SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q
         (Mark One)

[ ]  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 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                                 (Zip code)
  executive offices)
                                 (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
                                      ----   -----

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                            June 20, 2003
                                                     36,007,855 shares


<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES
                                      INDEX
                                                                            PAGE

PART I - FINANCIAL INFORMATION:

Item 1 - Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheets - April 30, 2003 and October 31, 2002....3

Condensed Consolidated Statements of Operations
        Three and Six Months Ended April 30, 2003 and 2002.....................5

Condensed Consolidated Statement of Changes of Stockholders'
        Deficit and Comprehensive Loss.........................................6

Condensed Consolidated Statements of Cash Flows
        Three and Six Months Ended April 30, 2003 and 2002.....................7

Notes to Condensed Consolidated Financial Statements...........................9

Item 2 - Management's Discussion and Analysis of Financial Condition
         and Results of Operations............................................26

Item 3 - Quantitative and Qualitative Disclosures About Market Risk...........38

Item 4 - Controls and Procedures..............................................38

PART II - OTHER INFORMATION:

Item 1 - Legal Proceedings....................................................39

Item 2 - Changes in Securities and Use of Proceeds............................39

Item 3 - Defaults Upon Senior Securities......................................39

Item 4 - Submission of Matters to a Vote of Security Holders..................39

Item 5 - Other Information....................................................39

Item 6 - Exhibits and Reports on Form 8-K.....................................39





<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

<TABLE>

                                                                                    April 30,        October 31,
                                                                                       2003             2002
                                                                                 ----------------------------------


Assets

Current assets:
<S>                                                                                <C>              <C>
    Cash and cash equivalents                                                      $          747   $          920
    Marketable securities                                                                     115              137
    Accounts receivable, net of allowance for doubtful accounts
      of $495 for 2003 and $495 for 2002                                                    3,994            3,307
    Accounts receivable, related parties                                                      211              206
    Inventories, net                                                                        7,928            7,315
    Prepaid expenses and other assets                                                         635            1,049
                                                                                 ----------------------------------

Total current assets                                                                       13,630           12,934

Property, plant and equipment, net                                                         24,411           23,048

Other assets:
    Goodwill, net                                                                           6,434            6,434
    Other intangible assets, net of accumulated amortization of $694 for
      2003 and $461 for 2002                                                                1,655            1,853
    Other                                                                                     131              116
    Assets of subsidiary held for sale                                                          -            1,538
                                                                                 ----------------------------------

                                                                                   $       46,261   $       45,923
                                                                                 ==================================

</TABLE>


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

<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


                                                                                    April 30,       October 31,
                                                                                       2003             2002
                                                                                 ----------------------------------

Liabilities and Stockholders' Deficit

Current liabilities:
<S>                                                                                <C>              <C>
    Current portion of long-term debt                                              $        7,130   $        5,667
    Current portion of long-term debt, related parties                                        119               --
    Accounts payable, trade                                                                 3,188            3,450
    Accounts payable, related parties                                                         838              668
    Accrued expenses and customer deposits                                                  1,871            1,558
                                                                                 ----------------------------------

Total current liabilities                                                                  13,146           11,343

Long-term debt, net of current portion                                                     20,203           23,879

Long-term debt, related parties                                                            12,126            5,518

Deferred income tax liabilities                                                               817            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                                                             1,536            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                                                             11,155           10,184
    Accumulated other comprehensive loss                                                      (70)             (49)
    Accumulated deficit                                                                   (13,335)         (10,832)
                                                                                 ----------------------------------

Total stockholders' deficit                                                                (2,242)            (689)
                                                                                 ----------------------------------

                                                                                   $       46,261   $       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                   Six Months Ended
                                            ------------------------------------------------------------------------
                                             April 30, 2003     April 30, 2002   April 30, 2003    April 30, 2002
                                            ------------------------------------------------------------------------
                                                                (as restated)                      (as restated)

<S>                                           <C>               <C>                <C>             <C>
Net sales                                     $       15,107    $       15,598     $     26,007    $       27,064

Cost of sales                                         13,316            12,973           23,056            22,921
                                            ------------------------------------------------------------------------

Gross profit                                           1,791             2,625            2,951             4,143

Selling, general and administrative
 expenses                                              2,197             2,260            4,253             4,264
                                            ------------------------------------------------------------------------

Income (loss) from operations                           (406)              365           (1,302)             (121)

Other income (expense):
  Interest expense, net                                 (904)             (931)          (1,688)           (1,776)
  Other expense, net                                      --                (4)               3               (33)
                                            ------------------------------------------------------------------------

Loss before income taxes and discontinued
 operations                                           (1,310)             (570)          (2,987)           (1,930)

Income tax benefit                                       401                --              559               155
                                            ------------------------------------------------------------------------

Loss before discontinued operations                     (909)             (570)          (2,428)           (1,775)

Loss from discontinued operations, net of
 tax                                                       -              (395)             (49)             (721)
                                            ------------------------------------------------------------------------
                                            ------------------------------------------------------------------------

Net loss                                      $         (909)   $         (965)    $     (2,477)   $       (2,496)
                                            ========================================================================
                                            ========================================================================

Basic and diluted loss per share
attributable to common shareholders:
  From continuing operations                  $         (.03)   $         (.02)    $       (.07)   $         (.04)
  Discontinued operations, net of tax                     --              (.01)            (.00)             (.02)
                                            ------------------------------------------------------------------------
                                            ------------------------------------------------------------------------

Net loss per share                            $         (.03)   $         (.03)    $       (.07)   $         (.06)
                                            ========================================================================
                                            ========================================================================

Weighted average common shares outstanding
 basic and diluted                                36,007,855        36,007,855       36,007,855        36,007,855
                                            ========================================================================
</TABLE>

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



<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
                         DEFICIT AND COMPREHENSIVE LOSS
                             (dollars in thousands)
                                   (unaudited)
<TABLE>

                                                           Series C         Series D
                                                           Convertible     Convertible             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   4,368,399   $ 5   88,330 $ --   $10,184   $ (49)       $(10,832)   $ (689)

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

Fair value adjustment on           --          --    --         --    --       --   --      (105)     --            (26)      (131)
 redeemable preferred stock

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

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

Unrealized loss on available      (21)                                                               (21)            --        (21)
 -for -sale marketable
 securities

Net loss                       (2,477)         --    --         --    --       --   --        --      --         (2,477)    (2,477)
                                 --------------------------------------------------------------------------------------------------

Total comprehensive loss      $(2,498)
                              ========

Balance at April 30, 2003              36,007,855   $ 3  4,368,399   $ 5   88,330  $--   $11,155   $ (70)     $ (13,335)   $(2,242)
                                       ============================================================================================
</TABLE>




<PAGE>


                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

<TABLE>
                                                                                           Six Months Ended
                                                                                    --------------------------------
                                                                                    April 30, 2003  April 30, 2002
                                                                                    --------------------------------
                                                                                                     (as restated)

Cash flow from operating activities:
<S>                                                                                   <C>             <C>
  Loss from continuing operations                                                     $    (2,428)    $  (1,775)
  Adjustments to reconcile loss from continuing operations to net cash provided by
   (used in) operating activities:
  Depreciation and amortization                                                             1,446           1,271
  Other                                                                                      (413)           (161)
  Changes in operating assets and liabilities
    Accounts receivable, net                                                                 (687)           (746)
    Inventories, net                                                                         (614)           (427)
    Other, net                                                                                100           1,779
                                                                                    --------------------------------

Net cash used in operating activities                                                      (2,596)            (59)
                                                                                    --------------------------------

