SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q
         (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, 2003;
          OR

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


         0-17430
         -----------------------
         Commission File Number

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

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

111 MONUMENT CIRCLE, SUITE 4800                        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 X No

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 ___

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


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
       $.0001 par value                            March 17, 2003
                                                   36,007,855 shares


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

                                     INDEX
                                                                         PAGE(S)

PART I - FINANCIAL INFORMATION:

     Item 1 - Condensed Consolidated Financial Statements:

              Condensed Consolidated Balance Sheets - January 31, 2003
              and October 31, 2002                                            3

              Condensed Consolidated Statements of Operations                 5
                Three Months Ended January 31, 2003 and 2002

              Condensed Consolidated Statement of Changes of
                Stockholders' Deficit                                         6

              Condensed Consolidated Statements of Cash Flows                 7
                Three Months Ended January 31, 2003 and 2002

              Notes to Condensed Consolidated Financial Statements            9

     Item 2 - Management's Discussion and Analysis of Financial Condition
       and Results of Operations                                              21

     Item 3 - Quantitative and Qualitative Disclosures About Market Risk      30

     Item 4 - Controls and Procedures                                         30

PART II - OTHER INFORMATION:

     Item 1 - Legal Proceedings                                               31

     Item 2 - Changes in Securities and Use of Proceeds                       31

     Item 3 - Defaults Upon Senior Securities                                 31

     Item 4 - Submission of Matters to a Vote of Security Holders             31

     Item 5 - Other Information                                               31

     Item 6 - Exhibits and Reports on Form 8-K                                31





<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


<TABLE>
                                                                                 January 31,       October 31,
                                                                                       2003             2002
                                                                                 ----------------------------------


Assets

Current assets:
<S>                                                                                <C>              <C>
    Cash and cash equivalents                                                      $          433   $          920
    Marketable securities                                                                     137              137
    Accounts receivable, net of allowance for doubtful accounts
      of $495 for 2003 for 2002                                                             2,891            3,307
    Accounts receivable, related parties                                                      221              206
    Inventories, net                                                                        8,825            7,315
    Prepaid expenses and other assets                                                         676            1,049
                                                                                 ----------------------------------

Total current assets                                                                       13,183           12,934

Property, plant and equipment, net                                                         24,836           23,048

Other assets:
    Goodwill, net                                                                           6,434            6,434
    Other intangible assets, net of accumulated amortization of $588 for
      2003 and $527 for 2002                                                                1,752            1,853
    Other                                                                                      84              116
    Assets of subsidiary held for sale                                                         --            1,538
                                                                                 ----------------------------------

                                                                                   $       46,289   $       45,923
                                                                                 ==================================

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


<PAGE>

                     OBSIDIAN ENTERPRISES AND SUBSIDIARIES

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

<TABLE>
                                                                                   January 31,      October 31,
                                                                                       2003             2002
                                                                                 ----------------------------------

Liabilities and Stockholders' Deficit

Current liabilities:
<S>                                                                                <C>              <C>
    Current portion of long-term debt                                              $        4,672   $        5,667
    Current portion of long-term debt, related parties                                         82               --
    Accounts payable, trade                                                                 2,923            3,450
    Accounts payable, related parties                                                         710              668
    Accrued expenses and customer deposits                                                  1,481            1,558
                                                                                 ----------------------------------

Total current liabilities                                                                   9,868           11,343

Long-term debt, net of current portion                                                     25,299           23,879

Long-term debt, related parties                                                             8,969            5,518

Deferred income tax liabilities                                                             1,257            1,624

Liabilities of subsidiary held for sale                                                        --            2,848

Commitments and contingencies

Mandatory redeemable preferred stock:
  Class of Series C Preferred Stock: 386,206 shares outstanding for
    2003               and 2002                                                             1,503            1,400
  Class of Series D Preferred Stock: 32,143 shares outstanding for 2003                       675               --

Stockholders' equity (deficit):
    Common stock, par value $.0001 per share; 40,000,000 shares authorized,
     36,007,855 shares outstanding                                                              3                3
    Preferred stock, 5,000,000 shares authorized; Class of Series C convertible
     preferred stock, par value $.001, 4,600,000 authorized, 3,982,193 issued
     and outstanding for 2003 and 2002, 200,000 shares of undesignated
     preferred stock authorized                                                                 5                5
    Preferred stock, 200,000 shares authorized; Class of Series D convertible
     preferred stock, par value $.001, 88,330 shares issued and outstanding in
     2003 and 2002                                                                             --               --
    Additional paid-in capital                                                             11,157           10,184
    Accumulated other comprehensive loss                                                      (49)             (49)
    Accumulated deficit                                                                   (12,398)         (10,832)
                                                                                 ----------------------------------

Total stockholders' deficit                                                                (1,282)            (689)
                                                                                 ----------------------------------

                                                                                   $       46,289   $       45,923
                                                                                 ==================================

</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, 2003   January 31, 2002
                                                                               -------------------------------------
                                                                                                   (as restated)

<S>                                                                              <C>               <C>
Net sales                                                                        $       10,899    $       11,466

Cost of sales                                                                             9,739             9,948
                                                                               -------------------------------------

GROSS PROFIT                                                                              1,160             1,518

Selling, general and administrative expenses                                              2,055             2,004
                                                                               -------------------------------------

Loss from operations                                                                       (895)             (486)

Other income (expense):
  Interest expense, net                                                                    (784)             (845)
  Other income (expense)                                                                      4               (29)
                                                                               -------------------------------------

Loss before income taxes and discontinued operations                                     (1,675)           (1,360)

Income tax benefit                                                                          158               155
                                                                               -------------------------------------

Loss before discontinued operations                                                      (1,517)           (1,205)

Loss from discontinued operations, net of tax                                               (49)             (326)
                                                                               -------------------------------------

Net loss                                                                         $       (1,566)   $       (1,531)
                                                                               =====================================

Basic and diluted loss per share attributable to common shareholders:
  From continuing operations                                                     $         (.01)   $         (.01)
  Discontinued operations, net of tax                                                       .00               .00
                                                                               -------------------------------------

Net loss per share                                                               $         (.01)   $         (.01)
                                                                               =====================================

Weighted average common and common equivalent shares outstanding, basic and
 diluted:                                                                            139,080,839       110,791,370
                                                                               =====================================
</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' DEFICIT
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
                                                             Series C        Series D                Accumulated
                            Comprehensive  Common Stock   Preferred Stock Preferred Stock Additional  Other
                                         ------------------------------------------------ Paid-in    Comprehensive Accumulated
                                Loss     Shares    Amount  Shares  Amount  Shares Amount Capital       Loss         Deficit   Total
                            -------------------------------------------------------------------------------------------------------

<S>                         <C>      <C>         <C>  <C>        <C>   <C>    <C>    <C>         <C>         <C>         <C>
Balance at October 31, 2002    $    --  36,007,855  $ 3  3,982,193  $ 5   88,330 $  --  $10,184     $  (49)     $(10,832)   $ (689)

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

Fair value adjustment on
redeemable preferred stock          --          --   --         --   --       --    --     (103)        --            --       (103)

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

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

Net loss                        (1,566)         --   --         --   --       --    --       --         --        (1,566)    (1,566)
                               ----------------------------------------------------------------------------------------------------

Total comprehensive loss       $(1,566)
                               ========

Balance at January 31, 2003             36,007,855  $ 3  3,982,193  $ 5   88,330 $  --  $11,157   $  (49)     $(12,398)   $(1,282)
                                        ===========================================================================================

