<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 December 31, 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 [X] 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 - $306,678
represents revenues for six month period ended December 31, 1996 *.

         The aggregate market value for the 9,450,724 shares of voting stock
(all of one class of $.00001 par value Common Stock) held by non-affiliates * of
Registrant as of March 31, 1996 is $7,088,043 based upon an average of the bid
($.625) and asked ($.875) 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
         March 31, 1997.

                   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. 13,713,887 shares as of
March 31, 1997. (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 2.5% 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".

o        The Registrant filed a Form 8-K with the SEC on July 29, 1996 with date
         of report of June 18, 1996, which Form 8-K indicated (at Item 5 - Other
         Events) that the Board of Directors of the Registrant at a meeting held
         June 18, 1996 resolved that immediately subsequent to the close of the
         Registrant's fiscal year ended June 30, 1996 that its year end be
         changed to December 31, 1996 (thereby giving the Registrant a "short"
         six month year). Revenues referred to are accordingly for the "short"
         six month year ended December 31, 1996. Additionally, all references
         throughout this Form 10-KSB to the year ended December 31, 1996 refer
         to the time period of July 1, 1996 through December 31, 1996 unless
         otherwise indicated.

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

Item 2.           Description of Property                                  10

Item 3.           Legal Proceedings                                        11

Item 4.           Submission of Matters to a Vote of
                   Security Holders                                        12

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                                     16
                                                                       F1 - F10

Item 8.           Changes in and Disagreements With
                   Accountants on Accounting and
                   Financial Disclosure                                  17

PART III

Item 9.           Directors, Executive Officers, Promoters
                   and Control Persons; Compliance With
                   Section 16(a) of the Exchange Act                      17

Item 10.          Executive Compensation                                  20

Item 11.          Security Ownership of Certain Beneficial
                   Owners and Management                                  21

Item 12.          Certain Relationships and Related
                   Transactions                                           23

Item 13.          Exhibits, List and Reports on Form 8-K                  23
</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 the completion of its 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 and most recently (as hereinafter indicated) in
Teplodar, near Odessa. Its present facilities have been and remain in the
process of being expanded into a fully integrated food production plant. Most
recently, in March 1997, a new facility became operational with meat and sausage
production supplemented by modern slaughter houses (new plant and machinery
having recently been purchased in Switzerland so as to encompass two
operations). The smaller of such facilities is expected to be operational as of
May 1, 1997 with a slaughter house capacity of 200 head per day. The larger
facility has been fully disassembled for shipment and has arrived in Teplodar,
near Odessa, for reassembly and is expected to be operational in early 1998
after the building for production has been erected. The land for such new
building has been provided to the Company by Odessa governmental authorities
without charge or cost. Once operational (and operating in accordance with
European Union standards and supplied

                                       -6-

<PAGE>   7



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 1,000 - 2,000 pigs and 400 -
500 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.

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 complete the expansion of its plant facilities in
the manner heretofore indicated 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 has been relocated to the new premises in Teplodar in 1997
with daily meat output capacity currently at 5 tons per day and with the
expectation that same will be increased to approximately 20 tons per day once
the building is completed by the end of 1997. Once fully operational (and
operating at capacity) it is expected that pasta production which commenced in
April 1997, and currently has a daily production rate of 5 tons per day will be
expanded to approximately 30 tons per day over approximately the next four
months..

         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.

                                       -7-

<PAGE>   8



      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).

      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 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 once pasta and meat production lines in the newly
established Teplodar 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

                                       -8-

<PAGE>   9
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.

FUTURE CORPORATE STRATEGY AND PROJECTIONS

         Current Company corporate strategy is to create a fully vertically
integrated production chain for meat and sausage production. As heretofore
indicated the smaller of two slaughter houses has been erected and is expected
to be operational in May 1997 while the second and larger slaughter house (upon
land to be provided by Odessa governmental authorities) is expected to be
erected in 1998. Such slaughter houses once fully erected are intended to be
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 in Teplodar is
anticipated 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.

