<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


[ ]      Annual report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934

         For the fiscal year ended    June 30, 1996
                                   ---------------------------

[ ]      Transition report under Section 13 or 15(d)of the Securities Exchange
         Act of 1934

         For the transition period from               to
                                        --------------   -------------

                         Commission file number 0-12775

                        Odessa Foods International, Inc.
--------------------------------------------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

           Delaware                                    75-1613360
-------------------------------                      -------------------
(State or Other Jurisdiction of                      (I.R.S. Employer
Incorporation or Organization)                        Identification No.)

One Evertrust Plaza, Jersey City, New Jersey                          07302
--------------------------------------------------------------------------------
  (Address of Principal Executive Office)                         (Zip Code)

                                  718-646-4175
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:    None

Securities registered under Section 12(g) of the Exchange Act:

    Common Stock par value $.00001 per share
--------------------------------------------------------------------------------
                              (Title of Class)

         Check whether the issuer; (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days.   Yes xx   No
                                                                     ---     ---
         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.         [ ]


                                        1
<PAGE>   2
         State issuer's revenues for its most recent fiscal year - $514,513

         The aggregate market value for the 7,135,390 shares of voting stock
(all of one class of $.00001 par value Common Stock) held by non-affiliates * of
Registrant as of October 1, 1996 is $10,703,085 based upon an average of the bid
($1.25) and asked ($1.75) prices for such stock on the date heretofore
indicated. See Item 5 (a) which indicates the limited, if any, trading activity
in the Registrant's securities for the periods indicated. By virtue hereof, it
is difficult if not impossible to accurately arrive at a completely realistic
"aggregate market value" of Registrant shares held by non-affiliates as called
for herein especially in view of the fact that the existence of limited or
sporadic quotations should not of itself be deemed to constitute an "established
public trading market". The above statements regarding "aggregate market value"
and "established public trading market" should be taken into careful
consideration when considering the information contained herein regarding the
indicated "aggregate market value" of shares of voting stock held by
non-affiliates.

*        Affiliates for the purpose of this item refers to the Registrant's
         officers and directors and/or any persons or firms (excluding those
         brokerage firms and/or clearing houses and/or depository companies
         holding Registrant's securities as record holders only for their
         respective clienteles' beneficial interest) owning 5% or more of the
         Registrant's Common Stock, both of record and beneficially - all as of
         October 1, 1996.

                   ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                           DURING THE PAST FIVE YEARS

         Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes    No
                                                                 ---   ---
                                 Not Applicable

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 11,471,077 shares as of
October 1, 1996. (1)

         Transitional Small Business Disclosure Format:  Yes    No
                                                            ---   ---
(1)      Included in the issued and outstanding shares throughout this Form
         10-KSB are an aggregate of 341,050 shares of common stock (i.e.
         approximately 3% of all issued and outstanding shares) currently owned
         of record and beneficially by certain former directors of the Company's
         predecessor (at a time when it was known as Fluid Lift International,
         Inc.), which shares are currently the subject of litigation wherein the
         Company has alleged that there was never any valid consideration given
         for the issuance of such shares. See "Litigation".

         
                                        2
<PAGE>   3
                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual report to
security-holders; (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act").
                                      None

                                        3
<PAGE>   4
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                        Page
                                                                       Number
                                                                       ------
PART I

<S>                                                                 <C>
Item 1.           Description of Business                                    5

Item 2.           Description of Property                                   10

Item 3.           Legal Proceedings                                         10

Item 4.           Submission of Matters to a Vote of
                   Security Holders                                         11

PART II

Item 5.           Market For Common Equity and Related
                   Stockholder Matters                                      12

Item 6.           Management's Discussion and Analysis
                   or Plan of Operation                                     13

Item 7.           Financial Statements                                      15
                                                                    FF1 - FF11
                                                                      F1 - F11

Item 8.           Changes in and Disagreements With
                   Accountants on Accounting and
                   Financial Disclosure                                     16

PART III

Item 9.           Directors, Executive Officers, Promoters
                   and Control Persons; Compliance With
                   Section 16(a) of the Exchange Act                        16

Item 10.          Executive Compensation                                    19

Item 11.          Security Ownership of Certain Beneficial
                   Owners and Management                                    20

Item 12.          Certain Relationships and Related
                   Transactions                                             22

Item 13.          Exhibits, List and Reports on Form 8-K                    22
</TABLE>

                                        4
<PAGE>   5
                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

BACKGROUND SUMMARY

         The Company was incorporated under the laws of the State of Delaware in
June 1972 under the name Aurre Management Co., Inc. and in January of 1982
changed its name to Fluid Lift International, Inc. Its business plans were
unsuccessful and it ceased operations in 1988. In January of 1995 the Company
changed its name to its current name - Odessa Foods International, Inc.

         Pursuant to written contract dated November 26, 1994, Odessa Foods,
Inc. (hereinafter "Odessa Foods"), a Delaware corporation, exchanged 300 shares
of common stock for all of the issued and outstanding shares of F&L Food &
Leisure Marketing Ltd. (an Irish corporation; hereinafter "F&L") which latter
corporation owns a 95% interest in Hilmac GmbH, Odessa (a Ukrainian corporation;
hereinafter "Hilmac"). The 300 shares of common stock of Odessa Foods issued to
shareholders of F&L represented 30% of the outstanding shares of Odessa Foods.
Accordingly, upon conclusion of this transaction, F&L became a wholly owned
subsidiary of Odessa Foods.

         Immediately thereafter and on November 26, 1994 a written contract was
entered into between the shareholders of Odessa Foods and the Company (then
known as Fluid Lift International, Inc. and currently known as Odessa Foods
International, Inc.). In accordance with the terms of such contract the Company
issued 8,500,000 shares of its common stock to the shareholders of Odessa Foods
in exchange for all of the outstanding shares of Odessa Foods. Accordingly, upon
conclusion of this transaction Odessa Foods became a wholly owned subsidiary of
the Company.

         The transactions indicated directly above have been accounted for as a
pooling of interest and accordingly, the Company's audited consolidated
financial statements included herein have been restated to include the accounts
of the Company, Odessa Foods and Hilmac.

         Further, and as a direct result of the above referenced transactions,
the Company, through its aforesaid subsidiaries, presently engages in the
manufacture of sausages and related food products in Odessa, Ukraine. Hilmac,
founded in September 1992, installed, in 1993, the first western equipped meat
factory in Odessa, Ukraine, thereafter commenced production in May 1993 and is
in the process of building (as hereinafter indicated) the first fully integrated
food production facility in the Ukraine.



                                        5
<PAGE>   6
         The organizational chart appearing immediately below is intended to
give on overview and summary to the narrative information contained directly
above and hereinafter.

                        ODESSA FOODS INTERNATIONAL, INC.
                              Organizational Chart



              Odessa Foods International, Inc.      
                         formerly                          Public Company
                   Fluid Lift International, Inc.




                       Odessa Foods Inc.
                   (a Delaware corporation)
                          formerly                         Wholly owned
            F&L Food & Leisure Marketing LTD.              Subsidiary
                     (an Irish corporation)




                    Hilmac GmbH, Odessa                    a 95% owned
                                                           Subsidiary of
                 (an Ukrainian corporation)                Odessa Foods Inc.



CURRENT POSITION AND RECENT ACTIVITIES

         The Company continues to operate its own sausage manufacturing and meat
production facility in order to produce, fresh and on a daily basis, a wide
range of sausages utilizing what it considers to be a technologically advanced
installation in Odessa, Ukraine. Its present factory is being expanded into a
fully integrated food production plant anticipated to be operational by late
1997/early 1998 with meat and sausage production expected to be supplemented by
a modern slaughter house (plant and machinery having recently been purchased in
Switzerland) fully disassembled and expected to be ready for shipment to new
Company premises in Teplodar, near Odessa, for reassembly in late 1997 (after
the building for production has been erected). Once operational (and operating
in accordance with European Union standards and supplied from piggeries
functioning in accordance with Western standards) the Company expects to employ
approximately 300 to 350 persons thereby creating a capacity for slaughtering
and processing of approximately 1,500 pigs and 400 cattle per day with
approximately half of the meat processed into sausage production and the balance
to be sold on the market in the form of raw meat.


                                        6
<PAGE>   7
COMPETITION

         The Company's sausage products (around 2 tons of which are produced
fresh each day according to Swiss recipes) are slightly more expensive than
those produced by local competitors but management considers such products to be
of a higher quality thereby creating greater demand (and sales) for such
products notwithstanding the fact that local producers put slow-cured goods onto
the market, i.e. goods with a longer shelf-life.

         Management has taken the above circumstances into account in its
expansion plans and intends to expand its plant facilities accordingly so that
the Company is in a position to manufacture products with a longer shelf life at
a high level with the end price (retail) for its goods not being substantially
higher than local competitors.

         Production is expected (as aforesaid) to be relocated to the new
premises in Teplodar in 1997 with daily output capacity expanded to 15 tons per
day. Once operational it is also expected that pasta production will be at a
daily production capacity of 20 tons.

         A secondary, and significant source of competition to the Company comes
from products manufactured abroad, subsequently packaged and treated with
various chemical substances so as to provide for a longer shelf life, which
products generally are only available at high prices in local currency terms.

SALES

         Company plans are to establish a network of sales outlets in various
marketing centers and, wherever possible, in the larger food stores in a
separate "Odessa" department in which only Company product is sold. Management
anticipates that such plan can be particularly advantageous to the Company for
the following reasons:

a.  -    Theft and shrinkage are not at Company expense, since it will not use
         its own employees for whom it is responsible;
b.  -    Potential elimination of leftover stock which the Company would
         otherwise have to take back;
c.  -    Elimination of numerous problems relating to hiring of its own
         employees (staff); and
d.  -    Elimination of significant rental and related overhead expenses.

         Additionally the Company is in the process of planning a three part
marketing network as follows:

1.       Sales directly from factory;
2.       Sales in major shopping centers and grocery shops (as aforesaid); and
3.       Sales via mobile sales vans (equipped with necessary refrigeration 
         units).


                                        7
<PAGE>   8
         The Company intends to offer its products to the market which products
are to be

i.    -   manufactured from local raw materials utilizing local labor;
ii.   -   of a higher quality;
iii.  -   bought fresh daily; and
iv.   -   priced so that  a majority of the population can buy the products at
          reasonable price/quality ratios.

         Company aims and goals include becoming a significantly recognized
sausage production (and related products) manufacturer utilizing both Swiss
recipes and technology and subsequently engaging in export activities so as to
annex export markets in the Commonwealth of Independent States and neighboring
countries, as well as supplying various passenger fleets of major shipping
lines.

