W-H HOLDINGS INC, S-1, 1997-12-30

W-H HOLDINGS INC
S-1, 1997-12-30

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 29, 1997

REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
W-H HOLDINGS, INC.
(Name of Registrant as specified in its charter)

<TABLE>
<C> <C> <C>
TEXAS 3550 76-0281502
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>

10370 RICHMOND AVENUE
SUITE 650
HOUSTON, TEXAS 77042
(713) 974-9071
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

KENNETH T. WHITE, JR.
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
W-H HOLDINGS, INC.
10370 RICHMOND AVENUE
SUITE 650
HOUSTON, TEXAS 77042
(713) 974-9071
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

<TABLE>
<C> <C>
ROBERT H. WHILDEN, JR. WILLIAM N. FINNEGAN, IV
VINSON & ELKINS L.L.P. DAVID P. OELMAN
2300 FIRST CITY TOWER ANDREWS & KURTH L.L.P.
1001 FANNIN 4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002 600 TRAVIS
(713) 758-2222 HOUSTON, TEXAS 77002
(713) 220-4200
</TABLE>

---------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=================================================================================================================
PROPOSED
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $1.00 par value.................. $80,500,000 $23,748
=================================================================================================================
</TABLE>

(1) Includes shares of Common Stock subject to the Underwriters' over-allotment
option.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o) under the Securities Act of 1933, as amended.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED DECEMBER 29, 1997

PROSPECTUS
, 1998

W-H HOLDINGS, INC.

COMMON STOCK

All of the shares of Common Stock, $1.00 par value (the "Common Stock"), of
W-H Holdings, Inc. (the "Company") offered hereby are being issued and sold by
the Company (the "Offering"). Prior to the Offering, there has been no public
market for the Common Stock. It is currently estimated that the initial public
offering price will be between $ and $ per share. For
information relating to the factors to be considered in determining the initial
public offering price, see "Underwriting."

Application will be made for quotation of the Common Stock on the Nasdaq
National Market under the symbol " ."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREIN FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Per Share................................ $ $ $
Total(3)................................. $ $ $
- --------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses estimated at $ , which will be paid by
the Company.
(3) The Company has granted to the Underwriters an option exercisable within 30
days after the date hereof to purchase up to additional shares of
Common Stock at the Price to the Public, less the Underwriting Discounts and
Commissions, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to the Public, Underwriting Discounts and
Commissions and Proceeds to the Company will be $ , $ and
$ , respectively. See "Underwriting."

The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters against payment
therefor and subject to certain prior conditions, including their right to
reject orders in whole or in part. It is expected that delivery of share
certificates representing the Common Stock will be made in New York, New York,
on or about , 1998.

DONALDSON, LUFKIN & JENRETTE JEFFERIES & COMPANY, INC.
SECURITIES CORPORATION
<PAGE> 3

[MAP OF GULF COAST REGION SHOWING OPERATING LOCATION]
[PICTURES OF CERTAIN FACILITIES AND EQUIPMENT]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the historical and pro forma financial statements, including the
notes thereto, appearing elsewhere in this Prospectus. Unless otherwise
indicated, the information in this Prospectus assumes that the Underwriters'
over-allotment option is not exercised and gives effect to a for 1 split of
the Common Stock to be effected by means of a stock dividend immediately prior
to the Offering. References to the Company in this Prospectus include W-H
Holdings, Inc. and, unless the context otherwise indicates, its subsidiaries.
Unless otherwise indicated, the financial and operational information contained
herein gives effect to the acquisition of Integrity Industries, Inc. in
September 1997 (the "Integrity Acquisition"). The Company also recently
completed the acquisition of Diamond Wireline Services, Inc. in October 1997
(the "Diamond Acquisition" and, together with the Integrity Acquisition, the
"Recent Acquisitions").

THE COMPANY

W-H Holdings, Inc. is a diversified oilfield service company focused on
providing products and services throughout the Gulf Coast region, primarily
offshore in the Gulf of Mexico. The Company's customers are major and
independent oil and gas companies, other independent oilfield service companies
and refining and petrochemical companies. Since the Company's formation in 1989,
it has entered six lines of business through the acquisition of high quality,
well managed independent companies with strong market share positions and
substantial growth opportunities in the markets in which they operate. These
companies continue to be operated by their former owners and key managers, all
of whom have an equity interest in the Company. The Company focuses on discrete
products and services that provide its customers with attractive alternatives to
certain components of the integrated services packages typically marketed by
larger oilfield service providers. The Company believes that its unique business
approach enables it to compete successfully against these larger providers while
maintaining rapid growth and high profitability.

The Company's operations include specialized oilfield equipment rental,
wireline logging and perforating services and the manufacture and wholesale of
speciality chemical products. Certain of the Company's products, including
downhole drilling motors, high-torque drill pipe and measurement-while-drilling
("MWD") systems, are essential for directional drilling. The Company also rents
equipment and provides services used in connection with the cleaning and
maintenance of refining, petrochemical and oil and gas drilling and production
facilities.

As a result of a series of new product introductions, increased market
share in established product lines and increased onshore and offshore drilling
and production activity, the Company has experienced significant growth in
revenue, EBITDA (as defined herein) and net income. For the fiscal year ended
September 30, 1997, on an historical basis, the Company generated revenue of
$48.2 million, EBITDA of $13.2 million and net income, excluding a non-recurring
compensation expense, of $3.8 million. These amounts represent increases of
approximately 33%, 35% and 22%, respectively, over fiscal 1996. On a pro forma
basis for the fiscal year ended September 30, 1997, the Company would have
generated revenue, EBITDA and net income of $59.1 million, $14.9 million and
$5.8 million, respectively. See "Selected Historical and Pro Forma Consolidated
Financial Data."

The Company conducts its operations through the following operating
businesses:

- THOMAS TOOLS. Thomas Tools, Inc. ("Thomas Tools"), which has been in
business since 1961, is a leading provider of specialized rental
equipment, tools and tubular goods for drilling, completion and workover
applications onshore and offshore in the Gulf Coast region. Thomas Tools
provides a broad range of drilling equipment, including drill pipe and
drill collars, pressure control equipment, including blowout preventers,
and pipe handling equipment. Thomas Tools maintains an extensive
inventory of drill pipe and tools at its facility in southern Louisiana
and a facility in South Texas, which was opened in the fall of 1996.

Thomas Tools also provides MWD systems, a critical component in
directional drilling. Following over two years of research, development
and testing, Thomas Tools entered the MWD business in mid-1997
3
<PAGE> 5

through the introduction of The Tracker(R), a proprietary and patent
pending MWD system. The Tracker(R) is used by independent directional
drillers to drill wells for both major and independent oil and gas
companies and has been successfully used in slim-hole (down to a 3 1/2"
drilling assembly), high temperature and high pressure drilling
conditions.

- DRILL MOTOR SERVICES. Drill Motor Services, Inc. ("Drill Motor
Services"), which has been in business since 1991, is a leading provider
of drilling motors to independent directional drillers onshore and
offshore in the Gulf Coast region. Drill Motor Services' products include
a full range of high performance downhole drilling motors and other
related tools, which are used by major and independent oil and gas
companies in all directional drilling applications, including deepwater
and harsh environments. Drill Motor Services has significantly expanded
its inventory of drilling motors from 64 in 1995 to 150 currently.

- PERF-O-LOG. Perf-O-Log, Inc. ("Perf-O-Log"), which has been in business
since 1982, is a provider of wireline logging and perforating services to
oil and gas companies onshore and offshore in the Gulf Coast region.
Perf-O-Log provides services primarily to the existing (cased-hole)
markets and, therefore, is more dependent on maintenance and enhancement
of existing production than new drilling activity. The Company believes
that Perf-O-Log's experienced workforce has established a reputation for
providing high quality services in challenging environments. Perf-O-Log's
fleet of perforating trucks, which operate onshore, and skid units, which
operate in the inland waterways and offshore, are deployed from its
facilities in Louisiana, Mississippi and, as a result of the Diamond
Acquisition, in South Texas.

- INTEGRITY. Integrity Industries, Inc. ("Integrity"), which has been in
business since 1986, manufactures and wholesales over 50 different
specialty chemical products, which are sold to a broad customer base
comprised largely of retail drilling fluid providers both domestically
and internationally. Consistent with its acquisition strategy, the
Company purchased Integrity based on its history of product innovations,
well established reputation and management expertise. Integrity's access
to the capital resources of the Company has allowed it to take advantage
of the growing drilling fluids market by significantly increasing its
production levels and accelerating its development of new products. One
of Integrity's most recent product innovations is a high performance
lubricant that allows the use of environmentally sensitive water based
drilling fluids in deep, severe drilling environments in the North Sea.

- CHARLES HOLSTON. Charles Holston, Inc. ("Charles Holston"), which has
been in business since 1985, provides integrated cleaning and maintenance
services to refining and petrochemical companies and major and
independent oil and gas companies in Louisiana. Charles Holston's
services include on-site cleaning and waste management, waste
transportation, wastewater services, container cleaning and repair,
emergency spill response services and other general plant support
services. Charles Holston operates a fleet of 65 high velocity vacuum
trucks, 175 rental tanks and other specialty rental equipment from its
Louisiana facility.

- WELL SAFE. Well Safe, Inc. ("Well Safe"), which has been in business
since 1984, is a leading provider of equipment used in the detection of
and protection from toxic gases encountered by refining and petrochemical
companies and oil and gas companies onshore and offshore in the Gulf
Coast region. Well Safe rents electronic detection and monitoring
equipment, breathing units and other personal safety equipment. In
addition, Well Safe provides comprehensive safety planning services,
safety training and safety supervision. The Company believes that Well
Safe is the only ISO 9002 certified provider of these products and
services in its areas of operation.
4
<PAGE> 6

BUSINESS STRATEGY

The Company's strategy is to grow revenue and earnings through internal
expansion and strategic acquisitions. The key components of this strategy are
set forth below:

Capitalize on Leading Market Positions in Specialized Segments. The
Company's operating subsidiaries maintain leading positions in many of the
specialized market segments and geographic regions in which they operate. The
Company's strategy is to build on the successful experiences of the businesses
it acquires. This strategy is accomplished by retaining key management,
providing them with an equity interest in the Company, and continuing to operate
under the name and with the operating procedures that were in place when the
business was acquired. The Company believes the excellent reputation and
operating expertise of each of its businesses, together with its proprietary
product lines, will provide opportunities to successfully expand its rental
inventory, pursue further geographic expansion and develop and introduce new
products.

Provide an Attractive Alternative to the Major Oilfield Service
Companies. One of the Company's primary business objectives is to provide high
quality products and services which represent attractive alternatives to certain
components of the integrated services packages typically marketed by larger
oilfield service providers. The Company believes its success in competing
against major oilfield services companies is attributable to (i) significant
management expertise in each of its business units, (ii) consistently high
quality products and services provided through its experienced field work force
and (iii) proprietary technology in certain specialized product areas.

Expand to Accommodate Increasing Drilling and Workover Activity. The
Company's business activity is directly affected by the volume of drilling,
completion and workover activity in its areas of operations. The onshore and
offshore Gulf Coast region has experienced significant increases in drilling and
workover rig counts and utilization during the past five years. Management
believes that drilling and workover activity will continue to increase as
improved discovery rates continue to positively impact the spending plans of
major and independent oil and gas companies. The Company intends to capitalize
on such growth through capital expansion.

Satisfy Increasing Demand for Directional Drilling Products and
Services. Demand for directional drilling products and services has grown
significantly over the past several years. This growth is reflected in the
increasing number of wells using directional drilling technology on an absolute
basis and as a percentage of total wells drilled. The Company believes that its
drilling motors, MWD systems, high torque drill pipe and specialized drilling
fluids will continue to experience increased demand as directional drilling
activity increases, particularly in deepwater locations, and as independent
directional drillers seek to overcome the current shortage of equipment
available to them.

Selectively Acquire Complementary Businesses. The Company will seek
additional acquisitions of high quality, well managed independent companies with
strong market share positions and substantial growth opportunities in the
markets in which they operate. The Company intends to focus on acquisitions that
expand its operations into new products and services, broaden its geographic
scope and increase its market share. The Company will continue to provide
management and key personnel of acquired businesses with stock based incentives.
5
<PAGE> 7

THE OFFERING

Common Stock offered by the
Company.......................... shares

Common Stock to be outstanding
after the Offering............... shares(1)

Use of Proceeds.................. The Company intends to
use the net proceeds of
the Offering to repay
indebtedness incurred
in connection with the
Recent Acquisitions and
the Company's
recapitalization
described herein (the
"Recapitalization").
See "The Company --
Recapitalization" and
"Use of Proceeds."

Proposed Nasdaq National Market
symbol........................... " "
- ---------------

(1) Does not include shares of Common Stock issuable upon the exercise
of outstanding warrants and options. See "Certain
Transactions -- Recapitalization" and "Management."

RISK FACTORS

For a discussion of certain matters that should be considered by
prospective investors, see "Risk Factors."
6
<PAGE> 8

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

The summary historical consolidated financial data for the Company set
forth below are derived from the audited consolidated financial statements of
the Company and should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere herein. The
pro forma statement of operations data of the Company set forth below are
derived from the Unaudited Pro Forma Consolidated Statement of Operations for
the year ended September 30, 1997 that appears elsewhere herein and gives effect
to (i) the Integrity Acquisition and the Offering and the application of the
estimated net proceeds therefrom as if such events had occurred on October 1,
1996 and (ii) the elimination of non-recurring compensation expense resulting
from the redemption of options in connection with the Recapitalization. The pro
forma financial information does not purport to represent what the Company's
results of operations actually would have been had these events, in fact,
occurred at the beginning of the period, nor are they intended to project the
Company's results of operations for any future period or date.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------
PRO FORMA
1995 1996 1997 1997
------- ------- ------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues......................................... $27,360 $36,215 $48,197 $59,099
Operating expenses............................... 11,931 15,448 20,299 27,559
Depreciation and amortization.................... 2,489 3,395 4,898 5,337
Selling, general and administrative expense...... 9,078 10,955 28,181(1) 16,723
------- ------- ------- -------
Operating income (loss).......................... 3,862 6,418 (5,181) 9,480
Interest expense................................. 1,003 1,301 2,281 446
Other (income) expense........................... 5 17 (4) (35)
------- ------- ------- -------
Income (loss) before income taxes................ 2,854 5,099 (7,458) 9,069
Provision for income taxes....................... 1,258 1,985 2,187 3,307
------- ------- ------- -------
Net income (loss)................................ $ 1,596 $ 3,114 $(9,645) $ 5,762
======= ======= ======= =======
Earnings (loss) per share........................ $ $ $ $
======= ======= ======= =======
Weighted average shares outstanding..............
OTHER FINANCIAL DATA:
EBITDA(2)........................................ $ 6,346 $ 9,795 $13,175 $14,852
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
--------------------------
ACTUAL AS ADJUSTED(3)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $ 16,837 $
Total assets.............................................. 80,881
Total debt................................................ 100,200
Total shareholders' equity (deficit)...................... (30,340)
</TABLE>

- ---------------

(1) Includes $13.5 million of non-recurring compensation expense resulting from
the redemption of options in connection with the Recapitalization.

(2) The Company calculates EBITDA as earnings before interest expense, income
taxes, depreciation and amortization and non-recurring compensation expense
of $13.5 million in fiscal 1997 resulting from the redemption of options in
connection with the Recapitalization. EBITDA should not be considered as an
alternative to net income or any other measure of operating performance
calculated in accordance with generally accepted accounting principles.
EBITDA is widely used by financial analysts as measures of financial
performance. The Company's measurement of EBITDA may not be comparable to
similarly titled measures reported by other companies.

(3) Gives effect to the Offering at an assumed initial public offering price of
$ per share and the use of the estimated net proceeds therefrom as if
the Offering had occurred on September 30, 1997. See "Capitalization."
7
<PAGE> 9

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Common Stock offered hereby.

DEPENDENCE ON OIL AND GAS INDUSTRY; INDUSTRY VOLATILITY

The Company's business depends in large part on the conditions of the oil
and gas industry, and specifically on the capital investment of the Company's
customers. The demand for oilfield services has traditionally been cyclical, as
purchases of products and services such as those provided by the Company are, to
a substantial extent, deferrable in the event oil and gas companies reduce their
capital investment as a result of conditions existing in the oil and gas
industry or general economic downturns.

Demand for the Company's products and services is primarily a function of
oil and gas exploration and workover activity in the Gulf of Mexico and along
the Gulf Coast. The level of oilfield activity is affected in turn by the
willingness of oil and gas companies to make capital expenditures for the
exploration, development and production of oil and natural gas. The levels of
such capital expenditures are influenced by oil and gas prices, the cost of
exploring for, producing and delivering oil and gas, the sale and expiration
dates of leases for the exploration, drilling and production of oil and gas in
the United States, the discovery rate of new oil and gas reserves, local and
international political and economic conditions and the ability of oil and gas
companies to generate capital. Although the production sector of the oil and gas
industry is less immediately affected by changing prices and, therefore, less
volatile than the exploration sector, producers would likely react to declining
oil and gas prices by reducing expenditures, which could adversely affect the
business of the Company. No assurance can be given as to the future price of oil
and natural gas or the level of oil and gas industry activity.

The Company's results in recent periods have benefitted from improved
market conditions for the Company's products and services associated with an
increase in drilling and workover activity and the trend towards the drilling of
deeper wells in harsh environments. There can be no assurance that the current
market conditions will continue. Any material decline in the current level of
drilling and workover activity could have a material adverse impact on the
Company's future results.

OPERATING RISKS

Certain products of the Company are used in potentially hazardous drilling,
completion and production applications, as well as cleaning, maintenance and
safety operations, that can cause personal injury, product liability and
environmental claims. Litigation arising from a catastrophic occurrence at a
location where the Company's equipment and/or services are used may in the
future result in the Company being named as a defendant in lawsuits asserting
potentially large claims.

In addition, certain of the Company's employees who perform services on
offshore platforms and vessels are covered by provisions of the Jones Act, the
Death on the High Seas Act and general maritime law. These laws operate to make
the liability limits established by state workers' compensation laws
inapplicable to these employees and, instead, permit them or their
representatives to pursue actions against the Company for damages on job-related
injuries, with generally no limitations on the Company's potential liability.

The frequency and severity of such incidents affect the Company's operating
costs, insurability and relationships with customers, employees and regulators.
Any increase in the frequency or severity of such incidents, or the general
level of compensation awards with respect thereto, could affect the ability of
the Company to obtain projects from oil and gas companies or insurance and could
have a material adverse effect on the Company.

The Company maintains insurance coverage that it believes is adequate in
amount and type for the risks associated with the Company's business. Such
insurance does not, however, provide coverage for all liabilities (including
liability for certain events involving pollution), and there is no assurance
that its insurance coverage will be adequate to cover claims that may arise or
that the Company will be able to maintain adequate

8
<PAGE> 10

insurance at rates it considers reasonable. The occurrence of an event not fully
covered by insurance could have a material adverse effect on the financial
condition and results of operations of the Company.

SEASONALITY AND ADVERSE WEATHER CONDITIONS

Demand for the Company's products and services may be affected by the
seasonality of oil and gas drilling activity in the Gulf Coast and offshore in
the Gulf of Mexico. Drilling activity is generally highest in the spring, summer
and fall months with the lowest activity experienced in winter months as a
result of inclement weather. Operations may also be affected by the rainy
weather, hurricanes and other storms prevalent in the Gulf of Mexico and along
the Gulf Coast throughout the year. Accordingly, the Company's operating results
may vary from quarter to quarter, depending upon factors outside of its control,
and full year results are not likely to be a direct multiple of any particular
quarter or combination of quarters.

DEPENDENCE ON KEY PERSONNEL, SKILLED WORKERS AND EQUIPMENT

The Company depends to a large extent on the abilities and continued active
participation of its President, Chief Executive Officer and Chairman, Ken White,
Jr., and the management and key employees of its operating subsidiaries. The
loss of the services of any of these persons could have a material adverse
effect on the Company's business and operations. See "Management."

The Company's future growth prospects will also depend substantially on its
ability to attract skilled workers and procure additional rental equipment, and
its ability to maintain its current level of profitability will be largely
dependent on retaining the skilled workers presently employed by the Company.
The demand for skilled workers in the Gulf Coast region is high and the supply
is limited. A significant increase in the wages paid by competing employers
could result in a reduction in the Company's skilled labor force, increases in
the wage rates paid by the Company, or both. Additionally, there is a general
shortage of drilling equipment and supplies. If the Company cannot obtain
adequate sources of additional equipment at reasonable prices, its ability to
meet increased demand for rental equipment may be delayed or adversely affected.
If either of these events occurred, the capacity and profitability of the
Company could be diminished and the growth potential of the Company could be
impaired.

INTENSE COMPETITION

The Company competes in highly competitive areas of the energy services
markets. The depressed oil and gas prices and the consequent decline in the oil
and gas industry in the 1980s has led to a consolidation of the number of
companies providing services similar to those provided by the Company. This
reduced number of companies competes intensely for available projects. Many of
the Company's competitors are larger and have greater marketing, distribution,
financial and other resources than the Company. There can be no assurance that
the Company's operations will continue at current volumes or prices if its
current competitors or new market entrants introduce new products or services
with better features, performance, prices or other characteristics than the
Company's products and services. Competitive pressures or other factors also may
result in significant price competition that could have a material adverse
effect on the Company's results of operations and financial condition.
Furthermore, competition among oilfield service and equipment providers is also
based on a provider's reputation for safety and quality. Although the Company
believes that its reputation for safety and quality service is good, there can
be no assurance that the Company will be able to maintain its competitive
position. See "Business -- Competition."