  Suppliers                           Production              Distribution


  Piggery sales      Slaughter        Sausage &               Factory sales
                       House             Meat

                                                                Mobile
                                      Pasta Line               sales van


  Cattle farming                     Canned food

                                                                Retail
                                       Sweets



RECENT DEVELOPMENTS

        Subsequent to the close of the Company's fiscal year ended June 30, 1996
and most recently

                                       -9-

<PAGE>   10



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 an 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 late 1997/early
1998.

         The larger of the two slaughter houses heretofore referred to as having
been recently acquired has been fully disassembled and has been shipped to
Teplodar for reassembly upon land to be provided to the Company by Odessa
governmental authorities. This process is currently expected to be completed in
1998. The sausage and meat production facility which had been producing 1.5 tons
per day in Odessa has been moved into new facilities thereby increasing
production capacity to 30 tons per day in the manner indicated directly above
with current production at 5 tons per day..

         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 December 31, 1996
amounted to approximately $646,579. 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 (after deduction for accumulated depreciation of $781,243) at $3,219,247.

         Production equipment - meat plant ($2,250,785) and construction
in-progress ($1,509,767) collectively accounted for 94% of the $4,000,490
valuation assigned to Property and Equipment before deduction for accumulated
depreciation.

         For specific information as to dollar amount assigned to each item of
Property and Equipment as broken down into specific categories, see note 3 to
consolidated financial statements.

                                      -10-

<PAGE>   11



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.

         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. The Company's aforesaid former President (since resigned - see
paragraph 2 hereof) and his son have submitted a motion for Summary Judgment

                                      -11-

<PAGE>   12



(in late March 1997) alleging (amongst other matters) that no issue of fact
exists so as to bar a judgment in their favor. Both the Company and its transfer
agent are contesting this motion and have submitted argument and memorandum in
opposition thereto. The Company awaits the courts determination on this motion.
It remains impossible at this time to determine with any degree of certainty the
final outcome of this litigation although the Company fully expects to
eventually prevail in 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, 1996, its last annual meeting was held in September 1993. While the Company
does currently intend to hold an annual meeting of stockholders for its calendar
year ended December 31, 1996 it has not, as yet,

                                     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 (or calendar) years (as and 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

Fiscal Year Ended June 30, 1996         Quarterly Common Stock Price
            By Quarter                             Ranges (1)
-------------------------------------   -------------------------------
Quarter              Date                 High                      Low
-------              ----                 ----                      ---
 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

Calendar Year Ended December 31, 1996   Quarterly Common Stock Price
            By Quarter (3)                          Ranges (1)
-------------------------------------    -----------------------------
Quarter              Date                  High                    Low
-------              ----                  ----                   ---
 1st          September 30, 1996          $1.875                 $ .97
 2nd          December 31, 1996           $1.4375               $ .875
</TABLE>

                                      -12-

<PAGE>   13


<TABLE>
<CAPTION>
Calendar Year Ended December 31, 1997         Quarterly Common Stock Price
            By Quarter (2)(3)                            Ranges (1)
-------------------------------------         --------------------------------
Quarter              Date                       High                      Low
-------              ----                       ----                      ---
<S>         <C>                             <C>                      <C>
 1st          March 31, 1997                   $1.125                   $ .625
</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 March 31, 1997 having
         exceeded 20,000 shares on only 22 occasions, with such volume exceeding
         30,000 shares on only 13 of such occasions.
(3)      Pursuant to Form 8-K filed with the SEC on July 29, 1996 the Registrant
         changed its year end from a fiscal year of June 30 to a calendar year
         of December 31 (thereby giving the Registrant a "short" six month year
         ended December 31, 1996).

         (b) Holders. As of March 31, 1997 the approximate number of
stockholders of the Company's Common Stock (as indicated on its transfer agent's
March 31, 1997 certified list of stockholders) amounted to 907 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 manufacture of sausages
and related food products in Odessa, Ukraine.


                                      -13-

<PAGE>   14



         This discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and/or liquidity/cash flows
of Registrant during the fiscal year ended June 30, 1996 and six month calendar
year ended December 31, 1996 and should be read in conjunction with the
consolidated financial statements and notes thereto included in such reports.

         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).

         The Company changed its year end from June 30 to December 31 and as a
result December 31, 1996 represents the first instance when such calendar year
has been utilized. Accordingly, the consolidated statements of operations do not
contain comparable information for the short six month calendar year ended
December 31, 1996 with the 12 month fiscal year ended June 30, 1996 and no
analysis of same is being given herein since it is not properly susceptible to
narrative comparison.

