SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1996

                        Commission File Number: 00-21219

                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 (Name of small business issuer in its charter)

                 Colorado                                   83-0288100
        (State or other jurisdiction                    (I.R.S. Employer 
        of incorporation or organization)                Identification No.)

               90 Park Avenue
           New York, New York 10016                          10016
     (Address of principal executive offices)             (Zip Code)

Issuer's telephone number: (212) 984-1090
Securities registered pursuant to Section 12(b) of the Act:

       Title of each class             Name of each exchange on which registered
       -------------------             -----------------------------------------
             None                                      None

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock,  par
value $0.00001

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during  the past 12  months,  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
Regulations S-B 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. [ ]

Issuer's revenues for its most recent fiscal year: $508,713.

The aggregate market value of voting stock held by non-affiliates computed using
the average of the bid and asked prices  reported by the Nasdaq  Bulletin Board,
on March 26, 1997 was $12,043,815.

As of March 26, 1997, the Registrant had 14,134,001  shares of Common Stock, par
value $0.00001, outstanding.

Transitional Small Business Disclosure Format     Yes [ ]  No [X].





<PAGE>



                                     PART I

Item 1. Description of Business

General

     Casdim  International  Systems,  Inc.  and its  subsidiaries  (collectively
referred to herein as the "Company") is a multimedia and communications  company
engaged  in  the  development,  marketing,  sale  and  leasing  of  interactive,
informational  and  transactional   kiosks.   The  Company  is  engaged  in  the
development  of  interactive   televisions,   which  will  be  used  to  provide
interactive programs to link vendors and customers and to supply information and
transactions  on  demand.   Another  area  of  the  Company's  business  is  the
development of servers and communications  applications for both satellite-based
networks and wide area  networks  ("WAN"),  that will enable  vendors to deliver
information services and effect transactions from their place of business.

Recent Developments

     In 1996  the  Company  devoted  substantial  managerial  time  and  capital
resources  to its  efforts  to enter  the North  American  market.  The  Company
determined that the best use for its technology in the North American market was
in the context of the lodging  industry and in the  transmission  of  electronic
data via satellite.

     The Company and Dick Clark  International  Cable Ventures Ltd. ("Dick Clark
Ventures")  have  agreed  to  enter  into a joint  venture  to  exploit  certain
satellite  transmission  licenses held by an affiliate of Dick Clark Ventures in
Mexico.  These  licenses,   granted  by  the  Secretaria  de  Communicaciones  y
Transports  ("SCT") of Mexico,  allow for the  installation  or  utilization  of
shared teleports,  for the bi-directional  transmission of voice, video and data
within the footprint of the Mexican Government's two Solidaridad satellites.

     The  Company  and Dick Clark  Ventures  have  agreed to  establish  a joint
venture corporation,  to be known as Technology Transfer Corporation, to design,
install and operate an advanced  communications platform utilizing the satellite
backbone.  The Company has agreed to contribute  $500,000 to the joint  venture.
When  activated,  the  satellite  network  is  intended  to provide a variety of
electronic services, currently unavailable on a wide scale in Mexico. Initially,
the joint venture intends to provide electronic transactional services under the
trade name DataMex (TM) which service will include  transactional banking via an
interconnected  ATM  network,   point  of  purchase  ("POP")   transactions  and
international funds transfers. No assurance can be given that this joint venture
will be successful  in  developing  the network or that it will be able to raise
sufficient capital for the initiation of its proposed business.

     On March 26, 1997, the Company and Ramada Franchise Systems,  Inc. ("RFS"),
a wholly owned  subsidiary of HFS  Incorporated,  announced  their  agreement to
enter into  "alpha" and "beta"  testing of Casdim's  integrated  Information  on
Demand System (the "IOD System").




                                       -2-

<PAGE>



     The IOD System  incorporates  interactive  TV,  Internet,  video-on-demand,
E-Mail, and a club member facility.  The IOD System is designed to utilize a WAN
to link video and data servers via  satellites  and/or  cable TV systems.  Hotel
guests will access their TV through the RFS/Casdim  default  channel.  Access to
various   services   including,    E-mail,   stock   quotes,    sports   scores,
video-on-demand, airline and car rental reservations and residential real estate
listings  will be  provided  to the  hotel  guest by the IOD  System.  Under the
proposed  arrangement,  Casdim will derive  revenues  from  advertising,  vendor
commissions  and user fees. RFS currently has over 120,000  lodging rooms in its
franchise  network.  The Company and RFS have agreed to enter into an  agreement
for full system  implementation  of the IOD  System,  pursuant to which RFS will
exclusively  recommend  the  IOD  System  to  all of its  franchises,  upon  the
successful  completion  of the alpha and beta  testing  at  various  Ramada  Inn
locations.  The testing of the IOD System is  scheduled to be completed in March
1998. No assurance can be given that such testing will prove successful, or that
the  Company  will be able to raise  sufficient  funds to install its IOD System
within the Ramada Inn franchise system.

Products

     Historically, the Company's main products and services consisted of:

          o the sale and lease of multimedia kiosks;
          o the development  and sale of databases,  kiosk and kiosk home pages,
            servers, and communications applications; and

     Multimedia  Kiosks.  The  Company's  kiosks  offer  a form  of  interactive
computerization which allows for easy consumer access to products, services, and
information.   Consumers  are  able  to  access   promotional   and  educational
information  as well as purchase  goods and services.  Each kiosk  consists of a
free-standing,  electronic,  informational and  transactional  booth combining a
number  of  computer   peripheral   technologies   which  collect  and  dispense
information   and  services.   The  kiosks  are  designed  to  be  flexible  and
user-friendly  in order to meet the  diverse  needs of  users,  and are  usually
placed  in a  highly  visible  and  active  location  to  provide  services  and
information to a wide audience.  The kiosks include up-to-date  technology in PC
hardware,   multimedia,  LAN,  WAN,  satellite  communication  and  applications
generators  and are  comprised of a  processor,  disk  drives,  keyboard,  video
display, touch screen,  magnetic card reader, a scanner, and printer.  Depending
on the  application,  kiosks  may or may not be  connected  to one or more  host
systems.

     The manufacture and assembly of kiosks entail five distinct steps:

          o Manufacturing  of the Kiosk  Enclosure.  The  manufacturing  process
     takes  approximately  one to two  months,  depending  on whether  the order
     consists  of an  existing  model  or a new  design.  Although  choice  of a
     suitable  enclosure  design is  usually  chosen  from one of the  Company's
     existing standard models, new designs may be manufactured at the customer's
     request. The creation of a new enclosure model takes approximately




                                       -3-

<PAGE>



     two to three  months  during  which a prototype  is built and tested and an
     operating  plan is developed.  The  enclosures are designed by Zog Ltd., an
     Israel-based   industrial   design   company,   which  also   oversees  the
     manufacturing process.

          o Purchase of Hardware  Components.  Most of the hardware  used in the
     kiosks'  operating  systems is standard and not customized,  which provides
     the Company with  flexibility  when a change of  manufacturer  is needed or
     technical  modifications  are  required.  The hardware  components  include
     computers and  expansion  cards,  a  touchscreen,  magnetic card reader,  a
     printer and  communications  equipment.  Generally,  the Company  selects a
     hardware  supplier after comparing the equipment of three or more suppliers
     for quality,  reliability  and  durability,  as well as adaptability to the
     other  components  in the system,  and the  supplier's  quality of service,
     manufacturer's warranty and selling price.

          o Integration and Adaptation of Software,  Database and Graphics. This
     process includes a system design stage,  design of the  user-interface  and
     connection of the  application  components into one complete  system.  Such
     components can include a logging  component to register  activities made at
     the kiosk stand,  and a component  for display of  advertising  during idle
     time.

          o Testing. The retrieval and content of the of information provided by
     the individual system is tested before shipping. Great importance is placed
     on building  mechanisms  that will enable easy updates of content items and
     automatic distribution of such information to the kiosks.

          o Connection of Kiosk Units.  This process  entails the preparation of
     the required infrastructure for connecting a kiosk to the Company's central
     control  room.  Such  connections  may be  implemented  through  the use of
     standard telephone lines, ISDN lines,  local Ethernet network,  frame relay
     lines,  point  to  point  lines,  or  satellite  network.   The  choice  of
     communication  line  depends  on the number of sites to be  connected,  the
     number of kiosks on the site,  the quantity of  information  to be relayed,
     and the frequency of  transactions,  and the type of project  (i.e.  credit
     card company,  medical data bank, etc.).  Gilat - Satellite  Communications
     provides VSATs and hubs for the kiosks' satellite wide area network.

