WORLDWIDE PETROMOLY INC, 10KSB, 1997-10-14

WORLDWIDE PETROMOLY INC
10KSB, 1997-10-14
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________________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________

FORM 10-KSB
_________________

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934; For the Fiscal Year Ended: June 30, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number: 0-24682

WORLDWIDE PETROMOLY, INC.
(Exact name of registrant as specified in its charter)

Colorado 84-1125214
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)

1300 Post Oak Boulevard, Suite 1985
Houston, Texas 77056
(Address of principal executive offices, including zip code)

(713) 892-5823
(Registrant's telephone number, including area code)
_________________

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

Name of Each Exchange
Title of Each Class on which Registered
------------------- -------------------
N/A N/A

Securities registered pursuant to 12(g) of the Exchange Act:

Title of Each Class
-------------------
Common Stock, no par value

Indicate by check mark whether the registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (ii) has been subject to such filing requirements for the
past 90 days. Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [x]

Issuer's revenues for the year ended June 30, 1997 were $216,887. The
aggregate market value of Common Stock held by non-affiliates of the registrant
at October 8, 1997, based upon the last reported sales prices on the OTCBB was
$7,433,125. As of October 8, 1997, there were 16,747,500 shares of Common Stock
outstanding.
________________________________________________________________________________

<PAGE>

TABLE OF CONTENTS
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Page
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<S> <C> <C> <C>
PART I

Item 1. Business............................................................ 3

Item 2. Properties.......................................................... 5

Item 3. Legal Proceedings................................................... 6

Item 4. Submission of Matters to a Vote of Security Holders................. 6

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 6

Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 7

Item 7. Financial Statements................................................ 13

Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure......................................... 13

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of The Exchange Act................ 13

Item 10. Executive Compensation.............................................. 16

Item 11. Security Ownership of Certain Beneficial Owners and Management...... 18

Item 12. Certain Relationships and Related Transactions...................... 19

Item 13. Exhibits and Reports on Form 8-K.................................... 20
</TABLE>

<PAGE>
PART I

ITEM 1. BUSINESS

GENERAL

Worldwide Petromoly, Inc., formerly known as Ogden, McDonald & Company
(the "Company") was incorporated under the laws of the State of Colorado on
October 13, 1989. The Company was originally formed for the primary purpose of
seeking out acquisitions of properties, businesses, or merger candidates,
without limitation as to the nature of the business operations or geographic
area of the acquisition candidate. In August 1994, the Company filed a
registration statement with the Securities and Exchange Commission on Form
10-SB, wherein it registered its common stock under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "34 Act"). As a result, the
Company became a fully reporting company under the 34 Act, which management
believed enhanced the Company's ability to attract a suitable private merger or
acquisition candidate.

Until July 22, 1996, when the Company acquired 100% of the outstanding
common stock of Worldwide Petromoly Corporation, the Company had no operations
other than issuing stock to its original shareholders. As such, the Company was
a "shell" company whose sole purpose was to locate and consummate a merger or
acquisition with a private entity. On July 22, 1996 the Company effected a 3-
for-1 stock split which resulted in 1,500,000 being outstanding. Also on July
22, 1996, the Company completed a reverse acquisition of 100% of the outstanding
common stock of Worldwide Petromoly Corporation in exchange for 14,507,500
shares of the Company's Common Stock which resulted in the shareholders of
Worldwide Petromoly Corporation acquiring approximately 90.6% of the shares
outstanding in the Company. The Company changed its name to Worldwide Petromoly,
Inc. Unless the context otherwise requires, the term "Company" as used herein
refers to the Company and its wholly-owned subsidiary, Worldwide Petromoly
Corporation.

DESCRIPTION OF BUSINESS

The Company is engaged in the business of manufacturing, marketing and
distributing a line of molybdenum fortified lubricant products called
Petromoly(R), which is an extended drain, high performance engine oil designed
to enhance and maintain all types of engines at their peak levels. Prior to the
completion of the Company's private offering during July 1996, the Company had
focused its efforts on product development, field testing and the development of
a small customer base to acquire testimonial support for the product technology.
On August 1, 1996 the Company hired James Danner who has been elected as
President of the Company and Fred Lehman has been elected to serve as Vice
President of Marketing. The Company's immediate focus is on adding new
commercial and industrial customers. This process takes three to six months
because such customers typically want to test the Company's products for 90 days
before making any decisions. Some of the Company's current customers are
Continental Airlines, Enron, Kyle Railroad, Northcoast Railroad and The Oil
Connection Lube Centers.

Based on various tests which have been conducted the Company believes that
its product line offers several competitive advantages over other products.
These benefits include a significant increase in fuel economy, longer engine
life, and an ability to substantially reduce harmful exhaust emissions, engine
wear and friction.

<PAGE>

ENGINE OIL AND OIL ADDITIVE PRODUCTS

The Company currently offers the following products for the markets
indicated:

1. Industrial Oil - HD SAE 40 Engine Oil - This was the Company's first
product and it is used as a general purpose industrial oil. It is available in
one quart containers, fifty-five gallon drums and in bulk shipments.

2. Railroads - HD SAE 40 RR Engine Oil - The railroad industry is a
major market for the Company. The Company has received favorable test results
from Kyle Railroad, North Coast Railroad and Washington Central Railroad. This
product is available in fifty-five gallon drums up to rail car quantities.

3. Passenger Cars, Light Duty Trucks, Vans and Utility Vehicles - LDF
SAE 10W-30.

4. Natural Gas Compressor Applications - NGC SAE 30 or SAE 40.

5. Automotive Additive - Moly Extra - This product is sold by the pint
or in eight ounce containers to be added at every oil change.

PATENTS, TRADEMARKS AND LICENSES

During November, 1994, the Company filed an application with the United
States Patent and Trademark Office for a patent on Petromoly. During December
1995, the Company received a Notice of Allowability indicating that a patent
would be granted for Petromoly provided that certain formalities are met. The
Company has filed a continuance for three years to protect the disclosure in the
patent application from the public. The Company also holds the rights to the
registered trademark "Petromoly(R)."

COMPETITION

Management believes that there is no other fully formulated motor oil like
Petromoly on the market. The major competitive products are the synthetic oils,
however, their additional expense is often not justified by actual benefits. In
many industrial applications there are also operational limitations to the
synthetic oils. Conventional motor oils differ according to their additive
packages. Most general use oils are similar in their makeup. As a result, there
is heavy competition in the consumer oils market due to similarity of the
products. Pennzoil has been the market share leader in passenger car motor oils
for 12 years. It introduced its first synthetic motor oil, Performax 5W-50, in
late 1992. Pennzoil has a nationwide distribution system and they continue to
expand to the international market. The Quaker State Corporation is another
major competitor in the passenger car motor oil industry with distribution and
products very similar to Pennzoil. The industrial market has substantially less
competition due to the unique operational requirements of many industrial
applications. In these applications the customers are less sensitive to the
purchase price of the product and base their purchasing decisions on extensive
real-life testing to determine operational advantages and cost savings from
prospective products. This process is more time consuming than traditional
consumer sales due to its one-on-one sales requirements. The Company intends to
compete both in the industrial and consumer motor oil markets by offering a
product which the Company believes provides significant benefits over competing
products. The major focus will be in the commercial and industrial areas

<PAGE>

MARKETING

Currently nearly all of the Company's personnel, including Directors, are
involved in marketing the Company's products. The target markets are industrial
and commercial users. The Company also has begun to approach the direct retail
markets through the Company's sales personnel. The methodology used is primarily
personal sales contact and referral sales.

MANUFACTURING

Fully formulated Petromoly is not a synthetic, has no exotic ingredients,
and is relatively inexpensive to produce. The secret to Petromoly's success is
the proprietary blending process which combines common components with
high-grade base oil stock. To provide rapid response to market needs without
significant capital investment, the Company has chosen to use existing contract
blending companies to produce the Company's products. The blending facility at
this point is Forsythe Lubrication Association, Ltd. in Canada. Forsythe is
producing railroad products, 15W-40 and 10W-30. They are also producing the car
oil additive. LSC in California and South Coast Terminals in Texas are also
under contract for production and will expand as the market grows. Mega
Lubricants is producing all of the Company's packaged goods (i.e. quarts and
gallons) for the trucking and car oil markets. With these three producers, the
Company is able to produce and ship products economically to any locality in the
United States or Canada. Additional manufacturers will be selected as necessary.

RESEARCH AND DEVELOPMENT

The Company spent $23,000 on research and development during the fiscal
year.

EMPLOYEES

The Company presently has 14 employees, of which eight are in management
positions, including corporate and administrative operations, and six are
engaged in sales.

MAJOR CUSTOMERS

During the year ended June 30, 1997, approximately 77% of the Company's
revenues were received from two customers.

