================================================================================
                                  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, 2001.

  [_]         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
No.)                                              incorporation or organization)

                           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 March 9,
2002, 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
March 9, 2002.

Documents incorporated by reference:  None

Transitional Small Business Disclosure Format (Check one):  Yes  [_]    No  [X]
================================================================================
<PAGE>

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 2001, 2000 and 1999. In 2001 the Company sold its
interest in Global for 1,750,000 shares of stock in Danzer Corporation, who
changed their name to Obsidian Enterprises in October 2001.

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

                                        1
<PAGE>

         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 2001 resulted in a
realized loss of $11,429 and an unrealized loss of $36,595. 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, 2001 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
2001 nor were any matters submitted for vote.










                                        2
<PAGE>

                                     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.


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

4th Quarter 2001          $.01             $.01         $.11               $.09
3rd Quarter 2001          $.02             $.01         $.15               $.10
2nd Quarter 2001          $.03             $.01         $.34               $.14
1st Quarter 2001          $.05             $.02         $.34               $.34

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


         The approximate number of stockholders of record of the Company's
Common Stock and Preferred Stock as of February 28, 2002, were 975 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 semi-annually in cash or common stock
unless they are deferred by the Board of Directors. The dividends that were
payable during 1993 through 2001 were deferred and have accumulated for possible
payment at a later date.

                                        3
<PAGE>

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

         The Company's primary focus in 2001 was to seek additional joint
venture partners since its existing Joint Venture investee, Global Environmental
Offshore Company, generated no revenues in 2001. Global was set up to provide
pollution control services for international customers. The investment in Global
was sold in 2001 for shares in Obsidian Corporation (formerly Danzer
Corporation)

         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 2001 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.

         During 2001, Cadema reviewed potential acquisition opportunities, as it
continued 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>

RESULTS OF OPERATIONS

FISCAL 2001 COMPARED TO FISCAL 2000
-----------------------------------

         In 2001, Cadema generated no revenues. Therefore operating results
present Cadema's administrative expenses and marketable securities activity.

Revenues
--------

     Global generated no orders in 2001 and so revenues were $0 the same as in
2000. The Joint Venture investment has been sold.

General and Administrative
--------------------------

     General and administrative expenses, incurred in maintaining the Company,
were $43,069 in 2001 and were 46,773 in 2000.

Trading Securities Transactions
-------------------------------

         Trading securities investment activity generated a realized loss of
$11,429 in 2001 compared to a realized gain of $19,009 in 2000. The securities
portfolio also generated an unrealized loss of $36,595 in 2001, compared to the
2000 unrealized loss of $61,322. The performance of individual stocks comprising
the trading securities holdings are the cause of these results.

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 was 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.

                                        5
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         Working capital was $271,574 at the end of 2001, up from $64,973 in
2000. Included in working capital are 1,750,000 unregistered shares of Obsidian
Enterprises common stock valued at $297,500 which are resticted for sale until
July 2002. The shares have limited marketability due to a low trading volume.
Therefore, the Company's ability to receive proceeds from these shares in the
future is limited. Management believes working capital is sufficient for funding
the Company's anticipated needs in 2002.

SELECTED FINANCIAL DATA
-----------------------
<TABLE><CAPTION>

                                                                                      Years Ended December 31,
                                                                     -----------------------------------------------------------
Operating Data:                                                           2001                  2000                  1999
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>                   <C>                  <C>
Revenue                                                                      -                     -                     -
Cost of Goods Sold                                                           -                     -                     -
Operating Expenses                                                    $ 43,069              $ 46,773             $  46,187
Other Income (Expense)                                                 209,683               (37,299)              (70,280)
Income (Loss) Before
 Income Taxes                                                          166,614              (125,072)             (116,467)
Provision for Income
 Taxes                                                                       -                     -                     -
Preferred Dividends Earned                                            (165,432)             (169,781)             (169,781)
Net Income (Loss)
 Applicable to Common Stockholders                                       1,182              (294,853)             (286,248)
Net Income (Loss) per Common Share -
 Basic and Diluted                                                         .00                  (.03)                 (.03)
Weighted Average Common Shares
  Outstanding                                                       10,921,122            10,909,442            10,905,549

Balance Sheet Data:
------------------

Working Capital                                                        271,574                64,973               152,579
Total Assets                                                           287,574               122,723               250,329
Total Current Liabilities                                               16,000                14,000                13,000
Stockholders' Deficiency                                            (1,252,107)           (1,253,289)             (958,436)
</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>

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
            1999 fiscal year 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 1999 fiscal year 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>

                                    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           66      Chairman of the Board,               1983
                                  Chief Executive Officer
                                  and President/Director

Richard B. Ames           63      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>

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 2001, 2000 and
1999, no options were granted and no options expired. As of December 31, 2001,
no options were outstanding and options covering 600,000 shares of Common Stock
were available under the 1986 Plan.

