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, 1997

                        Commission File Number: 00-21219

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

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

            150 East 58th Street
          New York, New York 10155                          10155
   (Address of principal executive offices)               (Zip Code)

Issuer's telephone number: (212) 829-1700
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 $0.01

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. [X]

Issuer's revenues for its most recent fiscal year: $33,091.

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 April 13, 1998 was $1,821,720.25.
    
As of April 8, 1998, the Registrant had 15,394,001  shares of Common Stock,  par
value $0.01, 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"  or  "Casdim")  is  a  multimedia   and
communications  company engaged in the  integration of interactive  televisions,
which will be used to provide interactive programs to link vendors and customers
and to supply information and transactions on demand (the "IOD System"). The IOD
System is designed to provide information and video on demand to the hotel guest
community.  The IOD  System  will  offer a wide  range of  local,  national  and
international activities and services,  including business information,  leisure
insight,  internet connectivity,  databanks and members' club facilities through
various Internet/Enthroned services and video on demand activities. 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.

     Historically,  the Company's  principal  business was the sale and lease of
multimedia  kiosks,  and the development and sale of databases,  kiosk and kiosk
home  pages,  servers  and  communications  applications.  In 1997,  the Company
discontinued  the  operations  of its  Israeli  subsidiary,  Casdim  Interactive
Systems Ltd., as a result of the substantial losses incurred by it in conducting
its kiosk  business,  and 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.

Products

     The IOD System

     On March 20, 1997, the Company and Ramada Franchise Systems,  Inc. ("RFS"),
a  wholly-owned  subsidiary of HFS  Incorporated,  entered into an agreement for
"alpha" and beta"  testing of Casdim's IOD System.  The IOD System  incorporates
interactive  television,  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  television  systems.  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 was completed in March 1998.  The Company built a demo
hotel  room  with  the  IOD  System  in  its  N.Y.   offices  and  is  presently
demonstrating the




                                      -2-

<PAGE>



operation of the IOD System to hotel  managers and owners.  No assurance  can be
given that RFS will provide the Company the  Internet-content for the IOD System
or that  RFS will  recommend  the  installation  of the IOD  System  or that the
Company will be able to raise  sufficient funds to install its IOD System within
the Ramada Inn franchise system.

     It is anticipated hotel guests utilizing the IOD System will access the IOD
System  through the Casdim  default  channel of their  television  and will have
access to various  services  pursuant to the following  planned  directories and
applications:

     Hotel Members Club. When a guest checks in to the hotel he or she will have
the option of becoming a hotel club member.  Members will enjoy  customized IOD,
stock,  sport and news screens.  The guest will have a personalized  screen with
the list of stocks he wishes to follow or see how his  favorite  sports  team is
doing. In addition, some hotels may chose to offer members credit points for use
of certain hotel  facilities,  such as  restaurants  and shops. A leisure screen
allows the guest to chat with others on the Internet with common interests.

     Business. This directory will allow the hotel guest to keep up to date with
the latest  financial  information,  including stock quotes,  financial data and
market research, all of which will be regularly updated. Hotel Club Members will
have  their  own  customized   screens  detailing  their  specified   securities
portfolio.

     News. The news directory will provide the hotel guest with a summary of the
day's  events and will supply  links to news  services on the  Internet for more
in-depth coverage.  A hotel club member will be able to turn his television into
a customized  news device by tailoring his or her  preferences to his or her own
personal taste.

     City Guide. A local-area guide that will provide  neighborhood maps, yellow
pages,  and  information on the latest films,  cultural and sports  events.  The
guest  will be able to find out about  local  points of  interest,  restaurants,
shops,  and various  activities.  It is  anticipated  that tickets for films and
cultural  and sports  events will be  purchased by the guest using a credit card
through the IOD secured system.

     E-mail and Fax. This directory will allow guests to send and receive e-mail
and to form their personal e-mail address or Hotel Member's Club e-mail address.
The hotel guest will also have the ability to send faxes worldwide.

     Travel.  The Travel Directory will provide on-line  airfare,  hotel and car
rental  reservations  through  carefully  selected Internet sites. All purchases
will be charged  directly  to the guest's  credit  card  through the IOD secured
system.

     Weather.  This directory will provide local and international weather data,
including synoptic maps and satellite  photography,  allowing the guests to plan
their day or continue travel arrangements.




                                       -3-

<PAGE>



     Hotel Guides.  This directory is a customized  interactive guide describing
facilities and amenities  available in a particular  hotel, such as health spas,
restaurants,  business  services,  laundry  and other  services.  The guide will
incorporate a hotel's individual logo into the graphic images.

     Messaging.  Message retrieval/viewing will provide hotel the guest with the
opportunity to review his or her messages on the television screen.

     Http://. This directory will provide the guest unlimited Internet access.

     In cases  where  the  Company  will  install  Video on Demand  facility  in
addition to the IOD System, such facility will include the following features:

     Account Review. An interactive guest services  application that will enable
the guest to review his or her individual hotel account status on the television
screen.

     Video Check-Out.  This application will allow the guest to check out of the
hotel via the television screen.

     Video  Store.  This  directory  will offer  movies in three ways;  Video on
Demand  (offers  the guest a variety  of video  titles  from  which to  choose),
Pay-Per-View  (movies  that  are  played  on a set  schedule),  and  Pay-Per-Day
(similar  to  Pay-Per-View,  except  for the  billing  cycle  and the  number of
channels included in the package).

     Room  Service.  Room  Service  will allow the guest to order  meals via the
television  screen  instead of the telephone.  It is anticipated  that the basic
types of room service to be provided  will include  "Tomorrow's  Breakfast"  and
"All-Day Dining".

