credit and notes payable above.*                                                       2,409              2,191

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 of 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

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

8.   FINANCING ARRANGEMENTS, CONTINUED

                                                                                            Debt Amount
                                                                                -------------------------------------
                                                                                   October 31,        October 31,
                                                                                      2003               2002
                                                                                ------------------ ------------------
<S>             <C>                                                                          <C>                 <C>

United, continued

Other including 41 to Fair Holdings                                                          122                 83
                                                                                ------------------ ------------------

Subtotal United                                                                           10,265              9,493
                                                                                ------------------ ------------------

*United was in technical default of certain loan covenants with its senior and
  subordinated lender at October 2003. 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 $12,000, interest
 payable monthly at 10%, due January 2007, collateralized by all assets of
 Obsidian Enterprises and guaranteed by certain officers                                   6,045              1,798

Note payable to Fair Holdings, interest payable monthly at 15%, balloon
 payment due March 2007, guaranteed by certain officers                                      803                774

Note payable to Fair Holdings, interest payable monthly at 5.25%, paid during
 2003                                                                                         --                108

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
 subordinate to Champion notes payable to DC Investments LLC                                  --              1,250
                                                                                ------------------ ------------------

Subtotal Obsidian Enterprises, Inc.                                                        6,848              3,930
                                                                                ------------------ ------------------

Champion


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
                                                                                ------------------ ------------------

Subtotal Champion                                                                             --              1,826
                                                                                ------------------ ------------------

Total all companies                                                                       41,081             36,890

Less liabilities of subsidiary held for sale                                                  --             (1,826)
Less related-party amounts presented separately                                          (13,937)            (5,518)
Less current portion                                                                      (2,379)            (5,667)
                                                                                ------------------ ------------------

                                                                                  $       24,765     $       23,879
                                                                                ================== ==================
</TABLE>
<PAGE>

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

2004                                                           $      2,379
2005                                                                 20,494
2006                                                                  8,446
2007                                                                  3,455
2008                                                                    547
Thereafter                                                            5,760
                                                             -------------------
                                                                   $ 41,081
                                                             ===================

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
2003 year end.  Management  has  received an extension of time from the lenders.
Renaissance US Growth & Income Trust PLC and FBSUS Special  Opportunities  Trust
PLC, the holders of debentures that completed the financing of United,  provided
the Company an extension in exchange  for 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 $1,370 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. During 2003 a capital call was made
for $250 for U.S.  Rubber to bring the Company in  compliance  with certain bank
covenants.  Partners  received  14,285  shares  of Series D  Preferred  Stock in
exchange for the capital call.

The following details  significant changes in debt during the year ended October
31, 2003:


PYRAMID, DW LEASING AND OBSIDIAN LEASING AND DC INVESTMENTS LEASING:

On  January  3, 2003,  Obsidian  Leasing  paid off debt in the amount of $928 to
former  shareholders of Pyramid and related  companies with proceeds from a note
with Fair  Holdings  which  includes  monthly  interest  payments  of 13% of the
outstanding principal amount and a balloon principal payment in January 2006.

On December 17,  2002,  Obsidian  Leasing  sold four  coaches to DC  Investments
Leasing  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.
The Company refinanced the debt on the four coaches in addition to financing the
five additional  coaches.  DC Investments Leasing entered into an agreement with
First  Indiana for $2,741 of the debt with  interest  payable at prime plus 1/2%
and a maturity of December 2007. DC Investments  Leasing also incurred debt with
Fair Holdings for the remaining 20% of the net book value of the transferred and
new  coaches.  Terms of the debt with Fair  Holdings  include  monthly  interest
payments on the principal  amount of $677 at 14% and a maturity of January 2008.
DC  Investments  Leasing also entered into a management  agreement  with Pyramid
under which all nine coaches described above will be leased by Pyramid.


DANZER:

As of January 31, 2003, Danzer was in violation of certain covenants included in
its credit agreement and First Forbearance Agreement dated October 14, 2002 with
its senior lender. On February 28, 2003, the Company and the lender entered into
a Second Forbearance Agreement waiving these violations.  On March 28, 2003, the
credit   agreement  was  assumed  by  Fair  Holdings  under  an  assumption  and
continuation  agreement.  An amendment was made as of the effective  date of the
agreement to extend the maturity  date of the line of credit  agreement to April
1, 2006 and the debt covenants required by the senior lender were waived through
the end of the  term.  In  September  2003 the line of  credit  was  amended  to
increase the total  availability  from $1,000 to $1,500.  All other terms of the
agreement  will  continue as stated in the original  agreement  dated August 15,
2001.


UNITED:

On December 26, 2002, United amended its credit agreement to provide  additional
working capital.  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%.

On January 28, 2004,  United amended its line of credit  agreement to extend the
maturity  date of the  original  $4,000 line to November  2004,  waive  United's
current debt violations,  and modify the covenants for future reporting periods.
In addition,  United is required to pay the additional $250 outstanding on their
line of credit at October 31, 2003 during  2004.  Therefore,  $4,000 of United's
line of credit  amount has been  reclassified  as long-term  debt at October 31,
2003.


OBSIDIAN ENTERPRISES:

On  February  2, 2004,  Obsidian  Enterprises,  Inc.'s  line of credit with Fair
Holdings was amended.  Maximum borrowings were increased from $8,000 to $12,000,
and the maturity date was extended from January 2005 to January 2007.


9.   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.

During October 2002, in conjunction  with the  refinancing  described in Note 8,
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.
<PAGE>

9.   LEASING ARRANGEMENTS, CONTINUED

The Company has various  operating  lease  commitments,  principally  related to
machinery and equipment,  office  equipment,  and  facilities.  The  approximate
future minimum  annual rentals 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,

2004                                      $   452
2005                                          314
2006                                          220
2007                                          173
2008                                           18
                                        ------------

                                          $ 1,177
                                        ============

Rental expense under  operating  leases for the years ended October 31, 2003 and
2002 and the ten  months  ended  October  31,  2001 was  $594,  $562,  and $514,
respectively.


10.  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 years ended October 31, 2003 and 2002 and the ten-month period ended October
31, 2001 was approximately $128, $148, $35, respectively.


11.  MANDATORY REDEEMABLE PREFERRED STOCK

In  conjunction  with the United  acquisition  described  in Note 5, 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.

