U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

   
                                   FORM 10-KSB/A
    

                                  ANNUAL REPORT
                    PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended                        Commission File Number: 0-18109
   December 31, 1996

         Exact name of small business issuer as specified in its charter

                            BCAM INTERNATIONAL, INC.

State or other jurisdiction of                    IRS Employer
incorporation or organization: New York           Identification No.: 13-3228375

                     Address of principal executive offices:

                             1800 Walt Whitman Road,
                            Melville, New York 11747
                                 (516) 752-3550

Securities registered under                         Name  of each  exchange  on
Section 12(b) of the Exchange  Act:                 which registered:
  Common Stock, $.01 par value                       Boston Stock Exchange
                                                     NASDAQ

         Securities registered under Section 12(g) of the Exchange Act:
                          Common Stock, $.01 par value
                         Common Stock Purchase Warrants
                   Units consisting of three common shares and
                         two redeemable Class A Warrants


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

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

         Registrant's revenues for its most recent fiscal year were $604,554.

         The  aggregate  market value of the  registrant's  common stock held by
non-affiliates  as of March 21, 1997, was  $19,880,916,  based on the average of
the bid and asked prices of such stock on March 21, 1997, as reported by NASDAQ.

         The number of shares outstanding of the registrant's common stock as of
March 21, 1997, was 15,954,733.

DOCUMENTS INCORPORATED BY REFERENCE

   
         None
    

Transitional Small Business Disclosure Format (check one): Yes __; No X_


<PAGE>







                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

         BCAM International Inc. (formerly  Biomechanics  Corporation of America
prior to a name change effected June 22, 1995), (the "Company") was organized in
1984 under the laws of the State of New York.


GENERAL

   
         BCAM  International,  Inc.  (the  "Company")  is a software  technology
company,  specializing in ergonomic  (human factor)  solutions for  individuals,
government, and for major corporations.  The Company's focus since 1995 has been
on (I)  accelerating  the  development  and  commercialization  of the Company's
Intelligent  Surface  Technology  ("IST"),  (II)  continuing its  development of
proprietary  software,  which consists of the intelligent part of IST, MQPro(TM)
(formerly Mannequin(R)),  the EARLY(R) process and Back-to-Work(TM) methodology,
and  (III) in  addition  to the  planned  proprietary  software  ("HumanCAD(R)")
product  sales of  MQPro(TM),  EARLY(R) and  Back-to-Work(TM),  the Company will
market  Software  Based  Ergonomic  Consulting  Services.  The Company will also
continue to provide its Traditional  Ergonomic  Consulting Services in Ergonomic
Product  Assessment and Redesign and Ergonomic  Workplace  Assessment,  but with
emphasis on broadening and strengthening  long term business  relationships such
as joint ventures,  partnerships,  licensees and other alliances.  The Company's
collaborative research and development  relationships,  such as the one with the
State  University  of New York at Stony  Brook,  provide  valuable  resources in
strengthening the Company's capabilities in ergonomic consulting.

         The Company  anticipates that its business plan will be enhanced by the
acquisition of a business which will provide a base for the commercialization of
IST in medical  footwear.  On March 19,  1997,  the Company  signed a definitive
agreement to acquire Drew Shoe  Corporation  ("Drew") of Lancaster,  Ohio, a 125
year-old leading designer,  manufacturer and distributor of medical footwear and
orthotic  products,  for  $4.6  million  subject  to  financing.  The  Company's
acquisition  of Drew and the related  financing  are expected to be completed in
the second quarter of 1997.  Drew's 1996 sales were  approximately  $15 million.
Upon  completion of IST, the Company hopes to  incorporate  it into  intelligent
medical footwear and orthotic products.
    

         The  Company  believes  that its  ergonomic  consulting  service is the
engine  that  drives new  product  ideas and with it, the  potential  for future
royalty streams, as well as new product and service offerings. During the course
of the Company's performance of ergonomic consulting services,  the Company from
time to time develops  certain  know-how based upon data from its services which
it is able to embody into proprietary technologies.  When this occurs, and it is
believed  that the  technology is a  significant  enhancement  from the existing
technology, the Company files for patent protection under the laws of the United
States, and if warranted, internationally.