Proposed Mexican Venture

     The Company and Dick Clark  International  Cable Ventures Ltd. ("Dick Clark
Ventures")  agreed  to enter  into a joint  venture,  to be known as  Technology
Transfer Corporation, 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  agreed to  contribute
$500,000 to the joint venture which will design, install and operate an advanced
communications  platform based on the satellite  platform.  To date, the Company
has  expended  approximately  $700,000  in  connection  with this  project.  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  transactions and  international
funds transfers.




                                       -4-

<PAGE>



The Company is currently  awaiting Dick Clark Ventures to obtain the licenses to
be issued by the Mexican Government. The Company is also waiting for the amended
licenses to be finalized. No assurance can be given that this joint venture will
begin operation,  will be able to raise sufficient capital for the initiation of
its proposed business or will be successful in developing the network.

Sales, Marketing and Distribution

     In 1996 and 1997, 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 proposed 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,  with
principal  emphasis  on the IOD  System.  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.

Competition

     The electronic  information  distribution market is rapidly evolving and is
competitive. The Company believes that most, if not all, 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  included in the Company's IOD System.  Accordingly,  these competitors
may have an advantage in competing  with the Company since its IOD System is not
commercially  installed  as  yet.  In  addition,  the  Company  expects  to face
competition  from  new  entrants  into  its  markets.   Such  competition  could
materially  adversely  affect the Company's  business,  financial  condition and
results of operation. There can be no assurance that the Company will be able to
compete successfully against current or future competitors.

Government Regulation

     The  Company's  proposed  joint venture with Dick Clark  Ventures  will, if
initiated,  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.

Trademarks and Patents

     In January 1995, the Company acquired a pending patent (No. 108935) for its
medical kiosks from Casdim  Software  Systems Ltd.  ("CSS Ltd."),  an affiliated
company owned by Mr. Yehuda Shimshon,  for $500,000. The consideration was based
on the man-hours invested in the project by CSS Ltd. This patent is pending both
in Israel  and the  United  States.  The  Company  does not have any  registered
trademarks.





                                       -5-

<PAGE>



Employees

     At March 17, 1998 the Company and its subsidiaries employed 8 persons, 1 in
technical   support,  1  in  marketing  and  sales,  and  6  in  operations  and
administration.


Item 2. Description of Property

     The  Company's  executive  offices are currently  located in  approximately
3,700 square feet of office space at 150 East 58th Street,  New York,  New York.
The lease for such facilities  expires on May 2, 2002. The annual rental for the
lease is approximately $134,000.


Item 3. Legal Proceedings.

     An action was  initiated  against the Company by three  investors  who have
alleged that they are owed a penalty fee in connection with their  investment in
the Company.  The investors  claimed that the Company  failed to promptly file a
registration   statement  with  the  Securities  and  Exchange  Commission  (the
"Commission")  with respect to their shares.  Such  investors  have claimed that
they are owed  $210,000 by the  Company.  The Company  intends to defend  itself
vigorously against the action brought by the investors.

     The Company has been advised that the 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.


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

     During the quarter  ended  December  31,  1997,  the Company held it Annual
Meeting of Stockholders. At the meeting held on December 22, 1997, the Company's
stockholders  voted on the  election of  directors  and the  appointment  of the
Company's auditors. The results of the vote were as follows:

     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:




                                       -6-

<PAGE>





                                   For                Withhold
                                   ---                --------
       Yehuda Shimshon          8,444,450              12,000
       Israel Shimshon          8,444,450              12,000
       Doron Leave              8,444,450              12,000
       Ilan Mintz               8,444,450              12,000
       David Tamir              8,444,450              12,000
       
     2. For the  approval  of the  appointment  of Hocker,  Lovelett,  Hargens &
Yennie, P.C. as the Company's auditors for the year ended December 31, 1997


       For                 Against               Abstain
       ---                 -------               -------
     8,444,450              4,000                 8,000







                                       -7-

<PAGE>



                                     PART II

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

     Because  there has been no  established  trading  market and only a limited
number of market makers have sporadically offered to purchase and sell shares of
the Company's Common Stock,  during significant  portions of the listed periods,
reliable quotations for the Common Stock were not available.


1996                                           High            Low 
----                                           ----            --- 
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

1997
----
First Quarter..........................       $3 1/2          $1 1/32
Second Quarter.........................        2 7/16          1 13/32
Third Quarter..........................        1 11/16           11/16
Fourth Quarter.........................        1 7/32             9/32

     The Nasdaq Bulletin Board symbol for the Company's Common Stock is CDMI. As
of March 11,  1998,  there  were  approximately  21  holders  of record  and 380
beneficial owners of the Company's Common Stock.

     The Company has not paid any cash  dividends  on its Common  Stock and does
not anticipate paying any cash dividends in the foreseeable future.


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.





                                       -8-

<PAGE>



Background

     The Company is a Delaware  corporation,  originally  incorporated under the
laws of Colorado 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. During the
three years prior to 1995, the Company had limited activity. The Company did not
have revenues and expenses  consisted  principally of general and administrative
costs used in the analysis of prospective business ventures. 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"),  a trust in which he is
primary  beneficiary.  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  issued to Mr.  Shimshon  and
Cedarwood  in equal  amounts.  At the time of the  exchange,  Mr.  Shimshon  and
Cedarwood  were each 50%  shareholders  of Casdim USA. 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. The exchange
transaction  resulted in a change of control in the Company and at December  31,
1995,  each  of  Mr.  Shimshon  and  Cedarwood  owned  44.1%  of  the  Company's
outstanding  shares of Common Stock. In April 1997 the Company was merged into a
Delaware subsidiary and changed its state of incorporation to Delaware.

Results of Operations

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996.