ITEM 2. PROPERTIES

The Company maintains its corporate offices at 1300 Post Oak Boulevard,
Suite 1985, Houston, Texas 77056. The Company rents approximately 932 square
feet at this location and pays approximately $1,200 per month for rent pursuant
to a lease which expires on December 14, 2001. The Company also rents
approximately 5,184 square feet at 757 Kenrick, Suite 112, Houston, Texas 77060,
pursuant to a lease which requires monthly payments of approximately $2,330 and
which expires September 30, 1999. In addition, the Company rents approximately
1,400 square feet of warehouse storage and facility space at 1550 Latham Road,
Bay #5, West Palm Beach, Florida 33409. Pursuant to a lease which requires
monthly payments of approximately $971 and which expires in May 1998. The
Company believes that its properties are suitable and adequate for its present
and contemplated operations.

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

The Company is not currently a party to any pending litigation.

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

During the fourth quarter of 1997, there were no matters submitted to a
vote of the Security Holders, through solicitation of proxies or otherwise.

PART II

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

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the OTCBB under the symbol "MOLY."
The following table sets forth the quarterly high and low bid prices per share
for the Common Stock, as reported by the OTCBB.

High Bid Low Bid
-------- -------

1996
First Quarter........................ $ (*) $ (*)
Second Quarter ...................... $ (*) $ (*)
Third Quarter........................ $ (*) $ (*)
Fourth Quarter....................... $ (*) $ (*)

1997
First Quarter........................ $8.00 $6 1/4
Second Quarter....................... $6 1/4 $3 1/2
Third Quarter........................ $4 7/8 $2 9/16
Fourth Quarter....................... $2 7/8 $1 7/16
____________________________
* The Company believes that there were no bids on the Company's common shares
during this period.

On October 8, 1997, the last bid for the Common Stock as reported by the
OTCBB was $1 3/4 per share. On September 26, 1997, there were approximately
1,060 stockholders of record of the Common Stock.

The Company has not paid, and the Company does not currently intend to pay
cash dividends on its common stock in the foreseeable future. The current policy
of the Company's Board of Directors is to retain all earnings, if any, to
provide funds for operation and expansion of the Company's business. The
declaration of dividends, if any, will be subject to the discretion of the Board
of Directors, which may consider such factors as the Company's results of
operations, financial condition, capital needs and acquisition strategy, among
others.

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes. See Consolidated Financial
Statements. Certain statements contained herein are not based on historical
facts, but are forward looking statements that are based upon assumptions about
future conditions that could prove not to be accurate. Actual events,
transaction and results may materially differ from the anticipated events,
transactions or results described in such statements. The Company's ability to
consummate such transactions and achieve such events or results is subject to
certain risks and uncertainties. Such risks and uncertainties include, but are
not limited to, the existence of demand for and acceptance of the Company's
products and services, regulatory approvals and developments, economic
conditions, the impact of competition and pricing, results of financing efforts
and other factors affecting the Company's business that are beyond the Company's
control. The Company undertakes no obligation and does not intend to update,
revise or otherwise publicly release the result of any revisions to these
forward-looking statements that may be made to reflect future events or
circumstances.

RESULTS OF OPERATIONS - GENERAL

In July 1996, the Company's operating subsidiary, Worldwide PetroMoly
Corporation, was acquired through a reverse acquisition by Ogden McDonald &
Company (former symbol-OGDM) preceded by approximately $4,000,000 of investment
capital to provide the Company adequate funding to build a foundation for growth
and industrial brand awareness of its new lubricating technology. While keeping
in perspective the acquisition of Worldwide PetroMoly Corporation, now a
subsidiary, by the Company (name changed to Worldwide PetroMoly Inc.
Symbol-MOLY), the Company's structure has changed significantly to reflect the
activities of this subsidiary. The Company has invested in recruiting and
training a new sales force and further establishing the Company's
infrastructure. These activities included the hiring of experienced and
qualified personnel. This includes hiring a new president, James Danner, a
former Pennzoil vice president executive, employed for 23 years, as well as
other high-level industry executives to properly administer the Company. The
focus has also been on expanding and improving the product lines, and spending
the appropriate and necessary amount of capital for product certification and
quality control. Product development successfully focused on applying the
proprietary technology to new products such as cutting oils for threading,
armament oil to private label(presently being tested by the US Army), and a very
effective oil additive designed for automobiles and light trucks.

Other activities include: relocating the corporate as well as the
administrative headquarters; the redesigning and upgrading of the corporate
image and sales support with a new logo, website, product brochures, product
labels and packaging; the purchasing of additional new delivery and operational
equipment, designing and printing investor brochures, and custom purchasing a
trade show booth along with related marketing materials. Additionally, the
Company expanded in the third quarter by adding new sales and sales-support
personnel and equipment, at a satellite office and warehouse in south Florida.

<PAGE>

The Company has continued extensive field testing and objective lab
testing while several major multinational customers were undergoing extended
final evaluation tests of the PetroMoly products on their complex high-end
machinery and fleet vehicles. These tests have been complicated and time
consuming, but all of the results have been excellent. Management anticipates a
material rise in revenue in the prospective production of contracts and
agreements, giving a significant rise to the PetroMoly revenues and customer
base within the next fiscal year. During the past year, sales concentration was
targeting various industrial leaders and massive fleet operators. For these
larger customers there are usually test periods that the PetroMoly products are
subjected to which can last anywhere from three months to a year, depending on
each market and end-user. Railroad, bus and gas compressor engines, for example,
are very expensive and complex machinery, requiring constant monitoring.
Therefore, the addition of PetroMoly's new lubrication technology to an entire
line or fleet is gradual.

The Company has enjoyed a significant amount of activity due to the test
results that PetroMoly achieved from subjecting its product to various
independent US Environmental Protection Agency sanctioned lab tests that
documented and certified the superior results of PetroMoly engine oil on the
most complex machinery. Although these tests are costly as well as time
consuming, management believes they will have a high value to the Company and
further its ability to market a new name brand and a new technology in motor oil
and related products.

This year's sales activities included a test radio advertising campaign
with Metro Traffic reports for brand awareness. The international sales
department has recently produced distributorship agreements in Europe, Mexico,
China, and South American countries. Domestically, the Company added a new
railroad customer, expanded its sales to customers such as Continental Airlines,
and is in various stages of development with customers such as Fluor Daniel,
Browning Ferris and Greyhound Bus.

YEAR ENDED JUNE 30, 1997, COMPARED TO YEAR ENDED JUNE 30, 1996

Total net sales for the year ended June 30, 1997 were $216,887 as compared
to $321,845 for the year ended June 30, 1996, a 33% decrease. The reason for the
decrease is Management's decision to concentrate the sales resources on
procuring a few large industrial customers that are known industry leaders.
Sales discounts, selective sampling of products, together with long attentive
testing periods were practiced to educate these elite customers about the new
lubricant technology. The potential of these relationships was deemed a much
stronger investment than spreading the focus on a broader customer reach. The
Company did attract considerable publicity from its association with Continental
Airlines, and this has lead to discussions and testing with other very large
industry related companies. Management believes that the next fiscal year will
prove that the past year's sales strategy will reward the Company with
substantial revenues and fiscal commitments.

Cost of sales as a percentage of net sales increased from 85% for the year
ended June 30, 1996, to 88% for the year ended June 30, 1997. Temporary sales
discounts and sampling out inventory were factored into 1997's cost of sales

<PAGE>

that reduce the sales margins. During the last fiscal quarter of 1997 the
Company negotiated lower costs of production with its suppliers as well as more
favorable freight rates for distribution. The Company is currently interviewing
several strategically located blending facilities throughout North America,
South America and Europe. Once these blending agreements are in place, proximity
will dictate lower freight cost thus reducing the cost of goods. A more material
drop in costs should be realized due to the economies of scale with increased
volume production runs. The demand associated with the caliber of customers that
the Company has been targeting could qualify it for a dramatic drop in cost of
production runs with only a few, or in some cases one, consummated commitment.

Selling, general and administrative expenses increased from $359,048 for
the year ended June 30, 1996, to $4,475,836 for the year ended June 30, 1997.
The large elevation in expenses was mainly due to non-cash transactional
payments in the form of shares and options granted as compensation to
non-employees totaling $2,934,158 that must be calculated and recorded as an
expense on the Company's profit and loss statement according to the
pronouncements of the generally accepted accounting principles. The other reason
for the large increase in expense was due to the large-scale increase in the
Company's administrative presence directly associated with the Company's July
1996 (fiscal 1997) reverse acquisition and preceding funding for such action.
These operational activities are described in the GENERAL section of this
analysis.

Interest income in 1997 of $151,539 was due to the interest received from
the investments in certificates of deposit and commercial paper with the
Company's cash reserves. Miscellaneous income decreased from $29,018 in the year
ended June 30, 1996, to $20,998 in the year ended June 30, 1997, because the
Company had a subtenant for some of its then office space during part of the
1996 year. This sublease terminated during March 1996.

Interest expense increased from $3,264 in the year June 30, 1996, to
$9,211 in the year ended June 30, 1997, due to increased borrowings during the
year.

LIQUIDITY AND CAPITAL RESOURCES.

At June 30, 1997, the Company had a positive working capital in the amount
of $1,911,708, including $864,555 unrestricted cash, $527,971 in investments in
certificates of deposits, and $418,857 restricted cash under line of credit
arrangements, as compared to a working capital of $(167,312) at June 30, 1996.
The increase in working capital was primarily due to the July 1996 private
offering.