Other Stock Options
-------------------

         In 2001, 2000, and 1999 no options were granted, exercised, terminated
or expired. As of December 31, 2001 there were no options outstanding.

Other Executive Plans
---------------------

         The Company has no long term incentive or pension plans.

COMPENSATION OF DIRECTORS

         In 2001, 2000 and 1999, 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>

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

         The following Table sets forth information as of the February 28, 2002,
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>
Title          Name and Address           Amount and Nature of     Percent of Class    Percent of
of Class      of Beneficial Owner         Beneficial Ownership            (1)          Voting Stock
----------------------------------------------------------------------------------------------------
<S>          <C>                            <C>                           <C>            <C>
Common        Roger D. Bensen                2,440,352 shares            23.9           22.5
              50 Washington Street                (2)(3)
              Norwalk, CT  06854

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

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

Preferred     Anne W. Bensen                    30,000 shares             6.2            -
              69 Dandy Drive                        (5)(6)
              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>


         (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>

                                     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 From 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, 2001.

                                       12
<PAGE>

ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
         ------------------------------------------

                        CADEMA CORPORATION AND SUBSIDIARY
                        ---------------------------------

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                                                                    Page
                                                                    ----

INDEPENDENT AUDITOR'S REPORT                                        F-2

FINANCIAL STATEMENTS:

Consolidated Balance Sheets - December 31, 2001 and 2000            F-4

Consolidated Statements of Operations for Each of the
         Three Years in the Period Ended December 31, 2001          F-5

Consolidated Statements of Changes in Stockholders'
         Deficiency for Each of the Three Years in the Period
         Ended December 31, 2001                                    F-6

Consolidated Statements of Cash Flows for Each of the
         Three Years in the Period Ended December 31, 2001          F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                          F-8 to F-14



                                       F-1
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------


Board of Directors
Cadema Corporation
Norwalk, Connecticut

We have audited the accompanying consolidated balance sheets of Cadema
Corporation and Subsidiary as of December 31, 2001 and 2000, and the related
consolidated statements of operations, changes in stockholders' deficiency and
cash flows for the years then ended. 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 auditing standards generally accepted
in the United States of America. 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 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, 2001 and 2000 and the results of their
operations and their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

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, 2001 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
March  10, 2002

                                       F-2
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------

Board of Directors
Cadema Corporation
Norwalk, Connecticut

We have audited the accompanying consolidated statements of operations, changes
in stockholders' deficiency and cash flows for the year 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 results of operations, changes in
stockholders' deficiency and cash flows of Cadema Corporation and Subsidiary for
the year ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States of America.

                                        /s/Rudolph, Palitz LLC

Blue Bell, PA
February 8, 2000




                                       F-3
<PAGE>

                        CADEMA CORPORATION AND SUBSIDIARY
                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------

<TABLE><CAPTION>
              ASSETS                           December 31,2001           December 31,2000
              ------                           ----------------           ----------------

CURRENT ASSETS:
<S>                                                <C>                        <C>
 Cash and cash equivalents                          $      666                 $    9,533
 Trading securities (Cost $610,249 in                  285,288                     67,820
 2001 and $525,883 in 2000)
  (Notes 4 and 5)
 Other current assets                                    1,620                      1,620
                                                    ----------                 ----------

     TOTAL CURRENT ASSETS                              287,574                     78,973

 NOTE RECEIVABLE less allowance for bad
   debt of $301,250 in 2000 (Note 4)                       -                       43,750
                                                    ----------                 ----------

     TOTAL ASSETS                                   $  287,574                 $  122,723
                                                    ==========                 ==========


  LIABILTIES AND STOCKHOLDERS'
           DEFICIENCY

CURRENT LIABILITIES:

 Accrued liabilities                                $   16,000                 $   14,000
                                                     ---------                  ---------