CONSOLIDATED STATEMENTS OF OPERATIONS:

         Six month "year" ended December 31, 1996 and fiscal year ended June 30,
1996.

         Sales for the six month calendar year ended December 31, 1996 were
$306,678 while cost of sales amounted to $250,270 resulting in a gross profit
for calendar year 1996 of $56,408. Operating expenses amounted to $620,258,
consisting of selling, general and administrative expenses of $349,232 (56%) and
depreciation and amortization of $271,026 (44%). As a result of the above, the
net loss for calendar year ended December 31, 1996 was $(592,534).

         Sales for the fiscal year ended June 30, 1996 were $514,513 while cost
of sales amounted to $414,633 resulting in a gross profit for fiscal year 1996
of $99,880. Operating expenses amounted to $983,640, consisting of selling,
general and administrative of $687,558 (70%) and depreciation and amortization
of $296,082 (30%). As a result of the above, the net loss for fiscal year ended
June 30, 1996 was $(893,621).

CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 1996:

         Total assets of the Company at calendar year ended December 31, 1996
were $4,184,593 of which property and equipment (less accumulated depreciation)
accounted for $3,219,247 (77%). Total current assets amounted to $57,767 while
total current liabilities amounted to $1,029,996 thereby creating a working
capital deficit of $(972,229).

         Approximately 47% of such current liabilities are directly attributable
to loans payable on advances received from two directors - $382,659 (inclusive
of accumulated interest) and current maturities of note payable (secured by meat
packing equipment) to a Company officer - $100,000 with the balance of $100,000
being a long term liability.

                                      -14-

<PAGE>   15




         At December 31, 1996 the only long term liability ($100,000) related to
that portion of the note payable officer referred to above which is due in 1998.
See note 8 to consolidated financial statements.

         As at December 31, 1996 the Company's accumulated deficit amounted to
$5,025,801 while total stockholders' equity amounted to $3,054,597.

CASH REQUIREMENTS AND LIQUIDITY

         The Company has been able to satisfy its cash requirements and raise
the necessary capital in order to finance its proposed growth through the sale
and issuance of 1,454,900 shares of its common stock during fiscal year ended
June 30, 1996 for a cash consideration of $1,679,010 and has most recently
(during six month period ended December 31, 1996) sold an additional 200,000
shares for a cash consideration of $335,000. The shares of Company common stock
referred to above were sold in accordance with certain terms and conditions
contained in Off-Shores Securities Subscription Agreements and, accordingly,
were sold outside the U.S., not as a registered public offering but rather in
reliance upon Regulation S of the General Rules and Regulations under the
Securities Act of 1933. A significant portion of the funds raised through sale
of such common shares have been utilized for the purchase of property and
equipment and for prepaid lease costs. An additional 114,533 shares of common
stock were issued in exchange for goods and services valued at $104,540.

         Since the close of its December 31, 1996 calendar year the Company has
issued certain additional shares either for (a) conversion of debt into equity
or (b) sale of shares of common stock. With respect to debt converted into
equity, the Registrant issued an aggregate of 160,000 shares in exchange for
cancellation of indebtedness totaling $100,000. Such shares were issued on or
about March 7, 1997. Additionally, and in accordance with Regulation D under the
Securities Act of 1933 the Registrant issued 2,000,000 shares of its common
stock for gross cash consideration of $1,000,000 with said shares being issued
on or about March 25, 1997.

         The consolidated financial statements to the Company's Form 10-KSB for
calendar year ended December 31, 1996 indicated (in Note 1 thereto) certain
factors which created 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 during the six month period ended December 31, 1996
and the fact that its current liabilities exceed its current assets by
approximately $972,000. Notwithstanding the concerns expressed and the loss as
most recently incurred during the six month period ended December 31, 1996 of
$(592,534), Company management nevertheless continues to believe that the
Company will be able to continue its operations through (a) the raising of
additional capital through either debt or equity financing if necessary and/or
(b) the belief that its operations (through utilization of equipment recently
purchased and establishment of new and larger facilities) will improve
sufficiently through increased sales volume and productivity.