Cash flows from investing activities:
  Capital expenditures                                                                       (296)           (405)
  Other                                                                                        --              11
                                                                                    --------------------------------

Net cash used in investing activities                                                        (296)           (394)
                                                                                    --------------------------------

Cash flows from financing activities:
  Advances from (repayments to) related parties, net                                         (961)            305
  Net borrowings on lines of credit                                                         1,188             601
  Net borrowings (repayments) on long-term debt, including related parties                  2,533            (721)
                                                                                    --------------------------------

Net cash provided by financing activities                                                   2,760             185

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

Decrease in cash and cash equivalents                                                        (173)           (262)

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

Cash and cash equivalents, end of period                                              $       747     $        267
                                                                                    ================================

Interest paid                                                                         $       832     $     1,562
                                                                                    ================================

Taxes paid                                                                            $        63     $        15
                                                                                    ================================

</TABLE>

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


<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

<TABLE>

                                                                                           Six Months Ended
                                                                                    --------------------------------
                                                                                    April 30, 2003  April 30, 2002
                                                                                    --------------------------------
                                                                                                     (as restated)

Supplemental disclosure of noncash operating, investing and financing
activities:
<S>                                                                                   <C>             <C>
  Acquisition of coaches and equipment through issuance of debt                       $     2,304     $        --
Contribution to capital from sale of Champion to related party                        $     1,142     $        --
  Issuance of mandatory redeemable preferred stock in conjunction with the sale of
   Champion                                                                           $       675     $        --
  Tax effect of sale of coaches to a related party                                    $        96     $        --
  Fair value change on mandatory redeemable preferred stock                           $      (131)    $       423
   Reclassification of debt due to assumption of credit agreement by
    Fair                                     Holdings                                 $     1,488     $        --
  Conversion of debt to preferred stock and additional paid-in capital                $        --     $     3,348
  Conversion of accounts payable, related parties to debt                             $        --     $     1,295
  Purchase price adjustment and conversion of accounts payable to debt for United     $        --     $       294

</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 April 30, 2003 and for the three and six
months ended April 30, 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 April 30, 2003, results of operations for the three and
six months ended April 30, 2003 and cash flows and stockholders' deficit for the
six months ended April 30, 2003 have been made.  The results of  operations  for
the three and six months ended April 30 , 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.

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



<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

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

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

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


BASIS OF PRESENTATION:

Over the past year,  the Company has undertaken  various  actions to improve its
operations and liquidity. Such actions include the sale of Champion described in
Note 3, as well as  conversion of debt to equity and  refinancing  of certain of
its debt  agreements as described in detail in the  Company's  10-K for the year
ended  October 31,  2002.  Management  believes  that the Company has  financing
agreements in place to provide adequate liquidity and working capital throughout
fiscal 2003.  However,  there can be no assurance that such working  capital and
liquidity  will in fact be adequate.  Therefore,  the Company may be required to
draw upon  other  liquidity  sources.  The  Company  has  therefore  secured  an
increased financial  commitment from Fair Holdings,  Inc. ("Fair Holdings"),  an
entity controlled by the Company's Chairman,  to provide, as needed,  additional
borrowings  under a $8,000 line of credit  agreement,  which expires  January 9,
2005. As of April 30, 2003,  availability  under the agreement is  approximately
$2,700.

The Company  incurred a net loss for the year ended  October 31, 2002 of $6,330,
which included an asset impairment  charge of $720,  cumulative effect of change
in  accounting  principle of $2,015 and a loss from  discontinued  operations of
$1,040. In addition,  the Company incurred a loss from continuing  operations of
$909 and $2,428 for the three and six months ended April 30, 2003, respectively.
Several  of  the  Company's  subsidiaries  were  acquired  in  highly  leveraged
transactions  and this  factor  combined  with the loss has  contributed  to its
failure to meet certain financial  covenants required by one of its lenders.  As
of April 30, 2003, the lender has waived all covenant violations.

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





<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

Management,  as a part of its plan towards resolving these issues and generating
positive  cash flow and  earnings,  has taken the  actions as  described  in the
Company's  10-K for the  year  ended  October  31,  2002 as well as the  actions
described below during the six months ended April 30, 2003.

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

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

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

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

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

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

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

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

o    The Company's truck body division at Danzer continues to negatively  impact
     the Company's cash flows.  The trailer  production line was put in place in
     the fourth  quarter of 2002 to support the  production  needs at United and
     also  provide a new product  line to the  existing  customers of Danzer and
     open a  potential  new market  along the East  coast of the U.S.  Given the
     current state of the  telecommunications  industry and economic conditions,
     management  will continue to evaluate the  operations and progress with the
     implementation of the trailer production. Management also expects to make a
     decision to continue or  discontinue  operations by the end of fiscal 2003.
     In  conjunction  with the  analysis of the Danzer  operations,  we are also
     analyzing the potential for asset impairment at the Danzer operation. Total
     assets  of  Danzer  as of April  30,  2003  were  $3,250  which  represents
     approximately 7% of total consolidated assets.
<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

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

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

SIGNIFICANT ACCOUNTING POLICIES:

Earnings Per Share:
Basic per-share amounts are computed,  generally, by dividing net income or loss
attributable  to common  shareholders by the  weighted-average  number of common
shares  outstanding.  Diluted  per-share  amounts are computed  similar to basic
per-share  amounts  except  that the  weighted-average  shares  outstanding  are
increased to include additional shares for the assumed exercise of stock options
and warrants, if dilutive.

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

                                                    Three Months Ended                      Six Months Ended
                                          --------------------------------------- --------------------------------------
                                            April 30, 2003      April 30, 2002     April 30, 2003      April 30, 2002
                                          ------------------- ------------------- ------------------ -------------------
                                                                (as restated)                          (as restated)
<S>                                         <C>                 <C>                 <C>                <C>
Loss before discontinued operations         $         (909)     $         (570)     $       (2,428)    $       (1,775)
Change in fair value of mandatory
 redeemable preferred stock                            (32)                232                (131)               423
                                          ------------------- ------------------- ------------------ -------------------

Loss attributable to common
 shareholders before discontinued
 operations                                           (941)               (338)             (2,559)            (1,352)

Loss from discontinued operations, net
 of tax                                                 --                (395)                (49)              (721)
                                          ------------------- ------------------- ------------------ -------------------

Net loss attributable to common
 shareholders                               $         (941)     $         (733)     $       (2,608)    $       (2,073)
                                          =================== =================== ================== ===================

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

Loss per share, basic and diluted,
attributable to common shareholders:
  From continuing operations                $       (.03)       $       (.02)       $       (.07)      $       (.04)
  Discontinued operations                             --                (.01)               (.00)              (.02)
                                          ------------------- ------------------- ------------------ -------------------

Net loss per share                          $       (.03)       $       (.03)       $       (.07)      $       (.06)
                                          =================== =================== ================== ===================
</TABLE>
<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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

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

Pro forma basic and diluted  loss per share have been  computed  below as if the
Series C and Series D Preferred  Stock were  converted to common stock.  For the
three and six months ended April 30, 2003 and 2002,  respectively,  the Series C
Preferred  Stock has been reflected on a weighted  average basis  outstanding as
common shares of 87,367,980 and 75,212,925 respectively.  The Series D Preferred
Stock has been  reflected  on a weighted  average  basis  outstanding  as common
shares of 21,082,775 and 18,364,013 for the three and six months ended April 30,
2003,  respectively.  There were no Series D Preferred  Stock  shares  issued or
outstanding during the three and six months ended April 30, 2002.