     Product sales  decreased to $33,091 during the year ended December 31, 1997
from  $508,713 in the year ended  December 31,  1996.  The decrease in sales was
principally  attributable  to the  Company's  Israeli  subsidiary  inability  to
generate  substantial  revenues  from  either  kiosk  sales or  leasing  and the
discontinuation of operation of the subsidiary in the fourth quarter of 1997.

     Cost  of  sales  decreased  to  $50,547  in 1997  from  $379,806  in  1996,
principally  as a  result  of  the  Company's  lower  level  of  sales  and  the
discontinuation of the operations of its Israeli subsidiary.  As a result of the
foregoing,  the Company's gross profit for 1997 was negative $17,456 compared to
$128,907 in 1996.





                                       -9-

<PAGE>



     Selling,  general and  administrative  expenses  increased to $2,774,875 in
1997 from  $1,259,347  in 1996,  due  primarily to the  Company's  investment of
approximately  $700,000  in the Dick Clark  Venture  project,  establishment  of
executive offices in New York City, increased compensation, legal and accounting
costs, and increased  marketing costs  associated with the Company's  efforts to
penetrate the United States market.  In 1997, the Company also recognized a loss
of  approximately  $300,000  as a result of the  write-off  of an  uncollectible
account receivable of Kupat Holim Leumit.

     In  1997,  the  Company  capitalized   approximately  $929,000  of  product
development  costs  principally  relating  to the  IOD  System  as  compared  to
approximately  $943,000 of product development costs relating to this project in
1996.

     During  1997,  the Company had other income of $40,733 as compared to other
income of $52,537 in 1996. In the first  quarter of 1997 the Company  recorded a
gain of $145,402 on the sale of an investment.

     For the year ended  December  31, 1997,  the Company  incurred an operating
loss of  $2,751,598  as compared an operating  loss of  $1,173,977  for the year
ended  December 31, 1996.  The increase in the Company's  operating  loss during
1997 was due  primarily to the increase in the  Company's  selling,  general and
administrative  expenses  and the  decline in sales.  In  addition,  in 1997 the
Company  recorded a loss of $774,020  from the  discontinued  operations  of its
Israeli subsidiary.

     As a result of the foregoing, the Company recorded a net loss of $3,525,618
(or $.23 per share, based on 15,334,001 weighted average shares outstanding) for
the year ended  December  31, 1997 as compared to a net loss of  $1,173,977  (or
$.09 per share based on 13,349,000  weighted average shares outstanding) for the
year ended December 31, 1996.

Liquidity and Capital Resources

     At December  31,  1997,  the Company had  $216,337 in cash and  $332,498 in
working  capital as compared to $915,527 in cash and $898,151 in working capital
at December 31, 1996. In 1997,  the Company  entered into various  financings in
order to raise funds for its working capital requirements.  In 1997, the Company
received  $400,000  upon the  exercise  of warrants  issued in its 1996  Private
Placement and $1.5 million from the sale of 1,200,000  shares of Common Stock in
a private  placement.  On December 23, 1997, the Company sold $250,000 principal
amount of 10%  convertible  secured  note due on January 5, 1999 (the  "December
Note") to an investor.  The December Note is  convertible  into shares of Common
Stock for a period of nine months and fourteen days beginning March 23, 1998 and
ending  January 5, 1999, at a 20% discount to the average  closing bid price per
share of the Common Stock on the Nasdaq  Bulletin Board on the five trading days
prior to the  conversion  date (the  "Market  Price").  After the 180th day, the
December Note is convertible at a 30% discount to Market Price. In the event the
Market  Price  will be less than  $0.50 per  share,  the  December  Note will be
convertible  at 50%  discount  to the  closing bid price for the share of Common
Stock for the five trading days before the  conversion  date.  In addition,  the
Company issued to the investor  two-year  warrants to purchase  50,000 shares of
Common Stock at an exercise  price of $0.50 per share.  In 1997,  the  Company's
financial  position  also  benefitted  from the  conversion  of  $955,550 of its
Israeli




                                      -10-

<PAGE>



subsidiary's  short-term  debt  into  long-term  debt.  The  proceeds  from  the
Company's financings funded the Company's operations in 1997.

     On March 17, 1998, the Company sold an additional $200,000 principal amount
of 10% convertible  secured note due on January 8, 1999 (the "March Note").  The
March Note is convertible  into shares of Common Stock for six months and twenty
four days  beginning June 15, 1998 and ending January 8, 1999, at a 20% discount
to the  average  closing  bid price per share of the Common  Stock on the Nasdaq
Bulletin Board for the five trading days prior to the conversion day (the "March
Note Market Price"). After the 180th day, the conversion price is convertible at
a 30%  discount  to the March  Note  Market  Price.  In the event the March Note
Market Price will be less than $0.50,  the March Note will be  convertible  at a
50%  discount to the bid price for the Common  Stock for the five  trading  days
before the  conversion  date. In addition,  the Company  issued to the investors
two-year  warrants to purchase  200,000  shares of Common Stock,  at an exercise
price equal to 80% of the average  closing bid and asked price of the  Company's
Common Stock as reported by the Nasdaq  Bulletin Board (and if not quoted on the
Nasdaq Bulletin Board as reported by National Quotation Bureau) on September 17,
1998.

      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  the  payment  of  the  remaining  amount  due  on  the  capital
contribution which the Company has agreed to make to the joint venture with Dick
Clark Ventures, if such venture ultimately proceeds,  for which no assurance can
be  given.  In 1997 the  Company  reduced  its  costs in order to  conserve  its
financial  resources and develop its current  projects.  Monthly expenses in the
United  States  were  reduced to less than  $100,000  per month in the third and
fourth quarters of 1997 in an effort to conserve cash.

