SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    Form 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the three months ended April 30, 2002

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from ______ to ______

                         Commission file number 0-17430

                           OBSIDIAN ENTERPRISES, INC.

             (Exact name of registrant as specified in its charter)

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

    111 Monument Circle, Suite 3680
       Indianapolis, Indiana                                 46204
  (Address of principal executive offices)                 (Zip Code)

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

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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

          Common Stock                                Outstanding at
          $.0001 par value                            April 30, 2002
                                                      36,007,855 shares



<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                                      INDEX


                                                                         PAGE(S)

PART I - FINANCIAL INFORMATION:

     Item 1 -  Condensed Consolidated Financial Statements:

               Condensed  Consolidated  Balance  Sheets  -
               April  30,  2002  and October 31, 2001                          3

               Condensed  Consolidated  Statements  of Operations              5
               Three Months and Six Months Ended April 30, 2002 and 2001

               Condensed  Consolidated  Statement  of
               Changes  of  Stockholders'Equity                                6

               Condensed Consolidated Statements of Cash Flows                 7
               Six Months Ended April 30, 2002 and 2001

               Notes to Condensed Consolidated Financial Statements            9

     Item 2 -  Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                      20

     Item 3 -  Quantitative and Qualitative Disclosures About Market Risk     32

PART II - OTHER INFORMATION:

     Item 2 -  Changes in Securities and Use of Proceeds                      32

     Item 4 -  Submission of Matters to a Vote of Security Holders            32

     Item 6 -  Exhibits and Reports on Form 8-K                               32





<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                   (unaudited)

<TABLE>

                                                                                    April 30,        October 31,
                                                                                       2002             2001
                                                                                 ----------------------------------

Assets

Current assets:
<S>                                                                                <C>              <C>
    Cash and cash equivalents                                                      $          267   $          529
    Marketable securities                                                                     160              223
    Accounts receivable, net of allowance for doubtful accounts
      of $70 for 2002 and $90 for 2001                                                      4,403            3,744
    Accounts receivable, related parties                                                       28              217
    Inventories, net                                                                        6,402            6,694
    Prepaid expenses and other assets                                                         711            1,275
                                                                                 ----------------------------------

Total current assets                                                                       11,971           12,682

Property, plant and equipment, net                                                         23,456           24,232

Other assets:
    Goodwill, net                                                                           9,169            9,210
    Other intangible assets, net of accumulated amortization of $461 for
      2002 and $270 for 2001                                                                1,957            2,147
    Other                                                                                     668              579
                                                                                 ----------------------------------

                                                                                   $       47,221   $       48,850
                                                                                 ==================================
</TABLE>


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


<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                   (unaudited)

<TABLE>

                                                                                    April 30,       October 31,
                                                                                       2002             2001
                                                                                 ----------------------------------

Liabilities and Stockholders' Equity

Current liabilities:
<S>                                                                                <C>              <C>
    Current portion of long-term debt                                              $       14,666   $        9,233
    Accounts payable, trade                                                                 4,019            3,620
    Accounts payable, related parties                                                         665              925
    Accrued expenses and customer deposits                                                  2,188            2,388
                                                                                 ----------------------------------

Total current liabilities                                                                  21,538           16,166

Accounts payable, related parties                                                           1,198            2,170

Long-term debt, related parties                                                             3,323               --

Long-term debt, net of current portion                                                     17,679           27,546

Deferred income tax liabilities                                                             1,433            1,672

Commitments and contingencies                                                                  --               --

Stockholders' equity:
    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 convertible
     preferred stock, par value $.001, 4,600,000 authorized, 4,358,399 and
     3,739,169 shares issued and outstanding for 2002 and 2001, respectively,
     400,000 shares of undesignated preferred stock authorized                                  4                4
    Additional paid-in capital                                                              8,960            5,612
    Accumulated other comprehensive income (loss)                                             (26)              37
    Accumulated deficit                                                                    (6,891)          (4,360)
                                                                                 ----------------------------------

Total stockholders' equity                                                                  2,050            1,296
                                                                                 ----------------------------------

                                                                                   $       47,221   $       48,850
                                                                                 ==================================
</TABLE>


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


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

                                                     Three Months Ended                    Six Months Ended
                                            --------------------------------------------------------------------------
                                             April 30, 2002     April 30, 2001     April 30, 2002    April 30, 2001
                                            --------------------------------------------------------------------------

<S>                                           <C>               <C>                <C>                <C>
Net sales                                     $       16,973    $        5,260     $       29,456     $        9,003

Cost of sales                                         14,434             4,203             25,460              7,504
                                            --------------------------------------------------------------------------

Gross profit                                           2,539             1,057              3,996              1,499

Selling, general and administrative
 expenses                                              2,489               976              4,695              1,491
                                            --------------------------------------------------------------------------

Income (loss) from operations                             50                81               (699)                 8

Other income (expense):
  Interest expense, net                                 (972)             (671)            (1,846)              (888)
  Other expense                                           (4)               10                (33)               (67)
                                            --------------------------------------------------------------------------

Loss before income taxes                                (926)             (580)            (2,578)              (947)

Income tax (expense) benefit                              --                 1                155                 13
                                            --------------------------------------------------------------------------

Net loss                                      $         (926)   $         (579)    $       (2,423)    $         (934)
                                            ==========================================================================

Basic and diluted loss per share              $         (.01)   $         (.01)    $         (.02)    $         (.02)
                                            ==========================================================================

Weighted average common and common
 equivalent shares outstanding basic and
 diluted:                                        111,220,780        39,419,240        111,001,235         39,419,240
                                            ==========================================================================
</TABLE>




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



<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


                                                                                        Accumulated
                          Comprehensive   Common Stock    Preferred Stock    Additional    Other
                         -------------------------------------------------   Paid-in    Comprehensive     Accumulated
                          Loss           Shares   Amount   Shares   Amount   Capital    Income (Loss)       Deficit       Total
                         ---------------------------------------------------------------------------------------------------------

Balance at
<S>     <C> <C>          <C>           <C>          <C>     <C>        <C>     <C>         <C>            <C>           <C>
October 31, 2001         $    --       36,007,855   $ 3     3,739,169  $ 4     $  5,612    $      37      $  (4,360)    $   1,296

Distributions                 --               --    --            --   --           --           --           (108)         (108)
to members of
DW Leasing, LLC

Unrealized loss on
on available-for-
sale marketable
securities                   (63)              --    --             --  --           --          (63)            --           (63)

Conversion of
debt to preferred
stock and
additional paid-in
capital                       --               --    --        619,230  --        3,348           --             --         3,348

Net loss                  (2,423)              --    --             --  --           --           --         (2,423)       (2,423)
                         ----------------------------------------------------------------------------------------------------------

Total
comprehensive loss       $(2,486)
                         ==================

Balance at
April 30, 2002                         36,007,855   $ 3      4,358,399 $ 4     $  8,960    $     (26)     $  (6,891)    $   2,050
                                       ============================================================================================
</TABLE>



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

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
                                                                                        Six Months Ended
                                                                                 -------------------------------
                                                                                 April 30, 2002  April 30, 2001
                                                                                 -------------------------------

Cash flow from operating activities:
<S>                                                                                <C>             <C>
  Net loss                                                                         $    (2,423)    $      (934)
  Adjustments to reconcile net loss to net cash provided by (used in) operating
   activities:
  Depreciation and amortization                                                          1,346             859
  Other                                                                                    126              51
  Changes in operating assets and liabilities, net of effect of acquisitions:
    Accounts receivable, net                                                              (659)           (735)
    Inventories, net                                                                       292             650
    Other, net                                                                             996             514
                                                                                 -------------------------------

Net cash provided by (used in) operating activities                                       (322)            405
                                                                                 -------------------------------

Cash flows from investing activities:
  Capital expenditures                                                                    (405)           (585)
  Payments to acquire U.S. Rubber                                                           --          (5,528)
  Other                                                                                     11              13
                                                                                 -------------------------------

Net cash used in investing activities                                                     (394)         (6,100)
                                                                                 -------------------------------
</TABLE>





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


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>

                                                                                        Six Months Ended
                                                                                 -------------------------------
                                                                                 April 30, 2002  April 30, 2001
                                                                                 -------------------------------

Cash flows from financing activities:
<S>                                                                                <C>             <C>
  Borrowings from and distributions to related parties, net                        $     1,329     $       429
  Net borrowings on lines of credit                                                        401              84
  Borrowings (repayments) on long-term debt                                             (1,276)          4,044
  Debt issuance cost                                                                        --             (76)
  Proceeds from issuance of U.S. Rubber common stock                                        --             880
                                                                                 -------------------------------

Net cash provided by (used in) financing activities                                        454           5,361
                                                                                 -------------------------------