REGULATORY AND ENVIRONMENTAL MATTERS

The Company's business is significantly affected by foreign, federal, state
and local laws and other regulations relating to the oil and gas industry, the
petrochemical and processing industry, worker safety and environmental
protection, by changes in such laws and by changing administrative regulations
and the level of enforcement thereof. The Company cannot predict the level of
enforcement of existing laws and regulations or how such laws and regulations
may be interpreted by enforcement agencies or court rulings, whether

9
<PAGE> 11

additional laws and regulations will be adopted, or the effect such changes may
have on it, its businesses or financial condition.

The Company depends on the demand for its products and services from oil
and gas companies and refining and petrochemical companies, and such demand is
affected by changing taxes, price controls and other laws and regulations
relating to the oil and gas industry generally. The adoption of laws and
regulations curtailing exploration and development drilling for oil and gas in
the Company's areas of operations for economic, environmental or other policy
reasons would adversely affect the Company's operations by limiting demand for
its services. In addition, the Company's petrochemical processing services are
substantially dependent on the cleaning and maintenance operations of its
customers. Numerous state and federal laws and regulations affect the necessity,
timing and frequency of the cleaning and maintenance operations of petrochemical
and other processors and consequently affect the demand for the Company's
equipment and services. The Company cannot determine the extent to which its
future operations and earnings may be affected by new legislation, new
regulations or changes in existing regulations or enforcement.

The Company's operations are affected by numerous foreign, federal, state
and local environmental laws and regulations. The technical requirements of
these laws and regulations are becoming increasingly expensive, complex and
stringent. These laws may provide for "strict liability" for damages to natural
resources or threats to public health and safety, rendering a party liable for
environmental damage without regard to negligence or fault on the part of such
party. Sanctions for noncompliance may include revocation of permits, corrective
action orders, administrative or civil penalties, and criminal prosecution.
Certain environmental laws provide for joint and several strict liability for
remediation of spills and releases of hazardous substances. In addition,
companies may be subject to claims alleging personal injury or property damage
as a result of alleged exposure to hazardous substances, as well as damage to
natural resources. Such laws and regulations may also expose the Company to
liability for the conduct of or conditions caused by others, or for acts of the
Company that were in compliance with all applicable laws at the time such acts
were performed. See "Business -- Governmental Regulations."

TECHNOLOGY RISKS

Certain of the Company's operations, primarily its MWD services and
speciality chemical sales, are based substantially on its proprietary
technology. The Company's success in these areas depends to a significant extent
on the development and implementation of new product designs and formulations.
Whether the Company can continue to develop products and technology to meet
evolving industry requirements at levels of capability and prices acceptable to
its customers will be a significant factor in determining the Company's ability
to compete in these areas. Many of the Company's competitors have greater
resources devoted to research and development of new products and technologies
than does the Company. While the Company has patents on certain of its
technologies and products and has applied for patents on others, there is no
assurance that any patents secured by the Company will not be successfully
challenged by others or will protect it from the development of similar products
by others. See "Business -- Properties."

DEPENDENCE ON SUBSIDIARIES

The Company is structured as a holding company which owns the stock of the
Company's operating subsidiaries. The Company's current operations are conducted
exclusively through its subsidiaries, and the Company's only significant assets
are the capital stock of its subsidiaries. Substantially all of the assets of
the Company's subsidiaries are pledged as security to the lenders under the
Company's Credit Facility.

CONCENTRATION OF COMMON STOCK OWNERSHIP

Upon completion of the Offering, the Company's principal stockholder,
together with such stockholder's officers, directors and affiliates, will
beneficially own approximately % ( % if the Underwriters' over-allotment
option is exercised in full) of the outstanding shares of Common Stock, assuming
the exercise of their outstanding warrants. Accordingly, these stockholders will
have the ability to influence the election of the Company's directors and the
outcome of other matters submitted to a vote of the Company's stockholders,

10
<PAGE> 12

which may have the effect of delaying or preventing a change of control of the
Company. See "Principal Shareholders."

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of the Offering, the Company will have a total of
shares of Common Stock outstanding. Of these shares, the
shares of Common Stock offered hereby ( shares if the Underwriters'
over-allotment option is exercised in full) will be freely tradeable without
restrictions or registration under the Securities Act of 1933, as amended (the
"Securities Act"), by persons other than "affiliates" of the Company, as defined
under the Securities Act. The remaining shares of Common Stock
outstanding will be restricted securities as that term is defined by Rule 144 as
promulgated under the Securities Act. In addition shares of Common
Stock may be issued pursuant to options that will be issued under the Company's
stock option plan or pursuant to existing options and warrants. See
"Management -- Executive Compensation."

Under Rule 144 (and subject to the conditions thereof, including volume
limitations), all of the restricted shares will become eligible for
sale within one year of the Offering. However, the directors, officers and
stockholders of the Company have agreed that they will not, directly or
indirectly, sell any shares of Common Stock for a period of 180 days from the
date of this Prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation. Future sales of substantial amounts of Common
Stock in the public market following the Offering could adversely affect the
market price of the Common Stock. For further information concerning Common
Stock available for resale after the Offering, see "Shares Eligible for Future
Sale" and "Underwriting."

Certain of the Company's stockholders have registration rights, which have
been waived for the Offering. In addition, following the consummation of the
Offering, the Company intends to register the issuance of up to shares
of Common Stock purchased by the exercise of options granted under the Company's
1997 Option Plan. All shares issued upon exercise of such options will be freely
tradeable without restrictions or registration under the Securities Act, by
persons other than "affiliates" of the Company, as defined under the Securities
Act. Affiliates of the Company will be able to sell such shares under Rule 144.
See "Principal Shareholders -- Stockholders Agreement."

ABSENCE OF PRIOR PUBLIC MARKET

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price will be determined by negotiation
between the Company and the Underwriters and may not be indicative of the price
at which the Common Stock will trade following the completion of the Offering.
See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The completion of the Offering
provides no assurance that an active trading market for the Common Stock will
develop or, if developed, that it will be sustained. The market price of the
Common Stock could also be subject to significant fluctuation and may be
influenced by many factors, including variations in results of operations,
variations in natural gas and oil prices, investor perceptions of the Company
and the oilfield services and refinery and petrochemical services industries,
and general economic and other conditions.

DILUTION

Purchasers of Common Stock in the Offering will experience immediate and
substantial dilution in the net tangible book value of their stock. See
"Dilution."

11
<PAGE> 13

FORWARD LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this
Prospectus that address activities, events or developments that the Company
intends, expects, projects, believes or anticipates will or may occur in the
future, including, without limitation, statements regarding the Company's
business strategy, plans and objectives; statements expressing beliefs and
expectations regarding future demand for the Company's products and services and
other events and conditions that may influence the oilfield services and
refinery and petrochemical services markets and the Company's performance in the
future; statements concerning future expansion plans, including the anticipated
level of capital expenditures for, and the nature and scheduling of, purchases
or manufacture of rental tool inventory, wireline equipment or drilling fluids
and other such matters are forward-looking statements. Such statements are based
on certain assumptions and analyses made by management of the Company in light
of its experience and its perception of historical trends, current conditions,
expected future developments and other factors it believes to be appropriate.
The forward-looking statements included in this Prospectus are also subject to a
number of material risks and uncertainties. Important factors that could cause
actual results to differ materially from the Company's expectations are
discussed herein under the captions "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations." Prospective
investors are cautioned that such forward-looking statements are not guarantees
of future performance and that actual results, developments and business
decisions may differ from those anticipated, estimated or expected.

12
<PAGE> 14

THE COMPANY

The Company was incorporated in 1989 under the laws of the State of Texas.
The Company's principal executive offices are located at 10370 Richmond Avenue,
Suite 650, Houston, Texas 77042, and its telephone number is (713) 974-9071.

ACQUISITIONS

Since its formation, the Company has acquired the following seven
businesses:

<TABLE>
<CAPTION>
OPERATING SUBSIDIARY DATE ACQUIRED PRESENT FACILITIES BUSINESS
- -------------------- ------------- ------------------ --------
<S> <C> <C> <C>
Diamond October 1997 Corpus Christi, TX Wireline Services
Integrity September Kingsville, Conroe and Victoria, TX Specialty Chemicals
1997
Drill Motor Services December 1995 Broussard, LA; Elk City, OK Drilling Motors
Thomas Tools June 1994 New Iberia, LA; Victoria, TX Rental Tools
Perf-O-Log December 1990 Lafayette, LA; Laurel, MS Wireline Services
Well Safe May 1990 Mobile and Decatur, AL; Gonzales and Safety Equipment
Sulphur, LA; Beaumont and Houston,
TX
Charles Holston May 1989 Jennings, Eunice, Baton Rouge, Lake Cleaning and
Charles and Lafayette, LA Maintenance
</TABLE>

RECAPITALIZATION

On August 11, 1997, the Company and W-H Investment, L.P. ("W-H Investment")
entered into an Agreement and Plan of Recapitalization, providing for a series
of equity and debt transactions. W-H Investment is a limited partnership
organized by The Jordan Company ("Jordan"), a private merchant banking firm.
Pursuant to the Recapitalization, a substantial portion of the then issued and
outstanding shares of Common Stock (including warrants and options) were
repurchased by the Company and retired. The remaining issued and outstanding
shares were retained by certain shareholders. Certain members of the management
of the Company were issued warrants to purchase Common Stock. Also as part of
the Recapitalization, W-H Investment purchased 80% of the Common Stock and was
issued certain warrants to purchase Common Stock. In connection with the
Recapitalization, the Company entered into a $95.0 million senior secured credit
facility (the "Credit Facility") and issued $24.0 million in aggregate principal
amount of 12 1/2% subordinated debentures due 2007 (the "Subordinated Notes").
See "Principal Shareholders" and "Certain Transactions-Recapitalization."

13
<PAGE> 15

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common
Stock offered by the Company hereby, after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company, are
estimated to be approximately $ million ($ if the Underwriters'
over-allotment option is exercised in full), based on an assumed initial Price
to the Public of $ per share, the midpoint of the range set forth on
the cover page of this Prospectus.

The Company intends to use the net proceeds of the Offering: (i) to repay
in full, for a cash payment of $ million, the Subordinated Notes; and (ii)
to repay approximately $ million of principal and accrued interest on the
Credit Facility. Pending such uses, the net proceeds will be invested in
short-term, investment grade, interest-bearing securities. See "Managements'
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Certain Transactions."

Upon completion of the Offering and the application of the net proceeds
therefrom, the Company will have approximately $20 million of available
commitments under the Revolving Line of Credit, which may be used for capital
expansion projects, acquisitions, working capital and general corporate
purposes.

The amounts outstanding under the Credit Facility bear interest at floating
rates equal to the London Interbank Offered Rate ("LIBOR") plus a range of 2.75%
to 3.25% and mature between August 2002 and August 2003. At September 30, 1997,
the weighted average applicable interest rate under the Credit Facility was
8.68%. The Subordinated Notes bear interest at 12 1/2% per annum and are due in
September 2006 and September 2007. The debt incurred under the Subordinated
Notes and the Credit Facility was used to fund the Recapitalization and the
Recent Acquisitions. See "The Company -- Recapitalization" and "Certain
Transactions-Recapitalization."

DIVIDEND POLICY

The Company has never paid cash dividends on its Common Stock and does not
intend to pay cash dividends on the Common Stock in the foreseeable future. The
Company currently intends to retain its cash for the continued development of
its business. In addition, the Credit Facility currently restricts the ability
of the Company to pay dividends. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

14
<PAGE> 16

DILUTION

The net tangible book value of the Company at September 30, 1997 was
$ per share of Common Stock. Net tangible book value per share is
determined by dividing the tangible net worth of the Company (tangible assets
less total liabilities) by the total number of outstanding shares of Common
Stock. After giving effect to the sale of the shares offered hereby (at an
assumed initial Price to the Public of $ per share) and the receipt of the
estimated net proceeds (after deducting estimated underwriting discounts and
commissions and estimated expenses of the Offering), the net tangible book value
of the Company at September 30, 1997 would have been $ per share. This
represents an immediate increase in the net tangible book value of $
per share to existing shareholders and an immediate dilution (i.e., the
difference between the initial public offering price and the pro forma net
tangible book value after the Offering) to new investors purchasing Common Stock
in the Offering. The following table illustrates the per share dilution to new
investors purchasing Common Stock in the Offering of $ per share:

<TABLE>
<S> <C> <C>
Assumed public offering price per share............................... $
Net tangible book value per share at September 30, 1997... $
Increase per share attributable to new investors..........
Pro forma net tangible book value per share after the Offering........
-------
Dilution per share to new investors................................... $
=======
</TABLE>

The following table sets forth, as of September 30, 1997, the number of
shares of Common Stock purchased from the Company, the total consideration paid
therefor and the average price per share paid by existing shareholders and by
new investors (based on an assumed initial Price to the Public of $ per
share):

<TABLE>
<CAPTION>
TOTAL CASH
SHARES PURCHASED CONSIDERATION AVERAGE
----------------- ------------------ PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
<S> <C> <C> <C> <C> <C>
Existing shareholders............... % $ % $
New investors.......................
------ ----- ------- -----
Total..................... 100.0% $ 100.0%
====== ===== ======= =====
</TABLE>

The foregoing computations assume no exercise of outstanding warrants or
stock options issued by the Company. Warrants to purchase a total of
shares of Common Stock are exercisable at a weighted average of $ per
share and stock options covering shares of Common Stock are exercisable
at a weighted average of $ per share. See "Management." In the event
the shares currently subject to outstanding warrants and stock options
were included in the foregoing calculations, the net tangible book value per
share before the Offering would be $ , the pro forma net tangible book
value per share after the Offering would be $ and the dilution per
share to new investors would be $ . In addition, the average price per
share paid by existing shareholders would increase to $ per share.

15
<PAGE> 17

CAPITALIZATION

The following table sets forth the capitalization of the Company at
September 30, 1997 and as adjusted to reflect the sale of the shares of Common
Stock offered hereby (at an assumed initial Price to the Public of
$ per share) and the application of the estimated net proceeds
therefrom. This table should be read in conjunction with "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of the Company and the
Unaudited Pro Forma Consolidated Statement of Operations and in each case the
related Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current maturities:
Credit Facility:
Revolving Line of Credit............................... $ -- $
Term A Facility........................................ 20,000
Term B Facility........................................ 40,000
Delayed Term Facility.................................. 15,000
Subordinated Notes........................................ 24,000
Other long-term debt...................................... 1,200
-------- --------
Total long-term debt, including current
maturities...................................... 100,200
Shareholders' equity (deficit):
Preferred Stock, $1.00 par value per share;
shares authorized; no shares outstanding............... --
Common Stock; $1.00 par value per share; shares
authorized; shares issued and outstanding, historical;
shares issued and outstanding, as adjusted
(1).................................................... 275
Additional paid-in capital................................ --
Retained deficit.......................................... (30,615)
-------- --------
Total shareholders' equity (deficit).............. (30,340)
-------- --------
Total capitalization.............................. $ 69,860 $
======== ========
</TABLE>

- ---------------

(1) Excludes approximately shares of Common Stock issuable upon the
exercise of outstanding stock options and shares of Common Stock
issuable upon the exercise of outstanding warrants.

16
<PAGE> 18

SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

The selected historical consolidated financial data for the Company set
forth below are derived from the audited consolidated financial statements of
the Company and should be read in conjunction with the Company's Consolidated
Financial Statements and Notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere herein. The
pro forma statement of operations data of the Company set forth below are
derived from the Unaudited Pro Forma Consolidated Statement of Operations for
the year ended September 30, 1997 that appear elsewhere herein and gives effect
to (i) the Integrity Acquisition and the Offering and the application of the
estimated net proceeds therefrom as if such events had occurred on October 1,
1996 and (ii) the elimination of non-recurring compensation expense resulting
from the redemption of options in connection with the Recapitalization. The pro
forma financial information does not purport to represent what the Company's
results of operations actually would have been had these events, in fact,
occurred at the beginning of the period, nor are they intended to project the
Company's results of operations for any future period or date.

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------
PRO FORMA
1993 1994 1995 1996 1997 1997
------- ------- ------- ------- ------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues............................ $15,230 $20,458 $27,360 $36,215 $48,197 $59,099
Operating expenses.................. 7,209 8,949 11,931 15,448 20,299 27,559
Depreciation and amortization....... 1,705 1,835 2,489 3,395 4,898 5,337
Selling, general and administrative
expense.......................... 6,006 6,975 9,078 10,955 28,181(1) 16,723
------- ------- ------- ------- ------- -------
Operating income (loss)............. 310 2,699 3,862 6,418 (5,181) 9,480
Interest expense.................... 906 769 1,003 1,301 2,281 446
Other (income) expense.............. 46 (25) 5 17 (4) (35)
------- ------- ------- ------- ------- -------
Income (loss) before income taxes... (642) 1,955 2,854 5,099 (7,458) 9,069
Provision for income taxes.......... -- 421 1,258 1,985 2,187 3,307
------- ------- ------- ------- ------- -------
Net income (loss)................... ($ 642) $ 1,534 $ 1,596 $ 3,114 $(9,645) $ 5,762
======= ======= ======= ======= ======= =======
Earnings (loss) per share...........
Weighted average shares
outstanding......................
OTHER FINANCIAL DATA:
EBITDA(2)........................... $ 1,969 $ 4,559 $ 6,346 $ 9,795 $13,175 $14,852
</TABLE>

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-----------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $ 1,885 $ 2,768 $ 3,888 $ 5,855 $16,837
Total assets........................ 13,300 21,001 23,137 33,796 80,881
Total debt.......................... 11,616 10,987 9,732 15,066 100,200
Total shareholders' equity
(deficit)........................ 226 6,844 8,644 12,285 (30,340)
</TABLE>

- ---------------

(1) Includes $13.5 million of non-recurring compensation expense resulting from
the redemption of options in connection with the Recapitalization.

(2) The Company calculates EBITDA as earnings before interest expense, income
taxes, depreciation and amortization and non-recurring compensation expense
of $13.5 million in fiscal 1997 resulting from the redemption of options in
connection with the Recapitalization. EBITDA should not be considered as an
alternative to net income or any other measure of operating performance
calculated in accordance with generally accepted accounting principles.
EBITDA is widely used by financial analysts as measures of financial
performance. The Company's calculation of EBITDA may not be comparable to
similarly titled measures reported by other companies.

17
<PAGE> 19

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

The following information should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto presented elsewhere in this
Prospectus.

OVERVIEW

Demand for the Company's services is primarily a function of oil and gas
exploration, development and workover activity in the Gulf of Mexico and along
the Gulf Coast. The level of oilfield activity is affected in turn by the
willingness of oil and gas companies to make capital expenditures for the
exploration, development and production of oil and natural gas. The levels of
such capital expenditures are influenced by oil and gas prices, the cost of
exploring for, producing and delivering oil and gas, the sale and expiration
dates of leases for the exploration, drilling and production of oil and gas in
the United States, the discovery rate of oil and gas reserves, local and
international political and economic conditions and the ability of oil and gas
companies to generate capital. Demand for the Company's cleaning and maintenance
services is driven by scheduled plant turnarounds, unscheduled plant outages and
day to day plant maintenance. See "Risk Factors -- Dependence on Oil and Gas
Industry; Industry Volatility."

RESULTS OF OPERATIONS

Year Ended September 30, 1997 Compared to Year Ended September 30, 1996

Revenues. Revenues increased by $12.0 million, or approximately 33%, to
$48.2 million for the year ended September 30, 1997 from $36.2 million for
fiscal 1996. This increase was primarily due to the increased demand for the
Company's products and services and the geographic expansion of certain of its
operating subsidiaries during fiscal 1997.

Operating Expenses. Operating expenses increased $4.9 million, or 31%, to
$20.3 million for the year ended September 30, 1997 from $15.4 million for
fiscal 1996. Operating expenses increased due to higher sales volumes. As a
percentage of revenues, operating expenses decreased from 43% in fiscal 1996 to
42% in fiscal 1997.

Depreciation and amortization. Depreciation and amortization increased by
$1.5 million, or 44%, to $4.9 million for the year ended September 30, 1997 from
$3.4 million for fiscal 1996. This increase is the result of an increase in the
Company's capital expenditures.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $17.2 million, or 157%, to $28.2 million
for the year ended September 30, 1997 from $11.0 million for fiscal 1996. Prior
to giving effect to a non-recurring charge of $13.5 million for the redemption
of options in connection with the Recapitalization, selling, general and
administrative expenses increased by $3.8 million, or 34%, during fiscal 1997.
This increase was primarily due to increased payroll costs from the larger
number of personnel on a company wide basis required to meet higher sales demand
in fiscal 1997. Excluding the non-recurring charge, selling, general and
administrative expenses remained at approximately 30% of revenues in each year.

Interest Expense. Interest expense for the year ended September 30, 1997
was $2.3 million, an increase of $1.0 million, or 75%, from $1.3 million for
fiscal 1996. The increase was due primarily to increased borrowing related to
financing the Company's fiscal 1997 capital expenditures and the
Recapitalization. See "The Company -- Recapitalization."