</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,
                                                                                      2003            2002
                                                                                 -------------------------------
                                                                                                 (as restated)

Cash flow from operating activities:
<S>                                                                                <C>             <C>
  Net loss from continuing operations                                              $    (1,517)    $    (1,205)
  Adjustments to reconcile net loss from continuing operations to net cash
   provided by (used in) operating activities:
  Depreciation and amortization                                                            687             664
  Other                                                                                    (93)           (105)
  Changes in operating assets and liabilities
    Accounts receivable, net                                                               417             (85)
    Inventories, net                                                                    (1,509)           (434)
    Other, net                                                                            (534)            810
                                                                                 -------------------------------

Net cash used in operating activities                                                   (2,549)           (355)
                                                                                 -------------------------------

Cash flows from investing activities:
  Capital expenditures                                                                     (96)           (222)
  Other                                                                                     --              11
                                                                                 -------------------------------

Net cash used in investing activities                                                      (96)           (211)
                                                                                 -------------------------------

Cash flows from financing activities:
  Advances from (repayments to) related parties, net                                      (652)            156
  Net borrowings on lines of credit                                                      1,574           1,002
  Net borrowings (repayments) on long-term debt, including related parties               1,277            (727)
                                                                                 -------------------------------

Net cash provided by financing activities                                                2,199             439

Net cash provided by (used in) discontinued operations                                     (41)             23
                                                                                 -------------------------------

Decrease in cash and cash equivalents                                                     (487)           (112)

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

Cash and cash equivalents, end of period                                           $       433     $       417
                                                                                 ===============================

Interest paid                                                                      $       718     $       915
                                                                                 ===============================

Taxes paid                                                                         $        14     $        15
                                                                                 ===============================

</TABLE>


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



<PAGE>
<TABLE>


                                                                                       Three Months Ended
                                                                                 -------------------------------
                                                                                   January 31,    January 31,
                                                                                      2003            2002
                                                                                 -------------------------------

Supplemental disclosure of noncash operating, investing and financing
 activities:
<S>                                                                                <C>             <C>
  Acquisition of coaches and equipment through issuance of debt                    $     2,278     $        --
  Contribution to capital from sale of Champion  to related party                  $     1,142     $        --
  Issuance of manadatory redeemable preferred stock in conjunction with the
   sale of Champion                                                                $       675     $        --
  Tax effect of sale of coaches to a related party                                 $        96     $        --
  Fair value change on mandatory redeemable preferred stock                        $      (103)    $       191
  Purchase price adjustment and conversion of accounts payable to debt for
   United                                                                          $        --     $       294

</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
                 (in thousands except per share and share data)
                                   (unaudited)


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


DESCRIPTION OF BUSINESS:

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

Pursuant to the Plan of Acquisition and Reorganization, United Expressline, Inc.
was acquired July 31, 2002.

The accompanying  financial data as of January 31, 2003 and for the three months
ended January 31, 2003 and 2002 has been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and Exchange  Commission
("SEC").  Certain  information  and footnote  disclosures  normally  included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such rules and regulations.  The October 31, 2002 consolidated  balance sheet
was  derived  from  audited  financial  statements,  but  does not  include  all
disclosures  required by accounting  principles generally accepted in the United
States of  America.  However,  the Company  believes  that the  disclosures  are
adequate to make the information  presented not misleading.  These  consolidated
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  and the notes thereto  included in the  Company's  Annual
Report on Form 10-K for the period ended October 31, 2002.  The Company  follows
the same accounting policies in preparation of interim reports.

In the opinion of management,  all adjustments  (which include normal  recurring
adjustments except as disclosed herein) necessary to present a fair statement of
financial  position as of January 31, 2003,  results of operations for the three
months ended January 31, 2003 and cash flows and  stockholders'  deficit for the
three months ended  January 31, 2003 have been made.  The results of  operations
for the three months ended  January 31, 2003 are not  necessarily  indicative of
the operating results for the full fiscal year or any future periods.

The entities  resulting from the merger described above,  considered  accounting
subsidiaries of U.S. Rubber Reclaiming, Inc. (the accounting acquirer) and legal
subsidiaries  of Obsidian  Enterprises,  Inc. 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 Corporation, the legal acquirer), a
holding company.



<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

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

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

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

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

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


BASIS OF PRESENTATION:

Over the past year,  the Company has undertaken  various  actions to improve its
operations and liquidity. Such actions include the sale of Champion described in
Note 3, as well as  conversion of debt to equity and  refinancing  of certain of
its debt  agreements as described in detail in the  Company's  10-K for the year
ended  October  31,  2002.  Management  believes  that the  Company's  financing
agreements will provide adequate liquidity and working capital throughout fiscal
2003. However, there can be no assurance that such working capital and liquidity
will in fact be  adequate.  Therefore,  the Company may be required to draw upon
other  liquidity  sources.  The  Company  has  therefore  secured  an  increased
financial  commitment  from Fair Holdings,  Inc.  ("Fair  Holdings"),  an entity
controlled  by  the  Company's  Chairman,  to  provide,  as  needed,  additional
borrowings  under a $5,000 line of credit  agreement,  which expires  January 9,
2005. As of January 31, 2003,  availability under the agreement is approximately
$1,200.

The Company  incurred a net loss for the year ended  October 31, 2002 of $6,330,
which included an asset impairment  charge of $720,  cumulative effect of change
in  accounting  principle of $2,015 and a loss from  discontinued  operations of
$1,040. In addition,  the Company incurred a net loss from continuing operations
of $1,517 for the three months ended January 31, 2003.  Several of the Company's
subsidiaries  were  acquired in highly  leveraged  transactions  and this factor
combined with the loss has contributed to its failure to meet certain  financial
covenants with two lenders as of January 31, 2003.  Covenant violations with one
lender have not been  waived and as a result,  $833 of  long-term  debt has been
reclassified  as a current  liability as of January 31, 2003. On March 19, 2003,
the Company  entered into an agreement in principle to refinance  this debt with
Fair Holdings as further described in Note 10.

In view of these matters  realization of assets and  satisfaction of liabilities
in the  ordinary  course of business is dependent  on the  Company's  ability to
generate sufficient cash flow to satisfy its obligations



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


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

on a timely  basis,  maintain  compliance  with  its  financing  agreements  and
continue to receive financing support from Fair Holdings to provide liquidity if
needed.

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

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

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

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

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

o    During January 2003, United and U.S. Rubber entered into amended agreements
     with their respective  lenders.  Such agreements  contain amended financial
     covenants.

The  above  factors  combined  with  additional  actions  by  management  at the
operating  subsidiaries have contributed to an increase in the Company's working
capital from $1,561 at October 31, 2002 to $3,315 at January 31, 2003.

Although management believes the actions described above will improve operations
and  liquidity,  there can be no assurance  that such actions will  sufficiently
improve  operations  or  liquidity.  In addition,  management  has  continued to
explore  various  opportunities  to refinance  the current  outstanding  debt of
Danzer which,  under a forebearance  agreement with the lender, is payable March
31, 2003.On March 19, 2003,  the Company  entered into an agreement in principle
to refinance this debt with Fair Holdings as further described in Note 10.