Decrease in cash and cash equivalents                                                     (262)           (334)

Cash and cash equivalents, beginning of period                                             529             341
                                                                                 -------------------------------

Cash and cash equivalents, end of period                                           $       267     $         7
                                                                                 ===============================

Interest paid                                                                      $     1,852     $       912
                                                                                 ===============================

Taxes paid                                                                         $        15     $        --
                                                                                 ===============================

Supplemental disclosure of noncash operating, investing and financing
 activities:
  Conversion of debt to preferred stock and additional paid-in capital             $     3,348     $        --
  Conversion of accounts payable, related parties to debt                          $     1,295     $        --
  Purchase price adjustment and conversion of accounts payable to debt for
   United                                                                          $       294     $        --
  Advances to construct coaches and equipment acquired by issuance of debt         $        --     $       292
  Seller notes issued in acquisition of U.S. Rubber                                $        --     $     2,573

</TABLE>




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


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   BASIS OF  PRESENTATION,  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
     ACCOUNTING POLICIES

Description of Business:

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"). In addition,  Danzer Corporation changed its name to Obsidian
Enterprises,  Inc. However,  the operating  company,  Danzer  Industries,  Inc.,
retained its name.  The  operating  company  will  continue to be referred to as
Danzer  Industries,  Inc. The Acquisition and Plan of  Reorganization  of Danzer
Corporation   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  Danzer  subsequent  to the  Acquisition  and Plan of
Reorganization.  For accounting purposes, U.S. Rubber Reclaiming, Inc. is deemed
to have acquired Danzer.

Pursuant to the Plan of Acquisition and Reorganization, United Expressline, Inc.
was acquired July 31, 2001.

The  accompanying  financial data as of April 30, 2002 and for the three and six
months ended April 30, 2002 and 2001 has been  prepared by the Company,  without
audit,  pursuant to the rules and  regulations  of the  Securities  and Exchange
Commission  ("SEC").  Certain  information  and  footnote  disclosures  normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the  United  States  of  America  have  been
condensed  or omitted  pursuant to such rules and  regulations.  The October 31,
2001 consolidated  balance sheet was derived from audited financial  statements,
but does not include all disclosures required by accounting principles generally
accepted in the United States of America. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
consolidated  financial  statements  should  be read  in  conjunction  with  the
consolidated  financial  statements  and  the  notes  thereto  included  in  the
Company's  Annual Report on Form 10-K for the period ended October 31, 2001. The
Company follows the same accounting policies in preparation of interim reports.

In the opinion of management,  all adjustments  (which include normal  recurring
adjustments except as disclosed herein) necessary to present a fair statement of
financial position as of April 30, 2002, results of operations for the three and
six months ended April 30, 2002 and cash flows and stockholders'  equity for the
six months ended April 30, 2002 have been made.  The results of  operations  for
the three and six months ended April 30, 2002 are not necessarily  indicative of
the operating results for the full fiscal year or any future periods.

The entities  resulting from the merger described above,  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.


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   BASIS OF  PRESENTATION,  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
     ACCOUNTING POLICIES, CONTINUED

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

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") and Obsidian Leasing Company,  Inc. ("Obsidian
Leasing"),  formed November 1, 2001. DW Leasing is controlled by individuals who
are  also   controlling   shareholders  of  Obsidian   Enterprises,   Inc.  and,
accordingly,  Pyramid.  DW Leasing and Obsidian Leasing also own the majority of
the coaches operated by Pyramid. All intercompany transactions are eliminated in
consolidation.

To complete the Plan of Reorganization,  Pyramid and DW Leasing were required to
obtain  lender  approval of the  transfer of assets  subject to  liabilities  to
Obsidian Leasing, a wholly owned subsidiary of the Company. On November 1, 2001,
the Company  completed the tax-free  exchange  contemplated  by the  Acquisition
Agreement of June 21, 2001,  whereby all but seven  coaches and the  liabilities
thereon were transferred to Obsidian Leasing to operate this segment of business
previously  under DW Leasing.  However,  as of April 30, 2002,  the entities are
combined due to cross-guarantees associated with the debt on the seven coaches.

Champion Trailer, Inc. ("Champion") manufactures and sells transport trailers to
be used primarily in the auto racing industry.

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

Basis of Presentation:

The  Company's  April  30,  2002  consolidated  financial  statements  have been
presented  on the  basis  that  it is a going  concern  which  contemplates  the
realization  of assets and  satisfaction  of liabilities in the normal course of
business.  The Company  incurred a loss from operations for the ten months ended
October 31, 2001 of $2,149,000 and a net loss of  $4,360,000,  which included an
asset impairment charge of $2,305,000.  In addition,  the Company has incurred a
net loss of $2,423,000  for the six months ended April 30, 2002. The losses have
weakened the Company's  financial  condition and  contributed  to its failure to
meet certain financial  covenants required by the lenders.  As a result of these
covenant  violations  which  either  were not waived,  were waived only  through
November 2002, or were subject to amendments to credit agreements, $4,683,000 of
long-term debt has been reclassified and included in the current debt caption of
current liabilities as of April 30, 2002. A significant portion of the Company's
assets is pledged as collateral on these loans and  foreclosure  by a bank would
seriously  impair the  Company's  existence.  In addition,  these losses and the
reclassification  of  long-term  debt have  contributed  to a total  deficit  in
working capital of $9,567,000 at April 30, 2002.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   BASIS OF  PRESENTATION,  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
     ACCOUNTING POLICIES, CONTINUED

In view of these  matters,  realization  of the assets and  satisfaction  of the
liabilities in the ordinary  course of business is dependent upon its ability to
generate  sufficient cash flow to meet its obligations on a timely basis, comply
with the terms of its debt financing  agreements,  obtain refinancing of certain
obligations,  and continue to receive  capital  contributions  from its majority
stockholder.

Management,  as a part of its plan towards resolving these issues and generating
revenue  and cash  flow,  has taken  the  actions  described  below  during  and
subsequent to the quarter  ended April 30, 2002.  Although  management  believes
these actions will improve  operations and liquidity,  there can be no assurance
that such actions will sufficiently improve operations or liquidity, or occur on
terms acceptable to the Company.  See  "Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations"  elsewhere  in this filing for
further  discussions  of the  liquidity  issues  facing the Company and the risk
factors  associated  with  these  issues  as  well  as  management's  plans  for
addressing them.

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 $1,463,000.  The  subordinated  lender  received
     30,000 shares of Series C convertible 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 $602,000 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  $1,289,000  of debt and accrued
     interest due to Obsidian Capital  Partners,  LP ("OCP"),  majority owner of
     the  Company,  to  equity  in  exchange  for  402,906  shares  of  Series C
     convertible preferred stock.

o    On April 30,  2002,  the  Company  converted  $596,000  of debt and accrued
     interest due to Fair Holdings,  Inc. ("Fair"),  an entity controlled by the
     Company's  Chairman,  to equity in exchange for 186,324  shares of Series C
     convertible preferred stock.

The above  transactions  are estimated to reduce interest costs by approximately
$345,000 on an annual basis.

o    The Board of Directors has  authorized the Chairman of the Board to explore
     various  options  regarding  the  operations at Champion.  Options  include
     divestiture,  restructuring of operations or closing the facility. As these
     options  are  considered,  management  has taken  steps to  further  reduce
     overhead through cost reductions and reduction in the space currently under
     lease.

o    The Company is  undertaking  to refinance the coaches  transferred  from DW
     Leasing to Obsidian  Leasing  with  existing  lenders  and DC  Investments.
     Management  anticipates  that this will be concluded  by the fourth  fiscal
     quarter of 2002.

o    The Company is also pursuing  refinancing of the  outstanding  bank debt at
     U.S.  Rubber  that is due  November  1, 2002.  Management  anticipates  the
     refinancing will be concluded by the third fiscal quarter of 2002.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   BASIS OF  PRESENTATION,  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
     ACCOUNTING POLICIES, CONTINUED

o    OCP has  entered  into  agreements  related to the debt of U.S.  Rubber and
     United. Specifically,  in the event of a default and in accordance with the
     default provisions,  Obsidian is obligated to make capital contributions to
     these subsidiaries of $1,620,000 and $1,000,000, respectively. In addition,
     OCP has  committed  to fund through the  purchase of  additional  preferred
     stock the costs of legal, accounting and related costs to complete the Plan
     of  Reorganization  and the costs to meet regulatory  requirements to allow
     continued  trading of Company  stock by  shareholders.  Funding from OCP is
     anticipated  to occur  during  the  third  fiscal  quarter  and  result  in
     additional cash of  approximately  $440,000 and conversion of approximately
     $860,000 of advances from OCP to equity.