     TOTAL CURRENT LIABILITIES                          16,000                     14,000

Accrued dividends on preferred stock
   (Note 7)                                          1,523,681                  1,358,249
Minority Interest in Subsidiary
   (Note 4)                                                -                        3,763
                                                     ---------                  ---------

     TOTAL LIABILITIES                               1,539,681                  1,376,012
                                                     ---------                  ---------

STOCKHOLDERS' DEFICIENCY (Notes 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 2001 and 476,423 shares in 2000              4,764                      4,764
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.                                   109,511                    109,511
Additional paid-in capital                           7,765,836                  7,765,836
Accumulated deficit                                 (9,035,848)                (9,037,030)
Less:  Treasury stock at cost
   Common shares                                       (75,000)                   (75,000)
   Preferred shares                                    (21,370)                   (21,370)
                                                    -----------                -----------

     TOTAL STOCKHOLDERS'DEFICIENCY                  (1,252,107)                (1,253,289)
                                                    -----------                -----------
     TOTAL LIABILITIES AND
      STOCKHOLDERS' DEFICIENCY                      $  287,574                 $  122,723
                                                    ==========                 ==========
</TABLE>
         The accompanying notes to the consolidated financial statements
                   are an integral part of these statements.

                                       F-4
<PAGE>

                        CADEMA CORPORATION AND SUBSIDIARY
                        ---------------------------------
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001
        -----------------------------------------------------------------

<TABLE><CAPTION>
                                                            2001                   2000                  1999
                                                            ----                   ----                  ----
<S>                                                     <C>                    <C>                   <C>
REVENUE                                                         --                     --                     --
COST OF GOODS SOLD                                              --                     --                     --
                                                        ------------           ------------           ------------
         GROSS PROFIT                                           --                     --                     --

OPERATING EXPENSES:
         General and administrative                     $     43,069           $     46,773           $     46,187
         Provision for loss on note
         receivable                                             --                   41,000                   --
                                                        ------------           ------------           ------------

                  Total operating expenses                    43,069                 87,773                 46,187
                                                        ------------           ------------           ------------

                  Loss from operations                       (43,069)               (87,773)               (46,187)
                                                        ------------           ------------           ------------
OTHER INCOME (EXPENSE):
      Gain on sale of joint venture
        Interest (Note 4 )                                   253,750                   --                     --
         Trading Securities Transactions
         (Note 5)
           Realized gains (losses)                           (11,429)                19,009                 14,002
           Unrealized losses                                 (36,595)               (61,322)               (84,495)
         Dividend income                                         194                  1,481                    213
         Write off minority interest in
           subsidiary                                          3,763                  3,533                   --
                                                        ------------           ------------           ------------
                  Total other income (expense)               209,683                (37,299)               (70,280)
                                                        ------------           ------------           ------------

INCOME (LOSS) BEFORE INCOME TAXES                            166,614               (125,072)              (116,467)

PROVISION FOR INCOME TAXES (BENEFIT)
                           (Note 6)                             --                     --                     --
                                                        ------------           ------------           ------------

NET INCOME (LOSS)                                            166,614               (125,072)              (116,467)

PREFERRED DIVIDENDS EARNED (Note 7)                         (165,432)              (169,781)              (169,781)
                                                        ------------           ------------           ------------

NET INCOME (LOSS) APPLICABLE TO
         COMMON STOCKHOLDERS (Note 7)                   $      1,182           $   (294,853)          $   (286,248)
                                                        ============           ============           ============

WEIGHTED AVERAGE COMMON SHARES                            10,921,122             10,909,442             10,905,549
                                                        ============           ============           ============
         OUTSTANDING (Note 7)

Income (LOSS) PER COMMON SHARE
         BASIC AND DILUTED
         (Notes 2):                                     $       0.00           $      (0.03)          $      (0.04)
                                                        ============           ============           ============
</TABLE>
         The accompanying notes to the consolidated financial statements
                    are an integral part of these statements

                                       F-5
<PAGE>

                        CADEMA CORPORATION AND SUBSIDIARY
                        ---------------------------------
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
         --------------------------------------------------------------
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001
        -----------------------------------------------------------------

