SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-Q/A
                                 AMENDMENT NO. 1

         (Mark One)

  [X]     QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934 FOR THE  QUARTERLY  PERIOD ENDED JANUARY 31, 2002
          OR

  [ ]     TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE    ACT   OF   1934   FOR   THE    TRANSITION    PERIOD   FROM
          _____________________________ TO ___________________________

         0-17430
         ----------------------------------------------------
         Commission File Number
                           OBSIDIAN ENTERPRISES, INC.
 ------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

      DELAWARE                                                35-2154335
---------------------------                     -------------------------------
---------------------------                     -------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

111 MONUMENT CIRCLE, SUITE 3680                             46204
    INDIANAPOLIS, INDIANA
-------------------------------                 -------------------------------
(Address of principal executive offices)                  (Zip code)

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

-------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

     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 ___ No X


APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKTUPCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes ___ No ___


APPLICABLE ONLY TO CORPORATE ISSUERS:

     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 March 15, 2002
$.0001 par value                          36,007,855 shares


<PAGE>

                                Introductory Note

This Amendment No. 1 amends the  Registrant's  Quarterly Report on Form 10-Q for
the fiscal quarter ended January 31, 2002, to amend and restate Items 1 and 2 of
Part I to incorporate certain changes.

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
                                   (unaudited)
<TABLE>


                                                                                   January 31,       October 31,
                                                                                       2002             2001
                                                                                 ----------------------------------
                                                                                    (as restated, see Note 10)

Assets

Current assets:
<S>                                                                                <C>              <C>
    Cash and cash equivalents                                                      $          417   $          529
    Marketable securities                                                                     194              223
    Accounts receivable, net of allowance for doubtful accounts                             3,883            3,744
      of $95 for 2002 and $90 for 2001
    Accounts receivable, related parties                                                       --              217
    Inventories, net                                                                        7,152            6,694
    Prepaid expenses and other assets                                                         731            1,275
                                                                                 ----------------------------------

Total current assets                                                                       12,377           12,682

Property, plant and equipment, net                                                         23,807           24,232

Other assets:
    Goodwill, net of accumulated amortization of $76                                        9,165            9,210
    Other intangible assets, net of accumulated amortization of $365 for 2002               2,052            2,147
    and $270 for 2001
    Other                                                                                     602              579
                                                                                 ----------------------------------

                                                                                   $       48,003   $       48,850
                                                                                 ==================================
</TABLE>



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


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                   (unaudited)
<TABLE>

                                                                                   January 31,      October 31,
                                                                                       2002             2001
                                                                                 ----------------------------------
                                                                                    (as restated, see Note 10)
Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
<S>                                                                                <C>              <C>
    Current portion of long-term debt                                              $       14,383   $        9,233
    Accounts payable, trade                                                                 3,399            3,620
    Accounts payable, related parties                                                         658              925
    Accrued expenses and customer deposits                                                  2,961            2,388
                                                                                 ----------------------------------

Total current liabilities                                                                  21,401           16,166

Long-term debt, net of current portion                                                     20,792           26,076

Deferred income tax liabilities                                                             1,528            1,672

Accounts payable, related parties                                                           3,169            2,170

Commitments and Contingencies                                                                  --               --

Mandatory redeemable preferred stock, Class of Series C Preferred stock:
 386,206 shares outstanding                                                                 1,244            1,435

Stockholders' equity (deficit):
    Common stock, par value $.0001 per share; 40,000,000 shares authorized,                     3                3
     36,007,855 shares outstanding
    Preferred stock, 5,000,000 shares authorized; Class of Series C convertible                 4                4
     preferred stock, par value $.001, 4,600,000 authorized and 3,739,169
     shares issued and outstanding, 400,000 shares of undesignated Preferred
     Stock authorized
    Additional paid-in capital                                                              5,873            5,682
    Accumulated other comprehensive income                                                      8               37
    Accumulated deficit                                                                    (6,019)          (4,395)
                                                                                 ----------------------------------

Total stockholders' equity (deficit)                                                         (131)           1,331
                                                                                 ----------------------------------

                                                                                   $       48,003   $       48,850
</TABLE>


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

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In Thousands Except Per Share And Share Data)
                                   (unaudited)
<TABLE>

                                                                                          Three Months Ended
                                                                                 -------------------------------------
                                                                                  January 31, 2002  January 31, 2001
                                                                                 -------------------------------------
                                                                                 (as restated, see
                                                                                      Note 10)

<S>                                                                                <C>                <C>
Net sales                                                                          $       12,483     $        3,743

Cost of sales                                                                              11,026              3,301
                                                                                 -------------------------------------

Gross profit                                                                                1,457                442

Selling, general and administrative expenses                                                2,206                515
                                                                                 -------------------------------------

Loss from operations                                                                         (749)               (73)

Other income (expense):
  Interest expense, net                                                                      (908)              (217)
  Other expense                                                                               (29)               (77)
                                                                                 -------------------------------------

Loss before income taxes                                                                   (1,686)              (367)

Income tax (expense) benefit                                                                  155                 12
                                                                                 -------------------------------------

Net loss                                                                           $       (1,531)    $         (355)
                                                                                 =====================================

Basic and diluted earnings (loss) per share                                        $         (.04)    $        --
                                                                                 =====================================

Weighted average common and common equivalent shares outstanding basic and
 diluted                                                                               36,007,855                 --
                                                                                 =====================================

</TABLE>


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


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

       CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                             (dollars in thousands)
                                   (unaudited)

<TABLE>

                                                                                          Accumulated
                                             Common Stock      Preferred Stock Additional  Other          Retained
                             Comprehensive  ----------------------------------- Paid-in  Comprehensive    Earnings
                             Income (Loss)  Shares    Amount    Shares  Amount  Capital    Income        (Deficit)      Total
                             ------------------------------------------------------------------------------------------------------
                             (as restated,                                                                            (as restated
                             see Note 10)                                                                             see Note 10)


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

Distributions to
members of DW Leasing, LLC             --            --   --          --   --       --       --             (93)         (93)

Unrealized loss on
available-for-sale marketable         (29)           --   --          --   --       --      (29)             --          (29)
securities

Fair value adjustment on
redeemable preferred shares             --           --   --          --   --      191       --              --          191

Net loss                            (1,531)          --   --          --   --       --       --          (1,531)      (1,531)
                                             --------------------------------------------------------------------------------------

Total comprehensive loss      $     (1,560)
                              ==============

Balance at January 31, 2002                  36,007,855  $ 3   3,739,169  $ 4   $5,873     $  8        $ (6,019)   $    (131)
                                             ======================================================================================
</TABLE>




<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>

                                                                                       Three Months Ended
                                                                                 -------------------------------
                                                                                   January 31,    January 31,
                                                                                      2002            2001
                                                                                 -------------------------------
                                                                                 (as restated,
                                                                                   see Note 10)

Cash flow from operating activities:
<S>                                                                                <C>             <C>
  Net loss                                                                         $    (1,531)    $      (355)
  Adjustments to reconcile net loss to net cash provided by (used in) operating
   activities:
  Depreciation and amortization                                                            701             286
  Other                                                                                   (106)             77
  Changes in operating assets and liabilities net of effect of acquisitions:
    Accounts receivable, net                                                              (139)            (98)
    Inventories                                                                           (458)            456
    Other, net                                                                           1,193            (309)
                                                                                 -------------------------------

Net cash provided by (used in) operating activities                                       (340)             57
                                                                                 -------------------------------

Cash flows from investing activities:
  Capital expenditures                                                                    (222)           (293)
  Payments to acquire U.S. Rubber                                                           --          (5,528)
  Other                                                                                     11               9
                                                                                 -------------------------------

Net cash used in investing activities                                                     (211)         (5,812)
                                                                                 -------------------------------

</TABLE>





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

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
<TABLE>


                                                                                       Three Months Ended
                                                                                 -------------------------------
                                                                                   January 31,    January 31,
                                                                                      2002            2001
                                                                                 -------------------------------
                                                                                 (as restated,
                                                                                   see Note 10)

Cash flows from financing activities:
<S>                                                                                <C>             <C>
  Borrowings from and distributions to related parties, net                        $       856     $       484
  Net borrowings (payments) on lines of credit and long-term debt                          961            (366)
  Borrowings (repayments) on long-term debt                                             (1,378)          4,555
  Debt issuance cost                                                                        --             (76)
  Proceeds from issuance of U.S. Rubber common stock                                        --             880
                                                                                 -------------------------------

Net cash provided by (used in) financing activities                                        439           5,477
                                                                                 -------------------------------

Decrease in cash and cash equivalents                                                     (112)           (278)

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

Cash and cash equivalents, end of period                                           $       417     $        63
                                                                                 ===============================

Interest paid                                                                      $       915     $       238
                                                                                 ===============================

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

Supplemental disclosure of noncash operating, investing and financing
 activities:
  Purchase price adjustment and conversion of accounts payable to debt for         $       294     $        --
   United
  Advances to construct coaches funded by issuance of debt                         $        --     $        50
  Seller notes issued in acquisition of U.S. Rubber                                $        --     $     2,573
  Fair value change on mandatory redeemable preferred stock                        $       191     $        --

</TABLE>



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


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


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

Description of Business:

     Danzer  Corporation  was  reorganized  through an  Acquisition  and Plan of
Reorganization  with U.S. Rubber  Reclaiming,  Inc. and Related  Entities ("U.S.
Rubber  Companies"),  which was  consummated  on June 21,  2001 (the  "Effective
Date").  In  addition,   Danzer   Corporation   changed  its  name  to  Obsidian
Enterprises,  Inc. However,  the operating  company,  Danzer  Industries,  Inc.,
retained its name. Hereafter, the names Danzer, Danzer Corporation, and Obsidian
Enterprises, Inc. are used interchangeably.  The operating company will continue
to be  referred  to as  Danzer  Industries,  Inc.  The  Acquisition  and Plan of
Reorganization of Danzer Corporation with U.S. Rubber Companies (see Note 2, the
"Acquisition  and  Plan  of  Reorganization")  was  accounted  for as a  reverse
acquisition as the shareholders of the U.S. Rubber Companies owned a majority of
the  outstanding  stock of  Danzer  subsequent  to the  Acquisition  and Plan of
Reorganization.  For accounting purposes, U.S. Rubber Reclaiming, Inc. is deemed
to have acquired Danzer.