         As aforesaid, (see subheading herein entitled Consolidated Balance
Sheet as at December 31,

                                      -15-

<PAGE>   16



1996) working capital has been augmented by the infusion to date of $582,659
(inclusive of accumulated interest of $22,857) in loans as advances made to the
Company by two of its Board members in order to enable the Company to actively
pursue its business purposes.

         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 current
formal plans exist with respect to hiring of any significant number of
additional employees.

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 F-1 through F-10 inclusive of
this Form 10-KSB, which pages follow this page.

                        ODESSA FOODS INTERNATIONAL, INC.
                                DECEMBER 31, 1996
                                    CONTENTS

<TABLE>
<CAPTION>
                                                           Page
                                                           ----
<S>                                                   <C>
Independent Auditor's Report                               F-1
Consolidated Balance Sheet                                 F-2
Consolidated Statements of Operations                      F-3
Consolidated Statement of Stockholders' Equity             F-4
Consolidated Statements of Cash Flows                      F-5
Notes to Consolidated Financial Statements               F-6 -F-10
</TABLE>



                                      -16-

<PAGE>   17
                         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 December 31, 1996 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the six months ended December 31, 1996 for the year ended June 30,
1996. 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 December 31, 1996 and the results of
their operations and their cash flows for the six months ended December 31, 1996
and for the year ended June 30, 1996 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.




ALLEN G. ROTH, P.A.


/s/ ALLEN G. ROTH, P.A.
New York, New York
March 21, 1997

                                     F-1

<PAGE>   18

              ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                              DECEMBER 31, 1996

                                    ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS:
<S>                                                         <C>    
  Cash                                                             $13,384
  Accounts receivable, less allowance for doubtful
  accounts of $3,200                                                27,458
  Inventories                                                       15,225
  Prepaid expenses                                                   1,700
                                                               ------------

               TOTAL CURRENT ASSETS                                 57,767
                                                               ------------

PROPERTY AND EQUIPMENT, less accumulated
  depreciation of $781,243 (Note 3)                              3,219,247
                                                               ------------

OTHER ASSETS:
  Intangible Assets, less amortization of $99,000 (Note 4)         261,000
  Prepaid lease costs (Note 5)                                     646,579
                                                               ------------

               TOTAL OTHER ASSETS                                  907,579
                                                               ------------
                                                                $4,184,593
                                                               ============

                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued expenses                           $472.337
  Note payable - bank (Note 6)                                      75,000
  Loans payable (Note 7)                                           382,659
  Current maturities of note payable - officer (Note 8)            100,000
                                                               ------------

               TOTAL CURRENT LIABILITIES                         1,029,996
                                                               ------------

NOTE PAYABLE - OFFICER (Note 8)                                    100,000
                                                               ------------

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

STOCKHOLDERS' EQUITY (Notes 9 and 13):
  Common stock, $.00001 par value; authorized
    25,000,000 shares; issued and outstanding
    11,556,810 shares                                                  116
Additional paid-in capital                                       8,080,282
Accumulated deficit                                            (5,025,801)
                                                               ------------

               TOTAL STOCKHOLDER'S EQUITY                        3,054,597
                                                               ------------

                                                                $4,184,593
                                                               ============
</TABLE>

                      See notes to financial statements.

                                     F-2
<PAGE>   19

              ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                           Six Months Ended        Year Ended
                                           December 31, 1996     June 30, 1996
                                           -----------------     -------------
<S>                                        <C>                     <C>     
SALES                                               $306,678            $514,513

COST OF SALES                                        250,270             414,633
                                           ------------------   -----------------

GROSS PROFIT                                          56,408              99,880
                                           ------------------   -----------------

OPERATING EXPENSES:

  Selling, general and
        administrative expenses                      349,232             687,558
  Depreciation and amortization                      271,026             296,082
                                           ------------------   -----------------
                                                     620,258             983,640
                                           ------------------   -----------------
OPERATING LOSS                                      (563,850)           (883,760)
                                           ------------------   -----------------

OTHER EXPENSES (INCOME):
  Interest                                            13,583              20,500
  Foreign currency exchange rate changes              15,101            (10,639)
                                           ------------------   -----------------
                                                      28,684               9,861
                                           ------------------   -----------------

NET LOSS                                          $(592,534)          $(893,621)
                                           ==================   =================

NET LOSS PER SHARE                                   $(0.05)             $(0.08)
                                           ==================   =================

WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING                              11,374,434          10,552,716
                                           ==================   =================
</TABLE>
















                      See notes to financial statements.