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 or retained earnings
when  additional  paid in  capital  related  to the fair  value  change has been
reduced to zero. At October 31, 2003,  the estimated  redemption  requirement is
$1,803 to be paid July 2006.
<PAGE>

11.  MANDATORY REDEEMABLE PREFERRED STOCK, CONTINUED

In conjunction with the sale of Champion discussed in Note 4, the Company agreed
to settle the  outstanding  subordinated  debt due to Markpoint from 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.  The  agreement  provided
Markpoint  the option to require the  Company to  repurchase  these  shares at a
price of $21 per share.  The  repurchase  option was  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. On May 12, 2003,
under an Assignment  Agreement,  the Company  transferred all rights,  title and
interest in the  repurchase  option to Fair  Holdings.  Markpoint  exercised the
repurchase  option  with  respect to 16,072  shares on May 12, 2003 and was paid
$338 by Fair Holdings.  The exercise of the option  resulted in the reduction of
the  liability  and an  increase  in  additional  paid in  capital of $337 as of
October 31, 2003. Subsequent to October 31, 2003, Markpoint exercised the option
for the  remaining  16,071  shares and those  shares also were  acquired by Fair
Holdings.


12.  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 5) 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.
<PAGE>

12.  STOCKHOLDERS' EQUITY, CONTINUED

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.

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  for 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.

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.


12.  STOCKHOLDERS' EQUITY, CONTINUED

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.

On May  12,  2003,  16,072  shares  of  Series  D  Preferred  Stock,  previously
classified as mandatory  redeemable  preferred stock (see Note 11) were acquired
by Fair Holdings from Markpoint.

On October 13,  2003,  the Company  issued  14,285  shares of Series D Preferred
Stock for $250. The issuance was as a result of a capital call from Partners who
were obligated to fund additional  capital required to maintain  compliance with
the debt covenants of U.S. Rubber.


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, 2003.

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 2003,  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.
<PAGE>

12. STOCKHOLDERS' EQUITY, CONTINUED

On December 13, 2003, the Company's Board of Directors approved the extension of
the  expiration  date of 200,000 fixed stock  options,  exercisable at $.05. The
original  expiration  date of  December  31,  2002 was  originally  extended  to
December 31, 2003 and subsequently to June 30, 2004. The Company  recognized $30
of compensation  expense related to the extension of the options during the year
ended October 31, 2003.

The Company  accounts for stock-based  compensation  under the provisions of APB
No. 25. The Company has adopted the disclosure-only  provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Accordingly, no compensation expense is
recognized if the exercise  price of stock options  equals the fair market value
of the underlying stock at the date of grant.  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  basic and diluted net income (loss) per share would not have changed.
See Note 2 for comparison of net income and net income per share as reported and
as adjusted for the pro forma  effects of  determining  compensation  expense in
accordance with SFAS 123.

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 and 1999,  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 years ended  October 31, 2003 and 2002 and
the ten months ended October 31, 2001:

<TABLE>
<CAPTION>



                                             2003                          2002                         2001
                                 ----------------------------- ----------------------------- ----------------------------
                                                  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       800,000            .09      1,047,500            .09      1,137,500            .09

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

Exercised during the year                 --          --                --          --                --          --
                                 -------------- -------------- -------------- -------------- -------------- -------------

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

Eligible, end of year for
 exercise                            800,000            .09        800,000*           .09      1,047,500            .09
                                 ============== ============== ============== ============== ============== =============

</TABLE>
<PAGE>

12.  STOCKHOLDERS' EQUITY, CONTINUED

A further  summary  about fixed  options  outstanding  at October 31, 2003 is as
follows:

<TABLE>
<CAPTION>
                                                            Weighted
                                                             Average        Weighted                       Weighted
                                                            Remaining       Average                        Average
                                            Number         Contractual      Exercise        Number         Exercise
                                          Outstanding         Life           Price        Exercisable       Price
                                        ---------------- ---------------- ------------- ---------------- -------------
<S>               <C>                        <C>             <C>                 <C>        <C>                  <C>
Exercise price of $.10                       600,000*        .5 yr.              .10        600,000              .10

Exercise price of $.05                       200,000         .67 yr.             .05        200,000              .05

*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.

</TABLE>


STOCK WARRANTS:

The Company has issued warrants to purchase common stock to several parties.  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 the debenture  holders to purchase
up to 16,000 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.

The following  table  summarizes  the  outstanding  warrants for the years ended
October 31, 2003 and 2002:

<TABLE>
<CAPTION>

                                                Outstanding                                                 Outstanding
                                                  Warrants       Issued                        Warrants       Warrants
                                                October 31,    During the                      Exercised    October 31,
                                                    2002          Year       Exercise Price    in Period        2003
                                               --------------- ------------ ----------------- ------------ ---------------
<S>                                                   <C>          <C>               <C>                         <C>
Common Stock:
  Renaissance US Growth & Income Trust PLC            8,000        8,000             .20            --           16,000
  BFSUS Special Opportunities Trust PLC               8,000        8,000             .20            --           16,000


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

Common Stock:
  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, expire
    August 31, 2002                                  10,000           --           $2.00       (10,000)              --

  Markpoint financing agreement expiring May
    2008 associated with Champion**                  Zero**           --            $.01            --           Zero**


**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 4 and 16, the Company  agreed to a
settlement with Markpoint in January 2003. Accordingly, these warrants have been
terminated.

</TABLE>


In February  2004,  the Company  received an  extension  of the  requirement  to
provide audited financial  statements to debenture holders. In exchange for this
extension,  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 February 9, 2007.
<PAGE>

CONVERTIBLE DEBT:

As  described  in Note 8, 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.