<TABLE>

                                                    Three Months Ended                      Six Months Ended
                                          --------------------------------------- --------------------------------------
                                            April 30, 2003      April 30, 2002     April 30, 2003      April 30, 2002
                                          ------------------- ------------------- ------------------ -------------------
                                                                (as restated)                          (as restated)

Pro forma weighted average common
<S>                                            <C>                 <C>                 <C>                <C>
 shares outstanding, basic and diluted         144,458,610         111,220,780         141,739,848        111,001,235
                                          =================== =================== ================== ===================

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

Pro forma net loss per share                $       (.01)       $       (.00)       $       (.02)      $       (.02)
                                          =================== =================== ================== ===================
</TABLE>

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

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 April 30, 2003 and
2002,  respectively,  the  inclusion  of those  potential  common  shares in the
calculation of diluted loss per share would have an antidilutive effect.

<PAGE>

RECENTLY ISSUED PRONOUNCEMENTS:

In January 2003,  the Financial  Accounting  Standards  Board (FASB) issued FASB
Interpretation No. 46 (FIN No. 46), Consolidation of Variable Interest Entities,
an interpretation of Accounting  Research Bulletin No., 51. This  Interpretation
addresses the application of Accounting  Research Bulletin No. 51,  Consolidated
Financial Statements,  to certain entities in which equity investors do not have
the  characteristics  of  a  controlling  financial  interest  or  do  not  have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional subordinated financial support from other parties. The Interpretation
applies  immediately  to variable  interest  entities  created after January 31,
2003,  and to  variable  interest  entities  in which an  enterprise  obtains an
interest after that date. It applies in the first interim period beginning after
June 15, 2003, to variable interest entities in which an entity holds a variable
interest that it acquired prior to February 1, 2003.  Management does not expect
the adoption of FIN No. 46 to have a material impact on the Company's  financial
position, results of operations, cash flows, or its debt covenants.

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

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

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



<PAGE>


2.   INVENTORIES

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

<TABLE>
                                                                 April 30,       October 31, 2002
                                                                   2003
                                                             ------------------ -------------------

<S>                                                            <C>                <C>
Raw materials                                                  $        4,207     $        3,655
Work-in-process                                                           855                709
Finished goods                                                          3,220              3,417
Valuation reserve                                                        (354)              (466)
                                                             ------------------ -------------------

Total                                                          $        7,928     $        7,315
                                                             ================== ===================
</TABLE>

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  April  30,  2003  and are  included  in the
consolidated  balance sheet as of October 31, 2002 as "Assets of subsidiary held
for sale" and "Liabilities of subsidiary held for sale," respectively.

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

A summary of the Company's discontinued  operations for the three and six months
ended April 30, 2003 and 2002 are as follows:
<TABLE>

                                                    Three Months Ended                      Six Months Ended
                                           -------------------------------------- -------------------------------------
                                            April 30, 2003      April 30, 2002     April 30, 2003     April 30, 2002
                                           ------------------ ------------------- ------------------ ------------------

<S>                                          <C>                <C>                 <C>                <C>
Net sales                                    $           --     $        1,375      $          170     $        2,392
Operating expenses                                       --             (1,690)               (286)            (2,970)
Interest                                                 --                (80)                (85)              (143)
Other                                                    --                 --                 127                 --
Tax benefit                                              --                 --                  25                 --
                                           ------------------ ------------------- ------------------ ------------------

Net loss                                     $           --     $         (395)     $          (49)    $         (721)
                                           ================== =================== ================== ==================

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

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



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

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

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

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

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

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

4.  FINANCING ARRANGEMENTS


OBSIDIAN LEASING:

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

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


UNITED:

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

United was in technical  default of certain loan covenants with its subordinated
lender at April 30, 2003.  United has obtained a waiver of the  violations  from
the lender.
<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


OBSIDIAN ENTERPRISES:

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

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


DANZER:

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


5.   MANDATORY REDEEMABLE PREFERRED STOCK

In conjunction with the sale of Champion discussed in Note 3, the Company agreed
to settle the  outstanding  subordinated  debt due to Markpoint from Champion in
exchange  for a cash  payment of $675 and  issuance to the debt holder of 32,143
shares  of the  Company's  Series D  Preferred  Stock.  The  agreement  provides
Markpoint  the option to require the  Company to  repurchase  these  shares at a
price of $21 per share.  The  repurchase  option is  available  to  Markpoint as
follows:  16,072 shares during the period May 1, 2003 to June 1, 2003 and 16,071
shares during the period  November 1, 2003 to December 1, 2003.  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  April  30,  2003.
Subsequent to April 30, 2003 Markpoint exercised its option for 16,072 shares as
further described in Note 10.


6.   STOCKHOLDERS' DEFICIT

STOCK OPTIONS

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


<TABLE>

                                                    Three Months Ended                      Six Months Ended
                                           -------------------------------------- -------------------------------------
                                            April 30, 2003      April 30, 2002     April 30, 2003     April 30, 2002
                                           ------------------ ------------------- ------------------ ------------------

<S>                                          <C>                <C>                 <C>                <C>
Net loss as reported                         $         (909)    $         (965)     $       (2,477)    $       (2,496)
Deduct total stock-based employee
 compensation expense determined under
 fair value methods                                      --                 --                  --                 --
                                           ------------------ ------------------- ------------------ ------------------
                                           ------------------ ------------------- ------------------ ------------------

Pro forma net loss                                     (909)              (965)             (2,477)            (2,496)

Basic and diluted loss per share:
  As reported                                         (0.03)             (0.03)              (0.07)             (0.06)
  Pro forma                                           (0.03)             (0.03)              (0.07)             (0.06)
</TABLE>


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









<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (in thousands except 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 April 30, 2003
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------

Sales:
<S>                                      <C>                <C>                 <C>                <C>
  Domestic                               $        9,970     $        1,419      $        2,439     $       13,828
  Foreign                                           876                 --                 403              1,279
                                       ------------------------------------------------------------------------------

Total                                    $       10,846     $        1,419      $        2,842     $       15,107

Cost of goods sold                       $       10,034     $          732      $        2,550     $       13,316

Loss before taxes                        $         (865)    $         (173)     $         (129)    $       (1,167)**

Identifiable assets                      $       21,271     $       13,871      $       10,363     $       45,505*

Depreciation and amortization expense    $          189     $          258      $          311     $          758

*Identifiable assets, as stated above                                                              $       45,505
  Corporate-level goodwill                                                                                    650
  Other corporate-level assets                                                                                106
                                                                                                --------------------
                                                                                                --------------------

Total assets                                                                                      $        46,261
                                                                                                ====================

**Identifiable loss before taxes, as stated above                                                  $       (1,167)
    Corporate-level loss before taxes, not identifiable with a specific segment                              (143)
                                                                                                --------------------

Total loss before taxes                                                                           $        (1,310)
                                                                                                ====================
</TABLE>


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


<TABLE>

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

Sales:
<S>                                      <C>                <C>                 <C>                <C>
  Domestic                               $       11,503     $        1,511      $        2,383     $       15,397
  Foreign                                            --                 --                 201                201
                                       ------------------------------------------------------------------------------

Total                                    $       11,503     $        1,511      $        2,584     $       15,598

Cost of goods sold                       $        9,854     $          766      $        2,353     $       12,973

Loss before taxes                        $         (295)    $          (20)     $         (255)    $         (570)

Identifiable assets                      $       22,468     $       12,518      $       10,067     $       45,053*

Depreciation and amortization expense    $          190     $          165      $          253     $          608

