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 July 31, 2003

                                       OR

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

                         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 4800
          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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

             YES                           NO    X
                 ------                       --------

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              July 31, 2003
                                           36,007,855 shares
<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                                      INDEX



PART I - FINANCIAL INFORMATION:

  Item 1 - Condensed Consolidated Financial Statements:

     Condensed Consolidated Balance Sheets - July 31, 2003 and October 31, 2002

     Condensed Consolidated Statements of Operations
       Three Months and Nine Months Ended July 31, 2003 and 2002

     Condensed Consolidated Statement of Changes of Stockholders' Deficit
       And Comprehensive Loss

     Condensed Consolidated Statements of Cash Flows
       Nine Months Ended July 31, 2003 and 2002

     Notes to Condensed Consolidated Financial Statements

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

  Item 3 - Quantitative and Qualitative Disclosures About Market Risk

  Item 4 - Controls and Procedures

PART II - OTHER INFORMATION:

  Item 1 - Legal Proceedings

  Item 2 - Changes in Securities and Use of Proceeds

  Item 3 - Defaults Upon Senior Securities

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

  Item 5 - Other Information

  Item 6 - Exhibits and Reports on Form 8-K

<PAGE>
<TABLE>
<CAPTION>



PART I--FINANCIAL INFORMATION
Item 1 Condensed Consolidated Financial Statements

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)
                                   (unaudited)

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

Current assets:
  Cash and cash equivalents                                                        $          329   $          920
  Marketable securities                                                                        80              137
  Accounts receivable, net of allowance for doubtful
  accounts of $492 for 2003 and $495 for 2002                                               4,597            3,307
  Accounts receivable, related parties                                                        229              206
  Inventories, net                                                                          7,692            7,315
  Prepaid expenses and other assets                                                           903            1,049
                                                                                 ----------------------------------

Total current assets                                                                       13,830           12,934

Property, plant and equipment, net                                                         24,271           23,048

Other assets:
  Goodwill                                                                                  6,434            6,434
  Other intangible assets, net of accumulated amortization of $787 for 2003 and
  $555 for 2002                                                                             1,562            1,853
  Other                                                                                        28              116
  Assets of subsidiary held for sale                                                           --            1,538
                                                                                 ----------------------------------

                                                                                   $       46,125   $       45,923
                                                                                 ==================================



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

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

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)
                                   (unaudited)



                                                                                      July 31,       October 31,
                                                                                        2003             2002
                                                                                  ----------------------------------
<S>                                                                                 <C>              <C>
Liabilities and Stockholders' Deficit

Current liabilities:
  Current portion of long-term debt                                                 $        6,889   $        5,667
  Current portion of long-term debt, related parties                                            73               --
  Accounts payable, trade                                                                    2,398            3,450
  Accounts payable, related parties                                                            805              668
  Accrued expenses and customer deposits                                                     2,473            1,558
                                                                                  ----------------------------------

Total current liabilities                                                                   12,638           11,343

Long-term debt, related parties                                                             13,107            5,518

Long-term debt, net of current portion                                                      20,155           23,879

Deferred income tax liabilities                                                                599            1,624

Liabilities of subsidiary held for sale                                                         --            2,848

Commitments and contingencies                                                                   --               --

Mandatory redeemable preferred stock:
  Class of Series C Preferred Stock: 386,206 shares outstanding for
  2003               and 2002                                                                1,125            1,400
Class of Series D Preferred Stock: 16,071 shares outstanding for 2003                          337               --

Stockholders' deficit:
  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, 3,982,193 issued and
  outstanding for 2003 and 2002, 200,000 shares of undesignated preferred stock
  authorized                                                                                     5                5
  Preferred stock, 200,000 shares authorized; Class of Series D convertible
  preferred stock, par value $.001, 104,402 and 88,330 shares issued and
  outstanding in 2003 and 2002, respectively                                                    --               --
Additional paid-in capital                                                                  11,873           10,184
Accumulated other comprehensive loss                                                          (106)             (49)
Accumulated deficit                                                                        (13,611)         (10,832)
                                                                                  ----------------------------------

Total stockholders' deficit                                                                 (1,836)            (689)
                                                                                  ----------------------------------

                                                                                    $       46,125   $       45,923
                                                                                  ==================================


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

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

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

                                                      Three Months Ended                   Nine Months Ended
                                             -------------------------------------------------------------------------
                                               July 31, 2003     July 31, 2002      July 31, 2003     July 31, 2002
                                             -------------------------------------------------------------------------
<S>                                            <C>               <C>                <C>               <C>
Net sales                                      $       16,795    $       15,239     $       42,802    $       42,302

Cost of sales                                          14,390            12,400             37,445            35,320
                                             -------------------------------------------------------------------------

Gross profit                                            2,405             2,839              5,357             6,982

Selling, general and administrative expenses            1,976             1,855              6,229             6,118
Insurance recovery                                         --              (325)                --              (325)
                                             -------------------------------------------------------------------------

Income (loss) from operations                             429             1,309               (872)            1,189

Other income (expense):
  Interest expense, net                                  (889)             (839)            (2,577)           (2,616)
  Other income (expense)                                  (59)                1                (52)              (32)
                                             -------------------------------------------------------------------------

Income (loss) before income taxes,
 discontinued operations and cumulative
 effect of change in accounting principle                (519)              471             (3,501)           (1,459)

Income tax benefit                                        212                --                771               155
                                             -------------------------------------------------------------------------

Income (loss) before discontinued
 operations and cumulative effect of change
 in accounting principle                                 (307)              471             (2,730)           (1,304)

Loss from discontinued operations, net of
 tax                                                       --              (364)               (49)           (1,085)
                                             -------------------------------------------------------------------------

Income (loss) before cumulative effect of
 change in accounting principle                          (307)              107             (2,779)           (2,389)

Cumulative effect of change in accounting
 principle                                                 --                --                 --            (2,015)
                                             -------------------------------------------------------------------------

Net income (loss)                              $         (307)   $          107     $       (2,779)   $       (4,404)
                                             =========================================================================


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

<PAGE>




                                                      Three Months Ended                   Nine Months Ended
                                              ------------------------------------------------------------------------
                                                July 31, 2003     July 31, 2002     July 31, 2003     July 31, 2002
                                              ------------------------------------------------------------------------
Basic and diluted income (loss) per share attributable to common shareholders:
  From continuing operations:
    Basic                                       $          .00    $          .01    $         (.07)   $         (.03)
                                              ========================================================================
    Diluted                                     $          .00    $          .00    $         (.07)   $         (.03)
                                              ========================================================================

  Discontinued operations, net of tax:
    Basic                                       $          .00    $         (.01)   $         (.00)   $         (.03)
                                              ========================================================================
    Diluted                                     $          .00    $         (.00)   $         (.00)   $         (.03)
                                              ========================================================================

  Cumulative effect of change in accounting principle:
    Basic                                       $          .00    $          .00    $          .00    $         (.05)
                                              ========================================================================
    Diluted                                     $          .00    $          .00    $          .00    $         (.05)
                                              ========================================================================

  Net income (loss):
    Basic                                       $          .00    $          .00    $         (.07)   $         (.11)
                                              ========================================================================
    Diluted                                     $          .00    $          .00    $         (.07)   $         (.11)
                                              ========================================================================

  Weighted average common shares outstanding:
    Basic                                           36,007,855        36,007,855        36,007,855        36,007,855
                                              ========================================================================
    Diluted                                        149,915,726       128,701,226        36,007,855        36,007,855
                                              ========================================================================



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

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

                           CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT AND COMPREHENSIVE LOSS
                             (dollars in thousands)
                                   (unaudited)
                                                                    Series C          Series D             Accumu-
                                                                   Convertible      Convertible             lated
                                                                    Preferred         Preferred    Addi-    Other
                                                Common Stock          Stock             Stock     tional   Compre-  Accumu-
                               Comprehensive  --------------------------------------------------- Paid-in  hensive   lated
                                   Loss       Shares    Amount    Shares Amount     Shares Amount Capital   Loss    Deficit   Total
                               -----------------------------------------------------------------------------------------------------

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

Contribution to capital from
 sale of Champion to related
 party                                --            --    --           --  --           --   --     1,142    --         --    1,142

Fair value adjustment on
 redeemable preferred stock           --            --    --           --  --           --   --       275    --         --      275

Tax effect of sale of coaches
 to DC Investments Leasing, LLC       --            --    --           --  --           --   --       (96)   --         --      (96)

Extension of stock options            --            --    --           --  --           --   --        30    --         --       30

Issuance of mandatory
 redeemable preferred stock           --            --    --           --  --       32,143   --        --    --         --       --

Assignment of Mandatory
 redeemable preferred stock           --            --    --           --  --                --       338    --         --      338

Unrealized loss on
 available-for-sale marketable
 securities                          (57)           --    --           --  --           --   --        --   (57)        --      (57)

Net loss                          (2,779)           --    --           --  --           --   --        --    --     (2,779)  (2,779)
                               ----------------------------------------------------------------------------------------------------

Total comprehensive loss         $(2,836)
                               ===========

Balance at July 31, 2003                    36,007,855    $3    4,368,399 $ 5      120,473  $--   $11,873  $(106) $(13,611) $(1,836)
                                            =======================================================================================



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

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



                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


                                                                                            Nine Months Ended
                                                                                      -------------------------------
                                                                                      July 31, 2003   July 31, 2002
                                                                                      -------------------------------
<S>                                                                                     <C>            <C>
Cash flow from operating activities:
  Loss from continuing operations                                                       $    (2,730)   $    (3,319)
  Adjustments to reconcile loss from continuing operations to net cash provided by
   (used in) operating activities:
  Depreciation and amortization                                                               2,232          1,907
  Goodwill impairment loss                                                                       --          2,015
  Other                                                                                        (538)          (349)
  Changes in operating assets and liabilities:
    Accounts receivable, net                                                                 (1,289)        (1,317)
    Inventories, net                                                                           (376)          (498)
    Other, net                                                                                 (252)         1,451
                                                                                      -------------------------------