Significant Accounting Policies:


Property, Plant and Equipment

Property,  plant and equipment are recorded at cost.  Depreciation is calculated
using the  straight-line  method over the estimated  useful lives of the assets.
Effective  February 1, 2002,  the Company  changed its  estimate  with regard to
depreciation of coaches owned by Obsidian Leasing and DW Leasing by establishing
a salvage  value for the  coaches of  approximately  38% of original  cost.  The
depreciable  lives of the coaches of fifteen years was not changed.  This change
in  estimate  resulted  in a  reduction  of  depreciation  for  the  quarter  of
approximately $78,000.

Goodwill and Intangible 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 Financial  Accounting  Standard
(FAS) No. 142,  goodwill  is no longer  amortized  but is instead  subject to an
annual  impairment  test.  The Company has not yet  completed  its  transitional
impairment test in conjunction  with the adoption of FAS 142.  However,  because
the vast  majority  of the  goodwill  recorded  relates  to  recently  completed
acquisitions,  management  does not  believe  that such  goodwill  is  impaired.
However,  until the transitional  impairment test is completed,  there can be no
assurance  that such goodwill is not impaired.  The Company  expects to complete
the transitional impairment test in the third quarter of fiscal 2002.

Earnings Per Share:

Basic per-share amounts are computed,  generally, by dividing net income or loss
by the weighted-average  number of common shares outstanding.  Basic and diluted
weighted  average  common  shares  outstanding  for  2002  and 2001 are the same
because the Company incurred losses for all periods  presented.  Therefore,  the
inclusion  of  options,  warrants  and other  common  stock  equivalents  in the
calculation of diluted loss per share would have an antidilutive effect.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   BASIS OF  PRESENTATION,  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT
     ACCOUNTING POLICIES, CONTINUED

In arriving at the weighted  average  number of common  shares  outstanding  for
basic income  (loss) per share,  the Company's  Series C  Convertible  Preferred
Stock,  which has all the rights and  privileges of the Company's  common stock,
has been reflected as equivalent common shares. Therefore, for the three and six
months  ended  April 30,  2002,  the  4,358,399  shares of Series C  Convertible
Preferred Stock have been reflected, on a weighted average basis outstanding, as
common  equivalent  shares  of  75,212,925  and  74,993,470,  respectively.  The
weighted  average common shares  outstanding  for the three and six months ended
April 30, 2001 reflects the 1,970,962  shares of Series C Convertible  Preferred
Stock issued to the former stockholders of the companies acquired in the reverse
merger above, as if such shares had been converted into their equivalent  number
of common shares of 39,419,240.

2.   PRO FORMA INFORMATION

The  unaudited  condensed  consolidated  results of  operations  shown below are
presented  on  a  pro  forma  basis  and   represent  the  results  of  Obsidian
Enterprises,  Inc. (formerly Danzer),  Danzer Industries,  U.S. Rubber,  United,
Champion,  Pyramid,  Obsidian  Leasing and DW Leasing on a combined  basis.  The
schedule below includes all necessary pro forma adjustments for all entities for
the periods shown.

                                       Three Months Ended  Six Months Ended
                                           April 30,           April 30,
                                              2001               2001
                                      ----------------------------------------

Net sales                                $        17,578     $        31,577

Net loss                                 $          (341)    $        (1,223)

Net loss per share - basic and diluted   $         (.01)     $         (.03)

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 is it necessarily
indicative of future operating results.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


3.  INVENTORIES

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

                                    April 30,       October 31,
                                      2002              2001
                               ------------------ -------------------

Raw materials                    $    3,818        $     3,734
Work-in-process                         977              1,471
Finished goods                        2,173              2,322
Valuation reserve                      (566)              (833)
                               ------------------ -------------------

Total                            $    6,402     $        6,694
                               ================== ===================

4.   FINANCING ARRANGEMENTS AND STOCKHOLDERS' EQUITY

U.S. Rubber

On March 7, 2002,  the  Company  completed  a series of  transactions  with U.S.
Rubber,  SerVaas,  Inc.  ("SerVaas"),  the former owner of U.S.  Rubber,  and DC
Investments,  an entity  controlled by the Company's  Chairman,  whereby certain
existing debt of U.S. Rubber was acquired from SerVaas. DC Investments  acquired
the SerVaas interest in the debt agreement with a remaining balance of $730,000,
plus accrued interest of $123,000, for $700,000.  U.S. Rubber then acquired this
agreement  in  exchange  for a new note  payable to DC  Investments  with a face
amount of $700,000. The note requires monthly interest payments at 15% per annum
with  the  principal  payable  March  2007.  The  note  is  subordinate  to debt
outstanding with the senior lender of U.S. Rubber.

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

No gain or loss was recognized in the transactions because of the involvement of
related  parties.  The  transaction  resulted  in an  increase  in equity of the
Company of $1,463,000 and an annual interest savings of approximately $145,000.

During  February 2002,  U.S.  Rubber entered into a "Second  Amendment to Credit
Agreement" with its primary lender. The terms of the amendment require scheduled
debt service  payments under  substantially  the same terms through  November 1,
2002 when all debt  outstanding  with the primary  lender  will become due.  The
agreement  also  modifies  the  terms of an  operating  lease  with  the  lender
requiring  payment in full of the remaining  lease  obligation as of November 1,
2002 of approximately $738,000.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


4.   FINANCING ARRANGEMENTS AND STOCKHOLDERS' EQUITY, CONTINUED

Obsidian Enterprises

On April 30, 2002, the Company converted $1,289,000 of debt and accrued interest
owed to OCP and  $596,000 of debt and accrued  interest  owed to Fair  Holdings,
Inc. ("Fair"), an entity controlled by the Company's Chairman, to equity through
the  issuance  to OCP  and  Fair  of a total  of  589,230  shares  of  Series  C
Convertible   Preferred  Stock  which  are  convertible  into  an  aggregate  of
11,784,600 shares of common stock of the Company. The transaction resulted in an
increase in equity of the Company of $1,885,000 and an annual  interest  savings
of approximately $200,000.

The Company and DW Leasing  converted  amounts owed to DC  Investments  to notes
payable. The notes bear interest at 10% payable quarterly, with principal due in
one installment in March 2005. The total advances  converted to notes payable to
DC  Investments  were  $1,085,000 and $210,000 for Obsidian  Enterprises  and DW
Leasing, respectively.

Champion

Champion was in technical default of its debt due its subordinated  lender as of
April 30, 2002 and in technical  default of debt due its senior and subordinated
lender at October  31,  2001.  The  Company has not been able to obtain a waiver
from the subordinated lender. Accordingly,  debt in the amount of $1,250,000 has
been classified as current as of April 30, 2002. At October 31, 2001, $2,612,000
of debt was classified as current.  On March 20, 2002, DC  Investments  acquired
the senior  lender's loan to Champion in the amount of $602,000 in a nonrecourse
assignment of the debt.

DW Leasing

DW Leasing was in technical  default of certain loan  covenants  with two of its
primary lenders. The Company has obtained bank waivers from one of these lenders
through  November  2002 for a portion  of this  amount.  Amounts  classified  as
current as of April 30, 2002 and October 31, 2001 due to defaults  that have not
been waived are $600,000 and $639,000, respectively.

Danzer Industries

Danzer  Industries  was in technical  default of certain  loan  covenants in its
credit agreement. As a result of these violations,  long-term debt in the amount
of $883,000 is classified as current as of April 30, 2002.

The Company was in violation of three  negative  covenants  with  Renaissance US
Growth & Income Trust PLC and FBSUS Special Opportunities Trust PLC, the holders
of debentures that completed the financing of United. The Company has received a
waiver of these violations through November 1, 2002.