Operating activities for the year ended June 30, 1997, utilized cash of
$1,594,825 as compared to $146,959 for the year ended June 30, 1996. The
increased utilization of cash resulted primarily from the fiscal 1997 net loss.

Cash flow of $4,001,879 was provided from financing activities for the
year ended June 30, 1997, as compared to $144,080 for the year ended June 30,
1996. During 1997 cash financing was accounted from the following sources:

<PAGE>

$3,900,115 was provided by the July 1996 private offering; $80,000 in options
exercised; and $345,000 proceeds from notes payable--compared to $123,236 from
1996. $323,236 was used to repay notes payable and advances to stockholders in
1997.

Net cash used from investing activities in 1997 was $1,543,419. These
activities involve $481,194 net of repayments in notes receivable, which include
related parties; and $527,971 in certificates on deposit.

As of June 30, 1997, the Company had revolving lines of credit with two
banks, which expire in August 1998 with total balances outstanding of $265,000.

During the 1997 fiscal year, $108,000 was used to upgrade computer equipment and
move administrative offices.

As of June 30, 1997, the Company had no material commitments for capital
expenditures.

At June 30, 1997, the Company has recorded a full valuation allowance
against all deferred tax assets because it could not determine whether it was
more likely or not that the deferred tax asset would be utilized.

For the years ended June 30, 1997 and 1996, the Company incurred net
losses totaling $4,287,123 and $284,221 respectively. Those losses contributed
to net cash used in operating activities of $1,594,825 and $146,959 for each of
the years ended June 30, 1997 and 1996, respectively. As of June 30, 1997, the
Company has unrestricted cash of and cash equivalents and investments and
certificates of deposit balance of $1,392,526. In the event that the Company is
unable to generate sufficient revenues from operations, or is unable to obtain
additional financing, it may be unable to continue to develop and support its
present cost levels and continue as a going concern. However, Management
strongly believes, the operational activities that the Company invested its
time and resources in will come to fruition in fiscal 1998. Furthermore, the
Company is presently considering raising additional equity through the sale of
its common stock and/or the contracting with third parties for financing to
develop a direct-market advertising campaign, to expand it's marketing efforts
in order to generate additional revenues. No assurance can be given that the
Company will be successful in achieving its revenue growth strategy; or that
will obtain financing at terms that are acceptable to the Company.

OUTLOOK

The year ended June 30, 1997 was a year of transition for the Company as
its strategic focus lay on consummating relationships with a group of leaders in
the industrial markets, which are known as opinion leaders of new technologies.
Management foresees an ending in fiscal year 1998 of the "testing periods" that
the Company has invested with these groups, followed by qualified revenue
producing contracts, and testimonials that will attract other companies in the
similar industries for a greater market share. As stated earlier, any one of the
substantial customers that the Company is presently working with is capable of
increasing the volume productions to much greater economies of scale. These
savings will decrease cost of sales, and possibly decrease the cost to the
customers as well.

<PAGE>

Management is extremely anxious to begin marketing the newly developed oil
additive that uses the same proprietary technology to suspend molybdenum in
motor oil for cars and light trucks. An advertising campaign is planned for this
particular product beginning with an infomercial to create consumer awareness
and educate the general public about the Company's new technology. This exposure
will possibly facilitate a demand for the other PetroMoly products as well.
During this campaign, distribution will be maintained through fulfillment
houses. Later a full-scale retail campaign is planned as the product is sold in
the auto after-market stores and retail chains. Reports to management show this
oil additive product, being a new technology in a proven direct response
category, is projected to carry an enormous demand.

With the progressing sales relationships maturing and the new product
lines being marketed, the Company expects operating margins and revenues to
improve appreciably during fiscal 1998.

NEW ACCOUNTING PRONOUNCEMNETS

In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"). SFAS
128 provides a different method of calculating earnings per share than is
currently used in APB Opinion 15. SFAS 128 provides for the calculation of basic
and diluted earnings per share. Basic earnings per share includes no dilution
and is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Dilutive
earnings per share reflects the potential dilution of securities that could
share in the earnings of an entity, similar to existing fully diluted earnings
per share.

The Company is required to adopt this standard in the fourth quarter of
1997. Using the principles set forth in SFAS 128, basic and diluted earnings per
share would not be materially different from that presented.

Statement of Financial Accounting Standards No. 129, Disclosure of
Information about Capital Structure ("SFAS 129") effective for periods ending
after December 15, 1997, establishes standards for disclosing information about
an entity's capital structure. SFAS 129 requires disclosure of the pertinent
rights and privileges of various securities outstanding (stock, options,
warrants, preferred stock, debt and participation rights) including dividend and
liquidation preferences, participant rights, call prices and dates, conversion
or exercise prices and redemption requirements. Adoption of SFAS 129 will have
no effect on the Company as it currently discloses the information specified.

In June 1997, the Financial Accounting Standards Board issued two new
disclosure standards. Results of operations and financial position will be
unaffected by implementation of these new standards.

<PAGE>

income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

SFAS 131, "Disclosure about Segments of a Business Enterprise",
establishes standards for the way that public enterprises report information
about operating segments in annual financial statements and requires reporting
of selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.

Both of these new standards are effective for financial statements for
periods beginning after December 15, 1997 and require comparative information
for earlier years to be restated. Due to the recent issuance of these standards,
management has been unable to fully evaluate the impact, if any, they may have
on future financial statement disclosures.

<PAGE>

ITEM 7. FINANCIAL STATEMENTS

The information required hereunder is included in this report as set
forth in the "Index to Financial Statements" on page F-1.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On September 19, 1996, the Company's former auditors resigned and
the Company engaged BDO Seidman, LLP as its independent certified public
accountants for the fiscal year ended June 30, 1996. The details of this change
in accountants has been previously reported in the Company's Form 8-K dated
September 19, 1996. The Company's Board of Director's made the decision to
engage BDO Seidman, LLP because the Company relocated its main office to
Houston, Texas.

PART III
--------

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

The directors and executive officers of the Company and its wholly-owned
subsidiary, their ages and positions held in the Company are as follows:

Name Age Positions Held
---- --- --------------

Gilbert Gertner* 72 Chairman of the Board, Director
and Chief Executive Officer of the Company

Robert Goldberg 47 President and Director of the Company

Fred Lehman 58 Vice President of Marketing Worldwide
Petromoly Corporation

Lance Rosmarin* 35 Secretary and Director of the Company
and Chief Financial and Accounting Officer

James Danner 48 President of Worldwide Petromoly Corporation
________________________

*Gilbert Gertner is the step-father of Lance Rosmarin. There is no family
relationship between any other officer and director of the Company.

<PAGE>

BUSINESS EXPERIENCE

GILBERT GERTNER has served as the Chairman of the Board of the Company
since July 22, 1996, and Chairman of the Board and CEO of Worldwide Petromoly
Corporation since April 15, 1993. Gilbert Gertner was born and raised in New
York City and entered the real estate business in New York in 1946 as a real
estate salesman. He became a partner in the firm, with holdings in several
states consisting of hospitals, motels and office buildings and other
businesses. In 1964, Mr. Gertner came to Houston where he had major holdings. In
1965 he entered the apartment business with a purchase of 1,900 apartments. He
became involved in general real estate and specifically in the area of
apartments, motels, mobile home parks, restaurant franchising, nursing homes,
hospitals, land developments and businesses. From 1977 to 1992, he was the
senior partner of Gertner, Aron, Ledet and Lewis Investments, an investment
company which was involved in apartment construction, shopping center
development, mini-warehouse development, business purchases, financing and
medical investments. In 1992, Mr. Gertner formed his own company, Gertner
Investments. He serves on the Board of Directors of one of his companies, CXR
Telecom Communications, located in San Jose, California. He has served, or still
serves as Chairman of the Board of several public and privately held
corporations which include: DATA Systems Software, Inc. (NASDAQ -- DSSI), which
provides sophisticated software services and products to commercial and military
customers (1990 - 1991); Citadel Computer Systems, Inc. (NASDAQ -- NOFF), which
produces a line of network security computer software (1992 to present); GGR
Oil, Inc., which manages a chain of Texaco Express Lube centers, and Pennzoil
related lube centers, located in Texas and Florida, which employs over 100
people (1993 to present); and National Recycling Group, an oil and oil filter
recycling company (1994 to present). He has owned and operated many hospitals,
including Pasadena General, Medical Arts Hospital Building, Southmore Hospital
and Peachtree Hospital (Atlanta), Villa Capri (Austin, Texas), and the Villa Inn
(Dallas, Texas). He has also owned and operated over 6,000 apartment units in
Houston and Pasadena, Texas. In 1990, Mr. Gertner was honored with the Zionist
Organization of America ("ZOA") "Man of the Year" award, commending him has a
civic leader and humanitarian. Mr. Gertner is a member of Congregation Beth
Yeshuran. He has served in numerous communal activities in the UJA Prime
Minister's Mission. Mr. Gertner spends approximately 80% of his time on the
Company's business.