SIGNIFICANT ACCOUNTING POLICIES:

Earnings Per Share:
Basic per-share amounts are computed,  generally, by dividing net income or loss
attributable  to common  shareholders by the  weighted-average  number of common
shares outstanding. Diluted per-share amounts




<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


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

are computed similar to basic per-share amounts except that the weighted-average
shares  outstanding are increased to include  additional  shares for the assumed
exercise of stock options and warrants, if dilutive. In arriving at the weighted
average  number of common  shares  outstanding  for basic  loss per  share,  the
Company's Series C Preferred Stock and Series D Preferred Stock,  which have all
the rights and privileges of the Company's common stock,  have been reflected as
equivalent  common shares based on their  conversion rates of 20 to 1 and 175 to
1,  respectively.  Therefore,  for the three months  ended  January 31, 2003 and
2002,  respectively,  the  Series C  Preferred  Stock  has been  reflected  on a
weighted  average  basis  outstanding  as  common  stock  equivalent  shares  of
87,367,980 and 74,783,380,  respectively.  The Series D Preferred Stock has been
reflected on a weighted  average basis  outstanding  as common stock  equivalent
shares of 15,705,004 for the three months ended January 31, 2003.  There were no
Series D Preferred  Stock shares issued or  outstanding  during the three months
ended 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.
In addition,  the Company has options outstanding to purchase a total of 800,000
shares of common stock, at a weighted average  exercise price of $.09.  However,
because the Company  incurred a loss for the periods  ended January 31, 2003 and
2002,  respectively,  the  inclusion  of those  potential  common  shares in the
calculation of diluted loss per share would have an antidilutive effect.

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

                                                                                            Three Months Ended
                                                                                   -------------------------------------
                                                                                   January 31, 2003   January 31, 2002
                                                                                   ------------------ ------------------

<S>                                                                                  <C>                <C>
Loss before discontinued operations                                                  $       (1,517)    $       (1,205)
Change in fair value of mandatory redeemable preferred stock                                   (103)               191
                                                                                   ------------------ ------------------

Loss attributable to common shareholders before discontinued operations                      (1,620)            (1,014)

Loss from discontinued operations, net of tax                                                   (49)              (326)
                                                                                   ------------------ ------------------

Net loss attributable to common shareholders                                         $       (1,669)    $       (1,340)
                                                                                   ================== ==================

Weighted average common and common equivalent shares outstanding, basic and
 diluted                                                                                139,080,839        110,791,370
                                                                                   ================== ==================

Loss per share, basic and diluted, attributable to common shareholders:
  From continuing operations                                                         $       (.01)      $       (.01)
  Discontinued operations                                                                     .00                .00
                                                                                   ------------------ ------------------

Net loss per share                                                                   $       (.01)      $       (.01)
                                                                                   ================== ==================
</TABLE>
<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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



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


RECENTLY ISSUED PRONOUNCEMENTS:

In November 2002, the Financial  Accounting  Standards  Board (FASB) issued FASB
interpretation  No. 45, Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,  Including Indirect Guarantees of Indebtedness of Others ("FIN 45").
FIN 45 requires that upon issuance of a guarantee,  a guarantor must recognize a
liability for the fair value of an obligation assumed under a guarantee.  FIN 45
also requires  additional  disclosures  by a guarantor in its interim and annual
financial  statements about the obligations  associated with guarantees  issued.
The  recognition  provisions of FIN 45 will be effective for any guarantees that
are issued or modified after December 31, 2002.  Management  does not expect the
adoption of FIN 45 to have a material impact on the Company's financial position
or results of operations.

In January  2003,  FASB  issued FASB  Interpretation  No. 46,  Consolidation  of
Variable Interest  Entities,  an interpretation of Accounting  Research Bulletin
No., 51. This  Interpretation  addresses the application of Accounting  Research
Bulletin No. 51,  "Consolidated  Financial  Statements," to certain  entities in
which  equity  investors  do  not  have  the  characteristics  of a  controlling
financial  interest or do not have  sufficient  equity at risk for the entity to
finance its activities  without additional  subordinated  financial support from
other parties.  The  Interpretation  applies  immediately  to variable  interest
entities  created after January 31, 2003, and to variable  interest  entities in
which an enterprise obtains an interest after that date. It applies in the first
interim period beginning after June 15, 2003, to variable  interest  entities in
which an entity holds a variable  interest that it acquired prior to February 1,
2003.  The  Company is  currently  evaluating  the  impact  that  adopting  FASB
Interpretation  No.  46  may  have  on  its  consolidated  financial  statements
including the potential  consolidation of DW Leasing and DC Investments  Leasing
that are currently included in the Company's  consolidated  financial statements
on a  combined  basis.  If  it is  determined  that  these  entities  should  be
consolidated  rather  than  combined,   it  may  impact  current  balance  sheet
classifications and a result in cumulative effect of change in accounting in the
consolidated  statement of  operations.  Such  impact,  if any, has not yet been
determined.

2.   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):

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

Raw materials            $        4,219     $        3,655
Work-in-process                     816                709
Finished goods                    4,174              3,417
Valuation reserve                  (384)              (466)
                         ------------------ -------------------

Total                    $        8,825     $        7,315
                         ================== ===================



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


3.   DISCONTINUED OPERATIONS

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

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

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

                                             Three Months Ended
                        -------------------------------------------------------
                                January 31, 2003            January 31, 2002
                        ---------------------------- --------------------------

Net sales                       $          170               $        1,017
Operating expenses                        (286)                      (1,280)
Interest                                   (85)                         (63)
Other                                      127                           --
Tax benefit                                 25                           --
                        ---------------------------- --------------------------

Net loss                        $          (49)              $         (326)
                        ============================ ==========================

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

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

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

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

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

                                                     $        2,848
                                                   ============================
<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


4.   FINANCING ARRANGEMENTS


OBSIDIAN LEASING:

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

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


UNITED:

On December 26, 2002, United entered into an amended credit agreement to provide
additional  working capital during the winter months.  The amendment  included a
"temporary  overline"  line of credit with maximum  borrowings not to exceed the
lesser of $650 or the  remainder  of the  borrowing  base  less the  outstanding
principal amount of the revolving line of credit. Interest is payable monthly at
a rate of prime plus 3/4%.  The  temporary  overline  line of credit  matures on
March 31, 2003.  The  "temporary  overline"  was used by the Company to increase
inventories  during  the  quarter  ended  January  31,  2003.  Inventories  were
increased to improve the Company's  ability to deliver  orders during the second
and third  quarters  when sales  have been  historically  higher  than the first
quarter.

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

OBSIDIAN ENTERPRISES:

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

At October 31, 2002,  the Company was in violation  of negative  covenants  with
Renaissance US Growth & Income Trust PLC and FBSUS Special  Opportunities  Trust
PLC, the holders of debentures  that  completed the financing of United.  During
January  2003,  the Company  received a waiver of the  violations  and  obtained
modifications of terms with the debenture  holders to provide for less stringent
covenants.  In exchange  for the waiver and  modifications,  the Company  issued
warrants  to the  debenture  holders  to  purchase  up to  16,000  shares of the
Company's common stock at an exercise price of $.20 per share.