TERRITORIES AND EMPLOYEES

         Company current marketing activities are primarily within the Odessa,
Ukraine area with its over 3,000,000 inhabitants; Odessa being the largest ex
Soviet harbor with a duty-free zone thereby attracting in excess of over
2,000,000 tourists per annum. Geographically it is within the reach (of a few
hours) of a number of cities with populations of approximately 3,000,000 to
4,000,000 inhabitants.

         Costs of goods sold by the Company contain direct and indirect
production costs as well as packaging and storage costs while sales agents are
engaged primarily on a commission basis.

         The Company currently employs approximately 65 persons, 21 of whom are
engaged in meat production and related activities, 20 of whom are engaged in
engineering and building activities, 6 of whom are engaged in administration
(accounting, administrative and translation activities) with the balance of
approximately 18 being engaged in sales (3), drivers and deliveries (5),
cleaning and storage (2) and security-24 hours a day, 7 days a week (8). It is
anticipated (although no assurance can be given) that the number of employees
will grow to approximately 180 when pasta and meat production lines in the new
Teplodor premises are in full production. Additionally, the slaughter house is
expected to provide employment for an approximate 300 local people.

PROMOTION AND SPONSORSHIP

         In the effort to promote the Company and create further identification
within the local Odessa community as well as with local Odessa regulators, the
Company sponsored (in conjunction with Republic National Bank and others) the
Odessa Philharmonic Orchestra's visit to the United Nations General Assembly for
the performance of the Chernobyl Memorial Concert on April 25, 1996, which
concert, in addition to being held at the United Nations, was broadcast live on
WNYC in New York and was simulcast on national public radio stations throughout
the United States.

                                        8
<PAGE>   9
FUTURE CORPORATE STRATEGY AND PROJECTIONS

         Current Company corporate strategy is to create a fully vertically
integrated production chain for meat and sausage production. The slaughter house
(heretofore referred to) is to be erected upstream from operating meat and
sausage factory so as to enable a supply of high-quality raw materials processed
by up-to-date methods with the animals for slaughter being supplied from
fattening units with whom firm purchasing and delivery contracts exist and/or
are being negotiated. The products of the meats and sausage factory will then be
put on the market.

         At a future date the sausage and pasta factory being established in
Teplodar is to be expanded into a four-section production unit so as to include
pasta, canned products as well as sweets, pastries and bread in order to produce
a broad range of food for daily consumption. The chart appearing directly below
summarizes current and proposed activities including projected activities as
heretofore indicated in narrative fashion.

<TABLE>
<CAPTION>

  Suppliers                                Production            Distribution
<S>                      <C>               <C>                   <C> 


  Piggery sales          Slaughter         Sausage &             factory sales
                         House             Meat

                                                                 mobile
                                           Pasta Line            sales van


  Cattle farming                           Canned food

                                                                 Retail
                                           Sweets
</TABLE>



RECENT DEVELOPMENTS

         Subsequent to the close of the Company's fiscal year and most recently
during the first week of October 1996 it reported that three pasta lines were
fully installed and ready for production at its new premises in Teplodar near
Odessa. These three pasta production lines, including six silos for 20 tons of
flour each, have a production capacity of 30 tons of pasta per day and are part
of the Company's project wherein a 80,000 square foot food processing facility,
pasta, sausage and other meat products, canned meat and sweets intend to be
produced. Further, the Company will be producing approximately one ton per day
in order to make eventual quality adjustments required by its clientele with the
expectation that production will be raised to 10 tons per day thereafter with
full production of 30 tons per day planned and projected for mid 1997.


                                        9
<PAGE>   10
         The slaughter house heretofore referred to as having been recently
purchased has been fully disassembled and is ready to be shipped to Teplodar for
reassembling in late 1997. The sausage and meat production facility currently
producing 1.5 tons per day in Odessa will be moved into such new facilities
during 1997 thereby increasing production capacity to 30 tons per day in the
manner indicated directly above.

         There can be no assurance that the aims and goals indicated directly
above can be achieved within the foreseeable future, if ever, or that the
necessary expenditures inherent in attempting to achieve such goals will result
in sufficient revenues so as to justify the time and effort involved as well as
the expenditure incurred.

ITEM 2.           DESCRIPTION OF PROPERTY

         In addition to the Company's U.S. offices located in Jersey City, New
Jersey, the Company maintains principal offices in the Ukraine. With respect to
the latter offices, the Company entered into an operating lease agreement with
an unaffiliated landlord (in April 1995) for a term of 25 years for the rental
of an unfinished building (approximately 8,000 square meters) in the Ukraine
intended to be utilized as its manufacturing facility. In accordance with the
terms of the Agreement, the Company is required to pay all alteration and
improvement charges which, upon completion, will be deducted from monthly rental
charges until all costs are recovered. Prepaid lease costs at June 30, 1996
amounted to approximately $504,000. For further information with respect to the
aforesaid lease agreement as well as minimum annual lease payments (excluding
percentage of sales) reference is herewith made to note 5 to the Company's
consolidated financial statements. The facility has been renovated, fitted with
offices and with production lines established.

         Located at the Company's aforesaid Ukraine facility is various property
and equipment consisting primarily of production equipment, transportation
equipment and vehicles and office equipment. Such property and equipment is
valued at approximately $3,200,000 less accumulated depreciation which reduces
such valuation to approximately $2,700,000. Production equipment accounts for
approximately 98% of all property and equipment.

ITEM 3.           LEGAL PROCEEDINGS

         The Company is not presently a part to any material litigation nor, to
the knowledge of management, is any material litigation threatened except as
indicated directly hereinunder.

         On October 1, 1993 the Board of Directors of the Company's corporate
predecessor (then known as Fluid Lift International, Inc.) purported to
authorize the issuance of 14,391,300 (old - pre-split) shares of its then $.01
par value common stock for "services rendered" and valued at $143,913. The
company's then President (since resigned and having no position whatsoever in
the Company or any relationship to its business activities) received 13,191,300
of such shares of common stock and a further 1,200,000 shares were issued to
four other individuals (300,000 shares per individual; at least three of whom,
upon information and belief, are immediate members of such former President's
family). When adjusted for the Company's subsequent 1 for 68 reverse stock split
the 13,191,300 shares currently represent 193,990 shares while the 1,200,000
shares (300,000 to each of four persons) currently represent 17,648 shares.

                                       10
<PAGE>   11
         Thereafter, on October 5, 1993, the same Board of Directors purported
to authorize issuance to such former President of an additional 50,000,000
shares - later adjusted to 44,000,000 shares - for "services rendered". These
shares were not, however, issued until May of 1994 and represent the equivalent
of 647,059 post 1 for 68 reverse split shares. A balance of 129,412 of such
647,059 post split shares are indicated - on the Company's transfer records - as
being "owned" of record and beneficially by such former President.

         When giving effect to all of the above transactions such former
President and the four other individuals referred to currently claim to own an
aggregate of 341,050 Company shares, with such former Company President claiming
to own 323,402 of such shares.

         All of the above referenced shares have borne a restrictive legend from
date of issuance which the Company has recently refused to remove. Proper
ownership, if any, remains in dispute until such time, if ever, as such
stockholders are able to prove, amongst other matters, that such shares were
issued for valid consideration. To date written requests for such proof have
gone unanswered.

         The Company's transfer agent, in a Complaint for Interpleader,
Declaratory Judgment and related relief commenced an action in the United States
District Court for the District of Utah, Central Division under Index No.
96CV0194B, has tendered to the Court Company stock certificates representing
133,824 of the aforesaid 341,050 shares in dispute (and upon information and
belief intends to tender any further portion of such 341,050 shares as may come
into its possession) in an effort to seek Court determination as to true
ownership and a Court Order regarding issuance or cancellation of such
certificates. The Company is a party defendant to this action, in which its
transfer agent seeks indemnification from the Company for any sums which may be
awarded against such transfer agent by reason of its compliance with the
Company's instructions to not remove restrictive legend(s) from the certificates
in question. Owing to the current early stages of the litigation and further
owing to the fact that discovery proceedings have not even been scheduled as
yet, it is virtually impossible to determine, with any degree of certainty, the
final outcome of this litigation although the Company fully expects to prevail
on all material aspects of this lawsuit.

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

         As reported in the Company's Form 10-KSB for its fiscal year ended June
30, 1995, its last annual meeting was held in September 1993. While the Company
does currently intend to hold an annual meeting of stockholders for its fiscal
year ended June 30, 1996 it has not, as yet, formalized any specific plans as to
any proposed date for such meeting.



                                       11
<PAGE>   12
                                   PART II

ITEM 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
                  MATTERS

         (a) Marketing Information. The following table sets forth, for the
periods indicated, the range of high and low bid prices on the dates indicated
for the Company's securities indicated below for each full quarterly period
within the two most recent fiscal years (if applicable) and any subsequent
interim period for which financial statements are included and/or required to be
included.

<TABLE>
<CAPTION>
Fiscal Year Ended June 30, 1995                  Quarterly Common Stock Price
            By Quarter                                   Ranges (1)
-------------------------------                  ----------------------------
Quarter              Date                             High           Low
-------              ----                             ----           ---
<S>           <C>                                    <C>            <C>
 1st          September 30, 1994                       (2)            (2)
 2nd          December 31, 1994                        (2)            (2)
 3rd          March 31, 1995                           (2)            (2)
 4th          June 30, 1995                          $2.25          $1.75

<CAPTION>
Fiscal Year Ended June 30, 1996                  Quarterly Common Stock Price
            By Quarter                                    Ranges (1)
-------------------------------                  ----------------------------
Quarter              Date                             High           Low
-------              ----                             ----           ---
<S>           <C>                                    <C>            <C>
 1st          September 30, 1995                     $2.50          $1.00
 2nd          December 31, 1995                      $2.50          $1.25
 3rd          March 31, 1996                         $3.00          $1.75
 4th          June 30, 1996                          $2.40          $1.50

<CAPTION>
Fiscal Year Ended June 30, 1997                 Quarterly Common Stock Price
            By Quarter                                   Ranges (1)
-------------------------------                 ----------------------------
Quarter              Date                             High           Low
-------              ----                             ----           ---
<S>           <C>                                    <C>            <C>
 1st          September 30, 1996                    $1.875         $ .97
</TABLE>

(1)      The existence of limited or sporadic quotations should not of itself be
         deemed to constitute an "established public trading market". To the
         extent that limited trading in the Company's Common Stock has taken
         place, such transactions have been limited to the over-the-counter
         market (except as otherwise may be indicated hereinafter). All prices
         indicated herein are as reported to the Company by broker-dealer(s)
         making a market in its securities in the National Quotation Data
         Service ("pink sheets") and/or in the Electronic Over-the-Counter
         Bulletin Board (the latter under the symbol ODSA). The aforesaid
         securities were not traded or quoted on any automated quotation system
         (other than as may be indicated herein). The over-the-counter market
         quotes indicated above reflect inter-dealer prices, without retail
         mark-up, mark-down or commission, and may not necessarily represent
         actual transactions.
(2)      The Company has been unable to obtain any reliable stock price quotes
         for the periods indicated. The first printed quotation it has been able
         to receive has been as of April 26, 1995, at which time the bid price
         of $2.25 was indicated for a relatively low volume of trades. Since
         such date trading has continued on a sporadic basis with reported
         volume during the most recent quarter ended September 30, 1996 having
         exceeded 20,000 shares on only six occasions, with any reported sales
         volume indicated for only 15 days during such period.