<TABLE><CAPTION>
                                    Preferred Stock               Common Stock
                                    ---------------               ------------
                                                              Number
                              Number of                         of
                               Shares         Amount          Shares        Amount
                             -----------    -----------    -----------   -----------
<S>                         <C>            <C>             <C>          <C>
BALANCE, December 31, 1998       485,123    $     4,851     10,935,549   $   109,356
                             -----------    -----------    -----------   -----------

Preferred dividend accrued
(Note 7)                              --             --             --            --
Net Loss - 1999                       --             --             --            --


                             -----------    -----------    -----------   -----------
BALANCE, December 31, 1999       485,123    $     4,851     10,935,549   $   109,356

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

Preferred dividend accrued
(Note 8)                              --             --             --            --
Net Loss - 2000                       --             --             --            --

                             -----------    -----------    -----------   -----------
BALANCE, December 31, 2000       476,423    $     4,764     10,951,122   $   109,511

Preferred dividend accrued
(Note 7)                              --             --             --            --
Net Income - 2001                     --             --             --            --

                             -----------    -----------    -----------   -----------
BALANCE, December 31, 2001       476,423    $     4,764     10,951,122   $   109,511
                             ===========    ===========    ===========   ===========
</TABLE>

<TABLE><CAPTION>
                              Additional                    Treasury          Total
                               Paid-in      Accumulated       Stock,      Stockholders'
                               capital         Deficit       at Cost       Deficiency
                             -----------    -----------    -----------    -----------
<S>                         <C>            <C>            <C>            <C>
BALANCE, December 31, 1998   $ 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   $ 7,765,904    ($8,742,177)      ($96,370)     ($958,436)

Conversion of preferred
  stock to common stock
  (Note 7)                           (68)            --

Preferred dividend accrued
(Note 8)                              --       (169,781)            --       (169,781)
Net Loss - 2000                       --       (125,072)            --       (125,072)

                             -----------    -----------    -----------    -----------
BALANCE, December 31, 2000   $ 7,765,836    ($9,037,030)      ($96,370)   ($1,253,289)

Preferred dividend accrued
(Note 7)                              --       (165,432)            --       (165,432)
Net Income - 2001                     --        166,614             --        166,614

                             -----------    -----------    -----------    -----------
BALANCE, December 31, 2001   $ 7,765,836    ($9,035,848)      ($96,370)   ($1,252,107)
                             ===========    ===========    ===========    ===========
</TABLE>

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

                                       F-6
<PAGE>

                        CADEMA CORPORATION AND SUBSIDIARY
                        ---------------------------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
        FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2001
        -----------------------------------------------------------------

<TABLE><CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES             2001         2000         1999
                                            ---------    ---------    ---------
<S>                                         <C>          <C>          <C>
Net Income (loss)                           $ 166,614    ($125,072)   ($116,467)
Adjustments to reconcile net income
  (loss) to
    net cash used in operating
   activties

Provision for loss on note
  receivable                                        -       37,467            -
  Decrease in Minority Interest in
   Subsidiary                                  (3,763)           -            -
  Realized gain on sale of joint
   venture interest                          (253,750)           -            -
  Realized (gain) loss on sale of
    trading securities                         11,429      (19,009)     (14,002)
  Unrealized loss in value
    of trading securities                      36,595       61,322       84,495
  Decrease (increase) in other
       current assets                               -           24         (495)
  Increase in other

       current liabilities                      2,000        1,000            -
                                            ---------    ---------    ---------
       Net cash used in operating
         activities                           (40,875)     (44,268)     (46,469)
                                            ---------    ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of trading securities                   -      (58,425)     (37,122)
   Proceeds from sales of trading
   securities                                  32,008       99,172       82,816
       Net cash provided by investing
                                            ---------    ---------    ---------
        activities                             32,008       40,747       45,694

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


Net decrease in cash                           (8,867)      (3,521)        (775)

Cash - Beginning of Year                        9,533       13,054       13,829
                                            ---------    ---------    ---------

Cash - End of Year                          $     666    $   9,533    $  13,054
                                            =========    =========    =========

SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
   Preferred Stock Dividends Accrued        $ 165,432    $ 169,781    $ 169,781
                                            =========    =========    =========

 Exchange of note receivable with book
  value of $43,750 for a trading security
  with fair market value of $297,500        $ 253,750    $       -    $       -
                                            =========    =========    =========
</TABLE>
         The accompanying notes to the consolidated financial statements
                    are an integral part of these statements.