     Management  believes that the Company will require additional  financing of
$1.8  million  in 1998 to fund the  installation  of the IOD  System at  various
Ramada Inn sites.  In addition the Company will require $1.2 million for further
development of the IOD System,  to start the full marketing and sales activities
for the IOD System and to have  sufficient  working capital for the remainder of
the year.  Although the Company is currently  investigating  several  sources of
financing,  no  assurance  can be given that the  Company  will be able to raise
sufficient  financing on either an equity or debt basis to permit it to continue
operations and implement its IOD System.




                                      -11-





<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








                                      -12-

<PAGE>



                          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 Delaware corporation) and its subsidiaries as of
December 31, 1997 and 1996, 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, 1997 and 1996 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.              

April 7, 1998
Riverton, Wyoming




                                       F-1

<PAGE>



                       CASDIM INTERNATIONAL SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>

                                                           1997                     1996
                                                          ------                   -----
<S>                                                   <C>                      <C> 
     ASSETS

CURRENT ASSETS
     Cash                                               $216,337                 $915,527
     Accounts receivable
        Trade - Note 10                                       --                  438,807
         Related parties                                      --                  834,144
         Officers                                        247,695                  254,200
         Prepaid expenses                                     --                  148,323
     Investments                                          90,000                  173,596
                                                         -------                ---------

         Total                                           554,032                2,764,597


PROPERTY AND EQUIPMENT - Note 4
     Property and equipment                               95,977                  225,361
     Less accumulated depreciation                       (15,159)                 (36,435)
                                                         -------                 --------
         Net                                              80,818                  188,926

OTHER ASSETS
    Deposits                                              55,893                   10,200
     Start-up and organization
        costs, net                                        44,870                   48,304
     Patent, net - Note 5                                     --                  400,000
     Product development costs - Note 6                1,872,421                  943,164
                                                       ---------                ---------


               TOTAL                                  $2,608,034               $4,355,191
                                                      ==========               ==========



</TABLE>




           See accompanying notes to consolidated financial statements




                                       F-2

<PAGE>



                        CASDIM INTERNATIONAL SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                  1997               1996
                                                                 ------             ------
<S>                                                           <C>                <C>
     LIABILITIES AND STOCKHOLDERS' EQUITY 

CURRENT LIABILITIES
     Accounts payable
         Trade                                                  $249,335           $ 52,675
         Other - Note 13                                              --            469,355
     Current maturities of long-term debt                        574,602                 --
     Notes payable - Note 14                                     250,000          1,344,416
                                                                 -------          ---------
         Total                                                 1,073,937          1,866,446

LONG-TERM DEBT
     Accrued severance pay - Note 7                                   --             25,474
     Long-term bank debt - Note 11                               700,050                 --
                                                              ----------          ---------

               TOTAL                                           1,773,987          1,891,920

STOCKHOLDER'S EQUITY - Note 9
     Common stock, $.01 par value,
        30,000,000 shares authorized
        15,334,001 shares issued and
        outstanding, 285,000 shares
        held in treasury stock                                   169,590                985
     Additional paid in capital                                4,873,057          3,145,268
     Less treasury stock (cost)                                   (1,425)           ( 1,425)
     Gain (loss) from foreign currency translation               (51,860)           (51,860)
     Retained earnings (deficit)                              (4,155,315)         ( 629,697)
                                                              ----------         ----------
         Total shareholders' equity                              834,047          2,463,271
                                                               ---------         ----------

               Total liabilities and shareholders' equity     $2,608,074         $4,355,191
                                                              ==========         ==========

</TABLE>








           See accompanying notes to consolidated financial statements




                                       F-3

<PAGE>



                       CASDIM INTERNATIONAL SYSTEMS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>

                                                               1997                      1996
                                                              ------                    ------
<S>                                                       <C>                       <C>        
SALES                                                        $33,091                   $508,713
COST OF SALES                                                 50,547                    379,806
                                                           ---------                 ----------
GROSS PROFIT                                                 (17,456)                   128,907
SALES, ADMINISTRATIVE AND GENERAL                          2,774,875                  1,259,347
                                                           ---------                 ----------
EXPENSES
INCOME (LOSS) FROM OPERATIONS                             (2,792,331)                (1,121,440)
OTHER INCOME (EXPENSES)
      Interest income                                         25,432                     21,309
      Dividend income                                          2,203                     35,673
      Interest expense                                      (132,304)                  (109,519)
      Investment activity (loss) gain                        145,402                         --
                                                            --------                  ---------
                Total                                         40,733                    (52,537)
                                                            --------                   --------
INCOME (LOSS) FROM OPERATIONS BEFORE
TAXES AND DISCONTINUED OPERATIONS                         (2,751,598)                (1,173,977)
(LOSS) FROM DISCONTINUED OPERATIONS                         (774,020)                        --
                                                           ---------                -----------
NET INCOME (LOSS)                                        $(3,525,618)               $(1,173,977)
                                                         ============               ===========
DILUTED (LOSS) PER SHARE                                       $(.23)                     $(.09)
                                                               =====                      =====
BASIC (LOSS) PER SHARE                                         $(.23)                     $(.09)
                                                               =====                      =====
WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING                                      15,334,001                 13,349,000
                                                          ==========                 ==========