                                     F-3


<PAGE>   20
              ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         YEAR ENDED JUNE 30, 1996 AND
                      SIX MONTHS ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                 Common stock         Additional
                          -------------------------    Paid-In     Accumulated
                             Shares       Amount       Capital       Deficit
                             ------       ------       -------       -------
<S>                       <C>                 <C>   <C>         <C>         
Balance - July 1, 1995       9,787,377      $98      $5,951,750  $(3,539,646)
                                                    
  Issuance of common                                
    stock:                   1,454,900       14       1,678,996
       Cash                                         
       Services                100,000        1           9,999
                                                    
  Net Loss       
                            ----------   -------     ----------  -----------
Balance - June 30, 1996     11,342,277      113       7,640,745   (4,433,267)

  Issuance of common                                
    stock:                                              
                         
       Cash                    200,000        2         334,998
       Goods and services      114,533        1         104,539
                          
                                                    
                       
  Cancellation of                                   
    previously                   
    issued shares             (100,000)                                 
                              
  Net Loss                                                          (592,534)
                            ----------   -------     ----------  -----------
Balance - December 31, 1996 11,556,810     $116      $8,080,282  $(5,025,801)
                            ==========   =======     ==========  =========== 

</TABLE>














                      See notes to financial statements.

                                     F-4



<PAGE>   21



                  ODESSA INTERNATIONAL INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                Six Months Ended   Year Ended
                                                December 31, 1996  June 30, 1996
                                                -----------------  -------------
<S>                                        <C>                   <C>      
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                              $(592,534)   $(893,621)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
    Depreciation and amortization                          271,026      296,082
    Other                                                   62,401          882

  Changes in assets and liabilities:
    Accounts receivable                                    (3,527)      (8,345)
    Inventories                                              1,196        1,863
    Prepaid expenses                                     (144,404)    (409,920)
    Accounts payable and accrued expenses                  164,400       92,174
                                                 -----------------  -----------
                                                 
NET CASH USED IN OPERATING ACTIVITIES                    (241,442)    (920,885)
                                                 -----------------  -----------

CASH FLOWS USED IN INVESTING ACTIVITIES:
  Purchases of property and equipment                    (662,528)    (785,309)
                                                 -----------------  -----------

CASH FLOWS PROVIDED BY FINANCING
 ACTIVITIES:
  Net proceeds from issuance of common stock               335,000    1,679,010
  Increase in loans payable                                412,356      120,303
                                                 -----------------  -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES                  747,356    1,799,313
                                                 -----------------  -----------

EFFECT OF FOREIGN CURRENCY EXCHANGE
 RATE CHANGES                                             (15,101)       10,639
                                                 -----------------  -----------

NET INCREASE (DECREASE) IN CASH                          (171,715)      103,758

CASH BEGINNING OF PERIOD                                  185,099       81,341
                                                 -----------------  -----------

CASH  END OF PERIOD                                       $13,384     $185,099
                                                 =================  ===========
SUPPLEMENTAL INFORMATION:
NONCASH INVESTING AND FINANCING
ACTIVITIES:
  Common stock issued for goods and services              $104,540      $10,000
                                                 =================  ===========
</TABLE>


No cash was paid during each of the above periods for interest and income taxes.


                      See notes to financial statements.

                                     F-5

<PAGE>   22

              ODESSA FOODS INTERNATI0NAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 1996



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 six months ended
      December 31, 1996. In addition, at December 31, 1996 current liabilities
      exceeded current assets by $972,000. 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.

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.




                                        F-6
<PAGE>   23


              ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 1996



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 repairs 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

      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 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 six months ended December 31, 1996 and for the year ended June 30,
      1996.








                                        F-7

<PAGE>   24

              ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 1996

2     SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Fiscal Year

      The Company changed its fiscal year to December 31. Accordingly, the
      current financial statements are as of December 31, 1996 and for the six
      months then ended.