ROBERT GOLDBERG has served as President and a Director of the Company
since July 22, 1996, as President of Worldwide Petromoly Corporation from April
15, 1993, until September 3, 1996, and as a Director of Worldwide Petromoly
Corporation since April 15, 1993. From 1986 until 1988, Mr. Goldberg was the
General Manager of Gregg Bingham's Ten Minute Oil'R Change, a small two store
operation in the quick lube industry in Houston. He joined Jiffy Lube
International as Director of Operations for 37 Houston area centers in 1988.
During this period, Jiffy Lube decided to sell all the company stores and Bob
moved into franchise sales for Jiffy Lube and became their leading salesman.
After Jiffy Lube was acquired by Pennzoil in 1990, Mr. Goldberg left the
company. From 1990 until June 1992, he consulted in the quick lube business,
becoming known in the Houston area for his expertise. In June 1992, G.G.R. Oil,
Inc. was formed, with Mr. Goldberg as President and a director, to purchase two
stores in the Houston market which Texaco had been trying to operate,
unsuccessfully. From this base, G.G.R .Oil, Inc. has expanded to a total of 15
stores in Houston and West Palm Beach, Florida. In the Houston market the stores
operate under the name Texaco Express Lube, while the stores in Florida are
known as the Oil Connection. Mr. Goldberg continues to serve as President of
G.G.R. Oil, Inc. Mr. Goldberg received an Engineering Degree from the University
of Michigan in 1972. Mr. Goldberg spends approximately 15% of his time on the
Company's business.

<PAGE>

LANCE ROSMARIN has served as Secretary, Chief Financial and Accounting
Officer and a Director of the Company since July 22, 1996, and as Secretary,
Treasurer and a Director of Worldwide Petromoly Corporation since April 15,
1993. Since 1993, he has been a partner in Gertner Investments, an investment
company with investments in real estate and other businesses. From 1990 until
1993, Mr. Rosmarin was employed by Gertner, Aron, Ledet and Lewis Investments.
He has served as Secretary, Vice President and a director of GGR Oil, Inc. since
1993, and as Vice President and a director of National Recycling Group since
1994. He also served as Secretary, Vice President and a director of Citadel
Computer Systems, Inc., a public company, from 1993 until March 1996. Mr.
Rosmarin received a Bachelor of Science Degree in Finance and Marketing from the
University of Texas in 1985, and an MBA Degree in Finance from the University of
Texas in 1988. Mr. Rosmarin spends approximately 80% of his time on the
Company's business.

FRED LEHMAN was elected Vice President of Marketing of Worldwide Petromoly
Corporation on September 3, 1996, and he has been employed by Worldwide
Petromoly Corporation since March 1994. Mr. Lehman was employed by Pennzoil from
1962 until his retirement in 1990. During his last eight years at Pennzoil, he
was the national sales manager for their commercial and industrial division.
During his eight year tenure, commercial and industrial sales grew from $3.7
million to $88 million.

JAMES DANNER was elected President of Worldwide Petromoly Corporation on
September 3, 1996, and he has been employed by Worldwide Petromoly Corporation
since August 1, 1996. Mr. Danner graduated from the University of Colorado in
1970 with a B.S. degree in Business. He was an executive with Pennzoil Products
from 1971 until July 1996. He served as Vice President of the Installed
Marketing Division from 1994 until July 1996, and prior thereto he served for
approximately fifteen years as the Division Manager for the Northeastern United
States. During Mr. Danner's term, Pennzoil attained the number one market share
in both the DIY and installed market segments of the Passenger Car Motor Oil
business. Mr. Danner's Northeastern division was responsible for in excess of
$250 million in annual sales.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

No person who was either a director, officer or beneficial owner of more
than 10% of the Company's Common Stock, failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act during the most recent fiscal year
except for Lance Rosmarin, who failed to timely file one Form 4 which has been
filed.

<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

The following table reflects all forms of compensation for services to the
Company for the fiscal years ended June 30, 1997, 1996 and 1995 of the Chief
Executive Officers of the Company. No executive officer of the Company, other
than Gilbert Gertner and James Danner, received compensation which exceeded
$100,000 during the fiscal year ended June 30, 1997.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------- --------------------
All
Restricted Stock Other
Stock Options Compen-
Name & Principal Position Year Salary Bonus Other (1) Awards (Shares) sation
- ------------------------- ---- ------ ----- ------ ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Gilbert Gertner 1997 $110,000 $6,000 $9,900 -0- 540,000 (2) -0-
Chief Executive Officer 1996 -0- -0- -0- -0- -0- -0-
of Worldwide Petromoly, Inc. 1995 -0- -0- -0- -0- -0- -0-

James Danner 1997 $ 94,416 $5,200 $7,700 -0- 300,000 (3) -0-
President 1996 -0- -0- -0- -0- -0- -0-
of Worldwide Petromoly Corporation 1995 -0- -0- -0- -0- -0- -0-
_________________________________________

(1) Automobile allowance.
(2) All options vested in August 1996, and expire in July 2001.
(3) 100,000 options vested in August 1996. 65,000 options vested in August 1997. 65,000 options do
not vest until August 1998. 70,000 options do not vest until August 1999. All options expire in
August 2001.
</TABLE>

DIRECTOR COMPENSATION

The Company does not currently pay any cash directors' fees, but it pays
the expenses of its directors in attending board meetings.

EMPLOYMENT AGREEMENTS

Effective August 1, 1996, Worldwide Petromoly Corporation entered into
five year employment agreements with its four executive officers. The following
table sets forth the name and title of each person and their compensation for
the first year of their employment agreement.

Annual Automobile
Name Title in Petromoly Salary Allowance
- ---- ------------------ ------ ---------

Gilbert Gertner Chairman of the Board $120,000 $950/month
and Chief Executive Officer

James Danner President $103,000 $655/month

Mr. Gertner's agreement provides that his annual salary will increase to
$144,000 in the second year and to $180,000 in the third, fourth and fifth
years. All four officers may receive bonuses or other extraordinary compensation
as determined in the discretion of the Worldwide Petromoly Corporation Board of
Directors.

<PAGE>

All four agreements include a covenant not to engage in any business that
uses any of Worldwide Petromoly Corporation's proprietary information regarding
MSO2 or Molydisulfide, that competes with Worldwide Petromoly Corporation during
the term of the agreement and for a period of five years following the
termination of the agreement.

STOCK OPTION PLAN

During July 1996, the Board of Directors adopted a Stock Option Plan (the
"Plan"), and in July 1996, the Company's shareholders approved the Plan. The
Plan as amended authorizes the issuance of options to purchase up to 3,500,000
shares of the Company's Common Stock. The Plan allows the Board to grant stock
options from time to time to employees, officers, directors and consultants of
the Company. The Board has the power to determine at the time that the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. Vesting provisions are determined by the
Board at the time options are granted. The option price for any option will be
no less than the fair market value of the Common Stock on the date the option is
granted.

Since all options granted under the Plan must have an exercise price no
less than the fair market value on the date of grant, the Company will not
record any expense upon the grant of options, regardless of whether or not they
are incentive stock options. Generally, there will be no federal income tax
consequences to the Company in connection with Incentive Stock Options granted
under the Plan. With regard to options that are not Incentive Stock Options, the
Company will ordinarily be entitled to deductions for income tax purposes of the
amount that option holders report as ordinary income upon the exercise of such
options, in the year such income is reported.

As of June 30, 1997, 2,875,000 stock options had been granted under the
Plan, 40,000 of which have been exercised. Neither Mr. Gertner nor Mr. Danner
received any stock options during the fiscal year ended June 30, 1997.

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth, as of September 19, 1997, the stock
ownership of each person known by the Company to be the beneficial owner of five
percent or more of the Company's Common Stock, each officer and director
individually, and all officers and directors as a group. Each person has sole
voting and investment power over the shares except as noted.

Amount and Nature
Name and Address of Beneficial Ownership Percent of Class
- ---------------- ----------------------- ----------------

Gilbert Gertner 11,790,000 (1) 68%
1300 Post Oak Boulevard, Suite 1985
Houston, Texas 77056

Robert Goldberg 1,310,000 (2) 8%
15010 Falling Creek
Houston, Texas 77068

James Danner 300,000 (3) 2%
1300 Post Oak Boulevard, Suite 1985
Houston, Texas 77056

Fred Lehman 150,000 (4) 1%
1300 Post Oak Boulevard, Suite 1985
Houston, Texas 77056

Lance Rosmarin 50,000 (5) 0.3%
1300 Post Oak Boulevard, Suite 1985
Houston, Texas 77056

All Directors and Officers 13,600,000 76%
as a Group (5 Persons)
______________________

(1) Includes 540,000 shares underlying currently exercisable options held by
Mr. Gertner.
(2) Includes 60,000 shares underlying currently exercisable options held by Mr.
Goldberg.
(3) Includes 300,000 shares underlying currently exercisable options held by
Mr. Danner.
(4) Includes 150,000 shares underlying currently exercisable options held by
Mr. Lehman.
(5) Includes 50,000 shares underlying currently exercisable options held by Mr.
Rosmarin.