Net Income. Excluding the non-recurring $13.5 million charge for the
redemption of options in connection with the Recapitalization, net income
increased by $0.7 million, or 22%, to $3.8 million for the year ended September
30, 1997 from $3.1 million for fiscal 1996.

18
<PAGE> 20

Year Ended September 30, 1996 Compared to Year Ended September 30, 1995

Revenues. Revenues increased by $8.9 million, or approximately 32%, to
$36.2 million for the year ended September 30, 1996 from $27.4 million for
fiscal 1995. This increase was primarily due to increased demand for the
Company's products and services and an increase in its capital expenditures.

Operating Expenses. Operating expenses increased $3.5 million, or 29%, to
$15.4 million for the year ended September 30, 1996 from $11.9 million for
fiscal 1995. Operating expenses increased due to higher sales volumes. As a
percentage of revenues, operating expenses decreased from 44% in fiscal 1995 to
43% in fiscal 1996.

Depreciation and amortization. Depreciation and amortization increased $0.9
million, or 36%, to $3.4 million for the year ended September 30, 1996 from $2.5
million for fiscal 1995. This increase is the result of the Company's increase
in capital expenditures.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1.9 million, or 21%, to $11.0 million for
the year ended September 30, 1996 from $9.1 million for fiscal 1995. This
increase was primarily due to the increased number of personnel required to meet
increasing sales demand in fiscal 1996. Selling, general and administrative
expenses as a percentage of revenue decreased from 33% of revenue for the year
ended September 30, 1995 to 30% for the year ended September 30, 1996.

Interest Expense. Interest expense for the year ended September 30, 1996
was $1.3 million, an increase of $0.3 million, or 30%, from interest expense of
$1.0 million for fiscal 1995. This increase was due primarily to increased
borrowings to finance the Company's fiscal 1996 capital expenditures.

Net Income. Net income increased by $1.5 million, or 95%, to $3.1 million
for the year ended September 30, 1996 from $1.6 million for fiscal 1995. The
strong earnings growth experienced by the Company is primarily a result of both
increased revenue and a decrease in selling, general and administrative expenses
as a percent of sales.

LIQUIDITY AND CAPITAL RESOURCES

The primary liquidity needs of the Company are to fund capital expansions,
including expanding its rental tool inventory, and to pay principal and interest
on indebtedness. The Company's principal sources of funds have been cash flow
from operations and borrowings under the Credit Facility and Subordinated Notes.
Other sources of cash have included approximately $9.3 million of net proceeds
received from the sale of shares of Common Stock in connection with the
Recapitalization in fiscal 1997. As of September 30, 1997, the Company had net
working capital of approximately $16.8 million, of which amount $3.1 million was
used to fund the Diamond Acquisition.

Net cash provided by operating activities was $5.3 million in fiscal 1996
and $2.4 million in fiscal 1997. Decreases in cash flow from operating
activities are principally the result of working capital requirements
attributable to increases in accounts receivable and inventory.

In August 1997, the Company established the Credit Facility to effectuate
the Recapitalization and fund the Recent Acquisitions. As of September 30, 1997,
there was $75.0 million outstanding under the Credit Facility. The Company
intends to use the net proceeds of the Offering to repay a portion of the
indebtedness incurred under the Credit Facility. Upon completion of the Offering
and the application of the net proceeds therefrom as described herein, the
Company will have approximately $ million in outstanding indebtedness under
the Credit Facility. The Credit Facility provides for a Revolving Line of Credit
up to $20.0 million which will mature in August 2002 and bears interest at an
annual rate of LIBOR plus a margin (2.75% at September 30, 1997) that depends on
the Company's debt coverage ratio. As of December 31, 1997, the Company had
$ million outstanding under the Revolving Line of Credit. Borrowings under
the Revolving Line of Credit are available for letters of credit, working
capital, general corporate purposes and certain acquisitions. Indebtedness under
the Credit Facility is guaranteed by the Company's subsidiaries and
collateralized by accounts receivable, equipment, inventory and contract rights
of the Company and its subsidiaries. Pursuant to the Credit Facility, the
Company has agreed to maintain certain financial ratios. The Credit Facility
also imposes certain limitations on the ability of the Company to make capital
expenditures,

19
<PAGE> 21

pay dividends or other distributions to its stockholders, make acquisitions or
incur indebtedness outside of the Credit Facility. See "Use of Proceeds."

During fiscal 1997, the Company made capital expenditures of approximately
$18.0 million, primarily for expansion of its rental tool inventory. Management
currently projects capital expenditures, excluding the Diamond Acquisition and
other acquisitions, of approximately $13.0 million during fiscal 1998, primarily
for additional rental tool inventory and wireline equipment. The Company
believes that cash generated from operations and amounts available under the
Revolving Line of Credit will provide sufficient funds for the Company's
identified capital projects, debt service and working capital requirements.
However, part of the Company's strategy involves the acquisition of companies
which have products and services complementary to the Company's existing
strategic base of operations. Depending on the size of any future acquisitions,
the Company may require additional debt financing, possibly in excess of the
limits of the Credit Facility, or additional equity financing. Although the
Company is continually evaluating potential acquisitions, it does not have any
contracts, understandings or arrangements with respect to any material
acquisitions.

BUSINESS

GENERAL

The Company's operations include specialized oilfield equipment rental,
wireline logging and perforating services and the manufacture and wholesale of
specialty chemical products. Certain of the Company's products, including
downhole drilling motors, high-torque drill pipe and measurement-while-drilling
("MWD") systems, are essential for directional drilling. The Company also rents
equipment and provides services used in connection with the cleaning and
maintenance of refining and petrochemical facilities and oil and gas facilities.

INDUSTRY OVERVIEW

Demand for the Company's oilfield products and services is substantially
dependent upon levels of drilling activity and, to a lesser extent, production
and workover activity. The Gulf Coast region has experienced increased drilling
and workover activity levels in recent years and is one of the most prolific
hydrocarbon producing regions in the world. Recent increases in drilling
activity levels in the Gulf of Mexico are largely attributable to (i) favorable
oil and gas prices, (ii) increasing worldwide demand for hydrocarbons, (iii)
rapid technological advancements, such as advances in 3-D seismic technology and
directional drilling techniques, and (iv) significant improvement in the
financial condition of many oil and gas companies. These increases in drilling
activity levels are reflected in the statistics set forth below:

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<PAGE> 22

AVERAGE NUMBER OF DRILLING RIGS WORKING IN THE INLAND WATERS
OF THE GULF COAST REGION, OFFSHORE IN THE GULF OF MEXICO AND ONSHORE IN
LOUISIANA

BAR CHART

-------------------------------

Source: Baker Hughes

Demand for the Company's rental tools, downhole drilling motors, MWD
systems and specialized drilling fluids is primarily a function of the number of
oil and gas wells being drilled, the drilling method employed and the depth and
drilling conditions of such wells. Since 1993, the average number of directional
drilling rigs working in the inland waters of the Gulf Coast region, offshore in
the Gulf of Mexico and onshore in Louisiana has increased 80% from 149 in 1993
to 268 year to date in 1997. The average number of directional drilling rigs
working in these areas as a percentage of total drilling activity in the areas
has increased from 19.8% in 1993 to 28.4% year to date in 1997. The following
graph depicts the significant increase in working rigs drilling utilizing
directional drilling techniques in recent years:

AVERAGE NUMBER OF DIRECTIONAL DRILLING RIGS WORKING IN THE U.S.

BAR CHART

-------------------------------

Source: Baker Hughes

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<PAGE> 23

Demand for the Company's wireline and logging services depends primarily
upon the level of workover activity, which improves and extends production from
existing oil and gas reservoirs and, to a lesser extent, on the level of
drilling activity in the Company's areas of operations. Since 1995, the average
number of workover rigs working in the Gulf Coast region has increased 15% from
391 in 1995 to 448 in 1997.

BUSINESS STRATEGY

The Company's strategy is to grow revenue and earnings through internal
expansion and strategic acquisitions. The key components of this strategy are
set forth below:

THE COMPANY'S BUSINESSES

The Company's acquisition strategy has targeted high quality, well run
independent companies with strong market share positions and substantial growth
opportunities in the markets in which they operate. The Company conducts its
operations through six operating businesses.

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<PAGE> 24

Thomas Tools

Overview of Operations. Thomas Tools, headquartered in New Iberia,
Louisiana, has been a leading provider of specialized rental equipment, tools
and tubular goods for drilling, completion and workover applications onshore and
offshore in the Gulf Coast region since 1961. Thomas Tools provides a broad
range of drilling equipment, including drill pipe and drill collars, pressure
control equipment, including blowout preventers, and pipe handling equipment. In
addition, through its MWD services unit, Thomas Tools provides "steerable"
drilling guidance systems critical in directional drilling. Thomas Tools' latest
technological MWD innovation is The Tracker(R), a proprietary and patent pending
MWD system introduced to the market in mid-1997.

Drilling contractors typically utilize several different sizes of drill
pipe in the drilling of a single well, as pipe diameter is often reduced as the
depth of drilling increases. Thomas Tools' primary rental product line consists
of an extensive inventory of various sizes of drill pipe and related handling
tools, providing its customers with a full range of drill pipe for drilling at a
variety of depths. In response to the growth in directional drilling techniques,
Thomas Tools has expanded its inventory of premium, high torque drill pipe,
which provides operators with the technical characteristics that are demanded by
deeper wells and wells expected to encounter adverse conditions, including
deviated well bores. Thomas Tools also offers complementary handling and
sub-surface tools and pressure control equipment.

Following the Recapitalization, the Company utilized its Credit Facility to
expand Thomas Tools' rental pipe and MWD systems inventory. The Company intends
to focus further capital expansion at Thomas Tools on growing its rental
inventory at its South Texas facility for use in the lower Gulf Coast region and
offshore in the Gulf of Mexico.

Products and Services. Thomas Tools' rental inventory includes blowout
preventers, power tongs, test pumps, drill collars, stabilizers, drill pipe and
other tubular goods. Thomas Tools' products and services are marketed directly
through its sales force and operating managers at its two locations.

In order to ensure optimal performance, Thomas Tools regularly maintains
and inspects its rental fleet. As drill pipe arrives at its facilities, either
from the manufacturer or as it returns from a job, the pipe is hydroblasted to
remove all harmful deposits on the inside and outside of the pipe. This
hydroblasting procedure ensures that the pipe is free of any contaminants which
might cause decay. Once an individual string of pipe is cleaned, a third party
inspection team inspects each joint of pipe to ensure its integrity and
suitability for use on additional jobs.

Thomas Tools often works with its customers to develop a comprehensive list
of equipment specifications for projects that utilize its equipment. Thomas
Tools works directly with drilling contractors to ensure that all required
equipment is available as it is needed. The coordination and execution of the
drilling plan and Thomas Tools' cleaning and inspection procedures have resulted
in what it believes are strong customer relationships.

As utilization of directional drilling techniques has increased, the need
for sophisticated guidance systems has increased significantly. After two years
of extensive research and development, Thomas Tools recently added an MWD system
to its product line. The Tracker(R), which was developed by Thomas Tools'
internal staff of technicians, provides drillers with a steerable drilling
system which is well suited for work in slim hole (down to a 3 1/2" drilling
assembly), high temperature and high pressure drilling conditions. In the summer
of 1997, Thomas Tools began moving The Tracker(R) system from a field testing
phase, during which six devices had been operated by select customers to drill
wells for both major and independent oil and gas companies, to a full commercial
roll-out of ten Tracker(R) systems, which is expected to be completed by the end
of the second quarter of fiscal 1998. Thomas Tools has applied for a patent on
its MWD system and is currently in a patent pending status.

Facilities. Thomas Tools maintains its inventory of drill pipe and tools at
its leased facilities in New Iberia, Louisiana and, since 1996, in Victoria,
Texas. Thomas Tools assembles and maintains its MWD systems at its Louisiana
facility.

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<PAGE> 25

Drill Motor Services

Overview of Operations. Drill Motor Services was established in 1991 to
meet the increasing demand for downhole drilling motors, which are necessary for
directional drilling, and has become a leading provider of drilling motors,
primarily on a rental basis, to independent directional drillers onshore and
offshore in the Gulf Coast region. Drill Motor Services' products include a full
range of high performance downhole drilling motors and other related tools,
which are used by independent directional drillers to drill for major and
independent oil and gas companies in all directional applications, including
deepwater and harsh environments. In recent years, improved directional drilling
techniques have resulted in increased demand for Drill Motor Services' high
performance drilling motors. In addition, increasing day rates for drilling rigs
are causing operators to keep additional drilling motors on location in order to
ensure continuous drilling operations, which the Company believes has resulted
in increasing demand for Drill Motor Services' products.

Products and Services. Drill Motor Services' primary rental product line
consists of a wide range of sizes of downhole drilling motors ranging from 3 1/2
inches to 9 5/8 inches in outside diameter for use at various drilling depths.
Drill Motor Services has significantly expanded its inventory of drilling motors
from 64 in 1995 to 150 currently. Downhole positive displacement drilling motors
consist of four basic elements: the power section, the transmission section, the
output shaft assembly and the motor casing. When attached to the drillstring of
a drilling platform, the drill motor is powered by fluid which is pumped through
the motor and turns the inner components of the drill motor leading to the drill
bit. The components of the drill motor are designed to operate at various speeds
and torque levels and to withstand severe environmental conditions such as high
temperatures, hard rock and abrasive muds.

Drill Motor Services works directly with its customers in the coordination
of a comprehensive drilling plan. Once a job is initiated, a Drill Motor
Services representative works with the drilling contractor to ensure that the
required equipment is available on site when it is needed. Drill Motor Services'
product line is manufactured internally with the exception of the drill motor
power sections. Drill Motor Services has an exclusive supply agreement with an
ISO 9002 certified machine shop for the manufacture, heat-treating, material
control and quality assurance of all major drill motor parts with the exception
of the power sections, which are acquired from other third party sources.

Drill Motor Services markets and sells its services and products directly
through its sales force and operating managers at its two locations.

Facilities. Based in Broussard, Louisiana, Drill Motor Services expanded
its geographical presence in 1993 through the addition of a location in Elk
City, Oklahoma.

Perf-O-Log

Overview of Operations. Perf-O-Log is a provider of wireline logging and
perforating services to oil and gas companies onshore and offshore in the Gulf
Coast region. Perf-O-Log provides services primarily to the existing
(cased-hole) markets and therefore is more dependent on maintenance and
enhancement of existing production than new drilling activity. The Company
believes that Perf-O-Log's experienced workforce has established a reputation
for providing high quality services in challenging environments.

Products and Services. The services provided by Perf-O-Log include the
following:

- Logging Services. Logging services involve the gathering of a variety of
downhole information which identifies various characteristics about the
formation or zone which is to be produced. Logging services are performed
through armored electro-mechanical cable (wireline) which is lowered into
a well from a truck (on land) or a skid unit (offshore). These units
contain considerable instrumentation and computer equipment which is used
to chart and record downhole information.

- Perforating Services. Perforating is the method by which communication is
established between the reservoir and production tubing to enable the
production of oil or gas. A path for oil and gas to flow from the
reservoir through the casing and cement to the tubing is created through
the use of a shaped

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<PAGE> 26

explosive charge which penetrates into the producing zone. Wireline is used to
position and discharge the perforating guns.

- Other Services. Perf-O-Log performs a variety of other services aimed
primarily at improving the production rate of existing oil and gas wells
and in perforating new zones once a zone or formation is depleted.
Perf-O-Log provides a gravel pack service (the "Thru-Tubing Wireline
Gravel Pack"), which is covered by a patent, that provides operators of
oil and gas wells with a more precise method of installing gravel packs.
A gravel pack involves the use of a slurry-like material which is placed
in the well to restore or improve production in wells that have become
congested by the producing sand.

While each assignment is different, a typical job for Perf-O-Log involves
the use of a logging and perforating unit at a customer's well site to perform
its wireline logging and perforating services. These services require a skilled
operator and typically last several days on land and a week or more offshore.
Perf-O-Log markets and sells its services through an internal sales force, and
its customers typically utilize its services on a per-well basis.

The recent acquisition of Diamond Wireline Services, Inc. ("Diamond"), a
land-based wireline logging and perforating service company currently operating
onshore in South Texas, complements Perf-O-Log's business and is expected to
allow Perf-O-Log to leverage its presence and reputation in the land, inland
waterway and offshore Louisiana, Mississippi and Alabama markets into South
Texas and expand Diamond's operations to include inland waterway and offshore
services.

Facilities. Headquartered in Lafayette, Louisiana, Perf-O-Log was organized
in 1982 to provide wireline logging and perforating services to the oil and gas
industry in Louisiana. In 1987, Perf-O-Log expanded its geographic coverage to
include Mississippi and Alabama by opening an additional facility in Laurel,
Mississippi. As of December 1997, Perf-O-Log's fleet of equipment was comprised
of 12 perforating trucks and 6 skid units. Diamond has a facility in South Texas
and maintains a fleet of 6 perforating trucks.

Integrity

Overview of Operations. Integrity manufactures and wholesales over 50
different specialty chemical products, which are sold to a broad customer base
comprised primarily of retail drilling fluid providers both domestically and
internationally.

The Company believes that Integrity maintains several key competitive
advantages, including a highly controlled cost structure, significant research
and development capabilities and new product innovations. Integrity manufactures
over 70% of the products it sells, enabling it to control the cost and the
proprietary nature of these products. Management believes that Integrity's
research and development department is larger than many other companies of
comparable size and is uniquely positioned to develop products designed
specifically for its growing customer base. One of Integrity's most recent
product innovations is a high performance lubricant that allows the use of
environmentally sensitive water based drilling fluids in deep, severe drilling
environments in the North Sea.

Products and Services. Integrity, which was founded in 1986, manufactures
specialty chemicals and additives for drilling fluids. These materials are used
in the production and maintenance of oil based drilling fluids, synthetic
drilling fluids, water based drilling fluids and completion/workover fluids. Oil
based and synthetic drilling fluids are typically used to drill deep wells,
deviated wells to prevent stuck pipe and any well where high performance fluids
are desired. Synthetic drilling fluids are currently the preferred fluids for
high performance drilling in environmentally sensitive areas. Water based
drilling fluids are the most common type of fluids used in normal drilling
environments where operating costs and environmental aspects are the primary
concerns.

Integrity also produces specialty chemicals for niche applications in
various industries. These products include oilfield products (enhanced recovery
chemicals, spotting fluids, well treating chemicals and liquified polymers),
industrial products (cleaners, lubricants and environmentally sensitive
solvents) and environmental remediation products. These products are used in
drilling, refining, transportation, water treatment and environmental clean-up
applications.

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<PAGE> 27

Integrity's products are distributed from strategically located facilities
along the Gulf Coast of Texas, Louisiana and Mexico. Fluids and chemicals are
sold both domestically and internationally to customers around the world,
including Canada, Colombia, Indonesia, Trinidad, Venezuela, and Mexico.
International orders are shipped in bulk from major ports, such as the Port of
Houston, to customers overseas.

Facilities. Integrity is headquartered in Kingsville, Texas, where all of
its products are currently manufactured. Additional facilities include Conroe,
Texas, Ciudad Del Carmen, Mexico, and a new facility under construction at
Victoria, Texas.

Charles Holston

Overview of Operations. Charles Holston provides integrated cleaning and
maintenance services to refining and petrochemical companies and major and
independent oil and gas companies in Louisiana. Charles Holston's services
include on-site cleaning and waste management, waste transportation, wastewater
services, container cleaning and repair, emergency spill response services and
other general plant support services.

Charles Holston was founded in 1985 with a primary focus on vacuum services
to oil and gas customers in Louisiana. In recent years, Charles Holston has
expanded its fleet and diversified its customer base to include refining and
petrochemical companies.

Products and Services. As of December 1997, Charles Holston's rental fleet
consisted of 65 high velocity vacuum trucks, 175 storage tanks and boxes as well
as a broad selection of specialty equipment. Services provided by Charles
Holston include the following:

- Liquid and Semi-Solid Vacuuming Service. Charles Holston's vacuum trucks
provide an efficient method of removing industrial wastes and fluids
produced in drilling and operating oil and gas wells and in cleaning and
maintaining refining and petrochemical facilities. Typically these
materials are contained in a customer's tanks, containers, or process
equipment.

- Transportation, Roll-off and Tank Rental Service. Charles Holston
provides both short and long distance transportation of liquid and
semi-solid non-hazardous waste and materials from customer sites to
customer designated treatment, storage and disposal facilities,
landfills, and recycling/reclamation facilities. Charles Holston also
rents tanks and boxes which provide temporary storage of waste materials.
These services are provided primarily on a unit-price or daily rental
basis.

- Miscellaneous Cleaning and Remediation Services. Charles Holston provides
several different cleaning and remediation services, depending on the
individual needs of its customers. The cleaning services include
hydroblasting cleaning which is performed using high pressure water
pumps. Hydroblasting is an effective method of removing deposits from
surfaces in above-ground storage tanks, pipelines and heat exchangers
utilized by refining and petrochemical companies and oil and gas
companies. In addition, Charles Holston performs remediation projects at
oil and gas and petrochemical sites following the spill of various
materials. These materials are removed from the contaminated area, stored
in Charles Holston's storage tanks and then transported to a proper
customer-designated disposal site.