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

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

     In the  opinion  of  management,  all  adjustments  (which  include  normal
recurring  adjustments  except as disclosed  herein) necessary to present a fair
statement of financial  position as of January 31, 2002,  results of operations,
cash flows,  and  stockholders'  deficit for the three months ended  January 31,
2002 have been  made.  The  results of  operations  for the three  months  ended
January 31, 2002 are not necessarily indicative of the operating results for the
full fiscal year or any future periods.

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

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

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

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



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

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

     Pyramid  Coach,  Inc.  ("Pyramid"),  which is  engaged  in the  leasing  of
coaches,  designed and fitted out for use for travel by country,  rock bands and
other business enterprises, primarily on weekly to monthly leases. The financial
statements of Pyramid are presented on a combined basis. The combined  financial
statements of Pyramid also include the assets,  liabilities,  equity and results
of operations of DW Leasing,  LLC ("DW Leasing") and Obsidian  Leasing  Company,
Inc. ("Obsidian Leasing"),  formed November 1, 2001. DW Leasing is controlled by
individuals  which are also  controlling  shareholders of Obsidian  Enterprises,
Inc. and,  accordingly,  Pyramid.  DW Leasing and Obsidian  Leasing also own all
coaches  operated by Pyramid.  All  intercompany  transactions are eliminated in
combination of this entity.

     To  complete  the  Plan of  Reorganization,  Pyramid  and DW  Leasing  were
required  to  obtain  lender  approval  of the  transfer  of assets  subject  to
liabilities to Obsidian Leasing Company,  Inc.  ("Obsidian  Leasing"),  a wholly
owned subsidiary of the Company.  On November 1, 2001, the Company completed the
tax-free  exchange  contemplated by the Acquisition  Agreement of June 21, 2001,
whereby all but seven coaches and the  liabilities  thereon were  transferred to
Obsidian  Leasing  to  operate  this  segment of  business  previously  under DW
Leasing.  However,  as of January 31,  2002,  the  entities  are combined due to
cross-guarantees associated with the debt on the seven coaches.

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

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


Basis of Presentation:

     The Company's January 31, 2002 consolidated  financial statements have been
presented  on the  basis  that  it is a going  concern  which  contemplates  the
realization  of assets and  satisfaction  of liabilities in the normal course of
business.  The Company  incurred a loss from operations for the ten months ended
October 31, 2001 of $2,149,000 and a net loss of  $4,395,000,  which included an
asset impairment charge of $2,305,000.  In addition,  the Company has incurred a
loss of $1,531,000  for the three months ended January 31, 2002. The losses have
weakened the Company's  financial  condition and  contributed  to its failure to
meet certain financial  covenants required by the lenders.  As a result of these
covenant  violations  which were not waived or were only waived through November
2002,  $4,343,000 of long-term  debt has been  reclassified  and included in the
current  debt  caption  of  current  liabilities  as  of  January  31,  2002.  A
significant  portion of the  Company's  assets is pledged as collateral on these
loans  and  foreclosure  by  the  bank  would  seriously  impair  the  Company's
existence. In addition,  these losses and the reclassification of long-term debt
have  contributed to a total deficit in working capital of $9,024,000 at January
31, 2002.


<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



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

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

     Management,  as a part of its  plan  towards  resolving  these  issues  and
generating  revenue and cash flow, has taken the actions  described below during
and  subsequent  to the quarter  ended  January 31,  2002.  Although  management
believes these actions will improve  operations  and liquidity,  there can be no
assurance that such actions will sufficiently  improve  operations or liquidity,
or occur on terms  acceptable to the Company.  See  Management's  Discussion and
Analysis of Financial Condition and Results of Operations  elsewhere in the this
filing for further  discussions  of the liquidity  issues facing the Company and
the risk factors  associated with these issues as well as management's plans for
addressing them.

o    The Board of  Directors  has agreed in  principle  to divest  Champion to a
     group consisting of the Chairman of the Board of the Company, the President
     and the management group of Champion  pursuant to the terms of a nonbinding
     Letter of Intent  subject  to an  independent  review of fair  value by the
     independent  Board  members  of  the  Company.  DC  Investments,  LLC  ("DC
     Investments"),   an  entity  controlled  by  the  Company's  Chairman,   is
     negotiating to purchase the loans of Bank One to Champion and has agreed in
     principle to  contribute  the loan to the Company in exchange for an as yet
     undetermined  number  of  Series  C  Preferred  Stock.  The  Company  would
     contribute  that note to Champion as  additional  capital.  The  management
     group  would  acquire  Champion  in  exchange  for  the  assumption  of the
     $1,250,000  subordinated  debt of  Champion  and all accrued  interest  and
     either  a  release  of  the   Company's   guarantee  of  that  debt  or  an
     indemnification  of the  Company for any loss to the Company as a result of
     the guarantee.  This proposed sale would result in the Company disposing of
     a subsidiary that comprised 77% of the Company's net loss for the ten-month
     period  ended  October 31, 2001 and 22% of the  Company's  net loss for the
     quarter ended January 31, 2002.

o    DC Investments,  as approved by the Company Board of Directors,  has made a
     loan in the amount of $570,000 to pay down a portion of the  Champion  debt
     that will be converted to equity after final review by the Board.

o    Obsidian Capital Partners,  LP ("OCP"),  majority owner of the Company,  is
     negotiating with the Board of Directors to convert to capital $1,222,000 of
     loans made at the date of the Acquisition and Plan of Reorganization.

o    Negotiations have been ongoing with a new lender to refinance the debt with
     the primary lender of U.S.  Rubber at more favorable terms than the current
     terms.  Management  anticipates  the  refinancing  will be concluded by the
     third fiscal  quarter.  Management and an affiliated  entity  subsequent to
     year-end have negotiated with the  subordinated  debt holder of U.S. Rubber
     to pay off the debt  and  reduce  debt  amounts  and  accrued  interest  by
     approximately  $1,400,000.  Such  agreement was finalized in February 2002.
     See Note 9.

o    The Company is  undertaking  to refinance the coaches  transferred  from DW
     Leasing to a new wholly owned subsidiary of the Company  (Obsidian  Leasing
     Company, Inc.) with existing

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


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

lenders and a related party (DC Investments,  LLC). Management  anticipates that
this will be concluded by the third fiscal quarter.

o    OCP has  entered  into  agreements  related to the debt of U.S.  Rubber and
     United.  Specifically,  in the event of and in accordance  with the default
     provisions,  Obsidian is obligated to make capital  contributions  to these
     subsidiaries of $1,620,000 and $1,000,000,  respectively.  In addition, OCP
     has  committed to fund through the purchase of additional  preferred  stock
     the costs of all legal,  accounting  and related costs to complete the Plan
     of  Reorganization  and the costs to meet all  regulatory  requirements  to
     allow continued trading of Company stock by shareholders.

SIGNIFICANT ACCOUNTING POLICIES:


Principles of Consolidation:

     The accompanying  condensed consolidated financial statements as of and for
the three  months  ended  January  31,  2002  present  the  accounts of Obsidian
Enterprises,  Inc. and its wholly owned  subsidiaries  described  above,  all of
which are treated for accounting  purposes as purchases in a reverse merger more
fully described in Note 2. The entities are  collectively  referred to herein as
the "Company". All significant intercompany  transactions and balances have been
eliminated in consolidation.  The accompanying  financial statements include the
operations of Obsidian Enterprises,  Inc. (formerly Danzer Corporation),  Danzer
Industries,   United  Expressline,  U.S.  Rubber,  Champion,  Pyramid,  Obsidian
Leasing,  and a related  entity (DW  Leasing) for the  three-month  period ended
January 31,  2002.  The  accompanying  condensed  financial  statements  for the
three-month  period ended January 31, 2001  represent the financial  position of
U.S.  Rubber,  Champion,  Pyramid  and DW Leasing as of January  31,  2001.  The
statements of operations  and cash flows include the results of U.S.  Rubber for
the three months ended  January 31, 2001 and Champion,  Pyramid,  and DW Leasing
from January 1, 2001 through January 31, 2001.


Goodwill, Intangible Assets and Other Assets:

     The Company  adopted the  provisions  of Statement of Financial  Accounting
Standards  ("SFAS") No. 142,  Goodwill and Other  Intangible  Assets,  effective
November 1, 2001 and accordingly, goodwill is no longer amortized.

     Other  intangible  assets  include  trade  names,  customer  relations  and
backlogs and other items,  which are being  amortized on a  straight-line  basis
over lives ranging from 3 months to 15 years.


Earnings Per Share, as restated, see Note 10:

     Basic per-share amounts are computed,  generally, by dividing net income or
loss by the  weighted-average  number of common  shares  outstanding.  Basic and
diluted weighted average common shares outstanding for 2002 are the same because
the Company incurred a loss for the period presented.  Therefore,  the inclusion
of options,  warrants and other common stock  equivalents as described in Note 5
in the calculation of diluted loss per share would have an antidilutive effect.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



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

No common  shares of the  legal  acquirer  were  issued in  connection  with the
acquisition which was accounted for as a reverse merger. Accordingly, there were
no common  shares  outstanding  for the three months ended January 31, 2001.

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

                                                                                       Three Months Ended
                                                                                 -------------------------------
                                                                                   January 31,    January 31,
                                                                                      2002            2001
                                                                                 -------------------------------

<S>                                                                                <C>             <C>
Loss before change in fair value of mandatory redeemable preferred stock           $    (1,531)    $      (355)
Change in fair value of mandatory redeemable preferred stock                               191              --
                                                                                 -------------------------------

Net loss attributable to common shareholders                                       $    (1,340)    $      (355)
                                                                                 ===============================

Weighted average common and common equivalent shares outstanding:
  Basic and diluted                                                                 36,007,855      39,419,240
                                                                                 ===============================

Net loss per share, basic and diluted                                              $      (0.04)   $     (0.01)
                                                                                 ===============================
</TABLE>

     The  Company's  Series C  Preferred  Stock,  which has all the  rights  and
privileges of the Company's  common stock,  is convertible at a rate of 20 to 1.
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.

     Pro forma basic and diluted loss per share have been  computed  below as if
the Series C Preferred Stock was converted to common stock. For the three months
ended  January 31, 2002,  the Series C Preferred  Stock has been  reflected on a
weighted average basis outstanding as common shares of 74,783,380. There were no
Series C Preferred  Stock shares issued or  outstanding  during the three months
ended January 31, 2001.