The Company knows of no arrangement or understanding, the operation of
which may at a subsequent date result in a change of control of the Company.

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ACQUISITION OF WORLDWIDE PETROMOLY CORPORATION

On July 22, 1996, the Company completed the acquisition of 100% of the
outstanding common stock of Worldwide Petromoly Corporation in exchange for
14,507,500 shares of the Company's Common Stock (approximately 90.6% of the
shares now outstanding). The stock issuances were made pursuant to the Agreement
("Agreement") between the Company and Worldwide Petromoly Corporation. The terms
of the Agreement were the result of negotiations between the managements of the
Company and Worldwide Petromoly Corporation. However, the Board of Directors did
not obtain any independent "fairness" opinion or other evaluation regarding the
terms of the Agreement, due to the cost of obtaining such opinions or
evaluations. A total of 12,500,000 of the shares issued in connection with the
acquisition of Worldwide Petromoly Corporation were issued to Petromoly Capital
Partners, which is a Texas general partnership. Gilbert Gertner and Robert
Goldberg are the two general partners and Mr. Gertner owns 90% of the
partnership and Mr. Goldberg owns 10% of the partnership.

TRANSACTIONS INVOLVING WORLDWIDE PETROMOLY CORPORATION

On January 1, 1996, Worldwide Petromoly Corporation accepted a capital
contribution from its sole shareholder, Petromoly Capital Partners, a Texas
general partnership (the "Partnership"), of assets previously licensed to and
utilized in Worldwide Petromoly Corporation's business, which assets the Board
of Directors valued at $1,500,000. The assets were conveyed to Worldwide
Petromoly Corporation under a Quitclaim Bill of Sale and Assumption Agreement,
which included a provision obligating Worldwide Petromoly Corporation to pay a
certain obligation of the Partnership to Gilbert Gertner, when due, in an amount
not to exceed $90,000. This obligation has subsequently been paid in full by the
Company for $52,000. The assets contributed by the Partnership will be recorded
on the Company's financial statements at zero value because generally accepted
accounting principles require that such assets may not be recorded in excess of
their original cost basis. The assets contributed by the Partnership will be
recorded on the Company's financial statements at zero value, because generally
accepted accounting principles require that such assets may not be recorded in
excess of their original cost basis.

In December, 1996 the Company loaned Citadel Computer Systems
Incorporated ("Citadel"), a company of which Mr. Gertner is a director, $500,000
pursuant to a short term promissory note which bore interest at the rate of 10%
per annum and was due in January, 1997 (the "Citadel Note"). The Citadel Note
was secured by 733,000 shares of common stock of Citadel. As part of the loan
transaction, the Company received warrants to purchase 150,000 shares of common
stock of Citadel at an exercise price of $.59 per share. In February, 1997,
Citadel paid the Company $250,000 as a principal reduction payment. As of June
30, 1997, the outstanding balance on the Citadel Note, which was in default, was
$267,289.

In partial consideration for not foreclosing on the Citadel Note, on June
30, 1997, Commercial Capital Trading Corporation ("Commercial Capital"), a
company in which Mr. Gertner is a stockholder, agreed to enter into a new
promissory note with the Company in the amount of the then outstanding
obligation of Citadel (the "Commercial Capital Note"). The agreement by
Commercial Capital to execute this new note and to assume the obligations of
Citadel to the Company was part of a transaction between Citadel and Commercial
Capital, in which the Company was not a party. The Commercial Capital Note

<PAGE>

provided for the payment to the Company of $5,000 per month and bore interest at
the rate of 10% per annum. The Commercial Capital Note was secured by the
accounts receivable of Commercial Capital. In October, 1997, the Company and
Commercial Capital agreed to restructure and modify the Commercial Capital Note,
which had a then outstanding balance of $204,000 to provide for an increase in
the monthly installment payments to the Company of the greater of (i) $10,000
per month or (ii) 15% of the proceeds received from the collection of accounts
receivable up to $100,000 and 50% of the collection of any accounts receivable
thereafter, for 12 months, with a final payment to the Company of the remaining
outstanding principal and interest, if any, due in the 13th month. The first
installment payment under the modified note is due October 20, 1997. The
Commercial Capital Note is secured by the accounts receivable of Commercial
Capital and the personnel guarantee of Mr. Gertner and another stockholder of
Commercial Capital.

From time to time, the Company's principal stockholder, Gilbert Gertner,
has made unsecured, non-interest bearing advances of working capital funds to
the Company. The outstanding balance of the advances as of June 30, 1997 and
June 30, 1996 were $312,573 and $432,573, respectively. Mr. Gertner has agreed
to defer repayment of the advances through June 30, 1998, unless excess cash
flow of the Company allows the repayment of the advances prior to that date.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit No. Identification of Exhibit
-------------------------

21.1 Subsidiaries
27.1 Financial Data Schedule
_______________________________

(b) Reports on Form 8-K.

None

<PAGE>

SIGNATURES

In accordance with the requirements of Section 13 of 15(d) of the
Exchange Act, the Registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 13th day of October 1997.

Worldwide Petromoly, Inc.

By: /s/ Gilbert Gertner
----------------------------------------
Gilbert Gertner, Chairman of the Board

Pursuant to the requirements of the Exchange Act, this report has been signed
below by the following persons in the capacities and on the dates indicated:

Signature Title Date

/s/ Gilbert Gertner Director October 13, 1997
- ---------------------------- and Chairman of the Board
Gilbert Gertner

- ---------------------------- Director and October ___, 1997
Robert Goldberg President

/s/ Lance Rosmarin Director, Secretary and October 13, 1997
- ---------------------------- Chief Financial and
Lance Rosmarin Accounting Officer

<PAGE>

INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

PAGE
----
<S> <C> <C>
Worldwide Petromoly, Inc. Consolidated Financial Statements:

Report of Independent Certified Public Accountants..........................F-2

Balance Sheet as of June 30, 1997...........................................F-3

Statements of Loss for the Years Ended June 30, 1997 and 1996...............F-4

Statements of Stockholders' Equity for the Years Ended June 30,
1997 and 1996...........................................................F-5

Statements of Cash Flows for the Years Ended June 30, 1997 and 1996.........F-6

Notes to Financial Statements...............................................F-7 to F-17

</TABLE>

F-1

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
Worldwide Petromoly, Inc.

We have audited the accompanying consolidated balance sheet of Worldwide
Petromoly, Inc. (formerly Ogden, McDonald & Company - the "Company") as of June
30, 1997, and the related consolidated statements of loss, stockholders' equity
and cash flows for the years ended June 30, 1997 and 1996. 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.

As described in Notes 2 and 3, the Company executed a reverse merger on July 22,
1996, and acquired all of the outstanding common stock of Worldwide Petromoly
Corporation, a privately-held Texas corporation engaged in the marketing and
sale of engine lubrication products. The Company then changed its name from
Ogden, McDonald & Company to Worldwide Petromoly, Inc.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Worldwide Petromoly, Inc. at June 30, 1997, and the results of its operations
and its cash flows for the years ended June 30, 1997 and 1996, in conformity
with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has incurred losses from
operations since inception and at June 30, 1997 had an accumulated deficit of
$5,003,244. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management plans in regard to these matters are
also described in Note 1. The accompanying consolidated financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.

BDO SEIDMAN, LLP

October 1, 1997
Houston, Texas

F-2

<PAGE>
WORLDWIDE PETROMOLY, INC.

CONSOLIDATED BALANCE SHEET

June 30,
1997
-----------
Assets

Current:
Cash and cash equivalents ................................... $ 864,555
Investments in certificates of deposit ...................... 527,971
Restricted investments in certificates of deposit (Note 6) .. 418,857
Accounts receivable:
Trade .................................................... 61,761
Related parties (Note 7) ................................. 29,536
Notes receivable - related parties, current portion (Note 7) 277,347
Inventories (Note 4) ........................................ 128,651
Prepaid expenses and other .................................. 18,139
-----------

Total current assets ............................................ 2,326,817

Property and equipment, net (Note 5) ............................ 108,547

Notes receivable - related parties, noncurrent portion (Note 7) . 203,847
-----------

$ 2,639,211
===========

Liabilities and Stockholders' Equity

Current Liabilities:
Accounts payable and accrued expenses ....................... $ 150,109
Notes payable (Note 6) ...................................... 265,000
-----------

Total current liabilities ....................................... 415,109

Advances from stockholder (Note 7) .............................. 312,573
-----------

Total liabilities ............................................... 727,682
-----------

Commitments (Notes 9 and 10)

Stockholders' equity (Notes 3, 10 and 11):
Preferred stock, no par value, 10,000,000 shares
authorized, none issued .................................. --
Common stock, no par value, 800,000,000 shares
authorized; 16,747,500 shares issued and outstanding;
2,835,000 shares reserved for stock options .............. 6,914,773
Accumulated deficit ......................................... (5,003,244)
-----------

Total stockholders' equity ...................................... 1,911,529
-----------

$ 2,639,211
===========

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

F-3

<PAGE>

WORLDWIDE PETROMOLY, INC.