Net cash used in operating activities                                                        (2,953)          (110)
                                                                                      -------------------------------

Cash flows from investing activities:
  Capital expenditures                                                                         (560)          (575)
  Other                                                                                          23             16
                                                                                      -------------------------------

Net cash used in investing activities                                                          (537)          (559)
                                                                                      -------------------------------

Cash flows from financing activities:
  Advances from (repayments to) related parties, net                                         (1,414)           272
  Net borrowings on lines of credit                                                           1,907          1,143
  Borrowings (repayments) on long-term debt, including related parties                        2,447           (822)
                                                                                      -------------------------------
                                                                                      -------------------------------

Net cash provided by financing activities                                                     2,940            593

Net cash provided by (used in) discontinued operations                                          (41)             6
                                                                                      -------------------------------
                                                                                      -------------------------------

Decrease in cash and cash equivalents                                                          (591)           (70)

Cash and cash equivalents, beginning of period                                                  920            529
                                                                                      -------------------------------

Cash and cash equivalents, end of period                                                $       329    $       459
                                                                                      ===============================

Interest paid                                                                           $     2,577    $     2,389
                                                                                      ===============================

Taxes paid                                                                              $        63    $        --
                                                                                      ===============================



The accompanying notes are an integral part of the condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>



                                                                                       Nine Months Ended
                                                                                 -------------------------------
                                                                                  July 31, 2003  July 31, 2002
                                                                                 -------------------------------


<S>                                                                                <C>             <C>
Supplemental disclosure of noncash operating, investing and financing
 activities:
Acquisition of coaches and equipment through issuance of debt                      $     2,304     $        --
Contribution to capital from sale of Champion to related party                     $     1,142     $        --
Issuance of mandatory redeemable preferred stock in conjunction with the sale
 of Champion                                                                       $       338     $        --
Assignment and assumption of mandatory redeemable preferred stock to Fair
 Holdings                                                                          $       675     $        --
Tax effect of sale of coaches to a related party                                   $        96     $        --
Fair value change on mandatory redeemable preferred stock                          $       275     $       341
Reclassification of debt due to assumption of credit agreement by Fair Holdings    $     1,488     $        --
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



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

</TABLE>
<PAGE>



                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)


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

Description of Business:

Obsidian   Enterprises,   Inc.   ("Obsidian   Enterprises"),   formerly   Danzer
Corporation,  was reorganized (the "Reorganization")  through an Acquisition and
Plan of Reorganization  with U.S. Rubber  Reclaiming,  Inc. and Related Entities
("U.S.  Rubber  Companies"),  which  was  consummated  on  June  21,  2001  (the
"Effective  Date").  The  Acquisition  and Plan of  Reorganization  of  Obsidian
Enterprises   with  U.S.  Rubber  Companies  was  accounted  for  as  a  reverse
acquisition as the shareholders of the U.S. Rubber Companies owned a majority of
the outstanding stock of Obsidian Enterprises  subsequent to the Acquisition and
Plan of Reorganization. For accounting purposes, U.S. Rubber Reclaiming, Inc. is
deemed to have acquired Obsidian Enterprises.

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

The  accompanying  financial data as of July 31, 2003 and for the three and nine
months ended July 31, 2003 and 2002 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,
2002 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, 2002. 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 July 31, 2003, results of operations for the three and
nine months ended July 31, 2003 and cash flows and stockholders' deficit for the
nine months ended July 31, 2003 have been made.  The results of  operations  for
the three and nine months ended July 31, 2003 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
                 (in thousands except share and per-share data)
                                   (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 and cargo trailers.

Pyramid  Coach,  Inc.  ("Pyramid"),  which is engaged in the leasing of coaches,
designed  and  fitted out for use for  travel by  country,  rock bands and other
business  enterprises,  primarily on weekly to monthly leases. The coach leasing
segment also includes the assets, liabilities,  equity and results of operations
of DW Leasing,  LLC ("DW Leasing"),  Obsidian Leasing Company,  Inc.  ("Obsidian
Leasing"),  formed  November  1,  2001  and DC  Investments  Leasing,  LLC  ("DC
Investments  Leasing),  formed  December 13, 2002. DW Leasing and DC Investments
Leasing are controlled by individuals who are also  controlling  shareholders of
Obsidian  Enterprises,  Inc. and,  accordingly,  Pyramid.  DW Leasing,  Obsidian
Leasing and DC Investments Leasing also own the majority of the coaches operated
by Pyramid. All intercompany transactions are eliminated in consolidation.

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

Champion Trailer, Inc. ("Champion") manufactures and sells transport trailers to
be used  primarily  in the  auto  racing  industry.  During  October  2002,  the
Company's Board of Directors  agreed to a plan to dispose of  substantially  all
assets and  liabilities of Champion as further  discussed in Note 3. The sale of
Champion was completed January 30, 2003. Accordingly, the operations of Champion
are  classified  as  discontinued   operations  in  the  accompanying  financial
statements.

Basis of Presentation:

Over the past year,  the Company has undertaken  various  actions to improve its
operations and liquidity. Such actions include the sale of Champion described in
Note 3, as well as  conversion of debt to equity and  refinancing  of certain of
its debt  agreements as described in detail in the  Company's  10-K for the year
ended  October 31,  2002.  Management  believes  that the Company has  financing
agreements in place to provide adequate liquidity and working capital throughout
fiscal 2003.  However,  there can be no assurance that such working  capital and
liquidity  will in fact be adequate.  Therefore,  the Company may be required to
draw upon  other  liquidity  sources.  The  Company  has  therefore  secured  an
increased financial  commitment from Fair Holdings,  Inc. ("Fair Holdings"),  an
entity controlled by the Company's Chairman,  to provide, as needed,  additional
borrowings  under a $8,000 line of credit  agreement,  which expires  January 9,
2005. As of July 31, 2003,  availability  under the  agreement is  approximately
$2,480.

The Company  incurred a net loss for the year ended  October 31, 2002 of $6,330,
which included an asset impairment  charge of $720,  cumulative effect of change
in  accounting  principle of $2,015 and a loss from  discontinued  operations of
$1,040. In addition,  the Company incurred a loss from continuing  operations of
$307 and $2,730 for the three and nine months ended July 31, 2003, respectively.
Several  of  the  Company's  subsidiaries  were  acquired  in  highly  leveraged
transactions  and this  factor  combined  with the loss has  contributed  to its
failure to meet certain financial  covenants required by two of its lenders.  As
of July 31, 2003, the lenders have waived all covenant violations.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)


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

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

Management,  as a part of its plan towards resolving these issues and generating
positive  cash flow and  earnings,  has taken the  actions as  described  in the
Company's  10-K for the  year  ended  October  31,  2002 as well as the  actions
described below during the nine months ended July 31, 2003.

     o    During  2002,  the Board of Directors  authorized  the Chairman of the
          Board to explore various options regarding the operations at Champion.
          Options included  divestiture,  restructuring of operations or closing
          the facility.  It was  determined in the best interests of the Company
          to sell Champion.  On January 30, 2003, the Company completed the sale
          of substantially  all assets of Champion to an entity owned by Messrs.
          Durham  and   Whitesell,   Chairman  and  President  of  the  Company,
          respectively.  The sale resulted in an increase in equity of $1,142 as
          further described in Note 3.

     o    During  December  2002,  the Company sold certain  coaches of Obsidian
          Leasing to DC Investments Leasing for assumption of the existing debt.
          DC  Investments  Leasing  then  refinanced  this  debt at  terms  more
          favorable than the previous terms.

     o    On April 1, 2003,  the Company  obtained an increase in its  available
          line of credit with Fair Holdings to $8,000.

     o    On January 3, 2003,  Obsidian  Leasing  refinanced  debt due to former
          shareholders in the amount of $928 with Fair Holdings at terms further
          described in Note 4.

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

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

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

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

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)


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

The  above  factors  combined  with  additional  actions  by  management  at the
operating  subsidiaries  are  expected  to  contribute  to an  increase  in  the
Company's working capital and liquidity.

Although management believes the actions described above will improve operations
and  liquidity,  there can be no assurance  that such actions will  sufficiently
improve  operations  or  liquidity.  In addition,  management  is  continuing to
explore various opportunities to refinance the current outstanding debt.