<TABLE>

                                                                                         Three Months Ended
                                                                                --------------------------------------
                                                                                January 31, 2002    January 31, 2001
                                                                                ------------------ -------------------

<S>                                                                                  <C>            <C>
Pro forma weighted average common shares outstanding, basic and diluted              110,791,370                 --
                                                                                ================== ===================

Pro forma net loss per share, basic and diluted, attributable to common                        1
 shareholders                                                                     $          (.0 )   $         (.00)
</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



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


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


Recently Issued Accounting Pronouncements:

     In June 2001, the Financial  Accounting  Standards Board (FASB) issued SFAS
No. 141, Business Combinations,  and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 requires all business combinations initiated after June 30,
2001 to be accounted for using the purchase method.  In addition,  companies are
required to review  goodwill and intangible  assets  reported in connection with
prior  acquisitions,  possibly  disaggregate  and report  separately  previously
identified  intangible assets and possibly  reclassify certain intangible assets
into  goodwill.  SFAS No. 142  establishes  new  guidelines  for  accounting for
goodwill and other intangible  assets. In accordance with SFAS No. 142, goodwill
associated with  acquisitions  consummated after June 30, 2001 is not amortized.
The Company implemented the remaining  provisions of SFAS No. 142 on November 1,
2001. Since adoption,  existing goodwill is no longer amortized but instead will
be assessed for impairment at least annually. The adoption of this pronouncement
will result in $5,829,000 of goodwill not being amortized and the elimination of
approximately  $225,000 of amortization  annually on an additional $3,381,000 of
goodwill previously being amortized.

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

     In July 2001,  the FASB  issued  SFAS No.  144,  Impairment  or Disposal of
Long-Lived Assets,  which is effective for fiscal years beginning after December
15, 2001. The provisions of this statement provide a single accounting model for
impairment of long-lived assets.  The Company is currently  assessing the impact
of this new standard.


2.   ACQUISITIONS AND PLAN OF REORGANIZATION

     The Reorganization (reverse merger) with Danzer, and subsequent acquisition
of United,  were  accounted for under the purchase  method of  accounting.  U.S.
Rubber,  the largest company owned by OCP Partners,  was considered the acquirer
for accounting  purposes and recorded Danzer's assets and liabilities based upon
their  estimated  fair  values,  under the  purchase  method of  accounting  for
business combinations. The operating results of Danzer have been included in the
accompanying  consolidated  financial  statements  from the date of acquisition.
Under the  purchase  method of  accounting,  the  acquired  assets  and  assumed
liabilities have been recorded at their estimated fair values at the date of the
acquisition.

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


2.  ACQUISITIONS AND PLAN OF REORGANIZATION, CONTINUED

     The  acquisition  of Champion and Pyramid were also accounted for under the
purchase method of accounting;  however, due to the related-party  relationships
of the  previous  owners to the  Company,  the assets were  recorded at net book
value similar to pooling-of-interest  accounting,  referred to as reorganization
of entities  under  common  control.  Accordingly,  no  additional  goodwill was
recognized  beyond that recorded during the original  acquisition from unrelated
third parties.

     Champion and Pyramid,  included in the financial statement as of January 1,
2001 and part of the Plan of Reorganization of June 21, 2001 as discussed above,
were  previously  owned by  individuals  who are also the members  and  managing
directors of Obsidian Capital Company,  LLC ("OCC"), the General Partner of OCP.
Purchase  accounting and a goodwill  allocation of $2.6 million were recorded on
Champion  when the managing  members of OCC and other related  parties  acquired
those entities from unrelated third parties.


Pro Forma Information:

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

                                                  Three Months Ended
                                                     January 31,
                                                         2001
                                                 ---------------------

Net sales                                           $        13,999

Net loss                                            $          (917)

Net loss per share - basic and diluted              $          (.05)

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




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




3.   INVENTORIES

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

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

<S>                                                            <C>                <C>
Raw materials                                                  $        3,907     $        3,734
Work-in-process                                                         1,636              1,471
Finished goods                                                          2,317              2,322
Valuation reserve                                                        (708)              (833)
                                                             ------------------ -------------------

Total                                                          $        7,152     $        6,694
                                                             ================== ===================
</TABLE>


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

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

<S>                 <C> <C>                <C>                <C>                <C>
Balance at December 31, 2000               $       (1,338)    $           --     $       (1,338)
  Provision for losses, 2001                          (60)               (13)               (73)
  Write-off of inventory, 2001                        578                 --                578
                                         ------------------ ------------------ ------------------

Balance at October 31, 2001                          (820)               (13)              (833)
                                         ------------------ ------------------ ------------------
  Write-off of inventory, first
    quarter 2002                                      121                  4                125
                                         ------------------ ------------------ ------------------

Balance at January 31, 2002                $         (699)    $           (9)    $         (708)
                                         ================== ================== ==================

</TABLE>




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




4.   FINANCING ARRANGEMENTS

     In  connection  with the  Acquisitions  described  in Note 2 and to provide
working  capital,  the Company has incurred the following debt as of January 31,
2002 and October 31, 2001, as restated, see Note 10:
<TABLE>

                                                                                     Debt Amount (in thousands)
                                                                                -------------------------------------
                                                                                   January 31,     October 31, 2001
                                                                                      2002
                                                                                ------------------ ------------------

U.S. Rubber

Line of credit due November 1, 2002, bearing interest at the prime rate plus
 .75% (5.5% at January 31, 2002), borrowings not to exceed the greater of
 $3,000,000 or the borrowing base (80% of eligible accounts receivable and 50%
 of eligible inventories), collateralized by substantially all assets of
<S>                                                                               <C>                <C>
 U.S. Rubber*                                                                     $        2,093     $        1,732

Note payable to a bank due November 1, 2002, interest payable monthly at prime
 rate plus 1% (5.75% at January 31, 2002), monthly principal payments of $2,395
 beginning January 2002, collateralized by substantially all assets
 of U.S. Rubber*                                                                             195                200

Note payable to a bank, due November 1, 2002, monthly principal payments of
 $34,725, balloon payment and accrued interest due at maturity, accruing
 interest at the prime rate plus 1% (5.75% at January 31, 2002), used to finance
 the acquisition and capital expenditures, collateralized by
 substantially all assets of U.S. Rubber*                                                  2,049              2,187

As part of the original acquisition of U.S. Rubber, the Company issued a note
 payable to former owner (SerVaas, Inc.) in the amount of $1,750,000. The note
 requires interest payable monthly at fourteen percent (14%) from the date of
 this note until March 31, 2001 and at a rate of twenty percent (20%)
 thereafter. The former owner agreed to defer interest and principal payments
 through May of 2001. The amounts accrued during this period will become part of
 the balloon payment due December 28, 2005. The note is collateralized by a
 Stock Pledge Agreement given by OCP. In addition, this note is subordinated to
 the lines of credit and note payable described above. On February 26, 2002, the
 Company refinanced the debt, as further described in
 Note 9.*                                                                                  1,750              1,750

</TABLE>




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




4.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>

                                                                                     Debt Amount (in thousands)
                                                                                -------------------------------------
                                                                                   January 31,     October 31, 2001
                                                                                      2002
                                                                                ------------------ ------------------
U.S. Rubber, Continued

Note payable to former owner, total payments of $929,600, with interest
 imputed at 12%. Due in monthly installments of $38,733. Subordinate to bank
 debt and collateralized by inventory. Matures December 2001. Refinanced
<S>                                                                                   <C>                <C>
 subsequent to January 31, 2002 as discussed in Note 9.                                       730                730

Note payable to a bank, due November 1, 2002, monthly principal payments of
 $2,778, balloon payment and accrued interest due at maturity, accruing interest
 at the prime rate plus 1% (6.5% at January 31, 2002), to be used to finance the
 acquisition, collateralized by substantially all assets of U.S.
 Rubber*                                                                                      463                474

Other                                                                                         77                 88
                                                                                ------------------ ------------------

Subtotal U.S. Rubber                                                                       7,357              7,161
                                                                                ------------------ ------------------

*U.S. Rubber was in technical default of various loan covenants with its primary
  and subordinated lender at January 31, 2002. The Company has entered into an
  amendment to the credit agreement with the primary lender which includes
  waiver of the covenant violations and resets the maturity date on all loans to
  November 1, 2002. The Company also obtained a waiver through November 1, 2002
  from the subordinated lender.

Champion

Bank One, N.A. Facility 1--Line of Credit, maximum borrowing equal to $200,000,
 interest payable monthly at prime plus 1/2% (5.25% at January 31, 2002) due
 March 15, 2002, collateralized by substantially all assets of Champion and
 guaranteed by Messrs. Durham and Whitesell. On March 15, 2002, the Company
 refinanced the debt with a related party and paid off the Bank
 One debt, as further described in Note 9.*                                       $          159     $          200




</TABLE>

<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



4.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>

                                                                                     Debt Amount (in thousands)
                                                                                -------------------------------------
                                                                                   January 31,     October 31, 2001
                                                                                      2002
                                                                                ------------------ ------------------
Champion, Continued
Bank One, N.A. Facility 2--term loan, note payable $650,000, requires monthly
 principal installments of $7,738 plus interest at prime plus 3/4% (5.5% at
 January 31, 2002), matures June 2005, collateralized by substantially all
 assets of Champion and guaranteed by Messrs. Durham and Whitesell. On March 15,
 2002, the Company refinanced the debt with a related party and paid off
<S>                                                                                    <C>                <C>
 the Bank One debt, as further described in Note 9.*                                         503                526

Bank One, N.A. Facility 3 - term loan, note payable $1,118,000, requires monthly
 principal installments of $31,056 plus interest at prime matures 1 1/2% (6.25%
 at January 31, 2002), matures June 2003, paid off on January 8, 2002,
 collateralized by substantially all assets of Champion and guaranteed by
 Messrs. Durham and Whitesell*                                                                --                621

Note payable to The Markpoint Company, $1,250,000, interest payable monthly at
 13 1/2%, commencing June 1, 2000, balloon payment of outstanding principal
 balance due May 2005, collateralized by substantially all assets of Champion
 and subordinate to senior bank debt described above*                                      1,250              1,250

Other                                                                                          8                 15
                                                                                ------------------ ------------------

Subtotal Champion                                                                          1,920              2,612
                                                                                ------------------ ------------------
</TABLE>

*    Champion was in technical default of all of its debt as of January 31, 2002
     and October 31, 2001, respectively. The Company has not been able to obtain
     waivers  from the lenders.  Accordingly,  all debt has been  classified  as
     current.