13.  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. All segment information is presented from continuing
operations and before cumulative effect of change in accounting method. Selected
information by segment follows:

<TABLE>
<CAPTION>

                                                               Year Ended October 31, 2003
                                       ------------------------------------------------------------------------------
                                             Trailer         Coach        Butyl Rubber           Total
                                          Manufacturing     Leasing        Reclaiming
                                       ------------------------------------------------------------------------------
<S>                                      <C>                 <C>                 <C>               <C>
Sales:
  Domestic                               $       37,590      $       7,281       $       9,893      $      54,764
  Foreign                                         3,419                 --               1,112              4,531
                                       ------------------------------------------------------------------------------

Total                                    $       41,009      $       7,281       $      11,005      $      59,295

Cost of goods sold                       $       37,704      $       4,060       $       9,972      $      51,736

Income (loss) before taxes               $       (3,480)     $        (122)      $        (752)     $      (4,354)*

Identifiable assets                      $       19,722      $      14,147       $      11,028      $      44,897**

Depreciation and amortization expense    $          751      $         767       $       1,332      $       2,850

Interest expense                         $        1,395      $       1,189       $         556      $       3,140***

*Identifiable income (loss) before
  taxes, as stated above                                                                            $      (4,354)
  Corporate-level loss before taxes,
   not identifiable with a specific
   segment                                                                                                   (407)
                                                                                                 --------------------

  Total loss before taxes                                                                           $      (4,761)
                                                                                                 ====================

**Identifiable assets, as stated above                                                              $      44,897
  Corporate-level goodwill                                                                                    650
  Other corporate-level assets                                                                                335
                                                                                                 --------------------

  Total assets                                                                                      $      45,882
                                                                                                 ====================

***Identifiable interest expense, as stated above                                                   $       3,140
  Corporate-level interest expense, not identifiable with a specific segment                                  407
                                                                                                 --------------------

  Total interest expense                                                                            $       3,547
                                                                                                 ====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

13.  BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

                                                                Year Ended October 31, 2002
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------
<S>                                       <C>                <C>                 <C>                <C>
Sales:
  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                         $      (1,966)     $        (417)      $        (732)     $      (3,115)*

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

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

Interest expense                          $       1,277      $       1,468       $         614      $       3,359***

*Identifiable income (loss) before
  taxes, as stated above                                                                            $      (3,115)
  Corporate-level loss before taxes,
   not identifiable with a specific
   segment                                                                                                   (193)
                                                                                                 --------------------

  Total loss before taxes                                                                           $      (3,308)
                                                                                                 ====================

**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
                                                                                                 ====================

***Identifiable interest expense, as stated above                                                   $       3,359
  Corporate-level interest expense, not identifiable with a specific segment                                  193
                                                                                                 --------------------

  Total interest expense                                                                            $       3,552
                                                                                                 ====================

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

13.  BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

                                                             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                       $      22,291      $      13,330       $      10,205      $      45,826*

Depreciation and amortization expense     $         365      $         785       $         905      $       2,055

Interest expense                          $         369      $       1,266       $         677      $       2,312

*Identifiable assets, as stated above                                                               $      45,826
  Assets of subsidiary held for sale                                                                        2,374
  Corporate-level goodwill                                                                                    650
                                                                                                 --------------------

  Total assets                                                                                      $      48,850
                                                                                                 ====================

</TABLE>

Obsidian  Enterprises,  Inc.  (legal  parent)  allocates  selling,  general  and
administrative  expenses  to  the  respective  companies  primarily  based  on a
percentage  of sales.  For the years ended October 31, 2003 and 2002 and the ten
months ended October 31, 2001,  respectively,  allocated  corporate  expenses by
segment were as follows:

<TABLE>
<CAPTION>


                                                Year Ended October 31,          Ten Months Ended
                                                                                   October 31,
                                         ------------------- ------------------
                                                2003               2002               2001
                                         ------------------- ------------------ ------------------
<S>                                        <C>                 <C>                <C>
Trailer manufacturing                      $        1,174      $          934     $          245
Coach leasing                                         200                 146                 96
Butyl rubber reclaiming                               317                 232                275
                                         ------------------- ------------------ ------------------

                                           $        1,691      $        1,312     $          616
                                         =================== ================== ==================

</TABLE>


14.  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 or 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.
<PAGE>
<TABLE>
<CAPTION>

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

                                                2003            2002            2001
                                           ------------------------------------------------
<S>                                          <C>             <C>             <C>
Current:
  Federal                                    $         --    $         --    $         --
  State                                               (66)            (15)            (36)
                                           ------------------------------------------------

                                                      (66)            (15)            (36)
                                           ------------------------------------------------

Deferred:
  Federal                                             733              41             350
  State                                               270               7              58
  Discontinued operations                              25             332              --
                                           ------------------------------------------------

                                                    1,028             380             408
                                           ------------------------------------------------

Total tax benefit                                     962             365             372

Less tax benefit from discontinued
operations                                            (25)           (332)             --

Tax benefit from continuing operations       $        937    $         33    $        372
                                           ================================================
</TABLE>

<TABLE>
<CAPTION>

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

                                                 2003            2002            2001
                                           -------------------------------------------------
<S>                             <C>          <C>              <C>             <C>
Benefit (tax) at statutory rate (34%)        $      1,536     $      1,125    $      1,609
Effect of nontaxable combined entity                  138              (18)           (166)
State income tax                                      180              (15)            (36)
Goodwill amortization                                  --               --             (26)
Non-deductible goodwill                                --             (245)             --
Valuation reserve applied to equity                    --           (1,267)*            --
(Increase) decrease in valuation reserve           (1,028)             380          (1,038)
Other                                                 111               73              29
                                           -------------------------------------------------

                                             $        937     $         33    $        372
                                           =================================================
</TABLE>


*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.

<PAGE>

14.  INCOME TAXES, CONTINUED

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:

                                                2003            2002
                                           --------------------------------

Deferred tax assets (liabilities):
  Accounts receivable                        $        195    $        199
  Inventories                                         215             307
  Accrued expenses                                    143             158
  Intangibles                                         370           1,004
  Operating loss carryforwards                      5,209           2,961
  Property and equipment                           (4,272)         (4,497)
  Other                                                10              80
                                           --------------------------------

                                                    1,870             212
Less valuation reserves                            (1,971)         (1,171)
                                           --------------------------------

Deferred tax assets (liabilities), net       $       (101)   $       (959)
                                           ================================



Included in the accompanying balance sheet under the following:

                                                2003            2002
                                           --------------------------------

Deferred tax assets                          $        550    $        665
Deferred tax liabilities                             (651)         (1,624)
                                           --------------------------------

                                             $       (101)   $       (959)
                                           ================================

The amount of federal tax net operating loss carryforwards  available at October
31, 2003 was  $13,400.  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>

14.  INCOME TAXES, CONTINUED

Federal tax net operating loss  carryforwards and expiration dates as of October
31, 2003 are as follows:

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

 $  2,996        2008 through 2021         $ 10,422        2021 through 2023
==============                         ===============

Cash  payments of income taxes for the years ended October 31, 2003 and 2002 and
the ten months ended October 31, 2001 were $96, $22, and $44, respectively.