Rental fleets and workers are based at each customer location in accordance
with the customer needs to be serviced from that location. Depending on the
service to be provided, Charles Holston's fleet may be in the field for a few
days on a small cleanup job or several months for large projects in which case a
customer dedicated team may be placed onsite at the customer's facility and
remain until the project is completed. Charles Holston markets and sells its
services and products directly through its sales force and operating managers at
its five locations.

Facilities. Charles Holston, headquartered in Jennings, Louisiana since
1985, has district offices in Eunice, Baton Rouge, Lake Charles, and most
recently in Lafayette, Louisiana.

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<PAGE> 28

Well Safe

Overview of Operations. Well Safe is a leading provider of equipment used
in the detection of and protection from toxic gases encountered by refining and
petrochemical companies and oil and gas companies onshore and offshore in the
Gulf Coast region. Well Safe rents electronic detection and monitoring
equipment, breathing units and other personal safety equipment. In addition,
Well Safe provides comprehensive safety planning services, safety training and
safety supervision.

Well Safe was organized in 1984 to primarily serve the oil and gas
exploration market. In 1993, Well Safe expanded its business to include refining
and petrochemical companies in order to capitalize on the safety requirements of
this relatively stable market. Well Safe is now a recognized leader in the areas
it serves.

Well Safe markets and sells its services and products directly through its
sales force and operating managers at its six locations.

Facilities. Well Safe is headquartered in Mobile, Alabama and operates
district offices throughout Louisiana, Texas and Alabama.

POTENTIAL LIABILITIES AND INSURANCE

The Company's operations involve a high degree of operational risk,
particularly personal injuries and equipment damage, that are typical of
companies operating in its industry. Failure of the Company's equipment could
result in property damages, personal injury, environmental pollution and
resulting damage for which the Company could be liable. Litigation arising from
a catastrophic occurrence at a location where the Company's equipment or
services are used may in the future result in damage claims. The Company
maintains insurance against risks that are consistent with industry standards
and required by its customers. Although management believes that the Company's
insurance protection is adequate, there can be no assurance that the Company
will be able to maintain adequate insurance at rates which management considers
commercially reasonable, nor can there be any assurance that such coverage will
be adequate to cover all claims that may arise. See "Risk Factors -- Operating
Risks."

GOVERNMENT REGULATION

The Company's business is significantly affected by local, state, federal
and foreign laws and other regulations relating to the oil and gas industry, the
petrochemical and processing industry, worker safety and environmental
protection, by changes in such laws and by changing administrative regulations
and the level of enforcement thereof. The Company cannot predict the level of
enforcement of existing laws and regulations or how such laws and regulations
may be interpreted by enforcement agencies or court rulings, whether additional
laws and regulations will be adopted, or the effect such changes may have on it,
its businesses, results of operations, cash flows or financial condition.

The Company depends on the demand for its services from the oil and gas
industry, and such demand is affected by changing taxes, price controls and
other laws and regulations relating to the oil and gas industry generally. The
adoption of laws and regulations curtailing exploration and development drilling
for oil and gas in the Company's areas of operations for economic, environmental
or other policy reasons would adversely affect the Company's operations by
limiting demand for its services. In addition, the Company's petrochemical
processing services are substantially dependent on the cleaning and maintenance
operations of its customers. Numerous local, state and federal laws and
regulations affect the necessity, timing and frequency of the cleaning and
maintenance operations of petrochemical and other processors and consequently
affect the demand for the Company's equipment and services. The Company cannot
determine the extent to which its future operations and earnings may be effected
by new legislation, new regulations or changes in existing regulations or
enforcement.

Certain of the Company's employees who perform services on offshore
platforms and vessels are covered by the provisions of the Jones Act, the Death
on the High Seas Act and general maritime law. These laws operate to make the
liability limits established under state workers' compensation laws inapplicable
to these employees and, instead, permit them or their representatives to pursue
actions against the Company for

27
<PAGE> 29

damages or job related injuries, with generally no limitations on the Company's
potential liability. See "Risk Factors -- Operating Risks."

The Company's operations are subject to numerous foreign, federal, state,
and local laws and regulations governing the manufacture, management, and/or
disposal of materials and wastes in the environment and otherwise relating to
environmental protection. Numerous governmental departments issue rules and
regulations to implement and enforce such laws which are often difficult and
costly to comply with and the violation of which may result in the revocation of
permits, issuance of corrective action orders, assessment of administrative and
civil penalties and even criminal prosecution. For example, state and federal
agencies have issued rules and regulations pursuant to environmental laws that
regulate environmental and safety matters such as restrictions on the types,
quantities, and concentration of various substances that can be released into
the environment in connection with specialty chemical manufacturing and tank
vacuum or other field service operations, remedial measures to prevent pollution
arising from current and former operations, and requirements for worker safety
training and equipment usage. Management believes the Company is in compliance
in all material respects with applicable environmental laws and regulations to
which it is subject. Management further does not anticipate that compliance with
existing laws and regulations will have a material effect on the Company. See
"Risk Factors -- Regulatory and Environmental Matters."

The Company generates wastes, including hazardous wastes, that are subject
to the federal Resource Conservation and Recovery Act ("RCRA") and comparable
state statutes. The U.S. Environmental Protection Agency and various state
agencies have limited the approved methods of disposal for certain hazardous and
nonhazardous wastes. Furthermore, it is possible that certain wastes handled by
the Company in connection with its tank vacuum or other field service activities
that are currently exempt from treatment as "hazardous wastes" may in the future
be designated as "hazardous wastes" under RCRA or other applicable statutes, and
therefore be subject to more rigorous and costly operating and disposal
requirements.

The federal Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA"), also known as the "Superfund" law, imposes liability,
without regard to fault or legality of the original conduct, on certain classes
of persons that are considered to have contributed to the release of a
"hazardous substance" into the environment. These persons include the owner or
operator of the disposal site or the site where the release occurred and
companies that disposed of or arranged for the disposal of the hazardous
substances at the site where the release occurred. Under CERCLA, such persons
may be subject to joint and several liability for the costs of cleaning up the
hazardous substances that have been released into the environment and for
damages to natural resources, and it is not uncommon for neighboring landowners
and other third parties to file claims for personal injury and property damage
allegedly caused by the hazardous substances released into the environment. The
Company currently leases a number of properties upon which activities involving
the handling of hazardous substances or wastes may have been conducted by third
parties not under the Company's control. These properties may be subject to
CERCLA, RCRA and analogous state laws. Under such laws and implementing
regulations, the Company could be required to remove or remediate previously
discarded hazardous substances and wastes or property contamination that was
caused by such third parties. Such laws and regulations may also expose the
Company to liability for acts of the Company that were in compliance with all
applicable laws at the time such acts were performed.

CUSTOMERS

The Company's customers include major and independent oil and gas
companies, other independent oilfield service companies and refining and
petrochemical companies operating throughout the Gulf Coast and offshore in the
Gulf of Mexico. The Company provides services and equipment to a broad range of
customers and, therefore, the Company believes that it is not dependent on any
single customer or group of customers. For the year ended September 30, 1997, no
single customer or group of affiliated customers accounted for 10% or more of
the Company's revenues. The Company generally enters into informal, nonbinding
commitments with its customers, which is customary within the Company's business
lines.

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COMPETITION

The Company competes in highly competitive areas of the energy services
industry. The depressed oil and gas prices and the resulting decline in the oil
and gas industry in the 1980s has led to a consolidation of the number of
companies providing services similar to the Company. This reduced number of
companies competes intensely for available projects. Many of the Company's
competitors are larger and have greater marketing, distribution, financial and
other resources than the Company.

There can be no assurance that the Company's operations will continue at
current volumes or prices if its current competitors or new market entrants
introduce new products or services with better features, performance, prices or
other characteristics than the Company's products and services. Competitive
pressures or other factors also may result in significant price competition that
could have a material adverse effect on the Company's results of operations and
financial condition. Furthermore, competition among oilfield service and
equipment providers is also based on the provider's reputation for safety and
quality. Although the Company believes that its reputation for safety and
quality service is good, there can be no assurance that the Company will be able
to maintain its competitive position. See "Risk Factors -- Intense Competition."

EMPLOYEES

At December 1, 1997, the Company and its subsidiaries had approximately 400
employees. None of the Company's employees are represented by a union or covered
by a collective bargaining agreement. The Company believes that its relations
with its employees are good.

PROPERTIES

Facilities. The Company operates out of its headquarters located in
Houston, Texas. Each of the Company's subsidiaries maintains its own
headquarters and operating facilities, which are located throughout the Gulf
Coast area. All of the Company's facilities are leased pursuant to operating
leases for various terms. Certain of the facilities are leased from the former
owners of the Company's subsidiaries. The Company believes that all of its
leases are at competitive or market rates and does not anticipate any difficulty
in leasing suitable additional space upon expiration of its current lease terms.

Intellectual Property. The Company uses several patented and patent-pending
items in its operations, which management believes are important but are not
indispensable to the Company's business as a whole. Although the Company seeks
patent protection when it determines that such protection is commercially
reasonable, it relies to a greater extent on the technical expertise and
know-how of its personnel to maintain its competitive position. See "Risk
Factors -- Technology Risks."

LEGAL PROCEEDINGS

The Company is not a party to, nor is any of its property the subject of,
any pending legal proceedings that, in the opinion of management, are expected
to have a material adverse effect on the Company's business or financial
condition.

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<PAGE> 31

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names, ages and titles of the current
directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Kenneth T. White, Jr......... 56 Chairman of the Board, President, Chief
Executive Officer and Director
David N. Eliff............... 37 Vice President, Secretary and Chief Financial
Officer
Jeffrey L. Tepera............ 32 Vice President and Treasurer
Jonathan F. Boucher.......... 40 Director
John W. Jordan II............ 50 Director
David W. Zalaznick........... 44 Director
J. Jack Watson............... 69 Director
Christopher Mills............ 45 Director
Robert H. Whilden, Jr........ 62 Director
</TABLE>

Each of the directors and executive officers of the Company will serve
until the next annual meeting of the shareholders or until their death,
resignation or removal, whichever is earlier. Directors are elected annually and
executive officers hold office for such terms as may be determined by the
Company's Board of Directors. Following completion of the Offering, the Company
intends to form audit and compensation committees consisting solely of
non-employee directors.

The Company has agreements with each of its directors to indemnify them for
costs and expenses resulting from their service as directors of the Company to
the fullest extent permitted by law.

Set forth below is a brief description of the business experience of each
director and executive officer of the Company.

MR. WHITE founded the Company, has served as a director since its inception
and serves as its Chairman, President and Chief Executive Officer. Prior to
founding the Company, Mr. White participated in the acquisition, development and
eventual sale of a number of businesses, including an oil and gas service and
equipment business with approximately $50 million in annual revenues, and a
manufacturing and distributing company with annual revenues of approximately
$160 million.

MR. ELIFF, a certified public accountant, joined the Company in July 1995
and from 1984 to 1995 was employed by Arthur Andersen LLP and Price Waterhouse
LLP, independent accountants, in their mergers and acquisitions, corporate
finance, operational productivity and financial consulting segments.

MR. TEPERA, a certified public accountant, joined the Company in December
1997 and from 1989 to 1997 was employed by Arthur Andersen LLP, independent
accountants, serving various positions, most recently as an experienced manager
in the enterprise group, a group specializing in emerging high growth
companies..

MR. JORDAN has served as a director of the Company since August 1997. Mr.
Jordan is a managing partner of The Jordan Company, a private merchant banking
firm which he founded in 1982. Mr. Jordan is also a director of American Safety
Razor Company, AmeriKing, Inc., Carmike Cinemas, Inc., Rockshox, Inc., Jordan
Industries, Inc., Motors and Gears, Inc., Jordan Telecommunication Products,
Inc. and Welcome Home, Inc. as well as other privately held companies. In
January 1997, Welcome Home filed a voluntary petition for bankruptcy.

MR. ZALAZNICK has served as a director of the Company since August 1997.
Mr. Zalaznick has been a partner of The Jordan Company since 1982. Mr. Zalaznick
is also a director of Carmike Cinemas, Inc, AmeriKing, Inc., American Safety
Razor Company, Jordan Industries, Inc., Motors and Gears, Inc., Jordan
Telecommunication Products, Inc. and Marisa Christina, Inc., as well as other
privately held companies.

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<PAGE> 32

MR. BOUCHER has served as a director of the Company since August 1997. Mr.
Boucher has been a partner of The Jordan Company since 1983. Mr. Boucher is also
a director of American Safety Razor Company, Jordan Industries, Inc., Motors and
Gears, Inc. and Jordan Telecommunication Products, Inc. as well as other
privately held companies. In December 1996, Mr. Boucher resigned as a director
and officer of Welcome Home. In January 1997, Welcome Home filed a voluntary
petition for bankruptcy.

MR. WATSON has served as a director of the Company since August 1997. Mr.
Watson was President and Chief Executive Officer of Newflo Corporation from 1987
through 1996. Newflo is a manufacturer of pumps, valves and meters with annual
revenues of approximately $250 million in annual revenues.

MR. MILLS has served as a director of the Company since 1990. Mr. Mills is
a director of Compass Plastics, Horace Small PLC, Oak Industries, Denison
Investments PLC and North Atlantic Smaller Companies Trust. Mr. Mills has been
the Chief Executive Officer of North Atlantic Smaller Companies Trust since
1984.

MR. WHILDEN has served as a director of the Company since its inception.
Mr. Whilden has been a partner in the law firm of Vinson & Elkins L.L.P. in
Houston, Texas since 1970. Mr. Whilden is also a director of Tom Brown, Inc., an
independent oil and gas company.

MANAGEMENT OF OPERATING SUBSIDIARIES

Set forth below is a brief description of each principal executive officer
of each of the Company's main operating subsidiaries:

WILLIAM J. THOMAS III has been the Chief Executive Officer of Thomas Tools
since June 1994 and was a principal shareholder when it was acquired by the
Company. Mr. Thomas has over 20 years of experience in the oil and gas industry
and has been with Thomas Tools since 1974.

DANIEL M. SPILLER is the Chief Executive Officer of Drill Motor Services.
Mr. Spiller has over 22 years of experience in the design, manufacture, sale and
rental and operation of downhole drilling motors. Mr. Spiller organized Drill
Motor Services in 1991 and, prior to such time, worked with several recognized
leaders in the downhole drilling motor sector.

LAWRENCE J. THOMPSON has been the Chief Executive Officer of Perf-O-Log
since its formation in 1982. Mr. Thompson was the original founder of Perf-O-Log
and is well recognized in the Gulf Coast wireline business, with over 50 years
of experience.

WILLIAM MAX DUNCAN, JR. has been the President of Integrity since he
co-founded it in 1986. Mr. Duncan has over 18 years of experience in the
specialty chemicals and drilling fluids business.

CRAIG HOLSTON is the Chief Executive Officer of Charles Holston and has
been with Charles Holsten since it was founded in 1985.

J.B. WILSON, JR. is the President of Well Safe and has been with Well Safe
since its inception in 1985.

These principal executive officers are generally parties to employment
agreements that contain certain non-competition provisions.

31
<PAGE> 33

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the President
and Chief Executive Officer and Vice President, Secretary and Chief Financial
Officer of the Company:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------
NAME AND PRINCIPAL POSITION OTHER ANNUAL ALL OTHER
IN THE COMPANY YEAR SALARY BONUS COMPENSATION COMPENSATION(1)
--------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Kenneth T. White, Jr. 1997 $249,808 $100,000 $ -- $4,525,000
Chairman, President and 1996 200,000 80,000 -- --
Chief Executive Officer 1995 200,000 50,000 -- --
David N. Eliff 1997 $120,000 $ 30,000 $2,042 $ 839,000
Vice President, Secretary 1996 103,231 5,000 665 --
and Chief Financial Officer 1995 21,538 -- -- --
</TABLE>

- ---------------

(1) Consists of proceeds from the redemption of stock options and compensatory
restricted stock pursuant to the Recapitalization.

EMPLOYMENT AGREEMENT

Mr. White has an employment agreement with the Company for a term expiring
December 31, 2000, which provides for Mr. White's employment as the Chairman of
the Board, President and Chief Executive Officer of the Company. The employment
agreement provides for a base salary of $250,000 for each of the first two years
and $300,000 for the third year, plus such bonus up to 100% of the base salary,
as may be determined in the sole discretion of the Board of Directors.

As an additional incentive for Mr. White to serve as Chief Executive
Officer of the Company and subject to consummation of the Offering, W-H
Investment has agreed to sell warrants to Mr. White for $104,000 to purchase
shares of Common Stock of the Company from WH Investment at an exercise
price of $ per share.

Mr. Eliff has an employment agreement with the Company for a term expiring
April 30, 2000, which provides for Mr. Eliff's employment as an Officer of the
Company. The employment agreement provides for a base salary of $120,000 per
year plus such bonus as may be determined in the sole discretion of the Board of
Directors.

Mr. Tepera has an employment agreement with the Company for a term expiring
December 31, 2000, which provides for Mr. Tepera's employment as an Officer of
the Company. The employment agreement provides for a base salary of $85,000 per
year plus such bonus as may be determined in the sole discretion of the Board of
Directors.

COMPENSATION OF DIRECTORS

Upon completion of the Offering, directors of the Company will receive
$10,000 per year for their services to the Company, plus reimbursement of
out-of-pocket expenses.

STOCK OPTION PLAN

The Board adopted a Stock Option Plan (the "1997 Option Plan") in August
1997. The Board believes that by providing key employees with an opportunity to
acquire a proprietary interest in the Company, the 1997 Option Plan will give
employees a stronger incentive to work for the continued success of the Company.
The Board of Directors also believes that the 1997 Option Plan will be helpful
to the Company in attracting and retaining outstanding personnel. The principal
features of the 1997 Option Plan are described below.

32
<PAGE> 34

The 1997 Option Plan covers an aggregate of shares of Common Stock
(subject to adjustments in the event of stock dividends, stock splits and
certain other events). The 1997 Option Plan provides for non-qualified stock
options.

The 1997 Option Plan is administered by a committee of the Board appointed
by the Board (the "Committee"). If no Committee is appointed under the 1997
Option Plan, the Board will act as the Committee. The Committee has the power to
determine those employees to be granted options, the price and the number of
shares subject to each option, the time at which each option is granted and
becomes exercisable, the duration of the option period, the inclusion of stock
appreciation rights and such other conditions and limitations as may be
applicable.

Each option granted under the 1997 Option Plan will contain such terms and
conditions as may be approved by the Committee. The Committee has granted
options under the 1997 Option Plan that will vest over a four-year period and
will expire in all cases 10 years from the date the options were granted. Except
in certain circumstances including a merger or consolidation with another
corporation or the sale of substantially all of the Company's assets, no option
will be exercisable as to any share as to which a continuous service requirement
has not been satisfied. If an optionee's employment terminates for any reason,
the option may be exercised during the three-month period following such
termination, but only to the extent vested at the time of such termination.

Each option will be assignable or transferable only by will or by the laws
of descent and distribution or pursuant to a qualified domestic relations order
as defined by the Internal Revenue Code of 1986, as amended, or Title 1 of The
Employee Retirement Income Security Act of 1974, as amended, and will be
exercisable during the optionee's lifetime only by the optionee or the
optionee's guardian or legal representative.

No consideration is payable to the Company upon the grant of any option.
The exercise price of any option will be determined by the Committee.

The Board of Directors may amend the 1997 Option Plan as it deems
advisable. The Board may terminate the 1997 Option Plan at any time. Termination
of the 1997 Option Plan will not affect the rights of the optionees or their
successors under any options outstanding and not exercised in full on the date
of termination. Unless earlier terminated by the Board of Directors, the 1997
Option Plan will terminate in August 2007.

As of December 15, 1997, ten year options have been granted under the 1997
Option Plan with respect to a total of shares of Common Stock, which will
vest over a four-year period, in 25% increments after each full year of service
following the date of grant, beginning in August 1998. At and
contingent upon the consummation of the Offering, the Company granted options
under the 1997 Option Plan to Mr. White for a total of shares of Common
Stock, of which are exercisable at $ per share and the remainder
vest in equal amounts on the first, second and third anniversary of the
consummation of the Offering.

OTHER COMPENSATORY ARRANGEMENTS

Retirement Plan. The Company provides its employees with a 401(k) Plan
pursuant to which the Company contributes $.50 for each $1.00 contribution by
the employee on the first 3% of salary that such employee contributes to the
plan.

Health Plan. The Company provides its employees with a traditional major
medical plan that pays 80% of the employees medical expenses.

Group Life Insurance. The Company provides a group term life insurance for
each of its employees which pays a $20,000 death benefit ($40,000 if death is
the result of an accident) to the employee's estate or beneficiary.

33
<PAGE> 35

CERTAIN TRANSACTIONS

CONSULTING AGREEMENT. On August 11, 1997, the Company entered into a
Consulting Agreement (the "Consulting Agreement") with TJC Management
Corporation ("TJC"), an affiliate of Jordan and W-H Investment, the principal
stockholder of the Company. The Consulting Agreement expires on December 31,
2007, but is automatically renewed for successive one-year terms, unless either
party provides written notice of termination 60 days prior to the scheduled
renewal date; provided, however, the Consulting Agreement will automatically
terminate if substantially all of the stock or assets of the Company are sold
to, or the Company is merged with, an entity unaffiliated with TJC or a majority
of the Company stockholders immediately prior to sale. The Consulting Agreement
provides for an annual consulting fee payable on a quarterly basis equal to 2.5%
of the Company's net income before interest, tax, depreciation, amortization and
other non-cash charges and extraordinary or non-recurring expenses or losses, in
each case, charged, expensed or accrued against such net income.