*Identifiable assets, as stated above                                                              $       45,053
  Corporate-level goodwill                                                                                    650
  Assets of subsidiary held for sale                                                                        1,518
                                                                                                --------------------
                                                                                                --------------------

Total assets                                                                                      $        47,221
                                                                                                ====================

</TABLE>


<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


<TABLE>

                                                              Six Months Ended April 30, 2003
                                       ------------------------------------------------------------------------------
                                             Trailer                             Butyl Rubber
                                          Manufacturing      Coach Leasing        Reclaiming            Total
                                       ------------------------------------------------------------------------------

Sales:
<S>                                      <C>                <C>                 <C>                <C>
  Domestic                               $       16,982     $        2,526      $        4,652     $       24,160
  Foreign                                         1,223                 --                 624              1,847
                                       ------------------------------------------------------------------------------

Total                                    $       18,205     $        2,526      $        5,276     $       26,007

Cost of goods sold                       $       16,754     $        1,354      $        4,948     $       23,056

Loss before taxes                        $       (1,867)    $         (400)     $         (478)    $       (2,745)**

Identifiable assets                      $       21,271     $       13,871      $       10,363     $       45,505*

Depreciation and amortization expense    $          378     $          448      $          620     $        1,446


*Identifiable assets, as stated above                                                              $      45,505
  Corporate-level goodwill                                                                                   650
  Other corporate-level assets                                                                               106
                                                                                                --------------------
                                                                                                --------------------

Total assets                                                                                      $       46,261
                                                                                                ====================


**Identifiable loss before taxes, as stated above                                                  $      (2,745)
    Corporate-level loss before taxes, not identifiable with a specific segment                             (242)
                                                                                                --------------------

Total loss before taxes                                                                           $       (2,987)
                                                                                                ====================
</TABLE>


<PAGE>

                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


<TABLE>

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

Sales:
<S>                                      <C>                <C>                 <C>                <C>
  Domestic                               $       19,736     $        2,554      $        4,462     $       26,752
  Foreign                                            --                 --                 312                312
                                       ------------------------------------------------------------------------------

Total                                    $       19,736     $        2,554      $        4,774     $       27,064

Cost of goods sold                       $       17,183     $        1,339      $        4,399     $       22,921

Loss before taxes                        $         (917)    $         (395)     $         (618)    $       (1,930)

Identifiable assets                      $       22,468     $       12,518      $       10,067     $       45,053*

Depreciation and amortization expense    $          350     $          410      $          511     $        1,271


*Identifiable assets, as stated above                                                              $      45,053
  Corporate-level goodwill                                                                                   650
  Assets of subsidiary held for sale                                                                       1,518
                                                                                                --------------------
                                                                                                --------------------

Total assets                                                                                      $       47,221
                                                                                                ====================

</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 and six months ended April 30, 2003 and 2002,
allocated corporate expenses by segment were as follows:


<TABLE>

                                                Three Months Ended                      Six Months Ended
                                      -------------------------------------------------------------------------------
                                           April 30,           April 30,          April 30,          April 30,
                                              2003               2002               2003                2002
                                      -------------------------------------------------------------------------------

<S>                                      <C>                 <C>                <C>                <C>
Trailer manufacturing                    $           339     $           462    $           657    $           673
Coach leasing                                         44                  61                 92                101
Butyl rubber reclaiming                               90                 104                189                160
                                      -------------------------------------------------------------------------------

                                         $           473     $           627    $           938    $           934
                                      ===============================================================================
</TABLE>



<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>

                                                                                     April 30,         October 31,
                                                                                       2003               2002
                                                                                 ------------------ ------------------
Balance sheet:
  Current assets:
<S>                                                                                <C>                <C>
    Accounts receivable, Obsidian Capital Partners                                 $        165       $        181
    Accounts receivable, Fair Holdings                                                       12                 --
    Accounts receivable, Obsidian Capital Company                                             4                 13
    Accounts receivable, other affiliated entities                                           30                 12
                                                                                 ------------------ ------------------

Total assets                                                                       $        211       $        206
                                                                                 ================== ==================

  Current liabilities:
    Accounts payable, Obsidian Capital Company                                     $        283       $        279
    Accounts payable, stockholders                                                          322                338
    Accounts payable, DC Investments and Fair Holdings                                      209                 42
    Accounts payable, other affiliated entities                                              24                  9
    Notes payable, Fair Holdings                                                            119                 --
  Long-term portion:
    Notes payable, DC Investments                                                           700                700
    Notes payable, Fair Holdings                                                          6,153              3,020
    Line of credit, Fair Holdings                                                         5,273              1,798
                                                                                 ------------------ ------------------

Total liabilities                                                                  $     13,083       $      6,186
                                                                                 ================== ==================

</TABLE>
<TABLE>

                                                   Three Months Ended                      Six Months Ended
                                          -------------------------------------- -------------------------------------
                                            April 30, 2003     April 30, 2002     April 30, 2003     April 30, 2002
                                          ------------------- ------------------ ------------------ ------------------

Statement of operations:
  Interest expense, DC Investments and
<S>                                         <C>                 <C>                <C>                <C>
  Fair Holdings                             $        324        $        104       $        503       $        104
  Rent expense, Obsidian Capital Company    $         15        $         15       $         30       $         30
  Rent expense, Fair Holdings               $         13        $         --       $         18       $         --
</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 April 30, 2003 and
October  31,  2002,  respectively,   or  amounts  converted  to  long-term  debt
subsequent to April 30, 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

On May 12,  2003,  Markpoint  exercised  its Put Option  rights to  require  the
Company to purchase  16,072 shares of Series D Preferred Stock for $21 per share
or $338  (the "Put  Option")  as  discussed  in Note 5. Under an  Assignment
Agreement,  the Company  transferred  all rights,  title and interest in the Put
Option to Fair Holdings, who exercised the option and acquired the shares.


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. In addition, we have also
determined the weighted average common and common equivalent shares  outstanding
as previously  reported should not have included Series C and Series D preferred
stock  as they  have  not yet  been  converted  to  common  shares  and thus are
antidilutive.   The  Company  is  restating  its  previously   issued  financial
statements for the three and six months ended April 30, 2002 for these errors.



<PAGE>
                   OBSIDIAN ENTERPRISES, INC. AND SUBSIDIARIES

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


Below is a comparison of previously  reported and restated  balances included in
the Condensed Consolidated  Statements of Operations as of and for the three and
six months ended April 30, 2002.
<TABLE>

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

Statements of Operations:*

Three months ended April 30, 2002:
<S>                                                            <C>                <C>                 <C>
  Interest expense, net                                        $        892       $         39        $        931
  Loss before income taxes                                             (531)               (39)               (570)
  Net loss                                                             (926)               (39)               (965)

  Net loss per share basic and diluted                                 (.01)              (.02)               (.03)
  Weighted average common shares outstanding                    111,220,780        (75,212,925)         36,007,855

Six months ended April 30, 2002:
  Interest expense, net                                               1,703                 73               1,776
  Loss before income taxes                                            1,857                (73)             (1,930)
  Net loss                                                           (2,423)               (73)             (2,496)

  Net loss per share basic and diluted                                 (.02)              (.04)               (.06)
  Weighted average common shares outstanding                    111,001,235        (74,993,380)         36,007,855
</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. In addition, we have also
determined the weighted average common and common equivalent shares  outstanding
as previously  reported should not have included Series C and Series D preferred
stock  as they  have  not yet  been  converted  to  common  shares  and thus are
antidilutive.   The  Company  is  restating  its  previously   issued  financial
statements for the three and six months ended April 30, 2002 for these errors.