The  Company  has an  agreement  with OCP that  gives it the right to  mandate a
capital  contribution  from OCP if the lenders to U.S. Rubber and United were to
declare a default. In that event, the Company has the right to enforce a capital
contribution  agreement with OCP up to $1,620,000 on U.S.  Rubber and $1,000,000
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.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


5.   BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA

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

<TABLE>
                                                                         Three Months Ended April 30, 2002
                                                   -------------------------------------------------------------------------------
                                                         Trailer                             Butyl Rubber
                                                      Manufacturing       Coach Leasing       Reclaiming            Total
                                                   -------------------------------------------------------------------------------

                    Sales:
<S>                                                  <C>                  <C>                <C>               <C>
                      Domestic                       $       12,878       $       1,511      $       2,383     $       16,772
                      Foreign                                    --                  --                201                201
                                                   -------------------------------------------------------------------------------

                    Total                            $       12,878       $       1,511      $       2,584     $       16,973

                    Cost of goods sold               $       11,315       $         766      $       2,353      $      14,434

                    Income (loss) before taxes       $         (651)      $         (20)     $        (255)     $        (926)

                    Identifiable assets              $       24,636       $      12,518      $      10,067      $      47,221

                    Depreciation and                 $          227       $         165      $         253      $         645
                        amortization expense
                                                                         Three Months Ended April 30, 2001
                                                   -------------------------------------------------------------------------------
                                                         Trailer                             Butyl Rubber
                                                      Manufacturing       Coach Leasing       Reclaiming            Total
                                                   -------------------------------------------------------------------------------

                    Sales:
                      Domestic                       $        1,246       $         900      $       2,955     $        5,101
                      Foreign                                    --                  --                159                159
                                                   -------------------------------------------------------------------------------

                    Total                            $        1,246       $         900      $       3,114     $        5,260

                    Cost of goods sold               $        1,100       $         358      $       2,745      $       4,203

                    Loss before taxes                $         (172)      $        (365)     $         (43)     $        (580)

                    Identifiable assets              $        5,476       $      10,747      $      11,264      $      27,487

                    Depreciation and                 $           79       $         227      $         267      $         573
                        amortization expense


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


5.  BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

                                                                          Six Months Ended April 30, 2002
                                                   -------------------------------------------------------------------------------
                                                         Trailer                             Butyl Rubber
                                                      Manufacturing       Coach Leasing       Reclaiming            Total
                                                   -------------------------------------------------------------------------------

                    Sales:
                      Domestic                       $       22,128       $       2,554      $       4,462     $       29,144
                      Foreign                                    --                  --                312                312
                                                   -------------------------------------------------------------------------------

                    Total                            $       22,128       $       2,554      $       4,774     $       29,456

                    Cost of goods sold               $       19,722       $       1,339      $       4,399      $      25,460

                    Loss before taxes                $       (1,584)      $        (387)     $        (607)     $      (2,578)

                    Identifiable assets              $       24,636       $      12,518      $      10,067      $      47,221

                    Depreciation and                 $          424       $         410      $         512      $       1,346
                        amortization expense
                                                                          Six Months Ended April 30, 2001
                                                   -------------------------------------------------------------------------------
                                                         Trailer                             Butyl Rubber
                                                      Manufacturing       Coach Leasing       Reclaiming            Total
                                                   -------------------------------------------------------------------------------

                    Sales:
                      Domestic                       $        1,364       $       1,179      $       6,195     $        8,738
                      Foreign                                    --                  --                265                265
                                                   -------------------------------------------------------------------------------

                    Total                            $        1,364       $       1,179      $       6,460     $        9,003

                    Cost of goods sold               $        1,183       $         447      $       5,874      $       7,504

                    Loss before taxes                $         (309)      $        (531)     $        (107)     $        (947)

                    Identifiable assets              $        5,476       $      10,747      $      11,264      $      27,487

                    Depreciation and                 $          108       $         302      $         449      $         859
                        amortization expense
</TABLE>


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


5.   BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

Obsidian  Enterprises,  Inc.  (legal  parent)  allocates  selling,  general  and
administrative  expenses  to  the  respective  companies  primarily  based  on a
percentage  of sales.  For the three months and six months ended April 30, 2002,
allocated corporate expenses by segment were as follows:

                                       Three Months Ended  Six Months Ended
                                           April 30,           April 30,
                                              2002               2002
                                      ----------------------------------------

Trailer manufacturing                    $           476     $           694
Coach leasing                                         56                  81
Butyl rubber reclaiming                               95                 146
                                      ----------------------------------------

                                         $           627     $           921
                                      ========================================

Included in the above  expenses  are  professional  fees  related to  regulatory
filings  and  historical  audits  and  other  related  expenses  which  will  be
nonrecurring costs. Total nonrecurring costs for the three months and six months
ended April 30, 2002 were approximately $400,000 and $600,000, respectively.

6.   RELATED PARTIES

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

<TABLE>
                                                                                     April 30,         October 31,
                                                                                       2002               2001
                                                                                 ------------------ ------------------

Balance sheet:
  Current assets:
<S>                                                                                <C>                <C>
    Accounts receivable, DC Investments                                            $          5       $         --
    Accounts receivable, Obsidian Capital Company (OCC)                                       4                217
    Accounts receivable, Obsidian Capital Partners (OCP)                                     10                 --
    Accounts receivable, stockholders                                                         9                 --
  Long-term portion:
    Investment banking fees, purchase accounting                                             --              1,960
                                                                                 ------------------ ------------------

Total assets                                                                       $         28       $      2,177
                                                                                 ================== ==================

  Current liabilities:
    Accounts payable, DC Investments                                               $         15       $         --
    Accounts payable, Obsidian Capital Company                                              263                625
    Accounts payable, Obsidian Capital Partners                                               5                 --
    Accounts payable, stockholders                                                          382                300
  Long-term portion:
    Accounts payable, DC Investments                                                        338                 --
    Accounts payable, Obsidian Capital Partners                                             860              2,170
                                                                                 ------------------ ------------------

Total liabilities                                                                  $      1,863       $      3,095



                                                                                 ================== ==================
</TABLE>

<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

6.  RELATED PARTIES, CONTINUED
<TABLE>

                                                   Three Months Ended                      Six Months Ended
                                          -------------------------------------- -------------------------------------
                                            April 30, 2002     April 30, 2001     April 30, 2002     April 30, 2001
                                          ------------------- ------------------ ------------------ ------------------

Income statement:
<S>                                         <C>                 <C>                <C>                <C>
  Interest expense, DC Investments          $        104        $         --       $        104       $         --

                                          =================== ==================================== ==================
  Interest expense, Obsidian Capital        $         58        $         --       $         58       $         --
  Partners
                                          =================== ================== ================== ==================
  Rent expense, Obsidian Capital Company    $         10        $         --       $         25       $         --
                                          =================== ================== ================== ==================
</TABLE>

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 April 30,  2002 or  October  31,  2001,
respectively.  Amounts  classified as long term represent  amounts not currently
due, amounts that are expected to be converted to equity subsequent to April 30,
2002 and October 31, 2001, respectively,  or amounts converted to long-term debt
subsequent to April 30, 2002.

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.  Also see Note 4 for  details  regarding
related-party transactions converting debt to equity.

7.   COMMITMENTS AND CONTINGENCIES

The  Company  has a purchase  commitment  to purchase or lease three (3) coaches
within 60 days of completion.  The cost of these coaches will approximate  $1.35
million.  This transaction was initially expected to close in the second quarter
of calendar  2002 and has been  extended  until  financing for these coaches has
been obtained.

On April 29,  2002,  the  Company  received  notice  of a  lawsuit  filed by the
subordinated  lender of Champion  seeking  payment of a $1,250,000  note payable
plus accrued  interest from Champion or Obsidian  Enterprises  under a guarantee
agreement. An answer of general denial on behalf of Champion has been filed with
the court. In addition,  a special  appearance with respect to jurisdiction  has
been filed with the court on behalf of Obsidian Enterprises.

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.

8.   SUBSEQUENT EVENTS

On May 16, 2002, one of the production  facilities of U.S. Rubber was damaged by
a fire at an adjacent property. The primary production facility was not damaged,
and the Company is able to produce and ship product  although at a reduced rate.
The Company is currently having discussions with its insurance carrier regarding
potential claims for damaged equipment and facilities and business interruption.
Total losses and any potential recovery are not currently known.




<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


ITEM 2 MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
OF OPERATIONS

IMPORTANT NOTE ABOUT FORWARD-LOOKING STATEMENTS.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities  Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. The Company and its representatives may from time to
time make  written  or oral  forward-looking  statements,  including  statements
included in or incorporated by reference into this Quarterly Report on Form 10-Q
and  the  Company's   other  filings  made  with  the  Securities  and  Exchange
Commission. These forward-looking statements are based on management's views and
assumptions and involve risks,  uncertainties and other important factors,  some
of which may be beyond the  control of the  Company,  that  could  cause  actual
results  to  differ   materially   from  those   expressed  or  implied  in  the
forward-looking  statements.  Factors  that might  cause or  contribute  to such
differences  include,  but are not limited to, those  discussed in this Item 2.,
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  in this  Form  10-Q.  Readers  should  carefully  review  the risks
described in this and other  documents  that the Company files from time to time
with the  Securities and Exchange  Commission.  The  forward-looking  statements
speak  only as of the date  that  they are made and the  Company  undertakes  no
obligation to update or revise any of the forward-looking statements.

OVERVIEW

The reverse  merger  transactions,  completed  in June and July 2001,  have been
treated for  accounting  purposes as an  acquisition  by U.S.  Rubber.  For this
reason,  the results for the six-month  period April 30, 2001 represent only the
financial  results of U.S.  Rubber for six  months,  Champion  Trailer  for four
months,  and the  Pyramid  Group for four  months  based on the  January 1, 2001
acquisition  date. Danzer  Corporation and its wholly owned  subsidiary,  Danzer
Industries,  and United  Expressline  were  acquired  June 21, 2001 and July 31,
2001,  respectively,  and,  accordingly,  are not  included  in the  results  of
operations for the three and six months ended April 30, 2001.  Since the Company
acquired a substantial portion of its operations on or after January 1, 2001 and
was not previously a registrant,  management's  discussion and analysis does not
include  a  comparison  of 2001  operating  results  with  the  three-month  and
six-month periods ended April 30, 2000.