(I)      INTELLIGENT SURFACE TECHNOLOGY

         Since  1991,  the Company  has  developed  and  patented  seven  issued
patents,  one notice of allowance and four additional  patent filings related to
its IST which empowers  surfaces to  automatically  measure any part of the body
touching  that surface and then, in real time,  adjust  themselves to conform to
that user's body to provide the  ultimate in comfort and fit.  Such a surface is
considered an intelligent surface because it is able to learn about the user and
recognize   patterns  of  the  user's   activities   through  its  sophisticated
proprietary  software.   The  Company  has  identified   applications  for  this
technology in the primary areas of seating,  footwear and bedding.  In addition,
the technology can be used for handtools, exercise equipment, helmets, etc.


Current Licensees

         Textron.  The Company and McCord Winn  Textron,  Inc., a subsidiary  of
Textron,  Inc.,  ("Textron") signed a Development and License Agreement in March
1993,  amended in October 1993 and August 1996,  whereby the Company  granted an
exclusive  worldwide  license to Textron to use the IST patents and  know-how in
the  manufacture,  use  and  sale  of  seats,  and  seating  components  for the
transportation industry, wheelchairs, office furniture applications and hospital
beds.

         In 1996,  Textron  informed  the Company that it expects a certain 1998
model automobile to be introduced in the fall of 1997, to incorporate IST in the
design of the driver and passenger seat. Textron is obligated to pay the Company
a royalty  for the use of the  Company's  technology  in the sale of the systems
which is expected to commence in 1997.

         The August 1996  amendment  obligated  Textron to pay  royalties to the
Company through December 31, 1999, for any products designed using the Company's
IST.  After  January 1, 2000,  Textron  shall be  obligated  to pay the  Company
royalties only for any products designed which actually  incorporate IST patents
and know-how  transmitted  to Textron by the Company  after May 31, 1996.  As of
today,  the Company has  disclosed to Textron that it has received  four patents
and one "Notice of Allowance" after May 31, 1996.


         Reebok.  In January  1994,  the Company and Reebok  International  Ltd.
("Reebok") signed a world-wide exclusive licensing and development agreement for
the use of IST  footwear.  In addition,  Reebok has a right of first  refusal to
obtain exclusive  licenses to use IST on athletic,  sport and fitness  equipment
fields of use.  The fields of  medical  equipment  and  orthopedic  devices  are
specifically excluded from the Reebok license.

         The Company and Reebok are continuing to work closely in developing the
application of the Company's IST, which is expected to be introduced in Reebok's
footwear products in due course.


         Lumex.  The agreement  signed in September 1994 between the Company and
Lumex, Inc. was terminated in April 1996. The fields relinquished by Lumex cover
operating room tables, medical rockers and medical procedure chairs.


Potential New Licensees

         The Company has  identified  several  fields that can benefit  from its
technologies  and  ergonomic  design  expertise.  The  Company  is  in  advanced
discussions with a recliner  company,  an office  furniture  company for seating
products,  a company which  manufactures  operating room tables,  a tool company
which manufactures  jackhammers and a hand tool company. It is actively pursuing
the leading  companies  within  these  fields in order to increase the number of
licensees and generate additional revenue.

         Sealy. In August 1996, the Company signed an agreement with Sealy, Inc.
to utilize the Company's IST, computer software,  know-how and expertise towards
development of new Sealy products.  Specifically,  Sealy has an option agreement
to license IST for its adjustable bed and a right of first refusal as applied to
all bedding products (excluding medical bedding applications).


         Revenue from IST accounted for 4% of revenue in 1996 versus 13% in 1995
and 23% in 1994.  The 1996  revenue  was  generated  from the  Sealy  and  Lumex
licensing  agreements,  while the 1995 and 1994 revenue was  generated  from the
Reebok and Lumex agreements.


 (II) PROPRIETARY SOFTWARE DEVELOPMENT

         In  addition  to  the  IST  software,   the  Company's  other  software
development efforts have always been focused in areas that support the Company's
Traditional  Ergonomic Consulting  Services,  and beginning in 1997 the Software
Based  Ergonomic  Consulting  Services.  Since 1989,  the Company has developed,
marketed,   maintained,  and  continuously  upgraded  two  proprietary  software
packages: MQPro(TM) (formerly known as Mannequin(R)) and EARLY(R). Recently, the
Company  has been  identifying,  testing,  validating,  and  modifying  software
technology  for use in the  Worker's  Compensation  area  of  "Back-to-Work(TM)"
products.  These  proprietary  software  products will be further  developed and
marketed by the Company's HumanCAD(R) division.