     The  sales  price  of a kiosk  in  Israel,  including  both  equipment  and
technology, ranges from $10,000 to $25,000. As of December 31, 1996, the Company
has sold or installed approximately 80 kiosks.

     The Company has targeted a base selling price of approximately  $15,000 per
unit in the U.S. as a consequence  of the increased  level of competition in the
U.S. market. In the U.S., prices may range from $13,000 to $150,000 for a highly
sophisticated kiosk.





                                       -4-

<PAGE>



     In 1996,  the  Company  attempted  to  emphasize  the  leasing of kiosks to
shopping  malls  where they would be placed in  strategic  locations  offering a
diverse network of information and transaction  capabilities.  In great measure,
the Company was unsuccessful with this marketing  approach because it was unable
to obtain long-term exclusive agreements from the shopping malls.  Recently, the
Company began to negotiate with several malls in an attempt to obtain  long-term
agreements.   No  assurance  can  be  given  that  these  negotiations  will  be
successful. The Company has determined that it will in the future concentrate on
the sale of kiosks and obtaining fees from  advertising and coupon  distribution
from kiosks installed by the Company in high traffic, public areas.

     The Company provides  technical support to its customers,  at approximately
15% of the total value of the system  provided.  The Company's  information  and
control  center is located  at it's head  office in Petah  Tikva,  from which it
monitors all kiosks on the network in real time, allowing for tracking of usage,
up and down time,  information  received,  access time and a multitude  of other
functions.  This  network  has been  designed  to provide  flexibility,  and the
Company believes it provides an advantage over it's  competitors'  non-networked
kiosks.

     Development and Sale of Databases,  Kiosk and Internet Home Pages, Servers,
and  Communications  Applications.   The  charge  for  developing  a  customer's
interactive  program ranges from $20,000 to $200,000.  Depending on the project,
the Company's  experienced  staff is able to respond to every  customer's  needs
concerning data structure by developing,  building,  maintaining, and connecting
customized databases to the Company's kiosk network.

Sales, Marketing and Distribution

     In 1996,  the  Company  expended  substantial  efforts on its  strategy  of
entering the North American market and achieved  preliminary success by entering
into  relationships with RFS for its IOD System and with Dick Clark Ventures for
the  transmission of electronic  services via satellite.  The Company intends to
devote  a  substantial   portion  of  its  resources  to  the   development  and
implementation of the technologies for these projects. No assurance can be given
that these projects will be successful or that the Company will be able to raise
sufficient funding for such projects.

     With respect to its historical kiosk business,  the Company has developed a
multi-dimensional  approach to the information  services market by targeting the
underutilized  "leisure  time" market.  The "leisure time" market refers to time
spent between the home and the office, where the customer is more predisposed to
shop or require  access to services.  The Company has approached the market from
two   different   avenues.   First,   targeting   markets  which  are  currently
underutilized and have not yet been identified as market niches.  Secondly,  the
Company attempts to turn kiosks located in high traffic public areas into profit
centers.  The markets which the Company  targets need not be related,  different
information  channels can co-exist on a single kiosk,  and the consumer can then
choose which channel to use.





                                       -5-

<PAGE>






Research and Development

     The Company  directs its R&D efforts into the  integration  between various
products in the areas of multimedia platforms,  and the development of software,
video and audio products,  and animation  software,  network  technologies (LAN,
WAN),  and products  involved in the areas of fiber  distributed  data interface
(FDDI) and asynchronous transfer mode (ATM). This approach results in relatively
low cost R&D and allows  the  Company to  integrate  a wide range of  multimedia
applications.

     Simultaneously  with the  development of kiosks for ongoing  projects,  the
Company is in the process of developing  sub-systems  for general use in various
other applications, including:

          o HMTL Kiosk: This type of kiosk is suitable for use when vast amounts
     of  information  must  be  displayed  simultaneously,  or  when  the use of
     Hypertext Markup Language is required.

          o Mall Kiosk:  This type of information kiosk enables shoppers to find
     a certain  store within a mall either  alphabetically  or by category.  The
     system also provides printed directions to store locations.

          o Bit Technology: The transfer of existing operating systems to 32 bit
     technology.

          o Updated Central  Control  System:  For controlling the status of the
     kiosks and their informational content,  receiving reports from the kiosks,
     managing  service  calls and  distribution  of  updates  for  software  and
     day-to-day contents.

          o Video Conference and Cartographic  Information  Display System: This
     will provide consumers with the ability to engage in video conferencing.

          o Continuous  Advertising:  This component will display advertisements
     on a separate screen will be used solely for this purpose. This system will
     include a mechanism  for  determining  the frequency  and  availability  of
     advertisements according to the amount for transmission time sold.

     No  assurance  can be given that the Company  will be able to  successfully
complete the  development  of its IOD System or the  technology for its proposed
venture with Dick Clark Ventures.







                                       -6-

<PAGE>



Competition

     The electronic  information  distribution market is rapidly evolving and is
competitive.  The Company  believe  that most of its  competitors  have  greater
financial resources and name recognition than the Company. In addition,  some of
these  competitors,  including LodgeNet  Entertainment  Corp. and Spectravision,
currently  offer  information  products which include some of the services to be
included in the Company's IOD System. Accordingly, these competitors may have an
advantage in competing  with the Company since its system is not  operational as
yet. In addition, the Company expects to face competition from new entrants into
its markets.  Such competition could materially  adversely effect the Company's,
business,  operating results and financial condition.  There can be no assurance
that the Company will be able to compete  successfully against current or future
competitors.

     The Israeli  kiosk  market is a  relatively  small one in which the Company
believes it is a leading  competitor.  The Company's main  competitors in Israel
are Golden Screens and Interactive  Information  Ltd. Golden Screens has been in
operation for approximately six years  specializing  primarily in the public and
government sectors and does not service private organizations.  Its kiosks offer
fewer features and less updated  technological  and  multimedia  design than the
Company's product. Golden Screen's kiosks do not operate in "real time," and lag
behind the Company's kiosks in multimedia, computer technology and applications.
Interactive  Information Ltd. has been in operation for  approximately two years
and, to date, services only the hotel industry.

     A number of  companies  are  active in the field of  information  kiosks in
North America Management believes that Factura  Composites,  Inc., is the market
leader in kiosk  manufacturing  in the United States.  Other companies active in
the field include:  Quick ATM, 1-Media,  Aimtech, EDR Systems,  Virtual Shopping
Inc., Rikon Corporation,  and HSI. All of these companies have greater financial
resources  than the  Company.  There are also a large number of companies in the
field of touch  screens,  peripherals  and  applications  software.  The Company
believes  that it's high  standard  of product  and  innovative  approach to the
market  will allow the  Company to compete  favorably  in the U.S.  and  Israeli
markets.

Government Regulation

     The  Company  believes  that it is not  currently  subject  to any  federal
regulations  with respect to the sale of kiosks in the United  States;  however,
the  placement of kiosks may be subject to local  zoning and other  regulations.
The Company's proposed joint venture with Dick Clark Ventures will be subject to
regulation by the SCT of the  Government of Mexico and may be subject to federal
regulations  with  respect to the  transmission  of data by  satellite  into the
United States.







                                       -7-

<PAGE>



Trademarks and Patents

     In January 1995, the Company acquired a pending patent (No. 108935) for its
medical  kiosks  from CSS  Ltd.,  an  affiliated  company  owned  by Mr.  Yehuda
Shimshon,  for  $500,000.  This patent is pending  both in Israel and the United
States. The Company does not have any registered trademarks.

Conditions in Israel

     The Company's principal research and development  facilities are located in
Israel,  and its  operations  are  therefore  directly  affected  by  political,
military  and  economic  conditions  in that  country  and in the  Middle  East.
Accordingly,  the  Company's  operations  could be  adversely  affected if major
hostilities should occur in the Middle East involving Israel or if trade between
Israel and its present trading partners were interrupted or curtailed.  All male
permanent  residents of Israel between the ages of 18 and 54 are, unless exempt,
obligated  to perform  reserve  duty in the Israeli  Defense  Forces,  presently
consisting of approximately 30 to 60 days' service annually.  Additionally,  all
such  residents  are subject to being called to active duty at any time upon the
out break of  hostilities.  Many of the  Company's  officers and  employees  are
currently  obligated  to perform  annual  reserve  duty.  While the  Company has
operated  effectively  under  these  requirements  since  its  organization,  no
assessment  can be made  as to the  full  impact  of  such  requirements  on the
Company's  business or work force and no prediction can be made as to the effect
on the Company of any expansion of such obligations.