<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



4.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>

                                                                                     Debt Amount (in thousands)
                                                                                -------------------------------------
                                                                                   January 31,     October 31, 2001
                                                                                      2002
                                                                                ------------------ ------------------
Pyramid, DW Leasing and Obsidian Leasing

Ford Motor Credit installment loan, $39,104 repayable in monthly installments of
 $667 including interest at .9% through October 2005, first lien on asset
<S>                                                                               <C>                <C>
 (purchase asset)                                                                 $           29     $           31

Various installment loans, $11,796,038 repayable in monthly installments
 totaling $151,453 including interest ranging from 7.5% to 11.8% through
 November 2007 and applicable balloon payments thereafter through December 2007,
 first lien on assets financed (finance acquisition and asset purchases).
 Substantially all borrowings guaranteed by the members of DW
 Leasing.*                                                                                 9,411              9,584

Various installment loans, $3,636,145 repayable in monthly installments totaling
 $51,950 including interest ranging from 8.0% to 13.2% through July 2007, first
 lien on assets financed (finance acquisition and asset purchases).
 Substantially all borrowings guaranteed by the members of DW
 Leasing.                                                                                  3,280              3,345

Former shareholders of Pyramid and related companies installment loans, $927,500
 repayable in monthly installments of interest at 9% through December 2002 with
 a balloon payment in January 2003, collateralized by Security Agreements for
 Pyramid, DW Leasing and the members of DW Leasing
 (finance acquisition)                                                                       928                928
                                                                                ------------------ ------------------

Subtotal Pyramid, DW Leasing and Obsidian Leasing                                         13,648             13,888
                                                                                ------------------ ------------------
</TABLE>

*    DW Leasing was in technical  default of several loan  covenants with two of
     its primary lenders. The Company has obtained bank waivers through November
     2002 for a portion  of this  amount.  Amounts  classified  as current as of
     January 31,  2002 and  October 31, 2001 due to defaults  that have not been
     waived are $622 thousand and $639 thousand, respectively.





<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




4.  FINANCING ARRANGEMENTS, CONTINUED
<TABLE>
                                                                                     Debt Amount (in thousands)
                                                                                -------------------------------------
                                                                                   January 31,     October 31, 2001
                                                                                      2002
                                                                                ------------------ ------------------
Danzer Industries

Bank of America line of credit, maximum borrowing equal to $1,000,000, with a
 base of 80% of eligible accounts receivable; plus 50% of raw material,
 work-in-process and finished goods inventory. Interest payable monthly at the
 LIBOR Daily Floating Rate plus 3.2% (5.5% at January 31, 2002), due March 31,
 2002, collateralized by substantially all assets of Danzer
<S>                                                                               <C>                <C>
 Industries and guaranteed by Obsidian Enterprises, Inc.*                         $          575     $           75

Bank of America loan--note payable $1,000,000, requires monthly principal
 installments of $5,555 plus interest at the LIBOR Daily Floating Rate plus 3.2%
 (5.5% at January 31, 2002), due August 15, 2006. Collateralized by
 substantially all assets of Danzer Industries and guaranteed by Obsidian                    967                983
 Enterprises, Inc.*

Equipment loans payable--monthly payments currently aggregating $2,443
 including interest of 8.90% to 11.25% through September 2006. Collateralized                107                 53
 by equipment financed.

Term loans payable to US Amada, Ltd. Monthly payments currently aggregating
 $12,668 including interest at 10%, loans due January 2003, collateralized by                254                285
 equipment financed

Other                                                                                          9                 10
                                                                                ------------------ ------------------

Subtotal Danzer Industries                                                                 1,912              1,406
                                                                                ------------------ ------------------
</TABLE>

*    Danzer  Industries  was in default of its credit  agreement  for failure to
     provide audited financial statements within 90 days of fiscal year end. The
     Company has obtained an  additional  45-day  extension  from the lender and
     anticipates providing audited statements within the extension period.





<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




4.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>

                                                                                     Debt Amount (in thousands)
                                                                                -------------------------------------
                                                                                   January 31,     October 31, 2001
                                                                                      2002
                                                                                ------------------ ------------------
United

First Indiana Bank Revolving Line of Credit, maximum borrowing equal to
 $3,500,000, with a base of 80% of eligible accounts receivable; plus 50% of raw
 material, work-in-process and finished goods inventory. Interest payable
<S>                                                                               <C>                <C>
 monthly at prime plus .75% (5.5% at January 31, 2002) due July 1, 2002,          $      3,185       $      3,111
 collateralized by substantially all assets of United and guaranteed by
 Obsidian Enterprises, Inc.*

First Indiana Term Loan I--note payable $291,000, requires monthly principal
 installments of $4,850 plus interest at prime plus 1% (5.75% at January 31,
 2002), due July 1, 2006, collateralized by substantially all assets of
 United and guaranteed by Obsidian Enterprises, Inc.*                                      267                281

First Indiana Term Loan II--note payable $1,116,000, requires monthly principal
 installments of $6,200 plus interest at prime plus 1% (5.75% at January 31,
 2002), due July 1, 2006, collateralized by substantially all
 assets of United and guaranteed by Obsidian Enterprises, Inc.*                          1,085              1,104

First Indiana Term Loan III--note payable $1,750,000, requires monthly principal
 installments of $72,917 plus interest at prime plus 2% (6.75% at January 31,
 2002), due July 1, 2003, collateralized by substantially all
 assets of United and guaranteed by Obsidian Enterprises, Inc.*                          1,385              1,604

Subordinated note payable to Huntington Capital Investment Company, $3,500,000,
 interest payable quarterly at 14% per annum, balloon payment of outstanding
 principal balance due July 26, 2006, less unamortized discount ($1,436 and
 $1,470 at January 31, 2002 and October 31, 2001, respectively).
 Unsecured and subordinate to First Indiana debt.                                        2,064              2,030

Note payable to former shareholder $1,500,000, interest payable monthly at 9%
 per annum, balloon payment of outstanding principal balance due July 27,
 2006. Unsecured and subordinate to First Indiana and Huntington debt.                   1,500              1,500

</TABLE>



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




4.   FINANCING ARRANGEMENTS, CONTINUED
<TABLE>

                                                                                     Debt Amount (in thousands)
                                                                                -------------------------------------
                                                                                   January 31,     October 31, 2001
                                                                                      2002
                                                                                ------------------ ------------------

United, Continued

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

Note payable to former shareholder, $248,840, interest payable at 9% per
 annum, balloon payment of outstanding principal balance due February 1, 2003              249                 --

Other                                                                                      103                112
                                                                                ------------------ ------------------

Subtotal United                                                                         10,338             10,242
                                                                                ------------------ ------------------

*United Expressline was in technical default of loan covenants with one of its
  primary lenders as of October 31, 2001. The Company has obtained bank waivers
  from the lender through January 2002, at which time, the defaults were cured.
                                                                                ------------------ ------------------

Total all companies                                                                     35,175             35,309

Less current portion                                                                    14,383**            9,233
                                                                                ------------------ ------------------

                                                                                  $     20,792       $     26,076
                                                                                ================== ==================
</TABLE>

**   The current  portion of long-term  debt  includes  $4,343,000 of amounts in
     default or in default with waivers which expire November 1, 2002.

     The Company was in violation of three negative covenants and failure of the
Company to submit audited  financial  statements within 90 days of year end with
Renaissance US Growth & Income Trust PLC and FBSUS Special  Opportunities  Trust
PLC, the holders of  debentures  that  completed  the  financing of United.  The
Company has  received a waiver of all of these  violations  through  November 1,
2002.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




4.   FINANCING ARRANGEMENTS, CONTINUED

     Various  subsidiary  companies were in violation of requirements to provide
year-end financial  statements to various lenders within 90 days of the close of
the year-end. Management has received waivers on all of these covenants.

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


     5. STOCKHOLDERS' EQUITY

Preferred Stock:

     In conjunction with the merger and acquisitions  (described  previously) of
June 21,  the  Company  issued  1,970,962  of  Series  C  Preferred  Stock.  The
shareholders of Pyramid and Champion then converted  824,892 shares of preferred
stock to 16,497,840 of common stock.  In addition,  on July 5, 2001, the Company
increased the authorized shares of common stock by 20,000,000 to 40,000,000.  On
July 31, 2001, the Company  issued  2,593,099  shares of additional  convertible
preferred stock related to the United acquisition.

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

     These shares were offered and sold in  transactions  which were exempt from
Securities Act registration  under Section 4(2) of the Securities Act,  relating
to sales by an issuer not  involving a public  offering.  No  underwriters  were
involved in the sale of these shares.  The Corporation will use its best efforts
to file, as soon as reasonable practicable following the date of issuance of the
Series C Preferred, a registration statement ("Registration  Statement") on Form
S-1, pursuant to the rules of the Securities and Exchange  Commission ("SEC") or
on such  other  form  promulgated  by the SEC for  which  the  Corporation  then
qualifies,  which  is  available  to  Corporation,  and  which  counsel  for the
Corporation shall deem appropriate for the registration under the Securities Act
of 1933.

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

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


5.   STOCKHOLDERS' EQUITY, CONTINUED

Stock Options:

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

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

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

     In  September  1998,  Danzer  granted  a total of  604,500  stock  options,
exercisable at $.10 per share, to certain employees. The options expire November
2001. As a result of voluntary  termination,  75,000 options expired in 1999 and
192,000  options  expired in 2000.  None of these  options were  exercised as of
January 31, 2002.

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

     The Company has adopted the  disclosure-only  provisions  of  Statement  of
Financial  Accounting  Standards  (SFAS) No.  123,  Accounting  for  Stock-Based
Compensation.  Accordingly,  no compensation expense has been recognized for the
stock option plans.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




5.   STOCKHOLDERS' EQUITY, CONTINUED


Stock Options and Warrants:

     The following table summarizes the outstanding options and warrants for the
three-month period ended January 31, 2002:
<TABLE>

                                                                                               January 31, 2002
                                                                                          ----------------------------
                                                                                                           Weighted
                                                                                                           Average
                                                                                                           Exercise
                                                                                             Shares         Price
                                                                                          -------------- -------------

<S>                                                                                       <C>             <C>
Total granted stock options outstanding, January 31, 2002                                     800,000         $  .09
                                                                                          ============== =============

Fixed options:
  Exercise price $.10                                                                         600,000         $  .10
  Exercise price $.05                                                                         200,000         $  .05
                                                                                          ============== =============

Warrants:
  On June 21, 2001, Duncan-Smith Co. terminated warrant for 650,000 common
   shares and was issued new warrant for 10,000 shares Series C Preferred
   exercisable at $2.00 per
   share, expiring August 31, 2002                                                            200,000          $2.00
                                                                                          ============== =============

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


*    The number of warrants  available  under the  agreement  with  Markpoint is
     based on  twenty-five  percent of the fair  market  value of Champion to be
     determined based on a formula  including a multiple of EBITDA.  No warrants
     are currently available under this agreement based on the operating results
     and stockholder's deficit of Champion.