Significant Accounting Policies:

Earnings Per Share:

Basic per-share amounts are computed,  generally, by dividing net income or loss
attributable  to common  shareholders by the  weighted-average  number of common
shares  outstanding.  Diluted  per-share  amounts are computed  similar to basic
per-share  amounts  except  that the  weighted-average  shares  outstanding  are
increased to include  additional shares for the assumed  conversion of Company's
Series C and Series D Preferred Stock and assumed  exercise of stock options and
warrants, if dilutive.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

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

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

<TABLE>
<CAPTION>

                                                   Three Months Ended                     Nine Months Ended
                                          -------------------------------------- -------------------------------------
                                            July 31, 2003      July 31, 2002       July 31, 2003      July 31, 2002
                                          ------------------ ------------------- ------------------ ------------------
<S>                                         <C>                <C>                 <C>                <C>

Income (loss) before discontinued
 operations and cumulative effect of
 change in accounting principle             $         (307)    $          471      $       (2,730)    $       (1,304)
Change in fair value of mandatory
 redeemable preferred stock                            411                (82)                275                341
                                          ------------------ ------------------- ------------------ ------------------

Income (loss) attributable to common
 shareholders before discontinued
 operations and cumulative effect of
 change in accounting principle                        104                389              (2,455)              (963)

Loss from discontinued operations, net
of tax                                                  --               (364)                (49)            (1,085)

Cumulative effect of change in
accounting principle                                    --                 --                  --             (2,015)
                                          ------------------ ------------------- ------------------ ------------------

Net income (loss) attributable to
 common shareholders                        $           10-4   $           25      $       (2,504)    $       (4,063)
                                          ================== =================== ================== ==================

Weighted average common shares outstanding:
   Basic                                        36,007,855         36,007,855          36,007,855         36,007,855
                                          ================== =================== ================== ==================
   Diluted                                     149,915,726        128,701,226          36,007,855         36,007,855
                                          ================== =================== ================== ==================

Earnings (loss) per share attributable
 to common shareholders:
  From continuing operations:
    Basic                                   $          .00     $          .01      $         (.07)    $         (.03)
    Diluted                                            .00                .01                (.07)              (.03)

  Discontinued operations, net of tax:
    Basic                                              .00               (.01)               (.00)              (.03)
    Diluted                                            .00               (.00)               (.00)              (.03)

                                          ------------------ ------------------- ------------------ ------------------
  Cumulative effect of change in
    accounting principle:
                                          ------------------ ------------------- ------------------ ------------------
    Basic                                              .00                .00                 .00               (.05)
    Diluted                                            .00                .00                 .00               (.05)
                                          ------------------ ------------------- ------------------ ------------------

Net income (loss):
  Basic                                     $          .00     $          .00      $         (.07)    $        (0.11)
                                          ================== =================== ================== ==================
  Diluted                                   $          .00     $          .00      $         (.07)    $        (0.11)
                                          ================== =================== ================== ==================
</TABLE>

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

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

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

Pro forma basic and diluted  loss per share have been  computed  below as if the
Series C and Series D Preferred  Stock were  converted to common stock.  For the
three and nine months ended July 31, 2003, the Series C Preferred Stock has been
reflected  on  a  weighted  average  basis   outstanding  as  common  shares  of
87,367,980.  For the three and nine  months  ended July 31,  2002,  the Series C
Preferred  Stock has been reflected on a weighted  average basis  outstanding as
common shares of 87,167,980 and 79,111,259, respectively. The Series D Preferred
Stock has been  reflected  on a weighted  average  basis  outstanding  as common
shares of 21,082,775 and 19,283,594 for the three and nine months ended July 31,
2003,  respectively.  There were no Series D Preferred  Stock  shares  issued or
outstanding during the three and nine months ended July 31, 2002.

<TABLE>
<CAPTION>

                                                    Three Months Ended                      Nine Months Ended
                                          --------------------------------------- --------------------------------------
                                            July 31, 2003       July 31, 2002       July 31, 2003      July 31, 2002
                                          ------------------- ------------------- ------------------ -------------------
<S>                                            <C>                 <C>                 <C>                <C>

Pro forma weighted average common shares outstanding:
  Basic                                        144,458,610         123,175,835         142,659,429        115,119,114
  Diluted                                      149,915,726         128,701,226         142,659,429        115,119,114

Pro forma basic and diluted income (loss) per share, attributable to common
 shareholders:
  From continuing operations:
    Basic                                   $        .00        $        .00        $       (.02)      $       (.01)
                                          =================== =================== ================== ===================
    Diluted                                 $        .00        $        .00        $       (.02)      $       (.01)
                                          =================== =================== ================== ===================

  Discontinued operations, net of tax:
    Basic                                   $        .00        $       (.00)       $       (.00)      $       (.01)
                                          =================== =================== ================== ===================
    Diluted                                 $        .00        $       (.00)       $       (.00)      $       (.01)
                                          =================== =================== ================== ===================

  Cumulative effect of change in accounting principle:
    Basic                                   $        .00        $        .00        $        .00       $       (.02)
                                          =================== =================== ================== ===================
    Diluted                                 $        .00        $        .00        $        .00       $       (.02)
                                          =================== =================== ================== ===================

Net income (loss):
    Basic                                   $        .00        $        .00        $       (.02)      $       (.04)
                                          =================== =================== ================== ===================
    Diluted                                 $        .00        $        .00        $       (.02)      $       (.04)
                                          =================== =================== ================== ===================

</TABLE>

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

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

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

The Company has a note payable  agreement  which is convertible by the holder to
common stock totaling  5,000,000 shares at a conversion rate of $0.10 per share.
In addition,  the Company has options outstanding to purchase a total of 800,000
shares of common stock,  at a weighted  average  exercise  price of $.09.  These
additional  shares have been  included in the  calculation  of weighted  average
common shares  outstanding on a diluted basis for the three-month  periods ended
July 31, 2003 and 2002,  respectively.  However,  because the Company incurred a
loss for the nine  months  ended  July 31,  2003  and  2002,  respectively,  the
inclusion of those  potential  common shares in the  calculation of diluted loss
per share would have an antidilutive effect.

Asset Impairment

The Company's truck body division at Danzer  continues to negatively  impact the
Company's cash flows. The trailer production line was put in place in the fourth
quarter of 2002 to support the production needs at United and also provide a new
product line to the existing customers of Danzer and open a potential new market
along   the  East   coast  of  the  U.S.   Given  the   current   state  of  the
telecommunications industry and economic conditions, management will continue to
evaluate the  operations  and progress  with the  implementation  of the trailer
production.   Management  also  expects  to  make  a  decision  to  continue  or
discontinue  operations  by the end of  fiscal  2003.  In  conjunction  with the
analysis of the Danzer operations, we are also analyzing the potential for asset
impairment at the Danzer  operation.  Total assets of Danzer as of July 31, 2003
were  $3,395,  which  consists  of $1,396 of  current  assets  and $1,999 of net
property and equipment,  and represents  approximately 7% of total  consolidated
assets.

Recently Issued Pronouncements:

In January 2003,  the Financial  Accounting  Standards  Board (FASB) issued FASB
Interpretation No. 46 (FIN No. 46), Consolidation of Variable Interest Entities,
an interpretation of Accounting  Research Bulletin No., 51. This  Interpretation
addresses the application of Accounting  Research Bulletin No. 51,  Consolidated
Financial Statements,  to certain entities in which equity investors do not have
the  characteristics  of  a  controlling  financial  interest  or  do  not  have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. The Interpretation
applies  immediately  to variable  interest  entities  created after January 31,
2003,  and to  variable  interest  entities  in which an  enterprise  obtains an
interest after that date. It applies in the first interim period beginning after
June 15, 2003, to variable interest entities in which an entity holds a variable
interest that it acquired prior to February 1, 2003. DW Leasing and DCI Leasing,
which are included in the Company's  consolidated  financial statements,  may be
subject to the provisions of FIN No. 46. However, management does not expect the
adoption  of FIN No. 46 to have a  material  impact on the  Company's  financial
position,  results of  operations,  cash flows,  or its debt  covenants as these
entities have generated  negative  operating results in the past and the current
operating  model  does not  anticipate  income in  excess  of losses  previously
recognized in the  consolidated  financial  statements.  Should future operating
results  exceed  expectations,  income  generated by these entities in excess of
previously  recognized  losses  would be charged  to  minority  interest  in the
consolidated  statement of operations and recognized as minority interest on the
consolidated balance sheet.

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation - Transition and Disclosure. SFAS 148 amends FASB Statement No. 123
(SFAS 123),  Accounting for  Stock-Based  Compensation,  to provide  alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for stock-based employee compensation.  In addition,  SFAS 148 amends
the disclosure requirements of SFAS 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results.  The transition  guidance and annual disclosure  provisions of SFAS 148
are  effective  for fiscal  years ending  after  December 15, 2002.  The interim
disclosure  provisions are effective for financial reports containing  financial
statements for interim  periods  beginning  after December 15, 2002. The Company
plans to continue  accounting  for stock  options  under  Accounting  Principles
Bulletin Opinion No. 25, Accounting for Stock Issued to Employees,  (APB No. 25)
and has adopted the disclosure provisions of SFAS 148.

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

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)


In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity.  The standard
further defines the accounting for certain  financial  instruments  that,  under
previous  guidance,  issuers could  account for as equity or report  between the
liability and equity  section of the balance sheet.  The standard  requires that
those  instruments  be  classified  as  liabilities  in  statements of financial
position.  This standard is effective for interim  periods  beginning after June
15,  2003.  We believe the  adoption of this  standard  will result in mandatory
redeemable  preferred  stock  currently  reported on our balance  sheet  between
equity and liabilities being  reclassified as a liability.  We do not expect the
adoption of SFAS No. 150 to have a material  impact on the Company's  results of
operations, cash flows, or its debt covenants.

2. INVENTORIES

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

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

Raw materials                          $       4,819      $        3,655
Work-in-process                                  618                 709
Finished goods                                 2,614               3,417
Valuation reserve                               (359)               (466)
                                     ------------------ -------------------

Total                                  $       7,692      $        7,315
                                     ================== ===================
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)


3. DISCONTINUED OPERATIONS

On October 30, 2002, the Company's Board of Directors  agreed to sell the assets
of Champion to an entity controlled by Messrs. Durham and Whitesell (Officers of
the Company) for the  assumption of all  liabilities  of Champion  excluding its
subordinated  debt.  The  decision to divest  Champion was based on the entity's
inability to achieve  profitable  operations in the  foreseeable  future without
substantial  cash  infusion.  The Company also agreed in principal to settle the
outstanding  subordinated  debt due to Markpoint Equity Fund J.V.  ("Markpoint")
from  Champion in exchange  for a cash  payment of $675 and issuance to the debt
holder of 32,143 shares of the Company's  Series D Preferred Stock. In addition,
the agreement provides Markpoint the option to require the Company to repurchase
these shares at a price of $21 per share.  The sale of Champion was completed on
January 30, 2003.  Champion is accounted  for as a  discontinued  operation  and
therefore  the results of  operations  and cash flows have been removed from the
Company's continuing operations for all periods presented.  In addition,  assets
and  liabilities  of Champion  included in the sale have been  removed  from the
consolidated  balance  sheet  as of  July  31,  2003  and  are  included  in the
consolidated  balance sheet as of October 31, 2002 as "Assets of subsidiary held
for sale" and "Liabilities of subsidiary held for sale," respectively.

