Cadema Corp – ‘10KSB’ for 12/31/00

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Annual Report — Small Business   —   Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Cadema Corporation                                    29    114K 

Document Table of Contents

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 UNITED STATES
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 December 31, 2000.        

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE  
--------      SECURITIES EXCHANGE ACT OF 1934                                   
For the transition period from ________ to ________.

Commission File No. 0-9614                          

CADEMA CORPORATION
--------------------------------------------------------------------------------
(Name of small business issuer in its charter)

DELAWARE                                       88-0160741 
--------------------------------               ------------------------------   
(State or other jurisdiction of                (I.R.S. Employer Identification  
incorporation or organization)                 No.)                             

c/o Number One Corporation
50 Washington Street, Norwalk CT 06854
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)   (Zip Code)           

Issuer's telephone number, including area code:  (203)  854-6711                
                                                --------------------------------

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

Securities registered under Section 12(g) of the Exchange Act:                  
(Title of class) Common Stock, $0.01 Par Value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934      
during the preceding 12 months (or for such shorter period that the registrant  
was required to file such reports), and (2) has been subject to such filing     
requirements for the past 90 days.                                              
Yes   X    No                                                                   
------    ------                                                          

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405  
of Regulation S-B 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 )                                                         

State issuer's revenues for its most recent fiscal year $ 0 . As of February 28,
2001, the aggregate market value of common stock held by non-affiliates of the  
registrant, based on the average of the bid and asked prices of such stock as   
reported by the National Association of Securities Dealers, Inc. on such date,  
was approximately $110,000.                                                     

There were 10,921,122 shares of the Registrant's common stock outstanding as of 
February 28, 2001.                                                              

Documents incorporated by reference:  None                                      

Transitional Small Business Disclosure Format (Check one):                      
Yes             No      X                                                       
------------    ----------                                                

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SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     Except for the historical information contained herein, the matters
discussed in this Annual Report are forward-looking statements which involve    
risks and uncertainties, including but not limited to economic, competitive,    
governmental and other factors affecting the Company's revenues and operations  
and other factors discussed in the Company's various filings with the Securities
and Exchange Commission.                                                        

PART I

ITEM 1.  DESCRIPTION OF BUSINESS                                                

GENERAL DEVELOPMENT                                                             

   Cadema Corporation (the "Company") finances and operates business
enterprises that have the potential to generate profits and positive cash flow. 

The predecessor of the Company (Nevada Resources, Inc.) was   
incorporated in Nevada in 1980, at which time it acquired certain mining        
equipment and interests in undeveloped mining properties. The Company has been  
publicly held since 1980. In 1985, the Company decided to diversify its         
operations and, in September 1986, effected a merger with Cadema, Inc., a       
privately held company. Although the Company originally was engaged in mineral  
exploration, the 1986 acquisition of Cadema, Inc. changed the Company's primary 
business to the commercialization of medical technology. All mining interests   
have been sold or have been allowed to lapse. The Company was re-incorporated in
Delaware in December 1986 and changed its name to Cadema Corporation.           

        From 1986 until July 1992, the Company's business had been the sale of
medical products cleared by the Food and Drug Administration (FDA) and the      
development of new products for which FDA clearance was sought. In 1987, the    
Company raised approximately $3,900,000 in net proceeds through the public sale 
of preferred stock to finance these operations. The Company left the medical    
products business with the sale of its medical product lines in 1990 and 1992.  

      On July 15, 1992, the Company acquired SuperCads, Inc. (known by its
business name of "Cognition") and its primary business changed to computer      
software products. Cognition was sold in May 1993, and with this sale the       
Company no longer engaged in the computer software business.                    

On December 31, 1993, the Company entered into a Joint Venture
Agreement with Danzer Industries, Inc., formerly Global Environmental Corp.,    
which created Global Environmental Offshore Company ("Global") which previously 
engaged in contracting for the design and installation of air pollution control 
equipment and facilities in areas located outside the United States. Global     
previously provided design, assembly and project management services related to 
the construction of air pollution control systems. Global's business was        
inactive during fiscal 2000, 1999 and 1998. Cadema owns 51% of Global.          

         Unless the context otherwise indicates, all references herein to Cadema
or the Company include Cadema Corporation and its subsidiary and predecessors.  

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         The Company is still exploring other possible acquisitions and mergers,
as it has done in the past, seeking to enter into new operating businesses and  
to use the Company's liquid assets in connection therewith.                     

        The Company has also used available cash to purchase, hold and dispose
of equity interests in various high technology companies as outlined in a plan  
approved by stockholders in 1988. Securities transactions in 2000 resulted in a 
realized gain of $19,009 and an unrealized loss of $61,322. The Company intends 
to continue to invest in trading securities, including but not limited to       
stocks, bonds, options and warrants. The Company previously invested, and       
expects in the future to invest, primarily in stocks of smaller, lesser known   
and often more speculative companies, which while entailing above average risk, 
offer the potential of above average return on investment. See Note 5 to        
Consolidated Financial Statements.                                              

NUMBER OF EMPLOYEES                                                             

   The Company's Chief Executive Officer and President, Mr. Roger D.
Bensen, was the sole employee as of December 31, 2000 and was not compensated   
for serving in such capacity.                                                   

ITEM 2.  DESCRIPTION OF PROPERTY                                                

The Company does not currently own or lease any real property.

ITEM 3.  LEGAL PROCEEDINGS                                                      

     No material legal proceedings are pending to which the Company is a
party or to which any of its property is subject.                               

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

     There were no meetings of stockholders during the fourth quarter of
2000 nor were any matters submitted for vote.                                   

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 PART II

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

The Common Stock ("Common Stock") and the Series A 8% Cumulative      
Convertible Preferred Stock ("Preferred Stock") of the Company trade on the     
Nasdaq Bulletin Board under the symbols CIBM and CIBMP, respectively. Previously
these shares had traded on the Nasdaq Small Cap Market but were removed from    
this market due to failure to meet administrative requirements. The following   
Table sets forth, for the respective periods indicated, the prices of the Common
Stock and Preferred Stock in the over-the-counter market, based upon            
inter-dealer high and low bid prices, without retail mark-up, mark-down,        
commissions or adjustments (and may not represent actual transactions), as      
reported and summarized by the National Association of Securities Dealers       
Automated Quotation Service.                                                    

                                                                [Download Table]

                          Common                      Preferred     
                          ------                      ---------     
                        High     Low               High         Low 
                        -------------             ------------------

                                                                    
4th Quarter 2000        $.05     $.01              $.91        $.34 
3rd Quarter 2000        $.31     $.15             $1.03        $.36 
2nd Quarter 2000       $1.23     $.28             $1.03        $.35 
1st Quarter 2000        $.52     $.05              $.62        $.32 

4th Quarter 1999        $.50     $.02              $.66        $.31 
3rd Quarter 1999        $.04     $.02              $.41        $.21 
2nd Quarter 1999        $.06     $.01              $.62        $.33 
1st Quarter 1999        $.03     $.01              $.39        $.33 

  The approximate number of stockholders of record of the Company's Common
Stock and Preferred Stock as of February 28, 2001, were 988 and 276             
respectively, as set forth on the books of the transfer agent/registrar of the  
Company. The Company believes that a substantial number of additional           
stockholders hold their shares in nominee name.                                 