CONSOLIDATED STATEMENTS OF LOSS

Year Ended June 30,
-----------------------------

1997 1996
------------ ------------

Net sales .................................... $ 216,887 $ 321,845

Cost of sales ................................ 191,500 272,772
------------ ------------

Gross profit ................................. 25,387 49,073

Selling, general and administrative
expenses (Notes 10 and 11) ............... 4,475,836 359,048
------------ ------------

Loss from operations ......................... (4,450,449) (309,975)
------------ ------------

Other income (expense):
Interest income ........................... 151,539 --
Interest expense .......................... (9,211) (3,264)
Miscellaneous income, net ................. 20,998 29,018
------------ ------------

Total other income, net ...................... 163,326 25,754
------------ ------------

Net loss ..................................... $ (4,287,123) $ (284,221)
============ ============

Loss per common share ........................ $ (.27) $ (.19)
============ ============

Weighted average common shares outstanding ... 16,089,167 1,500,000
============ ============

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

F-4

<PAGE>

WORLDWIDE PETROMOLY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the years ended
June 30, 1997 and 1996

Preferred Stock Common Stock
--------------- ------------ Accumulated
Shares Amount Shares Amount Deficit Total
-------- --------- --------- ------------ ------------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, July 1, 1995 ....................... - $ - 1,500,000 $ 500 $ (431,900) $ (431,400)

Net loss..................................... - - - - (284,221) (284,221)
-------- --------- --------- ------------ ------------- --------

BALANCE, June 30, 1996 ...................... - - 1,500,000 500 (716,121) (715,621)

Reverse merger transactions (see Note 3):

Issuance of common stock in
connection with private
offering net of offering
costs................................... - - 2,007,500 3,900,115 - 3,900,115

Issuance of common stock in connec-
tion with reverse merger ................ - - 12,500,000 - - -

Issuance of common stock to non-
employees in exchange for services
rendered (Note 11)......................... - - 700,000 1,344,700 - 1,344,700

Stock options granted to non-employees
in exchange for services rendered
(Note 10).................................. - - - 1,589,458 - 1,589,458

Exercise of stock options.................... - - 40,000 80,000 - 80,000

Net loss..................................... - - - - (4,287,123) (4,287,123)
-------- --------- --------- ------------ ------------- -----------

BALANCE, June 30, 1997....................... - $ - 16,747,500 $ 6,914,773 $ (5,003,244) $ 1,911,529
======== ========= ========== ============ ============= ===========

</TABLE>

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

F-5

<PAGE>
WORLDWIDE PETROMOLY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------

1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................ $(4,287,123) $ (284,221)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation ...................................... 14,350 --
Common stock issued to non-employees for services . 1,344,700 --
Stock options granted to non-employees for services 1,589,458 --
Changes in assets and liabilities:
Accounts receivable ............................. (67,196) 37,486
Inventories ..................................... (106,887) (21,764)
Prepaid expenses and other assets ............... 43,641 (57,283)
Accounts payable and accrued expenses ........... (125,768) 178,823
----------- -----------

Net cash used in operating activities ................... (1,594,825) (146,959)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Certificates of deposit ................................. (527,971) --
Restricted investments in certificates of deposit ....... (418,857) --
Capital expenditures .................................... (115,397) (7,500)
Loans to related parties ................................ (741,194) --
Repayments on loans to related parties .................. 260,000 --
----------- -----------
Net cash used in investing activities ................... (1,543,419) (7,500)
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private offering, net of offering costs ... 3,900,115 --
Proceeds from options exercised ......................... 80,000 --
Proceeds from notes payable ............................. 345,000 123,236
Repayments of notes payable ............................. (203,236) (65,837)
Advances from stockholders .............................. (120,000) 86,681
----------- -----------

Net cash provided by financing activities ............... 4,001,879 144,080
----------- -----------

Net increase (decrease) in cash ......................... 863,635 (10,379)
Cash and cash equivalents beginning of year ............. 920 11,299
----------- -----------

Cash and cash equivalents at end of year ................ $ 864,555 $ 920
=========== ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid ........................................... $ 9,211 $ 3,264
=========== ===========

Non-cash, investing and financing activities:
Issuance of common stock for services (Note 11) ...... $ 1,344,700 $ --
=========== ===========
Stock option granted for services (Note 10) .......... $ 1,589,458 $ --
=========== ===========

</TABLE>

F-6

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

NOTE 1 - FINANCIAL CONDITION AND GOING CONCERN

For each of the years ended June 30, 1997 and 1996, the Company incurred
net losses totalling $4,287,123 and $284,221, respectively, and at June 30, 1997
had an accumulated deficit of $5,003,244. These losses contributed to net cash
used in operating activities of $1,594,825 and $146,959 for each of the years
ended June 30, 1997 and 1996, respectively. As a result of these recurring
losses and operating cash flow deficits, the Company will require additional
working capital to develop and support its customer base, technologies and
business until the Company either: (1) achieves a level of revenues adequate to
generate sufficient cash flows from operations; or (2) receive additional
financing necessary to support the Company's working capital requirements. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.

Concurrent with the reverse merger in July 1996, the Company raised
proceeds in a private offering in the amount of $3,900,115, net of offering
costs. As of June 30, 1997, the Company has unrestricted cash and cash
equivalents and investments in certificates of deposit balances totalling
$1,392,526.

Currently, the Company's focus has been on developing its customer base by
creating brand awareness of its lubrication technology through increasing its
marketing efforts and quality control. The Company's marketing efforts have
included the recruiting and training of a sales force and advertising and
promotion. quality control developments have included product testing and
certification and research and development with a focus toward improving and
expanding its product lines. Management's plans include raising the necessary
capital to continue this revenue growth strategy.

There are no assurances, however, that the Company can: (1) raise the
necessary capital to enable it to continue the execution of its revenue growth
strategy; or (2) generate sufficient revenue growth and improvements in
operating margins to meet its working capital requirements if such capital is
obtained. To the extent that funds generated from operations are insufficient,
the Company will have to raise additional working capital. No assurance can be
given that additional financing will be available, or if available, will be on
terms acceptable to the Company. If adequate working capital is not available
the Company may be required to curtail its operations.

The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

NOTE 2 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

Worldwide Petromoly, Inc. (the "Company"), a publicly-held Delaware
corporation, is engaged in the marketing and distribution of a line of engine
lubrication products under the tradename "Petromoly". The Company was formed as
a result of a reverse merger (see Note 3) on July 22, 1996, between Ogden,
McDonald & Company ("Ogden McDonald" - the former name of the Registrant with
the Securities and Exchange Commission) and Worldwide Petromoly Corporation
("WPC"). Ogden McDonald was incorporated in the state of Delaware on October 13,
1989, and became a public "shell" company for the purpose of engaging in
selected mergers and acquisitions. WPC was incorporated in the state of Texas on
April 1, 1993, and prior to the reverse merger, was engaged in the same line of

F-7

<PAGE>
WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

business as the Company. In connection with the reverse merger, Ogden McDonald
acquired all of the outstanding common stock of WPC and subsequently changed its
name to Worldwide Petromoly, Inc. WPC is now a wholly-owned subsidiary of the
Company.

The Company contracts with independent parties for the blending of its
lubricant products.

BASIS OF PRESENTATION

The Company has retained the June 30 fiscal year end of the former Ogden
McDonald. Accordingly, the accompanying consolidated financial statements
reflect the consolidated results of operations and cash flows of Ogden McDonald
and its wholly-owned subsidiary, WPC, as if the reverse merger occurred on July
1, 1995. All significant intercompany accounts and transactions have been
eliminated. Prior to the reverse merger, WPC reported on a December 31 fiscal
year end as a private company.

REVENUE RECOGNITION

Revenue is recognized when the product is shipped to the customer.

INVENTORIES

Inventories are valued at the lower of cost (weighted average cost) or
market.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed on the
straight line method for financial reporting purposes over the estimated useful
lives of the assets ranging from 5 to 7 years.

The Company reviews its property and equipment whenever events or changes
in circumstances indicate the carrying value of an asset may not be fully
recoverable.

RESEARCH AND DEVELOPMENT

Research and development expenses are charged to operations as incurred.
During the year ended June 30, 1997 and 1996, research and development costs
were $23,000 and $9,000, respectively.

ADVERTISING

Advertising costs are expensed as incurred. The amount charged to
advertising expenses was $108,000 and $6,000 for the years ended June 30, 1997
and 1996.

INCOME TAXES

Deferred income taxes result from the temporary differences between the
financial statement and income tax basis of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when
differences are expected to reverse.

LOSS PER COMMON SHARE

The loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding and common stock
equivalents, if dilutive. Common stock equivalents include the effect of common
shares contingently issuable from exercise of stock options only when the effect
would be dilutive.