                                       12
<PAGE>   13
         (b) Holders. As of October 1, 1996 the approximate number of
stockholders of the Company's Common Stock (as indicated on its transfer agent's
October 1, 1996 certified list of stockholders) amounted to 1,128 persons and/or
firms (inclusive of those brokerage firms and/or clearing houses and/or
depository companies holding the Company's securities for their respective
clientele - each such brokerage house, clearing house and/or depository firm
being considered as one record holder). The exact number of beneficial owners of
the Company's securities is not known but would necessarily exceed the number of
record owners indicated above in that brokerage firms and/or clearing house
and/or depository companies are normally record owners for presumably any number
of unidentified beneficial owners.

         (c) Dividends. The payment by the Company of dividends, if any, in the
future rests within the discretion of its Board of Directors and will depend,
among other things, upon the Company's earnings, its capital requirements and
its financial condition, as well as other relevant factors. The Company has not
paid or declared any dividends upon its Common Stock since its inception and, by
reason of its present financial status and its contemplated financial
requirements, does not contemplate or anticipate paying any dividends upon its
Common Stock in the foreseeable future.

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


         Odessa Foods International, Inc. (the "Registrant") is engaged, through
its subsidiaries (Odessa Foods Inc. and Hilmac GmbH) in the manufacture of
sausages and related food products in Odessa, Ukraine.

         This discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and/or liquidity/cash flows
of Registrant during the two year period ended June 30, 1996 and should be read
in conjunction with the consolidated financial statements and notes thereto
included in such reports.

         As indicated in Footnote 1 to the consolidated financial statements for
fiscal year ended June 30, 1995, the Company acquired its wholly owned
subsidiary, Odessa Foods, Inc., in November of 1994. The acquisition has been
reflected in the financial statements using the pooling of interest method of
accounting. Accordingly, the financial statements for all periods presented have
been restated to include the accounts of Odessa Foods International, Inc.
(parent), its wholly owned subsidiary, Odessa Foods, Inc. (a Delaware
corporation) and the latter's majority owned subsidiary, Hilmac GmbH, Odessa (a
Ukrainian corporation). See also Footnote 2 to consolidated financial statements
for fiscal year ended June 30, 1996.

Consolidated Statements of Operations:

         Comparative fiscal years ended June 30, 1996 and June 30, 1995.

         Sales for the fiscal year ended June 30, 1996 were $514,513 as compared
to sales of

                                       13

<PAGE>   14
$274,419 for fiscal year ended June 30, 1995, while cost of sales increased from
the preceding fiscal year 1995 from $237,188 to $414,633 resulting in a gross
profit for fiscal year 1996 of $99,880 as compared to $37,231 for the preceding
fiscal year. Operating expenses increased by $431,657 (from $551,983 to $983,640
during the comparative year). Primarily as a result of the above, the net loss
for fiscal year ended June 30, 1996, i.e. $(893,621) was $380,864 greater than
the $(512,757) net loss of the preceding fiscal year.

         Total assets of the Company at fiscal years ended June 30, 1995 and
1996 were $2,752,965 and $3,760,831 respectively; an increase of $1,007,866.
Such increase may be principally accounted for as follows: an increase in (a)
current assets of $101,027 (primarily as a result of an increase in cash of
$103,758), (b) property and equipment of $525,227 (after taking into account
accumulated depreciation) and (c) prepaid lease costs of $417,612. When adding
the aforesaid increases in total current assets, property and equipment and an
increase of $381,612 in total other assets (primarily due to increase in prepaid
lease costs) the aforesaid $1,007,866 increase in total assets if fully
accounted for. Total current assets increased by $101,027 primarily as a result
of the aforesaid increase in current assets - cash.

         Total current liabilities of the Company at comparative years ended
June 30, 1995 and 1996 were $340,763 and $553,240 respectively; an increase of
$212,477. Such increase in total current liabilities is attributable to
increases in (a) accounts payable and accrued expenses of $92,174 and (b) loans
payable of $120,303. The loans payable referred to herein relate to advances
received from two members of the Company's Board of Directors.

Consolidated Balance Sheets:

         Primarily as a result of total paid-in capital having increased by
$1,689,010 and accumulated deficit having increased by $893,621, stockholders'
equity increased from $2,412,202 at June 30, 1995 to $3,207,591 at June 30,
1996; an increase of $795,389. The aforesaid increase in additional paid-in
capital resulted from Registrant's sale of shares of its common stock during the
fiscal year ended June 30, 1996; the Registrant having sold 1,454,970 shares of
its common stock during such period for a cash consideration of $1,679,010 and
having further issued 100,000 shares for services valued at $10,000. A
significant portion of such funds were utilized for the purchase of property and
equipment and for prepaid lease costs both as heretofore indicated.

         Working capital (deficit) for the fiscal year ended June 30, 1996 was
$(327,989) as compared to a working capital deficit of $(216,539) for the
comparative fiscal year ended June 30, 1995. See note 1 to the June 30, 1996
consolidated financial statements which note indicates, in part, certain factors
which create an uncertainty about the Company's ability to continue as a going
concern; such factors primarily relating to the Company having sustained
substantial operating losses in each of its two most recent fiscal years and the
fact that, as aforesaid, its current liabilities exceed its current assets by
$327,989. Notwithstanding the concerns expressed, Company management
nevertheless believes that the Company will be able to continue its operations
through (a) the raising of additional capital through either debt or equity
financing if

                                       14
<PAGE>   15
necessary and/or (b) the belief that its operations (through utilization of
equipment recently purchased and establishment of new and larger facilities -
see Item 1 hereof) will improve sufficiently through increased sales volume and
productivity. See also note 7 with respect to approximately $170,000 in loans
payable which represent advances made to the Company by two of its Board
members.

         The Company does not anticipate any significant changes in the number
of its employees except as heretofore indicated in Item 1 - Description of
Business, Territories and Employees. Excepting as indicated therein no formal
plans with regard to hiring of any significant number of other additional
employees currently exists.

ITEM 7.           FINANCIAL STATEMENTS

         The following financial statements have been prepared in accordance
with the requirements of Regulation S-B and supplementary financial information
included herein, if any, has been prepared in accordance with Item 302 of
Regulation S-K, such information appears on pages FF-1 through FF-11 inclusive
for fiscal year ended June 30, 1996 and pages F-1 through F-11 inclusive for
fiscal year ended June 30, 1995 of this Form 10-KSB, which pages follow this
page.

                        ODESSA FOODS INTERNATIONAL, INC.
                                  JUNE 30, 1996
                                    CONTENTS

<TABLE>
<CAPTION>
                                                                         Page
                                                                         ----
<S>                                                               <C>
Independent Auditor's Report                                             FF-1
Consolidated Balance Sheet                                               FF-2
Consolidated Statements of Operations                                    FF-3
Consolidated Statement of Stockholders' Equity                           FF-4
Consolidated Statement of Cash Flows                                     FF-5
Notes to Consolidated Financial Statements                       FF-6 - FF-11


                        ODESSA FOODS INTERNATIONAL, INC.
                             JUNE 30, 1995 AND 1994
                                    CONTENTS
                                                                         Page
                                                                         ----
Independent Auditor's Report                                             F-1
Consolidated Balance Sheets                                              F-2
Consolidated Statements of Operations                                    F-3
Consolidated Statements of Stockholders' Equity                          F-4
Consolidated Statements of Cash Flows                                    F-5
Notes to Consolidated Financial Statements                        F-6 - F-11
</TABLE>

                                       15

<PAGE>   16
                          INDEPENDENT AUDITOR'S REPORT


Board of Directors and Stockholders
Odessa Foods International, Inc.

         We have audited the accompanying consolidated balance sheet of Odessa
Foods International, Inc. and subsidiaries as of June 30, 1996 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

         We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for an opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Odessa Foods
International, Inc. and subsidiaries at June 30, 1996 and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.

         The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed, in
Note 1 to the consolidated financial statements, the Company's significant
operating losses and limited sources of financing raise substantial doubts about
the Company's ability to continue as a going-concern. Management plans in regard
to these matters are described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



/s/ ALLEN G. ROTH, P.A.
ALLEN G. ROTH, P.A.


New York, New York
September 16, 1996


                                       FF-1
<PAGE>   17
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1996

                                     ASSETS

<TABLE>
<S>                                                                              <C>        
CURRENT ASSETS:
 Cash                                                                            $   185,099
 Accounts receivable, less allowance for doubtful
  accounts of $3,400                                                                  23,731
 Inventories                                                                          16,421
                                                                                 -----------

         TOTAL CURRENT ASSETS                                                        225,251
                                                                                 -----------

PROPERTY AND EQUIPMENT, less accumulated
  depreciation of $528,217 (Note 3)                                                2,752,705
                                                                                 -----------

OTHER ASSETS:
 Intangible Assets, less amortization of $81,000 (Note 4)                            279,000
 Prepaid lease costs (Note 5)                                                        503,875
                                                                                 -----------

         TOTAL OTHER ASSETS                                                          782,875

                                                                                 $ 3,760,831
                                                                                 ===========

                LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Accounts payable and accrued expenses                                           $   307,937
 Notes payable - bank (Note 6)                                                        75,000
 Loans payable (Note 7)                                                              170,303
                                                                                 -----------

         TOTAL CURRENT LIABILITIES                                               $   553,240
                                                                                 -----------

COMMITMENTS AND CONTINGENCIES
 (Notes 1, 5, 10  and 12)

STOCKHOLDERS' EQUITY (Note 8):
 Common stock, $.00001 par value; authorized
   25,000,000 shares; issued and outstanding
   11,342,277 shares                                                                     113
 Additional paid-in capital                                                        7,640,745
 Accumulated deficit                                                              (4,438,639)
 Foreign currency translation adjustment                                               5,372
                                                                                 -----------

         TOTAL STOCKHOLDERS' EQUITY                                                3,207,591
                                                                                 -----------

                                                                                 $ 3,760,831
                                                                                 ===========
</TABLE>

                       See notes to financial statements.