The Company and TJC have agreed to terminate the Consulting Agreement
concurrently with the Offering. On September 30, 1997, the Company paid TJC
$34,303 pursuant to the Consulting Agreement. The Company expects to pay TJC the
applicable consulting fee for the period from September 30, 1997 through the
consummation of the Offering on the date of the consummation of the Offering.

TRANSACTION ADVISORY AGREEMENT. On August 11, 1997, the Company entered
into a Transaction Advisory Agreement ("Advisory Agreement") with TJC pursuant
to which TJC shall render consulting services to the Company and its
subsidiaries in connection with their acquisitions, divestitures and
investments. The Advisory Agreement expires on December 31, 2007, but is
automatically renewed for successive one-year terms, unless either party
provides written notice of termination 60 days prior to the scheduled renewal
date; provided, however, the Advisory Agreement will automatically terminate if
substantially all of the stock or assets of the Company are sold to or the
Company is merged with an entity unaffiliated with TJC or a majority of the
Company stockholders immediately prior to sale. The Advisory Agreement provides
for (i) an investment banking and sponsorship fee payable by the Company of up
to 2% of the aggregate consideration paid by the Company for any acquisition
consummated by the Company or any sale by the Company of substantially all of
its stock or assets or the stock or assets of any of its subsidiaries, provided,
such acquisition of or investment in any business by the Company was directly
participated in by TJC, and (ii) a financial consulting fee of up to 1% of the
amount obtained or made available to the Company and/or its subsidiaries
pursuant to any debt or equity financing by the Company and which was arranged
by or completed with the assistance of TJC. Any such fee paid by the Company to
TJC pursuant to the Advisory Agreement shall be paid only upon the prior
approval of the Board of Directors of the Company.

The Board of Directors of the Company has agreed to pay TJC a fee of $1.6
million upon the consummation of the Offering for services rendered to the
Company under the Advisory Agreement.

RECAPITALIZATION. On August 11, 1997, the Company entered into a series of
equity and debt transactions which resulted in a recapitalization and change in
the controlling ownership of the Company. In connection with the
Recapitalization, (i) the Company repurchased and retired shares of its
Common Stock and warrants to purchase shares of Common Stock for
approximately $48.0 million, (ii) repurchased outstanding options for
approximately $13.5 million, (iii) issued new shares of Common Stock and
warrants to purchase shares of Common Stock to W-H Investment at an
exercise price of $ per share for approximately $12.0 million, (iv) issued the
Subordinated Notes to an affiliate of W-H Investment for $24.0 million and (v)
issued warrants to purchase shares of Common Stock at an exercise price
of $ per share to certain members of the Company's management. DLJ Capital
Funding, Inc., an affiliate of Donaldson, Lufkin and Jenrette Securities
Corporation, fully underwrote the $95.0 million Credit Facility, which was
funded in part concurrently with the Recapitalization to repurchase the Common
Stock and options and warrants to purchase Common Stock, to refinance existing
debt and to cash collateralize certain letters of credit. Transaction fees and
expenses relating to the Acquisition totaled approximately $5.3 million, $1.4
million of which was paid to TJC pursuant to the Advisory Agreement. See
"Principal Shareholders," "The Company -- Recapitalization" and "Underwriting."

A portion of the net proceeds to the Company from the Offering will be used
to repay in full the Subordinated Notes, which are held by an affiliate of W-H
Investment. See "Use of Proceeds."

34
<PAGE> 36

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 1, 1997, and as adjusted
to reflect the sale of the Common Stock offered hereby, by (i) each director,
(ii) each named executive officer in the Summary Compensation Table, (iii) each
person who is known by the Company to own beneficially 5% or more of the Common
Stock, (iv) all directors and executive officers as a group and (v) all
employees of the Company who own Common Stock as a group (excluding directors
and executive officers). Unless otherwise indicated, each person has sole voting
and dispositive power over the shares indicated as owned by such person.

<TABLE>
<CAPTION>
PERCENTAGE BENEFICIALLY
OWNED(1)
-----------------------
NUMBER BEFORE AFTER
OF SHARES OFFERING OFFERING
<S> <C> <C> <C>
W-H Investment, L.P.(2)..................................... 82%
Kenneth T. White, Jr.(3).................................... 8
David N. Eliff(4)........................................... 2
Jeffrey L. Tepera(5)........................................ -- -- --
John W. Jordan II(6)........................................ -- -- --
David W. Zalaznick(6)....................................... -- -- --
Jonathan F. Boucher(6)...................................... -- -- --
J. Jack Watson(6)........................................... -- -- --
Christopher Mills(7)........................................ 2
Robert H. Whilden, Jr.(8)................................... 1
All directors and officers as a group (9 persons)........... 13
All employees as a group (84 persons)(9).................... 12
</TABLE>

- ---------------

* Represents less than 1% of the outstanding Common Stock.

(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage owned
by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person listed.

(2) Includes warrants to purchase shares of Common Stock. W-H Investment,
L.P. is a limited partnership, for which W-H Investment, G.P. acts as the
General Partner and exercises the voting and investment control over the
Common Stock and warrants. W-H Investment, G.P. is owned by certain
affiliates of The Jordan Company, including John W. Jordan II, David Z.
Zalaznick and Jonathan F. Boucher.

(3) Includes warrants to purchase shares from the Company, warrants to
purchase shares from W-H Investment effective upon consummation of
the Offering and options to purchase shares granted under the 1997
Option Plan which vest upon consummation of the Offering, and excludes
options to purchase shares granted under the 1997 Option Plan.

(4) Includes warrants to purchase shares.

(5) Excludes options to purchase shares granted under the 1997 Option Plan.

(6) Excludes shares and warrants to purchase shares held by W-H
Investment, L.P., of which Mr. Jordan, Mr. Zalaznick, Mr. Boucher and Mr.
Watson are limited partners. Each of Mr. Jordan, Mr. Zalaznick, Mr. Boucher
and Mr. Watson disclaim beneficial ownership of the securities held by W-H
Investment.

(7) Includes warrants to purchase shares.

(8) Includes warrants to purchase shares.

(9) Excludes the shares, warrants to purchase shares and options held by the
directors and executive officers of the Company and options to purchase
shares granted under the 1997 Option Plan.

35
<PAGE> 37

STOCKHOLDERS AGREEMENT.

Each holder of outstanding shares of Common Stock of the Company is a party
to a Stockholders Agreement, dated as of August 11, 1997 (the "Stockholders
Agreement"), by and among the Company and such stockholders. The Stockholders
Agreement gives the holders of shares of Common Stock that are a party thereto
certain rights to participate in any registration by the Company of any of the
Company's equity securities for sale to the public pursuant to the Securities
Act, other than in connection with mergers, acquisitions, exchange offers,
dividend reinvestment plans or stock option or other employee benefit plans. The
holders of shares of Common Stock that are a party to the Stockholders Agreement
have waived their rights to participate in the Offering.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of shares of
Common Stock, $1.00 par value per share, and shares of preferred stock,
$1.00 par value per share ("Preferred Stock"). Upon completion of the Offering,
shares of Common Stock will be issued and outstanding ( shares if
the Underwriters exercise their over-allotment option in full) and no shares of
Preferred Stock will be issued and outstanding. As of December 15, 1997, the
Company had outstanding shares of Common Stock held of record by
shareholders.

COMMON STOCK

The rights of the holders of Common Stock are identical in all respects.
All of the shares of Common Stock are validly issued, fully paid and
nonassessable.

The holders of the Common Stock are entitled to one vote for each share
held on all matters submitted to a vote of common shareholders. The shares of
Common Stock do not have cumulative voting rights. Shares of Common Stock have
no preemptive rights, conversion rights, redemption rights or sinking fund
provisions. The Common Stock is not subject to redemption by the Company. All
shares of Common Stock issued in the Offering will be validly issued, fully paid
and nonassessable.

Subject to the rights of the holders of any class of capital stock of the
Company having preference or priority over the Common Stock, the holders of
Common Stock are entitled to dividends in such amounts as may be declared by the
Board of Directors of the Company from time to time out of funds legally
available for such payments and, in the event of liquidation, to share ratably
in any assets of the Company remaining after payment in full of all creditors
and provision for any liquidation preferences on any outstanding preferred stock
ranking prior to the Common Stock.

PREFERRED STOCK

The Company is authorized to issue shares of Preferred Stock. The
Board of Directors of the Company, in its sole discretion, may designate and
issue one or more series of Preferred Stock from the authorized and unissued
shares of Preferred Stock. Subject to limitations imposed by law or the
Company's Restated Articles of Incorporation, the Board of Directors of the
Company is empowered to determine the designation of and the number of shares
constituting a series of Preferred Stock. In addition, the Company's Board of
Directors may designate the dividend rate, the terms and conditions of any
voting and conversion rights, the amounts payable upon redemption or upon
liquidation, dissolution or winding-up of the Company, the provisions of any
sinking fund for the redemption or purchase of shares, and the preferences and
relative rights among the series of Preferred Stock. Such rights, preferences,
privileges and limitations could adversely effect the rights of holders of
Common Stock.

CERTAIN PROVISIONS OF THE RESTATED ARTICLES OF INCORPORATION AND BYLAWS

The Company's Restated Articles of Incorporation provide that shareholders
may act by the written consent of holders having not less than the minimum
number of votes necessary to take such action.

36
<PAGE> 38

TEXAS LAW PROVISION

Generally, Part Thirteen of the Texas Business Corporation Act (the "TBCA")
prohibits a publicly held Texas corporation from engaging in a "business
combination" with an "affiliated shareholder" for a period of three years after
the date of the transaction in which the person became an affiliated
shareholder, unless one of the following events occur: (i) prior to the date of
the business combination, the transaction is approved by the Board of Directors
of the Company; or (ii) no earlier than six months after such date, the business
combination is approved by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the affiliated shareholder. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the shareholder. An "affiliated shareholder"
is a person who, together with affiliates and associates, owns (or within three
years, did own) 20% or more of the Company's voting stock.

These and certain other provisions of the TBCA may tend to deter potential
unsolicited offers or other efforts to obtain control of the Company that are
not approved by the Board of Directors. Therefore, the TBCA may deprive the
holders of the Common Stock of opportunities to sell shares of Common Stock at a
premium to then prevailing market prices in connection with a takeover attempt.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is .

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no market for the Common Stock. The
sale, or availability for sale, of substantial amounts of Common Stock in the
public market subsequent to the Offering could adversely affect the prevailing
market price of the shares of Common Stock and could impair the Company's
ability to raise additional capital through the sale of equity securities.

Upon completion of the Offering, the Company will have shares of
Common Stock outstanding. Of these shares, the shares sold in the Offering
will be freely tradable without restriction or further registration under the
Securities Act, except that any shares purchased by "affiliates" of the Company,
as that term is defined under the Securities Act ("Affiliates"), may generally
only be sold in compliance with the limitations of Rule 144 described below.

The remaining shares of Common Stock are deemed "Restricted Shares"
under Rule 144. The number of shares of Common Stock available for sale in the
public market is limited by restrictions under the Securities Act and lock-up
agreements under which the holders of such shares have agreed not to sell or
otherwise dispose of any of their shares for a period of 180 days after the
effective date of this Offering (the "Lock-Up Period") without the prior written
consent of Donaldson, Lufkin & Jenrette Securities Corporation. Because of these
restrictions, on the date of this Prospectus, no shares other than those offered
hereby will be eligible for sale. Upon expiration of the Lock-Up Period, all of
the Restricted Shares will become available for sale in the public market,
subject to Rule 144 and Rule 701 of the Securities Act.

In general, under Rule 144 of the Securities Act as currently in effect,
beginning 90 days after this Offering, a person (or persons whose shares are
aggregated) who has beneficially owned "restricted" shares for at least one
year, including a person who may be deemed an affiliate of the Company, is
entitled to sell within any three-month period a number of shares of Common
Stock that does not exceed the greater of 1.0% of the then-outstanding shares of
Common Stock ( shares after giving effect to this Offering) or the average
weekly trading volume of the Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 of the Securities Act are subject to
certain restrictions relating to manner of sale, notice and the availability of
current public information about the Company. In addition, under Rule 144(k) of
the Securities Act, a person who is not an affiliate of the Company at any time
90 days preceding a sale, and who has beneficially owned shares for at least one
year, would be entitled to sell such shares immediately following this Offering
without regard to the volume limitations, manner of sale provisions or notice or
other requirements of Rule 144 of the Securities Act.

37
<PAGE> 39

Rule 701 under the Securities Act provides that shares of Common Stock
acquired on the exercise of outstanding options may be resold by persons other
than affiliates beginning 90 days after the date of this Prospectus, subject
only to the manner of sale provisions of Rule 144, and by affiliates, beginning
90 days after the date of this Prospectus, subject to all provisions of Rule 144
except its minimum holding period. The Company intends to register on a
registration statement on Form S-8, shortly after the date of this Prospectus, a
total of shares of Common Stock reserved for issuance under the 1997
Option Plan and its outstanding warrants.

38
<PAGE> 40

UNDERWRITING

Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement"), each of the Underwriters named below (the
"Underwriters") for whom Donaldson, Lufkin & Jenrette Securities Corporation and
Jefferies & Company, Inc. are acting as representatives (the "Representatives"),
has severally agreed to purchase from the Company the respective number of
shares of Common Stock set forth opposite their names below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.........
Jefferies & Company, Inc....................................

Total.............................................
---------
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions. If any of the shares of Common Stock are purchased
by the Underwriters pursuant to the Underwriting Agreement, all such shares of
Common Stock (other than those covered by the over-allotment option described
below) must be purchased.

The Representatives have advised the Company that the Underwriters propose
to offer the Common Stock to the public initially at the Price to the Public set
forth on the cover page of this Prospectus and to certain dealers at such price,
less a concession not in excess of $ per share. The Underwriters may
allow, and such dealers may re-allow to certain other dealers, a concession not
in excess of $ per share. After the initial offering of the Common
Stock, the offering price and the concessions and discounts to dealers may be
changed by the Representatives.

The Company has granted to the Underwriters an option to purchase up to an
aggregate of additional shares of Common Stock, at the Price to the
Public set forth on the cover page hereof, less underwriting discounts and
commissions, solely for the purpose of covering over-allotments. Such option may
be exercised at any time until 30 days after the date of this Prospectus. To the
extent that the Underwriters exercise such option, each of the Underwriters will
be committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment as indicated in
the preceding table.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.

In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may over-allot the Offering,
creating a syndicate short position. The Underwriters may bid for and purchase
Common Stock in the open market to cover such syndicate short position or to
stabilize the price of the Common Stock. These activities may stabilize or
maintain the market price of the Common Stock above independent market levels.
The Underwriters are not required to engage in these activities, and may end
either of these activities at any time.

The Company, its directors and executive officers, and stockholders have
each agreed that, subject to certain exceptions, during the period beginning on
the date of this Prospectus and continuing to and including the 180th day after
such date, they will not, directly offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock, any securities convertible into or
exercisable or exchangeable for shares of Common Stock or any rights to acquire
shares of Common Stock without the written consent of Donaldson, Lufkin &
Jenrette Securities Corporation.

39
<PAGE> 41

The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

Prior to the Offering, there has been no public market for the shares of
Common Stock offered hereby. The initial public offering price for the shares
was determined by negotiations between the Company and the Representatives and
does not necessarily reflect the market prices for the Common Stock following
the Offering. Among the principal factors considered in determining the initial
public offering price were prevailing economic prospects, the sales, earnings
and financial and operating performance of the Company in recent periods, the
future prospects of the Company, market valuations of companies in related
businesses and the history and prospects for the industries in which the Company
competes. Additionally, consideration has been given to the general condition of
the securities markets, the market for new issues of securities and the demand
for securities of comparable companies.

DLJ Capital, Inc. served as the syndication and administrative agent to the
lenders in connection with the Credit Facility funded in October 1997. DLJ
Capital, Inc. is an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation. DLJ Capital, Inc. received customary compensation in connection
with its role in the placement of such facility. In addition, DLJ Capital, Inc.
is the lender of approximately $ million of the amounts currently outstanding
under the Credit Facility. It is currently anticipated that approximately $
million of such indebtedness will be repaid with a portion of the proceeds of
the Offering.

As a result of the repayment of indebtedness owed to DLJ Capital, Inc., the
Offering is subject to the provisions of Section 2720 of the Conduct Rules of
the NASD (formerly Schedule E to the Bylaws of the NASD) ("Section 2720").
Accordingly, the underwriting arrangements for the Offering will conform with
the requirements set forth in Section 2720. In particular, the price at which
the Offering is to be distributed to the public must be a price no higher than
that recommended by a "qualified independent underwriter" who has also
participated in the preparation of the Prospectus and the Registration Statement
of which the Prospectus is a part and who meets certain standards. In accordance
with this requirement, Jefferies & Company, Inc. will serve in such role and
will recommend the public offering price in compliance with the requirements of
Section 2720. Jefferies & Company, Inc., in its role as qualified independent
underwriter, has performed the due diligence investigations and reviewed and
participated in the preparation of the Prospectus and the Registration Statement
of which the Prospectus forms a part.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Vinson & Elkins L.L.P., Houston, Texas. Certain legal matters in
connection with the sale of the Common Stock offered hereby will be passed upon
for the Underwriters by Andrews & Kurth L.L.P., Houston, Texas. Robert H.
Whilden, Jr., a partner of Vinson & Elkins L.L.P., is a director of the Company.
See "Principal Shareholders" for a description of Common Stock and warrants to
purchase Common Stock held by Mr. Whilden.

EXPERTS

The audited financial statements included in this Prospectus and
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein upon the authority of said firm as experts in giving said
reports.

40
<PAGE> 42

AVAILABLE INFORMATION

The Company has not previously been subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended. The Company has filed with
the Securities and Exchange Commission (the "Commission") a Registration
Statement on Form S-1 (the "Registration Statement") under the Securities Act,
with respect to the offer and sale of Common Stock pursuant to this Prospectus.
This Prospectus, filed as a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement or the exhibits
and schedules thereto in accordance with the rules and regulations of the
Commission and reference is hereby made to such omitted information. Statements
made in this Prospectus concerning the contents of any contract, agreement or
other document filed as an exhibit to the Registration Statement are summaries
of the terms of such contracts, agreements or documents and are not necessarily
complete. Reference is made to each such exhibit for a more complete description
of the matters involved and such statements shall be deemed qualified in their
entirety by such reference. The Registration Statement and the exhibits and
schedules thereto filed with the Commission may be inspected, without charge,
and copies may be obtained at prescribed rates, at the public reference facility
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, New York, New York 10048 and CitiCorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60621-2511. For further
information pertaining to the Common Stock offered by this Prospectus and the
Company, reference is made to the Registration Statement.

The Company intends to furnish its shareholders with annual reports
containing audited financial statements certified by independent auditors and
quarterly reports for the first three quarters of each fiscal year containing
unaudited financial statements.

41
<PAGE> 43

W-H HOLDINGS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

I. W-H HOLDINGS, INC.

<TABLE>
<S> <C>
Unaudited Pro Forma Consolidated Statement of Operations for
the Year Ended September 30, 1997......................... F-2
Report of Independent Public Accountants.................... F-3
Consolidated Balance Sheets as of September 30, 1996 and
1997...................................................... F-4
Consolidated Statements of Operations for the Years Ended
September 30, 1995, 1996 and 1997......................... F-5
Consolidated Statements of Shareholders' Equity (Deficit)
for the Years Ended September 30, 1995, 1996 and 1997..... F-6
Consolidated Statements of Cash Flows for the Years Ended
September 30, 1995, 1996 and 1997......................... F-7
Notes to Consolidated Financial Statements.................. F-8
II. INTEGRITY INDUSTRIES, INC.
Report of Independent Public Accountants.................... F-20
Balance Sheets as of December 31, 1996, and September 24,
1997...................................................... F-21
Statements of Operations for the Year Ended December 31,
1996, and the Eight Months and Twenty-Four Days Ended
September 24, 1997........................................ F-22
Statements of Shareholders' Equity (Deficit) for the Year
Ended December 31, 1996, and the Eight Months and
Twenty-Four Days Ended September 24, 1997................. F-23
Statements of Cash Flows for the Year Ended December 31,
1996, and the Eight Months and Twenty-Four Days Ended
September 24, 1997........................................ F-24
Notes to Financial Statements............................... F-25
</TABLE>

F-1
<PAGE> 44

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997

The following unaudited pro forma consolidated statement of operations for
the year ended September 30, 1997 gives effect to: (i) the Integrity Acquisition
and the Offering and the application of the estimated net proceeds therefrom, as
if such events had occurred on October 1, 1996 and (ii) the elimination of
non-recurring compensation expense resulting from the redemption of options in
connection with the Recapitalization. The pro forma financial information does
not purport to represent what the Company's results of operations actually would
have been had these events, in fact, occurred at the beginning of the period nor
are they intended to project the Company's results of operations for any future
period or date. The statement of operations for Integrity has been derived from
the books and records of Integrity on an unaudited basis. The unaudited pro
forma consolidated financial information should be read in conjunction with the
historical financial statements appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
HISTORICAL
------------------- PRO FORMA AS
THE PRO FORMA PRO FORMA OFFERING ADJUSTED FOR
COMPANY INTEGRITY ADJUSTMENTS BEFORE OFFERING ADJUSTMENTS THE OFFERING
------- --------- ----------- --------------- ----------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Revenues................................ $48,197 $10,902 $ -- $59,099 $ -- $59,099
Costs and Expenses:
Operating expenses.................... 20,299 7,260 -- 27,559 -- 27,559
Depreciation and amortization......... 4,898 104 335(1) 5,337 -- 5,337
Selling, general, and
administrative...................... 28,181 3,420 (14,878)(2)(3)(4) 16,723 -- 16,723
------- ------- -------- ------- ------- -------
Total costs and expenses........ 53,378 10,784 (14,543) 49,619 -- 49,619
Income (loss) from operations........... (5,181) 118 14,543 9,480 -- 9,480
Other (income) expense:
Interest expense...................... 2,281 209 1,110(5) 3,600 (3,154)(7) 446
Other income.......................... (4) (31) -- (35) -- (35)
------- ------- -------- ------- ------- -------
Income (loss) before income taxes (7,458) (60) 13,433 5,915 3,154 9,069
Provision for income taxes.............. 2,187 -- (30)(6) 2,157 1,150(8) 3,307
------- ------- -------- ------- ------- -------
Net income (loss)(9).................... $(9,645) $ (60) $ 13,463 $ 3,758 $ 2,004 $ 5,762
======= ======= ======== ======= ======= =======
Earnings (loss) per share............... $ $ $ $ $ $
======= ======= ======== ======= ======= =======
Weighted average shares outstanding.....
</TABLE>

- ---------------

(1) To reflect the amortization of goodwill over 40 years associated with the
acquisition of Integrity.