DANZER:

As of January 31, 2003, Danzer was in violation of certain covenants included in
its credit agreement and First Forbearance Agreement dated October 14, 2002 with
its senior lender. The Company and the lender subsequently entered into a Second
Forbearance  Agreement  waiving  these  violations  and reached an  agreement in
principle to refinance this debt with Fair Holdings as further described in Note
10.
<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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



5.  MANDATORY REDEEMABLE PREFERRED STOCK

In conjunction with the sale of Champion discussed in Note 3, the Company agreed
to settle the  outstanding  subordinated  debt due to Markpoint from Champion in
exchange  for a cash  payment of $675 and  issuance to the debt holder of 32,143
shares  of the  Company's  Series D  Preferred  Stock.  The  agreement  provides
Markpoint  the option to require the  Company to  repurchase  these  shares at a
price of $21 per share.  The  repurchase  option is  available  to  Markpoint as
follows:  16,072 shares during the period May 1, 2003 to June 1, 2003 and 16,071
shares during the period  November 1, 2003 to December 1, 2003.  The  repurchase
options  expire if not  exercised  during the specified  periods.  The Company's
repurchase obligation is guaranteed by Mr. Durham. Accordingly,  the Company has
recorded mandatory redeemable preferred stock of $675 at January 31, 2003.

6.  STOCKHOLDERS' DEFICIT

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

In January  2003,  the Company and certain  lenders  entered  into  amended debt
agreements containing less stringent covenants.  In exchange for this amendment,
the Company issued  warrants to each of the debenture  holders to purchase up to
8,000  shares of the  Company's  common  stock at an exercise  price of $.20 per
share.  These warrants expire January 24, 2006. The issuance of the warrants had
no material impact on earnings.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


7.   BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA

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

                                                            Three Months Ended January 31, 2003
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------

Sales:
<S>                                      <C>                 <C>                 <C>               <C>
  Domestic                               $        7,012      $       1,107       $       2,212     $       10,331
  Foreign                                           347                 --                 221                568
                                       ------------------------------------------------------------------------------

Total                                    $        7,359      $       1,107       $       2,433     $       10,899

Cost of goods sold                       $        6,720      $         622       $       2,397     $        9,739

Loss before taxes                        $       (1,066)     $        (248)      $        (361)    $       (1,675)

Identifiable assets                      $       20,466      $      14,043       $      10,977     $       45,486*

Depreciation and amortization expense    $          189      $         190       $         308     $          687
*Identifiable assets, as stated above                                                              $      45,486
  Corporate-level goodwill                                                                                   650
  Other corporate-level assets                                                                               153
                                                                                                --------------------

Total assets                                                                                      $       46,289
                                                                                                ====================

</TABLE>


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


7.   BUSINESS SEGMENT DATA AND GEOGRAPHIC DATA, CONTINUED

<TABLE>

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

Sales:
<S>                                      <C>                 <C>                 <C>               <C>
  Domestic                               $        8,233      $       1,043       $       2,079     $       11,355
  Foreign                                            --                 --                 111                111
                                       ------------------------------------------------------------------------------

Total                                    $        8,233      $       1,043       $       2,190     $       11,466

Cost of goods sold                       $        7,329      $         573       $       2,046     $        9,948

Loss before taxes                        $         (641)     $        (367)      $        (352)    $       (1,360)

Identifiable assets                      $       22,102      $      12,444       $      10,253     $       44,799*

Depreciation and amortization expense    $          160      $         245       $         259     $          664

*Identifiable assets, as stated above                                                              $       44,799
  Corporate-level goodwill                                                                                    650
  Other corporate-level assets                                                                                130
                                                                                                --------------------

Total assets                                                                                       $       45,579
                                                                                                ====================
</TABLE>

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

                                                Three Months Ended
                                      ----------------------------------------
                                          January 31,         January 31,
                                              2003               2002
                                      ----------------------------------------

Trailer manufacturing                    $           318     $           218
Coach leasing                                         48                  37
Butyl rubber reclaiming                               99                  52
                                      ----------------------------------------

                                         $           465     $           307
                                      ========================================



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


8.   RELATED PARTIES

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

                                                                                    January 31,        October 31,
                                                                                       2003               2002
                                                                                 ------------------ ------------------
Balance sheet:
  Current assets:
<S>                                                                                <C>                <C>
    Accounts receivable, Obsidian Capital Partners                                 $        156       $        181
    Accounts receivable, Fair Holdings                                                       21                 --
    Accounts receivable, Obsidian Capital Company                                            13                 13
    Accounts receivable, other affiliated entities                                           31                 12
                                                                                 ------------------ ------------------

Total assets                                                                       $        221       $        206
                                                                                 ================== ==================

  Current liabilities:
    Accounts payable, Obsidian Capital Company                                     $        274       $        279
    Accounts payable, other affiliated entities                                              29                  9
    Accounts payable, stockholders                                                          280                338
    Accounts payable, DC Investments and Fair Holdings                                      127                 42
    Notes payable, Fair Holdings                                                             82                 --
  Long-term portion:
    Notes payable, DC Investments                                                           700                700
    Notes payable, Fair Holdings                                                          4,500              3,020
    Line of credit, Fair Holdings                                                         3,769              1,798
                                                                                 ------------------ ------------------

Total liabilities                                                                  $      9,761       $      6,186
                                                                                 ================== ==================

                                                                                          Three Months Ended
                                                                                 -------------------------------------
                                                                                 January 31, 2003   January 31, 2002
                                                                                 ------------------ ------------------

Income statement:
  Interest expense, DC Investments and Fair Holdings                               $        179       $         --
  Rent expense, Obsidian Capital Company                                           $         21       $         15
  Rent expense, Fair Holdings                                                      $          4       $         --
</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.
Amounts  classified as long term represent  amounts not currently  due,  amounts
that are expected to be converted to equity  subsequent  to January 31, 2003 and
October  31,  2002,  respectively,   or  amounts  converted  to  long-term  debt
subsequent to January 31, 2003.




<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


9.   COMMITMENTS AND CONTINGENCIES

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

10.  SUBSEQUENT EVENTS

As of January 31, 2003, Danzer was in violation of certain covenants included in
its credit agreement and First Forbearance Agreement dated October 14, 2002 with
its senior lender.  The Company and the Lender entered into a Second Forbearance
Agreement dated February 28, 2003.  Terms of this agreement  include a waiver of
the Company's  violations of the above covenants.  The maturity date of the debt
with the senior lender remains March 31, 2003.

On March 19, 2003,  the Company  entered into an agreement in principle with the
senior lender of Danzer and Fair  Holdings to refinance the current  senior debt
of Danzer.  Under the  proposed  terms of this  refinancing,  Fair  Holding will
acquire  the senior  lender's  interest  in the Danzer debt based on the current
amount  outstanding of approximately  $1,429. The proposed terms also include an
amendment to the debt agreement to provide less stringent financial covenants.

11.  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. The Company is restating
its previously  issued  financial  statements for the three months ended January
31, 2002 for this error.

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

Statement of Operations:*
<S>                                                            <C>                <C>                 <C>
  Interest expense                                             $        811       $         34        $        845
  Loss before income taxes                                           (1,326)               (34)             (1,360)
  Net loss                                                           (1,497)               (36)             (1,531)

  Net loss per share                                                   (.01)                --                (.01)

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>

* Amounts do not include the operations of Champion which have been reclassified
  as discontinued operations.



<PAGE>



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

IMPORTANT NOTE ABOUT FORWARD-LOOKING STATEMENTS.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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


OVERVIEW

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

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

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. The Company is restating
its previously  issued  financial  statements for the three months ended January
31, 2002 for this error.