DIVIDENDS                                                                       

    The Company has not paid any dividends on its Common Stock since inception
and plans to retain any earnings for the future development of its business.    
Future dividends on the Common Stock, if any, will be dependent upon the        
Company's earnings, financial condition, and other relevant factors as          
determined by its Board of Directors. Annual cumulative dividends of $0.40 per  
share of Preferred Stock are payable semiannually in cash or common stock       
unless they are deferred by the Board of Directors. The dividends that were     
payable during 1993 through 2000 were deferred and have accumulated for possible
payment at a later date.                                                        

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

  The Company's primary focus in 2000 was to seek additional joint venture
partners since its existing Joint Venture investee, Global Environmental        
Offshore Company, generated no revenues in 2000. Global was set up to provide   
pollution control services for international customers.                         

  The Company continues in its principal business of seeking and financing
business enterprises with the potential to generate profits and positive cash   
flow. The Company's previous entry into the pollution control business is part  
of this strategy. New opportunities were evaluated in 2000 but none were deemed 
appropriate to enter into.                                                      

The Company intends to continue using its available funds to purchase,
invest in and sell securities as outlined in a plan approved by stockholders in 
1988.                                                                           

     In the near future, the Company will need to restructure its joint venture,
Global Environmental Offshore Company. During 1996, Danzer Industries, Inc.,    
formerly Global Environmental Corp., the other party to the joint venture,      
disposed of one of its subsidiaries which produced products of the type the     
Joint Venture was intending to sell internationally. Therefore, the Company is  
currently reevaluating its Joint Venture's status and plans. In connection with 
the formation of the Joint Venture, the Joint Venture loaned $345,000 to Danzer 
Industries, Inc., which was due to be repaid on December 31, 1996. Danzer       
Industries, Inc. does not presently have available funds to make such a         
repayment. Danzer Industries, Inc. has offered to exchange its stock for the    
note. The Company has established a 87% reserve against the carrying value of   
the aforementioned note in recognition of the potential costs involved in       
liquidating any noncash settlement of this investment. Negotiations are         
continuing to resolve this issue.                                               

 During 2000, Cadema reviewed potential acquisition opportunities, as it
continues to move toward its goal to become a larger company. All negotiations  
failed, however, because of a continuing problem with the existence of the      
Company's Preferred Stock. Originally issued 13 years ago, the Preferred Stock  
initially paid dividends in cash, and then paid them in shares of Common Stock, 
as provided for in its certificate of Designation for the Preferred Stock. This 
practice was continued for many years until Cadema's liquidity was impaired by  
the losses brought on by the Cognition acquisition and its subsequent disposal. 
Over the past several years, Preferred Stock dividends have been accrued rather 
than paid, because the Company has been unable to pay dividends.                

   Management believes that investors understand the practical limitation on
payment of dividends by a company the size of Cadema. If the Company were to    
issue more shares of Common Stock, in lieu of a cash dividend, at the past      
year's price of $.01, stockholders would be substantially diluted. Management is
reviewing this situation.                                                       

   In Cadema's case, all stockholders have a common interest in the value of
the Common Stock. Even individuals who only purchased the Preferred Stock now   
have Common Stock because of dividends they received in Common Stock. Management
is working toward a solution to resolve this matter pertaining to the Preferred 
Stock.                                                                          

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    The Company has experienced no impact on its operations from the Year 2000
issue. No impact is expected in the future.                                     

RESULTS OF OPERATIONS                                                           

FISCAL 2000 COMPARED TO FISCAL 1999                                             

    In 2000, Global generated no revenues. Therefore operating results present
Cadema's administrative expenses and marketable securities activity.            

REVENUES                                                                        

   Global generated no orders in 2000 and so revenues were $0 the same as in
1999. The Joint Venture is inactive.                                            

GENERAL AND ADMINISTRATIVE                                                      

General and administrative expenses, costs incurred in maintaining the
Company, were $46,773 in 2000, up 1% from 1999's $46,187.                       

TRADING SECURITIES TRANSACTIONS                                                 

     Trading securities investment activity generated a realized gain of $19,009
in 2000 compared to a realized gain of $14,002 in 1999. The securities portfolio
also generated an unrealized loss of $61,322 in 2000, compared to the 1999      
unrealized loss of $84,495. The performance of individual stocks comprising the 
trading securities holdings are the cause of these results.                     

FISCAL 1999 COMPARED TO FISCAL 1998                                             

    In 1999, Global generated no revenues. Therefore operating results present
Cadema's administrative expenses and marketable securities activity.            

REVENUES                                                                        

   Global generated no orders in 1999 and so revenues were $0 the same as in
1998. The Joint Venture is inactive.                                            

GENERAL AND ADMINISTRATIVE                                                      

General and administrative expenses, costs incurred in maintaining the
Company, were $46,187 in 1999, down slightly from 1998's $47,470.               

TRADING SECURITIES TRANSACTIONS                                                 

     Trading securities investment activity generated a realized gain of $14,002
in 1999 compared to a realized loss of $86,420 in 1998. The securities portfolio
also generated an unrealized loss of $84,495 in 1999, compared to the 1998      
unrealized loss of $134,549. The performance of individual stocks comprising the
trading securities holdings are the cause of these results.                     

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LIQUIDITY AND CAPITAL RESOURCES                                                 

     Working capital was $64,973 at the end of 2000, down from $152,579 in 1999.
Management believes this resource is sufficient for funding the Company's       
anticipated needs in 2001.                                                      

SELECTED FINANCIAL DATA                                                         

                                                        [Enlarge/Download Table]

                                                       Years Ended December 31,              
                                                       ------------------------              
Operating Data:                               2000               1999               1998     
---------------------------------------------------------------------------------------------
                                                                                             
Revenue                                           --                 --                 --   
Cost of Goods Sold                                --                 --                 --   
Operating Expenses                      $     46,773       $     46,187       $     65,470   
Other Expense                                (37,299)           (70,280)          (219,365)  
Loss Before                                                                                  
 Income Taxes                               (125,072)          (116,467)          (284,835)  
Provision for Income                                                                         
 Taxes                                            --                 --                 --   
Preferred Dividends Earned                  (169,781)          (169,781)          (169,781)  
Net Loss                                                                                     
 Applicable to Common Stockholders          (294,853)          (286,248)          (454,616)  
Net Loss per Common Share -                                                                  
 Basic and Diluted                              (.03)              (.03)              (.04)  
Weighted Average Common Shares                                                               
  Outstanding                             10,909,442         10,905,549         10,905,549   

BALANCE SHEET DATA:                                                                          

Working Capital                               64,973            152,579            269,045   
Total Assets                                 122,723            250,329            366,795   
Total Current Liabilities                     14,000             13,000             13,000   
Stockholders' Deficiency                  (1,253,289)          (958,436)          (672,188)  

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                            

    Incorporated herein by reference are the Consolidated Financial Statements
and Schedules of the Company and its Subsidiary filed with and made a part of   
this report. (Also see Item 13 of this Report.)                                 