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

A summary of the Company's discontinued operations for the three and nine months
ended July 31, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>



                               Three Months Ended                     Nine Months Ended
                      -------------------------------------- -------------------------------------
                        July 31, 2003      July 31, 2002       July 31, 2003      July 31, 2002
                      ------------------ ------------------- ------------------ ------------------

<S>                     <C>                <C>                 <C>                <C>
Net sales               $           --     $          236      $          170     $        2,629
Operating expenses                  --               (530)               (286)            (3,501)
Interest                            --                (70)                (85)              (213)
Other                               --                 --                 127                 --
Tax benefit                         --                 --                  25                 --
                      ------------------ ------------------- ------------------ ------------------

Net loss                $           --     $         (364)     $          (49)    $       (1,085)
                      ================== =================== ================== ==================

</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

3. DISCONTINUED OPERATIONS, CONTINUED

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

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

Inventories                                          $          551
Other current assets                                            177
Property and equipment, net                                     715
Other                                                            95
                                                   ---------------------

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

Accounts payable and accrued expenses                $          709
Customer deposits                                               313
Long-term debt, related parties                               1,826
                                                   ---------------------

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


4. FINANCING ARRANGEMENTS

Obsidian Leasing:

On January 3, 2003,  Obsidian  Leasing  refinanced debt in the amount of $928 to
former shareholders of Pyramid and related companies. Terms of the new note with
Fair  Holdings  include  monthly  interest  payments  of 13% of the  outstanding
principal amount and a balloon principal payment in January 2006.

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

United:

On December 26, 2002, United amended its credit agreement to provide  additional
working  capital during the winter months.  The amendment  included a "temporary
overline"  line of credit with  maximum  borrowings  not to exceed the lesser of
$650 or the  remainder  of the  borrowing  base less the  outstanding  principal
amount of the revolving line of credit. Interest is payable monthly at a rate of
prime plus 3/4%. The temporary overline line of credit matured on June 30, 2003.
The  Company  is  currently  in  negotiations  with its  lender to  convert  the
temporary overline to additional  availability under the current line of credit.
Should such an agreement not be reached, the line will be repaid from borrowings
under the Company's  line of credit with Fair Holdings and from  operating  cash
flow.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

4. FINANCING ARRANGEMENTS, CONTINUED

United was in technical  default of certain loan covenants with its subordinated
lender at July 31, 2003. United has obtained a waiver of the violations from the
lender.

Obsidian Enterprises:

On April 1, 2003, Obsidian Enterprises, Inc.'s line of credit with Fair Holdings
was amended. Maximum borrowings were increased from $5,000 to $8,000.

At October 31, 2002,  the Company was in violation  of 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.  During
January  2003,  the Company  received a waiver of the  violations  and  obtained
modifications of terms with the debenture  holders to provide for less stringent
covenants.  In exchange  for the waiver and  modifications,  the Company  issued
warrants  to the  debenture  holders  to  purchase  up to  16,000  shares of the
Company's common stock at an exercise price of $.20 per share.

Danzer:

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

5. MANDATORY REDEEMABLE PREFERRED STOCK

In conjunction with the sale of Champion discussed in Note 3, the Company agreed
to settle the  outstanding  subordinated  debt due to Markpoint from Champion in
exchange  for a cash  payment of $675 and  issuance to the debt holder of 32,143
shares  of the  Company's  Series D  Preferred  Stock.  The  agreement  provides
Markpoint  the option to require the  Company to  repurchase  these  shares at a
price of $21 per share.  The  repurchase  option is  available  to  Markpoint as
follows:  16,072 shares during the period May 1, 2003 to June 1, 2003 and 16,071
shares during the period  November 1, 2003 to December 1, 2003. On May 12, 2003,
under an Assignment  Agreement,  the Company  transferred all rights,  title and
interest in the Put Option to Fair Holdings.  Markpoint  exercised its option on
May 12,  2003 and was paid $338 by Fair  Holdings.  The  exercise  of the option
resulted in the reduction of the liability and an increase in additional paid in
capital of $338.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

6. STOCKHOLDERS' DEFICIT

Stock Options

The Company  accounts for stock-based  compensation  under the provisions of APB
No. 25. The Company has adopted the disclosure-only  provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Accordingly, no compensation expense is
recognized if the exercise  price of stock options  equals the fair market value
of the underlying stock at the date of grant.  Had compensation  expense for the
Company's  stock  option  plans been  determined  based on the fair value at the
grant  date for awards  consistent  with the  provisions  of SFAS No.  123,  the
Company's  basic and  diluted  net income  (loss)  per share  would have been as
follows:

<TABLE>
<CAPTION>
                                                    Three Months Ended                     Nine Months Ended
                                           -------------------------------------- -------------------------------------
                                             July 31, 2003      July 31, 2002       July 31, 2003      July 31, 2002
                                           ------------------ ------------------- ------------------ ------------------

<S>                                          <C>                <C>                 <C>                <C>
Net income (loss) as reported                $         (307)    $          107      $       (2,779)    $       (4,404)
Deduct total stock-based employee
 compensation expense determined under
 fair value methods                                      --                 --                  --                 --
                                           ------------------ ------------------- ------------------ ------------------

Pro forma net income (loss)                            (307)               107              (2,779)            (4,404)

Income (loss) per share:
  As reported:
    Basic                                    $           .00    $           .00     $          (.07)   $          (.11)
    Diluted                                  $           .00    $           .00     $          (.07)   $          (.11)

  Pro forma:
    Basic                                    $           .00    $           .00     $          (.07)   $          (.11)
    Diluted                                  $           .00    $           .00     $          (.07)   $          (.11)

</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions used for grants in 2000 and 1999,  respectively:  risk-free interest
rates  of 6.4 and 5.5  percent;  dividend  yield  of 0  percent  in both  years;
expected lives of 5 years; and volatility of 978 and 170 percent.  The estimated
weighted  average fair value of options  granted during 2000 and 1999 were $0.10
and $0.05 per share, respectively.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

7. 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:

<TABLE>
<CAPTION>

                                                            Three Months Ended July 31, 2003
                                      ------------------------------------------------------------------------------
                                      Trailer Manufacturing   Coach Leasing     Butyl Rubber           Total
                                                                                 Reclaiming
                                      ------------------------------------------------------------------------------
<S>                                     <C>                    <C>              <C>               <C>
Sales:
  Domestic                              $       10,402         $       2,562    $       2,338     $       15,302
  Foreign                                        1,132                    --              361              1,493
                                      ------------------------------------------------------------------------------

Total                                   $       11,534         $       2,562    $       2,699     $       16,795

Cost of goods sold                      $       10,378         $       1,525    $       2,487     $       14,390

Income (loss) before taxes              $         (427)        $         153    $        (141)    $         (415)*

Identifiable assets                     $       20,163         $      14,167    $      10,993     $       45,323**

Depreciation and amortization expense   $          176         $         281    $         329     $          786

Interest expense                        $          357         $         311    $         117     $          785***


*Identifiable income (loss) before taxes, as stated above                                         $         (415)
  Corporate-level loss before taxes, not identifiable with a specific segment                               (104)
                                                                                                --------------------

Total loss before taxes                                                                           $         (519)
                                                                                                ====================

**Identifiable assets, as stated above                                                            $       45,323
    Corporate-level intangibles                                                                              650
    Other corporate-level assets                                                                             152
                                                                                                --------------------

Total assets                                                                                      $       46,125
                                                                                                ====================

***Identifiable interest expense, as stated above                                                 $          785
      Corporate-level interest expense, not identified with a specific segment                               104
                                                                                                --------------------

Total interest expense                                                                            $          889
                                                                                                ====================

</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)
<TABLE>
<CAPTION>

7. BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

                                                             Three Months Ended July 31, 2002
                                       ------------------------------------------------------------------------------
                                             Trailer         Coach Leasing       Butyl Rubber           Total
                            Manufacturing Reclaiming
                                       ------------------------------------------------------------------------------
<S>                                      <C>                 <C>                 <C>               <C>
Sales:
  Domestic                               $       10,475      $       1,959       $       2,672     $       15,106
  Foreign                                            --                 --                 133                133
                                       ------------------------------------------------------------------------------

Total                                    $       10,475      $       1,959       $       2,805     $       15,239

Cost of goods sold                       $        8,952      $         997       $       2,451     $       12,400

Income  before taxes                     $           34      $         163       $         305     $          502*

Identifiable assets                      $       19,897      $      12,670       $      10,650     $       43,217**

Depreciation and amortization expense    $          178      $         169       $         289     $          636

Interest expense                         $          321      $         365       $         122     $          808***

*Identifiable income before taxes, as stated above                                                 $          502
  Corporate-level loss before taxes, not identifiable with a specific segment                                 (31)
                                                                                                 --------------------

Total income before taxes                                                                          $          471
                                                                                                 ====================

**Identifiable assets, as stated above                                                             $       43,217
    Corporate-level intangibles                                                                               650
                                                                                                 --------------------