Employees

     At December 31, 1996, the Company and its subsidiaries employed 31 persons,
13 in research and development and technical  support, 8 in marketing and sales,
and 10 in operations and administration.


Item 2.  Description of Property

     The Company's  executive  offices are currently  located at 90 Park Avenue,
New York, New York. The Company is scheduled to move its executive  offices into
approximately  3,700 square feet of office  space at 150 East 58th  Street,  New
York, New York in mid-April  1997.  The lease for such  facilities has a term of
five years and two months, with an annual rental of approximately $134,000.

     The  Company's  research  and  development   facility  is  located  in  the
industrial  zone  of  Petah  Tikva,  Israel.  The  premises,  which  consist  of
approximately  7,600 square feet and five parking bays, are shared with CSS Ltd.
The   Company   utilizes   approximately   3,000   square   feet  to  house  its
administrative,  marketing and  technical  departments.  The lease  provides for
monthly  rentals of $6,840  per month of which half of such  amount is linked to
changes in the Israeli Consumer Price




                                       -8-

<PAGE>



Index  ("CPI").  The Company pays its pro-rata  share of the lease costs for the
premises.  The lease  expires on  December  31, 1997 and may be renewed for five
additional years.

Item 3.   Legal Proceedings.

     The Company has been advised that the  Securities  and Exchange  Commission
has  entered a formal  order of private  investigation  in  connection  with the
offer,  purchase or sale of securities of the Company.  The Company has not been
advised by the Staff of the Commission of the status of the investigation. There
can be no assurance that the Commission  will not initiate a proceeding  against
the Company  and/or  certain of its former or present  affiliates  in connection
with its investigation, which proceeding could adversely affect the Company.

     The Company is not a party to any material litigation.


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

     During the quarter  ended  December  31,  1996,  the Company held it Annual
Meeting of Stockholders.  At the meeting held on October 16, 1996, the Company's
stockholders voted:

     1.   For the election of the following  directors to hold office for a term
          until their successors are duly elected and qualified at the Company's
          next Annual Meeting of Stockholders:


                                           For            Withhold
                                           ---            --------
          Yehuda Shimshon               10,173,564            --
          Israel Shimshon               10,173,564            --
          Doron Leave                   10,173,564            --
          Ilan Mintz                    10,173,564            --
          David Tamir                   10,173,564            --

     2.   For the approval of a plan of merger under which the Company  would be
          merged into a wholly-owned  subsidiary of the Company  incorporated in
          the State of Delaware:


               For              Against          Abstain
               ---              -------          -------
             9,757,138           1,000             -0-


     It is expected that the merger will be effected during the Spring of 1997.








                                       -9-

<PAGE>



     3. For the approval of the Company's 1996 Stock Option Plan:


               For              Against          Abstain
               ---              -------          -------
            10,167,939           5,625             -0-


                                     PART II

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

     After  completion  of its public  offering on September  27, 1989, a public
trading market did not develop for the Company's common stock, $0.0001 par value
(the "Common  Stock").  Until  recently  only a limited  number of market makers
sporadically  offered to purchase and sell shares of the Company's Common Stock.
Accordingly,  during  significant  portions  of  the  listed  periods,  reliable
quotations for the Common Stock were not available.



          1995
          ----
          First Quarter.................. No Bid          No Bid
          Second Quarter................. No Bid          No Bid
          Third Quarter.................. No Bid          No Bid
          Fourth Quarter................. No Bid          No Bid

          1996
          ----
          First Quarter.................. $1 1/8          $  7/32
          Second Quarter.................  5 3/4             1/2
          Third Quarter .................  5 1/4           2 3/4
          Fourth Quarter.................  5 1/2           4 1/16

     The Nasdaq Bulletin Board symbol for the Company's Common Stock is CDMI. As
of December  31,  1996,  there were  approximately  39 holders of record and 300
beneficial owners of the Company's Common Stock.

     The  Company  has not paid and has no  present  intention  of  paying  cash
dividends on its Common Stock in the foreseeable future.






                                      -10-

<PAGE>



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

     The  following  is   management's   discussion   and  analysis  of  certain
significant  factors which have affected the  Company's  financial  position and
operating  results  during the periods  included in the  accompanying  condensed
financial statements.

Background

     The Company is a Colorado holding company,  incorporated on January 5, 1988
under the name of S.W.  Financial  Corporation  for the purpose of  acquiring an
interest  in one or more  business  opportunities  in the  field of  multimedia,
information and communication  technology.  In keeping with the stated corporate
purpose,   the  then  management  of  the  Company  evaluated  several  business
opportunities and, during the fiscal year ended December 31, 1995, finalized the
Company's first corporate acquisition.  The acquisition was effected by means of
an agreement for the exchange of stock and plan of reorganization dated November
21,  1995,  (the  "Exchange  Agreement"),  by  and  among  the  Company,  Casdim
Interactive  Systems USA, Inc.  ("Casdim  USA"), a Nevada  corporation,  and Mr.
Yehuda Shimshon. Mr. Shimshon acted on behalf of himself and Cedarwood Trading &
Investment  Ltd.  ("Cedarwood"),  the then  sole  shareholders  of  Casdim  USA.
Pursuant to the terms of the Exchange  Agreement,  the Company  acquired all the
issued and outstanding  shares of Casdim USA in exchange for 425,000,000  shares
of the Company.  The Exchange Agreement,  which became effective on December 11,
1995, was approved at a special meeting of the  shareholders of the Company held
on October 24, 1995 at which the  shareholders  also approved:  (i) renaming the
Company  Casdim  International  Systems,  Inc.;  (ii)  the 50:1  stock  split of
76,700,000 shares,  the then outstanding  number of shares of the Company,  into
1,534,000  shares;  and (iii) the  appointment of Mr.  Shimshon as President and
Chairman of the Board.


Results of Operations

     Year Ended December 31, 1996 Compared to Year Ended December 31, 1995.

     Sales  decreased to $508,713  during the year ended  December 31, 1996 from
$2,011,110 in 1995. The decrease in sales was  principally  attributable  to the
Company's  decision to (i)  concentrate  its  resources  on  entering  the North
American  market,  (ii) its  failed  efforts  to lease  kiosks,  and  (iii)  the
determination of one of the Company's major customers to postpone  deliveries of
kiosks until its financial condition improves.

     Cost of  sales  decreased  to  $379,806  in 1996  from  $468,353  in  1995,
principally as a result of the Company's lower level of sales. As a result,  the
Company's gross profit for 1996 was $128,907 compared to $1,542,757 in 1995. The
Company expects its gross margins to vary in the future  depending on the nature
and volume of its revenues.




                                      -11-

<PAGE>




     Selling,  general and  administrative  expenses  increased to $1,244,144 in
1996 from  $237,016 in 1995,  due  primarily to the  increased  marketing  costs
associated  with the Company's  efforts to penetrate the North American  market,
costs associated with the  establishment of executive  offices in New York City,
increased  compensation,  legal and accounting costs, and a charge in the second
quarter of 1996 of  approximately  $164,000  arising  from the issuance of stock
options to the Company's former public  relations firm. The Company  anticipates
that selling,  general and administrative  expenses will continue to increase in
1997 a result of the planned  increases  in expenses  relating to its IOD System
and the joint venture with Dick Clark Ventures.

     In  1996  the  Company  capitalized   approximately   $943,000  of  product
development costs, principally relating to the IOD System. .

     During  1996,  the  Company  had other  expenses of $104,397 as compared to
other expenses of $174,617 in 1995. In 1995, the Company had a $93,142 loss from
its investment  activity,  resulting from unsuccessful  investments made in 1995
prior to the  acquisition of Casdim USA. In 1996, the Company was able to offset
part of the increased foreign currency  translation losses and interest expenses
with interest and dividend income from the investment of the proceeds of its May
1996 private  placement.  The Company expects  interest  expenses to increase in
1997.

     For  the  year  ended  December  31,  1996,  the  Company  had a loss  from
operations of $1,219,634 as compared to income from operations of $1,131,124 for
1995. The Company's  operating loss in 1996 was due primarily to the increase in
the Company's selling,  general and  administrative  expenses and the decline in
sales.

     In 1995, the Company's income tax expense was $ 440,309.

     As a result of the foregoing, the Company's net loss was $1,219,634 or $.09
per share for 1996 as  compared  to net income of $690,815 or $.36 per share for
1995.

     Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

     Product sales  increased to $2,011,110 in 1995 from $188,351 in 1994,  when
the  Company's  Israeli  subsidiary,  Casdim  Israel began its  operations.  The
increase in sales was  principally  attributable to the initiation of deliveries
of the Company's kiosks.

     Cost of sales  increased  to  $468,353  in 1995 from  $51,739  in 1994 as a
result  of the  Company's  increased  level  of  operations.  As a  result,  the
Company's gross profit margin was 76.8% in 1995.

     Selling,  general and  administrative  expenses,  increased  18% in 1995 to
$237,016, reflecting the Company's increased scope of operations.





                                      -12-

<PAGE>



     In 1995 the Company had interest expenses of $75,272 as compared to $54,361
in 1994 as a result of Casdim Israel's increased level of borrowing.

     As a result of the  foregoing,  the  Company  had  income  before  taxes of
$1,131,124 in 1995 as compared to a loss of $116,946 in 1994. The Company had an
income  tax  expense of  $440,309  in 1995 as a result of its  earnings.  Casdim
Israel's profits were taxed at the regular Israel corporation tax rate of 37% in
1995.

     In 1995,  the  Company  had net  income  of  $690,815  or $.36 per share as
compared to a loss of $82,612 or $.07 per share in 1994.

Liquidity and Capital Resources

     At December  31,  1996,  the Company had  $915,527 in cash and  $898,151 in
working  capital as compared to $26 in cash and  $179,432 in working  capital at
December 31, 1995. The Company's financial position improved in the 1996 period,
principally  as a result of its May 1996 private  placement of securities  which
resulted in approximately  $2,786,765 of net proceeds,  including  $100,000 from
the  exercise of  warrants.  In January  1997,  the  Company's  working  capital
position improved when it received an additional $400,000 in connection with the
exercise of warrants.  In addition,  the Company's financial position benefitted
from the  conversion of  approximately  $1,000,000  of its Israeli  subsidiary's
short-term debt into long-term debt in March 1997.

     Among the factors  that will affect the  Company's  working  capital in the
future  will be (i) the  amount  and  timing  of the  expenditures  required  to
complete the development,  installation and testing of the IOD System,  and (ii)
the timing of a $500,000  capital  contribution  which the Company has agreed to
make to the joint venture with Dick Clark  Ventures.  Another  factor which will
effect working capital is the  collectability  of a receivable of  approximately
$300,000 from Kupat Holim Leumit,  an Israeli health  maintenance  organization,
which is over 360 days old.  The  Company is  currently  negotiating  with Kupat
Holim Leumit to recover the account receivable.

     Management  believes that the Company will require additional  financing of
$2 million to $3 million in 1997, mainly to fund the installation and testing of
the IOD System at  various  Ramada Inn  sites.  No  assurance  can be given that
sufficient  financing on either an equity or debt basis will be available to the
Company or that it will be available at advantageous terms.







                                      -13-

<PAGE>



Item 7. Financial Statements

                          Index to Financial Statements



Independent Auditors' Report.................................F-1

Financial Statements:

      Consolidated Balance Sheets ...........................F-2

      Consolidated Statements of Income......................F-4

      Consolidated Statements of Stockholders Equity.........F-5

      Consolidated Statements of Cash Flows..................F-6

      Notes to Financial Statements..........................F-8









                                       14

<PAGE>
                   =========================================
                   HOCKER, LOVELETT, HARGENS, & YENNIE, P.C.
                   =========================================
                          Certified Public Accountants



                         INDEPENDENT AUDITORS' REPORT



To the Board of Directors 
CASDIM INTERNATIONAL SYSTEMS, INC.


We  have  audited  the  accompanying   consolidated  balance  sheets  of  CASDIM
INTERNATIONAL  SYSTEMS, INC. (a Colorado corporation) and its subsidiaries as of
December 31, 1996 and 1995, and the related  consolidated  statements of income,
stockholders' equity and cash flows for the years then ended. These consolidated
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  consolidated  financial  statements  are free of
material  misstatements.  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 the  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 CASDIM INTERNATIONAL
SYSTEMS,  INC.  and its  subsidiaries  as of December  31, 1996 and 1995 and the
results of their operations,  stockholders'  equity and their cash flows for the
years then ended, in conformity with generally accepted accounting principles.


                              /s/ Hocker, Lovelett, Hargens & Yennie, P.C.


March 21, 1997
Riverton, Wyoming


                                       F-1
<PAGE>



                       CASDIM INTERNATIONAL SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995



                                                1996                     1995
     ASSETS                                     ----                     ----
CURRENT ASSETS
     Cash and cash equivalents              $  915,527               $       26
     Accounts receivable
        Trade                                  438,807                  155,783
        Other - Note 2                       1,236,667                1,202,505
     Investments                               173,596                       --
                                               -------                   ------

         Total                               2,764,597                1,358,314


PROPERTY AND EQUIPMENT - NOTE 3
     Property and equipment                    225,361                  111,727
     Less accumulated depreciation             (36,435)                 (20,919)
         Net                                   188,926                   90,808

OTHER ASSETS
     Patent, net - Note 4                      400,000                  467,659
     Start-up and organization
        costs, - net - Note 4                   48,304                       --
     Deposits                                   10,200                       --
     Product development costs - Note 6        943,164                       --
                                               -------                  -------
                                             1,401,668                  467,659

               TOTAL                        $4,355,191               $1,916,781
                                            ==========               ==========








           See accompanying notes to consolidated financial statements



                                       F-2

<PAGE>



                        CASDIM INTERNATIONAL SYSTEMS, INC
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995



                                                       1996                1995
     LIABILITIES AND STOCKHOLDERS' EQUITY              ----                ---- 
CURRENT LIABILITIES
     Accounts payable
         Trade                                   $   52,675          $   38,763
         Other - Note 5                             469,355             465,417
     Current maturities of debt - Note 10         1,344,416             674,702
                                       --         ---------             -------
         Total                                    1,866,446           1,178,882

LONG-TERM DEBT
     Accrued severance pay, net - Note 7             25,474              12,986
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY             --              72,372
                                                     ------              ------

               TOTAL                              1,891,920           1,264,240

STOCKHOLDER'S EQUITY
         Common  stock, $.00001 par value,
          500,000,000 shares authorized
            13,634,000 shares issued and 
            outstanding, 285,000 shares
            held in treasury stock                      985                 945
     Additional paid in capital                   3,145,268             194,480
     Less treasury stock (cost)                      (1,425)             (1,425)
     Retained earnings (deficit)                   (681,557)            458,541
                                                   --------             -------
         Total                                    2,463,271             652,541
                                                  ---------             -------

               TOTAL                             $4,355,191           $1,916,781
                                                 ==========           ==========










          See accompanying notes to consolidated financial statements



                                       F-3

<PAGE>



                       CASDIM INTERNATIONAL SYSTEMS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995


                                                      1996               1995
                                                      ----               ----
SALES                                             $  508,713         $2,011,110
COST OF SALES                                        379,806            468,353
                                                     -------            -------
GROSS PROFIT                                         128,907          1,542,757
SALES, ADMINISTRATIVE AND GENERAL EXPENSES         1,244,144            237,016
                                                   ---------            -------
INCOME (LOSS) FROM OPERATIONS                     (1,115,237)         1,305,741
OTHER INCOME (EXPENSES)
         Interest income                              21,309                 --
         Dividend income                              35,673                 --
         Interest expense                           (109,519)           (75,272)
         Investment activity loss                         --             93,142
         Gain (loss) foreign translation             (51,860)            (6,203)
                                                     -------             ------ 
                   Total                            (104,397)          (174,617)
                                                    --------           -------- 
INCOME (LOSS) FROM OPERATIONS BEFORE TAXES        (1,219,634)         1,131,124
INCOME TAX (EXPENSE) BENEFIT                              --           (440,309)
                                                      ------           -------- 
NET INCOME (LOSS)                                $(1,219,634)        $  690,815
                                                 ===========         ==========
NET EARNINGS (LOSS) PER SHARE ON A FULLY
  DILUTED BASIS                                  $      (.09)        $      .36
                                                 ===========         ==========
NET EARNINGS (LOSS) PER SHARE                    $      (.09)        $      .36
                                                 ===========         ==========
WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING                              13,349,000          1,899,000
                                                  ==========          =========