MQPro(TM) (Formerly known as Mannequin(R))

         The Company's  HumanCAD(R)  division started the marketing of MQPro(TM)
software  on March 10,  1997.  The  software  is  compatible  with CAD and other
graphic  programs,  and has motion  capture  capabilities  useful for  graphical
illustrations and motion analysis.  The Company believes that many universities,
design organizations and government agencies,  including NASA, are current users
of the  earlier  version of  MQPro(TM)  (formerly  known as  Mannequin(R)).  The
results  of a  successful  beta  test  of the  new  version  of  MQPro(TM),  and
preliminary market survey confirmed that a substantial market exists, especially
among CAD users and industrial designers.

         MQPro(TM) is a human  modeling  program that enables the user to render
3-dimensional  scalable  humanoid  figures on a personal  computer  (PC).  These
figures can be  articulated  into any  position  and then can be viewed from any
angle, distance or perspective.  The result of that view can be printed, plotted
or exported to other graphics software for further enhancement of the image. The
figures  can  walk,  bend,  reach  and  grasp  objects.  A  user  can  test  the
functionality  of the design of almost anything used by humans.  The Company has
recently  upgraded  a  Windows(R)  version  that  processes  in  all  Windows(R)
platforms.

         The Company plans to extend its  development  and  marketing  effort of
MQPro(TM)  from the current  standard  version to  include:  a Lite  version,  a
Plug-in version, a Companion version and a Heavy version.


EARLY(R)

         The  Company's  EARLY(R)  process  (Ergonomic  Assessment  of Risk  and
Liability)  allows the  ergonomist  to  integrate  videotapes  of tasks with the
assistance  of  sophisticated  software to identify  risk of  Cumulative  Trauma
Disorders and determine opportunities for ergonomic intervention in order to fit
the  workplace  better to the workers'  capabilities.  Currently,  the Company's
EARLY(R)  process is marketed on a service retail basis to industrial  companies
and governments,  and on a wholesale basis to insurance companies. See Ergonomic
Consulting Services.

         The Company plans on developing and  eventually  marketing the EARLY(R)
process as a stand alone software with the ancillary  Software Based  Ergonomics
Consulting Services in addition to its traditional EARLY(R) workplace assessment
services.


Back-To-Work(TM) Technology

         The Company is currently  completing  the testing and  validation  of a
diagnostic  methodology  which will, in a non-invasive way, measure the severity
of back injury of an individual who is already on Workers'  Compensation,  or an
individual who has filed a claim to be on Workers' Compensation. This diagnostic
analysis  combines  the  measurement  of the  range  of  motion,  with  strength
calculation,  in order to assess the functional  capabilities  of an individual.
This objective,  non-invasive analysis should identify malingerers,  and provide
doctors for  employers and doctors for  insurance  companies  with the objective
necessary information on all employees that are claiming Workers'  Compensation.
In addition,  medical providers can use this information to prescribe  treatment
protocol,  monitor  progress of  treatment  and  determine  proper  back-to-work
procedures.  The  Company  intends  to  market  this as a service  to  insurance
companies and other third-party administrators ("TPA").

         The Company's testing and validating of a Back-to-Work(TM) methodology,
along with the necessary  modifications,  is to be completed in the near future.
The Company then plans to work with Risk Enterprise  Management  ("REM"),  a 75%
owned subsidiary of Zurich Companies, to perform a pilot study, using a group of
REM's  managed care  providers.  If the pilot study is  successful,  the Company
expects to roll out its new  Back-to-Work  diagnostic  methodology  some time in
1998. Several other large insurance companies have also been approached, and are
very  interested in this  diagnostic  technology.  See Marketing of  Traditional
Ergonomic Consulting Services.


(III)    ERGONOMIC CONSULTING SERVICES

         The Company has restructured its ergonomic consulting services into two
areas: (i) Software Based Consulting  Services,  tailored to the  implementation
and use of the  HumanCAD(R)  line  of  ergonomic  software  products,  and  (ii)
Traditional  Ergonomic Consulting Services,  in Ergonomic Product Assessment and
Redesign, and Ergonomic Workplace Assessment.

         The  Company  believes  that its  ergonomic  consulting  service is the
engine  that  drives new  product  ideas and with it, the  potential  for future
royalty streams, as well as new product and service offerings. During the course
of the Company's performance of ergonomic consulting services,  the Company from
time to time develops  certain  know-how based upon data from its services which
it is able to embody into proprietary technologies.  When this occurs, and it is
believed  that the  technology is a  significant  enhancement  from the existing
technology, the Company files for patent protection under the laws of the United
States, and if warranted, internationally.

Software Based Consulting Services

         As  part  of  the  Company's  restructuring,  the  Company  will  focus
resources for further development of its HumanCAD(R)  ergonomic software product
line.  The eventual  product  sales of the  HumanCAD(R)  software will create an
opportunity  for the  Company  to  provide  a new  consulting  service  based on
implementation and use of such proprietary software.