<TABLE>
<CAPTION>

15.  RELATED PARTIES

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

                                                              October 31,        October 31,
                                                                 2003               2002
                                                           ------------------ ------------------
<S>                                                          <C>                <C>
Balance sheets:
  Current assets:
    Accounts receivable, Obsidian Capital Partners           $         --       $        181
    Accounts receivable, Obsidian Capital Company                       8                 13
    Accounts receivable, other affiliated entities                     44                 12
                                                           ------------------ ------------------

Total assets                                                 $         52       $        206
                                                           ================== ==================

  Current liabilities:
    Accounts payable, Obsidian Capital Company               $        275       $        279
    Accounts payable, stockholders                                    320                338
    Accounts payable, DC Investments and Fair Holdings                221                 42
    Accounts payable, other affiliated entities                        21                  9
  Long-term portion:
  Notes payable, DC Investments                                       700                700
  Notes payable, Fair Holdings                                      7,192              3,020
  Line of credit, Fair Holdings                                     6,045              1,798
                                                           ------------------ ------------------
Total liabilities                                            $     14,774       $      6,186
                                                           ================== ==================

</TABLE>
<TABLE>
<CAPTION>

                                                              October 31, 2003   October 31, 2002   October 31, 2001
                                                             ------------------- ------------------ ------------------

Statements of Operations:
<S>                                                            <C>                 <C>                <C>
  Interest expense, DC Investments and Fair Holdings           $      1,274        $        322       $         --
  Interest expense, Obsidian Capital Partners                            --                  58                 --
  Rent expense, Fair Holdings                                            45                  --                 --
  Rent expense, Obsidian Capital Company                                 --                  56                 15

</TABLE>
<PAGE>

15.  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 17.

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 8.

On December 17,  2002,  Obsidian  Leasing  sold four  coaches to DC  Investments
Leasing  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 us thereby  eliminating  our  existing  purchase
commitment  for  the  coaches.  DC  Investments  Leasing  also  entered  into  a
management  agreement with Pyramid under which all nine coaches  described above
will be leased by Pyramid.


16.  COMMITMENTS AND CONTINGENCIES

In  connection  with their  dealers'  wholesale  floor-plan  financing  of cargo
trailers,  the Company has  entered  into  repurchase  agreements  with  various
lending  institutions.  The repurchase commitment is on an individual unit basis
with a term from the date it is  financed  by the  lending  institution  through
payment  date by the  dealer,  generally  not  exceeding  one year.  Outstanding
obligations  are  approximately  $2,000 at October 31, 2003. Such agreements are
customary in the cargo trailer industry and the Company's exposure to loss under
such  agreements  is  limited  by the  resale  value of the  inventory  which is
required to be  repurchased.  Losses incurred under such  arrangements  have not
been significant and the estimated liability for losses on contracts outstanding
at October 31, 2003 is not material.


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.


17.  SUBSEQUENT EVENTS

On November 10, 2003,  Markpoint  exercised  its  remaining  Put Option that was
assigned to Fair  Holdings,  as discussed in Note 4.  Markpoint was paid $337 by
Fair  Holdings and the exercise of the option  resulted in the  reduction of the
liability and an increase in additional paid in capital of $337.

On December 3, 2003, the Company's  stockholders and Board of Directors approved
a 50-to-1  reverse  stock  split.  The  reverse  stock  split will be  effective
February 16, 2004.  As a result of the reverse  stock split and the amendment to
the Certificate of Incorporation,  approximately  720,151 shares of common stock
will be outstanding and the number of authorized  shares of common stock will be
reduced to 10,000,000.  On December 15, 2003, the Company  commenced an exchange
offer for all of the outstanding shares of Net Perceptions, Inc., a developer of
software  products  for the  retail  industry  which has been  winding  down its
operations  and whose assets are  predominately  cash or cash  equivalents.  The
exchange offer, as fully disclosed in the Registration Statement on Form S-4 and
other filings made with the SEC, is for two common shares of Obsidian  stock for
every one share of Net Perceptions  stock. The Company cannot predict whether it
will be successful  in acquiring  some or all of the  outstanding  shares of Net
Perceptions  in  exchange  for its common  shares  due to the fact that  several
important  conditions  are with the  control  of the Board of  Directors  of Net
Perceptions.

On  February  2, 2004,  Obsidian  Enterprises,  Inc.'s  line of credit with Fair
Holdings was amended.  Maximum borrowings were increased from $8,000 to $12,000,
and the maturity date was extended from January 2005 to January 2007.
<PAGE>

18.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>



YEAR ENDED OCTOBER 31, 2003

                                          First Qtr. Ended   Second Qtr. Ended   Third Qtr. Ended      Fourth Qtr.
                                               1/31/03            4/30/03             7/31/03        Ended 10/31/03
                                          ------------------ ------------------- ------------------ ------------------
<S>                                         <C>                <C>                 <C>                <C>
Net sales                                   $       10,899     $       15,107      $       16,795     $     16,494

Gross profit                                         1,160              1,791               2,405            2,203***

Loss from continuing operations                     (1,517)              (909)               (307)          (1,091)***

Loss from continuing operations per
 basic common and common equivalent
 share                                                (.04)              (.03)                .00           (.05)



YEAR ENDED OCTOBER 31, 2002


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

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)

*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.