F-8

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

CONCENTRATIONS OF CREDIT RISK

The Company is required by FASB Statement 105, "Disclosure of Information
about Financial Instruments with Concentrations of Credit Risk" to disclose
concentrations of credit risk. The Company's financial instruments that are
exposed to concentrations of credit risk consist primarily of cash and cash
equivalents, restricted cash and certificates of deposit, trade accounts
receivable and notes receivable with related parties. The Company places cash
and temporary cash investments, which exceed FDIC insurance limits in the amount
of $911,358, in financial institutions with strong credit ratings. The Company
extends credit in the normal course of business to a number of customers in the
transportation industry. As of June 30, 1997, the Company had uncollateralized
receivables with three customers approximating $79,000, which represents 87% of
the Company's trade account balance, including the related party. During fiscal
1997, sales to three customers amounted to approximately $166,000, which
represents 35%, 21% and 20%, respectively of the Company's revenues. With
respect to notes receivable with related parties, management believes that there
is sufficient collateral underlying the note agreements to protect the Company's
credit risk in the event of default (see Note 7).

OTHER RISKS AND UNCERTAINTIES

The Company is subject to the business risks inherent in the petroleum
industry. These risks include, but are not limited to, a high degree of
competition within the petroleum industry and continuous technological advances.
Future technological advances in the petroleum industry may result in the
availability of new services or products that could compete with the products
currently provided by the Company.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, restricted cash,
investments in certificates of deposit, accounts and notes receivable and
long-term debt reported on the balance sheet approximate their fair value. The
Company estimated the fair value of long-term debt by comparing the carrying
amount to the future cash flows of the instruments, discounted using the
Company's incremental rate of borrowing for similar instruments.

MANAGEMENT'S ESTIMATES AND ASSUMPTIONS

The accompanying financial statements are prepared in conformity with
generally accepted accounting principles which requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities and 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. The actual results could differ from those
estimates.

PRODUCT WARRANTY

The Company maintains product liability insurance for claims, if any,
resulting from the use of the "Petromoly" product.

STATEMENT OF CASH FLOWS

For the purpose of the statement of cash flows, the Company considers
demand deposits and highly liquid debt instruments with an initial maturity of
three months or less to be cash equivalents.

F-9

<PAGE>
WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

STOCK BASED COMPENSATION

In October 1995, Statement of Financial Accounting Standards (SFAS) No.
123, "Accounting for Stock- Based Compensation" was issued which establishes
financial accounting and reporting standards for stock-based employee
compensation plans, effective for fiscal years beginning after December 15,
1995. Those plans include all arrangements by which employees receive shares of
the employer or the employer incurs liabilities to employees in amounts based on
the price of the employer's stock. The Statement also applies to transactions in
which an entity issues its equity securities or other equity investments to
acquire goods or services from non-employees. As of June 30, 1997, the Company
has stock options outstanding under its 1996 Stock Option Plan (see Note 10).

SFAS No. 123 also requires that equity instruments issued to non-employees
be accounted for based on fair value. The Statement encourages all entities to
adopt the fair value based method for employee stock compensation plans.
However, it allows an entity to continue to measure compensation cost for those
plans using the intrinsic value based method of accounting prescribed by APB
Opinion No. 25, ("APB No. 25"), "Accounting for Stock Issued to Employees".
Entities electing to remain with the accounting in APB No. 25 must make pro
forma disclosures of net income and earnings per share, as if the fair value
based method of accounting had been applied. At June 30, 1997, the Company has
elected to remain with the accounting under APB No. 25 and has made the required
pro forma disclosures in Note 10.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS
128 provides a different method of calculating earnings per share than is
currently used in APB Opinion 15. SFAS 128 provides for the calculation of basic
and diluted earnings per share. Basic earnings per share includes no dilution
and is computed by dividing income available to common stockholders by the
weighted average number of common shares outstanding for the period. Dilutive
earnings per share reflects the potential dilution of securities that could
share in the earnings of an entity, similar to existing fully diluted earnings
per share.

Statement of Financial Accounting Standards No. 129, Disclosure of
Information about Capital Structure ("SFAS 129") effective for periods ending
after December 15, 1997, establishes standards for disclosing information about
an entity's capital structure. SFAS 129 requires disclosure of the pertinent
rights and privileges of various securities outstanding (stock, options,
warrants, preferred stock, debt and participating rights) including dividend and
liquidations preferences, participant rights, call prices and dates, conversion
or exercise prices and redemption requirements. Adoption of SFAS 129 will have
no effect on the Company as it currently discloses the information specified.

In June 1997, the Financial Accounting Standards Board issued two new
disclosure standards. Results of operations and financial position will be
unaffected by implementation of these new standards.

Statement of Financial Accounting Standards (SFAS) 130, "Reporting
Comprehensive Income", establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

F-10

<PAGE>
WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

Both of these new standards are effective for financial statements for
period beginning after December 15, 1997 and require comparative information for
earlier years to be restated. Due to the recent issuance of these standards,
management has been unable to fully evaluate the impact, if any, they may have
on future financial statement disclosures.

NOTE 3 - REVERSE MERGER

On July 22, 1996, a reverse merger was consummated, whereby Ogden McDonald
offered one share of its common stock for each share of WPC's issued and
outstanding common stock, or a total of 14,507,500 restricted shares. WPC became
a wholly-owned subsidiary of, and WPC stockholders assumed 90.6% ownership in,
Ogden McDonald as of that date. In anticipation of the reverse merger, the
following equity transactions occurred:

On July 15, 1996, WPC amended its Articles of Incorporation to: (1)
increase its authorized common stock from 1,000,000 to 20,000,000 shares; (2)
change the par value from $.10 to $.001 per share; (3) reclassify and
automatically exchange each share of issued stock from one share, $.10 par
value, for 1,250 shares, $.001 par value.

Between July 15-22, 1996, WPC sold 2,007,500 shares of its common stock at
$2.00 per share in a private offering to non-U.S. investors for total net
proceeds of $3,900,115. These shares were exchanged for 2,007,500 of Ogden
McDonald's shares as part of the exchange.

On July 22, 1996, Ogden McDonald effected a 3 for 1 stock split which
increased its issued and outstanding common stock to 1,500,000 shares.

In accordance with the exchange agreement, on July 22, 1996, Ogden
McDonald offered one share of its common stock for each share of WPC's common
stock issued and outstanding, or a total of 14,507,000 restricted shares (after
the 3-for-1 stock split).

In connection with the reverse merger, 1,500,000 shares of Ogden
McDonald's common stock were reserved for issuance pursuant to the 1996 Stock
Option Plan (subsequently amended to 3,000,000 shares) which includes officers
of the Company.

F-11

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

NOTE 4 - INVENTORIES

The major components of inventories as of June 30, 1997 are as follows:

Finished goods............................................... $111,962
Raw materials and packaging.................................. 13,625
Work in progress............................................. 3,064
--------
$128,651
========

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of June 30, 1997:

Office furnishings and equipment............................. $103,858
Machinery and equipment...................................... 6,977
Vehicles..................................................... 12,062
--------
122,897
Less accumulated depreciation................................ (14,350)
--------

$108,547
========

NOTE 6 - NOTES PAYABLE

At June 30, 1997, the Company has a $250,000 revolving line of credit
facility with a bank which expired in July 1997, and was renewed to July 1998.
At June 30, 1997, the Company had drawn $170,000 under this agreement. Interest
is payable monthly (8.1% at June 30, 1997) and principal is due on demand, or if
no demand, at its scheduled maturity. The borrowings under the line of credit
are collateralized by a certificate of deposit in the amount of $262,996.

At June 30, 1997, the Company had drawn $95,000 under a $100,000 revolving
line of credit facility with another bank. Principal and interest (7.09%) are
due on demand, or if no demand, in August 1997 (renewed to August 1998, at an
interest rate of 7.77% payable quarterly). This borrowing is secured by a
certificate of deposit in the amount of $155,861.

NOTE 7 - RELATED PARTY TRANSACTIONS

ACCOUNTS RECEIVABLE - RELATED PARTY

The Company sells products to an entity that is controlled by the
Company's majority stockholder. Sales and the amount due from the entity at June
30, 1997 were approximately $45,000 and $29,536, respectively.

NOTES RECEIVABLE - RELATED PARTIES

On December 12, 1996, the Company executed a note agreement with a
publicly-held corporation in the amount of $500,000, in which a Company officer
serves in a similar capacity for both companies. Principal and interest (10%
annual rate) was due on January 17, 1997, and was secured by 1,000,000 shares of
the borrower's common stock. On February 19, 1997, a portion of the note

F-12

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

receivable balance in the amount of $250,000 was paid. On June 30, 1997, the
note agreement was assigned to a privately-held corporation controlled by this
Company officer and an individual Company stockholder. The note, which had a
principal balance of $267,289 at June 30, 1997, was refinanced on October 1,
1997 in the amount of $204,950 (reflecting payments and accrued interest
thereon). Principal and interest at 10% interest per annum are payable monthly
in consecutive installments commencing November 5, 1997, at the greater of: a)
$10,000; or b) 15% of the funds received by the borrower from the collection of
accounts receivable for the previous month on the first $100,000 of collections
and 50% of such funds after the first $100,000 of collections until the note is
collected in full. The note is secured by the borrower's accounts receivable and
personal guarantees of the individuals referred to above.