</TABLE>



           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, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                                                        FOREIGN
                                                        ADDITIONAL                                      CURRENCY
                                             COMMON      PAID IN         TREASURY         RETAINED     TRANSLATION
                             SHARES           STOCK       STOCK            STOCK          EARNINGS      GAIN (LOSS)          TOTAL
                             ------          ------      -------          -------         --------     -----------           -----
<S>                        <C>             <C>         <C>                <C>          <C>               <C>             <C>     
Balance - 12/31/95          9,634,000          $945      $194,480         $(1,425)        $464,744       $ (6,023)         $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
Foreign currency
   translation                                                                                            (45,657)          (45,657)
Net income (loss)                                                                       (1,173,977)                      (1,173,977)
                           -----------     --------    ----------         -------       -----------      --------        -----------
Balance - 12/31/96         13,634,000          $985    $3,145,268         $(1,425)       $(629,697)       (51,860)       $2,463,271
Recapitalization                            156,605      (156,605)
Sale of Stock               1,400,001        12,000     1,884,394                                                         1,896,394
Net (loss)                                                                              (3,525,618)                      (3,525,618)
                           ----------      --------    ----------         -------       -----------      --------        -----------
Balance - 12/31/97         15,534,001      $169,590    $4,873,057         $(1,425)     $(4,155,315)      $(51,860)       $  834,047


                            See accompanying notes to consolidated financial statements

</TABLE>



                                       F-5

<PAGE>



                       CASDIM INTERNATIONAL SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                1997                1996
                                                                ----                ----
<S>                                                         <C>                 <C>                
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income (loss)                                     $(3,525,618)        $(1,219,634)
      Adjustments to reconcile net income
        to net cash provided by operating
        activities:
         depreciation and amortization                           17,878              86,383

      Changes in operating assets and
        liabilities:
        (Increase) decrease in:
        Accounts receivable - trade                             438,807            (283,024)
        Accounts receivable - other                             988,972             (26,998)
      (Decrease) increase in:
        Accounts payable - trade                                196,660              13,912
        Accounts payable - other                               (469,355)              3,938
                                                               --------             -------

             Net cash (used) by
               operating activities                          (2,352,656)         (1,425,423)
                                                             ----------          ----------

CASH FLOWS FROM INVESTING ACTIVITIES:

      Proceeds from sale of investments                          83,596                  --
      Purchase of property and equipment                             --            (113,634)
      Assets relinquished, net                                  443,664                  --
      Purchase of investments                                        --            (173,596)
      Payment for start-up costs                                     --             (51,512)
      Payment for product development                          (929,257)           (943,164)
      Payment of security deposit                               (45,693)            (10,200)
                                                              ---------          ----------
             Net cash (used) in investing activities           (397,690)         (1,292,106)
                                                               --------         - ---------


</TABLE>



           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, 1997 AND 1996



<TABLE>
<CAPTION>
                                                                1997                1996
                                                                ----                ----
<S>                                                           <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES

      Proceeds from notes payable, net                          180,236             669,714
      Severance pay relinquished                                (25,474)             12,488
      Proceeds from issuance of stock                         1,896,394           2,950,828
                                                              ---------          ----------

             Net cash provided by financing activities        2,051,156           3,633,030
                                                              ---------          ----------

INCREASE (DECREASE) IN CASH                                    (699,190)            915,501

CASH

      Beginning of year                                         915,527                  26
                                                                -------           ---------
      End of year                                              $216,337          $  915,527
                                                               ========          ==========


Interest paid                                                  $132,304           $ 109,519
                                                               ========           =========
Income Taxes Paid                                                    --                  --
                                                                =======             =======




</TABLE>





           See accompanying notes to consolidated financial statements




                                       F-7

<PAGE>


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

1.   General

     CASDIM  INTERNATIONAL  SYSTEMS,  INC.  and its  subsidiaries  (collectively
referred to herein as the "Company") is a multimedia and communications  company
engaged in the  integration  of interactive  televisions,  which will be used to
provide  interactive  programs  to link  vendors  and  customers  and to  supply
information  and  transactions  on demand (the "IOD System").  The IOD System is
designed to provide  information  and video on demand to hotel  guests.  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.

     Historically,  the Company's  principal  business was the sale and lease of
multimedia  kiosks,  and the development and sale of databases,  kiosk and kiosk
home  pages,  servers  and  communications  applications.  In 1997,  the Company
discontinued  the  operations  of its  Israeli  subsidiary,  Casdim  Interactive
Systems Ltd., as a result of the substantial losses incurred by it in conducting
its kiosk business.

2.    Summary of Significant Accounting Policies:

     This  summary of  significant  accounting  policies  of the Company and its
     subsidiaries,  CASDIM  INTERACTIVE  SYSTEMS USA,  INC.  ("Casdim  USA") and
     CASDIM INTERACTIVE SYSTEMS, LTD., (ISRAEL) ("CISL"), 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, the Company issued  8,500,000
          shares of stock after a 50:1  reverse  stock split to acquire  100% of
          Casdim USA, which owns 100% of 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  - CISL  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 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,




                                       F-8

<PAGE>


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

          "Foreign Currency  Translation," of the Financial Accounting Standards
          Board of the United States ("FASB").

          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 increased by 7.0% in the year ended  December 31, 1997
          and 10.6% in the year ended December 31, 1996.

          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.




                                       F-9

<PAGE>


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


                                                 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.

     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.   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.

     g.   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).

     h.   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 FASB  (Accounting  for Income  Taxes).
          Deferred income taxes are not material to the financial statements.






                                      F-10

<PAGE>


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

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

3.   Other Receivables and Prepaid Expenses

                                     1997                    1996
                                     ----                    ----
                                  
Prepaid expenses                       --              $  148,323
Related parties                        --               1,088,344
                                   ------               ---------
      Total                            --              $1,236,667
                                   ======              ==========

4.   Fixed Assets

                                   1997                    1996
                                   ----                    ----
Cost                                
Leasehold improvement          $ 10,168              $   10,168
Furniture & equipment            53,335                 182,719
Motor vehicles                   32,474                  32,474
                                 ------              ----------
                                 95,977                 225,361
Accumulated depreciation         15,154                  36,435
                                 ------               ---------
      Total                     $80,818              $  188,926
                                =======              ==========

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.
     See Note 15 for discussion of discontinued operations.