(2) To remove $1,024,000 of compensation for employees to amounts per employment
agreements entered into in connection with the acquisition of Integrity.

(3) To remove $400,000 of payments to Integrity employees as specified in the
acquisition agreement.

(4) To remove $13,454,000 of non-recurring compensation expense resulting from
the Recapitalization in 1997.

(5) To record interest expense at a current interest rate of 8.41% for bank
borrowings of $13,200,000 incurred to consummate the acquisition of
Integrity.

(6) To adjust the Company's provision for income taxes to give effect to the
acquisition of Integrity.

(7) To record a reduction in interest expense as a result of the repayment of
subordinated debt and certain debt under the Company's senior credit
facility from the net proceeds of the Offering.

(8) To adjust the Company's provision for income taxes to give effect to the
Offering.

(9) Upon consummation of the Offering, and the application of the net proceeds
therefrom, the Company will recognize a charge of approximately $400,000 for
the write-off of deferred financing costs related to the repayment of the
Subordinated Debt with the proceeds from the Offering.

F-2
<PAGE> 45

After the stock split discussed in Note 9 has been effected and properly
reflected in the Company's consolidated financial statements and related notes
thereto, we expect to be in a position to render the following audit report.

ARTHUR ANDERSEN LLP
December 29, 1997

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
WH-Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of
WH-Holdings, Inc. (a Texas corporation), and subsidiaries as of September 30,
1996 and 1997, and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for each of the three years in the
period ended September 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 financial statements referred to above present fairly,
in all material respects, the financial position of WH-Holdings, Inc., and
subsidiaries as of September 30, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1997, in conformity with generally accepted accounting principles.

Houston, Texas

F-3
<PAGE> 46

W-H HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
---------------------------
1996 1997
----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 922,676 $ 8,908,334
Accounts receivable, net.................................. 8,299,649 14,411,336
Income tax receivable..................................... -- 1,312,886
Inventories............................................... 1,574,717 4,019,390
Prepaid expenses and other................................ 388,556 777,674
----------- ------------
Total current assets.............................. 11,185,598 29,429,620
PROPERTY AND EQUIPMENT, net................................. 17,286,538 30,471,207
GOODWILL, net............................................... 4,331,036 17,616,037
OTHER ASSETS, net........................................... 993,169 3,363,827
----------- ------------
Total assets...................................... $33,796,341 $ 80,880,691
=========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 1,473,885 $ 1,750,000
Accounts payable and accrued liabilities.................. 3,856,241 10,842,446
----------- ------------
Total current liabilities......................... 5,330,126 12,592,446
LONG-TERM DEBT, net of current maturities................... 13,592,408 98,450,000
DEFERRED INCOME TAXES....................................... 2,171,317 --
OTHER LONG-TERM LIABILITIES................................. 417,929 177,933
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Class A common stock, $1.00 par value, 900,000 shares
authorized, 690,906 and 275,000 shares issued and
outstanding, respectively.............................. 690,906 275,000
Class B common stock, $1.00 par value, 100,000 shares
authorized, none issued and outstanding................ -- --
Additional paid-in capital................................ 8,712,594 --
Unearned portion of restricted stock...................... (48,778) --
Retained earnings (deficit)............................... 2,929,839 (30,614,688)
----------- ------------
Total shareholders' equity (deficit).............. 12,284,561 (30,339,688)
----------- ------------
Total liabilities and shareholders' equity
(deficit)....................................... $33,796,341 $ 80,880,691
=========== ============
</TABLE>

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

F-4
<PAGE> 47

W-H HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30
-----------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES............................................ $27,360,165 $36,215,180 $48,196,975
COSTS AND EXPENSES:
Operating expenses................................ 11,930,922 15,447,586 20,299,279
Depreciation and amortization..................... 2,489,108 3,394,666 4,898,264
Selling, general and administrative............... 9,078,489 10,955,205 28,180,322
----------- ----------- -----------
Total costs and expenses.................. 23,498,519 29,797,457 53,377,865
----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS....................... 3,861,646 6,417,723 (5,180,890)
OTHER (INCOME) EXPENSE:
Interest expense.................................. 1,002,634 1,301,299 2,281,492
Other (income) expense............................ 4,759 17,434 (4,424)
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES................... 2,854,253 5,098,990 (7,457,958)
PROVISION FOR INCOME TAXES.......................... 1,258,269 1,985,050 2,187,143
----------- ----------- -----------
NET INCOME (LOSS)................................... $ 1,595,984 $ 3,113,940 $(9,645,101)
=========== =========== ===========
INCOME (LOSS) PER SHARE............................. $ $ $
=========== =========== ===========
NUMBER OF SHARES USED IN PER SHARE CALCULATION......
=========== =========== ===========
</TABLE>

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

F-5
<PAGE> 48

W-H HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
CLASS A COMMON
STOCK ISSUED UNEARNED
-------------------- ADDITIONAL PORTION OF RETAINED
PAR PAID-IN RESTRICTED EARNINGS
SHARES VALUE CAPITAL STOCK (DEFICIT) TOTAL
-------- --------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, September 30, 1994...................... 677,620 $ 677,620 $ 8,403,520 $(456,778) $ (1,780,085) $ 6,844,277
RESTRICTED STOCK EXPENSE......................... -- -- -- 204,000 -- 204,000
NET INCOME....................................... -- -- -- -- 1,595,984 1,595,984
-------- --------- ------------ --------- ------------ ------------
BALANCE, September 30, 1995...................... 677,620 677,620 8,403,520 (252,778) (184,101) 8,644,261
RESTRICTED STOCK EXPENSE......................... -- -- -- 204,000 -- 204,000
PROCEEDS FROM THE SALE OF COMMON STOCK........... 3,286 3,286 95,294 -- -- 98,580
EXERCISE OF STOCK OPTIONS........................ 10,000 10,000 123,000 -- -- 133,000
INCOME TAX BENEFIT FROM STOCK OPTIONS
EXERCISED...................................... -- -- 90,780 -- -- 90,780
NET INCOME....................................... -- -- -- -- 3,113,940 3,113,940
-------- --------- ------------ --------- ------------ ------------
BALANCE, September 30, 1996...................... 690,906 690,906 8,712,594 (48,778) 2,929,839 12,284,561
RESTRICTED STOCK EXPENSE......................... -- -- -- 48,778 -- 48,778
INCOME TAX BENEFIT FROM STOCK OPTIONS
EXERCISED...................................... -- -- 5,004,799 -- -- 5,004,799
ISSUANCE OF STOCK PURCHASE WARRANTS.............. -- -- 130,000 -- -- 130,000
CONVERSION OF DEBT TO COMMON STOCK IN CONNECTION
WITH RECAPITALIZATION.......................... 10,000 10,000 490,000 -- -- 500,000
PROCEEDS FROM THE SALE OF COMMON STOCK IN
CONNECTION WITH RECAPITALIZATION, net of
transaction costs of $2,698,737................ 220,000 220,000 9,126,263 -- -- 9,346,263
REPURCHASE OF OUTSTANDING COMMON STOCK AND
WARRANTS IN CONNECTION WITH RECAPITALIZATION... (645,906) (645,906) (23,463,656) -- (23,899,426) (48,008,988)
NET LOSS......................................... -- -- -- -- (9,645,101) (9,645,101)
-------- --------- ------------ --------- ------------ ------------
BALANCE, September 30, 1997...................... 275,000 $ 275,000 $ -- $ -- $(30,614,688) $(30,339,688)
======== ========= ============ ========= ============ ============
</TABLE>

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

F-6
<PAGE> 49

W-H HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30
------------------------------------------
1995 1996 1997
----------- ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................ $ 1,595,984 $ 3,113,940 $(9,645,101)
Adjustments to reconcile net income (loss) to
cash provided by operating activities --
Depreciation and amortization................. 2,489,108 3,394,666 4,898,264
Deferred tax provision(benefit)............... 1,077,965 929,602 (2,171,317)
Compensation expense incurred in connection
with repurchase of stock options............ -- -- 13,453,500
Restricted stock expense...................... 204,000 204,000 48,778
Change in assets and liabilities, excluding
effects of acquisitions --
Increase in accounts receivable, net........ (851,375) (1,825,117) (3,780,844)
(Increase) decrease in prepaid expenses and
other.................................... (190,907) 2,822 (375,018)
Increase in inventory....................... (47,566) (483,172) (890,307)
Increase in income tax receivable........... -- -- (1,312,886)
(Increase) decrease in other assets......... 34,170 -- (2,696,268)
Increase (decrease) in accounts payable,
accrued liabilities and other long-term
liabilities.............................. 512,884 (24,098) 4,878,543
----------- ------------ -----------
Net cash provided by operating activities..... 4,824,263 5,312,643 2,407,344
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of DMS, net of cash of $31,833.......... -- (4,617,412) --
Purchase of Integrity............................ -- -- (13,357,400)
Additions to machinery and equipment............. (4,104,361) (7,145,719) (18,013,297)
Proceeds from sale of machinery and equipment.... 482,017 772,108 774,232
----------- ------------ -----------
Net cash used in investing activities......... (3,622,344) (10,991,023) (30,596,465)
----------- ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt............... 2,800,000 5,984,896 103,200,000
Payments on debt................................. (4,054,637) (650,695) (19,913,795)
Proceeds from the issuance of common stock, net
of offering costs............................. -- 231,580 9,346,263
Repurchase of outstanding common stock, stock
options and warrants.......................... -- -- (61,462,488)
Income tax benefit from stock options
exercised..................................... -- 90,780 5,004,799
----------- ------------ -----------
Net cash provided by (used in) financing
activities.................................. (1,254,637) 5,656,561 36,174,779
----------- ------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS...................................... (52,718) (21,819) 7,985,658
CASH AND CASH EQUIVALENTS, beginning of year....... 997,213 944,495 922,676
----------- ------------ -----------
CASH AND CASH EQUIVALENTS, end of year............. $ 944,495 $ 922,676 $ 8,908,334
=========== ============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the year................. $ 1,009,034 $ 1,303,706 $ 1,768,126
=========== ============ ===========
Income taxes paid during the year............. $ 615,355 $ 717,550 $ 1,052,763
=========== ============ ===========
</TABLE>

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

F-7
<PAGE> 50

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS ORGANIZATION:

DESCRIPTION OF COMPANY

W-H Holdings, Inc. (collectively with its subsidiaries, W-H or the
Company), is a diversified energy service company that provides a variety of
services and equipment to the oil and gas industry on the Gulf Coast through its
subsidiaries, Charles Holston, Inc. (Holston), Well Safe, Inc. (Well Safe),
Perf-O-Log, Inc. (POL), Thomas Tools, Inc. (Thomas Tools), Drill Motor Services,
Inc. (DMS), and Integrity Industries, Inc. (Integrity). The Company was
incorporated on April 10, 1989, under the laws of the state of Texas.

In December 1997, the Company filed a registration statement on Form S-1
(the Registration Statement) for the sale of its common stock (the Offering). An
investment in shares of common stock involves a high degree of risk. The
Company's business depends in large part on the conditions of the oil and gas
industry, and specifically on the capital investment of the Company's customers.
The demand for oilfield services has traditionally been cyclical, as purchases
of products and services such as those provided by the Company are, to a
substantial extent, deferrable in the event oil and gas companies reduce their
capital investment as a result of conditions existing in the oil and gas
industry or general economic downturns. The Company's results in recent periods
have benefitted from improved market conditions for the Company's products and
services associated with an increase in drilling and workover activity and the
trend towards the drilling of deeper wells in harsh environments. There can be
no assurance that the current market conditions will continue. Any material
decline in the current level of drilling and workover activity could have a
material adverse impact on the Company's future results. Other risk factors
include, but are not limited to, competition, risks relating to the Company's
acquisition strategy, risks relating to acquisition financing and reliance on
key personnel. Assuming the Offering is delayed or not successful and a downturn
occurs in the oilfield services industry, management believes that cash flows
anticipated to be generated from operations together with the Company's existing
credit capacity will provide sufficient liquidity for its forseeable needs. See
"Risk Factors" included in this Prospectus.

RECAPITALIZATION OF W-H HOLDINGS, INC.

On August 11, 1997, the Company's Board of Directors approved a series of
equity and debt transactions which resulted in a recapitalization of the Company
and a change in controlling ownership of the common stock outstanding (the
Recapitalization). In connection with the Recapitalization, the Company's Board
of Directors (i) approved the repurchase and retirement of 645,906 shares of
Class A common stock and warrants for the purchase of 15,050 shares of Class A
common stock for approximately $48.0 million, (ii) approved the repurchase of
251,500 outstanding options for approximately $13.5 million which was charged to
operations and included in selling, general and administrative expenses in the
accompanying consolidated statement of operations for the year ending September
30, 1997, (iii) approved the execution of a $95.0 million senior secured credit
facility (the Credit Facility) which was used to fund the repurchase of the
Class A common stock, options, warrants and to retire the outstanding borrowings
under the Company's loan agreement with a bank (See Note 5), (iv) approved the
issuance of 220,000 new shares of Class A common stock and warrants to purchase
37,813 shares of Class A common stock at an exercise price of $73 per share for
approximately $12.0 million to W-H Investment L.P., a limited partnership
organized by The Jordan Company (Jordan), a private merchant banking firm, (v)
the issuance of subordinated debentures in the amount of $24.0 million to an
affiliate of Jordan, and (vi) the issuance of warrants to purchase 30,937 shares
of Class A common stock to continuing members of management at an exercise price
of $73 per share (See Note 9). After the Recapitalization, W-H Investments L.P.
owned approximately 80% of the outstanding Class A Common Stock. Expenses of
approximately $5.3 million were incurred in connection with the
Recapitalization, of which $2.7 million was recorded as a reduction to equity
and $2.6 million was capitalized as debt offering costs, which is included in
other assets in the accompanying financial statements, and will be amortized
over the term of the applicable debt agreements. In connection with the
Recapitalization, $500,000 of convertible debentures were converted into 10,000
shares of Class A common stock.

F-8
<PAGE> 51

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany balances and
transactions have been eliminated.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include highly liquid investments with an
original maturity of three months or less.

ACCOUNTS RECEIVABLE

Accounts receivable have a concentration of credit risk in the oil and gas
industry. The Company performs continuing credit evaluations of its customers
and generally does not require collateral. Historically, the Company has not
experienced significant losses related to receivables from individual customers
or groups of customers. Accounts receivable have been recorded net of an
allowance for doubtful accounts of $425,706 and $848,118 at September 30, 1996
and 1997, respectively.

INVENTORIES

Inventory is stated at the lower of cost or market, determined on a
first-in, first-out basis. Inventory consists primarily of equipment parts,
explosives, raw materials and supplies.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized while minor replacements, maintenance
and repairs which do not improve or extend the life of such assets are charged
to operations as incurred. Disposals are removed at cost less accumulated
depreciation, and any resulting gain or loss is reflected in the accompanying
consolidated statements of operations.

Depreciation is calculated using the straight-line method over the
estimated useful lives of the depreciable assets which range from 2 to 10 years.
Capital leases and leasehold improvements are amortized over the shorter of
their useful lives or the term of the lease.

GOODWILL

Goodwill represents the excess of the aggregate price paid by the Company
in acquisitions accounted for as purchases over the fair market value of the
tangible and identifiable intangible net assets acquired. Goodwill is being
amortized on a straight-line basis over 40 years. Accumulated amortization of
goodwill was $139,400 and $248,300 as of September 30, 1996 and 1997,
respectively. Amortization expense charged to operations totaled approximately
$38,800, $96,300 and $108,900 for the years ended September 30, 1995, 1996 and
1997, respectively.

REALIZATION OF LONG-LIVED ASSETS

Effective October 1, 1996, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of." Accordingly, in the event
that facts and circumstances indicate that property and equipment and intangible
or other assets may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated future undiscounted cash
flows associated with the asset are compared to

F-9
<PAGE> 52

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the asset's carrying amount to determine if a write-down to market value is
necessary. Adoption of this standard did not have a material effect on the
financial position or results of operations of the Company.

REVENUE RECOGNITION AND OPERATING EXPENSES

The Company recognizes revenues for services at the time such services are
rendered. The primary components of operating expenses are those salaries,
expendable supplies, repairs and maintenance and general operational costs that
are directly associated with the services performed by the Company for its
customers.

INCOME TAXES

The Company utilizes the liability method of accounting for income taxes as
required by SFAS No. 109, "Accounting for Income Taxes." Under the liability
method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying values of existing assets and liabilities and their respective tax
bases based on enacted tax rates.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

FINANCIAL INSTRUMENTS

The Company considers the fair value of all financial instruments not to be
materially different from their carrying values at the end of each fiscal year
based on management's estimate of the Company's ability to borrow funds under
terms and conditions similar to those of the Company's existing debt.

ACCOUNTING FOR STOCK-BASED COMPENSATION

In 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which is effective for the Company's 1997 fiscal year. SFAS No.
123 allows the Company to adopt either of two methods for accounting for stock
options. The Company intends to continue to account for its stock-based
compensation plans under APB Opinion No. 25, "Accounting for Stock Issued to
Employees." In accordance with SFAS No. 123, certain pro forma disclosures are
provided in Note 9.

PER SHARE DATA

Per share data is based on the weighted average number of common shares and
common share equivalents outstanding for the period. Common and common
equivalent shares issued by the Company during the 12 months immediately
preceding the initial filing of the Registration Statement relating to the
Offering have been included in the calculation of the shares used in computing
net income (loss) per common share (for the periods prior to the completion of
the Offering) as if these shares were outstanding for such periods using the
treasury stock method.

During February 1997, the FASB issued SFAS No. 128, "Earnings per Share."
SFAS No. 128 requires the presentation of basic earnings per share and diluted
earnings per share in financial statements of public enterprises rather than
primary and fully diluted earnings per share as previously required. Under the
provisions of this statement, basic earnings per share will be computed based on
weighted average shares outstanding and will exclude dilutive securities such as
options, warrants, etc. Diluted earnings per share will

F-10
<PAGE> 53

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

be computed including the impact of all potentially dilutive securities. The
Company will adopt this statement in December 1997 but does not anticipate that
the statement will have a significant impact on the Company.

3. ACQUISITIONS:

INTEGRITY INDUSTRIES, INC.

On September 25, 1997, W-H acquired 100 percent of the issued and
outstanding stock of Integrity for total consideration of approximately $13.4
million resulting in goodwill of approximately $13.4 million which is being
amortized over 40 years on a straight-line basis. The Integrity acquisition was
funded by the senior secured delayed term loan facility (see Note 5). Integrity
is a manufacturer and wholesaler of specialty chemicals and drilling fluid
products. The former shareholders of Integrity agreed to indemnify the Company
for any aggregate liabilities in excess of $50,000 that occurred prior to the
Company's purchase of Integrity but were not reflected on the acquisition
financial statements. This indemnification liability shall not exceed the
purchase price.

The purchase price and estimated fair market value of the assets acquired
and liabilities assumed with the Integrity acquisition are as follows:

<TABLE>
<S> <C>
Cash paid................................................... $13,000,000
Debt issued................................................. 200,000
Warrants issued to former owners............................ 130,000
Acquisition costs........................................... 27,400
-----------
Total purchase price.............................. $13,357,400
===========
Net assets acquired
Current assets............................................ $ 3,900,000
Property and equipment, net............................... 314,000
Goodwill.................................................. 13,386,400
Current liabilities....................................... (1,895,000)
Other liabilities......................................... (2,348,000)
-----------
Net assets acquired............................... $13,357,400
===========
</TABLE>

The Integrity acquisition has been accounted for as a purchase; therefore,
the accompanying statements of operations reflect the results of Integrity's
operations since its acquisition date. The allocation of purchase prices to the
assets acquired and liabilities assumed has been initially assigned and recorded
based on preliminary estimates of fair value and may be revised as additional
information concerning the valuation of such assets and liabilities becomes
available. Management believes that all liabilities related to the acquisition
of Integrity have been accrued.