On June 30, 1997, the Company refinanced a note agreement with a
stockholder in the amount of $210,945. The note agreement was again refinanced
on October 1, 1997, in the amount of $202,182 (reflecting payments and accrued
interest thereon). Principal and interest are payable monthly in thirteen
consecutive installments ranging between $5,000 and $60,000 commencing October
20, 1997, at 10% per annum. The note is secured by 40,000 shares of Company
common stock and 200,000 shares of common stock of the publicly traded
corporation referred to above.

As of June 30, 1997, the Company had a demand note receivable in the
amount of $12,960, due from the entity referred to in "Accounts
receivable-related party" above which was subsequently paid in July 1997.

As of June 30, 1997, notes receivable maturities were as follows:

Amount
----------

1998..................................................... $ 277,347
1999..................................................... 203,847
----------
481,194
Less current portion..................................... 277,347
----------
Long-term portion........................................ $ 203,847

ADVANCES FROM STOCKHOLDER

Prior to the reverse merger, the principal stockholder of WPC who is now
an officer and majority stockholder of the Company, advanced funds to WPC
resulting in a balance of $432,573 at June 30, 1996. During the year ended June
30, 1997, such balance has been reduced by two draws: 1) the utilization of
$95,000 proceeds on the Company's note payable with a bank (see Note 6); and 2)
the application of a $25,000 advance by the Company to an officer which was
released in exchange for the draw against the advances from stockholder.

NOTE 8 - INCOME TAXES

Deferred taxes are determined based on temporary differences between the
financial statement and income tax basis of assets and liabilities as measured
by the enacted tax rates which will be in effect when these differences reverse.

F-13

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

Deferred tax assets are comprised of the following at June 30, 1997:

Net operating loss carryforwards........................... $ 1,112,500
Stock options granted to non-employees..................... 540,500
Amortization expense....................................... 25,500
Bad debt expense........................................... 7,000
-----------
Gross deferred tax asset................................... 1,685,500
-----------
Valuation allowance........................................ (1,685,500)
-----------
Net deferred tax asset..................................... $ -
===========

The Company has recorded a full valuation allowance against all deferred
tax assets because it could not determine whether it was more likely than not
that the deferred tax asset would be realized.

At June 30, 1997, the Company had net operating loss carryforwards
totalling approximately $3,272,000 available to reduce future taxable income
through the year 2012. The net operating loss carryforwards expire as follows:

Year ended December 31, Amount
----------------------- -----------

2008................................................... $ 72,000
2009................................................... 266,000
2010................................................... 206,000
Eighteen months ended June 30, 2012.................... 2,728,000
-----------

$ 3,272,000
===========

NOTE 9 - COMMITMENTS

The Company leases its office space under long-term operating lease
agreements. At June 30, 1997, future minimum lease payments under these
operating leases were as follows:

1998...................................................... $ 63,000
1999...................................................... 50,000
2000...................................................... 22,000
2001...................................................... 14,000
2002...................................................... 7,000
-----------
$ 156,000
===========

Rent expense for the years ended June 30, 1997 and 1996 were $54,000 and
$29,000, respectively.

In August 1996, the Company entered into five year employment agreements
with four officers at a combined annual salary of $361,000 (subject to
escalation ranging from $385,000 in fiscal 1998 to $432,000 in fiscal 2001) plus
a combined annual automobile allowance of $33,600.

F-14

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

NOTE 10 - STOCK OPTIONS

On July 22, 1996 the Company approved the 1996 Stock Option Plan which
authorizes the Company's Board of Directors to grant options to purchase up to
3,500,000 shares of Common Stock (as amended), to eligible employees, officers
and directors of the Company, and consultants to the Company. The terms of the
options are generally over five years with immediate vesting. The Plan is not
qualified under Section 401(a) of the Internal Revenue Code of 1986, nor is it
subject to any provision of the Employee Retirement Income Security Act of 1974.

The Company has elected to continue to account for stock options issued to
employees in accordance with APB No. 25. During the year ended June 30, 1997,
all 1,095,000 options issued to officers and employees were granted at an
exercise price, which equaled or exceeded the market price per share at the date
of grant and accordingly, no compensation was recorded.

Effective for the year ended June 30, 1997, the Company was required to
adopt the disclosure portion of SFAS No. 123. This statement requires the
Company to provide proforma information regarding net loss applicable to common
stockholders and loss per share as if compensation cost for the Company's stock
options granted had been determined in accordance with the fair value based
method prescribed in SFAS No. 123. The Company estimates the fair value of each
stock option at the grant date by using the Black-Scholes option pricing model
with the following weight average assumptions used for grants in 1997 as
follows:

1. Dividend yield of 0%

2. Expected volatility of 0% for options granted in August 1996 due to no
trading activity; expected volatility of 52% for options granted in
June 1997.

3. Risk-free interest rates ranging from 6.49% to 6.60%

4. Expected term of 5 years.

Under the accounting provisions of SFAS No. 123, the Company's net loss
applicable to common stockholders and loss per share for the year ended June 30,
1997 would have been increased to the proforma amounts indicated below:

1997

Net loss applicable to common stockholders:
As reported $(4,287,123)
===========
Proforma $(4,884,123)
===========

Loss per share:
As reported $ (.27)
=======
Proforma $ (.30)
=======

For the year ended June 30, 1997, in accordance with SFAS No. 123, the
Company accounted for options issued to non-employees for services rendered
using the fair value method of their vesting period. The Company granted
1,780,000 options to purchase an equal number of shares of common stock at an
exercise price of $2.00 per share to consultants during the year. The options

F-15

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

vest within 0-1 year and expire 5 years from the date of grant. The options were
granted for services rendered during the year ended June 30, 1997. The Company
recorded compensation expense in the amount of $1,589,458 in the accompanying
consolidated statements of loss for the year ended June 30, 1997, based on the
fair value of the options on the grant date using the Black-Scholes option
pricing model.

There was no granting of stock options to employees and non-employees
prior to June 30, 1996, and accordingly, there was no effect on the Company's
net loss applicable to common stockholders and loss per share for the year then
ended.

A summary of the status of the Company's stock options as of June 30, 1997
and changes during the year then ending is presented below.
Weighted
Average
Shares Exercise Price
------ --------------

Outstanding at beginning of year
Granted 2,875,000 $ 2.00
Exercised (40,000) 2.00
Forfeited - -
--------- ------

Outstanding at end of year 2,835,000 $ 2.00
========= ======

Options exercisable at end of year 2,015,000 $ 2.00
========= ======

Weighted average fair value of
options granted during the year $ .52
======

The following table summarizes information about fixed stock options
outstanding at June 30, 1997:

Number Weighted Average Number
Outstanding at Exercise Remaining Contractual Exercisable at
June 30, 1997 Price Life (Years) June 30, 1997

2,835,000 $ 2.00 4.3 2,015,000
========= ======= === =========

NOTE 11 - OTHER EQUITY TRANSACTIONS

In June 1997, the Company issued common stock to four individuals totaling
700,000 shares for sales and marketing consulting services. Compensation expense
in the amount of $1,344,700 has been recorded as selling, general and
administrative expenses in the accompanying consolidated statements of loss for
the year ended June 30, 1997, as a result of these stock issuances.

F-16

<PAGE>

WORLDWIDE PETROMOLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 1997 AND 1996

NOTE 12 - LAWSUIT SETTLEMENT

On formation of the Company, the Company agreed to indemnify the principal
stockholder for any payments made by such stockholder resulting from or arising
out of a lawsuit settlement totaling $90,000, which lawsuit was filed by a third
party against the former distributor of the "Petromoly" product, and the
principal stockholder. Accordingly, this amount was included in accrued expenses
at June 30, 1996. The negotiated settlement in the amount of $53,000 was paid in
full during August 1996. The difference of $37,000 between the amount accrued
and paid was included in other income for the year ended June 30, 1997.

F-17

EXHIBIT 21.1
SUBSIDIARIES
- ------------

The Company has one subsidiary:

Worldwide Petromoly Corporation

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WORLDWIDE PETROMOLY, INC. FOR THE FISCAL YEAR ENDED JUNE
30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1

<S> <C>

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 864,555
<SECURITIES> 946,828
<RECEIVABLES> 91,297
<ALLOWANCES> 0
<INVENTORY> 128,651
<CURRENT-ASSETS> 2,326,817
<PP&E> 122,897
<DEPRECIATION> 14,350
<TOTAL-ASSETS> 2,639,211
<CURRENT-LIABILITIES> 415,109
<BONDS> 0
0
0
<COMMON> 6,914,773
<OTHER-SE> (5,003,244)
<TOTAL-LIABILITY-AND-EQUITY> 2,639,211
<SALES> 216,887
<TOTAL-REVENUES> 216,887
<CGS> 191,500
<TOTAL-COSTS> 191,500
<OTHER-EXPENSES> 4,475,836
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,211
<INCOME-PRETAX> (4,287,123)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,287,123)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,287,123)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> (.27)

</TABLE>