                                       FF-2
<PAGE>   18
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                            YEAR ENDED JUNE 30, 1996


<TABLE>
<S>                                                                <C>         
SALES                                                              $    514,513

COST OF SALES                                                           414,633
                                                                   ------------

GROSS PROFIT                                                             99,880
                                                                   ------------

OPERATING EXPENSES:

 Selling, general & administrative expenses                             687,558
 Depreciation and amortization                                          296,082
                                                                   ------------

                                                                        983,640
                                                                   ------------
OPERATING LOSS                                                         (883,760)
                                                                   ------------

OTHER EXPENSES (INCOME):
 Interest                                                                20,500
 Foreign currency exchange rate changes                                 (10,639)
                                                                   ------------

                                                                          9,861
                                                                   ------------

NET LOSS                                                           $   (893,621)
                                                                   ============

NET LOSS PER SHARE                                                 $      (0.08)
                                                                   ============

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                                                $ 10,552,716
                                                                   ============
</TABLE>




                       See notes to financial statements.


                                      FF-3



<PAGE>   19
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            YEAR ENDED JUNE 30, 1996


<TABLE>
<CAPTION>
                                      Common Stock           Additional                       Foreign
                                 ----------------------       Paid-In        Accumulated      Currency
                                   Shares         Amount      Capital          Deficit       Transaction
                                 -----------      ------     ----------      -----------     -----------

<S>                               <C>              <C>       <C>             <C>               <C>   
Balance - July 1, 1995             9,787,377       $ 98      $5,951,750      $(3,545,018)      $5,372

  Issuance of common stock:
    Cash                           1,454,900         14       1,678,996                -            -
    Services                         100,000          1           9,999                -            -

 Net Loss                                                                       (893,621)           -
                                 -----------       ----      ----------      -----------       ------

Balance - June 30, 1996           11,342,277       $113      $7,640,745      $(4,438,639)      $5,372
                                 ===========       ====      ==========      ===========       ======
</TABLE>




                       See notes to financial statements.


                                      FF-4




<PAGE>   20
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            YEAR ENDED JUNE 30, 1996


<TABLE>
<S>                                                                 <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                                           $  (893,621)
 Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation and amortization                                        296,082
   Other                                                                    882

 Changes in assets and liabilities:
   Accounts receivable                                                   (8,345)
   Inventories                                                            1,863
   Prepaid expenses                                                    (409,920)
   Accounts payable and accrued expenses                                 92,174
                                                                    -----------

NET CASH USED IN OPERATING ACTIVITIES                                  (920,885)

CASH FLOWS USED IN INVESTING ACTIVITIES:
  Purchases of property and equipment                                  (785,309)
                                                                    -----------

CASH FLOWS PROVIDED BY FINANCING
 ACTIVITIES:
  Net proceeds from issuance of common stock                          1,679,010
  Increase in loans payable                                             120,303
                                                                    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                             1,799,313
                                                                    -----------

EFFECT OF FOREIGN CURRENCY EXCHANGE
 RATE CHANGES                                                            10,639
                                                                    -----------

NET INCREASE IN CASH                                                    103,758

CASH - BEGINNING OF PERIOD                                               81,341
                                                                    -----------

CASH - END OF PERIOD                                                $   185,099
                                                                    ===========

NON-CASH OPERATING ACTIVITIES:
  Common stock issued for services                                  $    10,000
                                                                    ===========
</TABLE>




                       See notes to financial statements.


                                      FF-5




<PAGE>   21
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996



Note 1   GOING CONCERN

         The accompanying financial statements have been prepared in conformity
         with generally accepted accounting principles, which contemplate
         continuation of the Company as a going concern. However, the Company
         has sustained substantial operating losses during the year ended June
         30, 1996. In addition, at June 30, 1996 current liabilities exceeded
         current assets by $328,000. These factors create uncertainty as to the
         Company's ability to continue as a going concern. Management believes
         that the Company will be able to raise additional capital through the
         issuance of common stock and that its operations will improve through
         increased sales volume and productivity. The ability of the Company to
         continue as a going concern is dependent on obtaining capital from the
         issuance of common stock and increasing sales volume and productivity.
         The financial statements do not include any adjustments that might be
         necessary if the Company is unable to continue as a going concern.

Note 2   SIGNIFICANT ACCOUNTING POLICIES

         Organization and Business

         The Company was incorporated in Delaware in 1972 as Aurre Management
         Co., Inc. In 1982, the Company changed its name to "Fluid Lift
         International, Inc." and ultimately ceased operations in 1988. On
         January 23, 1995, the Company became Odessa Foods International, Inc.
         and commenced operation of a meat processing facility through its
         foreign subsidiary in Odessa, Ukraine.

         Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
         of Odessa Foods International, Inc. (the "Company") and its wholly
         owned subsidiary Odessa Foods, Inc. (incorporated in Delaware) and the
         latter's majority owned subsidiary Hilmac GmbH, Odessa (a Ukraine
         entity). All intercompany transactions and balances have been
         eliminated in consolidation.

         Basis of Accounting

         The Company maintains its records on the accrual basis of accounting.
         Revenues are recognized when the products are delivered and expenses
         are recorded when incurred.


                                      FF-6



<PAGE>   22
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996



Note 2   SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Inventories

         Inventories, consisting of meat and related food products, are stated
         at the lower of cost (first-in, first-out method) or market.

         Property and Equipment

         Property and equipment are recorded at cost. Maintenance and repair
         costs are charged to expense as incurred.

         Depreciation and Amortization

         Depreciation of property and equipment is provided for by the
         straight-line method over the estimated useful lives of the respective
         assets. Amortization of intangible assets is provided by the
         straight-line method over ten years.

         Expenses Related to Sales of Securities

         All costs incurred in connection with sales of the Company's common
         stock were charged to additional paid-in capital.

         Loss Per Share

         Net loss per common share is based upon the weighted average number of
         shares of common stock outstanding during the weighted period.

         Foreign Currency Translation

         Hilmac GmbH, the Company's foreign subsidiary, is located in the
         Ukraine, a country which has a highly inflationary economy.
         Accordingly, the entity's financial statements were remeasured as if
         the functional currency was the U.S. dollar. The remeasurement process
         resulted in translation adjustments which are included in the results
         of operations for the year ended June 30, 1996.


                                      FF-7

<PAGE>   23
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996



Note 2   SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Fiscal Year

         The Company changed its fiscal year to December 31. Accordingly, the
         next fiscal year will be the six months ended December 31, 1996.

Note 3   PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                               Estimated
                                              Useful Life         Amount
                                              -----------       ----------

<S>                                             <C>             <C>       
         Production equipment - meat plant      10 years        $2,169,877
         Transportation equipment               5-8 years          157,466
         Office equipment                       5-10 years          17,586
         Construction in-progress (a)                              935,993
                                                                ----------
                                                                 3,280,922
         Less:  Accumulated depreciation                           528,217
                                                                ----------

                                                                $2,752,705
                                                                ==========
</TABLE>

(a)      Construction in-progress includes the cost of the pasta production
         equipment and the cost of dismantling, reassembling and installing such
         equipment in the leased premises located in Teplodar, Ukraine.
         Depreciation will commence when the equipment is put into use.
         Depreciation expense for the year ended June 30, 1996 was $260,082.

Note 4   INTANGIBLE ASSETS

         Intangible assets consist of costs incurred prior to the commencement
         of operations for incorporation fees, obtaining production and sales
         rights, registration fees and governmental approvals and certificates.
         Amortization expense for the year ended June 30, 1996 was $36,000.

Note 5   PREPAID LEASE COSTS

         The Company is obligated under a lease agreement with an unaffiliated
         landlord for the rental of an unfinished building through the year
         2020. The Company has agreed to pay the costs of alterations and
         improvements and upon completion the Company will


                                       FF-8
<PAGE>   24
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996



Note 5   PREPAID LEASE COSTS (Continued)

         commence deducting these costs from monthly rent charges until such
         costs are fully recovered. The agreement provides for minimum monthly
         lease payments of $66 plus two percent of gross sales. Prepaid lease
         costs may only be offset against percentage rents. Minimum annual lease
         payments excluding percentage rents are $792 through April 2020.

Note 6   NOTE PAYABLE - BANK

         The note is unsecured and is payable on demand with interest at ten
         percent per annum. At June 30, 1996 the financial statements included
         accrued interest of $9,000 due to the bank.

Note 7   LOANS PAYABLE

         Loans payable represents advances received from two members of the
         Board of Directors. The loans include interest at eight percent per
         annum which at June 30, 1996 amounted to $13,000.

Note 8   STOCK OPTION PLAN

         In June 1996 the Company adopted a 1996 Non-Statutory Stock Option Plan
         and reserved 1,000,000 shares for issuance to eligible employees,
         officers, directors and consultants. Options are non-transferable and
         are exercisable during a term of not more than ten years from the date
         of grant. The options are issuable in such amounts and at such prices
         as determined by the Board of Directors, except that the option price
         of each grant will not be less than twenty percent of the market value
         of such shares on the date the options are granted.

         On June 13, 1996, options to purchase 100,000 shares were granted at an
         exercise price of $.30 per share. At June 30, 1996 the options were
         unexercised and expire on June 13, 2001.


                                       FF-9
<PAGE>   25
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996



Note 9   INCOME TAXES

         The Company has adopted Statement of Financial Accounting Standards No.
         109, "Accounting for Income Taxes" ("SFAS No. 109") which requires the
         recognition of a deferred tax asset resulting from the expected future
         tax benefit to be derived from a tax loss carryforward. SFAS No. 109
         additionally requires the establishment of a valuation allowance to
         reflect the likelihood of realization of such deferred tax asset. At
         June 30, 1996 the Company had a deferred tax asset of $720,000 arising
         from an operating loss deduction. The Company has recorded a valuation
         allowance for the full amount of such deferred tax asset. The Company's
         tax loss carryforward expires primarily in the year 2011.

Note 10  COMMITMENT

         The Company has an employment agreement with a key executive officer
         which expires on December 15, 1997. In addition to a base salary the
         agreement provides for a bonus based on net income, as defined, after
         taxes. Compensation expense for the year ended June 30, 1996 was
         $120,492.