         The Company  anticipates  that a portion of customers who will purchase
its  HumanCAD(R)  ergonomic  software line will need the added expertise to help
them  fully  utilize  the  software  products  in order to meet  their  business
objectives,  whether those objectives are making better products, bringing those
products to market more quickly,  reducing product development costs or creating
a safer and more efficient workplace environment.


Traditional Ergonomic Consulting Services

     Ergonomic Product Assessment and Redesign

         The Company performs  comprehensive  subjective and objective ergonomic
testing on products  that  quantifies  the  product's  relationship  in terms of
comfort,  fit,  usability and user performance to human users. This knowledge is
used by product developers, manufacturers and industrial design firms to improve
existing products and/or develop new ones. In essence, the Company serves as the
"User's  Representative",  communicating  user needs in terms that engineers and
industrial  designers can apply in the design of their  products.  This analysis
provides substantial guidance and a strong foundation to the design process.

         Ergonomic Product  Assessment and Redesign Services provided 69% of the
Company's  revenue in 1996, 60% of the Company's  revenue in 1995 and 70% of the
Company's revenue in 1994.


     Ergonomic Workplace Assessment

         Workers'  compensation  coverage to employees cost U.S.  employers over
$100 billion in 1996.  It is also  estimated  that more than 2.5 million  people
developed  musculoskeletal disorders last year, and according to OSHA, each year
over $20 billion  dollars is spent on repetitive  stress injuries (or Cumulative
Traumatic  Disorders).  Many of  these  injuries  involve  lost  duty  time  for
recuperation,  reassignment  of injured  workers to other  jobs,  in addition to
medical treatment costs, thus escalating total workers' compensation costs.

         The  Company  provides  Ergonomic  Workplace   Assessment  services  to
industrial   companies,   government,   and  insurance   companies,   to  reduce
musculoskeletal  injuries,  through its proprietary EARLY(R) services and custom
tailored  consulting  services.  Other  benefits are the  potential for improved
productivity, enhanced product and service quality.


         Ergonomic  Workplace  Assessment Services provided 26% of the Company's
revenues in 1996, 27% of the revenues in 1995 and 7% of the revenues in 1994.


SALES AND MARKETING

Marketing Strategy for Licensing IST

         In order  for the  Company  to  obtain  new  licensees,  the  Company's
marketing strategy has focused on identifying organizations that:

     -    Are large,
     -    Are financially strong,
     -    Have marketing presence, and
     -    Have the financial resources to commercialize the technology

         The Company will license the IST technology to organizations  that meet
the above criteria and will assist those  organizations in  commercializing  the
technology.

Marketing of Traditional Ergonomic Consulting Services

-    Ergonomics  (human  factors)  originated  in academia and was only recently
     popularized by industry.  As a result,  the sales cycle is long.  Since the
     service is intangible,  the Company's emphasis,  therefore,  is on building
     long-term  relationships  with  major  organizations  that  may lead to new
     product  ideas  and  with it,  potential  royalty  streams,  as well as new
     product and service offerings.

-    The Company is marketing and promoting its Traditional Ergonomic Consulting
     Services in traditional  ways,  including  referrals from existing clients,
     publishing articles,  speaking at seminars and conducting industry specific
     seminars.


-    In addition to the above  approaches  to market the  Traditional  Ergonomic
     Consulting Services,  the Company is also attending and exhibiting at trade
     shows,  utilizing direct marketing techniques,  and advertising in selected
     trade publications, including on its Internet web site (www.bcamergo.com).



Pricing Policy

         During  1995,  the  Company  changed  its  pricing   practices  in  its
Traditional  Ergonomic  Consulting  Service  business.  Previously,  the Company
charged only a consulting  fee per project.  The Company's  new pricing  formula
calls for, in addition to a consulting  fee, a royalty  which may be earned when
the  Company's   ergonomic   product   redesign   change   recommendations   are
commercialized  or a percentage of cost savings when major  ergonomic  workplace
assessment recommendations are implemented.

The following are some examples of the new pricing policy:


-    The Long  Island  Lighting  Company  ("LILCO")  and the  Company  will work
     together to market a "Lift Assist" for a Jackhammer,  for which the Company
     provided design  recommendations as part of its workplace  assessment.  The
     Company  will share  equally in the proceeds  from an income  stream in the
     future.

