<PAGE>   1
                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                AMENDMENT NO. 1
                                       TO
                                   FORM 10-KSB

[ X ]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 
       OF 1934

       FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
                                       OR

[   ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
       ACT OF 1934

Commission file number 0-28088


                                  MODACAD, INC.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

              California                               95-4145930
    (State or other jurisdiction of        (IRS Employer Identification Number)
     incorporation or organization)

    1954 Cotner Avenue, Los Angeles                       90025
(Address of principal executive offices)                (Zip Code)

                                 (310) 312-9826
                           ---------------------------
                           (Issuer's telephone number)

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

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

                                      Unit
                                ----------------
                                (Title of Class)

                  Selling Shareholder's Unit Purchase Warrants
                  --------------------------------------------
                                (Title of Class)

              Selling Shareholder's Common Stock Purchase Warrants
              ----------------------------------------------------
                                (Title of Class)

                                  Common Stock
                                ----------------
                                (Title of Class)

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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. [ ]

The registrant's revenues for its most recent fiscal year were $3,370,222.

The aggregate market value of the voting stock held by non-affiliates of the
registrant was $12,575,020 based on the average bid and asked prices of $7.625
per share as quoted on the NASDAQ SmallCap Market on March 26, 1997.

The number of shares outstanding of the registrant's common stock, as of March
26, 1997, was 3,893,290.

Documents Incorporated by Reference: Portions of the registrant's definitive
Proxy Statement to be delivered to shareholders in connection with their Annual
Meeting of Shareholders to be held in June 1997 are incorporated into Part III
of this Annual Report.

Transitional Small Business Disclosure Format: Yes    No  X
                                                   ---   ---

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                                    SIGNATURE

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                      ModaCAD, INC.


Date:  July 1, 1997                  By: /s/  JOYCE FREEDMAN
                                         ----------------------------------
                                         Joyce Freedman
                                         Chairman of the Board and
                                         President

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


<TABLE>
<S>                                 <C>                                    <C> 
 /s/  JOYCE FREEDMAN                Chairman of the Board and                   July 1, 1997
--------------------------------    President                              ----------------------
      Joyce Freedman                                                                Date


/s/  MAURIZIO VECCHIONE             Executive Vice President and                July 1, 1997
--------------------------------    Director                               ----------------------
     Maurizio Vecchione                                                             Date


/s/  LEE FREEDMAN                   Vice President, Finance,                    July 1, 1997
--------------------------------    Chief Financial Officer and            ----------------------
     Lee Freedman                   Director                                        Date
                                               


/s/  ANDREA VECCHIONE               Secretary and Director                      July 1, 1997
--------------------------------                                           ----------------------
     Andrea Vecchione                                                               Date


/s/  STEPHEN WYLE                   Director                                    July 1, 1997
--------------------------------                                           ----------------------
     Stephen Wyle                                                                   Date


/s/  PETER FRANK                    Director                                    July 1, 1997
--------------------------------                                           ----------------------
     Peter Frank                                                                    Date
</TABLE>





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                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
        EXHIBIT                                                                   SEQUENTIALLY
        NUMBER                  DESCRIPTION                                      NUMBERED PAGE
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         <S>      <C>                                                            <C>

        *10.23    Investment Banking Consulting Agreement dated December 4, 1996
                  between the Registrant and Shamrock Partners, Ltd.



</TABLE>

* Confidential treatment is being requested with respect to portions of this
exhibit, and such confidential portions have been deleted and will be separately
filed with the Securities and Exchange Commission pursuant to Rule 24b-2
promulgated under the Exchange Act of 1934.


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