Note 11  RELATED PARTY TRANSACTIONS

         The Company received professional service from an accounting firm whose
         principal is an officer and director of the Company. Fees for such
         services were $26,000 in 1996. The Company incurred costs of $15,000 in
         1996 for consulting services provided by a shareholder relating to the
         construction of the pasta manufacturing facility. Accounts receivable
         and accrued expenses include $40,500 due to the above persons. The
         Company has incurred costs for services rendered by a shareholder in
         connection with the sale of its securities. Fees for such services
         amounted to $12,000 in 1996.

Note 12  LITIGATION

         The Company's transfer agent, in a Complaint for Interpleader,
         Declaratory Judgment and related relief commenced an action in the
         United States District Court for the District of Utah, Central Division
         under Index No. 96CV0194B, has tendered to the Court Company stock
         certificates representing 133,824 of an aggregate of 341,050 shares in
         dispute (and upon information and belief intends to tender any further
         portion of such 341,050 shares as may come into its possession) in an
         effort to seek Court determination as to true ownership and a Court
         Order regarding issuance or cancellation of such certificates. The


                                      FF10
<PAGE>   26
                ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1996



Note 12  LITIGATION (Continued)

         Company is a party defendant to this action, in which its transfer
         agent seeks indemnification from the Company for any sums which may be
         awarded against such transfer agent by reason of its compliance with
         the Company's instructions to not remove restrictive legend(s) from the
         certificates in question. Owing to the current early stages of the
         litigation and further owing to the fact that discovery proceedings
         have not even been scheduled as yet, it is virtually impossible to
         determine, with any degree of certainty, the final outcome of this
         litigation although the Company is of the opinion that such outcome
         will not have a material adverse effect upon its financial position or
         the results of its operations.

Note 13  SUBSEQUENT EVENTS

         On September 11, 1996, the Company granted 60,000 options to purchase
         up to 60,000 shares of the Company's common stock under the 1996
         Non-Statutory Stock Option Plan with an exercise price of $.25 per
         share.

         As of September 16, 1996 all options issued to date remain unexercised
         and expire five years from the date of grant.


                                      FF11
<PAGE>   27
                     [BEDERSON AND COMPANY LLP LETTERHEAD]

                          INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders of
Odessa Foods International, Inc.
Jersey City, New Jersey


We have audited the accompanying consolidated balance sheets of Odessa Foods
International, Inc., and its subsidiaries, as of June 30, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity (deficiency)
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the 1995 and 1994 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Odessa
Foods International, Inc., and its subsidiaries, at June 30, 1995 and 1994 and
the results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed, in Note 2 to
the consolidated financial statements, the Company's significant operating
losses and limited sources of financing raise substantial doubt about the
Company's ability to continue as a going-concern. Management's plans in regard
to these matters are discussed in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


                                                   /S/ BEDERSON & COMPANY LLP
                                                   ---------------------------
                                                       BEDERSON & COMPANY LLP
West Orange, New Jersey
October 9, 1995


                                      F(1)
<PAGE>   28
                        ODESSA FOODS INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                             JUNE 30, 1995 AND 1994

                                     ASSETS

<TABLE>
<CAPTION>
                                                                       1995               1994
                                                                   -----------        -----------
<S>                                                                <C>                <C>
CURRENT ASSETS:
  Cash                                                             $    81,341        $     9,064
  Accounts receivable, net of allowance for
    doubtful accounts of $1,879 and $1,378,
    respectively                                                         16,907             12,397
  Inventory                                                              18,284              3,580
  Prepaid expenses and sundry receivables                                 7,692             30,731
                                                                    -----------        -----------
  TOTAL CURRENT ASSETS                                                  124,224             55,772
                                                                    -----------        -----------
PROPERTY AND EQUIPMENT, net of accumulated
  depreciation of $268,135 and $51,438,
  respectively                                                        2,227,478          2,006,093
                                                                    -----------        -----------

OTHER ASSET:
  Start-up costs, net of amortization of
    $45,000 and $9,000, respectively                                    315,000            351,000
  Prepaid lease costs                                                    86,263               --
                                                                    -----------        -----------

  TOTAL OTHER ASSETS                                                    401,263            351,000
                                                                    -----------        -----------

TOTAL ASSETS                                                        $ 2,752,965        $ 2,412,865
                                                                    ===========        ===========

                                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
  Accounts payable                                                  $   214,263        $     1,885
  Note payable - bank                                                    75,000               --
  Loan payable - related party                                           50,000               --
  Accrued expenses                                                        1,500               --
                                                                    -----------        -----------
  TOTAL CURRENT LIABILITIES                                             340,763              1,885
                                                                    -----------        -----------
LONG-TERM DEBT:
  Due to stockholders                                                      --            2,657,639
                                                                    -----------        -----------
MINORITY INTEREST                                                          --                1,995
                                                                    -----------        -----------
STOCKHOLDERS' EQUITY (DEFICIENCY)
  Common stock, $.00001 par value,
    authorized 75,000,000 shares
    issued and outstanding 9,787,377
    shares (1995) and 9,515,477
    shares (1994)                                                            98                 95
  Additional paid-in capital                                          5,951,750          2,783,512
  Accumulated deficit                                                (3,545,018)        (3,032,261)
  Foreign currency translation                                            5,372               --
                                                                    -----------        -----------

  TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY)                             2,412,202           (248,654)
                                                                    -----------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  (DEFICIENCY)                                                      $ 2,752,965        $ 2,412,865
                                                                    ===========        ===========
</TABLE>



                     The accompanying notes are an integral
                       part of these financial statements.

                                      F(2)
<PAGE>   29
                        ODESSA FOODS INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       YEARS ENDED JUNE 30, 1995 AND 1994

<TABLE>
<CAPTION>
                                                      1995               1994
                                                  -----------        -----------
<S>                                                <C>                <C>


SALES                                             $   274,419        $   141,158

COST OF SALES                                         237,188            151,784
                                                  -----------        -----------

GROSS PROFIT (LOSS)                                    37,231            (10,626)
                                                  -----------        -----------

OPERATING EXPENSES:
  Officer salary                                       38,750               --
  Legal and consulting                                 97,402               --
  Marketing research and development                     --              410,000
  Depreciation and amortization                       252,697             60,438
  Other                                               163,134             32,931
                                                  -----------        -----------

  TOTAL OPERATING EXPENSES                            551,983            503,369
                                                  -----------        -----------

LOSS FROM CONTINUING OPERATIONS
  BEFORE MINORITY INTEREST AND INCOME TAXES          (514,752)          (513,995)

MINORITY INTEREST IN NET LOSS OF
  CONSOLIDATED SUBSIDIARY                               1,995                852

INCOME TAXES                                             --                 --
                                                  -----------        -----------

LOSS FROM CONTINUING OPERATIONS                      (512,757)          (513,143)

DISCONTINUED OPERATIONS - loss from
  discontinued operations, net of
  income taxes of $-0-                                   --              (11,649)
                                                  -----------        -----------

NET LOSS                                          $  (512,757)       $  (524,792)
                                                  ===========        ===========

LOSS PER COMMON SHARE:
  Loss from continuing operations                 $      (.05)       $      (.06)
  Loss from discontinued operations                      --                 --
                                                  -----------        -----------

  NET LOSS                                        $      (.05)       $      (.06)
                                                  ===========        ===========

WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                                9,616,078          8,922,580
                                                  ===========        ===========
</TABLE>


                     The accompanying notes are an integral
                       part of these financial statements.

                                      F(3)
<PAGE>   30
                        ODESSA FOODS INTERNATIONAL, INC.
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)






<TABLE>
<CAPTION>
                                                                             Common Stock
                                                                      --------------------------         Additional        
                                                                      Number of                           Paid-in          
                                                                       Shares             Amount          Capital          
                                                                       ------             ------          -------          
<S>                                                                 <C>                 <C>               <C>              



BALANCE - June 30, 1993, as previously reported                      10,608,700        $   106,087        $ 2,435,871      

  Adjustment for pooling of interests with Odessa Foods, Inc. 
    (a Delaware corporation)                                          8,500,000                 85            229,915      

  Reverse stock split (including fractional shares)                 (10,451,919)          (104,527)           104,527      
                                                                    -----------        -----------        -----------      

BALANCE, as restated - June 30, 1993                                  8,656,781              1,645          2,770,313      

  Year ended June 30, 1994:
    Change in par value from $.01 to $.00001 per common share              --               (1,558)             1,558      
                                                                                                                           

    Issuance of common stock for services                               858,696                  8                576      

    Capital contribution - expenses paid on behalf of Company
      by stockholder                                                       --                 --               11,065      

    Net loss for the year                                                  --                 --                 --        
                                                                    -----------        -----------        -----------      

BALANCE - June 30, 1994                                               9,515,477                 95          2,783,512      

  Year ended June 30, 1995:
    Capital contributions by stockholders representing loans               --                 --            2,706,341      
                                                                                                                           

    Issuance of common stock for cash                                   241,900                  2            431,898      

    Issuance of common stock in accordance with
      bank note agreement                                                30,000                  1             29,999      

    Net loss for the year                                                  --                 --                 --        

    Foreign currency translation                                           --                 --                 --        
                                                                    -----------        -----------        -----------      


BALANCE - June 30, 1995                                               9,787,377        $        98        $ 5,951,750      
                                                                    ===========        ===========        ===========      

<CAPTION>
                                                                                               Foreign                       
                                                                           Accumulated         Currency                      
                                                                             Deficit          Translation        Total       
                                                                             -------          -----------        -----       
<S>                                                                        <C>                <C>               <C> 
BALANCE - June 30, 1993, as previously reported                            $(2,541,958)       $      --         $      --  
                                                                                                                                   
  Adjustment for pooling of interests with Odessa Foods, Inc.                                                                
    (a Delaware corporation)                                                    34,489               --             264,489  
                                                                                                                             
  Reverse stock split (including fractional shares)                               --                 --                --    
                                                                           -----------        -----------       -----------  
                                                                                                                             
BALANCE, as restated - June 30, 1993                                        (2,507,469)              --             264,489  
                                                                                                                             
  Year ended June 30, 1994:                                                                                                  
    Change in par value from $.01 to $.00001 per common share                     --                 --                --
                                                                                                                             
    Issuance of common stock for services                                         --                 --                 584  
                                                                                                                             
    Capital contribution - expenses paid on behalf of Company                                                                
      by stockholder                                                              --                 --              11,065  
                                                                                                                             
    Net loss for the year                                                     (524,792)              --            (524,792) 
                                                                           -----------        -----------       -----------  
                                                                                                                             
BALANCE - June 30, 1994                                                     (3,032,261)              --            (248,654) 
                                                                                                                             
  Year ended June 30, 1995:                                                                                                  
    Capital contributions by stockholders representing loans                      --                 --           2,706,341  
                                                                                                                             
    Issuance of common stock for cash                                             --                 --             431,900  
                                                                                                                             
    Issuance of common stock in accordance with                                                                              
      bank note agreement                                                         --                 --              30,000  
                                                                                                                             
    Net loss for the year                                                     (512,757)              --            (512,757) 
                                                                                                                             
    Foreign currency translation                                                  --                5,372             5,372  
                                                                           -----------        -----------       -----------  
                                                                                                                             
                                                                                                                             
BALANCE - June 30, 1995                                                    $(3,545,018)       $     5,372       $ 2,412,202  
                                                                           ===========        ===========       ===========  
</TABLE>


                   The accompanying notes are an integral part
                         of these financial statements.
                              