The financial  condition at April 30, 2002 and the results of operations for the
three and six months ended April 30, 2002,  include the  operations  of Obsidian
Enterprises,  U.S. Rubber, Champion Trailer, Pyramid Coach, Obsidian Leasing, DW
Leasing, United Expressline, and Danzer Industries.

RESULTS OF OPERATIONS

The Company's overall operating results and financial  condition improved during
the second  quarter  of 2002  compared  to the first  quarter of 2002 and can be
characterized by revenue increases in each segment of its business, the shift to
positive EBITDA in each business segment,  reduced operating losses and positive
stockholders'  equity.  These results are indicative of business  seasonality in
the trailer and related transportation equipment manufacturing and coach leasing
segments,  and  increasing  demand  in the  butyl  rubber  segment,  as  well as
management's efforts to concentrate on generating revenue and earnings, managing
cash, and steadily  addressing the debt/equity  structure  while  completing the
integration of acquired subsidiaries (mostly nonaudited privately held entities)
into an effective  publicly traded operating  company with consistent  reporting
systems.  Management  has no prior history in effecting  such an  integration of
subsidiaries under a holding company, and its ability to successfully accomplish
this task will have a  substantial  impact on  long-term  Company  revenues  and
profits. During this quarter, the Company hired a new Chief Financial Officer to
direct many of these functions  including cash management,  debt  consolidation,
more timely reporting,  and development of personnel incentive programs,  and to
help integrate the acquired subsidiaries into an effective operating company.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

The  Company  operates  in three  industry  segments,  comprised  of trailer and
related transportation  equipment  manufacturing,  butyl rubber reclaiming,  and
coach  leasing.  Trailer  and  related  transportation  equipment  manufacturing
includes the operations of United, Danzer Industries, and Champion. Butyl rubber
reclaiming includes the operations of U.S. Rubber and coach leasing includes the
operations of Pyramid, DW Leasing, and Obsidian Leasing.

The  following is a discussion  of the major  elements  impacting  the Company's
operating  results by segment for the  three-month  and six-month  periods ended
April 30, 2002 compared to the three-month and six-month periods ended April 30,
2001. The comments that follow should be read in conjunction  with the Company's
condensed  consolidated financial statements and related notes contained in this
Form 10-Q.

TRAILER AND RELATED TRANSPORTATION EQUIPMENT MANUFACTURING

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

<TABLE>

                                        Three Months Ended                      Six Months Ended
                        ------------------------------------------ ------------------------------------------
                           April 30, 2002       April 30, 2001        April 30, 2002       April 30, 2001
                        --------------------- -------------------- --------------------- --------------------

<S>                         <C>                   <C>                  <C>                   <C>
Net Sales                   $     12,878          $      1,246         $     22,128          $      1,364
Cost of Sales                     11,315                 1,100               19,722                 1,183
                        --------------------- -------------------- --------------------- --------------------

Gross Profit                $      1,563          $        146         $      2,406          $        181
                        ===================== ==================== ===================== ====================

Gross Profit %                    12.1%                 11.7%                10.9%                 13.3%
</TABLE>

Three Months  Ended April 30, 2002  Compared to The Three Months Ended April 30,
2001 And Six Months Ended April 30, 2002  Compared to The Six Months Ended April
30, 2001

Operating   results  between  these  periods  are  not  comparable  due  to  the
acquisition of Danzer and United in June and July of 2001, respectively, and the
acquisition of Champion in January 2001.  During the three months and six months
ended April 30, 2002, this segment has seen increasing  sales in cargo trailers,
primarily in the three months ended April 30,  2002,  due to  additional  demand
driven by  marketing  efforts,  as well as the  seasonal  nature of the product.
These  increases  have been  partially  offset by a continued  reduction  in the
demand for truck bodies and slow sales volume in the transport specialty trailer
product line.

The primary reason for truck body sales at levels below historic  amounts is the
continued   depressed   condition  of  the   telecommunications   industry  that
historically  purchased a significant  volume of this product  line.  Management
anticipates that the overall general economic  conditions and the economic state
of the  telecommunications  industry will continue to adversely  impact sales of
truck  bodies  during 2002.  Management  is  investigating  the  possibility  of
integrating  the  production of cargo  trailers  into its truck body  production
facility as a means to increase production capacity of the cargo trailer product
and absorb excess capacity at this facility.

Gross  profit  for the three  months  and six months  ended  April 30,  2002 was
impacted  negatively  due to  reduced  volume  in the truck  body and  specialty
transport  trailer  lines  partially  offset by reductions in personnel at these
facilities and increased volume in the cargo trailer product line.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


BUTYL RUBBER RECLAIMING

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

<TABLE>
                                Three Months Ended                      Six Months Ended
                        ------------------------------------------ ------------------------------------------
                           April 30, 2002       April 30, 2001        April 30, 2002       April 30, 2001
                        --------------------- -------------------- --------------------- --------------------

<S>                         <C>                   <C>                  <C>                   <C>
Net Sales                   $     2,584           $     3,114          $     4,774           $     6,460
Cost of Sales                     2,353                 2,745                4,399                 5,874
                        --------------------- -------------------- --------------------- --------------------

Gross Profit                $       231           $       369          $       375           $       586
                        ===================== ==================== ===================== ====================

Gross Profit %                    8.9%                 11.9%                 7.9%                  9.1%
</TABLE>

                 Three Months Ended April 30, 2002 Compared to
                     The Three Months Ended April 30, 2001

Net sales in this  segment for the three months ended April 30, 2002 as compared
to the comparable three-month period ended April 30, 2001 decreased 17.0% in the
amount of $530. While a negative trend,  sales did improve over the first fiscal
quarter  2002 as demand has begun to  increase.  The  reduction  in sales is due
primarily  to  reduced  sales  to  tire   manufacturers   and  pipeline   mastic
manufacturers.

The Company's tire manufacturing customers built up large inventories during the
widespread  tire  recalls  in 2001 in  anticipation  of huge  demand  under such
recalls.  The number of tire orders  submitted  by  consumers to be replaced was
substantially lower than anticipated,  and as a result, tire manufacturer orders
were lower than the previous year, producing a substantial decrease in reclaimed
butyl  demand.  The Company has seen an increase in sales  beginning  in January
2002  which may  indicate  a return  to  historic  inventory  levels at its tire
manufacturer  customers,  but does not anticipate a return to historic levels of
demand for  reclaimed  butyl  rubber by tire  manufacturers  prior to the fourth
fiscal quarter of 2002.

The demand for  pipeline  mastic  wraps  produced  with  reclaimed  butyl rubber
supplied by the Company  also fell  dramatically  beginning in October 2001 as a
result of the  decline  in the price of crude  oil in late 2001  which  caused a
decline in new oil exploration. If the price of crude oil begins to climb again,
the  Company  believes  the demand for those uses will also  return to  historic
levels.

Gross profit percentage fell from 11.9% in the three months ended April 30, 2001
to 8.9% for the three months  ended April 30, 2002 as a result of the  decreased
volume.  The  reduction  was partially  offset by the  refurbishment  of the 12"
extruder,  a primary piece of operating  equipment,  and the use of butyl rubber
pad scrap in the production process that have reduced operating costs.

                  Six Months Ended April 30, 2002 Compared to
                      The Six Months Ended April 30, 2001

Net sales in this segment for the six months ended April 30, 2002 as compared to
the  comparable  six-month  period ended April 30, 2001  decreased  26.1% in the
amount of $1,686.  The  reduction in sales is due  primarily to reduced sales to
tire manufacturers and pipeline mastic manufacturers as described above.

Gross  profit  percentage  for the six  months  ended  April  30,  2002 was 7.9%
compared  to 9.1% for the six  months  ended  April 30,  2001 as a result of the
decreased  volume.  Gross profit in the six months ended April 30, 2001 was also
below  historical  levels as the  result  of an  inventory  obsolescence  charge
recorded in December  2001. The reduction in gross profit for 2002 was partially
offset by the  refurbishment  of the 12" extruder,  a primary piece of operating
equipment,  and the use of butyl rubber pad scrap in the production process that
have reduced operating costs.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


Management believes that the use of butyl rubber pad scrap will help control the
cost of raw  materials  during  the  remainder  of 2002 and the  Company is also
exploring the ability to raise prices in late 2002.