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

   1.   On August 1, 2000, the Company was notified that Rudolph, Palitz LLC
        had merged with McGladrey & Pullen, LLP and that Rudolph, Palitz LLC
          would no longer be the auditor for the Registrant. McGladrey & Pullen,
LLP was appointed as the Registrant's new auditor.          

  2.   The auditor's reports from Rudolph, Palitz LLC for the Registrant's
          past two fiscal years did not contain an adverse opinion or disclaimer
     of opinion, and were not qualified or modified as to uncertainty,
audit scope, or accounting principles.                      

     3.   The decision to engage McGladrey & Pullen, LLP was not approved by the
Board of Directors.                                         

4.   During the Registrant's two most recent fiscal years and the     
      subsequent interim period preceding the change, there have been no
      disagreements with Rudolph, Palitz LLC on any matter of accounting
        principles or practices, financial statement disclosure, or auditing
scope or procedure.                                         

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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 are as follows:   

                                                           Director or
                                                         Officer
Name                Age           Position                   Since    
--------------------------------------------------------------------------------

Roger D. Bensen          65      Chairman of the Board,           1983          
         Chief Executive Officer
        and President/Director

Richard B. Ames          62      Director                         1985          

     All directors and officers of Cadema serve for a term of one year and until
their respective successors are duly elected and qualified. There are no family 
relationships among any officers and directors.                                 

     ROGER D. BENSEN has been Chairman of the Board of Directors of Cadema since
February 12, 1983. He is Chief Executive Officer of Cadema and was President of 
the Company from September 1990 until July 1992 and became President again in   
May 1993 until present. Mr. Bensen has been President of the Number One         
Corporation, a privately held financial consulting firm based in Norwalk,       
Connecticut, for 25 years. He is also the President of Roundel Petroleum        
Exploration Company, Inc., a privately held company that is engaged in the      
exploration and production of oil and gas. Mr. Bensen devotes such time as is   
necessary to perform his duties as an officer and director of Cadema.           

   RICHARD B. AMES became a director of Cadema in February 1985. Mr. Ames is
President of Ames and Associates, an independent investment consulting company  
in Eureka, California. From 1981 until the formation of his present company, Mr.
Ames was Associate Vice President for Dean Witter Reynolds, Inc., a member of   
the New York Stock Exchange, at their Eureka office.                            

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE                         

     All necessary reports required to be filed pursuant to Section 16(a) of the
Securities Exchange Act of 1934 have been filed on a timely basis. In making    
these statements, the Company has relied on representations of its incumbent    
directors and officers (and its ten percent holders) and copies of the reports  
that they have filed with the Securities and Exchange Commission.               

ITEM 10.  EXECUTIVE COMPENSATION                                                

     Roger D. Bensen received no salary or compensation in the last three fiscal
years. No officer received compensation of more than $100,000 in any of the last
three fiscal years.                                                             

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STOCK OPTION PLANS:                                                             

1986 PLAN                                                                       

In November 1986, the Board of Directors of the Company adopted the   
Company's 1986 Stock Option Plan (the "1986 Plan") and the plan was approved by 
the Company's stockholders on December 15, 1986. Options intended to qualify as 
incentive stock options and nonqualified options may be granted under the 1986  
Plan. The aggregate number of shares which may be issued under the 1986 Plan may
not exceed 600,000 shares of Common Stock. The purpose of the 1986 Plan is to   
provide eligible employees, officers and directors of the Company with an       
opportunity to acquire or increase their equity interest in the Company, and    
thereby to induce them to remain in the Company's service. In 2000, 1999 and    
1998, no options were granted and no options expired. As of December 31, 2000,  
no options were outstanding and options covering 600,000 shares of Common Stock 
were available under the 1986 Plan.                                             

OTHER STOCK OPTIONS                                                             

   In 2000, 1999, and 1998 no options were granted, exercised, terminated or
expired. As of December 31, 2000 there were no options outstanding.             

OTHER EXECUTIVE PLANS                                                           

The Company has no long term incentive or pension plans.              

COMPENSATION OF DIRECTORS                                                       

In 2000, 1999 and 1998, the directors did not receive compensation for
their services. Currently there are no standard arrangements for the            
compensation of directors for their services.                                   

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ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

 The following Table sets forth information as of the February 28, 2001,
regarding the voting securities of the Company owned by each person who owns of 
record, or is known by the Company to own beneficially, more than five percent  
of any class of voting securities and by each director of the Company and all   
directors and officers of the Company as a group. None of the directors or      
officers are holders of record of Preferred Stock.                              

                                                        [Enlarge/Download Table]

                                                     Amount and Nature        Percent                       
 Title               Name and Address                 of Beneficial           of Class       Percent of     
of Class           of Beneficial Owner                  Ownership               (1)          Voting Stock   
------------------------------------------------------------------------------------------------------------
                                                                                                            
Common             Roger D. Bensen                2,440,352 shares(2)(3)        23.9              22.5      
                   50 Washington Street                                                                     
                   Norwalk, CT  06854                                                                       

Common             Richard B. Ames                  86,406 shares(4)              .8                .7      
                   730 7th Street                                                                           
                   Eureka, CA  95501                                                                        

Common             All Directors and                 2,707,758 shares           24.8              23.3      
                   Officers as a Group                                                                      
                   (2 Persons)                                                                              

Preferred          Anne W. Bensen                  30,000 shares(5)(6)           6.2                --      
                   69 Dandy Drive                                                                           
                   Cos Cob, CT  06807                                                                       

   (1) Shares of Common Stock which a person has the right to acquire within
60 days after January 31, 2001 are deemed to be outstanding in calculating the  
percentage ownership of the person, but are not deemed to be outstanding as to  
any other person.                                                               

(2) Includes shares owned of record by Roundel Petroleum Exploration  
Company, Inc., (which is a privately held company controlled by Mr. Bensen).    

(3) Includes 140,352 shares of Common Stock held by Anne Bensen, Mr.  
Bensen's wife, as to which Mr. Bensen disclaims beneficial ownership and as to  
which he has no voting or investment powers. Does not include a total of 30,000 
shares of Preferred Stock held by Mr. Bensen's wife as to which he disclaims    
beneficial ownership and as to which he has no voting or investment powers.     