RESULTS OF OPERATIONS

The Company's overall operating results and financial condition during the three
and six months  ended April 30, 2003  compared to the three and six months ended
April 30, 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 the business  seasonality in the trailer and related  transportation
equipment manufacturing and coach leasing segments.

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

                                            Three Months Ended                           Six Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    April 30, 2003       April 30, 2002        April 30, 2003        April 30, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                  <C>                   <C>                  <C>                   <C>
Trailer manufacturing                $     10,846          $     11,503         $     18,205          $     19,736
Butyl rubber reclaiming                     2,842                 2,584                5,276                 4,774
Coach leasing                               1,419                 1,511                2,526                 2,554
                                 --------------------- -------------------- --------------------- ---------------------

Net Sales                            $     15,107          $     15,598         $     26,007          $     27,064
                                 ===================== ==================== ===================== =====================
</TABLE>
<PAGE>

The  following is a discussion  of the major  elements  impacting  the Company's
operating  results by segment for the three and six months  ended April 30, 2003
compared to the three and six months  ended April 30, 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:
<TABLE>

                                            Three Months Ended                           Six Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    April 30, 2003       April 30, 2002        April 30, 2003        April 30, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                  <C>                   <C>                  <C>                   <C>
Net Sales                            $     10,846          $     11,503         $     18,205          $     19,736
Cost of Sales                              10,034                 9,854               16,754                17,183
                                 --------------------- -------------------- --------------------- ---------------------

Gross Profit                         $        812          $      1,649         $      1,451          $      2,553
                                 ===================== ==================== ===================== =====================

Gross Profit %                              7.5%                 14.3%                 8.0%                 12.9%
                                 ===================== ==================== ===================== =====================
</TABLE>

Three Months  Ended April 30, 2003  Compared to The Three Months Ended April 30,
2002

Net sales in this  segment for the three months ended April 30, 2003 as compared
to the three month period ended April 30, 2002  decreased  5.7% in the amount of
$657.  Sales in this segment were lower than the prior year due primarily to two
factors.  First, a new discount/rebate  program was implemented in February 2003
for the cargo trailers to stimulate sales. The trailer market remains very price
competitive and all major  competitors are offering similar  discount  programs.
Second,  the sales of truck  bodies for the three  months  ended  April 30, 2003
decreased  $239  compared  to April  30,  2002.  The  decrease  in sales was due
primarily to the loss of this  segment's  primary truck body customer due to the
customer's bankruptcy. We believe sales of truck bodies will continue at a level
below 2002 as the Company  does not  anticipate  any orders from this  segment's
primary   truck  body   customer  in  the  future.   In   addition,   the  sales
discount/rebate  program for cargo trailers is expected to continue through June
2003, which may result in lower sales than 2002.

The gross profit percentage  decreased 6.8% for the three months ended April 30,
2003. The reduction in gross profit is  attributable  to three primary  factors.
First,  the sales  discount/rebate  program  discussed  above has reduced  gross
profit by  approximately  3.3%.  Second,  during the fourth quarter of 2002, the
Company opened an additional cargo trailer manufacturing facility. This facility
has not as yet  obtained  the level of  efficiency  of the  existing  production
facilities.  Efficiency  is  improving  and  should  be in  line  with  existing
facilities by June 2003. Lastly,  gross profit has been negatively impacted by a
reduction  in sales of truck  bodies,  which has  reduced  the ability to absorb
overhead at the truck body manufacturing facility. During late 2002, the Company
began  manufacturing  cargo  trailers  in this  facility  to provide  additional
capacity and serve new markets.  Production  levels are  increasing but have not
yet  reached  a level  of  efficiency  of  existing  cargo  trailer  facilities.
Management  is  currently  analyzing  the use of the  truck  body  facility  and
considering options of continuing production of truck bodies and cargo trailers,
discontinuing  one of these lines at this  facility or closing the  facility.  A
decision is expected prior to October 31, 2003. In conjunction with the analysis
of  operations  at the truck body  manufacturing  facility,  management  is also
analyzing  any potential  asset  impairment  at this  facility.  Total assets of
Danzer as of April 30, 2003 were $3,250  which  represents  approximately  7% of
consolidated total assets.
<PAGE>

Six Months Ended April 30, 2003 Compared to The Six Months Ended April 30, 2002

Sales in this segment  decreased  $1,531 or 7.8% over the  comparable  period of
2002. The decrease was primarily related to the following factors.

First,  sales of truck bodies  decreased by $317 over the six months ended April
30, 2003. This reduction was related to the continued depressed condition of the
telecommunications  industry which has historically been a significant  consumer
of truck bodies,  as well as the bankruptcy  filing of a significant  truck body
customer  in late 2002.  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 $574 as a result of the general
state of the U.S.  economy and  harsher  weather  during the winter of 2003.  In
addition,  as noted above the Company began a sales  discount/rebate  program to
stimulate sales and to stay price competitive in the cargo trailer market.

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 six months  ended April 30,  2002.  Management  believes  gross
profits will  continue to be  adversely  impacted by the lack of sales volume in
truck bodies and sales discounts/rebates offered during 2003.


BUTYL RUBBER RECLAIMING

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

                                            Three Months Ended                           Six Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    April 30, 2003       April 30, 2002        April 30, 2003        April 30, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                  <C>                   <C>                  <C>                   <C>
Net Sales                            $     2,842           $     2,584          $     5,276           $     4,774
Cost of Sales                              2,550                 2,353                4,948                 4,399
                                 --------------------- -------------------- --------------------- ---------------------

Gross Profit                         $       292           $       231          $       328           $       375
                                 ===================== ==================== ===================== =====================

Gross Profit %                              10.3%                  8.9%                 6.2%                  7.9%
                                 ===================== ==================== ===================== =====================
</TABLE>

Three Months  Ended April 30, 2003  Compared To The Three Months Ended April 30,
2002


Net sales for the three months ended April 30, 2003  compared to same period for
2002  increased  $258 or 10%.  The  increase  relates  to the  demand  from  the
Company's  tire  manufacturing  customers  for the three  months ended April 30,
2003.  The Company also benefited from a 2.2% price increase over the comparable
period in 2002. The Company also plans a price  increase to its customers  which
will take effect in the third  quarter of 2003.  While the  Company  expects the
price  increase to increase the level of sales,  management  does not anticipate
the  return  to  historical  levels  due to the  availability  of raw  materials
discussed below.

Gross profit  increased  1.4% for the three  months  ended April 30, 2003.  This
increase  was due to increased  volume and the  continuing  improvements  in the
production process with equipment  maintenance and the realignment of production
facilities.  The Company has consolidated  part of its equipment from two plants
into one.  The Company  continues  to utilize as much  equipment in one plant to
maximize the production facilities. A portion of the equipment not consolidated,
with a  carrying  value  of  approximately  $650,  is  temporarily  idle  and is
evaluated  on an ongoing  basis for its use in a  production  process  for "fine
grind" rubber. Existing and new equipment will be required to complete the "fine
grind" production line. If it is determined the idle equipment does not have any
foreseeable  use, the equipment  will be  reclassified  as idle equipment on the
balance  sheet,  not  depreciated  and tested for  impairment.  Due to  specific
manufacturing  nature of this equipment,  we are not currently able to determine
if an impairment  charge will be recorded  should this equipment not be utilized
in the fine grind process.
<PAGE>


In addition,  the Company utilized $143 of its inventory reserve as of April 30,
2003  compared to $134 as of April 2002.  This  increase is primarily due to the
factors in using the specific  inventory in production for which the reserve was
established.  Reserves have been established  primarily for inventory not usable
without additional  processing costs and currently usable only when mixed in the
production  process  at a low rate  with  quality  raw  material.  Reserves  are
reversed when such inventory is used in production.