RESULTS OF OPERATIONS

The Company's overall operating results and financial condition during the three
months ended  January 31, 2003  compared to the three  months ended  January 31,
2002 were  adversely  affected by the overall  economic  situation in the United
States,  the  limited  availability  of raw  materials  in the butyl  reclaiming
segment  and  adverse  weather  conditions  in the  Midwest  that  affected  the
Company's  ability to deliver  orders in the trailer and related  transportation
equipment manufacturing segment.

The following table shows net sales by product segment:


                                            Three Months Ended
                                 ------------------------------------------
                                   January 31, 2003     January 31, 2002
                                 --------------------- --------------------

Trailer manufacturing                $      7,359          $      8,233
Butyl rubber reclaiming                     2,433                 2,190
Coach leasing                               1,107                 1,043
                                 --------------------- --------------------

Net Sales                            $     10,899          $     11,466
                                 ===================== ====================
<PAGE>

The  following is a discussion  of the major  elements  impacting  the Company's
operating  results  by segment  for the three  months  ended  January  31,  2003
compared to the three months ended  January 31, 2002.  The comments  that follow
should  be  read  in  conjunction  with  the  Company's  condensed  consolidated
financial statements and related notes contained in this Form 10-Q.


TRAILER AND RELATED TRANSPORTATION EQUIPMENT MANUFACTURING

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

                                          Three Months Ended
                              -------------------------------------------
                                January 31, 2003      January 31, 2002
                              --------------------- ---------------------

Net Sales                         $      7,359          $      8,233
Cost of Sales                            6,720                 7,329
                              --------------------- ---------------------

Gross Profit                      $        639          $        904
                              ===================== =====================

Gross Profit %                             8.7%                 11.0%
                              ===================== =====================

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

Sales in this  segment  decreased  $874 or 10.6% over the  comparable  period of
2002. The decrease was primarily related to two factors.

First,  sales of truck bodies  decreased by $354 over the quarter  ended January
31, 2002. This reduction was related to the continued depressed condition of the
telecommunications  industry which has historically been a significant  consumer
of truck bodies,  as well as the bankruptcy  filing of a significant  truck body
customer  in late 2002.  Sales to this  customer  in the first  quarter  did not
decline significantly from 2002, but the Company anticipates little to no future
sales from this customer after January 31, 2003.

Second,  the sale of cargo trailers decreased by $520 as a result of the general
state of the U.S. economy and harsher weather during the winter of 2003.

The gross  profit  decrease was  primarily a result of  decreased  volume at the
Company's  truck body plant  which  resulted  in an  inability  to absorb  fixed
overhead  costs.  To offset these costs,  management  began  production of cargo
trailers in this facility  during late 2002.  Inefficiencies  in the start up of
this  operation  have also had a  negative  impact in gross  profit  margins  as
compared to the three months ended January 31, 2002.  Management  believes gross
profits will  continue to be  adversely  impacted by the lack of sales volume in
truck bodies during 2003.




<PAGE>



BUTYL RUBBER RECLAIMING

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

                                   Three Months Ended
                        ------------------------------------------
                          January 31, 2003     January 31, 2002
                        --------------------- --------------------

Net Sales                   $     2,433           $     2,190
Cost of Sales                     2,397                 2,046
                        --------------------- --------------------

Gross Profit                $        36           $       144
                        ===================== ====================

Gross Profit %                    1.5%                  6.6%
                        ===================== ====================

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

Net sales in this  segment  for the  three  months  ended  January  31,  2003 as
compared to the three-month period ended January 31, 2002 increased 11.1% in the
amount of $243.

Sales in this segment  were higher than the three months ended  January 31, 2002
because of increased demand from Company's tire manufacturing  customers.  While
the Company  experienced  an increase in sales  throughout  calendar  year 2002,
management does not anticipate a return to historic levels of sales of reclaimed
butyl rubber to tire  manufacturers  during fiscal 2003, in part due to the lack
of consistent sources of raw materials.

Net sales also  increased  over the first  quarter of 2002 due to the demand for
pipeline  mastic wraps  produced with  reclaimed  butyl rubber.  Demand for this
product fell  dramatically  beginning in October 2001 as a result of the decline
in the  price of crude  oil in late  2001,  which  caused a  decline  in new oil
exploration.  As the price of crude oil increased, the demand for those uses has
also  increased.  Although this demand has increased from its lows at the end of
fiscal 2001 and beginning 2002, demand has not returned to historical levels.

Gross profit  percentage  decreased  5.1% for the three months ended January 31,
2003 when  compared to the three  months  ended  January 31,  2002.  The primary
reasons for this decrease is a lack of a consistent  supply of raw materials and
increasing  energy costs.  The Company's  reclaim process is most efficient when
raw  material  consists of  primarily  road worn inner tubes with a mix of other
butyl rubber. Since the introduction of the tubeless tire for automobiles in the
1970s, sources of material have declined substantially and the cost of available
raw materials has increased.  As a result of having to use less than optimum raw
material mix in the reclaiming process,  additional  processing time is incurred
to ensure  delivery  of  quality  product.  Management  has been  testing  other
materials  including  butyl pad  scrap as a  replacement  material  for the past
several years with some success.  In addition,  alternative sources of material,
including overseas sources,  are being pursued to provide a consistent supply of
material in the future. Until such time that consistent sources of raw materials
are available, sales growth and gross profit in this segment will be limited.




<PAGE>



COACH LEASING

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

                                   Three Months Ended
                        ------------------------------------------
                          January 31, 2003     January 31, 2002
                        --------------------- --------------------

Net Sales                  $      1,107          $      1,043
Cost of Sales                       622                   573
                        --------------------- --------------------

Gross Profit               $        485          $        470
                        ===================== ====================

Gross Profit %                     43.8%                 45.1%
                        ===================== ====================

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

Sales for the three months ended January 31, 2003  increased  6.1% in the amount
of $64 over the  comparable  three-month  period  ended  January 31,  2002.  The
increase in sales is attributable to increased utilization of the coach fleet as
well  as the  use of "all  inclusive"  lease  arrangements.  Under  these  lease
arrangements,  the customer pays one price for all costs  including  drivers and
fuel as opposed to paying  these items  separately  and leasing  only the coach.
Management  believes  the  increased  utilization  is a result of its  marketing
efforts to  specialized  tour  groups  (i.e.  golf course  trips) and  corporate
customers.  These  customers  are in  addition  to the  traditional  country and
western  performers who have  traditionally been this segment's primary customer
base.

The first  quarter  is  typically  the  segment's  lowest  sales  period  due to
seasonality. Business is historically stronger in the spring, summer and fall.

Gross profit for this  segment was 43.8% for the three months ended  January 31,
2003 compared to 45.1% for the comparable  three-month  period ended January 31,
2002. The reduction is attributable  primarily to an increase in "all inclusive"
lease  arrangements  described  above which  result in higher costs of sales and
also to  additional  costs  of  maintaining  a larger  fleet  during  the  lower
utilization period of the year.


SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES

The Company's selling,  general and administrative expenses for the three months
ended January 31, 2003 increased $51 or 2.5% over the  three-month  period ended
January 31,  2002.  $30 of this  increase is related to the  extension  of stock
options for certain employees in December 2002.


INTEREST EXPENSE

Interest  expense for the three months ended January 31, 2003 as a percentage of
average debt borrowings of $37,318 was 2.1% (8.4% on an annual basis).  Interest
expense for the three months ended  January 31, 2002 as a percentage  of average
debt borrowings of $32,975 was 2.6% (10.4% on an annual basis).  The decrease is
primarily  due  to  the  reduction  of  the  prime  rate  and  refinancing  of a
significant portion of the coach debt at lower rates during 2002.