                                      F(4)
<PAGE>   31
                        ODESSA FOODS INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       YEARS ENDED JUNE 30, 1995 AND 1994

<TABLE>
<CAPTION>
                                                       1995               1994
                                                     ----------        -----------
<S>                                                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                          $  (512,757)       $  (524,792)
  Adjustments to reconcile net loss to
    net cash from operating activities:
      Depreciation and amortization                     252,697             60,438
      Foreign currency translation                        5,372               --
      Operating expenses through
        issuance of common stock                         30,000             11,649
      Provision for doubtful accounts                       501              1,378
      Minority interest                                  (1,995)              (852)
      (Increase) decrease in operating
        assets:
          Accounts receivable                            (5,011)           (13,775)
          Inventory                                     (14,704)            (1,430)
          Prepaid expenses and sundry
            receivables                                 (63,224)            (1,086)
      Increase (decrease) in operating
        liabilities:
          Accounts payable                              212,378              1,885
          Accrued expenses                                1,500               --
                                                    -----------        -----------

  NET CASH USED BY OPERATING ACTIVITIES                 (95,243)          (466,585)
                                                    -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property and equipment                (438,082)          (721,388)
  Start-up costs                                           --             (360,000)
                                                    -----------        -----------

  NET CASH USED BY INVESTING ACTIVITIES                (438,082)        (1,081,388)
                                                    -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings                    75,000               --
  Issuance of common stock for cash                     431,900               --
  Loans from stockholders                                48,702          1,517,620
  Loan from related party                                50,000               --
                                                    -----------        -----------

  NET CASH PROVIDED BY FINANCING ACTIVITIES             605,602          1,517,620
                                                    -----------        -----------

INCREASE (DECREASE) IN CASH                              72,277            (30,353)

CASH - beginning                                          9,064             39,417
                                                    -----------        -----------

CASH - ending                                       $    81,341        $     9,064
                                                    ===========        ===========

NON-CASH OPERATING ACTIVITIES:
  Common stock issued in accordance with bank
    note agreement                                  $    30,000        $      --
                                                    ===========        ===========

NON-CASH FINANCING ACTIVITIES:
  Stockholder loans transferred to
    additional paid-in capital                      $ 2,706,341        $      --
                                                    ===========        ===========
</TABLE>


                     The accompanying notes are an integral
                       part of these financial statements.

                                      F(5)
<PAGE>   32
                        ODESSA FOODS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1995 AND 1994





NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              Organization
              The Company was incorporated under the laws of the State of
              Delaware on June 28, 1972 under the name "Aurre Management Co.,
              Inc." On January 11, 1982, the Company changed its name to "Fluid
              Lift International, Inc." The Company's business plans were
              unsuccessful and in 1988 it ceased operations. On January 23,
              1995, the Company changed its name to Odessa Foods International,
              Inc. The Company presently manufactures sausages, pastas and
              related food products in Odessa, Ukraine.

              Principles of Consolidation
              The accompanying consolidated financial statements include the
              accounts of Odessa Foods International, Inc. (Parent), and its
              wholly owned subsidiary Odessa Foods, Inc. (incorporated in
              Delaware) and the latter's majority owned subsidiary Hilmac GmbH,
              Odessa (a Ukrainian corporation). All intercompany transactions
              and balances have been eliminated in consolidation.

              Business Combination and Restatement
              On November 26, 1994, Odessa Foods, Inc. exchanged 300 shares of
              common stock for all of the outstanding shares of F & L Food &
              Leasure Marketing Ltd. (an Irish corporation) who owned a majority
              interest in Hilmac GmbH, Odessa.

              On November 26, 1994, Odessa Foods International, Inc. exchanged
              8,500,000 shares of common stock for all of the outstanding shares
              of Odessa Foods, Inc. subsequent to the above transaction.

              The transactions have been accounted for as a pooling of interest
              and accordingly, the consolidated financial statements for all
              periods presented have been restated to include the accounts of
              Odessa Foods International, Inc., Odessa Foods, Inc., F & L Food &
              Leasure Marketing Ltd. and Hilmac GmbH, Odessa.

              Basis of Accounting
              The Company maintains its records on the accrual basis of
              accounting. Revenues are recognized when the products are
              delivered and expenses are recorded when incurred.

              Inventory
              Inventory, consisting of perishable meat and related products, is
              stated at cost.

              Property and Equipment
              Property and equipment including significant betterments, are
              recorded at cost. Upon retirement or disposal of properties, the
              cost and accumulated depreciation are removed from the accounts,
              and any gain or loss is included in income. Maintenance and repair
              cost are charged to expense as incurred.



                                      F(6)
<PAGE>   33
                        ODESSA FOODS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1995 AND 1994



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Depreciation
              Depreciation of property and equipment is provided for over the
              estimated useful lives of the respective assets. Depreciation is
              recorded on the straight-line method. The estimated useful lives
              of each asset category are as follows:

<TABLE>
<CAPTION>
                                                               Years
<S>                                                            <C>

                   Production equipment                         10
                   Transportation equipment                      5
                   Office equipment                              5
</TABLE>


              Start-Up Costs
              Start-up costs consist of expenses and fees incurred prior to the
              commencement of operations for incorporation fees, cost for
              obtaining production and sales rights, registration fees and
              governmental approvals and certificates. Amortization is provided
              for over the estimated economic life of the assets. Amortization
              is recorded based on the straight-line method over an estimated
              economic life of ten (10) years.

              Amortization expense for the years ended June 30, 1995 and 1994
              were $36,000 and $9,000, respectively.

              Expenses Related to Sales and Issuance of Securities
              All costs incurred in connection with the sale of the Company's
              common stock have been capitalized and charged to additional
              paid-in capital.

              Net Loss Per Common Share
              Loss per common share is computed by dividing the net loss by the
              weighted average number of shares of common stock outstanding
              during the periods.

              Foreign Currency Translation

              Assets and liabilities of subsidiaries operating in foreign
              countries are translated into U.S. dollars using the exchange rate
              in effect at the balance sheet date. Results of operations are
              translated using the average exchange rates prevailing throughout
              the year. The effects of exchange rate fluctuations on translating
              foreign currency assets and liabilities into U.S. dollars are
              included in stockholders' equity, while gains and losses resulting
              from foreign currency transactions are included in operations.


                                   F(7)
<PAGE>   34
                        ODESSA FOODS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1995 AND 1994





NOTE 2 - GOING CONCERN

              The accompanying financial statements have been prepared in
              conformity with generally accepted accounting principles, which
              contemplates continuation of the Company as a going concern.
              However, the Company has sustained substantial operating losses
              for the years ended June 30, 1995 and 1994. In addition, at June
              30, 1995 current liabilities exceed current assets by $216,539.
              These factors create an uncertainty about the Company's ability to
              continue as a going concern. Management believes that the Company
              will be able to raise additional capital through the issuance of
              common stock and its operations will improve through increased
              sales volume and productivity. The ability of the Company to
              continue as a going concern is dependent on obtaining capital from
              the issuance of common stock and increasing sales volume and
              productivity. The financial statements do not include any
              adjustments that might be necessary if the Company is unable to
              continue as a going concern.

NOTE 3 - PROPERTY AND EQUIPMENT

              The components of property and equipment are as follows:

<TABLE>
<CAPTION>
                                                                                1995                 1994
                                                                             ----------           -------
<S>                                                                          <C>                  <C>


                   Production equipment                                      $2,444,113           $2,057,531
                   Transportation equipment                                      45,000                 -
                   Office equipment                                               6,500                 -
                                                                             ----------           ----------
                     Total                                                    2,495,613            2,057,531
                   Less:  Accumulated depreciation                              268,135               51,438
                                                                             ----------           ----------

                                                                             $2,227,478           $2,006,093
                                                                             ==========           ==========
</TABLE>


              Depreciation expense for the years ended June 30, 1995 and 1994
              were $216,697 and $51,438, respectively.

NOTE 4 - PREPAID LEASE COST

              In April 1995, the Company entered into an operating lease
              agreement for a term of twenty-five (25) years for the rental of
              an unfinished building. In accordance with the agreement, the
              Company will pay for the costs of alterations and improvements and
              upon completion the Company will deduct these costs from the
              monthly rent charge until all costs are recovered.Prepaid lease
              costs at June 30, 1995 were $86,263.


                                      F(8)
<PAGE>   35
             
                        ODESSA FOODS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1995 AND 1994




NOTE 5 - NOTE PAYABLE - BANK

              In May 1995, the Company entered into a ninety (90) day unsecured
              note agreement with the Bank In Liechtenstein in the amount of
              $100,000 at the interest rate of ten percent (10%) per annum. As
              additional consideration for the note, the Company issued 30,000
              shares of restricted common stock. The balance of the note at June
              30, 1995 was $75,000.

NOTE 6 - LOANS PAYABLE - RELATED PARTY

              In June 1995, a member of the Board of Directors advanced $50,000
              to the Company. The loan is interest free for a term of sixty
              days.

NOTE 7 - DUE TO STOCKHOLDERS

              This balance represents non-interest bearings loans from
              stockholders which were transferred to additional paid-in capital
              on November 20, 1994.

NOTE 8 - MINORITY INTEREST

              Minority interest represents a five percent (5%) interest in
              Hilmac GmbH, Odessa, a subsidiary of Odessa Foods, Inc. At June
              30, 1995 the minority interest in this subsidiary was reduced to
              zero due to accumulated losses exceeding the capital contributions
              of the minority shareholders.

NOTE 9 - INCOME TAXES

              The Company adopted Statement of Financial Accounting Standard 109
              ("SFAS"). SFAS 109 provides for an asset and liability approach to
              accounting for income taxes that require the recognition of
              deferred tax assets and liabilities for the expected future tax
              consequences of events that have been recognized in the Company's
              financial statements or tax returns.

              In estimating future consequences, SFAS 109 generally considers
              all expected future events other than proposed changes in the tax
              law or rates prior to enactment.