Six Months Ended April 30, 2003 Compared To The Six Months Ended April 30, 2002

Net sales in this segment for the six months ended April 30, 2003 as compared to
the six-month period ended April 30, 2002 increased 10.5% in the amount of $501.

Sales in this  segment  were  higher  than the six months  ended  April 30, 2002
because of increased demand from Company's tire manufacturing customers as noted
above.  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 second 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 1.7% for the six months ended April 30, 2003
compared to the six months  ended April 30, 2002.  The primary  reasons for this
decrease in a lack of a consistent supply of raw materials and increasing energy
costs.  The  Company's  reclaim  process  is most  efficient  when raw  material
consists of  primarily  road worn inner tubes with a mix of other butyl  rubber.
Since the  introduction  of the  tubeless  tire for  automobiles  in the  1970s,
sources of material  have declined  substantially  and the cost of available raw
materials  has  increased.  As a result of having to use less than  optimum  raw
material mix in the reclaiming process,  additional  processing time is incurred
to ensure  delivery  of  quality  product.  Management  has been  testing  other
materials  including  butyl pad  scrap as a  replacement  material  for the past
several years with some success.  In addition,  alternative sources of material,
including overseas sources,  are being pursued to provide a consistent supply of
material in the future. Until such time that consistent sources of raw materials
are available, sales growth and gross profit in this segment will be limited.


COACH LEASING

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

                                            Three Months Ended                           Six Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    April 30, 2003       April 30, 2002        April 30, 2003        April 30, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                 <C>                   <C>                  <C>                   <C>
Net Sales                           $      1,419          $      1,511         $      2,526          $      2,554
Cost of Sales                                732                   766                1,354                 1,339
                                 --------------------- -------------------- --------------------- ---------------------

Gross Profit                        $        687          $        745         $      1,172          $      1,215
                                 ===================== ==================== ===================== =====================

Gross Profit %                              48.4%                 49.3%                46.4%                 47.6%
                                 ===================== ==================== ===================== =====================
</TABLE>



Three Months  Ended April 30, 2003  Compared To The Three Months Ended April 30,
2002

Sales for the three months ended April 30, 2003  decreased  $92 or 6.1% from the
period April 30 2002.  The decrease in sales relates to a lower  utilization  of
the fleet for March and April of 2003 compared to the same period for 2002.  The
seasonality  of the  segment  sales  also have an impact  and  historically  are
stronger in the spring,  summer and fall.  The Company has  increased  its fleet
size by adding four new coaches  during the current fiscal year to a total of 37
coaches as of April 30,  2003  compared  to 30 coaches  for the same  period for
2002.  The  increase  in number of coaches to the fleet is  expected to increase
revenues  during  the  remainder  of  2003  which  historically  is the  highest
utilization period for the segment.

The gross profit  percentage  decreased .9% for the three months ended April 30,
2003  compared to the period  April 30,  2002.  The  reduction  is  attributable
primarily to the cost of  maintaining a larger fleet during a lower  utilization
period for the three months ended April 30, 2003.

Six Months Ended April 30, 2003 Compared To The Six Months Ended April 30, 2002

Sales for the six months  ended April 30, 2003  decreased  1.0% in the amount of
$28 over the comparable  six-month  period ended April 30, 2002. The decrease in
sales is  attributable to decreased  utilization of the coach fleet.  Management
believes the increased  utilization  will result from its  marketing  efforts to
specialized tour groups (i.e. golf course trips) and corporate customers through
the  remainder  of 2003.  These  customers  are in addition  to the  traditional
country  and  western  performers  who have  traditionally  been this  segment's
primary customer base.

The first half of the year is typically the segment's lowest sales period due to
seasonality. Business is historically stronger in the summer and fall.

Gross  profit for this segment was 46.4% for the six months ended April 30, 2003
compared to 47.6% for the comparable  six-month  period ended April 30, 2002. As
noted above,  the reduction is  attributable  primarily 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 decreased $63 or 2.8%
for the three months  ended April 30, 2003  compared to the  three-month  period
ended  April 30,  2002 and $11 or .2% for the six months  ended  April 30,  2003
compared to the six-month period ended April 30, 2002. The decreases are related
primarily to the overall reduction in administrative costs.


INTEREST EXPENSE--AS RESTATED

Interest expense as a percentage of average borrowings is as follows:
<TABLE>

                                            Three Months Ended                           Six Months Ended
                                 ------------------------------------------ -------------------------------------------
                                    April 30, 2003       April 30, 2002        April 30, 2003        April 30, 2002
                                 --------------------- -------------------- --------------------- ---------------------

<S>                                 <C>                   <C>                  <C>                   <C>
Average debt borrowings             $     39,300          $     34,085         $     37,321          $     33,806

Interest expense as a
 percentage of average debt
 borrowings                                2.3%                  2.7%                 4.5%                  5.3%

Interest expense as a
 percentage of average debt
 borrowings, annualized                    9.2%                 10.8%                 9.0%                 10.6%
                                 ===================== ==================== ===================== =====================
</TABLE>
<PAGE>


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


INCOME TAX PROVISION

The income tax benefit for the three-month period ended April 30, 2003 increased
by $401  compared to the  three-month  period ended April 30, 2002 and increased
$404 for the six-month  period ended April 30, 2003 as compared to the six-month
period ended April 30, 2002. The income tax benefit is created primarily through
net operating loss carryforwards  recognized to the extent they are available to
offset the Company's net deferred tax liability.  Any quarterly tax benefits are
based on the estimated effective tax rate for the full year.

DISCONTINUED OPERATIONS

On  October  30,  2002,  the  Company's  Board  of  Directors   agreed  to  sell
substantially all assets of Champion to an entity  controlled by Messrs.  Durham
and Whitesell in exchange for assumption of all  liabilities of Champion,  other
than its subordinated debt. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 144,  Accounting for Impairment of Long-Lived Assets, the
operating  results of Champion have been classified as discontinued  operations.
The losses from discontinued  operations for the six months ended April 30, 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 and six months ended April 30, 2003 and were $0 and $49, respectively,
as  compared to the three and six months  ended April 30, 2002 and totaled  $395
and $721, respectively.

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


LIQUIDITY AND CAPITAL RESOURCES

Each  of  the  subsidiaries  of  the  Company  have  separate  revolving  credit
agreements and term loan  borrowings  through which the subsidiary  finances its
operations together with cash generated from operations.  The principal balances
of some  of  these  loans  reflect  the  fact  that  Obsidian  Capital  Partners
("Partners"),  from whom 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  violation of their credit agreements.  These risks are mitigated,  in
part,  for the  Company's  United  and U.S.  Rubber  subsidiaries  by the  right
described below under "Guarantees of Partners."  Liquidity and capital resources
have also been negatively impacted by consolidated losses.

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

The Company's working capital position (current assets over current liabilities)
was positive at April 30, 2003 by $484. The working capital  position was $1,561
at October  31,  2002.  This  decrease is  attributable  to the lack of positive
results  primarily  from the trailer  manufacturing  segment and certain line of
credit  renewal dates which  resulted in  reclassification  of $4,288 to current
liabilities as of April 30, 2003. This is partially  offset by the assumption of
Danzer  Industries  bank debt by Fair  Holdings  and the  extension  of the term
resulting in a reclassification of $1,488 of debt from current to long term.