3     PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
                                           Estimated
                                          Useful Life       Amount
                                          -----------       ------
<S>                                      <C>           <C>       
      Production equipment - meat plant   10 - 15 years     $2,250,785
      Transportation equipment              5 - 8 years        218,510
      Office equipment                     5 - 10 years         21,428
      Construction in-progress (a)                           1,509,767
                                                        ---------------
                                                             4,000,490
      Less:  Accumulated depreciation                          781,243
                                                        ---------------

                                                            $3,219,247
                                                        ===============
</TABLE>

(a)   The Company is erecting a pasta production facility on leased premises
      located in Teplodar, Ukraine. Costs incurred through December 31, 1996
      were $1,007,745. An additional $502,022 has been expended towards the
      construction of a meat packing facility located in close proximity to the
      Teplodar plant. The meat packing equipment collateralizes the note payable
      to an officer in the amount of $200,000. Depreciation will commence when
      these facilities are put into service. Depreciation expense for the six
      months ended December 31, 1996 and for the year ended June 30, 1996 were
      $253,026 and $260,082 respectively.

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 six months ended December 31, 1996 and year
      ended June 30, 1996 were $18,000 and $36,000 respectively.

5     PREPAID LEASE COSTS

      The Company is obligated under a lease agreement with the Ukraine
      government 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

                                        F-8



<PAGE>   25

              ODESSA FOODS INTERNATIONAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 1996



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. Total rent expense for the six
      months ended December 31, 1996 and for the year ended June 30, 1996 was
      $6,276 and $16,828, respectively..

6     NOTE PAYABLE - BANK

      The note is unsecured and is payable on demand with interest at ten
      percent per annum. At December 31, 1996, the financial statements included
      accrued interest of $12,750 due to the bank.

7     LOANS PAYABLE

      Loans payable represent unsecured advances received from two officers. The
      loans include interest at eight percent per annum which at December 31,
      1996 approximated $23,000.

8     NOTE PAYABLE - OFFICER

      On December 31, 1996, the Company received a $200,000 loan from an officer
      which is secured by meat packing equipment and is repayable in increments
      of $50,000 plus interest at five percent per annum through June 30, 1998.
      Annual maturities are $100,000 each in 1997 and 1998.

9     STOCK OPTION PLAN

      In June 1996 the Company adopted a 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 the
      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.

      The following is a summary of stock option activity and the number of
      shares reserved for outstanding options:



                                        F-9


<PAGE>   26

               ODESSA FOODS INTERNATINAL, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 1996

9     STOCK OPTION PLAN (Continued)

<TABLE>
<CAPTION>
                                                             Number of
                                          Option Price      Stock Options
                                          Per Share          Outstanding
                                          ---------          -----------
<S>                                    <C>               <C>    
      Balance June 7, 1996                   $ --                  - 0 -
      Granted                                 0.30               100,000
                                                           --------------
      Balance June 30, 1996                                      100,000
      Granted                                 0.25                60,000
      Exercised                               0.30              (43,333)
                                                           --------------
      Balance December 31, 1996                                  116,667
                                                           ==============
</TABLE>

10    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
      December 31, 1996 the Company had a deferred tax asset of $1,186,000
      arising from net operating loss deductions. The Company has recorded a
      valuation allowance for the full amount of such deferred tax asset. The
      Company's tax loss carryforwards expire primarily in the year 2011.

11    RELATED PARTY TRANSACTIONS

      The Company received professional services from an accounting firm whose
      principal is an officer of the Company. Fees for such services were
      $19,000 for the six months ended December 31, 1996 and $26,000 the year
      ended June 30, 1996. The Company incurred costs of $15,000 in the year
      ended June 30, 1996 for consulting services provided by a shareholder
      relating to the construction of the pasta manufacturing facility. Accounts
      payable at December 31, 1996 included $19,000 due to the above persons.

12    LITIGATION

      The Company is a party to an action in which its transfer agent seeks
      indemnification for any sums which may be awarded against such transfer
      agent by reason of its compliance with the Company's instructions not to
      remove restrictive legends from certain stock certificates. The Company is
      of the opinion that the final outcome of such litigation will not have a
      material adverse effect on its financial position or the results of its
      operations.