                                       F-7
<PAGE>

                        CADEMA CORPORATION AND SUBSIDIARY
                        ---------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
               FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2001
               ---------------------------------------------------

(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 Danzer Industries, Inc. (formerly Global
         Environmental, Inc.) in December 1993. The joint venture business was
         inactive during 1999, 2000 and 2001.

         During 2001, the Company sold its interest in the joint venture for
         1,750,000 shares of Danzer Corporation common stock (Note 4). Danzer
         changed its name to Obsidian Enterprises in October 2001. As a result
         of this transaction, the balance sheet of the Company at December 31,
         2001 represents Cadema only and no longer is consolidated to include
         the joint venture which was consolidated at December 31, 2000. The
         statements of operations and cash flows include the consolidated
         activities of Cadema Corporation and Subsidiary up until June 21, 2001,
         the sale of the Company's joint venture interest.

         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.

         Included in current assets are 1,750,000 unregistered shares of
         Obsidian Enterprises common stock valued at $297,500 which are
         resticted for sale until July 2002. The shares have limited
         marketability due to a low trading volume. Therefore, the Company's
         ability to receive proceeds from these shares in the future is limited.

                                       F-8
<PAGE>

(2)      SIGNIFICANT ACCOUNTING POLICIES
         -------------------------------

         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.

         Income(loss) Per Common Share
         -----------------------------

         Basic income (loss) per common share represents net income (loss)
         available to common shareholders divided by the weighted average number
         of common shares outstanding during the period. Diluted income (loss)
         is calculated as net income (loss) divided by the weighted average
         number of common shares and the potential common shares, assuming
         conversion of the preferred stock outstanding during the period. All
         convertible preferred stock series were excluded from the 2001, 2000
         and 1999 computations of diluted net income (loss) per common share
         because the assumed conversion of such shares would have an
         anti-dilutive effect. There were 10,921,122, 10,909,442 and 10,905,549
         weighted average number of shares outstanding during 2001, 2000 and
         1999, respectively.

         Use of Estimates
         ----------------

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America 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.

                                       F-9
<PAGE>

(3)    GOING CONCERN:
       -------------

       The Company's financial statements have been prepared in conformity with
       accounting principles generally accepted in the United States of America,
       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, 2001, the Company has a stockholder's deficiency
       of $ 1,252,107. 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 2001 was to seek additional joint venture
       partners since its existing Joint Venture investee, Global Environmental
       Offshore Company, generated no revenues in 2001. Global was set up to
       provide pollution control services for international customers. The
       Company sold its interest in the Joint Venture in June 2001 ( Note 4).

       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
       2001 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 $ 271,000 of working capital at year-end. Annual
       required cash outlays include only the payment of administrative expenses
       of approximately $45,000. The Company is also attempting to restructure
       its payment of dividend arrearages, a long-term liability, in light of
       future plans.

(4)    SALE OF JOINT VENTURE INTEREST
       ------------------------------

       Effective June 21, 2001, the Company sold its interest in Global
       Environmental Offshore Company ( Note 5) , a joint venture between the
       Company and Danzer Corporation, for 1,750,000 shares of the common stock
       of Danzer Corporation with a fair market value of $297,500. Sale of the
       Danzer stock is restricted for one year from the issue date. The only
       asset on the joint venture's books at December 31, 2000 and at the time
       of the sale was a note receivable from Danzer Corporation with a carrying
       value of $43,750. In connection with the sale of its joint venture
       interest, the Company recognized a realized gain of $253,750. In October
       2001, Danzer Corporation changed its name to Obsidian Enterprises, Inc.

       For the year ended December 31, 2001, the Company recognized an
       unrealized loss of $35,000 on the Obsidian stock. Obsidian stock with a
       fair market value of $262,500 is included in trading securities on the
       Company's balance sheet at December 31, 2001.