Total assets                                                                                       $       43,867

***Identifiable interest expense, as stated above                                                  $          808
      Corporate-level interest expense, not identified with a specific segment                                 31
                                                                                                 --------------------

 Total interest expense                                                                            $          839
                                                                                                 ====================
</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)
<TABLE>
<CAPTION>

7. BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

                                                              Nine Months Ended July 31, 2003
                                       ------------------------------------------------------------------------------
                                             Trailer         Coach Leasing       Butyl Rubber           Total
                            Manufacturing Reclaiming
                                       ------------------------------------------------------------------------------
<S>                                      <C>                 <C>                 <C>               <C>
Sales:
  Domestic                               $       27,391      $       5,082       $       6,989     $       39,462
  Foreign                                         2,355                 --                 985              3,340
                                       ------------------------------------------------------------------------------

Total                                    $       29,746      $       5,082       $       7,974     $       42,802

Cost of goods sold                       $       27,132      $       2,879       $       7,434     $       37,445

Loss before taxes                        $       (2,317)     $        (246)      $        (669)    $       (3,232)*

Identifiable assets                      $       20,163      $      14,167       $      10,993     $       45,323**

Depreciation and amortization expense    $          364      $         704       $         570     $        1,638

Interest expense                         $        1,038      $         914       $         356     $        2,308***


*Identifiable loss before taxes, as stated above                                                   $       (3,232)
   Corporate-level loss before taxes, not identifiable with a specific segment                               (269)
                                                                                                 --------------------

Total loss before taxes                                                                            $       (3,501)
                                                                                                 ====================

**Identifiable assets, as stated above                                                             $       45,323
    Corporate-level intangibles                                                                               650
    Other corporate-level assets                                                                              152
                                                                                                 --------------------

Total assets                                                                                       $       46,125
                                                                                                 ====================

***Identifiable interest expense, as stated above                                                  $        2,308
      Corporate-level interest expense, not identified with a specific segment                                269
                                                                                                 --------------------

      Total interest expense                                                                       $        2,577
                                                                                                 ====================

</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)
<TABLE>
<CAPTION>

7. BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

                                                              Nine Months Ended July 31, 2002
                                       ------------------------------------------------------------------------------
                                             Trailer         Coach Leasing       Butyl Rubber           Total
                            Manufacturing Reclaiming
                                       ------------------------------------------------------------------------------
<S>                                      <C>                 <C>                 <C>               <C>
Sales:
  Domestic                               $       30,210      $       4,513       $       7,134     $       41,857
  Foreign                                            --                 --                 445                445
                                       ------------------------------------------------------------------------------

Total                                    $       30,210      $       4,513       $       7,579     $       42,302

Cost of goods sold                       $       26,134      $       2,336       $       6,850     $       35,320

Loss before taxes                        $         (772)     $        (237)      $        (297)    $       (1,306)*

Identifiable assets                      $       19,897      $      12,670       $      10,650     $       43,217**

Depreciation and amortization expense    $          639      $         579       $         800     $        2,018

Interest expense                         $          936      $       1,097       $         430     $        2,463***

*Identifiable income (loss) before taxes, as stated above                                          $       (1,306)
  Corporate-level loss before taxes, not identifiable with a specific segment                                (153)
                                                                                                 --------------------

Total loss before taxes                                                                            $       (1,459)
                                                                                                 ====================

**Identifiable assets, as stated above                                                              $      43,217
  Corporate-level intangibles                                                                                 650
                                                                                                 --------------------

Total assets                                                                                       $       43,867

***Identifiable interest expense, as stated above                                                  $        2,463
      Corporate-level interest expense, not identified with a specific segment                                153
                                                                                                 --------------------

      Total interest expense                                                                       $        2,616
                                                                                                 ====================

</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

7. 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 nine months ended July 31, 2003
and 2002, allocated corporate expenses by segment were as follows:

<TABLE>
<CAPTION>


                                    Three Months Ended                      Nine Months Ended
                          -------------------------------------------------------------------------------
                          -------------------------------------------------------------------------------
                             July 31, 2003       July 31, 2002      July 31, 2003      July 31, 2002
                          -------------------------------------------------------------------------------

<S>                          <C>                 <C>                <C>                <C>
Trailer manufacturing        $           199     $           146    $           856    $           828
Coach leasing                             42                  27                134                120
Butyl rubber reclaiming                   45                  38                234                185
                          -------------------------------------------------------------------------------

                             $           286     $           211    $         1,224    $         1,133
                          ===============================================================================
</TABLE>


8. RELATED PARTIES

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

<TABLE>
<CAPTION>


                                                             July 31,          October 31,
                                                               2003               2002
                                                         ------------------ ------------------
<S>                                                        <C>                <C>
Balance sheet:
  Current assets:
    Accounts receivable, Obsidian Capital Partners         $        156       $        181
    Accounts receivable, Fair Holdings                               12                 --
    Accounts receivable, Obsidian Capital Company                    12                 13
    Accounts receivable, other affiliated entities                   49                 12
                                                         ------------------ ------------------

Total assets                                               $        229       $        206
                                                         ================== ==================

  Current liabilities:
    Accounts payable, Obsidian Capital Company             $        274       $        279
    Accounts payable, stockholders                                  321                338
    Accounts payable, DC Investments and Fair Holdings              197                 42
    Accounts payable, other affiliated entities                      13                  9
    Notes payable, Fair Holdings                                     73                 --
  Long-term portion:
    Notes payable, DC Investments                                   700                700
    Notes payable, Fair Holdings                                  7,025              3,020
    Line of credit, Fair Holdings                                 5,382              1,798
                                                         ------------------ ------------------

Total liabilities                                          $     13,985       $      6,186
                                                         ================== ==================

</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except share and per-share data)
                                   (unaudited)

<TABLE>
<CAPTION>

8. RELATED PARTIES, CONTINUED

                                                   Three Months Ended                     Nine Months Ended
                                          -------------------------------------- -------------------------------------
                                            July 31, 2003       July 31, 2002      July 31, 2003      July 31, 2002
                                          ------------------- ------------------ ------------------ ------------------

<S>                                         <C>                 <C>                <C>                <C>
Statement of operations:
  Interest expense, DC Investments and
  Fair Holdings                             $        432        $         58       $        935       $        140
  Interest expense, Obsidian Capital
  Partners                                  $         --        $         --       $         --       $         58
  Rent expense, Obsidian Capital Company    $         15        $         16       $         30       $         41
  Rent expense, Fair Holdings               $         13        $         --       $         31       $         --

</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 July  31,  2003 or  October  31,  2002,
respectively.  Amounts  classified as long term represent  amounts not currently
due, amounts that are expected to be converted to equity  subsequent to July 31,
2003 and October 31, 2002, respectively,  or amounts converted to long-term debt
subsequent to July 31, 2003.

In addition to the transactions described above, Fair Holdings acquired from the
Company all rights and  interest  in a Put Option for Series D  Preferred  Stock
held by  Markpoint  as  discussed  in Note 5. Fair  Holdings  has also agreed to
purchase  shares subject to the second put option held by Markpoint which may be
exercised in November 2003.


9. COMMITMENTS AND CONTINGENCIES

In the normal course of business,  the Company is liable for contract completion
and product performance. In the opinion of management, such obligations will not
significantly affect the Company's financial position or results of operations.
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operation

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

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

RESULTS OF OPERATIONS

The Company's overall operating results and financial condition during the three
and nine months ended July 31, 2003  compared to the three and nine months ended
July  31,  2002  continue  to be  adversely  affected  by the  overall  economic
situation in the United States through lower than anticipated  product demand in
the trailer and related  transportation  equipment  manufacturing segment and by
the limited availability of raw materials in the butyl reclaiming segment.

The following table shows net sales by product segment:

<TABLE>
<CAPTION>

                                            Three Months Ended                          Nine Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    July 31, 2003         July 31, 2002        July 31, 2003         July 31, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                  <C>                   <C>                  <C>                   <C>
Trailer manufacturing                $     11,534          $     10,475         $     29,746          $     30,210
Butyl rubber reclaiming                     2,699                 2,805                7,974                 7,579
Coach leasing                               2,562                 1,959                5,082                 4,513
                                 --------------------- -------------------- --------------------- ---------------------

Net Sales                            $     16,795          $     15,239         $     42,802          $     42,302
                                 ===================== ==================== ===================== =====================
</TABLE>

The  following is a discussion  of the major  elements  impacting  the Company's
operating  results by segment for the three-month  and nine-month  periods ended
July 31, 2003 compared to the three-month and nine-month  periods ended July 31,
2002. 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.
<PAGE>

TRAILER AND RELATED TRANSPORTATION EQUIPMENT MANUFACTURING

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

<TABLE>
<CAPTION>

                                            Three Months Ended                          Nine Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    July 31, 2003         July 31, 2002        July 31, 2003         July 31, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                  <C>                   <C>                  <C>                   <C>
Net Sales                            $     11,534          $     10,475         $     29,746          $     30,210
Cost of Sales                              10,378                 8,952               27,132                26,134
                                 --------------------- -------------------- --------------------- ---------------------

Gross Profit                         $      1,156          $      1,523         $      2,614          $      4,076
                                 ===================== ==================== ===================== =====================

Gross Profit %                             10.0%                 14.5%                 8.8%                 13.5%
                                 ===================== ==================== ===================== =====================
</TABLE>

Three  Months  Ended July 31, 2003  Compared to The Three  Months Ended July 31,
2002