***The  fourth  quarter  includes  a  charge  related  to  inventory  at  United
Expressline of $500.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                SCHEDULE II--VALUATION AND QUALIFYING OF ACCOUNTS

                           Year Ended October 31, 2003
                                 (in thousands)

                                                       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
----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
<S>                             <C>              <C>               <C>               <C>               <C>
Allowance for doubtful
 accounts                       $      495       $       20        $       --        $       19(1)     $      496
                              ================ ================= ================= ================= =================

Inventory valuation
 allowances                     $      466       $       --        $       --        $      145(2)     $      321
                              ================ ================= ================= ================= =================

Deferred tax valuation
 reserve                        $    1,171       $    1,027        $      218(3)     $      445(4)     $    1,971
                              ================ ================= ================= ================= =================

                           Year Ended October 31, 2002
                                 (in thousands)

                                                       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
 accounts                       $       80       $      415        $       --          $   --          $      495
                              ================ ================= ================= ================= =================

Inventory valuation
 allowances                     $      833       $       50        $       --          $ 417(2)        $      466
                              ================ ================= ================= ================= =================

Deferred tax valuation
 reserve                        $    1,551       $       --        $       --          $ 380(5)        $    1,171
                              ================ ================= ================= ================= =================

(1)  Recovery of amounts previously reserved.
(2)  Use of inventory previously reserved.
(3)  Additional   valuation  reserve  recorded  related  to  adjustment  to  net
     operating loss  carryforwards.  No income or loss recorded in the financial
     statements.
(4)  Reduction from the sale of Champion to a related  party.  No income or loss
     recorded due to involvement of related parties.
(5)  Realization of operating losses against deferred tax liabilities.

</TABLE>
<PAGE>

ITEM 9A. 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.

The Company has carried out as of October 31,  2003,  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.

We have been taking steps to improve our financial infrastructure to account for
complex  transactions  on a consolidated  basis since the  reorganization  which
occurred in 2001. Our auditors  identified our limited financial  infrastructure
and the failure to  physically  inventory our United  Expressline  operations on
quarterly basis as a material  weaknesses in internal control in connection with
the audit of our financial  statements  for the period ending  October 31, 2003.
Effective  November  1,  2003,  the  Company  implemented  an  enterprise  wide,
integrated  accounting  system that  replaced  the separate  accounting  systems
previously  maintained  by the  several  subsidiaries  and  since  that date has
implemented an enhanced  segregation of duties of various  accounting  personnel
and  plans to  physically  inventory  our  United  Expressline  operations  on a
quarterly basis.  Management will continue to evaluate whether  additional steps
are needed to improve  our  financial  infrastructure.  There have been no other
significant  changes in the Company's internal controls or in other factors that
could  significantly  affect  internal  controls  subsequent  to the date of the
October 31, 2003 evaluation.


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  following  table sets forth  information  with respect to all directors and
executive  officers of the  Company,  including  their ages,  present  principal
occupations, other business experience during the last five years.
<TABLE>
<CAPTION>
               Name                  Age                         Position                           Director Since
               ----                  ---                         --------
<S>                                  <C>                                                                 <C>
Timothy S. Durham                    41    Chief Executive Officer and Chairman of the Board             2001
Terry G. Whitesell                   64    President, Chief Operating Officer and Director               2001
Jeffrey W. Osler                     35    Executive Vice President, Secretary, Treasurer and            2001
                                           Director
Goodhue W. Smith, III+               54    Director                                                      1997
John A. Schmit*+                     36    Director                                                      2001
D. Scott McKain*                     49    Vice Chairman and Director                                    2001
Daniel S. Laikin+                    41    Director                                                      2001
Rick D. Snow                         40    Executive Vice President and Chief Financial Officer          N/A
Anthony P. Schlichte                 48    Executive Vice President of Corporate Finance                 N/A
---------
*Members of the Compensation Committee
+Members of the Audit Committee

</TABLE>


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. Snow was named Executive Vice President and Chief Financial Officer in April
2003. He continues to serve as Chief Financial Officer for Fair Finance, Inc., a
company  for  which Mr.  Durham,  the  Company's  Chairman  and Chief  Executive
Officer, also serves as Chief Executive Officer.  Prior to joining Fair Finance,
Inc.,  in 2002,  Mr.  Snow had  served as Senior  Manager  of  Brockman,  Coats,
Gedelian & Co., a regional  accounting firm. Prior to joining  Brockman,  Coats,
Gedelian & Co., he was an accountant with Grant Thornton LLP.

Mr. Schlichte has served as Executive Vice President of Corporate  Finance since
April  2003.  Previously  he held vice  president  and  senior  lending  officer
positions at First Indiana Bank.

                        AUDIT COMMITTEE FINANCIAL EXPERT

The Company's  Board of Directors has  determined  that the three members of the
Audit  Committee,  Daniel S.  Laikin,  Goodhue W. Smith III, and John A. Schmit,
qualify as "audit  committee  financial  experts"  as defined by Item  401(h) of
Regulation  S-K adopted  pursuant to the  Securities  Exchange  Act of 1934,  as
amended.  Mr.  Schmit has a degree in Finance and seven years of  experience  in
reading,  interpreting  and analyzing  financial  statements in his role as Vice
President,  Investments  for RENN Capital Group,  Inc., a registered  Investment
Adviser.  Mr. Laikin and Mr. Smith also have extensive business  experience that
has involved  the review of  financial  statements.  Messrs.  Laikin,  Smith and
Schmit  also  qualify  as  "independent"   under  the  criteria   applicable  to
Nasdaq-listed  companies  (the SEC rules require that we apply either the Nasdaq
or exchange  definitions  of  independence  even though our  securities  are not
listed on Nasdaq or an exchange).

                                 CODE OF ETHICS

The Company has adopted a Code of Ethics for Chief Executive  Officer and Senior
Financial Officers ("Code of Ethics"),  which applies to the Company's principal
executive officer and to its principal financial and accounting officers. A copy
of the Code of Ethics is attached  as Exhibit 14 to this  Annual  Report on Form
10-K.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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, 2003, 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. Schmit was late in reporting the grant of warrants
in which he may be deemed to have a  beneficial  interest,  and Mr. Snow and Mr.
Schlichte  were late in filing Form 3s to report that they had become  executive
officers.
<PAGE>

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, 2003 by the CEO. (No executive  officers of
the Company received a salary and bonus for fiscal 2003 in excess of $100,000 so
as to require their inclusion in the table.)

<TABLE>
<CAPTION>

------------------------- --------------------------------------------------- -------------------- -----------------
                                                                                   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,           2003           $75,000                 $0                  0                   $0
Chief Executive              2002           $75,000                 $0                  0                   $0
Officer(1)                   2001           $27,404                 $0                  0                   $0
------------------------- ---------- ------------------- -------------------- -------------------- -----------------

(1)  Mr. Durham was elected Chief Executive Officer and Chairman of the Board on
     June 21, 2001.
</TABLE>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

No grants were made to the Company's Chief Executive  Officer during fiscal 2003
pursuant to the Company's 1999 Stock Option Plan or the Company's 2002 Long Term
Incentive Plan.