  (4) Includes 13,713 shares of Common Stock held by Mr. Ames' wife, as to
which Mr. Ames disclaims beneficial ownership and as to which he has no voting  
or investment powers.                                                           

     (5) The Preferred Stock is the Series A 8% Cumulative Convertible Preferred
Stock, which has one vote per share, voting together with the Common Stock, and 
is currently convertible into 1.79 shares of Common Stock for each share of     
Preferred Stock.                                                                

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(6) Does not include 2,300,000 shares of Common Stock held by Roger D.
Bensen, Mrs. Bensen's husband, as to which Mrs. Bensen disclaims beneficial     
ownership and as to which she has no voting or investment powers. Mrs. Bensen   
also owns 140,352 shares of common stock.                                       

Anne W. Bensen is the wife of Roger D. Bensen.                        

 By virtue of his ownership of shares of Common Stock and his service as
Chief Executive Officer and a Director, Mr. Bensen controls the management and  
affairs of the Company.                                                         

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

   Although Mr. Bensen does not receive compensation for his services to the
Company, he may receive compensation in the future as determined by the Board of
Directors.                                                                      

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 PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K                                      

A.   FINANCIAL STATEMENTS.                                                      

    Incorporated herein by reference are Consolidated Financial Statements and
Schedules of the Company and its Subsidiary filed with and made a part of this  
report.                                                                         

B.   EXHIBITS                                                                   

Exhibit Number                                       Description          
--------------------------------------------------------------------------------

3.1           Certificate of Incorporation, as amended (2)          
3.2           Bylaws of the Company (1)                             
  3.3           Form of Certificate of Designation of Series A Preferred
Stock (2)                               
  3.4           Form of Certificate of Designation of Series B Preferred
Stock (2)                               
10.1           1986 Stock Option Plan (1)                             
10.2           Form of Indemnity Agreement (2)                        
   10.3           Stock Purchase Agreement SuperCads, Inc., dated as of July
15, 1992. (3)                           
  10.4           Securities Exchange Agreement dated as of May 27, 1993(4)
10.5           Global Environmental Offshore Company Joint Venture    
   Agreement dated as of December 31, 1993 (5)
21.0           Subsidiary of Registrant (2)                           
27.0           Financial Data Schedule                                

(1)  Filed as Exhibits to the Company's Form 10-KSB for the fiscal year ended   
December 31, 1986 and incorporated herein by reference.               

(2)  Filed as Exhibits to the Company's Registration Statement on Form S-1 (File
   No. 33-14459) declared effective July 20, 1987 and incorporated herein by
reference.                                                            

(3)  Filed as Exhibit to the Company's Form 8-K dated July 15, 1992 and         
incorporated herein by reference.                                     

(4)  Filed as Exhibit to the Company's Form 8-K dated May 28, 1993 and          
incorporated herein by reference.                                     

(5)  Filed as Exhibit to the Company's Form 10-KSB dated December 31, 1995 and  
incorporated herein by reference.                                     

REPORTS ON FORM 8-K                                                             

 No reports on Form 8-K were filed during the last quarter of the fiscal
year ended December 31, 2000.                                                   

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ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA                             

 CADEMA CORPORATION AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                  Page

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS                             F-2 to F-3 

FINANCIAL STATEMENTS:                                                           

Consolidated Balance Sheets - December 31, 2000 and 1999               F-4      

Consolidated Statements of Operations for Each of the                           
   Three Years in the Period Ended December 31, 2000             F-5

Consolidated Statements of Changes in Stockholders'                             
Deficiency for Each of the Three Years in the Period          
   Ended December 31, 2000                                       F-6

Consolidated Statements of Cash Flows for Each of the                           
   Three Years in the Period Ended December 31, 2000             F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                          F-8 to F-15 

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INDEPENDENT AUDITOR'S REPORT

Board of Directors                                                              
Cadema Corporation                                                              
Norwalk, Connecticut                                                            

We have audited the accompanying consolidated balance sheet of Cadema           
Corporation and Subsidiary as of December 31, 2000, and the related consolidated
statements of operations, changes in stockholders' deficiency and cash flows for
the year ended December 31, 2000. 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 audit.                       

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable 
assurance about whether the 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 audit provides a reasonable basis for our opinion.          

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Cadema Corporation  
and Subsidiary as of December 31, 2000 and the results of their operations and  
their cash flows for the year ended December 31, 2000 in conformity with        
generally accepted accounting principles.                                       

The accompanying financial statements have been prepared assuming the Company   
will continue as a going concern. As discussed in Note 3 to the financial       
statements, the Company has suffered recurring losses from operations and at    
December 31, 2000 had a stockholders' deficiency. These conditions raise        
substantial doubt about the Company's ability to continue as a going concern.   
Management's plans in regard to these matters are also described in Note 3. The 
financial statements do not include any adjustments that might result from the  
outcome of this uncertainty.                                                    

                                             /s/ McGladrey & Pullen  LLP

Blue Bell, PA                                                                   
February 28, 2001                                                               

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INDEPENDENT AUDITOR'S REPORT

Board of Directors                                                              
Cadema Corporation                                                              
Norwalk, Connecticut                                                            

We have audited the accompanying consolidated balance sheet of Cadema           
Corporation and Subsidiary as of December 31, 1999, and the related consolidated
statements of operations, changes in stockholders' equity (deficiency) and cash 
flows for each of the two years in the period ended December 31, 1999. These    
financial statements are the responsibility of the Company's management. Our    
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

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

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of Cadema Corporation  
and Subsidiary as of December 31, 1999, and the results of their operations and 
their cash flows for each of the two years in the period ended December 31,     
1999, in conformity with generally accepted accounting principles.              