              For the years ended June 30, 1995 and 1994, there was no provision
              for deferred federal, state or foreign income taxes because all
              net operating loss carryforwards are no longer available due to
              the change in ownership of the Company.




                                      F(9)
<PAGE>   36
                        ODESSA FOODS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1995 AND 1994



NOTE 9 - INCOME TAXES (Continued)

              A reconciliation between the statutory federal income tax rate
              (34%) and the effective income tax rates based on continuing
              operations is as follows:

<TABLE>
<CAPTION>
                                                                                   1995               1994
                                                                                ---------          ---------
<S>                                                                             <C>                <C>
                   Statutory federal income tax
                     (benefit)                                                  $(174,337)         $(178,429)

                   State income tax                                                  -                  -

                   Foreign income tax                                                -                  -

                   Benefit not recognized on
                     operating loss                                               174,337            178,429
                                                                                ---------          ---------

                                                                                $    -             $    -
                                                                                =========          =========
</TABLE>


NOTE 10 - COMMON STOCK

              On November 20, 1994, the Company effectuated a 1 for 68 reverse
              stock split to its then outstanding 69,000,000 shares of common
              stock so that immediately subsequent thereto, the number of common
              shares outstanding was 1,014,706 shares.

              The accompanying financial statements reflect the retroactive
              effect of the reverse stock split, where applicable.

              On October 1, 1993, the Board of Directors approved the issuance
              of 211,637 shares (14,391,300 pre split shares) to officers and
              directors of the Company as compensation for services rendered.

              On October 2, 1993, at a special meeting of the Company's
              stockholders, the stockholders approved an increase in the
              Company's authorized capital from 25,000,000 shares of $0.01 par
              value common stock to 75,000,000 shares of $0.00001 par value
              common stock. On May 23, 1994, the Company filed a Certificate of
              Amendment reflecting the increase with the Secretary of State of
              Delaware.

              On October 5, 1993, the Board of Directors approved the issuance
              of 735,294 shares (50,000,000 pre split shares) of common stock to
              Gregory Aurre, President (since resigned), for services rendered.
              The shares were later reduced to 647,059 shares (44,000,000 pre
              split shares) and as such were issued after the filing of the
              Certificate of Amendment.

              In February of 1995, the Company issued 215,000 shares of common
              stock for $405,000, net of $25,000 for commissions and fees.

              In April 1995, the Company issued 26,900 shares of common stock
              for $26,900.

                                     F(10)
<PAGE>   37
                        ODESSA FOODS INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 1995 AND 1994


NOTE 11 - DISCONTINUED OPERATIONS

                The Company discontinued its operations in the development and
                sale of flexible tubing for oil and gas drilling in 1994. Loss
                from discontinued operations for the year ended June 30, 1994
                was $11,649, net of income taxes of $-0-.

NOTE 12 - GEOGRAPHIC AREAS

                The Company presently derives all of it's revenues from it's
                subsidiary located in the Ukraine. The Company is a manufacturer
                of sausages, pastas and related food products.

NOTE 13 - COMMITMENT

                The Company entered into a written employment agreement with the
                Chairman of the Board of Directors of Odessa Foods, Inc. and
                Chief Executive Officer of Hilmac, Odessa which agreements
                commenced on December 15, 1994 and expires two years thereafter.
                The agreement provides for a monthly salary of $7,500 ($90,000
                annually) as well as an annual bonus of five percent (5%) of
                Company consolidated income after taxes.

                The Company entered into an operating lease agreement in April
                of 1995 for the rental of a manufacturing facility in the
                Ukraine for a term of twenty five (25) years. The lease
                agreement provides for a base monthly rent payment of $66 per
                month plus two percent (2%) of the gross sales. The Company is
                presently renovating the facility and all costs incurred will be
                used to offset monthly rent charges. Rent expense for the years
                ended June 30, 1995 and 1994 were $6,851 and $-0-, respectively.

                Minimum annual lease payments (excluding percentage of sales)
                are as follows:

<TABLE>
<CAPTION>
                     Years Ended
                       June 30,
                     -----------
<S>                                                        <C>

                        1996                               $   792
                        1997                                   792
                        1998                                   792
                        1999                                   792
                        2000                                   792
                        Thereafter                          15,642
</TABLE>


NOTE 14 - RELATED PARTY TRANSACTIONS

                During 1994, a stockholder paid expenses of the Company from
                personal funds which totaled $11,065. This amount was recorded
                as additional paid-in capital.


                                     F(11)
<PAGE>   38
 ITEM 8. CHANGES IN THE AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         No disagreements with accountants on accounting and financial
disclosure matters existed during the Company's fiscal year ended June 30, 1996.
Notwithstanding the above, the Registrant did change its auditing firm as
indicated in a Form 8-K with date of report of February 1, 1996 (at Item 4
thereof and Exhibits A and B thereto) as filed with the Securities and Exchange
Commission on March 8, 1996.

                                    PART III

 ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The Directors and Executive Officers of the Company, as of October 1,
1996, were as follows:

<TABLE>
<CAPTION>
Name and Address                               Position(s) Held                                   Age
----------------                               ----------------                                   ---
<S>                                        <C>                                                    <C>
Leon Golden                                 President and Director                                34
135 Irwin Street
Brooklyn, NY   11235

Werner Heim                                 Secretary-Treasurer and                               63
Witikonerstrasse 311B                       a Director
CH-8053 Zurich
Switzerland

Max Hilpert                                 Chairman of the Board                                 54
u1. Tschkalowa, 2-a                         of Directors
270012 Odessa
Ukraine

Alfons Anderhub                             Director                                              50
Luessirainstrasse 51
CH-6300 Zug
Switzerland

Urs Wettstein                               Director                                              41
Weinbergstrasse 43
CH-8802 Kilchberg
Switzerland
</TABLE>



                                       16
<PAGE>   39
         Certain officers and/or directors of the Company resigned from the
positions held by them during fiscal year 1996 as follows:

1.       Kathleen Histon - former President and Director resigned October 9,
                           1995 and

2.       Kathie Horne - former Secretary-Treasurer and Director resigned
                        October 9, 1995.

         None of the above resignations were as a result of any disagreements
with the Company on any matter relating to its operations, policies or
practices.

         Directors are elected to serve until the next annual meeting of
stockholders and until their successors have been elected and have qualified.
Officers are appointed to serve until the meeting of the Board of Directors
following the next annual meeting of stockholders and until their successors
have been elected and have qualified.

LEON GOLDEN has been President and a Director of the Company since November
1995. Mr. Golden has over ten years of experience in public finance and is
working for a public accounting firm in the United States. Mr. Golden for the
past few years has been specializing his financial experience in the food
industry. Additionally, Mr. Golden currently serves as Secretary-Treasurer and a
Director of Moonlight International Corp. (see biographical information with
respect to Werner Heim appearing directly below).

Securities owned of record and/or beneficially: -0- shares of Common Stock as of
October 1, 1996. On September 11, 1996 Mr. Golden was granted options to
purchase up to 30,000 shares of Company common stock exercisable at $.25 per
share in accordance with the Company's 1996 Non-Statutory Stock Option Plan .
Such options are non transferable, expire five years from date of issuance and
remain unexercised as of October 1, 1996.

WERNER HEIM has been a Director of the Company since November, 1994 and
Secretary-Treasurer since November 1995. Mr. Heim has approximately 30 years of
experience in international business development in high technology industries
with a background which includes participation within the following industries;
computer systems, biotechnology, microfiltration and environmental waste
processing. In addition to the positions that Mr. Heim currently holds with the
Company he currently serves as (a) President and Chairman of the Board of
Directors of Seiler Pollution Control Systems, Inc. ("SEPC"), an international
environmental service and equipment company and (b) President and director of
Moonlight International Corp. ("LYTE"), a firm engaged in the development and
commercialization of a line of unique helium- filled lighting balloons providing
shadow-free/non-dazzling luminosity with an extremely low energy consumption.
SEPC is currently publicly traded in the NASDAQ SmallCap Market under the stock
symbol SEPC while LYTE is currently trading on the Electronic Over-the-Counter
Bulletin Board under the stock symbol LYTE.


Securities owned of record and/or beneficially: -0- shares of Common Stock as of
October 1, 1996.


                                       17
<PAGE>   40
MAX HILPERT has been Chairman of the Board of Directors of the Company since
November 1994. Mr. Hilpert had been President of the Company from October 1995
until his resignation from such position in November 1995. Mr. Hilpert served as
credit and loan manager for a major portfolio management bank located in Zurich,
Switzerland until 1978 at which time he left such firm in order to establish his
own portfolio and finance consulting company. Thereafter and in 1992 Mr. Hilpert
left Switzerland in order to establish and organize on behalf of the Company a
meat and sausage production facility and business in Odessa, Ukraine. Mr.
Hilpert is the co-founder of both Odessa Foods, Inc. (formerly F&L Food &
Leisure Marketing Ltd.) and Hilmac GmbH Odessa, Company subsidiaries.

Securities owned of record and/or beneficially: beneficial owner of 450,000
shares of Common Stock as of October 1, 1996.

URS WETTSTEIN has been a Director of the Company since November 1994 and had
been Secretary-Treasurer of the Company from November, 1994 until his
resignation in November 1995. Mr. Wettstein was employed by Coopers & Lybrand
until 1983 at which time he established his own consulting firm. Mr. Wettstein,
in conjunction with Mr. Hilpert, co-founded both Odessa Foods, Inc. and Hilmac
GmbH Odessa.

Securities owned of record and/or beneficially: -0- shares of Common Stock as of
October 1, 1996.

ALFONS ANDERHUB has been a Director of the Company since November, 1994. Mr.
Anderhub has approximately 25 years of experience in construction and consulting
of private and industrial projects having developed various multi million dollar
projects in Switzerland.

Securities owned of record and/or beneficially: record and beneficial owner of
300,000 shares of Common Stock as of October 1, 1996.


                                       18

<PAGE>   41
ITEM 10.          EXECUTIVE COMPENSATION

         Remuneration paid (and/or accrued, if applicable and so specifically
indicated) to current officers and/or directors of the Company during fiscal
year ended June 30, 1996 is indicated in the chart appearing directly
hereinafter.




