<PAGE>   1

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

<PAGE>   2


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.

                                        1

<PAGE>   3


         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.


                                       2


<PAGE>   4


                                     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.

<TABLE>
<CAPTION>
                          Common                      Preferred
                          ------                      ---------
                        High     Low               High         Low
                        -------------             ------------------

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


     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.


                                        3


<PAGE>   5


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.

                                        4

<PAGE>   6

     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.


                                       5

<PAGE>   7


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

<TABLE>
<CAPTION>
                                                       Years Ended December 31,
                                                       ------------------------
Operating Data:                               2000               1999               1998
---------------------------------------------------------------------------------------------
<S>                                     <C>                <C>                <C>
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)
</TABLE>

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.)


                                        6

<PAGE>   8

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.


                                        7


<PAGE>   9


                                    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.

                                        8

<PAGE>   10

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.



                                        9

<PAGE>   11


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.

<TABLE>
<CAPTION>
                                                     Amount and Nature        Percent
 Title               Name and Address                 of Beneficial           of Class       Percent of
of Class           of Beneficial Owner                  Ownership               (1)          Voting Stock
------------------------------------------------------------------------------------------------------------
<S>                                               <C>                           <C>               <C>
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
</TABLE>


     (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.

                                       10

<PAGE>   12


     (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.



                                       11


<PAGE>   13


                                     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.


                                       12

<PAGE>   14


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





                                       F-1


<PAGE>   15


                          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



                                       F-2
<PAGE>   16

                          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





                                       F-3

<PAGE>   17


                        CADEMA CORPORATION AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
               ASSETS                             December 31, 2000     December 31, 1999
               ------                             -----------------     -----------------
<S>                                                  <C>                  <C>
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
                                                     ===========          ===========
</TABLE>


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

                                       F-4

<PAGE>   18

                        CADEMA CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                          2000                1999                  1998
                                                          ----                ----                  ----
<S>                                                  <C>                   <C>                   <C>
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)
                                                     ============          ============          ============
</TABLE>



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

                                       F-5
<PAGE>   19

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

<TABLE>
<CAPTION>

                               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
                              -------   ------   -----------  -----------  -----------   -----------   -----------   -----------
<S>                           <C>       <C>       <C>         <C>          <C>           <C>             <C>        <C>
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)
                              =======   ======    ==========  ===========  ===========   ===========     ========   ===========
</TABLE>

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


                                      F-6

<PAGE>   20

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


<TABLE>
<CAPTION>

CASH FLOWS FROM OPERATING ACTIVITIES                              2000            1999            1998
                                                                ---------       ---------       ---------
<S>                                                             <C>             <C>             <C>
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)                            $      --       $      --       $      --
                                                                =========       =========       =========
</TABLE>


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


                                       F-7

<PAGE>   21

                        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.


                                       F-8
<PAGE>   22

(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.


                                       F-9

<PAGE>   23

(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.



                                      F-10


<PAGE>   24

(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.



                                      F-11

<PAGE>   25


(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:

<TABLE>
<CAPTION>
                                    Aggregate     Unrealized      Unrealized        Market
Title of Issue                        Cost          Gains           Losses           Value

COMMON STOCK AND EQUIVALENTS:
<S>                                <C>            <C>             <C>             <C>
   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
                                   =========      =========       =========       =========
</TABLE>



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

<TABLE>
<CAPTION>

                                   Aggregate     Unrealized     Unrealized        Market
Title of Issue                       Cost           Gains         Losses           Value
<S>                                <C>            <C>            <C>             <C>
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
                                   =========      =========      =========       =========
</TABLE>


     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.


                                      F-12

<PAGE>   26


(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
<PAGE>   27


(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.

<TABLE>
<CAPTION>
                                             2000              1999                1998
                                             ----              ----                ----
<S>                                     <C>                <C>                <C>
     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)
                                        ============       ============       ============
</TABLE>

                                      F-14


<PAGE>   28


(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

<PAGE>   29

                                   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