Convertible Debt:

     As described in Note 4, at January 31, 2002, 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 at January 31, 2002.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




6.   BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA

     The Company  operates in three industry  segments  comprised of trailer and
related transportation  equipment manufacturing (trailer  manufacturing);  coach
leasing;  and butyl rubber reclaiming.  All sales are in North and South America
primarily  in the United  States,  Canada and Brazil.  Selected  information  by
segment follows (in thousands), as restated, see Note 10:
<TABLE>

                                                            Three Months Ended January 31, 2002
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------

Sales:
<S>                                      <C>                 <C>                 <C>               <C>
  Domestic                               $        9,250      $       1,043       $       2,079     $       12,372
  Foreign                                            --                 --                 111                111
                                       ------------------------------------------------------------------------------

Total                                    $        9,250      $       1,043       $       2,190     $       12,483

Cost of goods sold                        $       8,407      $         573       $       2,046      $      11,026

Income (loss) before taxes                $        (967)     $        (367)      $        (352)     $      (1,686)

Identifiable assets                       $      25,370      $      12,380       $      10,253      $      48,003

Depreciation and amortization expense     $         197      $         245       $         259      $         701

                                                            Three Months Ended January 31, 2001
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------

Sales:
  Domestic                               $          118      $         278       $       3,082     $        3,478
  Foreign                                            --                 --                 265                265
                                       ------------------------------------------------------------------------------

Total                                    $          118      $         278       $       3,347     $        3,743

Cost of goods sold                        $          83      $          88       $       3,130      $       3,301

Income (loss) before taxes                $        (137)     $        (165)      $         (65)     $        (367)

Identifiable assets                       $       5,415      $      12,604       $      11,519      $      29,538

Depreciation and amortization expense     $          29      $          75       $         182      $         286

</TABLE>

Obsidian  Enterprises,  Inc.  (legal  parent)  allocates  selling,  general  and
administrative  expenses  to  the  respective  companies  primarily  based  on a
percentage of sales.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



7.  RELATED PARTIES

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

                                                                              January 31,        October 31,
                                                                                  2002              2001
                                                                            ----------------- ------------------
Balance sheet:
  Current assets:
<S>                                                                           <C>               <C>
    Accounts receivable, Obsidian Capital Company (OCC)                       $         --      $        217
  Long-term portion:
    Investment banking fees, purchase accounting*                                       --             1,960
                                                                            ----------------- ------------------

Total assets                                                                  $         --      $      2,177
                                                                            ================= ==================
  Current liabilities:
    Accounts payable, Obsidian Capital Company (OCC)                          $        314      $        625
    Accounts payable, Obsidian Capital Partners                                         16                --
    Accounts payable, stockholders                                                     328               300
  Long-term portion:
    Accounts payable, DC Investments                                                 1,295                --
    Accounts payable, Obsidian Capital Partners (OCP)                                1,874             2,170
                                                                            ----------------- ------------------

Total liabilities                                                             $      3,827      $      3,095
                                                                            ================= ==================

                                                                             January 31, 2002    January 31,
                                                                                                    2001
                                                                            ----------------- ------------------

Income statement:
  Rent expense, Obsidian Capital Company (OCC)                                $         15      $         --
                                                                            ================= ==================
</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 January 31, 2002 or October 31,
2001,  respectively.  Amounts  classified  as long term  represent  amounts  not
currently due, amounts that are expected to be converted to equity subsequent to
January 31, 2002 and October 31,  2001,  respectively,  or amounts  converted to
long-term debt subsequent to January 31, 2002. (See Note 9.)

     The Company was obligated to the stockholders  and certain  employees (that
were  formerly   stockholders  of  subsidiary   companies)  under  note  payable
agreements  acquired  as part of the  acquisitions.  The  details of these notes
payable are included in Note 4.

     *Subsidiaries  of the Company  paid  Obsidian  Capital  Company,  an entity
controlled by Mr.  Durham  (Chairman of the  Company),  investment  banking fees
associated with the  acquisitions  and related  financing on the Danzer and U.S.
Rubber merger and the United acquisition.  Amounts paid by U.S. Rubber,  United,
and Danzer were $760,000, $600,000, and $600,000 respectively.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



8.   COMMITMENTS AND CONTINGENCIES

     The  Company  has a purchase  commitment  to  purchase  or lease  three (3)
coaches  within 60 days of  completion,  expected to be in the second quarter of
calendar 2002. The cost of these coaches will approximate $1.35 million.

     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.


9.   SUBSEQUENT EVENTS

     On February 26,  2002,  the Company  entered into a series of  transactions
with US Rubber, SerVaas, Inc. ("SerVaas"), the former owner of US Rubber, and DC
Investments,  an entity  controlled by the Company's  Chairman)  whereby certain
existing debt of US Rubber was acquired from SerVaas.  DC  Investments  acquired
the SerVaas interest in the debt agreement with a remaining  balance of $730,000
plus accrued  interest for $700,000.  US Rubber then acquired this  agreement in
exchange  for a new  note  payable  to DC  Investments  with  a face  amount  of
$700,000.  The note requires monthly interest payments at 15% with the principal
payable March 2007. The note is subordinate to debt  outstanding with the senior
lender of US Rubber.

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

     No gain or loss  will be  recognized  in the  transactions  because  of the
involvement of related  parties.  The transaction  will result in an increase in
equity of the consolidated group of approximately $1,400,000.

     On February  12, 2002,  U.S.  Rubber  entered  into a "Second  Amendment to
Credit  Agreement" with its primary lender.  The terms of the amendment  require
scheduled debt service payments under  substantially the same terms as described
in Note 4 through  November 1, 2002 when all debt  outstanding  with the primary
lender will become due. The  agreement  also  modifies the terms of an operating
lease  with  the  lender  requiring  payment  in  full  of the  remaining  lease
obligation as of November 1, 2002 of approximately $738,000.

     After  October 31,  2001,  Champion is in  violation  of its Senior  Credit
facility  with Bank One.  Champion  is  working  under a  forbearance  agreement
through  March 15,  2002.  Champion  has paid down the Bank One debt by $570,000
during the quarter ended January 31, 2002 as consideration  for such agreements.
The Company  made a capital  contribution  to  Champion  of  $570,000  from loan
proceeds from DC Investments.




<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)




9.   SUBSEQUENT EVENTS, CONTINUED

     DC Investments has purchased accounts receivable from DW Leasing,  recorded
by DW  Leasing as  deposits  on  trailers,  in the  amount of  $1,050,000  as of
February  13,  2002.  DW Leasing  used the  proceeds  from the  purchase  of the
accounts receivable to pay off the accounts payable due Obsidian Capital Company
in the amount of  $624,000  and the amount due  shareholders  and other  related
parties in the approximate amount of $300,000.

     On March 15, 2002, the Company and DW Leasing  converted amounts owed to DC
Investments to notes payable.  The notes bear interest at 10% payable quarterly,
with principal due in one  installment in March 2005. The total amounts  payable
under these notes to DC  Investments  are  $1,085,000  and $210,000 for Obsidian
Enterprises and DW Leasing, respectively.


10.  RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

     In December  2002,  the  Company  became  aware of an error  related to the
accounting  for  the  redeemable  preferred  stock  issued  in  connection  with
subordinated  debt  pertaining  to the United  acquisition  on July 31, 2001. In
addition,  we have also  determined  the  weighted  average  common  and  common
equivalent  shares  outstanding as previously  reported should not have included
Series C preferred  stock as it has not yet been  converted to common shares and
thus is antidilutive.  The Company is restating its previously  issued financial
statements  for the three  months  ended  January 31,  2002 for this error.  The
Company has also  restated  the  consolidated  balance  sheet and  statement  of
operations  for the year ended  October  31, 2001 for the  redeemable  preferred
stock and the weighted average common shares and common  equivalent,  as further
discussed in Form 10-K/A for the year ended October 31, 2001.

     Below is a comparison of previously reported and restated balances included
in the  Condensed  Consolidated  Balance Sheet and Statement of Operations as of
and for the three months ended January 31, 2002.
<TABLE>

                                                            Previously            Change             As Restated
                                                            Reported
                                                        ------------------- ------------------- -----------------

Statement of Operations:
<S>                                                       <C>                 <C>                 <C>
  Interest expense                                        $         874       $          34       $         908
  Loss before income taxes                                       (1,652)                (34)             (1,686)
  Net loss                                                       (1,497)                (34)             (1,531)
Weighted average common and common equivalent shares
outstanding basic and diluted                               110,791,370        (74,783, 515)         36,007,855
  Net loss per share                                              (.01)                (.03)               (.04)

Balance Sheet:

  Long-term debt, net of current                                 22,228              (1,436)             20,792
  Mandatory redeemable preferred stock                               --               1,244               1,244
  Additional paid-in capital                                      5,612                 261               5,873
  Accumulated deficit                                            (5,950)                (69)             (6,019)
</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


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

IMPORTANT NOTE ABOUT FORWARD-LOOKING STATEMENTS.


Cautionary Statement Regarding Forward-Looking Statements

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


Overview

     The reverse merger transactions, completed in June and July 2001, have been
treated for  accounting  purposes as an  acquisition  by U.S.  Rubber.  For this
reason,  the first quarter results for 2001 represent only the financial results
of U.S. Rubber for three months, Champion Trailer for one month, and the Pyramid
Group for one  month  based on the  January  1, 2001  acquisition  date.  Danzer
Industries and United Expressline were acquired June 21, 2001 and July 31, 2001,
respectively,  and,  accordingly,  are not  included in  financial  condition at
January  31,  2001 or the  results of  operations  for the first  quarter  ended
January 31, 2001.