                       /s/ Rudolph, Palitz LLC

Blue Bell, PA                                                                   
February 8, 2000                                                                

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 CADEMA CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS 

                                                                [Download Table]

               ASSETS                          December 31, 2000  December 31, 1999
               ------                          -----------------  -----------------
                                                                                   
CURRENT ASSETS:                                                                    

 Cash and cash equivalents                        $     9,533       $    13,054    
 Trading securities (Cost $525,883 in                  67,820           150,881    
 2000 and $540,655 in 1999)                                                        
  (Notes 2 and 5)                                                                  
 Other current assets                                   1,620             1,644    
                                                  -----------       -----------    
     TOTAL CURRENT ASSETS                              78,973           165,579    

 NOTE RECEIVABLE less allowance for bad                                            
   debt of $301,250 in 2000 and $260,250                                           
   in 1999 (Note 4)                                    43,750            84,750    
                                                  -----------       -----------    
     TOTAL ASSETS                                 $   122,723       $   250,329    
                                                  ===========       ===========    
                LIABILITIES AND STOCKHOLDERS'                                      
                          DEFICIENCY                                               
CURRENT LIABILITIES:                                                               

 Accrued liabilities                              $    14,000       $    13,000    
                                                  -----------       -----------    
     TOTAL CURRENT LIABILITIES                         14,000            13,000    

Accrued dividends on preferred stock                                               
   (Note 7)                                         1,358,249         1,188,469    
Minority Interest in Subsidiary (Note 4)                3,763             7,296    
                                                  -----------       -----------    
     TOTAL LIABILITIES                              1,376,012         1,208,765    
                                                  -----------       -----------    
STOCKHOLDERS' DEFICIENCY (Notes 2,3                                                
  and 7)                                                                           
Series A 8% Cumulative Convertible                                                 
  Preferred Stock, par value $.01 per                                              
  share; authorized 5,000,000 shares;                                              
  issued 476,423 shares in 2000 and                                                
  485,123 shares in 1999                                4,764             4,851    
Series B 8% Cumulative Convertible                                                 
  Preferred Stock, par value, $.01 per                                             
  Share; authorized, 150,000 shares,                                               
  none issued                                              --                --    
Common Stock, par value, $.01 per share;                                           
  authorized 50,000,000 shares, issued                                             
  10,951,122 shares in 2000 and                                                    
  10,935,549 shares in 1999                           109,511           109,356    
Additional paid-in capital                          7,765,836         7,765,904    
Accumulated deficit                                (9,037,030)       (8,742,177)   
Less:  Treasury stock at cost                                                      
   Common shares                                      (75,000)          (75,000)   
   Preferred shares                                   (21,370)          (21,370)   
                                                  -----------       -----------    
     TOTAL STOCKHOLDERS' DEFICIENCY                (1,253,289)         (958,436)   
                                                  -----------       -----------    
     TOTAL LIABILITIES AND                                                         
      STOCKHOLDERS' DEFICIENCY                    $   122,723       $   250,329    
                                                  ===========       ===========    

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

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 CADEMA CORPORATION AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

                                                        [Enlarge/Download Table]

                                                   2000         1999           1998      
                                                   ----         ----           ----      
                                                                                         
REVENUE                                                 --             --             -- 
COST OF GOODS SOLD                                      --             --             -- 
                                              ------------   ------------   ------------ 

         GROSS PROFIT                                   --             --             -- 

OPERATING EXPENSES:                                                                      
         General and administrative           $     46,773   $     46,187   $     47,470 
         Provision for loss on note                                                      
         receivable (Note 4)                        41,000             --         18,000 
                                              ------------   ------------   ------------ 
                  Total operating expenses          87,773         46,187         65,470 
                                              ------------   ------------   ------------ 
                  Loss from operations             (87,773)       (46,187)       (65,470)

OTHER INCOME (EXPENSE):                                                                  
         Trading Securities Transactions                                                 
         (Notes 2 and 5)                                                                 
           Realized gains (losses)                  19,009         14,002        (86,420)
           Unrealized losses                       (61,322)       (84,495)      (134,549)
           Dividend income                           1,481            213          1,604 
         Minority interest in loss of                                                    
           subsidiary                                3,533             --             -- 
                                              ------------   ------------   ------------ 
                  Total other expense              (37,299)       (70,280)      (219,365)
                                              ------------   ------------   ------------ 
LOSS BEFORE INCOME TAXES                          (125,072)      (116,467)      (284,835)

PROVISION FOR INCOME TAXES (Note 6)                     --             --             -- 
                                              ------------   ------------   ------------ 
NET LOSS (Note 3)                                 (125,072)      (116,467)      (284,835)

PREFERRED DIVIDENDS EARNED (NOTE 7)               (169,781)      (169,781)      (169,781)
                                              ------------   ------------   ------------ 
NET LOSS APPLICABLE TO                                                                   
         COMMON STOCKHOLDERS (Notes 2 and 7)  $   (294,853)  $   (286,248)  $   (454,616)
                                              ============   ============   ============ 

WEIGHTED AVERAGE COMMON SHARES                  10,909,442     10,905,549     10,905,549 
                                              ============   ============   ============ 
         OUTSTANDING (Notes 2 and 7)                                                     

LOSS PER COMMON SHARE                                                                    
         BASIC AND DILUTED                                                               
         (Notes 2 and 7):                     $      (0.03)  $      (0.03)  $      (0.04)
                                              ============   ============   ============ 

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

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CADEMA CORPORATION AND SUBSIDIARY 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000 

                                                        [Enlarge/Download Table]


                              Preferred Stock          Common Stock                                                              
                            -----------------    -----------------------                                                         
                                                   Number                  Additional                   Treasury       Total     
                            Number of               of                      Paid-in     Accumulated      Stock,     Stockholders'
                             Shares    Amount      Shares       Amount      Capital       Deficit       at Cost      Deficiency  
                             -------   ------   -----------  -----------  -----------   -----------   -----------   -----------  
                                                                                                                                 
BALANCE, December 31, 1997   485,123   $4,851    10,935,549  $   109,356  $ 7,765,904   ($8,001,313)    $(96,370)  $  (217,572)  
                             -------   ------   -----------  -----------  -----------   -----------     --------   -----------   

Preferred dividend accrued                                                                                                       
(Note 7)                          --       --            --           --           --      (169,781)          --      (169,781)  
Net Loss - 1998                   --       --            --           --           --      (284,835)          --      (284,835)  
                             -------   ------   -----------  -----------  -----------   -----------     --------   -----------   
BALANCE, December 31, 1998   485,123   $4,851    10,935,549  $   109,356  $ 7,765,904   ($8,455,929)    $(96,370)  $  (672,188)  

Preferred dividend accrued                                                                                                       
(Note 7)                          --       --            --           --           --      (169,781)          --      (169,781)  
Net Loss - 1999                   --       --            --           --           --      (116,467)          --      (116,467)  

                             -------   ------   -----------  -----------  -----------   -----------     --------   -----------   
BALANCE, December 31, 1999   485,123   $4,851    10,935,549  $   109,356  $ 7,765,904   ($8,742,177)    $(96,370)  $  (958,436)  

Conversion of preferred                                                                                                          
  stock to common stock                                                                                                          
  (Note 7)                    (8,700)     (87)       15,573          155          (68)           --           --            --   

Preferred dividend accrued                                                                                                       
(Note 7)                          --       --            --           --           --      (169,781)          --      (169,781)  
Net Loss - 2000                   --       --            --           --           --      (125,072)          --      (125,072)  

                             -------   ------   -----------  -----------  -----------   -----------     --------   -----------   
BALANCE, December 31, 2000   476,423   $4,764    10,951,122  $   109,511  $ 7,765,836   ($9,037,030)    $(96,370)  $(1,253,289)  
                             =======   ======    ==========  ===========  ===========   ===========     ========   ===========   