On March 7, 2002,  the  Company  completed  a series of  transactions  with U.S.
Rubber,  SerVaas,  the former owner of U.S. Rubber,  and DC Investments  whereby
certain  existing debt of U.S. Rubber was acquired from SerVaas.  DC Investments
acquired the SerVaas interest in the debt agreement with a remaining  balance of
$730,000,  plus accrued  interest of $123,000,  for $700,000.  U.S.  Rubber then
acquired the debt  agreement  from DC Investments in exchange for a new $700,000
note payable to DC Investments.  The note requires monthly interest  payments at
15% per annum with the principal  payable March 2007. The note is subordinate to
debt outstanding with the senior lender of U.S. Rubber.

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

No gain or loss was recognized in the transactions due to involvement of related
parties.  The  transaction  resulted  in an increase in equity of the Company of
$1,463,548 and an net annual interest savings of approximately $145,000.

COACH LEASING

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

<TABLE>
                                     Three Months Ended                         Six Months Ended
                        ------------------------------------------ ------------------------------------------
                           April 30, 2002       April 30, 2001        April 30, 2002       April 30, 2001
                        --------------------- -------------------- --------------------- --------------------

<S>                        <C>                   <C>                  <C>                   <C>
Net Sales                  $      1,511          $        900         $      2,554          $      1,179
Cost of Sales                       766                   358                1,339                   447
                        --------------------- -------------------- --------------------- --------------------

Gross Profit               $        745          $        542         $      1,215          $        732
                        ===================== ==================== ===================== ====================

Gross Profit %                   49.3%                 60.2%                47.5%                 62.1%
</TABLE>

                 Three Months Ended April 30, 2002 Compared to
                     The Three Months Ended April 30, 2001

Sales for the three months ended April 30, 2002 increased 67.9% in the amount of
$611 over the comparable  three-month  period ended April 30, 2001. The increase
in  sales  is  attributable  to an  increase  in the  size of the  coach  fleet,
additional  revenue from the  increased  use of employer  coach  drivers  versus
independent  contractors  paid  directly by the  customer  and due to  increased
utilization of the fleet in 2002.  Management believes the increased utilization
is a result of its marketing  efforts to rock and roll,  pop,  touring  Broadway
shows  and  corporate  customers.   These  customers  are  in  addition  to  the
traditional  country  and western  performers  who have  historically  been this
segment's  primary  customer  base.  In addition,  this  business is seasonal in
nature and historically is stronger in the spring, summer and fall months.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


Gross  profit for this  segment was 49.3% for the three  months  ended April 30,
2002  compared to 60.2% for the  comparable  three-month  period ended April 30,
2001. The reduction is attributable to several  factors.  During the three-month
period ended April 30, 2002,  additional coaches have been 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.  In  addition,  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 three month period ended April 30,  2001,  a larger  percentage  of coach
drivers were independent contractors paid directly by the customer.

                  Six Months Ended April 30, 2002 Compared to
                      The Six Months Ended April 30, 2001

Results  for the six  months  ended  April 30,  2002 are not  comparable  to the
six-month  period  ended April 30,  2001,  as this  segment  was  acquired as of
January 1, 2001 and, therefore,  includes only four months of operations for the
period ended April 30, 2001. Gross profit  percentage is also not comparable for
the reasons  stated  above and also 2001 does not include the months of November
and December that are historically a slow period for this segment.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES

Selling,  general and  administrative  expenses  are higher for the three months
ended April 30, 2002 versus the  three-month  period ended April 30, 2001 due to
the operations added in 2002, as previously discussed.

In addition,  selling,  general and  administrative  expenses are higher for the
three  month  period  ended  April 30, 2002 than would be expected on an ongoing
basis.  This is due  primarily  to  increased  administrative  costs  that  were
necessary to continue the process of creating better subsidiary  reporting,  the
use of outside  professionals  for  services in  assisting  in post  acquisition
activities,  the cost to obtain  prior  year  audits to meet  regulatory  filing
requirements,  and the cost of  providing  accounting  and  related  services to
management,  that will  normally be  performed  by Company  personnel on a going
forward  basis.  As a part of the  postacquisition  process,  OCP has  agreed to
provide capital to fund certain of the  administrative  expenses and convert the
amount to equity prior to the end of this fiscal year. As of April 30, 2002, OCP
has provided  funding of  approximately  $860,000 of such  expenses.  Management
anticipates  this amount will be  converted  to equity  during the third  fiscal
quarter of 2002 in  exchange  for  issuance  of Series C  convertible  preferred
stock.  In  addition,  under the terms of the  agreement  with OCP,  the Company
anticipates receiving an additional amount of approximately  $440,000 during the
third fiscal quarter of 2002.  This will also be converted to equity in exchange
for Series C convertible preferred stock.

INTEREST EXPENSE

The Company's  interest  expense  remains a high percentage when calculated as a
percentage of net sales,  as all  acquisitions  were made on a highly  leveraged
basis.  For the  three-month  period ended April 30,  2002,  the  percentage  of
interest  expense  to net sales of 5.7% was  comparable  to the 5.7% for the Pro
Forma period ended April 30, 2001.  This percentage is indicative of the efforts
made to improve the debt/equity structure of the Company.

INCOME TAX PROVISION

The income tax benefit for the six-month  period ended April 30, 2002  increased
by $142,000 as compared to the six-month period ended April 30, 2001. The income
tax benefit is created primarily through operating loss carryforwards recognized
in the  quarter to the extent they are  available  to offset the  Company's  net
deferred  tax  liability.  Quarterly  tax  benefits  are based on the  estimated
effective tax rate for the full year.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


LIQUIDITY AND CAPITAL RESOURCES

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

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

The Company and certain of its subsidiaries  have violated certain  requirements
and  covenants  in their debt  agreements  relating  to  maintenance  of certain
minimum  ratios and levels of earnings to funded debt and fixed charge  coverage
rate.  Management  has brought these  violations to the attention of its lenders
and, except for the Champion  subordinated  debt, Danzer Line of Credit and Term
Note and one DW Leasing note agreement, the lenders have waived these violations
as described below under "Financial Covenant Waivers."

The Company's working capital position (current assets over current liabilities)
was negative at April 30, 2002 by $9,567,000 in part because  approximately  41%
of the Company's debt is classified as a current liability.

The Company has been addressing these liquidity and working capital issues in a
number of ways. Management anticipates that the following steps started in early
2002 and currently in process will improve the Company's working capital,
strengthen its equity and place the Company in a position to successfully
address its liquidity issues. These steps include:

o    The transactions described below under "Partners Equity Transactions" which
     converts  approximately  $2,689,000 of long-term  liabilities to equity. Of
     this amount,  $1,289,000  was converted to Series C  convertible  preferred
     stock during the second fiscal quarter of 2002.

o    The actions taken with respect to Champion  described below under "Champion
     Transaction"  which would improve the Company's  overall equity and working
     capital position.

o    The  transactions  described  below under  "Refinancing  Activities"  which
     management  anticipates  will  reduce  the  Company's  interest  costs  and
     decrease the  proportion of debt which has been  reclassified  as a current
     liability.

While there can be no assurance that these  transactions  will continue to occur
as projected,  the  transactions  that have taken place are consistent  with the
plans delineated in previously  issued reports.  It should be noted that even if
these  transactions  do  occur,  there  can  be  no  assurance  that  they  will
sufficiently address the Company's liquidity issues. Management will continue to
address the liquidity concerns as well as consider any additional actions if the
contemplated transactions either do not occur or are insufficient.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


FINANCIAL COVENANT WAIVERS

The  Company  has  reached  agreements  with  certain  of its  lenders  to waive
financial covenant defaults under the following loans:

o    Management  has  completed  discussions  with  Bank One in  respect  of the
     violations  by U.S.  Rubber of the  negative  covenants of (i) fixed charge
     coverage  ratio  and (ii)  funded  debt to  EBITDA  ratio.  Management  has
     received  a waiver  of these  violations  and an  amendment  of the  Credit
     Agreement which extends it through November 1, 2002 when the entire debt is
     due. The Company is currently pursuing refinancing of this debt.

o    Pyramid is a guarantor of DW  Leasing's  debt to Regions  Bank,  Nashville,
     Tennessee. DW Leasing and Pyramid have been in violation of the Funded Debt
     to EBITDA ratio in the Regions Bank Credit  Facility since the inception of
     the loan. This is due to the fact that DW Leasing acquired eight additional
     new luxury coaches,  in highly leveraged  transactions.  At the time of the
     Acquisition,  Regions Bank granted a waiver of this violation. To date, the
     covenant has not been  rewritten.  Regions Bank has waived the violation as
     of  October  31,  2001.  However,  since  the  Company  continues  to be in
     violation of this covenant, $600,000 of long-term debt due Regions Bank has
     been reclassified as a current liability.