     The  financial  condition  as of  January  31,  2002  and  the  results  of
operations for the first quarter ended January 31, 2002,  include the operations
of U.S. Rubber,  Champion Trailer,  Pyramid Coach, Obsidian Leasing, DW Leasing,
United Expressline, and Danzer Industries.


<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES


RESULTS OF OPERATIONS 2002 COMPARED WITH 2001

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


Segment Sales
The following table shows net sales by segment:
<TABLE>

                                                    Three Months Ended January 31,
                                                 -------------------------------------
                                                       2002               2001
                                                 ------------------ ------------------
                                 (in thousands)

<S>                                                <C>                <C>
Trailer and related transportation equipment       $       9,250      $         118
 manufacturing
Butyl rubber reclaiming                                    2,190              3,347
Coach leasing                                              1,043                278
                                                 ------------------ ------------------

Total                                              $      12,483      $       3,743
                                                 ================== ==================
</TABLE>

     The  Company's  operating  results and revenue were less than  expected for
each of its  segments  in the first  quarter  ended  January 31,  2002.  This is
primarily due to softer than expected sales of reclaimed butyl rubber, transport
specialty  trailers,  and truck bodies,  and the overall  continued  slowdown of
economic  activity  during the first quarter ended January 31, 2002. The results
of operations were also negatively impacted by normal seasonal slow activity for
the  coach  leasing   activities  and  the  Company's  sales  from  its  trailer
manufacturing  operations.  Management is still  focused on creating  consistent
reporting systems and communication  with each of its subsidiaries.  In addition
Management  is continuing to address the  transition  of the  subsidiaries  from
closely held mostly non-audited private companies to public entities. Management
has no prior history in effecting such an integration  of  subsidiaries  under a
holding company and its ability to successfully accomplish this task will have a
substantial  impact on future  Company  revenues and profits.  Subsequent to the
first quarter, the Company hired a new Chief Financial Officer to direct many of
these  functions  including cash  management,  debt  consolidation,  more timely
reporting,  development  of  programs  to  incentives  personnel,  and  to  help
integrate the acquired subsidiaries into an effective operating Company.


TRAILER AND RELATED TRANSPORTATION EQUIPMENT MANUFACTURING

     Company gross profit and gross profit percentage for the three months ended
January  31,  2002,  for  the  trailer  and  related  transportation   equipment
manufacturing  segment  were  $842,256  and 9.1%.  This segment had one month of
operations  only  generated  by Champion  Trailer  resulting in gross profit and
gross profit  percentage of $34,670 and 29.5% for the three months ended January
31, 2001.

     Sales and gross  profits  were lower than  expected in this  segment due to
various factors described below.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



     The continued depressed conditions in the  telecommunications  industry was
the primary factor that has seen lower than expected truck body sales during the
first quarter. Truck body cost of sales were greatly affected by the lower sales
and the efforts to lower  reductions in costs were not  sufficient to offset the
effect of the reduced  revenue.  The Company  anticipates  that overall economic
conditions  and the  economic  state  of the  telecommunications  industry  will
continue to impact sales of truck bodies during 2002.

     The Company's  transport  specialty  trailer gross profit was substantially
below  expectations  in the first  quarter  of 2002.  As a result  of  continued
negative  operating  results  of  Champion  Trailer,  including  a $2.3  million
impairment  charge in the fourth  quarter of 2001,  the Board of  Directors  has
agreed in principle to divest Champion to a group  consisting of the Chairman of
the Board of the Company,  the  President and the  management  group of Champion
pursuant to the terms of a nonbinding Letter of Intent subject to an independent
review  of fair  value by the  independent  Board  members  of the  Company.  DC
Investments is negotiating to purchase the loans of Bank One to Champion and has
agreed in principle to contribute  the loan to the Company in exchange for an as
yet  undetermined  number  of  Series  C  Preferred  Stock.  The  Company  would
contribute  that note to Champion as additional  capital.  The management  group
would  acquire  Champion  in  exchange  for  the  assumption  of the  $1,250,000
subordinated  debt of Champion and all accrued  interest and either a release of
the Company's  guarantee of that debt or an  indemnification  of the Company for
any loss to the Company as a result of the guarantee.

     The  Company's   gross  profit  and   operating   results  in  its  trailer
manufacturing  operations  were lower for the first  quarter than was  expected.
Although  the  Company  normally  expects  this  quarter  to be lower due to the
seasonal  nature of the  trailer  manufacturing  operations,  the results of the
first  quarter of 2002 sales,  gross profit and net  operating  income are lower
than expected.  Management believes that there are operational savings available
in the  consolidation  of  administrative  functions  performed  at United's two
facilities and expects to make changes  necessary to reduce certain common costs
during the third and fourth quarter of 2002.

     Sales and gross profit were affected by the  recession  and the  consequent
reduction  in the overall  level of capital  spending  during the first  quarter
ended January 31, 2002. As capital spending increases, the Company expects sales
and gross profit to rebound to  historical  levels in this segment at United and
Danzer Industries.


Butyl Rubber Reclaiming

Net sales for the periods reported in this segment are as follows:
<TABLE>

                                                  Three Months Ended January 31,
                                                 ------------------------------------------
                                                       2002                  2001
                                                 ------------------ -----------------------

<S>                                                <C>                <C>
Rubber net sales                                   $   2,190,445      $   3,347,276
                                                 ================== =======================
</TABLE>

     Net sales in this segment for the three  months  ended  January 31, 2002 as
compared to the comparable  three-month  period ended January 31, 2001 decreased
34.6% in the amount of $1,156,831.

     The  Company's   customers  had  built  up  large  inventories  during  the
widespread tire recalls at Bridgestone/Firestone and Goodyear in anticipation of
huge demand under such recalls. The number of tires submitted by consumers to be
replaced  was  substantially  lower  than  anticipated,  and as a  result,  tire
manufacturer  orders  through  December 2001 were lower than the previous  year,
producing a  substantial  decrease in reclaimed  butyl demand  through  December
2001. The Company saw an increase in sales during January 2002 and anticipates a
return to more normal inventory levels at its tire manufacturer  customers,  but
doesn't  anticipate a return to historic  levels of demand for  reclaimed  butyl
rubber by tire manufacturers until the third quarter of 2002.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



     The  decline in the price of crude oil in late 2001 caused a decline in new
oil exploration. As a result, the demand for pipeline mastic wraps produced with
reclaim butyl rubber supplied by the Company also fell dramatically beginning in
October  2001.  If the price of crude oil  begins to climb  again,  the  Company
believes the demand for those uses will return to historic levels during 2002.

     Cost of goods sold in this segment were as follows:
<TABLE>

                                                      Three Months Ended January 31,
                                                   ----------------------------------------
                                                         2002                2001
                                                   ----------------- ----------------------

<S>                                                <C>               <C>
Rubber cost of goods sold                          $     2,045,930   $       3,130,018
                                                 ==========================================

% of sales                                                  93.4%             93.5%
                                                 ==========================================
</TABLE>

     Manufacturing costs remained stable in 2002 when compared to the prior year
for the  three-month  period  ended  January  31,  2001.  With the 12"  extruder
renovation completed in September 2001 and the increased use of butyl rubber pad
scrap,  management  anticipates  that the cost of goods sold  percentage  should
continue  to  decline  in 2002  from that  experienced  in 2001 so long as sales
volume increases as expected.

     Gross profit and gross profit percentage for the three months ended January
31, 2002 and 2001 were as follows:
<TABLE>

                                                         Three Months Ended January 31,
                                                  ------------------------------------------
                                                         2002                 2001
                                                  ------------------- ----------------------

<S>                                               <C>                <C>
Rubber gross profit                               $       144,515    $       217,258
                                                ============================================

Rubber gross percentage                                      6.6%               6.5%
                                                ============================================
</TABLE>

     Gross profit was consistent during the first quarter of 2002 as compared to
the 2001 period.

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

     On February 26,  2002,  the Company  entered into a series of  transactions
with US Rubber, SerVaas, Inc. ("SerVaas"), the former owner of US Rubber, and DC
Investments  whereby  certain  existing  debt of US  Rubber  was  acquired  from
SerVaas. DC Investments acquired the SerVaas interest in the debt agreement with
a remaining  balance of $730,000 plus accrued  interest for $700,000.  US Rubber
then  acquired  this  agreement  in  exchange  for  a  new  note  payable  to DC
Investments  with a face amount of $700,000.  The note requires monthly interest
payments at 15% with the principal  payable March 2007.  The note is subordinate
to debt outstanding with the senior lender of US Rubber.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



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

     No gain or loss  will be  recognized  in the  transactions  because  of the
involvement of related  parties.  The transaction  will result in an increase in
equity of the consolidated group of approximately $1,400,000.


Coach Leasing

     The  results of  operations  for the three  months  ended  January 31, 2001
includes  only one month of  operating  results of coach  leasing,  as  Pyramid,
Obsidian Leasing and DW Leasing ("Pyramid Group") were not a part of the Company
until January 1, 2001.  Coach leasing  revenue was higher due to the increase in
size of the coach fleet.  Management  expects decreased  utilization  during the
second quarter of fiscal 2002. Management believes its marketing efforts to rock
and roll,  pop,  touring  Broadway shows and corporate  customers will result in
increased utilization during the third quarter of the Company's fiscal year.

     Through the fiscal year ended October 31, 2001,  the Company and DW Leasing
conducted    cooperative    operations    through   a   management    agreement,
cross-guarantees of debt and shared management and expense. On November 1, 2001,
a substantial  part of DW Leasing's  asset and liabilities  were  transferred to
Obsidian  Leasing  Company,  Inc.  ("Obsidian  Leasing"),  wholly  owned  by the
Company, to complete the purchase of the Coach Leasing business  contemplated by
the purchase  transaction in June 2001. The operations of Obsidian  Leasing have
been  included in the first  quarter  results of operation  of the  Company.  DW
Leasing's  operations  are also  included in the results of  operations  for the
first quarter of 2002.

     For the three months ended January 31, 2002, the coach leasing  segment had
gross profit and gross profit percentage of $470,537 and 45.1%.


SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES

     Selling,  general  and  administrative  expenses  are  higher for the three
months ended  January 31, 2002 versus the  three-month  period ended January 31,
2001 due to the operations added in 2001, as previously discussed.