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

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

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

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

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

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

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

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

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

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

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


FINANCIAL COVENANT WAIVERS

At April 30, 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 April 30, 2003,  the Company had  approximately
$747 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 April 30, 2003,  additional  current  availability
under these credit  lines and maximum  additional  availability  if supported by
their individual borrowing base are:


Company                  Current Availability         Maximum Availability
--------------------- --------------------------- ------------------------------
--------------------- --------------------------- ------------------------------
Danzer Industries          $     110                     $      110
U.S. Rubber                      108                          2,149
United                           112                            112
Obsidian Enterprises           2,727                          2,727

The Company  generated  negative net cash flow of $2,596 from operations  during
the six months ended April 30, 2003. Cash used in operations  during this period
is primarily  due to  increases in  inventories  and  accounts  receivable.  The
Company has increased  inventories during the first and second 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 the first 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.
Inventory  has  continued  to be above  historic  levels in the  second  quarter
primarily due to lower than anticipated sales of cargo trailers.  Funding during
this period was provided through  borrowings on lines of credit and from related
parties.


REFINANCING ACTIVITIES

Refinancing  activity  during the six months  ended April 30, 2003  included the
following:

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

o    On January 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.

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

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 on U.S.
Rubber and $1,000 on United to fund the respective subsidiary's shortfall. These
payments,   if  any,  would  be  applied   directly  to  reduce  the  respective
subsidiary's debt obligations to the lender.


CASH FLOWS (EBITDA)

A summary of our contractual  cash  obligations for the fiscal years ending 2003
through 2006 and 2007 and thereafter at April 30, 2003 is as follows:
<TABLE>

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

Long-term debt, and all debt service
<S>                                      <C>          <C>           <C>          <C>          <C>          <C>
 interest payments                       $   50,616   $    3,659    $    8,621   $   19,384   $    8,689   $   10,263
Operating leases                              1,397          450           353          274          189          131
Mandatory redeemable preferred stock          2,211          337           338           --        1,536           --
                                        ------------ ------------- ------------ ------------ ------------ ------------
                                        ------------ ------------- ------------ ------------ ------------ ------------

Total contractual cash obligations       $   54,224   $    4,446    $    9,312   $   19,658   $   10,414   $   10,394
                                        ============ ============= ============ ============ ============ ============
</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.

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

   Other Commercial Commitment       Total Amount Committed     Outstanding at April 30,       Date of Expiration
                                                                          2003
----------------------------------- -------------------------- --------------------------- ---------------------------

<S>                                       <C>                        <C>                   <C>
Line of credit, related party             $           1,000          $             890     April 1, 2006
Line of credit                                        3,750                      3,750     February 1, 2004
Line of credit                                        4,000                      1,742     October 1, 2005
Line of credit                                          650                        538     June 30, 2003
Line of credit, related party                         8,000                      5,273     January 9, 2005
</TABLE>

The  Company's  net cash used in  operations  for the six months ended April 30,
2003 was $2,596.  This is  comprised  of a loss from  continuing  operations  of
$2,428,  offset by noncash changes as follows:  depreciation and amortization of
$1,446, deferred tax benefit of $595, accretion of interest expense of $182, and
the extension of stock options of $30. In addition, the Company had increases in
accounts  receivable  of $687,  inventories  of $614,  and accrued  expenses and
customer  deposits of $313,  and  decreases  in other assets of $20 and accounts
payable of $263.

Net cash flow provided from financing  activities for the six months ended April
30, 2003 was $2,760.  This is comprised of borrowings of long-term  debt and net
borrowings of short-term  debt of $1,265 and borrowings  from related parties of
$4,212, offset by principal repayments of long-term debt of $1,756. In addition,
the Company repaid $961 of related-party payables.

Cash flow used in investing  activities  for the six months ended April 30, 2003
was $296 This is comprised of purchases of equipment.



<PAGE>


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

                                                                  Six Months Ended
                                                        --------------------------------------
                                                            April 30,           April 30,
                                                               2003               2002
                                                        ------------------- ------------------

<S>                                                       <C>                 <C>
Net cash used in operations                               $       (2,596)     $          (59)
Net cash used in investing activities                               (296)               (394)
Net cash provided by financing activities                          2,760                 185
Net cash provided by (used in) discontinued operations               (41)                  6
                                                        ------------------- ------------------

Decrease in cash and cash equivalents                     $         (173)     $         (262)
                                                        =================== ==================
</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 from continuing  operations by business segment and reconciliation to net
loss under  accounting  principles  generally  accepted in the United  States of
America by segment for the applicable periods is as follows:
<TABLE>

                                                                 Three Months Ended April 30, 2003
                                              -------------------------------------------------------------------------
                                                            Interest      Income       Depreciation           Net
                                                EBITDA       Expense      Taxes       & Amortization         Loss
                                              ------------ ------------ ----------- -------------------- --------------

Trailer and related transportation
<S>                                            <C>           <C>         <C>              <C>             <C>
equipment manufacturing                        $     (338)   $    338    $   (44)         $     189       $    (821)

Coach leasing                                         418         333         --                258            (173)

Butyl rubber reclaiming                               272          90        (25)               311            (104)

Corporate                                              --         143       (332)                --             189
                                              ------------ ------------ ----------- -------------------- --------------

Total Company                                   $     352    $    904    $  (401)         $     758       $    (909)
                                              ============ ============ =========== ==================== ==============

</TABLE>
<PAGE>
<TABLE>

                                                           Three Months Ended April 30, 2002
                                ----------------------------------------------------------------------------------------
                                ------------- ----------------- ------------ ---------- -------------------- -----------
                                                Discontinued     Interest     Income       Depreciation         Net
                                   EBITDA        Operations       Expense      Taxes      & Amortization        Loss
                                ------------- ----------------- ------------ ---------- -------------------- -----------

Trailer and related
 transportation equipment
<S>                               <C>           <C>               <C>         <C>             <C>             <C>
 manufacturing                    $     301     $     --          $    392    $    57         $     190       $    (281)

Coach leasing                           460           --               377        (57)              165             (25)

Butyl rubber reclaiming                 141           --               152         --               253            (264)

Discontinued operations                  --          395                --         --                --            (395)
                                ------------- ----------------- ------------ ---------- -------------------- -----------
                                ------------- ----------------- ------------ ---------- -------------------- -----------

Total Company                     $     902     $    395          $    921    $    --         $     608       $    (965)
                                ============= ================= ============ ========== ==================== ===========


                                                            Six Months Ended April 30, 2003
                                ----------------------------------------------------------------------------------------
                                ------------- ----------------- ------------ ---------- -------------------- -----------
                                                Discontinued     Interest     Income       Depreciation         Net
                                   EBITDA        Operations       Expense      Taxes      & Amortization        Loss
                                ------------- ----------------- ------------ ---------- -------------------- -----------

Trailer and related
 transportation equipment
 manufacturing                    $    (833)    $     --          $    656    $  (143)        $     378       $  (1,724)

Coach leasing                           651           --               603         --               448            (400)

Butyl rubber reclaiming                 329           --               187       (128)              620            (350)

Corporate                                --           --               242       (288)               --              46

Discontinued operations                  --           49                --         --                --             (49)
                                ------------- ----------------- ------------ ---------- -------------------- -----------
                                ------------- ----------------- ------------ ---------- -------------------- -----------

Total Company                     $     147     $     49          $  1,688    $  (559)        $   1,446       $  (2,477)
                                ============= ================= ============ ========== ==================== ===========