o    The Company was in violation of three negative  covenants with  Renaissance
     US Growth & Income Trust PLC and FBSUS Special Opportunities Trust PLC, the
     holders of debentures  that completed the financing of United.  The Company
     has received a waiver of these violations through November 1, 2002.

o    Danzer  Industries was notified by letter dated May 28, 2002 that it was in
     technical  default of its revolving note and term note due to nonreceipt of
     certain  documentation and  noncompliance  with the debt service ratio. The
     Company is endeavoring to provide the appropriate documentation and resolve
     the compliance requirement.  In addition, the Company's line of credit with
     an  outstanding  balance of $725,000  expired  March 31, 2002.  The line of
     credit has been extended  based on a verbal  agreement  with the bank while
     the covenant  violations are addressed.  As of April 30, 2002,  $883,000 of
     long-term  debt related to these  obligations  has been  reclassified  as a
     current liability due to these violations.

o    Champion  remains in  default of its  subordinated  debt  agreement  in the
     amount of $1,250,000,  which has been classified as a current liability due
     to the default. On April 29, 2002, the Company received notice of a lawsuit
     filed by the  subordinated  lender seeking  payment of the $1,250,000  note
     payable plus accrued interest from Champion or Obsidian Enterprises under a
     guarantee agreement.  An answer of general denial on behalf of Champion has
     been filed with the court. In addition,  a special  appearance with respect
     to  jurisdiction  has been  filed  with the  court on  behalf  of  Obsidian
     Enterprises. DC Investments, in a nonrecourse assignment, has purchased the
     outstanding  senior  debt from Bank One on March 20,  2002.  (See  Champion
     Transactions below.)

FUNDS AVAILABILITY

On a consolidated  basis,  as of April 30, 2002,  the Company had  approximately
$267,000 of cash and cash equivalents. Danzer Industries, U.S. Rubber and United
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 April 30, 2002, Danzer  Industries,  U.S. Rubber,  and United had
additional   current   availability   of  $233,000,   $140,000,   and  $560,000,
respectively.  Maximum  additional amounts available under these credit lines if
supported  by  their  individual  borrowing  base  are  approximately   $42,000,
$817,000,  and  $177,000  for  Danzer  Industries,   U.S.  Rubber,  and  United,
respectively.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


The  Company  generated  net cash flow of  $18,000  from  operations  during the
quarter ended April 30, 2002. While cash flow generated from operations  remains
negative for the six months ended April 30, 2002, the Company expects  operating
cash flow to be positive during the last half of the fiscal year.

REFINANCING ACTIVITIES

Management is in the process of refinancing certain of the currently outstanding
debt:

o    Negotiations  have been ongoing with a new lender to refinance  the primary
     lender of U.S.  Rubber at more  favorable  terms  than the  current  terms.
     Management  anticipates the refinancing  will be concluded during the third
     fiscal quarter.

o    The  Company  expects  in the  ordinary  course  of  business  to obtain an
     extension or annual  renewal of the term note on the United  revolving line
     of credit with First Indiana Bank.

o    The Company is  undertaking  to refinance the coaches  transferred  from DW
     Leasing to Obsidian  Leasing with DC Investments  and its various  existing
     lenders.  Management  anticipates  that this will be  concluded  during the
     fourth fiscal quarter.

PARTNERS EQUITY TRANSACTIONS

OCP,  the  major  shareholder  of the  Company,  is  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 OCP.
Such amounts  expended  through April 30, 2002  approximated  $1,300,000.  As of
April 30, 2002, OCP has advanced approximately $860,000 to the Company for these
expenses. Management anticipates receiving an additional amount of approximately
$440,000 during the third fiscal quarter of 2002. Upon receipt,  the Company and
OCP plan to convert  these  amounts to equity in exchange for issuance to OCP of
Series C convertible preferred stock.

OCP converted  $1,289,000 of notes payable and accrued  interest from OCP to the
Company  to  402,906  shares  of  Series C  convertible  preferred  stock of the
Company.

GUARANTEES OF OCP

The  Company  has an  agreement  with OCP that  gives it the right to  mandate a
capital  contribution  from OCP 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 OCP up to  $1,620,000  on U.S.
Rubber and $1,000,000 on United to fund the respective  subsidiary's  shortfall.
These  payments,  if any,  would be applied  directly  to reduce the  respective
subsidiary's debt obligations to the lender.

CHAMPION TRANSACTIONS

The Board of Directors has  authorized  the Chairman of the Board of the Company
to  explore  various  options  to divest  Champion  Trailer  or,  at a  minimum,
restructure  this  component  of  the  business.  As a  result,  DC  Investments
negotiated the purchase of the loans of Bank One to Champion.
<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


Champion is also  indebted  to  Markpoint  Equity  Fund IV under a  subordinated
credit  facility in the amount of $1,250,000.  Champion has been in violation of
the funded debt to EBITDA negative  covenant of the Markpoint  Credit  Agreement
since  the  inception  of  the  loan.   Management  brought  this  violation  to
Markpoint's  attention  prior to the close of the Acquisition and has obtained a
waiver of the violation  each quarter  through  January 31, 2002.  Markpoint has
informed  Champion  that it would not  grant  waiver  of this  violation  in the
future.  The Markpoint  debt has been  classified as a current  liability due to
this violation.  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.

CASH FLOWS (EBITDA)

A summary of our contractual  cash  obligations for the fiscal years ending 2002
through 2005 and 2006 and thereafter at April 30, 2002 is as follows:

<TABLE>
                                                                                                           2006 and
<S>                                      <C>         <C>          <C>          <C>          <C>      <C>
Contractual Obligations                    Total         2002         2003         2004         2005      Thereafter
                                        ------------ ------------- ------------ ------------ ------------ ------------

Long-term debt, with covenant
 violations and classified as current    $2,733,000   $2,733,000    $       --   $       --   $       --   $       --
Long-term debt, and all debt service
 interest payments                       37,932,000    5,351,000     6,433,000    3,783,000    8,599,000   13,766,000
Operating leases                          1,854,000      727,000       980,000       67,000       32,000       48,000
Purchase agreement for equipment          1,350,000    1,350,000            --           --           --           --
                                        ------------ ------------- ------------ ------------ ------------ ------------

Total contractual cash obligations       $43,869,000  $10,161,000   $7,413,000   $3,850,000   $8,631,000   $13,814,000
                                        ============ ============= ============ ============ ============ ============
</TABLE>

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

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

 Other Commercial Commitment      Total Amount Committed      Outstanding at April 30,        Date of Expiration
                                                                        2002
------------------------------- ---------------------------- ---------------------------- ----------------------------

<S>                                           <C>                            <C>                <C> <C>
Line of credit                                1,000,000                      725,000      March 31, 2002*
Line of credit                                3,500,000                    2,763,000      July 1, 2002
Line of credit                                3,000,000                    2,043,000      November 1, 2002
*extended by verbal agreement
</TABLE>

The  Company's  net cash used in  operations  for the six months ended April 30,
2002 was $322,000.  This is comprised of a net loss of  $2,423,000,  decrease in
other liabilities of $95,000,  and increases in accounts receivable of $659,000,
offset by noncash  depreciation  and  amortization  of $1,346,000,  decreases in
inventories  of  $292,000,  decreases  in prepaid  expenses  and other assets of
$341,000,  increases in accrued expenses and customer deposits of $183,000,  and
increases in accounts payable of $693,000.

Net cash flow provided from financing  activities for the six months ended April
30, 2002 was $454,000. This is comprised of borrowings of long-term debt and net
borrowings of short-term debt of $401,000 and borrowings from related parties of
$1,329,000, offset by principal repayments of long-term debt of $1,276,000.