     Selling, general and administrative expenses are higher for the three month
period than would be  expected on an ongoing  basis.  This is due  primarily  to
increased  administrative  costs that were  necessary to continue the process of
creating  better  subsidiary  reporting,  the use of outside  professionals  for
services in assisting in post-acquisition  activities,  the cost to obtain prior
year audits to meet regulatory  filing  requirements,  and the cost of providing
accounting  and related  services to management,  normally  performed by Company
personnel.


INTEREST EXPENSE, AS RESTATED

     The Company's interest expense is a very high percentage when calculated as
a percentage of net sales, as all  acquisitions  were made on a highly leveraged
basis.  For the  three-month  period ended January 31, 2002,  the  percentage of
interest expense to net sales of 7.3% was lower than the 7.4% for the comparable
Pro Forma period ended January 31, 2001 reflecting the lower sales for the three
months ended January 31, 2002,  offset by debt reductions  during 2001 primarily
from capital contributions.  The historical three-month period ended January 31,
2002,  the  percentage of interest  expense to sales of 7.3% was higher than the
5.8% for the  comparable  period  ended  January  31,  2001,  due to the cost of
financing the subsidiary purchases in June and July 2001.

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



INCOME TAX PROVISION

     The income tax benefit for the  three-month  period ended  January 31, 2002
increased by $143,000 as compared to the  three-month  period ended  January 31,
2001.  The  income  tax  benefit is created  primarily  through  operating  loss
carryforwards  recognized  in the  quarter to the extent they are  available  to
offset the  Company's  net deferred tax  liability.  Quarterly  tax benefits are
based on the estimated effective tax rate for the full year.


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 high principal
balances of some of these loans reflect the fact that Obsidian Capital Partners,
LP, from whom four of the five subsidiaries were purchased,  entered into highly
leveraged acquisitions of Champion, U.S. Rubber, Pyramid Group, and United.

     This high level of debt  creates  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  will be in technical default under
loans.  These risks are mitigated,  in part,  for the Company's  United and U.S.
Rubber subsidiaries by the right described below under "Guarantees of OCP."

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

     The  Company's  working  capital  position  (current  assets  over  current
liabilities)  was  negative at January 31, 2002 by  $9,024,000  in part  because
approximately 41% of the Company's debt is classified as a current liability.

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

o    The transactions described below under "Partners Equity Transactions" which
     converts more than $2,170,000 of long-term liabilities to equity.

o    The divestiture of Champion  described  below under "Champion  Transaction"
     which would improve the Company's working capital position.

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

     There can be no assurance that any or all of these transactions will occur.
Moreover,  if these  transactions do occur,  there can be no assurance that they
will  sufficiently  address the  Company's  liquidity  issues.  Management  will
continue to address the  liquidity  concerns as well as consider any  additional
actions  if  the   contemplated   transactions   either  do  not  occur  or  are
insufficient.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



FINANCIAL COVENANT WAIVERS

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

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

o    Pyramid is a guarantor of DW  Leasing's  debt to Regions  Bank,  Nashville,
     Tennessee. DW Leasing and Pyramid have been in violation of the Funded Debt
     to EBITDA ratio in the Regions Bank Credit  Facility since the inception of
     the loan. This is due to the fact that DW Leasing acquired eight additional
     new luxury coaches,  in highly leveraged  transactions.  At the time of the
     Acquisition,  Regions Bank granted a waiver of this violation. To date, the
     covenant has not been  rewritten.  Regions Bank has waived the violation as
     of  October  31,  2001.  However,  since  the  Company  continues  to be in
     violation of this covenant, $622,000 of long-term debt due Regions Bank has
     been reclassified as a current liability.

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

     Champion  remains in default of both the senior and the  subordinated  debt
agreements,  which  have  been  classified  as a  current  liability  due to the
default,  and is  operating  under a  forbearance  agreement  on the senior debt
through March 15, 2002. DC Investments is negotiating  with Bank One to purchase
the senior debt from Bank One. (See Champion Transactions.)


FUNDS AVAILABILITY

     On  a  consolidated  basis,  as  of  January  31,  2002,  the  Company  had
approximately  $417,000 of cash and cash equivalents.  Danzer  Industries,  U.S.
Rubber and United each have revolving credit lines available for working capital
at each individual entity.  Borrowings under the credit facilities are available
to the  lesser of the  maximum  amount or the  borrowing  base as defined in the
credit  agreement.  At January 31, 2002,  these  subsidiaries  had no additional
current  availability  due to borrowing  base  limitations.  Maximum  additional
amounts  available  under these credit  lines if  supported by their  individual
borrowing base are  approximately  $425,000,  $900,000,  and $315,000 for Danzer
Industries, U.S. Rubber, and United, respectively.

     The  Company  did not  generate  net cash flow from  operations  during the
quarter ended January 31, 2002.  Operating losses during the quarter were funded
primarily  through  borrowings under existing lines of credit and  related-party
finished  goods  financing  provided by DC  Investments,  and borrowing  from DC
Investments.

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



REFINANCING ACTIVITIES

Management is refinancing some of the currently outstanding debt:

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

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

o    The Company is  undertaking  to refinance the coaches  transferred  from DW
     Leasing to a new wholly owned subsidiary of the Company  (Obsidian  Leasing
     Company,  Inc.)  with DC  Investments  and its  various  existing  lenders.
     Management  anticipates  that this will be  concluded  by the third  fiscal
     quarter.


PARTNERS EQUITY TRANSACTIONS

     Obsidian Capital  Partners,  LP, the major  shareholder of the Company,  is
required  under the Plan of  Reorganization  to fund  through  the  purchase  of
additional  preferred  stock  certain  ongoing  administrative  expenses  of the
company to complete the Plan of  Reorganization,  complete all required  current
and prior year audits to meet the regulatory filing requirements, and ensure all
annual and quarterly SEC filings are completed to enable the registration of the
preferred stock issued to Obsidian  Capital  Partners,  LP. Such amount expended
through January 31, 2002 approximated $645,000.  Management anticipates this and
any additional items incurred will be converted to equity.

     Obsidian Capital  Partners,  LP has indicated that it is willing to convert
to Series C Preferred Stock of the Company  $1,222,000 of advances from Partners
to the Company. Management anticipates this transaction will be concluded in May
of 2002.


GUARANTEES OF OCP

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


CHAMPION TRANSACTIONS

     The Board of  Directors  has agreed in  principle  to divest  Champion to a
group  consisting  of  Champion's  management  and Messrs.  Durham and Whitesell
pursuant  to  the  terms  of a  nonbinding  Letter  of  Intent,  subject  to  an
independent  review  of fair  value  by the  independent  Board  members  of the
Company. DC Investments,  LLC is negotiating to purchase the loan of Bank One to
Champion and has agreed in principle  to  contribute  the loan to the Company in
exchange  for an as yet  undetermined  number of Series C Preferred  Stock.  The
Company  would  contribute  that note to Champion  as  additional  capital.  The
management  group would acquire  Champion in exchange for the  assumption of the
$1,250,000  subordinated  debt of Champion and all accrued interest and either a
release of the  Company's  guarantee of that debt or an  indemnification  of the
Company for any loss to the Company as a result of the guarantee.

     Champion was working  under a  forbearance  agreement  with Bank One on its
Senior Credit Facility which expired on March 15, 2002. Although the forbearance
agreement has not been formally  extended,  DC Investments  is negotiating  with
Bank One to purchase the loan.  Champion is also  indebted to  Markpoint  Equity
Fund IV under a  subordinated  credit  facility  in the  amount  of  $1,250,000.
Champion has been in violation of the funded debt to EBITDA negative covenant of
the  Markpoint  Credit  Agreement  since the  inception of the loan.  Management
brought  this  violation  to  Markpoint's  attention  prior to the  close of the
Acquisition  and has obtained a waiver of the violation each quarter.  Markpoint
has  informed  Champion  that it may not grant  waiver of this  violation in the
future. The Bank One debt and the Markpoint debt have been classified as current
liabilities due to these violations.

<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



CASH FLOWS (EBITDA), AS RESTATED

     A summary of our contractual  cash  obligations for the fiscal years ending
2002 through 2005 and 2006 and thereafter at January 31, 2002 is as follows:
<TABLE>

         Contractual Obligations           Total           2002          2003         2004         2005         2006 and
                                                                                                               Thereafter
                                        ------------- --------------- ------------ ------------ ------------ ---------------
<S>                                       <C>             <C>         <C>                        <C>         <C>
Long-term debt, with covenant             $4,343,000      $4,343,000  $             $       --   $       --  $           --
 violations and classified as current                                 --
Long-term debt, and all debt service                                              0
 interest payments                        37,108,300       7,137,800     11,264,50   3,417,400    2,559,000      12,729,600

Operating leases                           1,854,000         727,000  980,000           67,000       32,000          48,000

Purchase agreement for equipment           1,350,000       1,350,000  --                    --           --              --

Mandatory redeemable preferred stock       1,244,000              --  --                    --           --       1,244,000
                                        ------------- --------------- ------------ ------------ ------------ ---------------

Total contractual cash obligations       $45,899,300     $13,557,800  $12,244,500   $3,484,400   $2,591,000     $14,021,600
                                        ============= =============== ============ ============ ============ ===============
</TABLE>

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

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

 Other Commercial Commitment      Total Amount Committed       Outstanding at December        Date of Expiration
                                                                      31, 2001
------------------------------- ---------------------------- ---------------------------- ----------------------------

<S>                                  <C>                          <C>                     <C>
Line of credit                       $          200,000           $          159,000      March 15, 2002
Line of credit                                1,000,000                      575,000      March 31, 2002
Line of credit                                3,500,000                    3,185,000      July 1, 2002
Line of credit                                3,000,000                    2,093,000      November 1, 2002
</TABLE>

     The  Company's  net cash  used in  operations  for the three  months  ended
January 31, 2002 was $(340,000).  This is comprised of net losses of $1,531,000,
increases in  inventories  of  $458,000,  increases  in accounts  receivable  of
$139,000,  and  decrease  in  other  liabilities  of  $104,  offset  by  noncash
depreciation and amortization of $701,000,  and increases in accounts payable of
$73,  increases  in  customer  deposits  and accrued  expenses  of $572,000  and
decreases in prepaid and other assets of $546,000.

     Cash flow provided from  financing  activities,  for the three months ended
January 31, 2002 was $439,000. This is comprised of borrowings of long-term debt
and  borrowings  of short-term  debt of $961,000,  and  borrowings  from related
parties  of  $856,000,  offset by  principal  repayments  of  long-term  debt of
$1,378,000.