          See accompanying notes to consolidated financial statements



                                       F-4

<PAGE>



                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
                                                            ADDITIONAL
                                                COMMON       PAID IN       TREASURY       RETAINED
                                SHARES          STOCK         STOCK          STOCK        EARNINGS         TOTAL
                                ------          -----         -----          -----        --------          -----
<S>                          <C>                 <C>      <C>              <C>          <C>           <C>        
Balance - 12/31/94
as previously reported        1,134,000          $745     $   94,680       $(1,425)     $(152,738)    $   (58,738)
Sale of stock                                     200         99,800            --             --         100,000
50 : 1 reverse stock
split                         8,500,000
Net income                                                                                690,815         690,815
Less minority interest                                                                    (79,596)        (79,536)
                              ---------           ---        -------        ------        -------         ------- 
Balance - 12/31/95            9,634,000           945        194,480        (1,425)       458,541         652,541
Contribution of
   consolidated
   minority interest                                                                       79,536          79,536
Sale of stock                 4,000,000            40      2,686,725                                    2,686,765
Warrants exercised                                           100,000                                      100,000
Stock options issued                                         164,063                                      164,063
Net income (loss)                                                                      (1,219,634)     (1,219,634)
                             ----------          ----     ----------       -------      ---------      ---------- 

Balance - 12/31/96           13,634,000          $985     $3,145,268       $(1,425)     $(681,557)    $ 2,463,271
                             ==========          ====     ==========       =======      =========     ===========

</TABLE>

          See accompanying notes to consolidated financial statements

                                       F-5

<PAGE>



                       CASDIM INTERNATIONAL SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995


                                                       1996            1995
                                                       ----            ----
CASH FLOWS FROM OPERATING ACTIVITIES:
         Net income (loss)                        $(1,219,634)      $ 690,815
         Adjustments to reconcile net income
           to net cash provided by operating
           activities:
            depreciation and amortization              86,383          48,802

         Changes in operating assets and
           liabilities:
           (Increase) Decrease In:
           Accounts receivable - trade               (283,024)        929,570
           Accounts receivable - other                (26,998)       (899,680)
         (Decrease) Increase In:
           Accounts payable - trade                    13,912           1,524
           Accounts payable - other                     3,938         414,498
           Deposits                                        --      (1,234,516)
                                                    ---------      ---------- 
                Net cash (used) by
                  operating activities             (1,425,423)        (48,987)

CASH FLOWS FROM INVESTING ACTIVITIES:

         Purchase of property and equipment          (113,634)        (51,685)
         Purchase of patent                                --        (500,000)
         Purchase of investments                     (173,596)             --
         Payment for start-up costs                   (51,512)             --
         Payment for product development             (943,164)             --
         Payment of security deposit                  (10,200)             --
                                                      -------         -------
                Net cash used in investing
                  activities                       (1,292,106)       (551,685)







          See accompanying notes to consolidated financial statements



                                       F-6

<PAGE>



                        CASDIM INTERNATIONAL SYSTEMS, INC
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995




CASH FLOWS FROM FINANCING ACTIVITIES                 1996                1995
                                                     ----                ----
         Proceeds from notes payable                669,714            487,790
         Severance pay                               12,488              3,420
         Proceeds from issuance of stock          2,950,828            100,000
                                                  ---------            -------

                Net cash provided by 
                  financing activities            3,633,030            591,210
                                                  ---------            -------

INCREASE (DECREASE) IN CASH                         915,501             (9,462)

CASH

         Beginning of year                               26              9,488
                                                       ----              -----
         End of year                             $  915,527            $    26
                                                 ==========            =======

Interest paid                $109,519
                             ========
Income Taxes Paid                  --
                             ========        


















          See accompanying notes to consolidated financial statements



                                      F-7

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.   General

     The Company designs and develops  interactive  kiosks and performs  network
     integration.

2.   Summary of Significant Accounting Policies:

     This summary of  significant  accounting  policies of CASDIM  INTERNATIONAL
     SYSTEMS,  INC.,  (the  Company) and its  subsidiaries,  CASDIM  INTERACTIVE
     SYSTEMS USA,  INC.  and CASDIM  INTERACTIVE  SYSTEMS,  LTD.,  (ISRAEL),  is
     presented to assist in understanding  the Company's  financial  statements.
     The financial  statements  and notes are  representations  of the Company's
     management, which is responsible for their integrity and objectivity.

     a.   Principles of consolidation - In 1995, CASDIM  INTERNATIONAL  SYSTEMS,
          INC. issued 8,500,000 shares of stock after a 50:1 reverse stock split
          to acquire 100% of CASDIM  INTERACTIVE  SYSTEMS USA, INC.,  which owns
          100% of CASDIM  INTERACTIVE  SYSTEMS,  LTD.,  (ISRAEL)  ("CISL").  The
          business  combination  has been accounted for using the pooling method
          of  accounting.  The  consolidated  financial  statements  include the
          accounts of the Company and its subsidiaries.

     b.   Foreign  operations  -  CASDIM  INTERACTIVE  SYSTEMS,  LTD.,  (ISRAEL)
          maintains its accounts in nominal New Israeli Shekels ("NIS"). Certain
          of the dollar  amounts in the financial  statements  may represent the
          dollar  equivalent  of other  currencies,  including  the New  Israeli
          Shekel ("NIS"), which may not be exchangeable for dollars.

          Transactions  and  balances  denominated  in dollars are  presented at
          their  dollar  amounts.   Non-dollar  transactions  and  balances  are
          remeasured into dollars in accordance with the principles set forth in
          the  Statement  of  Financial  Accounting  Standards  ("FAS")  No. 52,
          "Foreign Currency  Translation," of the Financial Accounting Standards
          Board of the United States.



                                       F-8

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


          Accordingly, items have been remeasured as follows:

          Monetary  items-at the current  exchange  rate at each  balance  sheet
          date;

          Nonmonetary items-at historical exchange rates;

          Income and expense  items-at  exchange rates current as of the date of
          recognition  of those items  (excluding  depreciation  and other items
          deriving from nonmonetary items);

          Exchange gains and losses from aforementioned remeasurement (which are
          immaterial for each year) are reflected in the statements of income.

          Linkage  Basis -  Balances  which are linked to the  Israeli  Consumer
          Price Index (the "CPI") are presented on the basis of the index at the
          balance sheet date,  which index is published  subsequently.  Balances
          denominated  in, or linked  to,  currencies  other than the dollar are
          presented  according to the exchange  rates  prevailing at the balance
          sheet date.

          The Israeli CPI  increase  by 10.6% for the year ending  December  31,
          1996 and 8.15% in the year ending December 31, 1995.

          The effects of the inflationary erosion of monetary items and interest
          is included in financial income or expenses, as appropriate.

     c.   Fixed Assets - Fixed assets are stated at cost.  Depreciation has been
          calculated by the straight-line method over the estimated useful lives
          of the assets.

                                                       Years
                                                       -----
               Leasehold improvements                   10
               Motor vehicles                            7
               Office furniture and equipment          5-20
               (mainly computers and peripheral
               equipment)

          Leasehold  improvements are depreciated using the straightline  method
          over the period of each lease, not to exceed the estimated useful life
          of the improvements.




                                       F-9

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


     d.   Cash and Cash  Equivalents  - For  purposes of the  statement  of cash
          flows,  the Company  considers cash and cash equivalents to consist of
          all cash, either on hand or in banks including time deposits,  and any
          highly  liquid  debt  instruments  purchased  with a maturity of three
          months or less.

     e.   Bad Debts - Uncollectible  accounts  receivables are charged  directly
          against earnings when they are determined to be uncollectible.  Use of
          this  method  does  not  result  in a  material  difference  from  the
          valuation method required by generally accepted accounting principles.

     f.   Comparative Statements - The comparative statements for 1995 have been
          restated as if the individual  companies had been combined  during the
          entire periods.

     g.   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 the  reported  amounts  of
          revenues and expenses  during the  reporting  period.  Actual  results
          could differ from those estimates.

     h.   Recognition  of Income - Income  deriving from long term contracts are
          recognized upon percentage  completion basis. At December 31, 1996 the
          Company completed 83% of its $2,074,029 (NIS 6,502,080)  contract with
          Kupat Holim Leumit. Estimated costs and earnings in excess of billings
          at December 31, 1996 amounted to $259,533 (NIS 843,743).

     i.   Deferred  income  taxes -  Deferred  income  taxes  are  provided  for
          temporary differences between the assets and liabilities,  as measured
          in the  financial  statements,  and for tax  purposes  at the tax rate
          expected to be in force when these differences  reverse, in accordance
          with  Statement No. 109 of the Financial  Accounting  Standards  Board
          ("FASB") (Accounting for Income Taxes).  Deferred income taxes are not
          material to the financial statements.

     j.   Net  Income  per  Share - Net  income  per  share is  computed  on the
          weighted shares adjusted for the issuance of shares and consolidation.