<TABLE>
<CAPTION>
                                                                                Securities
                                                     Salaries, Fees,            or Property,           Aggregate of
                           Capacities                Directors' Fees,           Insurance Benefits     Contingent
Name of                    In Which                  Commissions                or Reimbursement,      Forms of
Individual                 Served                    and Bonuses                Personal Benefits      Remuneration
----------                 ------                    -----------                -----------------      ------------
<S>                       <C>                          <C>                       <C>                       <C>


Leon Golden                President and a             $ 17,500                         (2)                -0-
                           Director

Werner Heim                Secretary-Treasurer         $    -0-                      -0-                   -0-
                           and a Director

Max Hilpert (1)            Chairman of the             $117,000                  $23,000                   -0-
                           Board Directors

Urs Wettstein (1)          Director                    $ 26,000                      -0-                   -0-

Alfons Anderhub            Director                    $ 15,000                      -0-                   -0-
</TABLE>

 
(1)      Messrs. Hilpert (formerly Company President) and Wettstein (formerly
         Company Secretary-Treasurer) while remaining actively involved with the
         Company as directors, resigned from their respective positions as
         officers in the Company on or about November 19, 1995 as reported in a
         Form 8-K as filed with the Securities and Exchange Commission on
         November 29, 1995.

(2)      In September 1996 Mr. Golden was granted options to purchase up to
         30,000 shares of Company common stock exercisable at $.25 per share.
         See also Item 9 hereof.

         During fiscal year ended June 30, 1996 certain former officers and/or
directors of the Company, since resigned from all positions held (see Part III,
Item 9, footnotes 1 and 2 thereof) received compensation from the Company as
follows:

<TABLE>
<CAPTION>
                                                                                Securities
                           Capacities                Salaries, Fees,            or Property,                 Aggregate of
                           In Which                  Directors' Fees,           Insurance Benefits           Contingent
Name of                    Formerly                  Commissions                or Reimbursement,            Forms of
Individual                 Served                    and Bonuses                Personal Benefits            Remuneration
----------                 ------                    -----------                -----------------            ------------
<S>                       <C>                       <C>                        <C>                          <C> 
          
Kathleen Histon *          President and Director       $   -0-                      -0-                          -0-

Kathie Horne *             Secretary-Treasurer and      $   -0-                      -0-                          -0-
                           a Director
</TABLE>


 *       Ms. Histon and Ms. Horne resigned from all positions held with the
         Company on October 9, 1995 as reported in a Form 8-K as filed with the
         Securities and Exchange Commission on November 29, 1995.



                                       19

<PAGE>   42
         There are no current written employment agreements between the Company
and any of its officers and directors excepting as follows:

         The Company entered into a written employment agreement with Max
Hilpert, its former President and currently Chairman of the Board of Directors,
which Agreement commenced on December 15, 1994, expires December 15, 1997 and
provides for an annual salary of $97,500 as well as a annual bonus of five
percent (5%) of Company net consolidated profit after taxes. The Agreement
further provides, as follows; (a) payment of an additional $1,500 per month in
local Odessa currency, (b) free housing in Odessa, (c) contribution towards
Swiss State pension plan of $5,000 per annum, (d) contribution to medical-health
insurance in the sum of $8,000 per annum, (e) the annual sum of $10,000 for
travel expenses and (f) the use of a Company automobile.

         No compensation of any nature was paid to any director for services
rendered to the Company in such capacity excepting as indicated herein or for
repayment made, if any, for accountable expenses incurred on the Company's
behalf.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         (a) Security Ownership of Certain Beneficial Owners - The following
persons and/or firms are known to the Company to be the beneficial owners of
more than 5% of the 11,471,077 shares of the Company's outstanding $.00001 par
value Common Stock as of October 1, 1996. To the best of the Company's knowledge
each individual and/or firm has beneficial ownership of the shares and each
individual and/or firm has sole voting power and sole investment power with
respect to the number of shares beneficially owned.

<TABLE>
<CAPTION>
Name and Address of                      Amount and Nature of                        Percent
  Beneficial Owner                       Beneficial Ownership                        of Class
---------------------                    ----------------------                      --------
<S>                                              <C>                                 <C>
Berkshire International                           950,000                             8.28%
 Finance, Inc.
551 Fifth Avenue- Suite 605
New York, New York  10017

Rolcan Finance Ltd.                               588,800                             5.13%
c/o Akar Verwaltungs AG
Seestrasse 17, P.O. Box 53
Zollikon 2, Switzerland

Histon Financial                                  846,887                             7.38%
 Services Ltd. (1)
One Evertrust Plaza
Jersey City, NJ   07302
</TABLE>


 (1)     Includes 10,000 shares owned of record and beneficially by Ms. Histon
         in her own name.


                                       20
<PAGE>   43
Name and Address of         Amount and Nature of          Percent
  Beneficial Owner          Beneficial Ownership          of Class
-------------------         --------------------          --------
Swiss Volksbank                1,200,000 (2)              10.46%

(2)      Upon information and belief the number of shares indicated as being
         owned of record and beneficially by Swiss Volksbank includes an
         indeterminate number of shares owned in its trading account (record and
         beneficial) as well as Company shares held by it as record holder for
         beneficial interest of certain of its clientele.

         (b) Security Ownership of Management - The number and percentage of
shares of $.00001 par value Common Stock of the Company owned of record and
beneficially, by each current officer and director of the Company and by all
current officers and directors of the Company as a group, is as follows - as of
October 1, 1996. To the best of the Company's knowledge each individual has
beneficial ownership of the shares and each individual has sole voting power and
sole investment power with respect to the number of shares beneficially owned.

<TABLE>
<CAPTION>
Name and Address of                         Amount and Nature of                              Percent
 Beneficial Owner                           Beneficial Ownership                              of Class
-------------------                         ------------------------                          --------
<S>                                               <C>                                          <C>

Leon Golden                                             -0- (1)                                    -0-%
135 Irwin Street
Brooklyn, New York  11235

Werner Heim                                             -0-                                        -0-%
Witikonerstrasse 311B
CH-8053 Zurich
Switzerland

Max Hilpert                                        450,000 (2)                                  3.92%
u1. Tschkalowa, 2-a
270012 Odessa
Ukraine

Urs Wettstein                                           -0-                                       -0-%
Weinbergstrasse 43
CH-8802 Kilchberg
Switzerland

Alphons Anderhub                                   300,000 (3)                                  2.62%
Luessirainstrasse 51
CH-6300 Zug
Switzerland
</TABLE>


(1)      Does not include 30,000 options issued on September 11, 1996 pursuant
         to 1996 Non-Statutory Stock Option Plan whereby Mr. Golden has the
         right to purchase (for a period of 5 years from the date of grant) up
         to 30,000 shares of Company common stock at $.25 per share.
(2)      Owned beneficially only.
(3)      Owned of record and beneficially.


                                       21
<PAGE>   44
         (c) Security Ownership of Former Management - The number and percentage
of shares of $.00001 par value Common Stock of the Company owned of record and
beneficially, by each former officer and director of the Company (who served as
an officer and/or director during fiscal year ended June 30, 1996 but no longer
serves as an officer and/or director of the Company as heretofore indicated in
Part III, Item 9) is as follows as of October 1, 1996. To the best of the
Company's knowledge each individual has beneficial ownership of the shares and
each individual has sole voting power and sole investment power with respect to
the number of shares beneficially owned.

<TABLE>
<CAPTION>
Name and Address of                                  Amount and Nature of                          Percent
 Beneficial Owner                                    Beneficial Ownership                          of Class
-------------------                                  --------------------                          --------
<S>                                                      <C>                                        <C>

Kathleen Histon                                           846,887 (1)                                7.38%
30 Beech Hill Road
Scarsdale, NY   10883

Kathie Horne                                               10,000                                   .0008%
c/o Berkshire International 
 Finance, Inc.
551 Fifth Avenue - Suite 605
New York, NY   10017
</TABLE>


(1) Includes 836,887 shares owned by a corporation over which Ms. Histon has
control.

         The Company does not know of any arrangement or pledge of its
securities by persons now considered in control of the Company that might result
in a change of control.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         For the fiscal year ended June 30, 1996 there have not been any
material transactions between the Company and any director, executive officer,
security holder or any member of the immediate family of any of the
aforementioned which exceeded $60,000 other than as may be indicated in this
Form 10-KSB.

ITEM 13.          EXHIBITS, LIST AND REPORTS ON FORM 8-K

         Reference is herewith made to page FF-1 through FF-11 and pages F-1
through F-11 inclusive of this 10-KSB with respect to the financial statements
and notes thereto included therein.

         No exhibits are being filed with this Form 10-KSB.

         During the last quarter of the Company's fiscal year ended June 30,
1996 no Form 8-K was filed. However, during the following quarter the Company
filed a Form 8-K with the Securities and Exchange Commission on July 29, 1996
with date of report of June 18, 1996, which Form 8-K indicated (at Item 5 -
Other Events thereto) that the Board of Directors of the Company at a meeting
held June 18, 1996 resolved that immediately subsequent to the close of the
Company's fiscal year ended June 30, 1996 that its year end be changed to
December 31, 1996 (thereby giving the Company a "short" six month year).

 

                                       22
<PAGE>   45
                                   SIGNATURES




         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                                Odessa Foods International, Inc.



                                                 By   /Leon Golden/
                                                      --------------------------
                                                       Leon Golden, President
Date:  October 11, 1996



         In accordance with the Exchange act, This report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

<TABLE>
<S>                                                          <C>                                         <C>

   /Leon Golden/                                              President and                               Dated: Oct. 11, 1996
---------------------------                                   a Director 
Leon Golden                                                   



  /Werner Heim/                                               Secretary-Treasurer                         Dated: Oct.  4, 1996
---------------------------                                   and a Director
Werner Heim                                                   



 /Max Hilpert/                                                Chairman of the                             Dated: Oct.  8, 1996
----------------------------                                  Board of Directors
Max Hilpert                                                   



  /Alfons Anderhub/                                           Director                                    Dated: Oct.  3, 1996
----------------------------
Alfons Anderhub



  /Urs Wettstein/                                             Director                                    Dated: Oct.  7, 1996
----------------------------
Urs Wettstein
</TABLE>




                                       23
<PAGE>   46
SUPPLEMENTAL INFORMATION

         Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.

         The Company's fiscal year ended June 30, 1996. While the Company does
currently intend to hold an annual meeting of stockholders for its fiscal year
ended June 30, 1996 it has not, as yet, formalized any specific plans as to any
proposed date for such meeting.

         Four copies of all material to be mailed to stockholders with respect
to such Annual Meeting of Stockholders (when scheduled to be held) will be
furnished to the Securities and Exchange Commission but such documents, when
furnished, will not be deemed to be "filed" with the Securities and Exchange
Commission or otherwise subject to liabilities of Section 18 of the Act (except
to the extent that the Registrant specifically incorporates such material by
reference in any subsequent Form 10-KSB); it is expected that such documents
will consist of a Form of Proxy, Notice of Annual Meeting with Information
Statement as well as such schedules and/or exhibits as may be annexed thereto.


                                       24