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

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 CADEMA CORPORATION AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000

                                                        [Enlarge/Download Table]


CASH FLOWS FROM OPERATING ACTIVITIES                          2000        1999        1998    
                                                            ---------   ---------   --------- 
                                                                                              
Net loss                                                    $(125,072)  $(116,467)  $(284,835)
Adjustments to reconcile net loss to                                                          
  net cash used in operating                                                                  
  activities                                                                                  
Provision for loss on note                                                                    
  Receivable, net of minority interest                         37,467          --      18,000 
  Realized (gain) loss on sale of                                                             
    trading securities                                        (19,009)    (14,002)     86,420 
  Unrealized loss in value                                                                    
    of trading securities                                      61,322      84,495     134,549 
  Decrease (increase) in other                                                                
    current assets                                                 24        (495)        (99)
  Increase in other                                                                           
    current liabilities                                         1,000          --          -- 
                                                            ---------   ---------   --------- 
       Net cash used in operating                                                             
         activities                                           (44,268)    (46,469)    (45,965)
                                                            ---------   ---------   --------- 

CASH FLOWS FROM INVESTING ACTIVITIES:                                                         
   Purchase of trading securities                             (58,425)    (37,122)    (74,336)
   Proceeds from sales of trading                                                             
     securities                                                99,172      82,816      85,448 
                                                            ---------   ---------   --------- 
       Net cash provided by investing                                                         
        activities                                             40,747      45,694      11,112 
                                                            ---------   ---------   --------- 

Net decrease in cash                                           (3,521)       (775)    (34,853)

Cash and equivalents- Beginning of Year                        13,054      13,829      48,682 
                                                            ---------   ---------   --------- 

Cash and equivalents- End of Year                           $   9,533   $  13,054   $  13,829 
                                                            =========   =========   ========= 
SUPPLEMENTAL DISCLOSURES OF NON-CASH                                                          
INVESTING AND FINANCING ACTIVITIES                                                            
   Preferred Stock Dividends Accrued                        $ 169,781   $ 169,781   $ 169,781 
                                                            =========   =========   ========= 
   Conversion of 8,700 shares of preferred stock to 15,573                                    
     shares of common stock (Note 7)                        $      --   $      --   $      -- 
                                                            =========   =========   ========= 

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

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 CADEMA CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2000

(1)  NATURE OF BUSINESS AND CURRENT OPERATING ENVIRONMENT:                      

The principal business of Cadema Corporation (the "Company") is the   
financing and operating of business enterprises with the potential to 
     generate profits and cash flow. Currently the Company is exploring possible
     acquisitions and mergers throughout the United States and abroad, as it has
     done in the past, seeking to enter into new operating businesses and to use
the Company's liquid assets in connection therewith. As part of this  
  strategy, the Company entered into a joint venture agreement with Global
Environmental, Inc. in December 1993. The Company did not generate any
   revenues from operations in 1998, 1999 or 2000, and is currently pursuing
additional business opportunities.                                    

    While the principal business of the Company is the financing and operating
 of business enterprises with the potential to generate profits and cash
flow, it still intends to invest in and sell marketable securities as 
outlined in a plan approved by stockholders in 1988.                  

    The Company intends to continue to invest in trading securities, including
but not limited to stocks, bonds, options and warrants.               

The Company now holds and currently expects to invest primarily in the
    stock of smaller, lesser known and often more speculative companies, which
  while entailing above-average risk, offer the potential of above-average
reward.                                                               

 There are significant risk factors affecting the Company, including the
     volatility of market values of its investment securities portfolio, and the
     possible need for additional capital. These and other factors may adversely
affect the Company's future operations.                               

(2)  SIGNIFICANT ACCOUNTING POLICIES:                                           

CASH AND CASH EQUIVALENTS                                             

The Company considers all highly liquid instruments purchased with an 
original maturity of three months or less to be cash equivalents.     

TRADING SECURITIES                                                    

   In accordance with Statement of Financial Accounting Standards (SFAS) No.
    115, Accounting for Certain Investments in Debt and Equity Securities, the
 Company classifies marketable securities as trading and records them at
     fair market value, with unrealized gains and losses reported as a component
of net income (loss).                                                 

  Realized gains and losses are determined on a first-in, first-out basis.

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(2)  SIGNIFICANT ACCOUNTING POLICIES: (CONT.)                                   

LOSS PER COMMON SHARE                                                 

 The Company adopted Statement of Financial Accounting Standards No. 128
  (SFAS No. 128), "Earnings per Share," during the year ended December 31,
1997. SFAS No.128 replaced the previously reported primary and fully  
diluted earnings per share with basic and diluted earnings per share, 
  respectively. Unlike the previously reported primary earnings per share,
  basic earnings per share excludes the dilutive effects of stock options.
Diluted earnings per share is similar to the previously reported fully
     diluted earnings per share. All convertible preferred stock series, options
and warrants outstanding presently have an anti-dilutive effect and,  
     accordingly, no calculations of diluted loss per share have been presented.
  Loss per share amounts for all periods presented have been calculated in
     accordance with the requirements of SFAS No. 128 (Note 7) and determined by
dividing the net loss by the weighted average number of common shares 
outstanding during the period. There were 10,909,442, 10,905,549 and  
    10,905,549 weighted average number of shares outstanding during 2000, 1999
and 1998, respectively.                                               

USE OF ESTIMATES                                                      

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

STOCK-BASED COMPENSATION                                              

In October 1995, FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", ("Statement") which provides an alternative method of  
   accounting for stock-based compensation arrangements, based on fair value
     of the stock-based compensation utilizing various assumptions regarding the
   underlying attributes of the options and the Company's stock, rather than
 the existing method of accounting for stock-based compensation which is
 provided in Accounting Principles Board Opinion No. 25, "Accounting for
    Stock Issued To Employees" (APB No. 25). FASB encourages entities to adopt
   the fair value-based method but does not require adoption of this method.
     SFAS No. 123 became effective for fiscal years beginning after December 15,
1995. The Company is continuing its current accounting policy and has 
    adopted the "disclosure only" provisions of SFAS No. 123. SFAS No. 123 had
    no impact on the Company's financial position or results of operations for
1998, 1999 and 2000.                                                  

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(3)  GOING CONCERN:                                                             

  The Company's financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates the      
continuation of the Company as a going concern. Since inception, the  
   Company has not generated revenues to meet its operating expenses and has
     incurred significant operating losses and net losses. At December 31, 2000,
 the Company has a stockholders' deficiency of $1,253,289. These factors
    raise substantial doubt about the Company's ability to continue as a going
   concern. The financial statements do not include any adjustments relating
     to the recoverability and classification of recorded assets, or the amounts
    and classification of liabilities that might be necessary in the event the
Company cannot continue in existence.                                 