                                      F-10

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


3.   Other Receivables and Prepaid Expenses

                                       1996                     1995
                                       ----                     ----
     Prepaid expenses               $  148,323              $   52,103
     Related parties                 1,088,344               1,150,402
                                     ---------               ---------
                                    $1,236,667              $1,202,505
                                    ==========              ==========

4.   Fixed Assets

     Cost                               1996                    1995
                                        ----                    ----
     Leasehold improvement            $ 10,168                $  2,428
     Furniture & equipment             182,719                  89,325
     Motor vehicles                     32,474                  19,974
                                        ------                  ------
                                       225,361                 111,727

     Accumulated depreciation           36,435                  20,919
                                        ------                  ------
              Total                   $188,926                $ 90,808
                                    ==========                ========

5.   Patent

     In January  1995,  the Company  acquired a pending  patent No.  108935 from
     CASDIM SOFTWARE SYSTEMS, LTD. for the sum of $500,000.  The patent is being
     depreciated using the straight-line method over the period of ten years.

6.   Product Development Costs

     Based  on  the  Company's  product   development   process,   technological
     feasibility  is  established  upon  completion  of a working  model.  Costs
     incurred by the Company  between  completion  of the working  model and the
     point at  which  the  product  is  ready  for  general  release  have  been
     capitalized. Total costs incurred to December 31, 1996 were $943,164.

     Capitalized  software  costs are  amortized by the greater of: (I) ratio of
     current  gross  revenues from sales of the software to the total of current
     and  anticipated  future gross revenues from sales of that software or (ii)
     the  straight-line  method over the remaining  estimated useful life of the
     product  (not  greater  than  three  years).   The  Company   assesses  the
     recoverability  of  this  intangible  asset  by  determining   whether  the
     amortization of the asset over its remaining life can be recovered  through
     undiscounted future operating cash flows from the specific product.



                                      F-11

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


7.   Accrued Severance Pay

     The  liability of the Company for  severance  pay for the  employees of its
     Israeli  subsidiary is calculated on the basis of the latest salary paid to
     its  employees  and the length of time they have  worked  for the  Company.
     Pursuant to Israeli  law,  the  liability  is covered by a provision in the
     Company's  balance sheet and amounts deposited with the severance pay funds
     and insurance  policies.  The insurance policies are owned by CISL and have
     been  entered  into by CISL on  behalf  of its  individual  employees.  The
     amounts accumulated with the insurance company are not under CISL's control
     or management  and are  therefore  not  reflected in the Company's  balance
     sheet.

8.   Capital Stock

     On May 3, 1996, the Company completed a private placement of its securities
     in which  4,000,000  shares of common  stock were  issued  for  $3,000,000,
     before expenses of $313,210.

9.   Other Payable and Accrued Liabilities

                                              1996               1995
                                              ----               ----
     Provision for taxes, net               $     --           $364,520
     Payroll and related amounts              49,751             17,191
     Accrued expenses                         12,662              8,953
     Government authorities                  406,942             74,753
                                             -------             ------
                                            $469,355           $465,417
                                            ========           ========

10.  Current Maturities of Debt


                                                         1996          1995
                                                         ----          ----
     Note  payable  bank,  due  March  31,  1997,                          
     plus  accrued  interest  at  17.5%
     collateralized by fixed assets,
     securities, notes and negotiable documents       $1,344,416    $180,806
     
     Bank overdraft, due December 31, 1996, 
     plus accrued interest at 20.5%                          --      493,896
                                                      ---------      -------
     
            TOTAL                                     $1,344,416    $674,702
                                                      ==========    ========
     




                                      F-12

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


11.  Stock Warrants and Stock Options

     Stock Compensation Plan

     Under the Company's  1996 Stock Option Plan (the  "Plan"),  the Company may
     grant  options  for  up to  500,000  shares  of  its  common  stock  to its
     employees, directors and consultants. No options have been granted to date.

     Under the Plan, the exercise price of incentive  stock options  ("ISOs")may
     not be less than 100% (or 110%,  if at the time of grant the optionee  owns
     more than 10% of the voting  stock of the Company) of the fair market value
     of the shares of common stock at the date of grant.  The purchase  price of
     each share  subject  to an option,  or any  portion  thereof,  which is not
     designated  as an IS,  may not be less than 75% of the fair  market of such
     shares on the date of grant.  The term of each option under the Plan may be
     for a period of up to ten years  (five years if the  recipient  is a 10% or
     more shareholder).

     Under a public relations  retainer agreement (the "Agreement") with Sunrise
     Financial  Group Inc.  ("Sunrise"),  the  Company  agreed to issue  Sunrise
     options  to  purchase  up  to  700,000   shares  of  its  common  stock  as
     consideration for its public relations services.  Of such options,  460,000
     options  vested as of April 24, 1996 and options to purchase  10,000 shares
     of  common  stock  vest  monthly  for a  24-month  period,  subject  to the
     continued  provision  of services by Sunrise.  Options to purchase  540,000
     shares  of common  stock had  vested as of  December  31,  1996.  Under the
     Agreement,  the purchase price of each share subject to an option is $1.00.
     The term of these  options  will  expire on April  2001.  The  Company  has
     accounted  for the  fair  value of the  grant  of  options  to  Sunrise  in
     accordance  with FASB  Statement 123. The  compensation  cost that has been
     charged against income for the options granted to Sunrise was $164,063.

     Under a consulting  agreement with WEDA  Corporation,  N.V.  ("WEDA"),  the
     Company  agreed to issue WEDA  options to purchase up to 100,000  shares of
     common stock at $2.25 per share as partial consideration for its consulting
     services.  Such options vest monthly over a two-year period and will expire
     in June 2001.

     Warrants

     The Company issued  warrants  exercisable  into 1,150,000  shares of common
     stock in  connection  with its May 1996 private  placement.  The  warrants,
     which  are  exercisable  at $1.00 per  share,  have  been  included  in the
     computation of fully diluted earnings per share.



                                      F-13

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



12.  Taxes on Income

     CISL is subject to the income tax law (inflationary  adjustments)  pursuant
     to which its results of  operations  for tax  purposes are measured in real
     terms  in  accordance  with the  Israeli  CPI.  Under  the  Income  Tax Law
     (Adjustments  for Inflation)  1985,  income for tax purposes is measured in
     terms  of  earnings  in NIS  and  adjusted  for  changes  in the  CPI.  The
     theoretical tax expense,  assuming all income was taxed at the regular rate
     applicable  to an  Israeli  corporation  and  the  actual  tax  expense  is
     virtually  identical.  Any  differences  are  immaterial  to the  financial
     statements taken as a whole.

     CASDIM INTERNATIONAL SYSTEMS, INC. has a net operating loss carryforward in
     the amount of $616,312 which will begin to expire in the year 2002.

13.  Related Party Transactions

     In October,  1995, the Company  transferred  $1,000,000  (NIS 3,000,000) to
     CASDIM  SOFTWARE  SYSTEMS,  LTD.,  of which US  $700,000  served as advance
     payment on account  of the  purchase  and  adaptation  of related  software
     products for the "MEDICAL MULTIMEDIA KIOSK" which is expected to be sold by
     December 31, 1998 to Kupat Holim Klalit,  the largest H.M.O.  in Israel and
     US $300,000  was a short-term  loan.  The  principal  amount of the loan is
     linked to the  Israeli  CPI.  The Company  also  acquired a patent from the
     related party. See details at Note 5.

14.  Commitments and Contingent Liabilities

     Lease  commitment:  The Company's  Israeli  subsidiary  leases its premises
     under a rental  agreement  which  expires on December 31, 1997.  The annual
     rental  under the lease is Adjusted NIS 225,720 (US  $72,000).  The rent is
     linked to the US dollar.

15.  Subsequent Events

     In March 1997,  the public  relations  retainer  agreement with Sunrise was
     terminated (see note 11).  Sunrise will retain the option to purchase up to
     300,000 shares of the Company's  common stock. The Company has entered into
     negotiations  with Pelican  Investments Ltd. for a similar public relations
     agreement,  agreeing to issue Pelican  Investments Ltd. options to purchase
     up to 400,000 shares of the Company's common stock.