     Cash  flow was used in  investing  activities  for the three  months  ended
January  31,  2002 of  $211,000.  This is  comprised  primarily  of  purchase of
property and equipment of $222,000.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



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

                                                                 Three Months Ended
                                                                  January 31, 2002
                                                            ------------------------------

<S>                                                              <C>
Net cash used in operations                                      $      (340,000)
Net cash used in investing activities                                   (211,000)
Net cash provided by financing activities                                439,000
                                                            ------------------------------

Decrease in cash and cash equivalents                            $      (112,000)
                                                            ==============================
</TABLE>

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

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

                                                             Three-month Period Ended January 31, 2002
                                                                           (in thousands)
                                              -------------------------------------------------------------------------
                                                                                                              Net
                                                            Interest      Income       Depreciation         Income
                                                EBITDA       Expense      Taxes       & Amortization        (Loss)
                                              ------------ ------------ ----------- -------------------- --------------

Trailer and related transportation
<S>                                             <C>          <C>         <C>              <C>             <C>
equipment manufacturing                         $    (376)   $    394    $   (46)         $     197       $    (921)

Butyl rubber reclaiming                                83         176       (109)               259            (243)

Coach leasing                                         235         357         --                245            (367)
                                              ------------ ------------ ----------- -------------------- --------------

Total Company                                   $     (58)   $    927    $  (155)         $     701       $(1,531)
                                              ============ ============ =========== ==================== ==============
</TABLE>
<TABLE>

                                                                Three Months Ended January 31, 2001
                                                                          (in thousands)
                                              ------------------------------------------------------------------------
                                                                                                             Net
                                                            Interest      Income       Depreciation         Income
                                                EBITDA       Expense      Taxes       & Amortization        (Loss)
                                              ------------ ------------ ----------- -------------------- -------------

Trailer and related transportation
<S>                                             <C>          <C>         <C>              <C>             <C>
 equipment manufacturing                        $     (73)   $     35    $    --          $      29       $    (137)

Butyl rubber reclaiming                               192          74        (12)               182             (52)

Coach leasing                                          17         108         --                 75            (166)
                                              ------------ ------------ ----------- -------------------- -------------

Total Company                                   $     136    $    217    $   (12)         $     286       $    (355)
                                              ============ ============ =========== ==================== =============
</TABLE>
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



CRITICAL ACCOUNTING POLICIES

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

     As a matter of policy, we review our major assets for impairment. Our major
operating  assets are  accounts  receivable,  inventory,  intangible  assets and
property and equipment.  We have not  experienced  significant bad debts expense
and our reserve for  doubtful  accounts  of $95,000  should be adequate  for any
exposure  to loss in our  January 31,  2002  accounts  receivable.  We have also
established  reserves for slow-moving  and obsolete  inventories and believe the
reserve of $708,000 is adequate.  We  depreciate  our property and equipment and
amortize  intangible  assets (except for goodwill) over their  estimated  useful
lives. We have identified items that are impaired and the operating  results for
the  ten-month  period  ended  October 31, 2001  included a goodwill  impairment
charge of $2,305,000. There are no impairment charges in the three-month periods
ended January 31, 2002 and 2001.


RISK FACTORS

     There are a number of risk  factors  related to the  future  results of the
Company, including those discussed in the following paragraphs.


Liquidity

     The  Company  cannot  be  certain  that it will have  sufficient  liquidity
available  under  existing lines of credit.  Four of the Company's  subsidiaries
were  acquired  during the last  fiscal year in highly  leveraged  transactions.
Also,  four of the  Company's  subsidiaries  have been in  violation  of certain
requirements  and covenants in their debt agreements  relating to maintenance of
specified  minimum ratios and levels of earnings to funded debt and fixed charge
coverage. The Company cannot be certain whether it will be able to meet covenant
requirements contained in debt agreements. Although the Company has been able to
obtain  waivers of previous  violations,  the Company  cannot be certain that it
will be able to obtain  waivers of such  covenants  if waivers are needed in the
future.  One lender,  Markpoint,  has informed the Company that it may not grant
any additional waivers of certain covenant violations.

     There is no assurance  that  lenders will  continue to lend to the Company.
Lenders' criteria for loans change and, if there is a further general tightening
of credit  standards,  the Company may not qualify for credit.  Further,  if the
Company's  financial  performance  continues to  deteriorate  from the manner in
which its various operations have historically performed,  the Company's lenders
may declare  defaults and refuse to advance funds under revolving  credit lines.
Under these  circumstances  the Company may not be able to obtain  credit on any
terms.


Integration Of Operations

     The Company  consists of a business  combination  of Obsidian  Enterprises,
Inc. and various recently purchased  manufacturing  entities of Obsidian Capital
Partners,  L.P. The management  resources to date have been spent on purchasing,
continuing  operations at  preacquisition  capability  after the  purchase,  and
integrating  subsidiary  operations  with the Obsidian  management.  The date of
purchase of each entity by the current management is:

Operating Entity                        Date of Purchase

U.S. Rubber Reclaiming, Inc.            December 29, 2000
Pyramid Coach, Inc.                     December 20, 1999
Champion Trailer, Inc.                  May 2, 2000
Danzer Industries, Inc.                 June 21, 2001
United Expressline, Inc.                July 31, 2001
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES



     The Company is still in the  process of  resolving  issues  relating to the
integration  of the  operations  of  these  entities.  The  Company  nay  not be
successful in integrating these businesses or the integration may take longer or
be more costly than currently anticipated.


Market Risk

     The Company is exposed to market risk related to changes in interest  rates
on its debt. Approximately 36% of the Company's primary debt bears interest at a
variable rate. An interest rate increase of one percentage  point would increase
the Company's interest expense over a one-year period by approximately  $134,000
at current debt levels.


Ability To Attract And Retain Key Managers And Employees

     The Company's  ability to retain key  subsidiary  management  and employees
will be a significant factor in the Company's success.  The recent  acquisitions
of the four subsidiary entities and the changes in the Company's management have
made it even  more  important  for the  Company  to  focus on  retaining  former
managers and  employees.  In addition,  the Company just recently  hired a chief
financial officer and continues to seek to obtain skilled managers and employees
and to provide efficient incentives for all of the managers and employees of its
subsidiary companies.


Competition

     The Company  faces  strong  competitors  in its coach  leasing  segment and
trailer  and  related  transportation   equipment   manufacturing  segment.  The
Company's coach leasing business  competes with a number of other companies that
lease luxury  coaches.  The Company's  success in the coach  leasing  segment is
dependent  upon its ability to meet  demand and match the quality and  amenities
sought after by its target market at competitive  prices.  The Company's trailer
and related  transportation  equipment  manufacturing  segment  competes  with a
number of companies, including a number who are much larger than the Company and
have equal or greater technical and financial resources.


Butyl Rubber Reclaiming Segment

     The Company's butyl rubber reclaiming  segment is highly dependent upon the
availability of raw materials.  The Company is facing increased  competition for
raw materials from foreign manufacturers as the supply of the scrap butyl rubber
from inner tubes  continues to decline.  The success of this segment will depend
in large measure upon the Company's ability to successfully  develop alternative
sources of raw  materials.  The demand for butyl rubber by some of the Company's
customers also is closely tied to the price of crude oil, with demand falling as
the price of crude oil falls.


Coach Leasing Segment

     The Company's  coach leasing  segment  leases luxury  coaches  primarily to
performers in the entertainment  industry. This segment is highly dependent upon
the state of the  general  economy  and its  effect on  entertainment  spending.
Consumer spending on entertainment tends to decline during recessionary  periods
when disposable  income is low. The  availability of quality contract drivers is
another factor that affects the success of the coach leasing segment.
<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES




Trailer And Related Transportation Equipment Manufacturing Segment

     A majority  of truck  bodies  manufactured  by the  Company are used in the
telecommunications  industry.  The success of the Company's  trailer and related
transportation   equipment  manufacturing  segment  is  dependent  upon  overall
economic  conditions  and in particular  on the state of the  telecommunications
industry.  Slightly  more  than  one-half  of the  Company's  revenue  from  the
manufacture of service truck bodies,  which is part of the Company's trailer and
related transportation equipment manufacturing segment, is derived from a single
customer.  The Company's  success in this segment is dependent to a large degree
upon the  continued  financial  health of this one  customer  and the  continued
strength of the Company's  relationship with this customer.  The loss of this or
another  significant  customer  could  have a  material  adverse  effect on this
segment of the Company's business.


Other Factors

     Management's  attention to day-to-day  operating issues and the solution of
such issues is ongoing due to the very recent  dates of  purchase.  Management's
ability  to  successfully  integrate  the  operating  companies  into  a  public
reporting  and  cohesive   operations  while  attempting  to  attain  profitable
operating results will be determinative of later success.  Employee  uncertainty
and  lack of  management  focus  during  the  initial  stages  of  purchase  and
continuing integration is disruptive to the business of each Company subsidiary.
Retention of employees  through support of the Company's  ongoing  manufacturing
capability,  ongoing  sales and marketing  efforts will be required,  but is not
assured.

     The Company's  ability to stabilize  operations  and to eventually  achieve
growth of each of its  segments  will  require  it to  implement  and expand its
operating and financial systems.  This  implementation  will carry a significant
disproportionate  cost to the  operations  in the next twelve  months which will
have a negative impact on revenues.  The Company expects any significant  growth
would place a strain on its  operational  resources and its  financial  systems.
Failure to effectively manage any growth would have a material adverse effect on
the Company's  business,  financial  condition,  results of operations  and cash
flows.

                           PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

     EXHIBITS
     The exhibits  identified  in the Exhibit Index are  incorporated  herein by
reference.


     REPORTS ON FORM 8-K
     None



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES




                                   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.

August 25, 2003                  By: /s/ Timothy S. Durham
                                    ------------------------------------------
                                    Timothy S. Durham, Chief Executive Officer



<PAGE>


<TABLE>


                                  EXHIBIT INDEX

              Exhibit No.                             Description                             Location

<S>              <C>                     <C>                                                 <C>
                 31.1                    Sarbanes-Oxley    Act   Section   302                Attached
                                         Certification

                 31.2                    Sarbanes-Oxley    Act   Section   302                Attached
                                         Certification

                 32.1                    Sarbanes-Oxley    Act   Section   906                Attached
                                         Certification

                 32.2                    Sarbanes-Oxley    Act   Section   906                Attached
                                         Certification

</TABLE>