Net sales in this  segment for the three  months ended July 31, 2003 as compared
to the comparable  three month period ended July 31, 2002 increased 10.1% in the
amount of $1,059.  Sales in this  segment  were  higher  than the prior year due
primarily  to the  sales of cargo  trailers.  Production  and sales of the cargo
trailers  increased due to the additional cargo  manufacturing  facility and the
implementation  of a  discount/rebate  program that was  implemented in February
2003 for the  cargo  trailers  to  stimulate  sales.  Additional  sales of cargo
trailers were also made to existing customers that historically  purchased truck
bodies.  The  trailer  market  remains  very  price  competitive  and all  major
competitors are offering  similar discount  programs.  The sales of truck bodies
for the three  months  ended July 31, 2003  decreased  $36  compared to July 31,
2002.  The  decrease in sales was due  primarily  to the loss of this  segment's
primary truck body customer due to the customer's  bankruptcy.  We believe sales
of truck  bodies will  continue  at a level  below 2002 as the Company  does not
anticipate  any orders from this  segment's  primary  truck body customer in the
future.

     o    The gross profit percentage  decreased 4.5% for the three months ended
          July 31, 2003. The reduction in gross profit is  attributable to three
          primary factors.  First, the sales  discount/rebate  program discussed
          above has reduced gross profit by approximately  3.3%. Second,  during
          the fourth  quarter of 2002,  the Company  opened an additional  cargo
          trailer manufacturing  facility.  This facility did not obtain a level
          of  efficiency  of  existing  facilities  until  the end of the  third
          quarter.  Efficiency improved during the third quarter and is expected
          to be in line with existing facilities through the end of fiscal 2003.
          Lastly,  gross profit has been  negatively  impacted by a reduction in
          sales of truck  bodies,  which  has  reduced  the  ability  to  absorb
          overhead at the truck body manufacturing  facility.  During late 2002,
          the Company  began  manufacturing  cargo  trailers in this facility to
          provide additional  capacity and serve new markets.  Production levels
          are  increasing  but have not yet  reached  a level of  efficiency  of
          existing cargo trailer  facilities.  Management is currently analyzing
          the  use of  the  truck  body  facility  and  considering  options  of
          continuing   production   of  truck   bodies   and   cargo   trailers,
          discontinuing  one of these  lines at this  facility  or  closing  the
          facility.  A decision  is  expected  prior to  October  31,  2003.  In
          conjunction  with  the  analysis  of  operations  at  the  truck  body
          manufacturing  facility,  management  is also  analyzing any potential
          asset impairment at this facility.  Total assets of Danzer at July 31,
          2003 were  $3,395,  which  consists  of $1,396 of  current  assets and
          $1,999 of net property and equipment,  and represents approximately 7%
          of consolidated total assets.
<PAGE>

Nine Months Ended July 31, 2003 Compared to The Nine Months Ended July 31, 2002

Sales in this segment decreased $464 or 1.5% over the comparable period of 2002.
The decrease was primarily related to the following factors.  First the sales of
cargo trailers have increased approximately $900 over the nine months ended July
31, 2002 as a result of additional  production  facilities and sales to existing
customers in new markets. The Company also began a sales discount/rebate program
to stimulate sales.  While this program did increase the units sold, it resulted
in a lower average  price per unit.  This increase was offset by the decrease in
sales of truck  bodies by  approximately  $1,400 over the nine months ended July
31, 2003. This reduction was related to the continued depressed condition of the
telecommunications  industry which has historically been a significant  consumer
of truck bodies,  as well as the bankruptcy  filing of a significant  truck body
customer in late 2002. We believe sales of truck bodies will continue at a level
below 2002, as we do not anticipate any orders from this segment's primary truck
body  customer  in the  future,  and a  replacement  market  has  not  yet  been
developed.

The gross profit decreased 4.7% primarily as a result of decreased volume at the
Company's  truck body plant  which  resulted  in an  inability  to absorb  fixed
overhead  costs.  To offset these costs,  management  began  production of cargo
trailers in this facility  during late 2002.  Inefficiencies  in the start up of
this operation and  additional  production  facilities  have also had a negative
impact in gross  profit  margins as compared  to the nine months  ended July 31,
2002.  Management  believes gross profits will continue to be adversely impacted
by the lack of sales volume in truck bodies. The sales discounts/rebates offered
during 2003 have ended as of July 31, 2003 with the  introduction of new product
lines to compete in the market at higher gross margins than the discounted cargo
trailers.

BUTYL RUBBER RECLAIMING

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

<TABLE>
<CAPTION>
                                            Three Months Ended                          Nine Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    July 31, 2003         July 31, 2002        July 31, 2003         July 31, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                  <C>                   <C>                  <C>                   <C>
Net Sales                            $     2,699           $     2,805          $     7,974           $     7,579
Cost of Sales                              2,487                 2,451                7,434                 6,850
                                 --------------------- -------------------- --------------------- ---------------------

Gross Profit                         $       212           $       354          $       540           $       729
                                 ===================== ==================== ===================== =====================

Gross Profit %                             7.9%                 12.6%                 6.8%                  9.6%
                                 ===================== ==================== ===================== =====================
</TABLE>

Three  Months  Ended July 31, 2003  Compared to The Three  Months Ended July 31,
2002

Net sales for the three months  ended July 31, 2003  compared to same period for
2002  decreased  $106 or 3.7%.  The  decrease  relates  to the  demand  from the
Company's tire manufacturing customers for the three months ended July 31, 2003.
The decreased  demand was partially  offset by a price increase of 2.2% over the
comparable  period for 2002.  While sales have been  steady with the  additional
price increase,  management does not anticipate the return to historical  levels
due to the availability of raw materials discussed below.

The gross profit  percentage  decreased 4.7% for the three months ended July 31,
2003.  This decrease was due to the decrease in volume,  increase in the cost to
obtain  raw  material  and  ongoing  equipment  maintenance.   The  Company  has
consolidated  part of its  equipment  from two plants into one to  maximize  the
production  facilities.  A portion  of the  equipment  not  consolidated  with a
carrying  value of  approximately  $650 is used at various times for  additional
capacity and toll grinding but at times may be  temporarily  idle. The equipment
is being  evaluated on an ongoing basis for its use in a production  process for
"fine ground"  rubber.  Existing and new equipment  will be required to complete
the "fine grind"  production  line. If it is determined  the idle equipment does
not have  any  foreseeable  use,  the  equipment  will be  reclassified  as idle
equipment on the balance sheet, not depreciated and tested for impairment.
<PAGE>

Reserves  have been  established  primarily  for  inventory  not usable  without
additional  processing  costs  and  currently  usable  only  when  mixed  in the
production  process  at a low rate  with  quality  raw  material.  Reserves  are
reversed when such inventory is used in  production.  For the three months ended
July 31, 2003, the Company utilized $19 of its reserve.

Nine Months Ended July 31, 2003 Compared to The Nine Months Ended July 31, 2002

Net sales in this segment for the nine months ended July 31, 2003 as compared to
the nine-month  period ended July 31, 2002 increased 5.2% in the amount of $395.
Sales in this  segment  were  higher  than the nine  months  ended July 31, 2002
because of increased demand from Company's tire  manufacturing  customers and an
increase  in  pricing.  While  the  Company  experienced  an  increase  in sales
throughout  calendar  year  2002,  management  does not  anticipate  a return to
historic levels of sales of reclaimed butyl rubber to tire manufacturers  during
fiscal 2003, in part due to the lack of consistent sources of raw materials. Net
sales also increased over the third quarter of 2002 due to increased  demand for
pipeline  mastic wraps  produced with  reclaimed  butyl rubber.  Demand for this
product fell dramatically  beginning in October 2001 as a result of a decline in
the  price  of  crude  oil in late  2001,  which  caused  a  decline  in new oil
exploration.  As the price of crude oil increased, the demand for those uses has
also  increased.  Although this demand has increased from its lows at the end of
fiscal 2001 and beginning of fiscal 2002,  demand has not returned to historical
levels.

Gross profit  percentage  decreased 2.8% for the nine months ended July 31, 2003
compared to the nine months  ended July 31,  2002.  The primary  reason for this
decrease is a lack of a consistent supply of raw materials and increasing energy
costs.  The  Company's  reclaim  process  is most  efficient  when raw  material
consists of  primarily  road worn inner tubes with a mix of other butyl  rubber.
Since the  introduction  of the  tubeless  tire for  automobiles  in the  1970s,
sources of material  have declined  substantially  and the cost of available raw
materials  has  increased.  As a result of having to use less than  optimum  raw
material mix in the reclaiming process,  additional  processing time is incurred
to ensure  delivery  of  quality  product.  Management  has been  testing  other
materials  including  butyl pad  scrap as a  replacement  material  for the past
several years with some success.  In addition,  alternative sources of material,
including overseas sources,  are being pursued to provide a consistent supply of
material in the future. Until such time that consistent sources of raw materials
are available, sales growth and gross profit in this segment will be limited.

COACH LEASING

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

<TABLE>
<CAPTION>

                                            Three Months Ended                          Nine Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    July 31, 2003         July 31, 2002        July 31, 2003         July 31, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                 <C>                   <C>                  <C>                   <C>
Net Sales                           $      2,562          $      1,959         $      5,082          $      4,513
Cost of Sales                              1,525                   997                2,879                 2,336
                                 --------------------- -------------------- --------------------- ---------------------

Gross Profit                        $      1,037          $        962         $      2,203          $      2,177
                                 ===================== ==================== ===================== =====================

Gross Profit %                            40.5%                 49.1%                43.3%                 48.2%
                                 ===================== ==================== ===================== =====================

</TABLE>
<PAGE>

Three  Months  Ended July 31, 2003  Compared To The Three  Months Ended July 31,
2002

Sales for the three months ended July 31, 2003  increased $603 or 30.7% from the
period July 31. 2002.  The increase in sales relates to a higher  utilization of
the fleet for three months  ended July 31, 2003  compared to the same period for
2002.  The Company has  increased its fleet size by adding four new buses during
the current fiscal year to a total of 37 coaches as of July 31, 2003 compared to
30 coaches  for the same period for 2002.  The  increase in number of coaches to
the fleet is expected to increase revenues during the remainder of 2003.