 

                                      F-14

<PAGE>


                       CASDIM INTERNATIONAL SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

     In March 1997,  CISL was informed by Kupat Holim  Leumit,  of its continued
     postponement  of payment of a trade account  receivable owed to the Company
     in  the  amount  of  approximately   $300,000.  The  Company  is  currently
     researching all possible remedies to correct the situation.

     In March 1997, CISL entered into an agreement with Bank Hapoalim to convert
     approximately $1,000,000 of short-term debt into long-term debt.




                                      F-15

<PAGE>



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

     None.



                                    PART III

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

     The Directors and Executive Officers of the Company are:


          Name                          Position
          ----                          --------
          Yehuda Shimshon.............. Chairman of the Board, President &
                                        CEO, and Chief Financial Officer
          Ilan Mintz................... Director
          Israel Shimshon.............. Director
          David Tamir.................. Director
          Gary P. Tober................ Secretary
          Doron Leave.................. Vice President of Operations and
                                        Director

     Yehuda  Shimshon,  44,  Chairman of the Board,  President,  CEO,  and Chief
Financial  Officer of the Company since December  1995,  began his career in the
Israeli Defense Forces and rose to the rank of Captain.  Upon his discharge from
the  Israel  Defense  Forces  in  1977,  he began a career  as a  consultant  to
organizations  active in international  trade throughout Europe and Africa.  Mr.
Shimshon became active in the field of computer research, developing and writing
programs which led to the  establishment  by him of Casdim Software Systems Ltd.
in 1986,  an Israeli  company  which  develops  clinical  laboratory  management
systems ("CSS Ltd."),  and Casdim  Interactive  Systems Ltd. in 1994, an Israeli
company and  wholly-owned  subsidiary  of the Company which designs and develops
interactive  kiosks and customized  databases and performs  network  integration
("Casdim  Israel").  Mr. Shimshon has been the Chief Executive  Officer of these
companies since their inception.

     Israel  Shimshon,  67, a director of the Company since March 1996, has been
principally  employed as the managing director of Hagadish  Insurance Agency, an
Israeli general insurance  agency,  since 1953. Israel Shimshon is the father of
Yehuda Shimshon.




                                      -15-

<PAGE>



     Doron Leave,  43, a director of the Company since August 1996, has been the
Company's Vice President of Operations  since July 1996.  From September 1990 to
July 1996, Mr. Leave was employed by Bank Hapoalim Ltd., most recently as Branch
Manager of its Allenby,  Tel Aviv  branch.  Mr. Leave holds a degree in Business
Administration from Tel Aviv University.

     Ilan Mintz,  34, a director of the Company since  December  1995,  has been
principally  employed in various  executive  positions  with CSS Ltd.  Mr. Mintz
began his employment with CSS Ltd., a company wholly owned by Mr.  Shimshon,  in
1990 as manager of the Customer Support and Training  Division.  In June 1993 he
became the  director of the  Marketing  Division  of CSS Ltd.  and has served as
General Manager since January 1995.

     David  Tamir,  53, a director of the Company  since May 1996,  is currently
engaged as an  independent  consultant.  In addition,  he is currently the chief
project manager for WEDA  Consultants  N.V., a project  consulting  firm,  which
provides services to the Company.  From May 1992 to December 1995, Mr. Tamir was
president of Powerspectrum  Technology,  a  majority-owned  subsidiary of Geotek
Communications,  Inc.  ("Geotek"),  a  wireless  communications  provider.  From
January  1996 to May  1996,  Mr.  Tamir  was  employed  in Israel by Geotek in a
non-executive  position.  From  1990  until  May  1992,  Mr.  Tamir  served as a
representative of the Israeli Armament Development Authority in Washington, D.C.
Mr.  Tamir was  initially  elected to the  Company's  Board of  Directors as the
designee of the investors in the Company's 1996 Private Placement.

     Gary P. Tober, 47, Secretary of the Company since December 1995, has been a
member of the law firm of Lane Powell  Spears  Lubersky of Seattle for over five
years. Mr. Tober practices in the areas of international business law, taxation,
and international investment law.

     The  Company's   Board  of  Directors  has  appointed  an  audit  committee
consisting of Messrs. Ilan Mintz and David Tamir.

     All  Directors of the Company hold office until the next Annual  Meeting of
Stockholders  and until  their  successors  have  been  elected  and  qualified.
Officers serve at the pleasure of the Board of Directors. Mr. Israel Shimshon, a
director of the Company,  is the father of Mr.  Yehuda  Shimshon,  the Chairman,
President, and CEO of the Company. All of the executive officers, other than Mr.
Tober, devote their full time to the operations of the Company.

Key Employee

     Dr.  Adam  Livny   joined  the   Company  in  August   1997  as   Director,
Communications Systems. Dr. Livny holds a Ph.D. degree in Electrical Engineering
from  Polytechnic   University  of  New  York,  a  M.Sc.  degree  in  Electrical
Engineering  from  Polytechnic  Institute  of  Brooklyn,  and a B.Sc.  degree in
Electrical Engineering from the Technion, Israel Institute of Technology.  Prior
to joining the Company, he was for over 25 years a senior research engineer with
Rafael,  the Israeli  governmental  authority for warfare  systems  development.
While affiliated with Rafael,  Dr. Livny served as Vice President of Development
of Carcom/Rafael from 1993 to August 1996, where he




                                      -16-

<PAGE>



was responsible for research and development of mobile satellite  communications
systems.  He was  engaged in the  development  of many  advanced  communications
systems while employed by Rafael.  During the years 1987 through 1990, Dr. Livny
was on leave  from  Rafael  and  served as the Chief  Scientist  of the  Israeli
Ministry of Communications.

Section 16(a) Beneficial Ownership Reporting Compliance

     The Federal securities laws require directors and executive  officers,  and
persons  who own  more  than  10% of  Casdim's  Common  Stock  to file  with the
Securities and Exchange  Commission  initial reports of ownership and reports of
changes of  ownership  of any equity  securities  of the  Company.  To  Casdim's
knowledge,  based solely on review of the copies of such reports furnished to it
and representations that no other reports were required,  all persons subject to
these  reporting  requirements  filed the required  reports on a timely basis in
1996 except: (i) Yehuda Shimshon did not timely file initial filings on Schedule
13-G and Form 3, (ii) Cedarwood  Trading & Investments  Ltd. did not timely file
an initial  filing on  Schedule 13-G, (iii)  Doron  Leave did not timely file an
initial filing on Form 3, (iv) David Tamir did not timely file an initial filing
on Form 3, (v) Ilan Mintz did not timely file an initial  filing on Form 3, (vi)
Israel  Shimshon did not timely file an initial filing on Form 3, and (vii) Gary
Tober did not timely file an initial filing on Form 3.





                                      -17-

<PAGE>




Item 10.  Executive Compensation

     The  following   table  sets  forth   information   concerning   the  total
compensation for the Company's Chief Executive Officer in 1996. During the three
years ended December 31, 1996, no other executive officer received  compensation
in excess of  $100,000.  During the three years ending  December  31, 1996,  the
Company's  Chief Executive  Officer did not receive any restricted  stock award,
stock appreciation right or payment under any long-term incentive plan.


                           SUMMARY COMPENSATION TABLE

                                                                Long-Term
                                           Annual             Compensation
                                         Compensation      Securities Underlying
Name and Principal Position     Year       Salary($)            Options(#)
---------------------------     ----       ---------            ----------
Yehuda Shimshon,
  President and CEO             1996      $240,000(1)              --
  President and CEO             1995            --                 --
   (effective 12/11/95)         
                                1994            --                 --







---------
(1)  The aggregate value of all other  perquisites  and other personal  benefits
     furnished to Mr. Shimshon was less than 10% of such officer's salary.  This
     amount does not include Mr.  Shimson's  use of an  apartment  leased by the
     Company when he is in New York.

     There are currently no employment agreements between the Company and any of
its executive officers. The Company did not pay any Directors fees in 1996.

STOCK OPTIONS

     In 1996 the Chief Executive Officer named above in the Summary Compensation
Table  was not  granted  any  option,  nor  did he hold  any  options  or  stock
appreciation rights.