INCOME TAX PROVISION

The income tax  benefit  for the  three-month  period  ended  January  31,  2003
increased by $3 as compared to the  three-month  period ended  January 31, 2002.
The income tax benefit is created primarily through NOL carryforwards recognized
to the extent  they are  available  to offset the  Company's  net  deferred  tax
liability.  Any quarterly tax benefits are based on the estimated  effective tax
rate for the full year.
<PAGE>


DISCONTINUED OPERATIONS

On  October  30,  2002,  the  Company's  Board  of  Directors   agreed  to  sell
substantially all assets of Champion to an entity  controlled by Messrs.  Durham
and Whitesell in exchange for assumption of all  liabilities of Champion,  other
than its  subordinated  debt.  In accordance  with the criteria  provided for in
Statement of Financial  Accounting  Standards  ("SFAS") No. 144,  Accounting for
Impairment of  Long-Lived  Assets,  the operating  results of Champion have been
classified as discontinued  operations.  The losses from discontinued operations
for the three months  ended  January 31, 2003 and 2002  represent  the losses of
Champion during these periods,  net of tax benefit of $97 and $0,  respectively.
The loss from  discontinued  operations  for the three months ended  January 31,
2003  decreased by $277 as compared to the three months ended  January 31, 2002.
The  reduced  loss  was a  result  of a  gain  of  $127  on  the  settlement  of
subordinated  debt  and a  reduction  in  overhead  costs of the  operations  at
Champion.

Substantially  all assets of Champion  subject to its  liabilities  were sold on
January 30, 2003. No gain or loss was recognized in the  consolidated  statement
of  operations  due to the  involvement  of  related  parties.  The  benefit  of
liabilities  assumed by the  purchaser in excess of assets sold in the amount of
$1,142 was recorded as additional paid in capital.


LIQUIDITY AND CAPITAL RESOURCES

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

This high level of debt has  created  liquidity  issues for the  Company and the
stringent financial covenants that are common for this type of debt increase the
probability  that  the  Company's  subsidiaries  may  from  time  to  time be in
technical default under these loans. These risks are mitigated, in part, for the
Company's United and U.S. Rubber subsidiaries by the right described below under
"Guarantees  of  Partners."  Liquidity  and  capital  resources  have  also been
negatively impacted by consolidated losses.

The high level of debt also  subjects the Company to additional  liquidity  risk
should interest rates increase by a material  amount.  Approximately  57% of the
Company's  outstanding  debt is variable and based on market factors such as the
prime rate of LIBOR rates. A significant  increase in these market indexes could
have a material adverse affect on the Company's liquidity.

In addition,  the lack of positive  results at Danzer has resulted in violations
of certain  requirements of its loan agreement with its senior lender as further
described below under "Financial  Covenant  Waivers".  As a result, all debt due
the senior  lender  ($1,741 as of January 31,  2003)  matures on March 31, 2003.
Obsidian Enterprises also is a guarantor under this debt agreement.  The company
is currently  exploring  alternatives to refinance this debt or extend the terms
with the current  lender  although no  agreements  have been  reached as of yet.
Should refinancing or an extension of the current agreement not be obtained, the
Company's  liquidity and resources could be reduced materially should it need to
repay this loan.

The Company's working capital position (current assets over current liabilities)
was  positive at January 31, 2003 by $3,315.  The working  capital  position was
$1,561 at October 31, 2002. This increase is attributable to the items discussed
below.

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

o    The  agreement  to refinance  debt of Danzer with Fair  Holdings as further
     described under "Refinancing  Activities;"
<PAGE>

o    The actions taken with respect to Champion  described  under  "Discontinued
     Operations" which improved the Company's overall equity and working capital
     position;

o    The refinancing of additional coaches in the coach leasing group;

o    The increased line availability through Fair Holdings;

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


FINANCIAL COVENANT WAIVERS

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

o    As of January  31,  2003,  Danzer  was in  violation  of certain  covenants
     included in its credit  agreement  and First  Forbearance  agreement  dated
     October 14, 2002 with its senior lender. The Company and the Lender entered
     into a Second Forbearance  Agreement dated February 28, 2003. Terms of this
     agreement  include  a  waiver  of the  Company's  violations  of the  above
     covenants.  The maturity  date of the debt with the senior  lender  remains
     March 31, 2003.

o    At January 31, 2003, United was in violation of certain financial covenants
     with Huntington Capital Investment Company. United has received a waiver of
     these violations.

FUNDS AVAILABILITY

On a consolidated  basis, as of January 31, 2003, the Company had  approximately
$433 of cash and cash equivalents.  Danzer Industries,  U.S. Rubber,  United and
Obsidian  Enterprises  each have  revolving  credit lines  available for working
capital at each individual  entity.  Borrowings under the credit  facilities are
available to the lesser of the maximum  amount or the borrowing  base as defined
in the credit agreement.  At January 31, 2003,  additional current  availability
under  these  credit  lines  and  maximum  availability  if  supported  by their
individual borrowing base are:

   Company                Current Availability         Maximum Availability
Danzer Industries           $       0                     $        0(1)
U.S. Rubber                       274                          2,154
United                            112                            112
Obsidian Enterprises            1,231                          1,231

(1)  Additional  borrowings only at the bank's  discretion under the forbearance
     agreement

The Company  generated  negative net cash flow of $2,549 from operations  during
the three months  ended  January 31, 2003.  Cash used in  operations  during the
quarter is primarily due to increases in  inventories  and decreases in accounts
payable.  The  Company  has  increased  inventories  during  the  first  quarter
primarily  in the  trailer and related  transportation  equipment  manufacturing
segment.  The first quarter is  historically  the lowest  volume  quarter due to
seasonality of this business.  Inventories were increased during this quarter to
provide an increase in the Company's ability to deliver orders during the second
and third  quarters when sales have  historically  been higher than in the first
quarter.  Funding during the quarter was provided through borrowings on lines of
credit and from related parties.


REFINANCING ACTIVITIES

Refinancing  activity  during the quarter  ended  January 31, 2003  included the
following:
<PAGE>

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

o    Danzer is currently operating under a forbearance agreement with its senior
     lender that  includes a maturity date of the debt with this lender of March
     31,  2003.  On March 19,  2003,  the Company  entered  into an agreement in
     principle  with the senior  lender of Danzer and Fair Holdings to refinance
     the  current  senior  debt of  Danzer.  Under  the  proposed  terms of this
     refinancing,  Fair Holding will acquire the senior lender's interest in the
     Danzer  debt  based on the  current  amount  outstanding  of  approximately
     $1,429.  The proposed terms also include an amendment to the debt agreement
     to provide less stringent financial covenants.