</TABLE>
<PAGE>
<TABLE>

                                                            Six Months Ended April 30, 2002
                                ----------------------------------------------------------------------------------------
                                ------------- ----------------- ------------ ---------- -------------------- -----------
                                                Discontinued     Interest     Income       Depreciation         Net
                                   EBITDA        Operations       Expense      Taxes      & Amortization        Loss
                                ------------- ----------------- ------------ ---------- -------------------- -----------

Trailer and related
 transportation equipment
<S>                               <C>           <C>               <C>         <C>             <C>             <C>
 manufacturing                    $     158     $     --          $    725    $   (46)        $     350       $    (871)

Coach leasing                           749           --               734         --               410            (395)

Butyl rubber reclaiming                 222           --               328       (109)              512            (509)

Discontinued operations                  --          721                --         --                --            (721)
                                ------------- ----------------- ------------ ---------- -------------------- -----------
                                ------------- ----------------- ------------ ---------- -------------------- -----------

Total Company                     $   1,129     $    721          $  1,787    $  (155)        $   1,271       $  (2,496)
                                ============= ================= ============ ========== ==================== ===========
</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:
<TABLE>

                                                  Three Months Ended                      Six Months Ended
                                        ------------------------------------------------------------------------------
                                          April 30, 2003      April 30, 2002     April 30, 2003     April 30, 2002
                                        ------------------------------------------------------------------------------

<S>                                        <C>                <C>                 <C>                <C>
Trailer manufacturing                      $           339    $           462     $           657    $           673
Coach leasing                                           44                 61                  92                101
Butyl rubber reclaiming                                 90                104                 189                160
                                        ------------------------------------------------------------------------------

Total                                      $           473    $           627     $           938    $           934
                                        ==============================================================================
</TABLE>

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

                                                  Three Months Ended                      Six Months Ended
                                        ------------------------------------------------------------------------------
                                          April 30, 2003      April 30, 2002     April 30, 2003     April 30, 2002
                                        ------------------------------------------------------------------------------

<S>                                        <C>                <C>                 <C>                <C>
Trailer manufacturing                      $             1    $           763     $          (176)   $           831
Coach leasing                                          462                521                 743                850
Butyl rubber reclaiming                                362                245                 518                382
                                        ------------------------------------------------------------------------------

Total                                      $           825    $         1,529     $         1,085    $         2,063
                                        ==============================================================================
</TABLE>

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are summarized in Note 2 to the consolidated
financial statements in the Annual Report on Form 10-K for the fiscal year ended
October 31, 2002 and describe the  significant  accounting  policies and methods
used in the preparation of the consolidated  financial  statements.  Some of the
most critical policies are also discussed below.
<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
April 30,  2003  accounts  receivable.  We have also  established  reserves  for
slow-moving  and  obsolete  inventories  and  believe  the  reserve  of  $354 is
adequate.  We  depreciate  our property and  equipment  and amortize  intangible
assets (except for goodwill)  over their  estimated  useful lives.  Goodwill and
intangibles are reviewed  annually for impairment or more frequently when events
and circumstances indicate potential impairment factors are present. The Company
has  established  the first day of the fourth quarter as the date for its annual
goodwill  impairment  test.  In assessing  the  recoverability  of the Company's
goodwill,  the Company must make various assumptions  regarding estimated future
cash flows and other factors in  determining  the fair values of the  respective
assets.  If these estimates or their related  assumptions  change in the future,
the Company may be required  to record  impairment  charges for these  assets in
future periods.  Any such resulting  impairment charges could be material to the
Company's  results of  operations.  As  previously  discussed,  we are currently
evaluating the future use of various assets at both the truck body manufacturing
operation and butyl rubber reclaiming  operation.  The ongoing analyses of these
operations  may result in a  determination  that  certain  assets at one or both
facilities may be impaired.

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

In conjunction  with financing of the acquisition of United,  the Company issued
386,206  shares of Series C preferred  stock to  Huntington  Capital  Investment
Corporation  ("Huntington").  The note purchase  agreement  includes a provision
that gives  Huntington  the option to require  the Company to  repurchase  these
shares at 90% of market  value  upon the  earlier  of: a) fifth  anniversary  of
issuance of such shares,  b) default under the subordinated  debt agreement,  c)
other factors  related to a sale of  substantially  all assets of the Company as
defined in the  agreement.  Increases in the value of the  Company's  stock will
result in a corresponding increase to this repurchase requirement.  Accordingly,
a substantial increase in stock price at the repurchase date may have an adverse
impact on the Company's  liquidity.  At April 30, 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 April 30,
2003.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4 CONTROLS AND PROCEDURES

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

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  were  effective.   There  have  been  no
significant  changes in the Company's internal controls or in other factors that
could significantly  affect internal controls subsequent to the date of the most
recent evaluation.

                           PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


EXHIBITS

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


REPORTS ON FORM 8-K

Form 8-K (Item 2) filed on February 11, 2003,  to report the sale on January 30,
2003, of the assets of the Company's wholly owned subsidiary  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.

June 23, 2003                      By:  /s/ Timothy S. Durham
----------------------------       --------------------------------------------
Date                               Timothy S. Durham, Chairman and
                                    Chief Executive Officer

June 23, 2003                      By:  /s/ Rick D. Snow
----------------------------       --------------------------------------------
Date                               Rick D. Snow, 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  officer 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 officer 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  officer 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:  June 23, 2003           /s/ Timothy S. Durham
                               --------------------------------------------
                               Timothy S. Durham, Chief Executive Officer





<PAGE>


     I, Rick D. Snow, 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  officer 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 officer 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  officer 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:  June 23, 2003             /s/ Rick D. Snow
                                 ----------------------------------------------
                                 Rick D. Snow, Chief Financial Officer



<PAGE>

                                  EXHIBIT INDEX
<TABLE>

   Exhibit No.                              Description
------------------ --------------------------------------------------------------- --------------------------------
<S>               <C>                                                             <C>
      10.1         Assignment  Agreement,  dated May 12, 2003,  between  Obsidian  Incorporated by reference to
                   Enterprises, Inc. and Fair Holdings, Inc.                       Exhibit B to Amendment No. 3
                                                                                   to the Schedule 13D filed by
                                                                                   Timothy S. Durham on June 2,
                                                                                   2003
------------------ --------------------------------------------------------------- --------------------------------
      10.2         Assignment of Note and Other Loan  Documents,  dated March 28,  Attached
                   2003, between Bank of America, N.A. and Fair Holdings, Inc.
------------------ --------------------------------------------------------------- --------------------------------
      10.3         First  Amendment to Business  Loan  Agreement  and  Promissory  Attached
                   Note (Line of Credit),  dated March 28, 2003,  between  Danzer
                   Industries, Inc. and Fair Holdings, Inc.
------------------ --------------------------------------------------------------- --------------------------------
      10.4         Second Amendment to Promissory Note (Line of Credit),  dated    Attached
                   April 1, 2003,  between  Obsidian  Enterprises,  Inc. and Fair
                   Holdings, Inc.
------------------ --------------------------------------------------------------- --------------------------------
      99.1         Statement  Regarding  Certification  Pursuant  to 18 U.S.C.     Attached
                   Section 1350 by Timothy S. Durham, Chief Executive Officer.
------------------ --------------------------------------------------------------- --------------------------------
      99.2         Statement  Regarding  Certification  Pursuant  to 18 U.S.C.     Attached
                   Section 1350 by Rick D. Snow, Chief Financial Officer.
------------------ --------------------------------------------------------------- --------------------------------

</TABLE>