  The Company's primary focus in 2000 was to seek additional joint venture
  partners since its existing Joint Venture investee, Global Environmental
Offshore Company, generated no revenues in 2000. Global was set up to 
provide pollution control services for international customers.       

  The Company continues in its principal business of seeking and financing
  business enterprises with the potential to generate profits and positive
     cash flow. The Company's previous entry into the pollution control business
     is part of this strategy. New opportunities were evaluated in 2000 but none
were deemed appropriate to enter into.                                

The Company intends to continue using its available funds to purchase,
invest in and sell securities as outlined in a plan approved by       
stockholders in 1988.                                                 

There is approximately $65,000 of working capital at year-end. Annual 
   required cash outlays include only the payment of administrative expenses
     of approximately $47,000. The Company is also attempting to restructure its
   payment of dividend arrearages, a long-term liability, in light of future
plans.                                                                

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(4)  JOINT VENTURE:                                                             

 On December 31, 1993 the Company entered into a Joint Venture Agreement
  with Danzer Industries, Inc. formerly Global Environmental, Corp., a New
   York corporation, to create the Joint Venture entity Global Environmental
   Offshore Company ("Global" or "Joint Venture"). The Joint Venture Company
 engages in contracting for the design and installation of Air Pollution
Control equipment and facilities in areas located outside the United  
States. Under the terms of the Joint Venture Agreement, the Company   
contributed $350,000 and received 51% of control of the Joint Venture.

     Under the Joint Venture Agreement, Danzer Industries, Inc. has the right to
   acquire the Company's interest in the Joint Venture for, at the Company's
  option, 875,000 shares of Global stock or the greater of $350,000 or the
   Company's existing capital account. The Company has the option to convert
     its Joint Venture interest into 875,000 shares of Danzer Industries, Inc.'s
common stock.                                                         

 The financial statements of the Joint Venture are consolidated with the
    Company's results in the accompanying financial statements. The portion of
     the Joint Venture's income or loss that is not applicable to the Company is
recorded as Minority Interest on the Statement of Operations. The     
   cumulative income or loss along with Global Environmental Corp.'s initial
 capital contribution to the Joint Venture is recorded under the caption
Minority Interest in Subsidiary on the Balance Sheet. All significant 
intercompany accounts and transactions have been eliminated in        
consolidation.                                                        

    The Note payable issued by Danzer Industries, Inc. to the Joint Venture is
    carried on the Balance Sheet as a Note Receivable (the "Note") and was due
  on December 31, 1996. Negotiations are in process for the refinancing of
     this note receivable. Danzer Industries, Inc. does not have funds available
  to repay the Note in full in cash and has offered to exchange its common
     stock for the Note. Since collection of the Note in 2001 is not likely, the
Note has been classified as long term.                                

  The Company has established an 87% reserve against the carrying value of
    the Note in recognition of the potential costs involved in liquidating any
    noncash settlement of this Note. Although the Company believes such an 87%
 reserve to be adequate, the reserve is an estimate based on information
presently available. The Company's estimate could change, which would 
result in a change in the reserve in the future.                      

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(5)  TRADING SECURITIES:                                                        

  In July, 1988, the Company received stockholder approval to establish an
investment program in marketable securities utilizing the excess funds
generated by the proceeds of the 1987 Series A 8% Cumulative Preferred
Stock offering.                                                       

   The aggregate cost and market value of trading securities at December 31,
2000 were:                                                            

                                                                [Download Table]

                                Aggregate  Unrealized  Unrealized    Market 
Title of Issue                    Cost       Gains       Losses       Value 

COMMON STOCK AND EQUIVALENTS:                                               
                                                                            
   Caminosoft                  $  19,825          --   $ (11,325)  $   8,500
   Cover-All Tech                 93,001          --     (77,446)     15,555
   Photran Corp.                  39,523          --     (39,507)         16
   Reuter Mfg.                   186,384          --    (151,384)     35,000
   Symbollon Corp.                26,750                 (18,313)      8,437
   Syntech                       103,737          --    (103,425)        312
   Vista Tech. Inc.               56,663          --     (56,663)         --
                               ---------   ---------   ---------   ---------
       Total                   $ 525,883          --   $(458,063)  $  67,820
                               =========   =========   =========   =========

   The aggregate cost and market value of trading securities at December 31,
1999 were:                                                                      

                                                                [Download Table]


                               Aggregate  Unrealized  Unrealized    Market  
Title of Issue                   Cost        Gains      Losses       Value  
                                                                            
COMMON STOCK AND EQUIVALENTS:                                               
   Cover-All Tech              $  93,001          --   $ (16,751)  $  76,250
   Galagen                        24,225   $   6,588          --      30,813
   Isonics                        37,122         378          --      37,500
   Photran Corp.                  39,523          --     (39,508)         15
   Reuter Mfg.                   186,384          --    (180,144)      6,240
   Syntech                       103,737          --    (103,674)         63
   Vista Tech. Inc.               56,663          --     (56,663)         --
                               ---------   ---------   ---------   ---------
       Total                   $ 540,655   $   6,966   $(396,740)  $ 150,881
                               =========   =========   =========   =========

   Proceeds from sales of trading securities during 2000 were $99,172. Gross
 gains on those sales were $31,760 and gross losses were $12,751. During
  2000 net unrealized losses on trading securities of $61,322 were charges
   against 2000 earnings. In 1999, proceeds from sales of trading securities
     were $82,816. Gross gains on those sales were $19,685 and gross losses were
    $5,683. During 1999 net unrealized losses on trading securities of $84,495
were charged against 1999 earnings.                                   

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(6)  INCOME TAXES:                                                              

 As of December 31, 2000, the Company had available capital loss and net
operating loss carryforwards of approximately $4,000,000 which may be 
     carried forward to reduce future taxable income. These carryforwards expire
in varying amounts from 2001 to 2020.                                 

     The Company accounts for income taxes to comply with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes". A 
    requirement of SFAS No. 109 is that deferred tax assets and liabilities be
    recorded for any temporary differences between the financial statement and
   tax bases of assets and liabilities, using the currently enacted tax rate
 expected to be in effect when the taxes are actually paid or recovered.