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, 1997 were $1,872,421. The
     costs were  principally  incurred in the  development  of the Company's IOD
     information on demand project.






                                      F-11

<PAGE>


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

     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.

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. See Note 15 for discussion of discontinued operations.

8.   Capital Stock

     On  May  22,  1997,  the  Company  completed  a  private  placement  of its
     securities  in which  1,200,000  shares of Common  Stock  were  issued  for
     $1,500,000.

9.   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 ISO,  may not be less than 75% of the fair market of such
     shares on







                                      F-12

<PAGE>


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

     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 were to vest monthly for a 24-month period,  subject to the
     continued  provision  of  services  by Sunrise.  Under the  Agreement,  the
     purchase  price of each  share  subject  to an option is $1.00.  Options to
     purchase 540,000 shares of Common Stock had vested as of December 31, 1996.
     In March 1997,  the Agreement was  terminated  and the parties  agreed that
     Sunrise  would  retain  options to  purchase  up to  300,000  shares of the
     Company's Common Stock. The options will expire in April 2001.

     In  April  1997,  the  Company  entered  into  an  agreement  with  Pelican
     Consultants  U.S.A., Inc.  ("Pelican") to provide financial  consulting and
     financial  relations  services to the Company.  The Company agreed to issue
     Pelican  options to purchase up to 200,000  shares of the Company's  Common
     Stock,  at a purchase  price of $1.00 per share.  Of such options,  100,000
     options  vested as of April 11, 1997 and options to purchase the  remaining
     shares vest ratably over the next 12-month  period  beginning May 11, 1997,
     subject to the continued provision of services by Pelican.

     The  Company  has  accounted  for the fair value of the grant of options to
     Sunrise and Pelican in accordance with FASB Statement 123. The compensation
     costs that have been  charged  against  income for the  options  granted to
     Sunrise and Pelican was $164,063.

     Warrants

     The Company issued  warrants  exercisable  into 1,150,000  shares of Common
     Stock in connection with its May 1996 private placement. As of December 31,
     1997,  500,000 of such warrants were exercised and 850,000  warrants remain
     available  to  be  exercised.   The  Company  issued  additional   warrants
     exercisable  into 200,000 shares of Common Stock in connection with its May
     1997 private  placement.  All of such  warrants,  which are  exercisable at
     $1.00 per share,  have been  included in the  computation  of fully diluted
     earnings per share. In addition,  the Company issued  warrants  exercisable
     into  50,000  shares of Common  Stock,  at an  exercise  price of $0.50 per
     share, in connection  with the sale of a convertible  note in December 1997
     (see Note 14).






                                      F-13

<PAGE>


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

10.  Accounts Receivable

     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 has determined this
     account to be  uncollectible.  The  Company  has  included a loss from this
     account in the financial statements.

11.  Long Term Bank Debt

     On March 3, 1997, CISL converted $900,450 of short-term debt into long-term
     debt.  The terms of the  refinancing  call for  payments of  principal  and
     interest at a 7.75% annual interest rate.

     The following is a schedule of principal payments:

     1997                          $  200,400
     1998                             200,400
     1999                             200,400
     2000                             200,400
     2001                              98,850
                                    ---------
                                   $  900,450
     Current Maturities              (200,400)
                                   ----------
     Long-term debt                $  700,050
                                   ==========

12.  Segment Reporting - Foreign Operations

     Included  in  the  consolidated   financial  statements  is  the  following
     financial  information  relating  to the  Company's  wholly  owned  foreign
     subsidiary, CISL.


BALANCE SHEET AS OF DECEMBER 31,                       1997            1996
                                                       ----            ----
      ASSETS
         Cash                                         $2,081      $    1,468
         Accounts receivable - trade                      --         438,807
         Accounts receivable - related parties            --         982,462
         Property and equipment - net                     --         144,459
         Patent - net                                     --         400,000
                                                      ------      ----------
                  Total                               $2,081      $1,967,196
                                                      ======      ==========

      LIABILITIES AND SHAREHOLDERS EQUITY
         Notes payable                              $574,602      $1,344,416






                                      F-14

<PAGE>


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


         Accounts payable                             118,996         51,588
         Other payables                                    --        469,355
         Long-term debt                               700,050             --
         Accrued severance pay - net                       --         25,474
         Capital Stock                                     35             35
         Retained earnings (deficit)               (1,391,602)        76,328
                                                   -----------    ----------
                  Total                             $   2,081     $1,967,196
                                                    =========     ==========

INCOME STATEMENT FOR THE YEARS ENDED 
   DECEMBER 31,

                                                         1997           1996
                                                         ----           ----
         Sales                                        $33,091       $508,713
         Cost of sales                                 50,547        379,806
                                                     --------       --------
         Gross profit                                 (17,456)       128,907
         Sales, administrative and general expense    544,150        623,780
                                                     --------
         Operating income (loss)                     (561,606)      (494,873)
         Interest expense                             132,304        109,519
                                                    ---------      ---------
              Net (loss) from Operations            $(693,910)     $(604,392)
                                                    ==========     ==========


13.  Other Payables

      Included in other payables are the following:


                                                         December 31,
                                                      1997          1996
                                                      ----          ----
Related party                                        $  --       $    --
Accrued payroll                                         --         49,751
Accrued expenses                                        --         12,662
Income taxes payable to the State of Israel             --        406,942
                                                      ----       --------
                                                      $ --       $469,355
                                                      ====       ========

14.  Convertible Secured Note

     In December 1997 the Company  entered into an interim Note financing in the
     amount of  $250,000.  The Note bears  interest  at the rate of ten  percent
     (10%) per annum and is due and  payable  January 5, 1999.  At the option of
     the  Holder,   the  unpaid   principal  is  convertible   into  fully  paid
     nonassessable shares of the Company's Common Stock at a conversion price




                                      F-15

<PAGE>


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

      of 20% below the price per share. The conversion option is available after
      the  90th  day from the  date of  issuance  of the Note in  increments  of
      $25,000.