                                      -18-

<PAGE>



Item 11. Security Ownership of Certain Beneficial Owners and Management

     The following  table sets forth as of March 28, 1997,  certain  information
regarding the Company's  Common Stock for each person known by the Company to be
the beneficial owner of more than 5% of the outstanding  shares of the Company's
Common Stock, (ii) by each executive  officer named in Item 10 hereof,  (iii) by
each of the Company's Directors (iv) by all the executive officers and Directors
of the Company as a group:



                                             Amount of              Percent
Name and Address(1)                     Beneficial Ownership       of Class
-------------------                     --------------------       --------
Yehuda Shimshon                              8,250,000(2)             58.4%
Cedarwood Trading & Investment Ltd.          4,250,000                30.1%
Doron Leave                                         --                  --
Israel Shimshon                                     --                  --
Ilan Mintz                                          --                  --
David Tamir                                     29,162(3)               --
All Executive Officers and Directors     
  as a group (5 persons)                     8,279,162(3)             58.5%


--------- 

(1)  The address of Messrs. Israel Shimshon,  Yehuda Shimshon, Ilan Mintz, David
     Tamir and Doron Leave is 5 Haofan Street, Kiryat-Arie, P.O. Box 3599, Petah
     Tikva,  Israel 49130.  The address for Cedarwood is c/o Bank of Bermuda,  6
     Front Street, Hamilton HM 11, Bermuda.

(2)  Includes  4,250,000  shares held by  Cedarwood,  in which entity Mr. Yehuda
     Shimshon has a controlling beneficial interest.  Accordingly,  he is deemed
     to be the beneficial owner of such shares.

(3)  Includes  29,162  shares of common  stock  issuable  upon the  exercise  of
     warrants held by WEDA Consultants,  N.V., a company with which Mr. Tamir is
     affiliated.







                                      -19-

<PAGE>



Item 12. Certain Relationships and Related Transactions

     In October 1995,  Casdim Israel  entered into an agreement with CSS Ltd., a
company  wholly owned by Yehuda  Shimshon.  Pursuant to this  agreement,  Casdim
Israel paid CSS Ltd.  $700,000  for  services and products to be supplied by CSS
Ltd. to the Company. These products and services included: (i) adaptation of the
Scope(TM)  LIS system  operating in the 140  laboratories  of Kupat Holim Klalit
("Kupat  Holim")  to  work  with  the  medical  kiosk;   (ii)   development  and
implementation  of a  central  data  base for  laboratory  test  results;  (iii)
implementation  of the "Laboratory  Test Results Central Data Base" to work with
the 140  laboratories  and 400 clinics of Kupat  Holim;  and (iv)  communication
software  and  adaptation  of various  interfaces  between  CSS Ltd.  and Casdim
Israel's products.  The agreement also provided that in the event Kupat Holim or
other  companies  purchased  the  above-mentioned  products  from CSS Ltd.,  the
proceeds,  up to the sum of $700,000 would be repaid to Casdim Israel.  To date,
CSS Ltd. has paid Casdim Israel $50,000.

     In  October  1995,  Casdim  Israel  loaned CSS Ltd.  $300,000  at a rate of
interest  linked to the Israeli CPI,  which loan was repaid in 1996.  In January
1995,  Casdim Israel  purchased a pending  patent from CSS Ltd.  relating to the
medical multi-media kiosks for the sum of $500,000.

     On November 21, 1995 the Company  entered into an agreement with Casdim USA
and Mr. Yehuda Shimshon.  Mr. Shimshon acted on behalf of himself and Cedarwood,
the then sole  shareholders of Casdim USA. Pursuant to the terms of the Exchange
Agreement,  the Company acquired all the issued and outstanding shares of Casdim
USA in exchange for 425,000,000 shares of the Company.  The Exchange  Agreement,
which became  effective on December 11, 1995, was approved at a special  meeting
of the  shareholders  of the  Company  held on  October  24,  1995 at which  the
shareholders  also  approved:  (i)  renaming  the Company  Casdim  International
Systems,  Inc.;  (ii)  the  50:1  stock  split of  76,700,000  shares,  the then
outstanding  number of shares of the Company,  into 1,534,000 shares;  (iii) the
relocation of the Company's  headquarters from Colorado to Nevada;  and (iv) the
appointment  of Mr.  Shimshon as  President  and  Chairman  of the Board.  As of
December  31,  1996,  the  Company  had   14,134,001   shares  of  common  stock
outstanding,  of which 58.5% was owned by Mr. Shimshon and Cedarwood,  a company
in which he  holds a  controlling  interest.  At the time of the  exchange,  Mr.
Shimshon and Cedarwood were each 50% shareholders of Casdim USA.

     Under a public relations  retainer  agreement with Sunrise  Financial Group
Inc. ("Sunrise"),  the Company agreed to issue Sunrise options to purchase up to
700,000  shares  of  its  common  stock  at  a  price  of  $1.00  per  share  as
consideration  for its  public  relations  services.  Of such  options,  460,000
options  vested as of April 24, 1996 and options to  purchase  10,000  shares of
common  stock  were  to vest  monthly  for a  24-month  period,  subject  to the
continued  provision of services by Sunrise. In March 1997, the public relations
retainer  agreement with Sunrise was terminated.  Sunrise will retain the option
to purchase up to 300,000 shares of the Company's common stock.









                                      -20-

<PAGE>



     In July 1996 the Company entered into a one year consulting  agreement with
WEDA Consultants  N.V., a project  consulting firm, with which firm Mr. Tamir is
employed  as a  chief  project  manager.  Under  the  terms  of  the  consulting
agreement,  WEDA  receives a monthly  retainer of $10,000  and has been  granted
options to purchase 100,000 shares of common stock,  which vest ratably over two
years, beginning on the first anniversary of the grant. Mr. Tamir was originally
elected  to the Board of  Directors  as the  designee  of the  investors  in the
Company's 1996 Private Placement.


Item 13. Exhibits, List and Reports on Form 8-K

(a)      Exhibits

         *2       Agreement for the Exchange of Stock and Reorganization.
         *3.1     Articles of Incorporation as amended on December 6, 1995.
        **3.2     By-laws.
         *10.1    Software  Adaptation Services Agreement dated January 10, 1995
                  between the Company and CSS Ltd.
         *10.2    Short-term  Loan Agreement dated February 10, 1995 between the
                  Company and CSS Ltd.
         *10.3    Patent Assignment Agreement dated January 10, 1995 between the
                  Company and CSS Ltd.

         10.4     Alpha/Beta  Test  Agreement  between  the Company and Ramada
                  Franchise Systems, Inc.
  
        *21       Subsidiaries of the Company.

(b)  Reports on Form 8-K filed during the last quarter of the period  covered by
     this report:

          The  Company's  Report  on Form 8-K,  filed  with the  Securities  and
          Exchange  Commission on September 16, 1996, is hereby  incorporated by
          reference.
----------------
     *    Incorporated  by  reference  to the  Company's  Annual  Report on Form
          10-KSB for the year ended December 31, 1995.

     **   Incorporated by reference to the Company's  Annual Report on Form 10-K
          for the year ended December 31, 1994.





                                      -21-

<PAGE>



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange  Act of 1934,  the  Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized on March 30, 1997.


                       CASDIM INTERNATIONAL SYSTEMS, INC.



                                     /s/Yehuda Shimshon
                                     ------------------
                                    Yehuda Shimshon
                                    Chairman of the Board, President, CEO 
                                    and Chief Financial Officer


     In accordance  with the  Securities  Exchange Act of 1934,  this Report has
been signed  below on March 30, 1997 by the  following  persons on behalf of the
Company and in the capacities indicated.

Name                            Title



/s/Yehuda Shimshon
------------------
Yehuda Shimshon                 Chairman of the Board, President, CEO and Chief
                                Financial Officer


 /s/Doron Leave                 Director
 --------------                                
Doron Leave


/s/Ilan Mintz
-------------
Ilan Mintz                      Director


/s/Israel Shimshon
------------------
Israel Shimshon                 Director


/s/David Tamir
--------------
David Tamir                     Director






                                      -22-

<PAGE>




     Exhibit No.             Description                               Page No. 

     * 2      Agreement for the Exchange of Stock and Reorganization.

     * 3.1    Articles of Incorporation as amended on December 6, 1995.

     * 3.2    By-laws.

    * 10.1    Software  Adaptation  Services  Agreement  dated  January  10, 
              1995 between the Company and CSS Ltd.

   ** 10.2    Short-term  Loan  Agreement  dated  February  10, 1995 between the
              Company and CSS Ltd.

    * 10.3    Patent  Assignment  Agreement  dated  January  10, 1995  between 
              the Company and CSS Ltd.

      10.4    Alpha/Beta  Test Agreement  between the Company and Ramada   
              Franchise Systems, Inc.

    * 21      Subsidiaries of the Company.



-----------
*    Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the year ended December 31, 1995.

**   Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1994.