   Total income tax expense (benefit) amounted to -0- in 2000, 1999 and 1998
    (effective tax rates of 0% in each year) compared to income tax benefit of
    ($43,000), ($40,000) and ($91,000) computed by applying the statutory rate
   of 34.0% to loss before income taxes. These differences are accounted for
as follows:                                                           

                                            2000
                                            ----
                                                                Percent of
                                                  Amount         Pretax Loss
                                                  ------         -----------
 Computed expected tax benefit                 ($43,000)         (34.0%)
Decrease in benefit due to                                            
valuation allowance provided for                                
   deferred tax assets                          43,000           34.0%
                                             --------           ----
                                                     0%             0%
                                             ========           ====

                                              1999
                                              ----
                                                                Percent of
                                                  Amount         Pretax Loss
                                                  ------         -----------
Computed expected tax benefit                ($40,000)         (34.0%)
Decrease in benefit due to                                            
valuation allowance provided for                                
   deferred tax assets                          40,000           34.0%
                                             --------           ----
                                                    --              0%
                                             ========           ====

                                            1998
                                            ----
                                                                Percent of
                                                  Amount         Pretax Loss
                                                  ------         -----------
Computed expected tax benefit                ($91,000)          34.0% 
Decrease in benefit due to                                            
valuation allowance provided for                                
   deferred tax assets                         91,000          (34.0%)
                                           --------           ----
                                            $     --              0%
                                           ========           ====

 Deferred income tax assets (liabilities) result from net operating loss
     carryforwards and differences in the recognition of expenses for income tax
and financial reporting purposes.                                     

F-13

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(6)  INCOME TAXES: (CONT.)                                                      

The net deferred tax asset at December 31, 2000 and 1999, includes the
following:                                                            

                                                 2000               1999
                                                 ----               ----

    Deferred tax asset                           $ 1,620,000       $ 1,613,000

     Valuation allowance for deferred tax asset    (1,620,000)       (1,613,000)
                                                 -----------       -----------
                                                 $         0       $         0
                                                 ===========       ===========

    The Company has recorded a valuation allowance for its entire net deferred
   tax asset at December 31, 2000 and 1999 since management believes that it
   is more likely than not that the deferred tax asset will be not realized.

The tax effect of major temporary differences that gave rise to the   
Company's net deferred tax asset at December 31, 2000 and 1999 is as  
follows:                                                              

                                                      2000            1999
                                                      ----            ----

     Net operating loss carryforward                  $1,361,000      $1,393,000
Unrealized losses on marketable                                       
        securities                                       156,000         132,000
Allowance for uncollectible note receivable                           
                                                         103,000          88,000
                                                      ----------      ----------
                                                      $1,620,000      $1,613,000
                                                      ==========      ==========

(7)  NET LOSS AND STOCKHOLDERS' DEFICIENCY:                                     

LOSS PER COMMON SHARE                                                 

   The following is a reconciliation of the numerator and denominator of the
Basic and Diluted loss per share computation.                         

                                                                [Download Table]

                                        2000          1999            1998    
                                        ----          ----            ----    
                                                                              
Numerator for Basic                                                           
and Diluted                                                                   
  Loss Per Share:                                                             
    Net Loss                       $   (125,072)  $   (116,467)  $   (284,835)

  Less Preferred Stock                                                        
    Dividends                          (169,781)      (169,781)      (169,781)
                                   ------------   ------------   ------------ 
  Net loss applicable to                                                      
    common shareholders            $   (294,853)  $   (286,248)  $   (454,616)
                                   ============   ============   ============ 
  Denominator for Basic                                                       
  And Diluted                                                                 
  Loss Per Share:                                                             
    Weighted average  shares         10,909,442     10,905,549     10,905,549 
                                   ============   ============   ============ 
  Basic and Diluted loss per share                                            
                                   $       (.03)  $       (.03)  $       (.04)
                                   ============   ============   ============ 

F-14

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(7)  STOCKHOLDERS' DEFICIENCY: (CONT.)                                          

PUBLIC OFFERING - PREFERRED STOCK                                     

 In 1987, the Company completed a public offering of 1,000,000 shares of
 Series A 8% Cumulative Convertible Preferred Stock ("Series A Preferred
     Stock"). The preferred stock is convertible into common stock, at any time,
 at the option of the holder, beginning January 28, 1988. The conversion
   ratio is based upon the original price of the preferred stock of $5.00 in
   relation to the conversion price of 1.79 to 1 subject to adjustment under
  certain conditions. Each share of the preferred stock is entitled to one
    vote and an annual cumulative dividend of $.40 per share, which is payable
     semiannually in cash or common stock. The first year's dividend was paid in
   cash from proceeds of the offering. Subsequent dividends through December
1992 were paid in common stock of the Company. Dividends accrued since
January 1993 remain unpaid.                                           

    The Series A Preferred Stock is redeemable at the option of the Company at
     any time after July 28, 1989, in whole or in part, at a redemption price of
   $5.40 per share, subject to certain conditions. In addition, the Series A
    Preferred Stock is also redeemable, upon 30 days notice beginning July 28,
    1988, if during any period of 30 consecutive trading days the market price
    for the Company's common stock is at least $3.00. In September 2000, 8,700
shares of Series A Preferred Stock were converted to 15,573 shares of 
     Common Stock at a conversion ratio of 1.79 to 1. There was no effect on net
    income, loss per common share or total stockholders' equity as a result of
such conversion. At December 31, 2000, 530,450 shares of the Series A 
Preferred Stock have been converted into common stock or redeemed.    

  The Series B Preferred Stock has identical preferences and privileges to
   the Series A Preferred Stock, except that the Series B Preferred Stock is
   not subject to redemption by the Company. The Company has been authorized
    to issue up to 150,000 shares of Series B Preferred Stock. At December 31,
2000 and 1999, no shares of Series B Preferred Stock were issued and  
outstanding.                                                          

 No dividends were declared in 2000, 1999 or 1998. However, dividends on
 Series A 8% Preferred Stock of $.40 per share payable in cash or Cadema
   Corporation common stock do accumulate and as such the accompanying 2000,
  1999 and 1998 financial statements reflect the accrual of this dividend.

TREASURY STOCK                                                        

The Company held 30,000 and 60,670 shares of Common Stock and Series A
Preferred Stock, respectively in its treasury as of December 31,2000. 

WARRANTS                                                              

As of December 31, 2000, the Company has reserved 2,420,772 shares of 
common stock for possible future issuance resulting from conversion of
preferred stock.                                                      

F-15

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SIGNATURES

   Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed in its behalf  
by the undersigned, thereto duly authorized.                                    

CADEMA CORPORATION

Dated:                                  March 26, 2001                          

                       By: /s/ Roger D. Bensen
                                        ------------------------
                               ROGER D. BENSEN
                         President

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the          
Registrant and in the capacities and on the dates indicated.                    

/s/ Roger D.Bensen                      March 26, 2001                          
------------------                      ------------------------------          
ROGER D. BENSEN                                                                 
Chairman of the Board and Chief                                                 
Executive Officer and Director                                                  

/s/ Richard Ames                        March 26, 2001                          
----------------                        ------------------------------          
RICHARD B. AMES                                                                 
Director                                                                        

Dates Referenced Herein   and   Documents Incorporated by Reference

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