15.  Discontinued Operations

     In  December  1997,  the  Company  entered  into a  formal  arrangement  to
     discontinue  operations  of  CISL.  Included  in  the  consolidated  income
     statements is the loss resulting from the abandonment of activities of CISL
     amounting to $774,020. See Note 13 for segment information.

16.  Income Taxes

     The  Company  has a net  operating  loss  carry  forward  in the  amount of
     $2,673,437 which will begin to expire in the year 2002.

17.   Contingencies

     An action was  initiated  against the Company by three  investors  who have
     alleged  that  they  are  owed a  penalty  fee  in  connection  with  their
     investment in the Company. The investors claimed that the Company failed to
     promptly file a  registration  statement  with the  Securities and Exchange
     Commission  with respect to their shares.  Such investors have claimed that
     they are owed $210,000 by the Company. The Company intends to defend itself
     vigorously against the action brought by the investors.

18.  Subsequent Events

     On March 17,  1998,  the  Company  sold  $200,000  principal  amount of 10%
     convertible  secured  note due on January 8, 1999 (the "March  Note").  The
     March Note is  convertible  into shares of Common  Stock for six months and
     twenty four days  beginning  June 15, 1998 and ending January 8, 1999, at a
     20% discount to the average closing bid price per share of the Common Stock
     on the  Nasdaq  Bulletin  Board  for the  five  trading  days  prior to the
     conversion  day (the "Market  Price").  After the 180th day, the conversion
     price is  convertible  at a 30% discount to the Market Price.  In the event
     the  Market  Price  will  be  less  than  $0.50,  the  March  Note  will be
     convertible at a 50% discount to the bid price for the Common Stock for the
     five  trading days before the  conversion  date.  In addition,  the Company
     issued to the investors  two-year  warrants to purchase  200,000  shares of
     Common Stock at an exercise  price equal to 80% of the average  closing bid
     and asked  price of the  Company's  Common  Stock as reported by the Nasdaq
     Bulletin Board (and if not quoted on the Nasdaq  Bulletin Board as reported
     by National Quotation Bureau) on September 17, 1998.





                                      F-16

<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
                                            and Chief Executive Officer
Doron Leave................................ Vice President of Operations,
                                            Acting Chief Financial Officer and
                                            Director
Israel Shimshon............................ Director
Gary P. Tober.............................. Secretary

     Yehuda Shimshon,  45, Chairman of the Board,  President and Chief Executive
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.
("CSS Ltd."), an Israeli company which develops clinical  laboratory  management
systems,  in 1986.  Mr.  Shimshon has been the Chief  Executive  Officer of this
company since its inception.

     Doron Leave,  44, a director of the Company since August 1996, has been the
Company's Vice President of Operations  since July 1996 and has served as Acting
Chief  Financial  Officer since May 1997.  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.

     Israel  Shimshon,  68, 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.




                                       13

<PAGE>



     Gary P. Tober, 48, 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.

     Mr.  David Tamir  tendered his  resignation  from the Board of Directors on
December 22, 1997  because of his  inability  to devote  sufficient  time to the
affairs of the Company in the future.  Mr. Ilan Mintz  tendered his  resignation
from the Board of Directors on December 31, 1997 due to personal reasons.

     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.

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
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 1997.





                                       14

<PAGE>



Item 10. Executive Compensation

     The  following   table  sets  forth   information   concerning   the  total
compensation for the Company's Chief Executive Officer in 1997. During the three
years ended December 31, 1997, no other executive officer received  compensation
in excess of  $100,000.  During the three years ended  December  31,  1997,  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
                                                                Compensation
                                                    Annual       Securities
                                                 Compensation    Underlying
Name and Principal Position            Year       Salary ($)     Options (#)
---------------------------            ----       ----------     -----------
Yehuda Shimshon,
  President and CEO (effective         1997     $240,000(1)          --
       12/11/95)                       1996     $240,000(1)          --
                                       1995           --             --
________________

(1)  The aggregate value of all other  perquisites  and other personal  benefits
     furnished  to Mr.  Shimshon  was less than the greater of $50,000 or 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 1997.

STOCK OPTIONS

     In 1997 the Chief Executive Officer named above in the Summary Compensation
Table  was not  granted  any  options,  nor did he hold  any  options  or  stock
appreciation rights.







                                       15

<PAGE>



Item 11. Security Ownership of Certain Beneficial Owners and Management

     The following  table sets forth as of March 11, 1998,  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
Name and Address (1)                   Beneficial Ownership   Percent of Class
--------------------                   --------------------   ----------------
Yehuda Shimshon                            8,250,000 (2)         53.59%

Cedarwood Trading & Investment Ltd.        4,000,000             25.98%

Doron Leave                                     --                 --

Israel Shimshon                                 --                 --

All Executive Officers and Directors
as a group (5 persons)                      8,250,000             53.59%
___________

(1)  The address for Mr. Yehuda Shimshon is 150 East 58th Street,  New York, New
     York  10155.  The  address for  Cedarwood  is c/o Bank of Bermuda,  6 Front
     Street,  Hamilton HM 11, Bermuda.  The address for Messrs.  Doron Leave and
     Israel  Shimshon is 5 Haofan  Street,  Kiryat-Arie,  P.O.  Box 3599,  Petah
     Tikva, Israel 49130.

(2)  Includes  4,000,000  shares of Common Stock held by  Cedarwood.  Mr. Yehuda
     Shimshon  is the primary  beneficiary  of this  trust.  Accordingly,  he is
     deemed to be the beneficial owner of such shares.