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

No options have been granted to the Company's  Chief Executive  Officer,  who is
the only person named in the Summary Compensation 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  does not have an  employment  agreement  with its Chief  Executive
Officer, who is the only person named in the Summary Compensation Table.


           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None

<PAGE>

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 February 10, 2004, 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 2003 based on salary and bonus  earned  during  2003  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>
<CAPTION>
                                     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
     ----------------            -----           -----         -----         -----         -----           -----
<S>               <C>            <C>            <C>            <C>          <C>             <C>           <C>
Executive Officers and
Directors:
Timothy S. Durham (1)            111,880,119    80.8%          3,942,193    90.2%           134,758       100.0%

D. Scott McKain                      810,100     2.2%                 --      --                 --          --
Jeffrey W. Osler (2)              91,201,780    72.2%          3,755,869    86.0%            87,184        64.7%

John A. Schmit (3)                 5,032,000    14.0%                 --      --                 --          --
Goodhue W. Smith, III (4)            298,334     *                 5,000       *                 --          --
Terry G. Whitesell (5)            97,287,560    77.0%          3,755,869    86.0%            87,184        64.7%
Daniel S. Laikin                          --      --                  --      --                 --          --
Rick D. Snow                              --      --                  --      --                 --          --
Anthony P. Schlichte                      --      --                  --      --                 --          --
All current officers and
directors as a group (9
persons)                         125,733,593    90.8%          3,947,193    90.4%           134,758       100.0%
Other 5% Owners:
Fair Holdings, Inc.(6)            12,051,930    25.1%            186,324     4.3%            47,574        35.3%
Huntington Capital
Investment Company (7)             7,724,126    17.7%            386,206     8.8%                --          --
Obsidian Capital Partners,
L.P. (8)                          90,374,580    71.5%          3,755,869    86.0%            87,184        64.7%

Richard W. Snyder                  1,946,667     5.4%                 --      --                 --          --

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

</TABLE>
---------
*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 87,184  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 47,574 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 87,184 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") and pursuant to warrants  issued on January 24, 2003,  and February
     9, 2004,  in  consideration  of  waivers  granted  in  connection  with the
     convertible debentures. 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.
(5)  Includes  6,885,840 shares of common stock directly owned by Mr. Whitesell;
     3,755,869  shares of Series C preferred stock and 87,184 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 47,574 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 87,184 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.

<PAGE>
<TABLE>
<CAPTION>


EQUITY COMPENSATION PLAN INFORMATION

The  following  table  presents  information  regarding  grants under all equity
compensation plans of the Company through October 31, 2003.

------------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                                             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>                        <C>
Equity    compensation   plans
approved      by      security
holders(1)                                 800,000                      $0.09                      2,150,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity  compensation plans not
approved by security holders                     0                       0                                 0
------------------------------- ---------------------------- ---------------------------- ----------------------------
Total                                      800,000                      $0.09                      2,150,000
------------------------------- ---------------------------- ---------------------------- ----------------------------

(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.

</TABLE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

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.

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.

On December 17,  2002,  Obsidian  Leasing  sold four  coaches to DC  Investments
Leasing  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 acquired five additional coaches that were previously to
be purchased by us thereby  eliminating our existing purchase commitment for the
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 3, 2003,  Obsidian Leasing refinanced debt due to former shareholders
in the amount of $928 with Fair Holdings at terms further described in Note 8 to
the consolidated financial statements.

On March 28, 2003,  Fair Holdings  acquired the line of credit and term debt due
to the senior lender of Danzer in the amount of $1,488 under an  assignment  and
assumption  agreement.  The maturity date of the line of credit  included in the
assignment  and  assumption  agreement  was  extended to April  2006,  increased
maximum  borrowings  under the line of credit from $1,000 to $1,500 and the debt
covenants required by the senior lender were waived through the end of the term.
All other terms of the assumed notes remain the same.

In October 2003, we received $250 in proceeds from the issuance of 14,285 shares
of Series D Preferred Stock to Partners under an existing  capital  contribution
agreement  further  described  under  "Guarantee of Partners." The proceeds were
used to maintain  compliance  with certain debt covenants with the senior lender
of U.S. Rubber.

On February 2, 2004, we secured an  additional  financial  commitment  from Fair
Holdings to provide,  as needed,  additional  borrowings  under a line of credit
agreement  from $8,000 to  $12,000.  The line of credit  arrangement  expires on
January 1, 2007.

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.


ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

McGladrey  &  Pullen,  LLP  ("McGladrey  &  Pullen")  served  as  the  Company's
independent  auditors for 2003 and 2002.  The services  performed by McGladrey &
Pullen in this capacity  included  conducting an examination in accordance  with
generally  accepted  auditing  standards  of, and  expressing an opinion on, the
Company's consolidated financial statements. The Board of Directors has selected
McGladrey & Pullen as the  independent  public  accountants  for the year ending
October 31, 2004.


Audit Fees

McGladrey & Pullen's fees for professional  services rendered in connection with
the audit and review of Forms  10-Q and all other SEC  regulatory  filings  were
$267,850,  including an unbilled  estimate of $50,000,  for the 2003 fiscal year
and $290,477 for the 2002 fiscal year.  In addition,  fees for the audit related
services in connection  with the Company's Form 8-K filings were $45,513 for the
2002 fiscal year. The Company has paid and is current on all billed fees.


Audit-Related Fees

McGladrey & Pullen's fees for audit related services rendered in connection with
the audit of a subsidiary's  defined  contribution plan were $7,035 for the 2003
fiscal  year and $6,955  for the 2002  fiscal  year.  All of such fees have been
paid.


Tax Fees

McGladrey & Pullen did not render any tax compliance advice or planning services
for the 2003 and 2002 fiscal years.

RSM McGladrey, Inc., an affiliate of McGladrey & Pullen had fees of $695 for the
preparation of Form 5500 in relation to the  subsidiary's  defined  contribution
plan. All such fees have been paid.


All Other Fees

McGladrey  &  Pullen's  fees  for the  2003 and 2002  fiscal  years  related  to
management  advisory services were none and $19,666,  respectively.  All of such
fees have been paid.