Gross profit percentage  decreased 8.6% for the three months ended July 31, 2003
compared to the period July 31, 2002. The reduction is attributable primarily to
the cost of maintaining a larger fleet and the need to sublease additional buses
from third  parties for the three  months  ended July 31,  2003 to meet  current
demand. The Company has also had increased operating costs for insurance.

Nine Months Ended July 31, 2003 Compared To The Nine Months Ended July 31, 2002

Sales for the nine months ended July 31, 2003  increased  12.6% in the amount of
$569 over the comparable  nine-month period ended July 31, 2002. The increase in
sales is  attributable to increased  utilization of the coach fleet.  Management
believes the  increased  utilization  resulted  from its  marketing  efforts and
specialized tour groups (i.e. golf course trips) and corporate customers.  These
customers are in addition to the traditional  country and western performers who
have traditionally been this segment's primary customer base.

Gross  profit  percentage  for this  segment was 43.3% for the nine months ended
July 31, 2003 compared to 48.2% for the comparable  nine-month period ended July
31, 2002. As noted above the reduction is attributable  primarily to the need to
sublease  additional  buses  from  third  parties  to meet  current  demand  and
increased operating costs for insurance.

Selling, General And Administrative (SG&A) Expenses

The Company's  selling,  general and  administrative  expenses increased $121 or
6.5% for the three months ended July 31, 2003 compared to the three-month period
ended July 31,  2002 and $111 or 1.8% for the nine  months  ended July 31,  2003
compared to the nine-month period ended July 31, 2002. The increases are related
primarily  to the  overall  increase  in the use of  outside  professionals  for
services in assisting with amended filings for restatements.
<PAGE>

Interest Expense

Interest expense as a percentage of average borrowings is as follows:

<TABLE>
<CAPTION>
                                            Three Months Ended                          Nine Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    July 31, 2003         July 31, 2002        July 31, 2003         July 31, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                 <C>                   <C>                  <C>                   <C>
Average debt borrowings             $     40,101          $     35,893         $     37,844          $      36,448

Interest expense as a
 percentage of average debt
 borrowings                                2.2%                  2.4 %                6.8%                  7.8%

Interest expense as a
 percentage of average debt
 borrowings, annualized                    8.8%                  9.6%                 9.5%                 10.8%
                                 ===================== ==================== ===================== =====================
</TABLE>

The decrease is primarily due to the reduction of the prime rate and refinancing
of a  significant  portion  of the coach debt at lower  rates  during the fourth
quarter of fiscal 2002.

Income Tax Provision

The income tax benefit for the three-month  period ended July 31, 2003 increased
by $212  compared to the  three-month  period ended July 31, 2002 and  increased
$616 for the nine-month period ended July 31, 2003 as compared to the nine-month
period ended July 31, 2002. The income tax benefit is created  primarily through
net operating loss carryforwards  recognized to the extent they are available to
offset the Company's net deferred tax liability.  Any quarterly tax benefits are
based on the estimated effective tax rate for the full year.

Discontinued Operations

On  October  30,  2002,  the  Company's  Board  of  Directors   agreed  to  sell
substantially all assets of Champion to an entity  controlled by Messrs.  Durham
and Whitesell in exchange for assumption of all  liabilities of Champion,  other
than its subordinated debt. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 144,  Accounting for Impairment of Long-Lived Assets, the
operating  results of Champion have been classified as discontinued  operations.
The losses from discontinued  operations for the nine months ended July 31, 2003
and 2002  represent  the losses of Champion  during  these  periods,  net of tax
benefit of $25 and $0, respectively.  The loss from discontinued  operations for
the three and nine months ended July 31, 2003 and were $0 and $49, respectively,
as compared to the three and nine  months  ended July 31, 2002 and totaled  $364
and $1,085, respectively.

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

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  Obsidian  Capital  Partners
("Partners"),  from whom three of the four subsidiaries were purchased,  entered
into highly leveraged acquisitions of U.S. Rubber, Pyramid, and United.
<PAGE>

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  violation of their credit agreements.  These risks are mitigated,  in
part,  for the  Company's  United  and U.S.  Rubber  subsidiaries  by the  right
described below under "Guarantees of Partners."  Liquidity and capital resources
have also been negatively impacted by consolidated losses.

The high level of debt also  subjects the Company to additional  liquidity  risk
should interest rates increase by a material  amount.  Approximately  46% of the
Company's  outstanding  debt is variable and based on market factors such as the
prime rate or LIBOR rates. A significant  increase in these market indexes could
have a material adverse affect on the Company's liquidity.

The Company's working capital position (current assets over current liabilities)
was positive at July 31, 2003 by $1,192. The working capital position was $1,591
at October  31,  2002.  This  decrease is  attributable  to the lack of positive
results  primarily  from the Trailer  manufacturing  segment and certain line of
credit  renewal dates which  resulted in  reclassification  of $4,288 to current
liability as of July 31, 2003.  This is partially  offset by the  assumption  of
Danzer  Industries  bank debt by Fair  Holdings  and the  extension  of the term
resulting in a reclassification of $1,488 of debt from current to long term.

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

     o    During  2002,  the Board of Directors  authorized  the Chairman of the
          Board to explore various options regarding the operations at Champion.
          Options included  divestiture,  restructuring of operations or closing
          the facility.  It was  determined in the best interests of the Company
          to sell Champion.  On January 30, 2003, the Company completed the sale
          of substantially  all assets of Champion to an entity owned by Messrs.
          Durham  and   Whitesell,   Chairman  and  President  of  the  Company,
          respectively.  The sale resulted in an increase in equity of $1,142 as
          further described in Note 3.

     o    During  December  2002,  the Company sold certain  coaches of Obsidian
          Leasing to DC Investments Leasing for assumption of the existing debt.
          DC  Investments  Leasing  then  refinanced  this  debt at  terms  more
          favorable than the previous terms.

     o    On April 1, 2003,  the Company  obtained an increase in its  available
          line of credit with Fair Holdings to $8,000.

     o    On January 3, 2003,  Obsidian  Leasing  refinanced  debt due to former
          shareholders in the amount of $928 with Fair Holdings at terms further
          described in Note 4.

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

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

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

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

     o    The Company's  truck body  division at Danzer  continues to negatively
          impact the Company's cash flows.  The trailer  production line was put
          in place in the fourth quarter of 2002 to support the production needs
          at  United  and  also  provide  a new  product  line  to the  existing
          customers  of Danzer and open a  potential  new market  along the East
          coast of the U.S.  Given the current  state of the  Telecommunications
          industry and economic conditions  management will continue to evaluate
          the  operations  and progress with the  implementation  of the trailer
          production.  Management also expects to make a decision to continue or
          discontinue operations by the end of fiscal 2003.

     o    As a result of the actions described above,  management  believes that
          the  Company has  financing  agreements  in place to provide  adequate
          liquidity  and  working  capital  for the  remainder  of fiscal  2003.
          However,  there can be no assurance that  refinancing will be obtained
          or that such working capital and liquidity will, in fact, be adequate.
          Future  liquidity is also dependent upon the ability of the company to
          generate  profitable  operations  and  positive  cash  flow  from  its
          operating entities and maintain compliance with its credit agreements.


Financial Covenant Waivers

At July 31, 2003, United Expresslines and US Rubber were in violation of certain
financial  covenants with Huntington  Capital  Investment  Company and PNC Bank,
respectively. United and US Rubber have received waivers of these violations.

Funds Availability

On a consolidated basis, as of July 31, 2003, the Company had approximately $329
of cash and  cash  equivalents.  Danzer  Industries,  U.S.  Rubber,  United  and
Obsidian  Enterprises  each have  revolving  credit lines  available for working
capital at each individual  entity.  Borrowings under the credit  facilities are
available to the lesser of the maximum  amount or the borrowing  base as defined
in the credit agreement. At July 31, 2003, additional current availability under
these credit  lines and maximum  additional  availability  if supported by their
individual borrowing base are:

         Company            Current Availability       Maximum Availability
------------------------ --------------------------- --------------------------
Danzer Industries                 $       0                   $        0
U.S. Rubber                              62                        2,240
United                                    0                            0
Obsidian Enterprises                  2,480                        2,480

The Company  generated  negative net cash flow of $2,953 from operations  during
the nine months ended July 31, 2003. Cash used in operations  during this period
is primarily  due to  increases  in  inventories  and  accounts  receivable  and
decreases in accounts  payable.  The Company  increased  inventories  during the
first and second  quarters  primarily  in the Trailer  Manufacturing  segment to
improve the Company's  ability to deliver  orders during the balance of the year
when demand was  expected  to  increase.  Inventory  has  continued  to be above
historic  levels  primarily due to lower than expected demand of Cargo Trailers.
Accounts  receivable  increased  in both the  Trailer  Manufacturing  and  Coach
Leasing segments  primarily due to increasing sales in the summer months in both
segments. Funding during this period was provided through borrowings on lines of
credit and from related parties.
<PAGE>

Refinancing Activities

Refinancing  activity  during the nine months  ended July 31, 2003  included the
following:

     o    On  December  17,  2002,  Obsidian  Leasing  sold four  coaches  to DC
          Investments   Leasing  in  exchange  for  DC   Investments   Leasing's
          satisfaction of the debt  outstanding on such coaches.  DC Investments
          Leasing paid this debt through a refinancing  at terms that included a
          reduction in interest rates. In addition,  DC Investments Leasing also
          acquired five additional  coaches that were previously to be purchased
          by the Company  thereby  eliminating the Company's  existing  purchase
          commitment for such coaches.  DC Investments Leasing also entered into
          a  management  agreement  with  Pyramid  under which all nine  coaches
          described above will be leased by Pyramid.

     o    On January 5, 2003,  Obsidian Leasing refinanced debt in the amount of
          $928 to former shareholders of Pyramid and related companies. Terms of
          the new note with Fair Holdings include monthly  interest  payments of
          13%  of the  outstanding  principal  amount  and a  balloon  principal
          payment in January 2006.

     o    On March 28, 2003,  Danzer's line of credit and term loan were assumed
          by Fair Holdings. The maturity date on the line of credit was extended
          to April 1, 2006 and all covenants were waived.