The following table reflects on an unaudited consolidated pro forma basis
the results of operations as though Integrity had been acquired as of the
beginning of the Company's fiscal years 1996 and 1997. Appropriate adjustments
have been made to reflect the accounting basis used in recording the Integrity
acquisition. These pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of the results of operations that would
have resulted had the combination been in effect on the date indicated, that
have resulted since the date of acquisition or that may result in the future.

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
Total revenues............................................ $45,556,000 $59,099,000
Net income (loss)......................................... 3,694,000 (8,966,000)
Net income (loss) per common and common equivalent
shares..................................................
</TABLE>

F-11
<PAGE> 54

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DRILL MOTOR SERVICES, INC.

On December 15, 1995, the Company acquired all of the outstanding stock of
DMS, a Louisiana-based company engaged in the rental and sale of fluid-driven
drilling motors to end-users. This transaction has been accounted for as a
purchase, and the accompanying financial statements include the results of
operations of DMS from the date of purchase. The purchase price of $4.5 million
was paid in cash, and resulted in approximately $2.9 million of goodwill which
is being amortized over 40 years on a straight-line basis. The purchase price
and direct acquisition costs were allocated based on the fair value of the
assets acquired and liabilities assumed. The former shareholders of DMS agreed
to indemnify the Company for any aggregate liabilities in excess of $50,000 that
occurred prior to the Company's purchase of DMS but were not reflected on the
acquisition financial statements. This indemnification liability shall not
exceed the purchase price.

4. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS:

Activity in the Company's allowance for doubtful accounts consists of the
following:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Balance, beginning of year.................................. $ 379,055 $ 425,706
Deductions for uncollectible receivables written off........ (182,555) (120,763)
Additions charged to expense................................ 229,206 243,175
Additions due to acquisition................................ -- 300,000
--------- ---------
Balance, end of year........................................ $ 425,706 $ 848,118
========= =========
</TABLE>

Property and equipment at September 30, 1996 and 1997, consist of the
following:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Machinery and equipment................................... $24,765,302 $41,563,470
Automobiles and trucks.................................... 840,044 996,971
Office equipment, furniture and fixtures.................. 682,016 1,027,485
Leasehold improvements.................................... 635,063 1,019,566
----------- -----------
Total........................................... 26,922,425 44,607,492
Less Accumulated depreciation............................. 9,635,887 14,136,285
----------- -----------
Property and equipment, net..................... $17,286,538 $30,471,207
=========== ===========
</TABLE>

Depreciation expense charged to operations totaled approximately
$2,162,000, $2,967,000 and $4,471,255 for the years ended September 30, 1995,
1996 and 1997, respectively.

Accounts payable and accrued liabilities at September 30, 1996 and 1997
consist of the following:

<TABLE>
<CAPTION>
1996 1997
---------- -----------
<S> <C> <C>
Accounts payable........................................... $2,063,844 $ 5,983,032
Accrued taxes related to Recapitalization.................. -- 1,748,372
Accrued compensation and benefits.......................... 979,892 1,294,894
Other accrued liabilities.................................. 812,505 1,816,148
---------- -----------
$3,856,241 $10,842,446
========== ===========
</TABLE>

F-12
<PAGE> 55

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. DEBT:

Long-term debt at September 30, 1996 and 1997, consisted of the following:

<TABLE>
<CAPTION>
1996 1997
----------- ------------
<S> <C> <C>
Revolving line of credit to a bank, bearing interest at
9.25%, repaid in 1997.................................. $ 3,718,881 $ --
Term loan payable to a bank, bearing interest at 9.25%,
repaid in 1997......................................... 10,755,556 --
12% convertible subordinated debenture, convertible at a
rate of one share of Class A common stock for each $50
principal amount thereof, converted to 10,000 shares in
1997................................................... 500,000 --
Notes payable to financial institutions, bearing interest
at 7.9% to 9.0%, repaid in 1997........................ 91,856 --
Senior secured term A loan facility to financial
institutions payable in equal quarterly installments at
5% of principal in 1998, 10% in 1999, 15% in 2000, 30%
in 2001 and 40% in 2002, bearing interest at LIBOR
(5.66% at September 30, 1997) plus 2.75%, which is
payable quarterly, maturing at August 11, 2002......... -- 20,000,000
Senior secured term B loan facility to financial
institutions payable in equal quarterly installments at
1% of principal in 1998 through 2002 and 95% of
principal in 2003, bearing interest at LIBOR plus
3.25%, which is payable quarterly, maturing at August
11, 2003............................................... -- 40,000,000
Senior secured delayed term loan facility to financial
institutions payable in equal quarterly installments at
1% of principal in 1998 through 2002 and 95% of
principal in 2003, bearing interest at LIBOR plus
3.25%, which is payable quarterly, maturing at August
11, 2003............................................... -- 15,000,000
Subordinated notes payable to a financial institution
with $12,000,000 due at September 15, 2006 and 2007,
bearing interest at 12.5%, which is payable
semiannually on March 15 and September 15.............. -- 24,000,000
Notes payable to prior owners of Integrity, $200,000 due
in 1998 with remainder due October 1, 2001, bearing
interest at 10%, which is payable annually on September
30..................................................... -- 1,200,000
----------- ------------
Total long-term debt........................... 15,066,293 100,200,000
Less -- Current maturities of long-term debt............. (1,473,885) (1,750,000)
----------- ------------
$13,592,408 $ 98,450,000
=========== ============
</TABLE>

CREDIT FACILITY

In connection with the Recapitalization (see Note 1), the Company obtained
$95,000,000 in senior secured financing. The financing is comprised of a $20
million revolving credit facility, a $20 million term A loan facility, a $40
million term B loan facility and a $15 million delayed term loan facility. The
term A loan facility and term B loan facility were used primarily to finance the
Recapitalization and related fees and expenses. The delayed term loan facility
was used to finance the acquisition of Integrity. No amounts were outstanding on
the $20,000,000 revolving credit facility at September 30, 1997. The revolving
credit facility

F-13
<PAGE> 56

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and term A loan facility mature on August 11, 2002, and incur interest at LIBOR
plus 2.75%, subject to reductions determined by a debt coverage ratio based
pricing grid. The term B loan facility and delayed term loan facility mature on
August 11, 2003 and incur interest at LIBOR plus 3.25%, subject to reductions
determined by a debt coverage ratio based pricing grid. The Company is subject
to a .25%-.5% commitment fee for all unused balances on the delayed term loan
facility and the revolving credit facility. The Credit Facility is secured by
substantially all assets of the Company.

SUBORDINATED DEBT

In connection with the Recapitalization, the Company issued $24,000,000 in
subordinated unsecured notes (Subordinated Debt) to an affiliate of Jordan. The
Subordinated Debt is subordinated in right of payment and liquidation preference
to the Credit Facility.

Both the Credit Facility and Subordinated Debt agreements contain
restrictions which, among other things, require maintenance of certain financial
ratios, restrict encumbrance of assets, creation of indebtedness, capital
expenditures, investing activities and payment of dividends.

Scheduled maturities of long-term debt are as follows:

<TABLE>
<S> <C>
For the year ending September 30 --
1998...................................................... $ 1,750,000
1999...................................................... 2,550,000
2000...................................................... 3,550,000
2001...................................................... 6,550,000
2002...................................................... 9,550,000
Thereafter................................................ 76,250,000
------------
$100,200,000
============
</TABLE>

LINE OF CREDIT AND TERM LOAN

In December 1995, and in connection with the acquisition of DMS, the
Company amended its loan agreement with a bank by increasing its term loan from
$6,500,000 to $11,000,000 and its revolving line of credit from $3,500,000 to
$5,000,000. In August 1996, the revolving line of credit was increased to
$6,500,000. The Company used a portion of the proceeds from the Credit Facility
and Subordinated Debt to retire both the term loan and the revolving line of
credit in August 1997.

6. COMMITMENTS AND CONTINGENCIES:

OPERATING LEASES

The Company leases certain real estate properties and automobiles under
operating leases. Future minimum lease payments under noncancelable operating
leases are as follows:

<TABLE>
<S> <C>
For the year ending September 30 --
1998...................................................... $1,101,228
1999...................................................... 933,486
2000...................................................... 824,291
2001...................................................... 666,126
2002...................................................... 448,181
Thereafter................................................ 46,982
----------
$4,020,294
==========
</TABLE>

F-14
<PAGE> 57

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Included in future operating lease payments are amounts due to shareholders
and related parties for the lease of POL's, DMS's, TTI's and Holston's current
operating facilities. Under the agreements, a total of $705,560 is due to these
shareholders through October 31, 2002.

Rental expense under operating leases was $442,206, $464,367 and $585,931
for the years ended September 30, 1995, 1996 and 1997, respectively, of which
$80,900, $191,600 and $234,075, respectively, was paid to certain shareholders
for the lease of certain operating facilities.

EMPLOYMENT AGREEMENTS

The Company and/or its subsidiaries have employment agreements with certain
of its employees. These agreements expire through September 2002 and provide for
a base annual salary ranging from $40,800 to $250,000. The agreements also
provide for severance pay in the event of involuntary termination.

The Company has also entered into a royalty agreement with an employee
which provides for a maximum payment of approximately $1.7 million upon the
occurrence of certain events. This maximum payment is reduced over time by
royalties received from recurring operations.

NONCOMPETE AGREEMENT

In connection with the Company's acquisition of Thomas Tools on June 14,
1994, the former owners have agreed not to engage in any business of the type
engaged in by Thomas Tools in the states of Mississippi and Alabama and in
certain areas of the Gulf of Mexico and Louisiana for a period of five years in
exchange for $950,000 which is reflected in other assets in the accompanying
consolidated balance sheets and is being amortized ratably over the life of the
contract. The $950,000 will be paid in equal monthly installments through June
1999.

LITIGATION

The Company is involved in various lawsuits arising from normal business
activities. Management has reviewed pending litigation with legal counsel and
believes that the ultimate liability, if any, resulting from such actions will
not have a material adverse effect on the Company's financial position or
results of operations.

7. INCOME TAXES:

The components of the Company's income tax provision for the years ended
September 30, 1995, 1996 and 1997, are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Federal --
Current...................................... $ 50,028 $ 800,498 $ 829,285
Deferred..................................... 1,022,715 929,602 1,092,724
---------- ---------- ----------
1,072,743 1,730,100 1,922,009
---------- ---------- ----------
State --
Current...................................... 130,276 254,950 104,439
Deferred..................................... 55,250 -- 160,695
---------- ---------- ----------
185,526 254,950 265,134
---------- ---------- ----------
Total provision........................... $1,258,269 $1,985,050 $2,187,143
========== ========== ==========
</TABLE>

F-15
<PAGE> 58

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The provision for income taxes differs from an amount computed at the
statutory rate for the years ended September 30, 1995, 1996 and 1997 as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- -----------
<S> <C> <C> <C>
Federal income tax at statutory rates......... $ 970,446 $1,733,657 $(2,572,996)
State income taxes............................ 185,526 254,950 (335,608)
Non-recurring compensation charge............. -- -- 5,246,865
Nondeductible items........................... 73,353 65,914 60,666
NOL utilization............................... (58,426) (128,633) --
Restricted stock.............................. 69,360 69,360 (210,977)
Other......................................... 18,010 (10,198) (807)
---------- ---------- -----------
$1,258,269 $1,985,050 $ 2,187,143
========== ========== ===========
</TABLE>

The significant components of the deferred tax assets and liabilities at
September 30, 1996 and 1997, are as follows:

<TABLE>
<CAPTION>
1996 1997
----------- -----------
<S> <C> <C>
Deferred tax assets --
Net operating loss carryforwards........................ $ 243,620 $ 3,739,503
Accruals not currently deductible for tax purposes and
other................................................ 471,650 629,671
----------- -----------
Total gross deferred tax assets................. 715,270 4,369,174
Less -- Valuation allowance............................. (109,999) (109,999)
----------- -----------
Net deferred tax assets......................... 605,271 4,259,175
----------- -----------
Deferred tax liabilities --
Tax depreciation in excess of book depreciation......... (2,740,207) (4,225,379)
Other................................................... (36,381) (33,796)
----------- -----------
Total gross deferred tax liabilities............ (2,776,588) (4,259,175)
----------- -----------
Net deferred tax liabilities.................... $(2,171,317) $ --
=========== ===========
</TABLE>

The Company has recorded a valuation allowance to reflect the estimated
amount of deferred tax assets which may not be realized due to the expiration of
net operating losses and tax credit carryforwards. The change in the valuation
allowance for the years ended September 30, 1995, 1996 and 1997, is as follows:

<TABLE>
<CAPTION>
1995 1996 1997
-------- --------- --------
<S> <C> <C> <C>
Balance at beginning of year...................... $297,058 $ 238,632 $109,999
Utilization of net operating tax loss
carryforwards................................... (58,426) (128,633) --
-------- --------- --------
Balance at end of year............................ $238,632 $ 109,999 $109,999
======== ========= ========
</TABLE>

The Company and its subsidiaries file a consolidated federal tax return. At
September 30, 1997, the Company had a net operating loss (NOL) carryforward for
federal income tax purposes of approximately $8.5 million. The carryforward is
available through 2012 to offset future taxable income. As a result of the
purchase of Holston and other material changes in the ownership of the Company,
the utilization of certain carryforwards is subject to annual limitations and
has not been tax benefited for financial statement purposes. In addition, the
Company has net operating loss carryforwards in various state jurisdictions in
an aggregate amount of approximately $11.5 million. The utilization of these
losses is limited to the jurisdiction in which they arose.

F-16
<PAGE> 59

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. RELATED-PARTY TRANSACTIONS:

NOTES TO FORMER OWNERS OF INTEGRITY

At September 30, 1997, the Company had $1,200,000 in notes payable due to
the former owners of Integrity which bear interest at a rate of 10% per year. A
portion of the balance, $200,000, is due in 1998 with the remainder of the
principal balance due in its entirety on October 1, 2001.

SUBORDINATED DEBT

In connection with the Recapitalization, the Company issued $24,000,000 in
Subordinated Debt to an affiliate of Jordan (See Note 5).

CONSULTING AND ADVISORY AGREEMENTS

On August 11, 1997, the Company entered into a consulting agreement with an
affiliate of Jordan which provides for an annual fee payable on a quarterly
basis equal to 2.5% of the Company's net income before interest, tax,
depreciation and amortization and other non-cash or non-recurring expenses.
Under this agreement, the Company paid Jordan approximately $34,000 for the year
ended September 30, 1997. This agreement expires on December 31, 2007. This
agreement will be terminated upon completion of the Offering.

On August 11, 1997, the Company entered into a Transaction Advisory
Agreement (Advisory Agreement) with an affiliate of Jordan which expires on
December 31, 2007. The Advisory Agreement provides for an investment banking and
financial consulting fee ranging from 1% to 2% of the aggregate transaction size
for equity, debt, acquisitions, divestitures and other transactions.

9. SHAREHOLDERS' EQUITY:

CAPITAL STOCK

The Company has authorized 900,000 shares of Class A common stock of which
690,906 and 275,000 were outstanding at September 30, 1996 and 1997,
respectively. The Company has authorized 100,000 shares of Class B common stock
of which no shares were outstanding at September 30, 1996 and 1997.

The Company effected a -for-one stock split on . The
effect at the common stock split has been accounted for as a stock dividend in
the accompanying financial statements. On , the Board of
Directors increased the authorized number of common shares of common stock from
to and authorized the issuance of up to shares of
preferred stock.

STOCK OPTIONS AND STOCK PURCHASE WARRANTS

In August 1997, the Company adopted a stock option plan (the 1997 Option
Plan) to provide non-qualified stock options to employees and authorized 40,000
shares to be issued under the Plan. The Board of Directors or Compensation
Committee (the Committee) has the power to determine those employees to be
granted options, the price and the number of shares subject to each option, the
time at which each option is granted and becomes exercisable, the duration of
the option period, and such other conditions and limitations as may be
applicable.

Each option granted under the 1997 Option Plan will contain such terms and
conditions as may be approved by the Committee. As of September 30, 1997 the
Committee has granted options under the 1997 Option Plan at exercise prices
equal to the fair market value at the Company's common stock at date of grant.
These options vest over a four-year period and will expire ten years from the
date the options were granted. These options will vest in 25% increments after
each full year of service following the date of grant. If an optionee's
employment terminates for any reason, the option may be exercised during the
three-month period following such termination, but only to the extent vested at
the time of such termination.

F-17
<PAGE> 60

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the Company's stock options and warrants at September 30, 1996
and 1997, and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
NUMBER
OF SHARES
-------------------- PRICE
OPTIONS WARRANTS PER SHARE
------- -------- ---------
<S> <C> <C> <C>
Outstanding September 30, 1995.................. 218,500 15,050 $10 to $30
Granted......................................... 43,000 -- $30 and $40
Exercised....................................... (10,000) -- $10 to $16
-------- --------
Outstanding September 30, 1996.................. 251,500 15,050 $10 to $40
Repurchased in Recapitalization................. (251,500) (15,050) $73
Granted in Recapitalization..................... 17,400 68,750 $73
Granted in Integrity Acquisition................ -- 12,468 $73
-------- --------
Outstanding September 30, 1997.................. 17,400 81,218 $73
-------- --------
</TABLE>

Subsequent to September 30, 1997, options were granted under the 1997
Option Plan with respect to a total of 600 shares of Common Stock, at an
exercise price of $100 per share. In addition, upon consummation of the
Offering, the Company will issue 10,000 stock options to an officer of the
Company at an exercise price of $100 per share. These stock options will vest as
follows: 30% upon successful completion of the Offering and the remainder
ratably over the first, second and third anniversaries of the Offering. The
Company will recognize compensation expense equal to the difference between the
exercise price and the Offering price for these options which will be amortized
over the vesting period of the options.

Under SFAS No. 123, the fair value of each option and warrant grant was
estimated on the date of grant using the Black-Scholes option pricing model. The
following weighted average assumptions were used for the grants in the fiscal
years ended September 30, 1996 and 1997: risk-free interest rates of between
5.8%-6.9%; dividend rate of zero; expected lives of between five and ten years
and expected volatility of 43.7%-72.4%. The 17,400 options and 30,938 warrants
outstanding to employees at September 30, 1997 have a remaining contractual life
of 9.9 years.

The Black-Scholes option valuation model and other existing models were
developed for use in estimating the fair value of traded options that have no
vesting restrictions and are fully transferable. In addition, option valuation
models require the input of and are highly sensitive to subjective assumptions
including the expected stock price volatility. The Company's stock options have
characteristics significantly different from those of traded options, and
changes in the subjective input assumptions can materially affect the fair value
estimate.

F-18
<PAGE> 61

W-H HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Had compensation cost for the stock options and warrants granted to
employees been determined under SFAS No. 123, net income (loss) and net income
(loss) per share would have changed as indicated in the following pro forma
amounts:

<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
-------------------------
1996 1997
---------- -----------
<S> <C> <C>
Net income (loss) --
As reported.............................................. $3,113,940 $(9,645,101)
Pro forma................................................ 2,825,393 (10,093,466)
Net income (loss) per share --
As reported..............................................
Pro forma................................................
</TABLE>

ISSUANCE OF RESTRICTED STOCK TO EMPLOYEES

On November 3, 1993, the board of directors agreed to issue 46,300
restrictive Class A common shares to the management of the Company, the majority
of which vested after three and one-half years, and 24,000 of these shares were
contingent upon the accomplishment of certain milestones which were achieved in
fiscal year 1994. Unearned compensation was charged for the market value of the
restricted shares as these shares were issued or as milestones were achieved.
The unearned compensation was amortized ratably over the restricted period. The
unamortized unearned compensation value was shown as a reduction of
shareholders' equity in the accompanying consolidated balance sheets and
statements of shareholders' equity. During the years ended September 30, 1995,
1996 and 1997, the Company recognized $204,000, $204,000 and $48,778,
respectively, as compensation expense which is included in selling, general and
administrative expense in the accompanying consolidated statements of
operations. In connection with the Recapitalization, these shares were
repurchased by the Company (See Note 1).

10. 401(K) PLAN:

The Company adopted a 401(k) plan in 1993. Under the plan, employees can
contribute specified percentages of their annual compensation. The Company may
contribute a matching amount for each participant equal to a discretionary
percentage determined annually by the Company. The Company may also contribute
additional amounts at its sole discretion. Company matching contributions were
$29,709, $52,638 and $112,631 for the years ended September 30, 1995, 1996 and
1997, respectively.

11. SUBSEQUENT EVENTS:

In October 1997, the Company acquired all of the outstanding stock of
Diamond Wireline, Inc. (Diamond), for consideration of approximately $3.1
million in cash. Diamond provides wireline services to the oil and gas industry
along the Texas and Louisiana Gulf Coast.