                                       16

<PAGE>



Item 12. Certain Relationships and Related Transactions

     In October 1995, Casdim Israel, an Israeli  wholly-owned  subsidiary of the
Company,  entered into an agreement with CSS Ltd., a company wholly-owned by Mr.
Yehuda  Shimshon,  who  beneficially  owns  (directly and through his control of
Cedarwood) approximately 53.6% of the Company's issued and outstanding shares of
Common Stock.  Pursuant to this agreement,  Casdim Israel paid CSS Ltd. $700,000
for  services  and  products to be supplied  by CSS Ltd. to Casdim  Israel.  The
consideration  was determined based upon actual man-hours spent in providing the
services and products.  These products and services included:  (i) adaptation of
the Scope(TM) LIS system operating in the 140 laboratories of Kupat Holim Klalit
("Kupat Holim"),  Israel largest health maintenance  organization,  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. Mr. Yehuda Shimshon has agreed to place 500,000 of his shares of Common
Stock of the Company in escrow to guarantee the performance of CSS Ltd. pursuant
to the agreement with Casdim Israel. Such shares will remain in escrow until the
performance of the obligation under the agreement is complete.

     Also 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.  The consideration for the
patent was determined  based on the actual man-hours spent in the development of
the project.

     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.
Pursuant to the terms of the Exchange  Agreement,  the Company  acquired all the
issued and outstanding shares of Casdim USA, the owner of 100% of the voting and
equity  shares of Casdim  Israel,  in  exchange  for  425,000,000  shares of the
Company issued to Mr.  Shimshon and Cedarwood in equal  amounts.  At the time of
the exchange,  Mr.  Shimshon and Cedarwood were each 50%  shareholders of Casdim
USA. 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.  The  exchange  transaction  resulted  in a change of control in the
Company.

     On June 1, 1997, the Company entered into a sublease agreement with Medical
Visions,  Inc.,  a New York  corporation  in which  Mr.  Yehuda  Shimshon  has a
controlling  interest  ("Medical  Visions"),  pursuant to which Medical  Visions
subleased approximately one third of




                                       17

<PAGE>



the Company's  executive offices at 150 East 58th Street, New York, New York for
a three-month period, in consideration for $2,500 per month.

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

(a)      Exhibits


        Exhibit No.                         Description
        -----------                         -----------
                   
     *    3.1 Articles of Incorporation as amended on December 6, 1995.

     *    3.2 By-laws.

     **   4.1 Stock Option Agreement with Sunrise Financial Group Inc.

     ***  4.2 Stock Option Agreement between the Company and Pelican Consultants
              U.S.A., Inc.

     ***  4.3  Warrant  Agreement  dated May 22,  1997  between  the Company and
               Lydford Ltd..

     ***  4.4  Form of  Registration  Rights  Agreement  between  the Company 
               and Brayford Ltd., Lydford Ltd. and Stolin Ltd.

          4.5  10% Convertible  Secured Note dated December 23, 1997 between the
               Company and Frank K. Brosens.

          4.6  Warrant Agreement dated December 23, 1997 between the Company and
               Frank K. Brosens.

          4.7  10%  Convertible  Secured  Note dated March 17, 1998  between the
               Company and Frank K. Brosens.

          4.8  Form of  Warrant  Agreement  dated  March  17,  1998  and Form of
               Warrant Certificate.

     **** 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.

          27   Financial Data Schedule. 
___________

*    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  Report on Form 10-QSB for the
     quarter ended September 30, 1996.

***  Incorporated by reference to the Company's  Registration  Statement on Form
     SB-2, File Number 333-10287.

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

*****Incorporated  by reference to the  Company's  Annual  Report on Form 10-KSB
     for the year ended December 31, 1996.




                                       18

<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 April 14, 1998.


                                    CASDIM INTERNATIONAL SYSTEMS, INC.


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


     In accordance  with the  Securities  Exchange Act of 1934,  this Report has
been signed  below on April 14, 1998 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 and Chief
                                Executive Officer


/s/Doron Leave
--------------
Doron Leave                     Vice President of Operations, Acting Chief
                                Financial Officer and Director


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




                                       19

<PAGE>

                                 EXHIBIT INDEX
                                 -------------

        Exhibit No.                         Description               Page No.
        -----------                         -----------               --------
                   
     *    3.1 Articles of Incorporation as amended on December 6, 1995.

     *    3.2 By-laws.

     **   4.1 Stock Option Agreement with Sunrise Financial Group Inc.

     ***  4.2 Stock Option Agreement between the Company and Pelican Consultants
              U.S.A., Inc.

     ***  4.3  Warrant  Agreement  dated May 22,  1997  between  the Company and
               Lydford Ltd..

     ***  4.4  Form of  Registration  Rights  Agreement  between  the Company 
               and Brayford Ltd., Lydford Ltd. and Stolin Ltd.

          4.5  10% Convertible  Secured Note dated December 23, 1997 between the
               Company and Frank K. Brosens.

          4.6  Warrant Agreement dated December 23, 1997 between the Company and
               Frank K. Brosens.

          4.7  10%  Convertible  Secured  Note dated March 17, 1998  between the
               Company and Frank K. Brosens.

          4.8  Form of  Warrant  Agreement  dated  March  17,  1998  and Form of
               Warrant Certificate.

     **** 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.

          27   Financial Data Schedule. 
___________

*    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  Report on Form 10-QSB for the
     quarter ended September 30, 1996.

***  Incorporated by reference to the Company's  Registration  Statement on Form
     SB-2, File Number 333-10287.

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

*****Incorporated  by reference to the  Company's  Annual  Report on Form 10-KSB
     for the year ended December 31, 1996.