13    SUBSEQUENT EVENTS

      On March 20, 1997 the Company sold 2,000,000 shares of common stock for
      $1,000,000.

                                        F-10


<PAGE>   27


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 calendar year ended December 31,
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 March 31,
1997, 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>


                                      -17-

<PAGE>   28



       Certain officers and/or directors of the Company resigned from the
positions held by them during fiscal year ended June 30, 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.

These resignations were reported in a Form 8-K filed November 29, 1995. Neither
of these two individuals received any compensation during the 12 month fiscal
year ended June 30, 1996 or thereafter.

       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
March 31, 1997. 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 March 31, 1997.

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

                                      -18-

<PAGE>   29



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
March 31, 1997.

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: -0- shares of Common Stock as of
March 31, 1997.

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
March 31, 1997.

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. Additionally, Mr. Anderhub currently serves as
President of LYTE's wholly owned subsidiary, Moonlight SA (see biographical
information with respect to Werner Heim appearing above), located in
Switzerland.

Securities owned of record and/or beneficially: record and beneficial owner of
300,000 shares of Common Stock as of March 31, 1997.



                                      -19-

<PAGE>   30



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 six month
calendar year ended December 31, 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            $10,000                (2)                      -0-
                           Director

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

Max Hilpert (1)            Chairman of the            $48,750             $11,496 (3)                 -0-
                           Board Directors

Urs Wettstein (1)          Director                   $   -0-                -0-                      -0-

Alfons Anderhub            Director                   $   -0-                -0-                      -0-
</TABLE>

(1)    Messrs. Hilpert (formerly Company President) and Wettstein (formerly
       Company Secretary-Treasurer) while remaining actively involved in the
       Company business operations and continuing to serve 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.

(3)    Represents additional compensation received in accordance with employment
       agreement referred to below.

       
       See Form 10-KSB, Item 10 for prior 12 month fiscal year ended June 30,
1996 for information with respect to any compensation paid to persons who served
as officers and/or directors during any portion of such time frame.

       There are no current written employment agreements between the Company
and any of its officers and d rectors 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

                                      -20-

<PAGE>   31



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 13,713,887 shares of the Company's outstanding $.00001 par
value Common Stock as of March 31, 1997. 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                                763,163                           5.56%
 Finance, Inc.
551 Fifth Avenue- Suite 605
New York, New York  10017

Trianon Opus One Inc.                                2,000,000 (2)                      14.58%
c/o Julius Baer Securities
330 Madison Avenue
New York, New York 10017

Swiss Volksbank                                      1,200,000 (1)                       8.75%
</TABLE>

(1)      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.

(2)      In March of 1997 this foreign corporation purchased the above
         referenced shares for an aggregate cash consideration of $1,000,000 in
         accordance with the terms and provisions of Regulation D under the
         Securities Act of 1933. See also Item 6 hereto.

         (b)      Security Ownership of Management - The number and percentage 
of shares of

                                      -21-

<PAGE>   32



$.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 March 31, 1997.
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                            -0-                    -0-%
u1. Tschkalowa, 2-a
270012 Odessa
Ukraine

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

Alphons Anderhub                     300,000 (2)             2.19%
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 of record.

         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.




                                      -22-

<PAGE>   33



ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         For the calendar year ended December 31, 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 F-1 through F-10 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 calendar year ended December
31, 1996 no Form 8-K was filed.

                                      -23-

<PAGE>   34


                                   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.

                                      /Leon Golden/
                                By -------------------------------
                                    Leon Golden, President
Date: April 14, 1997


         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.


 /Leon Golden/                    President and          Dated: Apr. 14, 1997
-----------------------------     a Director
Leon Golden                       



 /Werner Heim/                    Secretary-Treasurer    Dated: Apr. 14, 1997
-----------------------------     and a Director
Werner Heim                      



 /Max Hilpert/                    Chairman of the        Dated: Apr. 14, 1997
-----------------------------     Board of Directors
Max Hilpert                      



-----------------------------     Director               Dated: Apr.   , 1997
Alfons Anderhub



 /Urs Wettstein/                  Director               Dated: Apr. 14, 1997
-----------------------------
Urs Wettstein




                                      -24-