F-19
<PAGE> 62

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Integrity Industries, Inc.:

We have audited the accompanying balance sheets of Integrity Industries,
Inc., as of December 31, 1996, and September 24, 1997, and the related
statements of operations, shareholders' equity (deficit) and cash flows for the
year ended December 31, 1996, and the eight months and twenty-four days ended
September 24, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Integrity Industries, Inc.,
as of December 31, 1996, and September 24, 1997, and the results of its
operations and its cash flows for the year ended December 31, 1996, and the
eight months and twenty-four days ended September 24, 1997, in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Houston, Texas
December 10, 1997

F-20
<PAGE> 63

INTEGRITY INDUSTRIES, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 24,
1996 1997
------------ -------------
<S> <C> <C>
CURRENT ASSETS:
Cash...................................................... $ 67,153 $ --
Accounts receivable, net.................................. 2,138,238 2,431,169
Inventories............................................... 897,952 1,554,366
Prepaid expenses and other................................ 17,135 13,774
----------- -----------
Total current assets.............................. 3,120,478 3,999,309
PROPERTY AND EQUIPMENT, net................................. 468,730 313,659
OTHER ASSETS................................................ 32,601 --
----------- -----------
Total assets...................................... $ 3,621,809 $ 4,312,968
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 767,947 $ 1,347,502
Accounts payable and accrued liabilities.................. 2,185,475 1,894,779
----------- -----------
Total current liabilities......................... 2,953,422 3,242,281
LONG-TERM DEBT, net of current maturities................... 97,263 --
LOANS FROM SHAREHOLDERS..................................... 916,000 962,000
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, par value $.01 per share, 10,000,000 shares
authorized, 125,000 shares issued...................... 1,250 1,250
Additional paid-in capital................................ 400,066 400,066
Retained earnings......................................... 279,808 733,371
Less- Treasury stock (60,000 shares)...................... (1,026,000) (1,026,000)
----------- -----------
Total shareholders' equity (deficit).............. (344,876) 108,687
----------- -----------
Total liabilities and shareholders' equity
(deficit)...................................... $ 3,621,809 $ 4,312,968
=========== ===========
</TABLE>

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

F-21
<PAGE> 64

INTEGRITY INDUSTRIES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE EIGHT
MONTHS AND
FOR THE YEAR TWENTY-FOUR
ENDED DAYS ENDED
DECEMBER 31, SEPTEMBER 24,
1996 1997
------------ -------------
<S> <C> <C>
REVENUES.................................................... $9,345,030 $8,331,018
COSTS AND EXPENSES:
Operating expenses........................................ 6,117,636 5,578,347
Depreciation and amortization............................. 74,326 81,191
Selling, general and administrative expenses.............. 3,337,330 1,831,669
---------- ----------
INCOME (LOSS) FROM OPERATIONS............................... (184,262) 839,811
OTHER INCOME (EXPENSE):
Interest expense.......................................... (210,698) (163,625)
Other income.............................................. 21,384 26,415
---------- ----------
NET INCOME (LOSS)........................................... $ (373,576) $ 702,601
========== ==========
</TABLE>

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

F-22
<PAGE> 65

INTEGRITY INDUSTRIES, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED SHAREHOLDERS'
------------------- PAID-IN EARNINGS TREASURY EQUITY
SHARES PAR VALUE CAPITAL (DEFICIT) STOCK (DEFICIT)
------- --------- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1996................ 125,000 $1,250 $400,066 $ 653,384 $(1,026,000) $ 28,700
Net loss.............................. -- -- -- (373,576) -- (373,576)
------- ------ -------- --------- ----------- ---------
BALANCE, December 31, 1996.............. 125,000 1,250 400,066 279,808 (1,026,000) (344,876)
Net income............................ -- -- -- 702,601 -- 702,601
Distribution of property to
shareholders........................ -- -- -- (249,038) -- (249,038)
------- ------ -------- --------- ----------- ---------
BALANCE, September 24, 1997............. 125,000 $1,250 $400,066 $ 733,371 $(1,026,000) $ 108,687
======= ====== ======== ========= =========== =========
</TABLE>

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

F-23
<PAGE> 66

INTEGRITY INDUSTRIES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE EIGHT
MONTHS AND
FOR THE YEAR TWENTY-FOUR
ENDED DAYS ENDED
DECEMBER 31, SEPTEMBER 24,
1996 1997
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ (373,576) $ 702,601
Adjustments to reconcile net income (loss) to cash
provided by operating activities --
Depreciation and amortization.......................... 74,326 81,191
(Gain) loss on sale of assets.......................... 31,443 (4,601)
Bad debts.............................................. 274,472 150,482
Net (increase) decrease in accounts receivables........... 297,669 (443,413)
Net (increase) decrease in inventory...................... 44,749 (656,414)
Net decrease in prepaid expenses.......................... 9,323 3,361
Net decrease in accrued expenses.......................... (429,439) (290,696)
----------- -----------
Net cash flows used in operating activities....... (71,033) (457,489)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions......................................... (208,164) (175,163)
Proceeds from sale of assets.............................. -- 4,606
----------- -----------
Net cash flows used in investing activities....... (208,164) (170,557)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans received............................................ 6,249,814 5,322,595
Payments on long-term debt................................ (5,917,120) (4,794,803)
Loans to others........................................... (35,869) 33,101
----------- -----------
Net cash flows provided by financing activities... 296,825 560,893
----------- -----------
NET INCREASE (DECREASE) IN CASH............................. 17,628 (67,153)
CASH, beginning of period................................... 49,525 67,153
----------- -----------
CASH, end of period......................................... $ 67,153 $ --
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the year............................. $ 210,569 $ 163,625
=========== ===========
</TABLE>

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

F-24
<PAGE> 67

INTEGRITY INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS

1. BUSINESS ORGANIZATION:

Integrity Industries, Inc. (the Company), a Texas corporation, is engaged
primarily in the business of supplying oil and gas companies with drilling mud
and other related products. The Company also sells to various supply outlets.
The majority of its sales are in Texas.

On September 25, 1997, the Company completed negotiations with W-H
Holdings, Inc. (W-H), for the sale of 100 percent of the outstanding stock of
the Company in exchange for cash consideration of approximately $13,200,000 and
warrants valued at $130,000 convertible into the common stock of W-H. W-H is a
diversified energy service company that provides a variety of services and
equipment to the oil and gas industry on the Gulf Coast through its various
subsidiaries. The accompanying financial statements were prepared in connection
with the transaction with W-H.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

ACCOUNTS RECEIVABLE

Accounts receivable have a concentration of credit risk in the oil and gas
industry. The Company performs continuing credit evaluations of its customers
and generally does not require collateral. Historically, the Company has not
experienced significant losses related to receivables from individual customers
or groups of customers. Accounts receivable have been recorded net of an
allowance for doubtful accounts of approximately $150,000 and $300,000 at
December 31, 1996, and September 24, 1997, respectively.

INVENTORIES

Inventory consists of raw materials and proprietary products used in the
completion of oil and gas wells and is stated at the lower of cost or market,
determined on a first-in, first-out basis.

PROPERTY AND EQUIPMENT

Depreciation is calculated using the double declining-balance method over
the estimated useful lives of the depreciable assets which range from five to
31.5 years. Depreciation expense for the year ended December 31, 1996, and the
eight months and twenty-four days ended September 24, 1997, were $74,326 and
$81,191, respectively. Capital leases and leasehold improvements are amortized
over the shorter of their useful lives or the term of the lease.

REVENUE RECOGNITION AND OPERATING EXPENSE

FEDERAL INCOME TAXES

The Company has elected S Corporation status, as defined by the Internal
Revenue Code, whereby the Company is not subject to federal taxation. Under S
Corporation status, the shareholders report their proportionate shares of the
Company's taxable earnings on their personal tax returns.

F-25
<PAGE> 68

INTEGRITY INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

USE OF ESTIMATES

3. LONG-TERM DEBT:

At December 31, 1996, and September 24, 1997, long-term debt consisted of
the following:

<TABLE>
<CAPTION>
1996 1997
-------- ----------
<S> <C> <C>
Note payable to bank under a $1,500,000 line of credit,
interest payable monthly, expiring 1997, interest 9.25%,
secured by accounts receivable, inventory and personal
guarantees of shareholders................................ $727,656 $1,347,502
Note payable to bank, payable monthly, maturing 2000,
interest 9.75%, secured by vehicles and trailers.......... 90,000 --
Notes payable to credit company, payable monthly, maturing
1997, 1999 and 2000, interest 8.5% to 9.5%, secured by
trucks and forklifts...................................... 47,554 --
-------- ----------
865,210 1,347,502
Less- Current portion....................................... 767,947 1,347,502
-------- ----------
$ 97,263 $ --
======== ==========
</TABLE>

4. LOANS FROM SHAREHOLDERS:

Loans from shareholders represent amounts loaned to the Company by the
shareholders for working capital purposes. The loans bear interest at 9.25
percent and are payable on demand. At December 31, 1996, and September 24, 1997,
accrued expenses included $1,037,060 and $-, respectively, in accrued wages to
shareholders.

5. PROFIT-SHARING PLAN:

The Company has a profit-sharing plan which covers all eligible employees.
The Company's contributions are subject to determination by the shareholders and
certain limitations on an annual basis. There are no required annual
contributions. Plan contributions for 1996 and 1997 were $146,000 and $75,000,
respectively.

F-26
<PAGE> 69

======================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES UNDER ANY CIRCUMSTANCES IN
WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
Forward Looking Statements............ 12
The Company........................... 13
Use of Proceeds....................... 14
Dividend Policy....................... 14
Dilution.............................. 15
Capitalization........................ 16
Selected Historical and Pro Forma
Consolidated Financial Data......... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 18
Business.............................. 20
Management............................ 30
Certain Transactions.................. 34
Principal Shareholders................ 35
Description of Capital Stock.......... 36
Shares Eligible for Future Sale....... 37
Underwriting.......................... 39
Legal Matters......................... 40
Experts............................... 40
Available Information................. 41
Index to Financial Statements......... F-1
</TABLE>

------------------------

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================

W-H HOLDINGS, INC.

COMMON STOCK

------------------------
PROSPECTUS
------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

JEFFERIES & COMPANY, INC.

, 1998

======================================================
<PAGE> 70

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses of the offering are estimated to be as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 23,748
NASD filing fee............................................. 8,550
NASDAQ listing fee.......................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses (including legal fees)........... *
Printing expenses........................................... *
Transfer Agent fees......................................... *
Miscellaneous............................................... *
--------
TOTAL............................................. $ *
========
</TABLE>

- ---------------

* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Bylaws of the Company provide that the Company shall indemnify (i) its
directors, (ii) its directors serving at its request as a director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust employee benefit plan or other enterprise and (iii) its
officers, against reasonable expenses incurred by them in connection with the
defense of any threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative, or investigative, any
appeal in such an action, suit, or proceeding, and any inquiry or investigation
that could lead to such an action, suit, or proceeding, where the person who
was, is, or is threatened to be made defendant or respondent in a proceeding was
named because the person is or was a director or an officer of the Company. The
foregoing indemnification is conditioned upon a determination (i) by a majority
vote of a quorum consisting of directors who at the time of the vote are not
named defendants or respondents in the proceeding, (ii) if such a quorum cannot
by obtained, by a majority vote of a committee of the Board of Directors,
designated to act in the matter by a majority vote of all directors who at the
time of the vote are not named defendants or respondents in the proceeding,
(iii) by special legal counsel selected by the Board of Directors or a committee
of the Board by vote as set forth in subsection (i) or (ii), or, if such a
quorum cannot be obtained and such a committee cannot be established, by a
majority vote of all directors, or (iv) by the stockholders in a vote that
excludes the shares held by directors who are named defendants or respondents in
the proceeding, that such person (1) conducted himself in good faith, (2)
reasonably believed, in the case of conduct in his official capacity as a
director or officer of the Company, that his conduct was in the Company's best
interest, and in all other cases, that his conduct was at least not opposed to
the Company's best interest, and (3) in the case of any criminal proceeding, had
no reasonable cause to believe his conduct was unlawful. Notwithstanding the
foregoing, the Company shall indemnify each director and officer against
reasonable expenses incurred by him in connection with a proceeding in which he
is a party because he is a director or officer if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding. A director or
officer, found liable on the basis that personal benefit was improperly received
by him, or found liable to the Company, may be indemnified but the
indemnification is limited to reasonable expenses actually incurred by the
person in connection with the proceeding and shall not be made in respect of any
proceeding in which the person shall have been found liable for willful or
intentional misconduct in the performance of his duty to the Company.

The Company's Bylaws also provide that reasonable expenses incurred by a
director or officer who was, is or is threatened to be named a defendant or
respondent in a proceeding may be paid or reimbursed by the

II-1
<PAGE> 71

Company in advance of the final disposition of the proceeding after (i) the
Company receives a written affirmation by the director or officer of his good
faith belief that he has met the standard of conduct necessary for
indemnification under the Company's Bylaws and a written undertaking by or on
behalf of the director or officer to repay the amount paid or reimbursed if it
is ultimately determined that he has not met that standard or if it is
ultimately determined that indemnification of the director against expenses
incurred by him in connection with that proceeding is prohibited by law and (ii)
a determination is made that the facts then known to those making the
determination would not preclude indemnification under the Company's Bylaws. The
Bylaws of the Company also provide that the Company may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Company or who is or was serving at the Company's request as a
director, officer, partner, venturer, proprietor, trustee, employee or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other enterprise,
in accordance with Article 2.02-1 of the Texas Business Corporation Act.

In addition, the Company's Restated Articles of Incorporation provide that
a director of the Company will not be liable to the Company or its stockholders
for monetary damages for an act or omission in the director's capacity as a
director, except in the case of (i) a breach of the director's duty of loyalty
to the Company or its stockholders, (ii) an act or omission not in good faith
that constitutes a breach of duty of the director to the Company or an act or
omission that involves intentional misconduct or a knowing violation of the law,
(iii) a transaction from which the director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office, or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. The Restated Articles
of Incorporation also excuse a director from liability to the fullest extent
permitted by any provisions of the statutes of Texas enacted in the future that
further limit the liability of a director.

The Company has agreements with each of its directors to indemnify them for
costs and expenses resulting from their service as directors of the Company to
the fullest extent permitted by law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The securities of the registrant which were sold by the registrant since
January 1995 and not registered under the Securities Act are as follows:

(i) In September 1997, the registrant issued warrants to purchase
12,468 shares of Common Stock to William Max Duncan, Burt Bull and Billy
Saul as partial consideration for the acquisition of all of the outstanding
stock of Integrity Industries, Inc., a Texas corporation, pursuant to the
exemption from the registration requirements of Section 5 of the Securities
Act offered by Section 4(2) of the Securities Act.

(ii) On August 11, 1997, the registrant sold 220,000 shares of Common
Stock for $12,045,000 and warrants to purchase 37,812.5 shares of Common
Stock to W-H Investment, L.P., a Delaware limited partnership, pursuant to
the exemption from the registration requirements of Section 5 of the
Securities Act offered by Section 4(2) of the Securities Act.

(iii) On February 12, 1996, the registrant sold 3,286 shares of Common
Stock to Daniel M. Spiller for $98,580, pursuant to the exemption from the
registration requirements of Section 5 of the Securities Act offered by
Section 4(2) of the Securities Act.

II-2
<PAGE> 72

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1 -- Form of Underwriting Agreement*

3.1 -- Restated Articles of Incorporation of the Company*

3.2 -- Bylaws of the Company*

4.1 -- Specimen Common Stock certificate*

5.1 -- Opinion of Vinson & Elkins L.L.P.*

9.1 -- Stockholders Agreement*

10.1 -- Employment Agreement of Kenneth T. White, Jr.*

10.2 -- Employment Agreement of David N. Eliff*

10.3 -- Employment Agreement of Jeffery L. Tepera*

10.4 -- 1997 Stock Option Plan*

10.5 -- Form of Stock Option Agreement*

10.6 -- Agreement and Plan of Recapitalization*

10.7 -- Senior Unsecured Credit Facility*

10.8 -- Transaction Advisory Agreement*

10.9 -- Consulting Agreement*

10.10 -- Integrity Stock Purchase Agreement*

10.11 -- Subordinated Notes Purchase Agreement*

10.12 -- Form of Subordinated Notes*

10.13 -- Form of Director Indemnity Agreement*

10.14 -- Form of Warrant Agreement*

11.1 -- Computation of Per Share Earnings*

11.2 -- Computation of Ratio of Earnings per Share*

21.1 -- List of subsidiaries of the Company

23.1 -- Consent of Arthur Andersen LLP

23.2 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit
5.1 hereto)

24.1 -- Power of Attorney (included on the signature page to this
Registration Statement)

27.1 -- Financial Data Schedule
</TABLE>

- ---------------

* To be filed by amendment.

(b) Consolidated Financial Statement Schedules, Years ended September 30,
1995, 1996, and 1997.

All schedules are omitted because the required information is inapplicable
or the information is presented in the Consolidated Financial Statements or
related notes.

II-3
<PAGE> 73

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes to provide at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 74

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the day of December, 1997.

W-H HOLDINGS, INC.

By: /s/ KENNETH T. WHITE, JR.
------------------------------------
Kenneth T. White, Jr.
Chairman and President

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Kenneth T. White, Jr. and David N. Eliff, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and ratifying
and confirming all that said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ KENNETH T. WHITE, JR. Chairman of the Board, December , 1997
- ----------------------------------------------------- President and Chief
Kenneth T. White, Jr. Executive Officer

/s/ DAVID N. ELIFF Vice President and Chief December , 1997
- ----------------------------------------------------- Financial Officer
David N. Eliff (Principal Financial and
Accounting Officer)

/s/ JOHN W. JORDAN II Director December , 1997
- -----------------------------------------------------
John W. Jordan II

/s/ DAVID W. ZALAZNICK Director December , 1997
- -----------------------------------------------------
David W. Zalaznick

/s/ JONATHAN F. BOUCHER Director December , 1997
- -----------------------------------------------------
Jonathan F. Boucher

/s/ J. JACK WATSON Director December , 1997
- -----------------------------------------------------
J. Jack Watson

/s/ CHRISTOPHER MILLS Director December , 1997
- -----------------------------------------------------
Christopher Mills

/s/ ROBERT H. WHILDEN, JR. Director December , 1997
- -----------------------------------------------------
Robert H. Whilden, Jr.
</TABLE>

II-5
<PAGE> 75

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
1.1 -- Form of Underwriting Agreement*

3.1 -- Restated Articles of Incorporation of the Company*

3.2 -- Bylaws of the Company*

4.1 -- Specimen Common Stock certificate*

5.1 -- Opinion of Vinson & Elkins L.L.P.*

9.1 -- Stockholders Agreement*

10.1 -- Employment Agreement of Kenneth T. White, Jr.*

10.2 -- Employment Agreement of David N. Eliff*

10.3 -- Employment Agreement of Jeffery L. Tepera*

10.4 -- 1997 Stock Option Plan*

10.5 -- Form of Stock Option Agreement*

10.6 -- Agreement and Plan of Recapitalization*

10.7 -- Senior Unsecured Credit Facility*

10.8 -- Transaction Advisory Agreement*

10.9 -- Consulting Agreement*

10.10 -- Integrity Stock Purchase Agreement*

10.11 -- Subordinated Notes Purchase Agreement*

10.12 -- Form of Subordinated Notes*

10.13 -- Form of Director Indemnity Agreement*

10.14 -- Form of Warrant Agreement*

11.1 -- Computation of Per Share Earnings*

11.2 -- Computation of Ratio of Earnings per Share*

21.1 -- List of subsidiaries of the Company

23.1 -- Consent of Arthur Andersen LLP

23.2 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit
5.1 hereto)

24.1 -- Power of Attorney (included on the signature page to this
Registration Statement)

27.1 -- Financial Data Schedule
</TABLE>

- ---------------

* To be filed by amendment.

<PAGE> 1

SCHEDULE 21.1

SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
STATE OF
SUBSIDIARY ORGANIZATION TRADE NAMES
<S> <C> <C>
Thomas Tools, Inc......................................... Louisiana Thomas MWD Service
Drill Motor Services, Inc................................. Louisiana N/A
Perf-O-Log, Inc........................................... Louisiana N/A
Integrity Industries, Inc................................. Texas N/A
Charles Holston, Inc...................................... Louisiana Holston
Well Safe, Inc............................................ Texas WSI Industrial
Diamond Wireline Services, Inc............................ Texas N/A
</TABLE>

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Houston, Texas
December 29, 1997

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<CASH> 8,908
<SECURITIES> 0
<RECEIVABLES> 15,259
<ALLOWANCES> 848
<INVENTORY> 4,019
<CURRENT-ASSETS> 29,430
<PP&E> 44,607
<DEPRECIATION> 14,136
<TOTAL-ASSETS> 80,881
<CURRENT-LIABILITIES> 12,592
<BONDS> 0
0
0
<COMMON> 275
<OTHER-SE> (30,615)
<TOTAL-LIABILITY-AND-EQUITY> 80,881
<SALES> 0
<TOTAL-REVENUES> 48,197
<CGS> 0
<TOTAL-COSTS> 20,299
<OTHER-EXPENSES> 33,079
<LOSS-PROVISION> 243
<INTEREST-EXPENSE> 2,281
<INCOME-PRETAX> (7,458)
<INCOME-TAX> 2,187
<INCOME-CONTINUING> (5,181)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,645)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0

</TABLE>