GUARANTEES OF PARTNERS

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


CASH FLOWS (EBITDA)

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


<S>                                     <C>           <C>          <C>          <C>          <C>         <C>
Contractual Obligations                    Total         2003         2004         2005         2006      2007 and Thereafter
                                        ------------ ------------- ------------ ------------ ------------ -------------------

Long-term debt, with covenant
 violations and classified as current    $      833   $      833    $       --   $       --   $       --   $       --
Long-term debt, and all debt service
 interest payments                           49,767        5,143         8,408       18,017        7,992       10,207
Operating leases                              1,397          450           353          274          189          131
Mandatory redeemable preferred stock          2,178          337           338            -        1,503            -
                                        ------------ ------------- ------------ ------------ ------------ ------------

Total contractual cash obligations       $   54,175   $    6,763    $    9,099   $   18,291   $    9,684   $   10,338
                                        ============ ============= ============ ============ ============ ============
</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 January        Date of Expiration
                                                                        31, 2003
----------------------------------- -------------------------- --------------------------- ---------------------------


<S>                                       <C>                        <C>                  <C>
Line of credit                            $           1,000          $             840     March 31, 2003
Line of credit                                        3,750                      3,750     February 1, 2004
Line of credit                                        4,000                      1,846     October 1, 2005
Line of credit                                          650                        538     March 31, 2003
Line of credit, related party                         5,000                      3,769     January 1, 2005
</TABLE>
<PAGE>

The Company's net cash used in operations for the three months ended January 31,
2003 was $2,549.  This is comprised of a net loss from continuing  operations of
$1,517,  offset by noncash changes as follows:  depreciation and amortization of
$687,  deferred  tax  benefit  of $174,  accretion  of  interest  of $81 and the
extension  of stock  options of $30. In addition,  the Company had  decreases in
accounts  receivable of $417, other assets of $44, accounts payable of $530, and
accrued  expenses and customer  deposits of $78 and increases in  inventories of
$1,509.

Net cash flow  provided  from  financing  activities  for the three months ended
January 31, 2003 was $2,199.  This is comprised of borrowings of long-term  debt
and net  borrowings of  short-term  debt of $1,651 and  borrowings  from related
parties of $2,033,  offset by principal repayments of long-term debt of $833. In
addition, the Company repaid $652 of related party payables.

Cash flow used in investing  activities  for the three months ended  January 31,
2003 was $96. This is comprised of purchases of equipment.

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

                                                                 Three Months Ended
                                                        --------------------------------------
                                                           January 31,         January 31,
                                                               2003               2002
                                                        ------------------- ------------------

<S>                                                       <C>                 <C>
Net cash used in operations                               $       (2,549)     $         (355)
Net cash used in investing activities                                (96)               (211)
Net cash provided by financing activities                          2,199                 431
Net cash provided by (used in) discontinued operations               (41)                 23
                                                        ------------------- ------------------

Decrease in cash and cash equivalents                     $         (487)     $         (112)
                                                        =================== ==================
</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 loss  from  continuing
operations under accounting  principles  generally accepted in the United States
of America by segment for the applicable periods is as follows:
<TABLE>

                                                                Three Months Ended January 31, 2003
                                              -------------------------------------------------------------------------
                                                                                                           Net Loss
                                                                                                             From
                                                            Interest      Income       Depreciation       Continuing
                                                EBITDA       Expense      Taxes       & Amortization      Operations
                                              ------------ ------------ ----------- -------------------- --------------

Trailer and related transportation
<S>                                             <C>          <C>         <C>              <C>             <C>
equipment manufacturing                         $    (495)   $    318    $   (99)         $     189       $    (903)

Coach leasing                                         233         270         --                190            (227)

Butyl rubber reclaiming                                58          97       (103)               308            (244)

Corporate                                              --          99         44                 --            (143)
                                              ------------ ------------ ----------- -------------------- --------------

Total Company                                   $    (204)   $    784    $  (158)         $     687       $  (1,517)
                                              ============ ============ =========== ==================== ==============
</TABLE>
<PAGE>
<TABLE>


                                                                Three Months Ended January 31, 2002
                                              -------------------------------------------------------------------------
                                                                                                           Net Loss
                                                                                                             From
                                                            Interest      Income       Depreciation       Continuing
                                                EBITDA       Expense      Taxes       & Amortization      Operations
                                              ------------ ------------ ----------- -------------------- --------------

Trailer and related transportation
<S>                                             <C>          <C>         <C>              <C>             <C>
 equipment manufacturing                        $    (148)   $    333    $   (46)         $     160       $    (595)

Coach leasing                                         235         357         --                245            (367)

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

Total Company                                   $     170    $    866    $  (155)         $     664       $  (1,205)
                                              ============ ============ =========== ==================== ==============
</TABLE>

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

                                                Three Months Ended
                                      ----------------------------------------
                                          January 31,         January 31,
                                              2003               2002
                                      ----------------------------------------

Trailer manufacturing                    $           318     $           218
Coach leasing                                         48                  37
Butyl rubber reclaiming                               99                  52
                                      ----------------------------------------

Total                                    $           465     $           307
                                      ========================================

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

                                                Three Months Ended
                                      ----------------------------------------
                                          January 31,         January 31,
                                              2003               2002
                                      ----------------------------------------

Trailer manufacturing                    $          (177)    $            70
Coach leasing                                        281                 272
Butyl rubber reclaiming                              157                 135
                                      ----------------------------------------

Total                                    $           261     $           477
                                      ========================================

CRITICAL ACCOUNTING POLICIES

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

As a matter of policy,  we review our major  assets  for  impairment.  Our major
operating  assets are  accounts  receivable,  inventory,  intangible  assets and
property and equipment.  We have not  historically  experienced  significant bad
debts  expense,  although the filing of Chapter 11  bankruptcy  during 2002 of a
customer resulted in a bad debt charge of $379.  However, we believe our reserve
for doubtful accounts of $495 should be adequate for any exposure to loss in our
January 31, 2003  accounts  receivable.  We have also  established  reserves for
slow-moving  and  obsolete  inventories  and  believe  the  reserve  of  $384 is
adequate.  We  depreciate  our property and  equipment  and amortize  intangible
assets (except for goodwill)  over their  estimated  useful lives.  Property and
equipment  is reviewed for  impairment  when events and  circumstances  indicate
potential impairment factors are present. In assessing the recoverability of the
Company's  property and  equipment,  the Company  must make various  assumptions
regarding  estimated future cash flows and other factors in determining the fair
values of the respective assets. If these estimates or their related assumptions
change in the future,  the Company may be required to record impairment  charges
for these assets in future periods.  Any such resulting impairment charges could
be material to the Company's results of operations.

Goodwill and  intangibles  are reviewed  annually for impairment as of the first
day of the  fourth  quarter or more  frequently  when  events and  circumstances
indicate  potential  impairment  factors are  present.  The  realization  of the
goodwill  of $6,434 is  primarily  dependent  on the  future  operations  of the
operating  entity  whether  the  goodwill  is  allocated   (primarily   United).
Historical  operating  results,  current  product  demand and  estimated  future
results  indicate  the  results of  operations  at United  should be adequate to
continue  to  realize  this  amount.   However,  future  results  may  not  meet
expectations due to economic or other factors,  and failure to meet expectations
may result in the goodwill not being fully realizable and accordingly  result in
impairment charges which could be material to the Company's operating results.

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

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4 CONTROLS AND PROCEDURES

Within the 90 days prior to the filing of this report,  the Company  carried out
an evaluation, under the supervision and with the participation of the Company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls  and  procedures.  Based  on  this  evaluation,  the  Chief
Executive  Officer and Chief  Financial  Officer  concluded  that the  Company's
disclosure  controls and  procedures  are  effective in timely  alerting them to
material  information required to be included in this report. It should be noted
that the  design  of any  system  of  controls  is based  in part  upon  certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving  its stated goals under all  potential
future  conditions,  regardless  of how remote.  There have been no  significant
changes  in the  Company's  internal  controls  or in other  factors  that could
significantly affect internal controls subsequent to the date of the most recent
evaluation.
<PAGE>

                           PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On January 27, 2003, the Company issued 32,143 shares of the Company's  Series D
Preferred  Stock to Markpoint  Equity  Fund,  J.V.,  a Texas joint  venture,  as
partial  settlement of a lawsuit  relating to amounts owed under a  subordinated
credit facility.  Each share of Series D Preferred Stock is convertible into 175
shares of the  Company's  Common  Stock at the  option of the holder at any time
prior to the Company's filing of a registration statement registering the shares
of the Company's  Common Stock under Section 6 of the Securities Act of 1933, as
amended (the "Securities Act").