PART IV

ITEM 16. 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

          No  Reports  on Form 8-K were  filed  during  the last  quarter of the
          fiscal year ended October 31, 2003.
<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:  February 12, 2004           OBSIDIAN ENTERPRISES, INC.


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

In  accordance  with the Exchange  Act,  this report was signed by the following
persons  on  behalf of the  Registrant  and in the  capacities  and on the dates
indicated.


Dated:  February 12, 2004           /s/ Timothy S. Durham
                                    --------------------------------------------
                                    Timothy S. Durham
                                    Chief Executive Officer (Principal Executive
                                    Officer) and Chairman of the Board and
                                    Director

Dated:  February 12, 2004           /s/ Rick D. Snow
                                    --------------------------------------------
                                    Rick D. Snow, Executive Vice President/Chief
                                    Financial Officer (Principal Financial and
                                    Accounting Officer)

Dated:  February 12, 2004           /s/ Jeffrey W. Osler
                                    --------------------------------------------
                                    Jeffrey W. Osler, Executive Vice President,
                                    Secretary and Treasurer and Director

Dated:  February 12, 2004           /s/ Terry G. Whitesell
                                    --------------------------------------------
                                    Terry G. Whitesell, Director

Dated:  February 12, 2004           /s/ Goodhue W. Smith
                                    --------------------------------------------
                                    Goodhue W. Smith, III, Director

Dated:  February 12, 2004           /s/ John A. Schmit
                                    --------------------------------------------
                                    John A. Schmit, Director

Dated:  February 12, 2004           /s/ D. Scott McKain
                                    --------------------------------------------
                                    D. Scott McKain, Vice Chairman and Director

Dated:  February 12, 2004           /s/ Daniel S. Laikin
                                    --------------------------------------------
                                    Daniel S. Laikin, Director

<PAGE>
<TABLE>
<CAPTION>

                                  EXHIBIT INDEX

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

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, dated October 30, 2002, between     Incorporated by reference to Exhibit
                 Champion Trailer, Inc. and Timothy S. Durham and Terry G.    2.1 to the Registrant's Report on Form
                 Whitesell                                                    8-K filed on November 6, 2002

2.3              Agreement  for the Purchase and Sale of Business  Assets of  Incorporated by reference to Exhibit
                 Champion  Trailer,  Inc.,  dated  January 31,  2003,  among  2.2 to the Current Report on Form 8-K
                 Obsidian  Enterprises,  Inc.,  Champion  Trailer,  Inc. and  filed by the Registrant on February
                 Champion  Trailer  Acquisition  Company,  LLC,  and related  11, 2003.
                 Assumption Agreement.

3.1              Amended Certificate of Incorporation.                        Incorporated by reference to Exhibit
                                                                              3.1 to Amendment No. 1 to the
                                                                              Registration Statement on Form S-4
                                                                              filed on December 17, 2003.

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              Amended Certificate of Designations, Preferences, Rights     Incorporated by reference to Exhibit
                 and Limitations of Series C Preferred Stock                  3.1 to Amendment No. 1 to the Registration
                                                                              Statement on Form S-4 filed on
                                                                              December 17, 2003.

3.4              Certificate  of  Designations,   Preferences,   Rights  and  Incorporated by reference to Exhibit
                 Limitations of Series D Preferred Stock                      3.4 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2002

3.5              Amended Certificate of Designations, Preferences, Rights     Incorporated by reference to Exhibit
                 and Limitations of Series D Preferred Stock                  3.4(b) to Amendment No. 1 to the Registration
                                                                              Statement on Form S-4 filed on
                                                                              December 17, 2003.

3.6              Bylaws  of  the  Registrant   (Restated   Effective  as  of  Incorporated by reference to Exhibit
                 September 27, 2002)                                          3.3 to the Registrant's Annual Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2002

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

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

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

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 Report
                                                                              on Form 10-K for the Year Ended
                                                                              October 31, 2001.

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

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

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   Incorporated by reference to Exhibit
                 Obsidian Enterprises, Inc. to Fair Holdings, Inc. in the     10.35 to the Registrant's Annual
                 principal amount of $700,000 due March 1, 2007               Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

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

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     Incorporated by reference to Exhibit
                 Company, LLC, to Fair Holdings, Inc.                         10.40 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.41            Promissory Note, dated September 3, 2002, from Obsidian      Incorporated by reference to Exhibit
                 Enterprises, Inc., to Fair Holdings, Inc.                    10.41 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.42            Promissory Note, dated January 9, 2002, from Obsidian        Incorporated by reference to Exhibit
                 Enterprises, Inc. to Fair Holdings, Inc.                     10.42 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.43            Credit Agreement, dated October 31, 2002, between Obsidian   Incorporated by reference to Exhibit
                 Leasing Company, Inc. and Old National Bank, N.A. and        10.43 to the Registrant's Annual
                 Related Documents                                            Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

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.                                                     Huntington Capital Investment
                                                                              Company on August  6, 2001.

10.45            Loan Agreement, dated September 24, 2002, between Edgar      Incorporated by reference to Exhibit
                 County Bank & Trust Co. and Obsidian Leasing Company, Inc.   10.45 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.46            Term Promissory Note, dated September 26, 2002, from         Incorporated by reference to Exhibit
                 Obsidian Leasing Company, Inc. to Fair Holdings, Inc.        10.46 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.47            Note Purchase Agreement, dated July 27, 2001, between        Incorporated by reference to Exhibit
                 United Acquisition, Inc. and The Huntington Capital          10.47 to the Registrant's Annual
                 Investment Company.                                          Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.48            Limited Forbearance Agreement, dated October 14, 2002,       Incorporated by reference to Exhibit
                 among Danzer Industries, Inc., Obsidian Enterprises, Inc.    10.48 to the Registrant's Annual
                 and Bank of America, N.A.                                    Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.49            Revolving Credit, Term Loan and Security Agreement, dated    Incorporated by reference to Exhibit
                 October 25, 2002, between PNC Bank, N.A. and U.S. Rubber     10.49 to the Registrant's Annual
                 Reclaiming, Inc. and Related Documents                       Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.50            Term Promissory Note, dated October 31, 2002, from DW        Incorporated by reference to Exhibit
                 Leasing Company, LLC to Fair Holdings, Inc.                  10.50 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.51            Rental Agreement, dated October 1, 2002, between DW          Incorporated by reference to Exhibit
                 Trailer, LLC and Danzer Industries, Inc.                     10.51 to the Registrant's Annual
                                                                              Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.52            Commercial Equipment Lease Agreement, dated August 1,        Incorporated by reference to Exhibit
                 2002, between Fair Holdings, Inc. and Danzer Industries,     10.52 to the Registrant's Annual
                 Inc.                                                         Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.53            Commercial Equipment Lease Agreement, dated August 1,        Incorporated by reference to Exhibit
                 2002, between Fair Holdings, Inc. and Obsidian               10.53 to the Registrant's Annual
                 Enterprises, Inc.                                            Report on Form 10-K for the Year Ended
                                                                              October 31, 2002