Cash flow was used in  investing  activities  for the six months ended April 30,
2002 of  $394,000.  This is  comprised  primarily  of  purchases of property and
equipment.
<PAGE>

                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


The total decrease in cash is summarized as follows:

                                                   Six Months Ended
                                         --------------------------------------
                                             April 30,          April 30,
                                               2002                2001
                                         ------------------ -------------------

Net cash used in operations                $          (322)   $           405
Net cash used in investing activities                 (394)            (6,100)
Net cash provided by financing
 activities                                            454              5,361
                                         ------------------ -------------------

Decrease in cash and cash equivalents      $          (262)   $          (334)
                                         ================== ===================

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

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

                                                                 Three Months Ended April 30, 2002
                                                                          (in thousands)
                                              ------------------------------------------------------------------------
                                                                                                             Net
                                                            Interest      Income       Depreciation         Income
                                                EBITDA       Expense      Taxes       & Amortization        (Loss)
                                              ------------ ------------ ----------- -------------------- -------------

Trailer and related transportation
<S>                                             <C>          <C>         <C>              <C>             <C>
equipment manufacturing                         $       9    $    433    $    57          $     227       $    (708)

Butyl rubber reclaiming                               150         152        (57)               253            (198)

Coach leasing                                         522         377         --                165             (20)
                                              ------------ ------------ ----------- -------------------- -------------

Total Company                                   $     681    $    962    $    --          $     645       $    (926)
                                              ============ ============ =========== ==================== =============

</TABLE>


<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



<TABLE>
                                                                 Three Months Ended April 30, 2001
                                                                          (in thousands)
                                              ------------------------------------------------------------------------
                                                                                                             Net
                                                            Interest      Income       Depreciation         Income
                                                EBITDA       Expense      Taxes       & Amortization        (Loss)
                                              ------------ ------------ ----------- -------------------- -------------

Trailer and related transportation
<S>                                             <C>          <C>         <C>              <C>             <C>
 equipment manufacturing                        $       1    $     94    $    --          $      79       $    (172)

Butyl rubber reclaiming                               427         203         (1)               267             (42)

Coach leasing                                         236         374         --                227            (365)
                                              ------------ ------------ ----------- -------------------- -------------

Total Company                                   $     664    $    671    $    (1)         $     573       $    (579)
                                              ============ ============ =========== ==================== =============

                                                                  Six Months Ended April 30, 2002
                                                                          (in thousands)
                                              ------------------------------------------------------------------------
                                                                                                             Net
                                                            Interest      Income       Depreciation         Income
                                                EBITDA       Expense      Taxes       & Amortization        (Loss)
                                              ------------ ------------ ----------- -------------------- -------------

Trailer and related transportation
equipment manufacturing                         $    (367)   $    793    $    11          $     424       $  (1,595)

Butyl rubber reclaiming                               233         328       (166)               512            (441)

Coach leasing                                         757         734         --                410            (387)
                                              ------------ ------------ ----------- -------------------- -------------

Total Company                                   $     623    $  1,855    $  (155)         $   1,346       $  (2,423)
                                              ============ ============ =========== ==================== =============

                                                                  Six Months Ended April 30, 2001
                                                                          (in thousands)
                                              ------------------------------------------------------------------------
                                                                                                             Net
                                                            Interest      Income       Depreciation         Income
                                                EBITDA       Expense      Taxes       & Amortization        (Loss)
                                              ------------ ------------ ----------- -------------------- -------------

Trailer and related transportation
equipment manufacturing                         $     (72)   $    129    $    --          $     108       $    (309)

Butyl rubber reclaiming                               619         277        (13)               449             (94)

Coach leasing                                         253         482         --                302            (531)
                                              ------------ ------------ ----------- -------------------- -------------

Total Company                                   $     800    $    888    $   (13)         $     859       $    (934)
                                              ============ ============ =========== ==================== =============

</TABLE>


<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


Obsidian  Enterprises,  Inc.  (legal  parent)  allocates  selling,  general  and
administrative  expenses  to  the  respective  companies  primarily  based  on a
percentage of sales. Amounts allocated by segment are as follows:

                                       Three Months Ended  Six Months Ended
                                           April 30,           April 30,
                                              2002               2002
                                      ----------------------------------------

Trailer manufacturing                    $           476     $           694
Butyl rubber reclaiming                               95                 146
Coach leasing                                         56                  81
                                      ----------------------------------------

Total                                    $           627     $           921
                                      ========================================

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

                                       Three Months Ended  Six Months Ended
                                           April 30,           April 30,
                                              2002               2002
                                      ----------------------------------------

Trailer manufacturing                    $           485     $           327
Butyl rubber reclaiming                              245                 379
Coach leasing                                        578                 838
                                      ----------------------------------------

Total                                    $         1,308     $         1,544
                                      ========================================

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  experienced  significant bad debts expense
and our reserve for  doubtful  accounts  of $70,000  should be adequate  for any
exposure  to loss in our  April  30,  2002  accounts  receivable.  We have  also
established  reserves for slow-moving  and obsolete  inventories and believe the
reserve of $566,000 is adequate.  We  depreciate  our property and equipment and
amortize  intangible  assets (except for goodwill) over their  estimated  useful
lives. We have identified items that are impaired and the operating  results for
the  ten-month  period  ended  October 31, 2001  included a goodwill  impairment
charge of $2,305,000.  There are no impairment  charges in the six-month  period
ended April 30, 2002.



<PAGE>
                  OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk related to interest rate changes.  See the
discussion of market risk in  Management's  Discussion and Analysis of Financial
Condition and Results of Operations in Item 2, which  discussion is incorporated
by reference herein.

                           PART II--OTHER INFORMATION

Item 1.  Legal Proceedings

On April 29,  2002,  Markpoint  Equity  Fund J.V.  ("Markpoint"),  a Texas joint
venture for which The Markpoint  Company serves as Managing  Venturer,  filed an
action in the Texas District Court,  Dallas County seeking payment of $1,250,000
owed by Champion  under the  subordinated  credit  facility  described  above in
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operation under the caption "Champion Transactions."

Item 2.  Changes in Securities and Use of Proceeds.

On March 7, 2002,  the Company  issued 30,000  shares of the Company's  Series C
convertible  preferred  stock and paid $700,000 to SerVaas,  the former owner of
U.S.  Rubber,  to  obtain  the  SerVaas  interest  in a U.S.  Rubber  $1,750,000
subordinated  note. This transaction is described in more detail above in Note 4
to the  Condensed  Consolidated  Financial  Statements  under the caption  "U.S.
Rubber," which description is incorporated herein by reference.

On April 30, 2002,  the Company  issued  402,906  shares of Series C convertible
preferred  stock to OCP in the  conversion of $1,289,299 of debt owed to OCP and
issued 186,324 shares of Series C convertible  preferred stock to Fair Holdings,
Inc. ("Fair") in conversion of $596,236 of debt owed to Fair. These transactions
are  described  in  more  detail  above  in  Note 4 to the  Notes  to  Condensed
Consolidated  Financial  Statements  under the caption  "Obsidian  Enterprises,"
which description is incorporated herein by reference.

Each share of Series C convertible  preferred  stock is convertible  into twenty
shares of the Company's common stock. All of the issuances  described above were
made in reliance upon the exemption  provided by Section 4(2) of the  Securities
Act of 1933 for transactions not involving a public offering.

Item 3.  Defaults Upon Senior Securities.

As  described  above  in  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operation  under the caption  "Champion  Transactions,"
Champion has been in violation of the funded debt-to-EBITDA negative covenant in
a $1,250,000 subordinated credit facility with Markpoint.  Markpoint has filed a
lawsuit  seeking payment in full of the debt in the suit described above in Item
1 of this Part II.

Item 4.  Submission of Matters to a Vote of Security Holders.
None
Item 5.  Other Information.
None
Item 6.  Exhibits and Reports on Form 8-K.
None
A.       Exhibits
The exhibits filed as part of this Quarterly  Report on Form 10-Q 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
         None

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                 OBSIDIAN ENTERPRISES, INC.

June 14, 2002                    By: /S/Timothy S. Durham
--------------------------          -------------------------------------
Date                                Timothy S. Durham, Chairman and
                                    Chief Executive Officer

June 14, 2002                    By: /s/ Barry S. Baer
--------------------------          -------------------------------------
Date                                Barry S. Baer, Executive Vice President/
                                    Chief Financial Officer




<PAGE>

                                  EXHIBIT INDEX

Exhibit No.         Description


   10.1             Assignment  and  Assumption   Agreement   between   Champion
                    Trailer, Inc. and DW Leasing, LLC dated February 19, 2002

   10.2             Assignment and Assumption  Agreement between DW Leasing, LLC
                    and Fair Holdings, Inc. dated February 20, 2002

   10.3             Agreement to Purchase  Subordinated  Secured Promissory Note
                    and Supply and Consignment  Agreement  among SerVaas,  Inc.,
                    the Beurt SerVaas Revocable Trust,  U.S. Rubber  Reclaiming,
                    Inc.,  Obsidian  Enterprises,  Inc. and DC Investments,  LLC
                    dated February 26, 2002

   10.4             Promissory  Note  of  Obsidian   Enterprises,   Inc.  to  DC
                    Investments,  LLC in the  principal  amount of $700,000  due
                    March 1, 2007

   10.5             Promissory  Note of Obsidian  Enterprises,  Inc. in favor of
                    Fair Holdings,  Inc. in the principal amount of $570,000 due
                    February 1, 2007

   10.6             Subscription  Agreement  of Fair  Holdings,  Inc.  for
                    186,324 shares of Series C Convertible Preferred Stock.

   10.7                 Subscription Agreement of Obsidian Capital Partners, LP
                    for 402,906 shares of Series C Convertible Preferred Stock .