On January 24,  2003,  the Company  issued two  warrants for 8,000 shares of the
Company's  Common  Stock  (the  "Warrants")  to each  of  Frost  National  Bank,
Custodian,  FBO Renaissance US Growth  Investment Trust PLC, Trust No. W00740100
and HSBC Global Custody Nominee (UK) Limited,  FBO BFS US Special  Opportunities
Trust PLC (the  "Trusts").  The Warrants were issued in exchange for the Trusts'
waiver of a violation of a negative  covenant and  agreement to modify the terms
relating to convertible  debentures previously issued by the Company and held by
the Trusts.  Each of the  Warrants  has an exercise  price of $0.20 per share of
Common Stock covered by the Warrants and is exercisable on or before January 24,
2006.

The  issuances  described  above  were  made  pursuant  to  the  exemption  from
registration provided by Section 4(2) of the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


EXHIBITS

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


REPORTS ON FORM 8-K

Form 8-K (Items 2 and 5) dated  November 6, 2002,  reporting on sale of Champion
Trailer, Inc.



<PAGE>




                                   SIGNATURES

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

                                   OBSIDIAN ENTERPRISES, INC.

March 21, 2003                     By:  /s/ Timothy S. Durham
----------------------------       --------------------------------------------
Date                               Timothy S. Durham, Chairman and
                                   Chief Executive Officer



March 21, 2003                     By:  /s/ Barry S. Baer
----------------------------       --------------------------------------------
Date                               Barry S. Baer, Executive Vice President/
                                   Chief Financial Officer




<PAGE>


                                 CERTIFICATIONS

     I, Timothy S. Durham, certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-Q  of  Obsidian
          Enterprises, Inc.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial  statement,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules 13a- 14 and 15d-14) for the  registrant
          and we have:

          a.   Designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made know to us by others  within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   Presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a.   All  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date:  March 21, 2003               /s/ Timothy S. Durham
                                    --------------------------------
                                    Timothy S. Durham, Chief Executive Officer





<PAGE>

                                 CERTIFICATIONS


     I, Barry S. Baer, certify that:

     1.   I have  reviewed  this  quarterly  report  on Form  10-Q  of  Obsidian
          Enterprises, Inc.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial  statement,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules 13a- 14 and 15d-14) for the  registrant
          and we have:

          a.   Designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made know to us by others  within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b.   Evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   Presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a.   All  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   Any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.


Date:  March 21, 2003                    /s/ Barry S. Baer
                                         ----------------------------------
                                         Barry S. Baer, Chief Financial Officer



<PAGE>

                                  EXHIBIT INDEX

<TABLE>

   Exhibit No.                              Description
------------------ --------------------------------------------------------------- --------------------------------
<S>                <C>                                                            <C>
       2.1         Memorandum  of  Agreement,  dated  October 30,  2002,  between  Incorporated by reference to
                   Champion  Trailer,  Inc.,  on the one  hand,  and  Timothy  S.  Exhibit 2.1 to the Current
                   Durham and Terry G. Whitesell, on the other hand.               Report on Form 8-K filed by
                                                                                   the Registrant on November 6,
                                                                                   2002.
------------------ --------------------------------------------------------------- --------------------------------
       2.2         Agreement  for the  Purchase  and Sale of  Business  Assets of  Incorporated by reference to
                   Champion   Trailer,   Inc.,  dated  January  31,  2003,  among  Exhibit 2.2 to the Current
                   Obsidian   Enterprises,   Inc.,  Champion  Trailer,  Inc.  and  Report on Form 8-K filed by
                   Champion  Trailer  Acquisition   Company,   LLC,  and  related  the Registrant on February 11,
                   Assumption Agreement.                                           2003.
------------------ --------------------------------------------------------------- --------------------------------
      10.1         Promissory  Term Note,  dated November 18, 2002, from Obsidian  Attached
                   Leasing Company, Inc. to Fair Holdings, Inc.
------------------ --------------------------------------------------------------- --------------------------------
      10.2         Third Amendment to Credit Agreement,  dated December 26, 2002,  Attached
                   between United Expressline, Inc. and First Indiana Bank, N.A.
------------------ --------------------------------------------------------------- --------------------------------
      10.3         Credit  Agreement,   dated  December  18,  2002,   between  DC  Attached
                   Investments  Leasing,  LLC and First  Indiana  Bank,  N.A. and
                   Related Documents.
------------------ --------------------------------------------------------------- --------------------------------
      10.4         Term  Promissory  Note,  dated January 3, 2003,  from Obsidian  Attached
                   Leasing, Inc. to Fair Holdings, Inc.
------------------ --------------------------------------------------------------- --------------------------------
      10.5         Stock  Purchase  Warrant,  dated  January 24, 2003,  issued by  Attached
                   Obsidian Enterprises,  Inc. to Frost National Bank, Custodian,
                   FBO  Renaissance  US  Growth  Investment  Trust  PLC Trust No.
                   WOO740100.
------------------ --------------------------------------------------------------- --------------------------------
      10.6         Stock  Purchase  Warrant,  dated  January 24, 2003,  issued by  Attached
                   Obsidian  Enterprises,  Inc., to HSBC Global  Custody  Nominee
                   (UK) Limited, FBO BFS US Special Opportunities Trust PLC.
------------------ --------------------------------------------------------------- --------------------------------
      10.7         Second  Limited  Forbearance  Agreement,  dated  February  28,  Attached
                   2003,   between   Danzer   Industries,   Inc.   and   Obsidian
                   Enterprises, Inc.
------------------ --------------------------------------------------------------- --------------------------------
      10.8*        Form  of  Letter   Amending   Stock   Options   and   Schedule  Attached
                   Identifying Material Details
------------------ --------------------------------------------------------------- --------------------------------
      10.9         First Amendment to Promissory Note, dated January 9, 2003.      Attached
------------------ --------------------------------------------------------------- --------------------------------
      10.10        Sublease,  effective  as of  January  1,  2003,  between  Fair  Attached
                   Holdings, Inc. and Obsidian Enterprises, Inc.
------------------ --------------------------------------------------------------- --------------------------------
      10.11        Commercial Equipment Lease Agreement,  commencing November 20,  Attached
                   2002,  between Fair  Holdings,  Inc.  and United  Expressline,
                   Inc.
------------------ --------------------------------------------------------------- --------------------------------
      99.1         Statement  Regarding  Certification  Pursuant  to 18 U.S.C.ss.  Attached
                   1350 by Timothy S. Durham, Chief Executive Officer.
------------------ --------------------------------------------------------------- --------------------------------
      99.2         State Regarding  Certification Pursuant to 18 U.S.C.ss.1350 by  Attached
                   Barry S. Baer, Chief Financial Officer.
-------------------------------------------------------------------------------------------------------------------
</TABLE>

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