10.54            Promissory  Term  Note,   dated  November  18,  2002,  from  Incorporated by reference to Exhibit
                 Obsidian Leasing Company, Inc. to Fair Holdings, Inc.        10.1 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.55            Third  Amendment to Credit  Agreement,  dated  December 26,  Incorporated by reference to Exhibit
                 2002,  between United  Expressline,  Inc. and First Indiana  10.2 to the Registrant's Quarterly
                 Bank, N.A.                                                   Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.56            Credit  Agreement,  dated  December  18,  2002,  between DC  Incorporated by reference to Exhibit
                 Investments  Leasing,  LLC and First Indiana Bank, N.A. and  10.3 to the Registrant's Quarterly
                 Related Documents.                                           Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.57            Term Promissory  Note, dated January 3, 2003, from Obsidian  Incorporated by reference to Exhibit
                 Leasing, Inc. to Fair Holdings, Inc.                         10.4 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.58            Stock Purchase  Warrant,  dated January 24, 2003, issued by  Incorporated by reference to Exhibit
                 Obsidian   Enterprises,   Inc.  to  Frost   National  Bank,  10.5 to the Registrant's Quarterly
                 Custodian,  FBO Renaissance US Growth  Investment Trust PLC  Report on Form 10-Q for the Quarter
                 Trust No. WOO740100.                                         Ended January 31, 2003

10.59            Stock Purchase  Warrant,  dated January 24, 2003, issued by  Incorporated by reference to Exhibit
                 Obsidian Enterprises,  Inc., to HSBC Global Custody Nominee  10.6 to the Registrant's Quarterly
                 (UK) Limited, FBO BFS US Special Opportunities Trust PLC.    Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.60            Second Limited  Forbearance  Agreement,  dated February 28,  Incorporated by reference to Exhibit
                 2003,   between  Danzer   Industries,   Inc.  and  Obsidian  10.7 to the Registrant's Quarterly
                 Enterprises, Inc.                                            Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.61            Form  of  Letter   Amending   Stock  Options  and  Schedule  Incorporated by reference to Exhibit
                 Identifying Material Details*                                10.8 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.62            First Amendment to Promissory Note, dated January 9, 2003.   Incorporated by reference to Exhibit
                                                                              10.9 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.63            Sublease,  effective  as of January 1, 2003,  between  Fair  Incorporated by reference to Exhibit
                 Holdings, Inc. and Obsidian Enterprises, Inc.                10.10 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.64            Commercial  Equipment Lease Agreement,  commencing November  Incorporated by reference to Exhibit
                 20,   2002,   between  Fair   Holdings,   Inc.  and  United  10.11 to the Registrant's Quarterly
                 Expressline, Inc.                                            Report on Form 10-Q for the Quarter
                                                                              Ended January 31, 2003

10.65            Assignment  Agreement,  dated May 12, 2003,  between         Incorporated by reference to Exhibit
                 Obsidian  Enterprises, Inc. and Fair Holdings, Inc.          10.1 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2003

10.66            Assignment of Note and Other Loan  Documents,  dated March   Incorporated by reference to Exhibit
                 28, 2003, between Bank of America, N.A. and Fair Holdings,   10.2 to the Registrant's Quarterly
                 Inc.                                                         Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2003

10.67            First  Amendment to Business  Loan  Agreement  and           Incorporated by reference to Exhibit
                 Promissory Note (Line of Credit),  dated March 28, 2003,     10.3 to the Registrant's Quarterly
                 between  Danzer Industries, Inc. and Fair Holdings, Inc.     Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2003

10.68            Second Amendment to Promissory Note (Line of Credit),        Incorporated by reference to Exhibit
                 dated April 1, 2003,  between  Obsidian  Enterprises,        10.4 to the Registrant's Quarterly
                 Inc. and Fair Holdings, Inc.                                 Report on Form 10-Q for the Quarter
                                                                              Ended April 30, 2003

10.69            Employment  Agreement,  dated April 30, 2003, between        Incorporated by reference to Exhibit
                 Obsidian Enterprises, Inc. and Rick D. Snow.*                10.1 to the Registrant's Quarterly
                                                                              Report on Form 10-Q for the Quarter
                                                                              Ended July 31, 2003

10.70            Third Amendment to Promissory Note (Line of Credit), dated   Attached
                 February 2, 2004, between Obsidian Enterprises, Inc. and
                 Fair Holdings, Inc.

10.71            Term Promissory Note, dated September 19, 2003, from DC      Attached
                 Investments Leasing, LLC to Fair Holdings, Inc.

10.72            Promissory Note, dated August 31, 2003, from DC              Attached
                 Investments, Inc. to Fair Holdings, Inc.

10.73            Second Amendment to Revolver Promissory Note, dated          Attached
                 September 30, 2003, between Danzer Industries, Inc. and
                 Fair Holdings, Inc.

10.74            Stock Purchase Warrant, dated February 9, 2004, issued by    Attached
                 Obsidian Enterprises, Inc. to HSBC Global Custody Nominee
                 (UK) Limited, FBO BFS US Special Opportunities Trust PLC.

10.75            Stock Purchase Warrant, dated February 9, 2004, issued by    Attached
                 Obsidian Enterprises, Inc. to Frost National Bank,
                 Custodian, FBO Renaissance US Growth Investment Trust PLC,
                 Trust No. W00740100.

14               Code of Ethics for Chief Executive Officer and Senior        Attached
                 Financial Officers

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

*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.
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