                                      F-10
<PAGE>

(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,
       2001 were:

                                Aggregate   Unrealized   Unrealized     Market
Title of Issue                    Cost         Gains       Losses       Value

COMMON STOCK AND EQUIVALENTS:
   Caminosoft                   $  19,825           -    $ (13,225)   $   6,600
   Cover-All Tech                  93,001           -      (77,141)      15,860
 Obsidian Enterprises             297,500           -      (35,000)     262,500
   Photran Corp.                   39,523           -      (39,507)          16
   Syntech                        103,737           -     (103,425)         312
   Vista Tech. Inc.                56,663           -      (56,663)           -
                                ---------   ---------    ---------    ---------
       Total                    $ 610,249           -    $(324,961)   $ 285,288
                                =========   =========    =========    =========


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

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


       Proceeds from sales of trading securities during 2001 were $32,008. Gross
       losses on those sales were $11,429. During 2001 net unrealized losses on
       trading securities of $36,595 were charges against 2001 earnings. In
       2000, proceeds from sales of trading securities 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 charged
       against 2000 earnings.

                                      F-11
<PAGE>

(6)     INCOME TAXES:
        ------------

       As of December 31, 2001, the Company had available capital loss and net
       operating loss carryforwards of approximately $ 3,400,000 which may be
       carried forward to reduce future taxable income. These carryforwards
       expire in varying amounts from 2002 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 2001, 2000 and 1999
       (effective tax rates of 0% in each year) compared to income tax expense (
       benefit) of $ 57,000, ($43,000) and ($40,000) computed by applying the
       statutory rate of 34.0% to income (loss) before income taxes. These
       differences are accounted for as follows:

                                                              2001
                                                              ----
                                                                     Percent of
                                                   Amount          Pretax Income
                                                  --------            --------
       Computed expected tax expense              $ 57,000              34.0%
       Utilization of net operating loss
       carryforward                               ($57,000)            (34.0%)
                                                  --------            --------
                                                         0%              0%
                                                  ========            ========


                                                              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%
                                                  ========            ========


                                                              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%
                                                  ========            ========



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-12
<PAGE>


(6)      INCOME TAXES: (CONT.)
         ------------

         The net deferred tax asset at December 31, 2001 and 2000, includes the
         following:

                                                        2001           2000
                                                        ----           ----
           Deferred tax asset                        $1,282,000    $1,620,000
           Valuation allowance for deferred
           tax asset                                 (1,282,000)   (1,620,000)
                                                    ------------  ------------
                                                     $        0    $        0
                                                    ============  ============

         The Company has recorded a valuation allowance for its entire net
         deferred tax asset at December 31, 2001 and 2000 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, 2001 and 2000 is as
         follows:

                                                   2001               2000
                                                   ----               ----
         Net operating loss carryforward       $1,171,000          $1,361,000
         Unrealized losses on marketable
            securities                            111,000             156,000
         Allowance for uncollectible note
         receivable                                  --               103,000
                                               ----------          ----------

                                               $1,282,000          $1,620,000
                                               ==========          ==========

(7)      NET INCOME (LOSS) AND STOCKHOLDERS' DEFICIENCY:
         ----------------------------------------------
         Income(Loss) Per Common Share
         -----------------------------

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

                                    2001               2000              1999
                                    ----               ----              ----
   Numerator for Basic
   and Diluted Income
   (Loss) Per Share:
    Net Income(Loss)          $    166,614       ($   125,072)     ($   116,467)

   Less Preferred Stock
    Dividends                     (165,432)          (169,781)         (169,781)
                              ------------       ------------      ------------

   Net Income (Loss)
    applicable to
    common shareholders       $      1,182       ($   294,853)     ($   286,248)
                              ============       ============      ============

   Denominator for Basic
   And Diluted Income
   (Loss) Per Share:
   Weighted average
   shares                       10,921,122         10,909,442        10,905,549
                              ============       ============      ============

   Basic and Diluted
   income(loss) per share
                              $        .00       ($       .03)     ($       .03)
                              ============       ============      ============

                                      F-13
<PAGE>

(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' deficiency as a result of such conversion. At
         December 31, 2001, 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, 2001 and 2000, no shares of Series B Preferred Stock
         were issued and outstanding.

         No dividends were declared in 2001, 2000 or 1999. 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
         2001, 2000 and 1999 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 31,2001
         and 2000.

         Warrants
         --------

         As of December 31, 2001, the Company has reserved 2,420,772 shares of
         common stock for possible future issuance resulting from conversion of
         preferred stock.

                                      F-14
<PAGE>

                                   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  27, 2002


                                                       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  27, 2002
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ROGER D. BENSEN
Chairman of the Board and Chief
Executive Officer and Director






/s/ Richard Ames                                        March  27, 2002
----------------                                        ------------------------
RICHARD B. AMES
Director