Guarantees Of Partners

The Company has an agreement  with Partners that gives it the right to mandate a
capital  contribution from Partners if the lenders to U.S. Rubber or United were
to declare a default.  In either of those  events,  the Company has the right to
enforce a capital contribution  agreement with Partners up to $1,620,000 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.

Cash Flows

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

<TABLE>
<CAPTION>

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

<S>                                      <C>          <C>           <C>          <C>          <C>          <C>
Long-term debt, and all debt service
 interest payments                       $   54,931   $    4,284    $    8,931   $   20,640   $   10,239   $   10,837
Operating leases                              1,397          450           353          274          189          131
Mandatory redeemable preferred stock          1,462           --           337           --        1,125           --
                                        ------------ ------------- ------------ ------------ ------------ ------------

Total contractual cash obligations       $   57,790   $    4,734    $    9,621   $   20,914   $   11,553   $   10,968
                                        ============ ============= ============ ============ ============ ============
</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.
<PAGE>

We also have a commercial commitment as described below:

<TABLE>
<CAPTION>


   Other Commercial Commitment       Total Amount Committed     Outstanding at July 31,        Date of Expiration
                                                                          2003
----------------------------------- -------------------------- --------------------------- ---------------------------
<S>                                       <C>                        <C>                         <C>
Line of credit, related party             $           1,000          $           1,000     April 1, 2006
Line of credit                                        3,750                      3,750     February 1, 2004
Line of credit                                        4,000                      2,068     October 1, 2005
Line of credit                                          650                        650     June 30, 2003*
Line of credit, related party                         8,000                      5,519     January 9, 2005

*Currently in negotiations with lender.

</TABLE>


The  Company's  net cash used in  operations  for the nine months ended July 31,
2003 was $2,953.  This is  comprised  of a loss from  continuing  operations  of
$2,730,  offset by noncash changes as follows:  depreciation and amortization of
$2,232, deferred tax benefit of $820, accretion of interest expense of $286, and
the extension of stock options of $30. In addition, the Company had increases in
accounts  receivable  of  $1,289,  inventories  of $376,  accrued  expenses  and
customer  deposits of $915,  and other assets of $146 and a decrease in accounts
payable of $1,055.

Net cash flow provided from financing  activities for the nine months ended July
31, 2003 was $2,940.  This is comprised of borrowings of long-term  debt and net
borrowings of short-term  debt of $1,984 and borrowings  from related parties of
$4,982, offset by principal repayments of long-term debt of $2,612. In addition,
the Company repaid $1,414 of related-party payables.

Cash flow used in investing  activities  for the nine months ended July 31, 2003
was $537 This is comprised of purchases of equipment of $560 and other of $23.

The total decrease in cash is summarized as follows:

<TABLE>
<CAPTION>

                                                                  Nine Months Ended
                                                        --------------------------------------
                                                             July 31,           July 31,
                                                               2003               2002
                                                        ------------------- ------------------
<S>                                                       <C>                 <C>
Net cash used in operations                               $       (2,953)     $         (110)
Net cash used in investing activities                               (537)               (559)
Net cash provided by financing activities                          2,940                 593
Net cash provided by (used in) discontinued operations               (41)                  6
                                                        ------------------- ------------------

Decrease in cash and cash equivalents                     $         (591)     $          (70)
                                                        =================== ==================

</TABLE>

Critical Accounting Policies

Our significant accounting policies are summarized in Note 2 to the consolidated
financial statements in the Annual Report on Form 10-K for the fiscal year ended
October 31, 2002 and describe the  significant  accounting  policies and methods
used in the preparation of the consolidated  financial  statements.  Some of the
most critical policies are also discussed below.

As a matter of policy,  we review our major  assets  for  impairment.  Our major
operating  assets are  accounts  receivable,  inventory,  intangible  assets and
property and equipment.  We have not  historically  experienced  significant bad
debts  expense,  although the filing of Chapter 11  bankruptcy  during 2002 of a
customer resulted in a bad debt charge of $379.  However, we believe our reserve
for doubtful accounts of $492 should be adequate for any exposure to loss in our
July 31,  2003  accounts  receivable.  We have  also  established  reserves  for
slow-moving  and  obsolete  inventories  and  believe  the  reserve  of  $359 is
adequate.  We  depreciate  our property and  equipment  and amortize  intangible
assets (except for goodwill)  over their  estimated  useful lives.  Property and
equipment are reviewed for  impairment  when events and  circumstances  indicate
impairment  factors may be present.  Currently,  operating  results at our truck
body  manufacturing  facility,  including the bankruptcy of a significant  truck
body  customer,  indicate  the  assets  of  this  facility  may  be  subject  to
impairment.  Accordingly,  we are  analyzing  these  assets  for  impairment  in
conjunction with our analysis of the continuing  operations of this facility. In
addition,  consolidation of facilities at our butyl rubber reclaiming  operation
has resulted in some  equipment at that facility  being  temporarily  idle as we
implement a new production line for "fine grind" rubber. Should this new process
not  utilize all of the idle  equipment,  we will  analyze  such  equipment  for
impairment.

Goodwill and intangibles are reviewed annually for impairment or more frequently
when events and circumstances indicate potential impairment factors are present.
The Company has  established the first day of the fourth quarter as the date for
its annual  goodwill  impairment  test. In assessing the  recoverability  of the
Company's  goodwill,   the  Company  must  make  various  assumptions  regarding
estimated  future cash flows and other factors in determining the fair values of
the respective assets. If these estimates or their related assumptions change in
the future,  the Company may be required to record impairment  charges for these
assets  in  future  periods.  Any such  resulting  impairment  charges  could be
material to the Company's results of operations.

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

In conjunction  with financing of the acquisition of United,  the Company issued
386,206  shares of Series C preferred  stock to  Huntington  Capital  Investment
Corporation  ("Huntington").  The note purchase  agreement  includes a provision
that gives  Huntington  the option to require  the Company to  repurchase  these
shares at 90% of market  value  upon the  earlier  of: a) fifth  anniversary  of
issuance of such shares,  b) default under the subordinated  debt agreement,  c)
other factors  related to a sale of  substantially  all assets of the Company as
defined in the  agreement.  Increases in the value of the  Company's  stock will
result in a corresponding increase to this repurchase requirement.  Accordingly,
a substantial increase in stock price at the repurchase date may have an adverse
impact on the Company's  liquidity.  At July 31, 2003,  the Company had violated
certain  financial  covenants  defined in the  subordinated  debt agreement with
Huntington.  The Company  received a waiver of these  violations  as of July 31,
2003.

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.
<PAGE>

Item 4 Controls And Procedures

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

The  Company  has  carried out as of July 31,  2003,  an  evaluation,  under the
supervision and with the  participation of the Company's  management,  including
the  Company's  Chief  Executive  Officer and Chief  Financial  Officer,  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures.  Based on this evaluation, the Chief Executive Officer and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures  were  effective.  There  have  been no  significant  changes  in the
Company's internal controls or in other factors that could significantly  affect
internal controls subsequent to the July 31, 2003 evaluation.


                           Part II--Other Information

Item 1.  Legal Proceedings

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

Item 2.  Changes In Securities And Use Of Proceeds
None.

Item 3.  Defaults Upon Senior Securities
None.

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

Exhibits

The  exhibits  filed as part of this Form 10-Q are listed in the Exhibit  Index,
which is incorporated herein by reference.

Reports on Form 8-K
None.
<PAGE>

                                   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.

September 15, 2003         By: /s/ Timothy S. Durham
--------------------       -----------------------------------------------------
 Date                             Timothy S. Durham, Chairman and Chief
                                  Executive Officer

September 15, 2003         By: /s/ Rick D. Snow
--------------------       -----------------------------------------------------
Date                              Rick D. Snow, Executive Vice President/
                                  Chief Financial Officer
<PAGE>
<TABLE>
<CAPTION>




                                  Exhibit Index

   Exhibit No.                              Description
------------------ --------------------------------------------------------------- ------------------
<S>   <C>          <C>                                                                <C>
      10.1         Employment  Agreement,  dated April 30, 2003, between Obsidian     Attached
                   Enterprises, Inc. and Rick D. Snow.*

      31.1         Certification of Timothy S. Durham.                                Attached

      31.2         Certification of Rick D. Snow.                                     Attached
      32.1         Statement  Regarding  Certification  Pursuant  to 18 U.S.C.ss.     Attached

                   1350 by Timothy S. Durham, Chief Executive Officer.
      32.2         Statement  Regarding  Certification  Pursuant  to 18 U.S.C.ss.     Attached

                   1350 by Rick D. Snow, Chief Financial Officer.

* Indicates exhibits that describe or evidence management contracts or
  compensatory plans or arrangements required to be filed as exhibits.

</TABLE>