-    Remington Arms Company,  Inc.  ("Remington"),  pursuant to a  Best-In-Class
     assessment by the Company, was provided redesign recommendations related to
     Remington's .22 caliber rifles.  The contract signed with Remington  states
     that if the Company's  recommendations are incorporated into their product,
     royalties will be paid to the Company.



Business Relationship Strategy

         During  1995 and  1996,  the  Company  focused  on  building  long-term
relationships with major  organizations as a key part of its marketing strategy.
The Company's objective is to obtain repeat business from its clients (which the
Company has already started accomplishing in 1996).

The following  are some  examples,  other than the IST  licensing  relationship,
where repeat business has occurred or is imminent:


-    In March 1996, the Company entered into a long-term  relationship  with REM
     to provide  EARLY(R)  service.  The  relationship is expected to broaden in
     1997 to include both prevention,  EARLY(R) service and a pilot study, using
     a group of REM's managed care providers.  If the pilot study is successful,
     the  Company  expects  to  roll  out its  new  Back-To-Work(TM)  diagnostic
     methodology some time in 1988.

-    Multiple  contracts with United Airlines  relating to the interior redesign
     of the plane,  such as seating,  have been entered into.  In addition,  the
     Company identified causes and then made recommendations for the redesign of
     food service carts on airplanes,  specifically to reduce  repetitive stress
     injuries.

-    Multiple   contracts   with  LILCO  for  Workplace   Assessments,   Product
     Assessments  and Redesign and a project  whereby LILCO and the Company will
     work together to market a "Lift Assist" for  Jackhammers.  The Company will
     share in the profit from sales of the product.

-    After completing a Product  Assessment and Redesign  assignment for Stanley
     Tools, a division of The Stanley  Works,  the Company  received  additional
     Product Assessment and Redesign assignments from other divisions of Stanley
     Works. More are expected.

-    Frisby  Technologies,   Inc.  ("Frisby"),   a  leading  technology  company
     established to develop,  manage and  commercialize  innovative dual use and
     environmental  remediation  technologies,  and the Company  entered  into a
     Business  Referral  Agreement.  In  the  agreement,  the  Company  has  the
     exclusive  right to refer  customers  to Frisby  relating to the  following
     products: bedding, recliners and heat stress reduction products for workers
     at utilities.  As of September 1996, LILCO awarded a grant to Frisby and to
     the  Company to develop  "cool"  gloves and "cool"  sleeves to reduce  heat
     stress for linesmen.



          Research and Development

         The  Company's  research and  development  is focused on enhancing  and
commercializing  the  Company's  core  technologies.  The  Company  attempts  to
minimize  spending on research.  Therefore,  the Company  typically  will try to
acquire  the rights to use an existing  technology,  if  available,  rather than
spend money and effort to invent a new  technology.  The Company will,  however,
fund research for technology,  when the needed technology is not available.  For
example, in the case of certain components (i.e., a self-generating power supply
and an  intelligent  switch) which are necessary to employ IST for handtools and
footwear  applications,  the  Company  is  seeking  to  acquire  the  rights  to
technology  to  manufacture  such  components  instead of trying to invent those
technologies.  However,  in the  case of other  control  components  (i.e.,  the
microvalve  that will  control  the "air  pressure"),  the  Company is  devoting
resources to develop  that  technology,  in order to be in a better  position to
exploit the commercial  opportunities of IST in a miniaturized  environment.  In
the area of  development,  the Company is focusing on software  and  application
engineering.  Further  software  developments  include IST,  several versions of
MQPro(TM), Back-To-Work(TM), and fully automating the EARLY(R) process.

         The Company uses its internal resources and subcontractors,  as needed,
in its  research  and  development  activities.  For  example,  the  Company has
established a  collaborative  research and  development  relationships  with the
State  University of New York at Stony Brook,  MCNC and the New Jersey Institute
of  Technology,  and plans to  establish  additional  relationships  with  other
universities, and government laboratories, as necessary.


Competition

         Management  of the  Company  believes  that its unique IST  technology,
HumanCAD(R)   software,   methodologies  and  know-how  give  it  a  significant
competitive advantage.

         Although there may be similar systems to the Company's IST, the Company
believes  that its patents and know-how  strongly  protect its  technology  from
competition.

         The Company believes that MQPro(TM) is the only software package of its
kind that  will  process  on a PC with a minimum  of  resources,  i.e.,  8 MB of
memory. Therefore,  MQPro(TM) has significant economic advantages over all other
competing software of its kind.

         Although there are many competing  sources for similar  services to the
Company's  offerings,  the  Company  believes  its  EARLY(R)  process,  with the
accompanying  EARLY(R)  software  provides  significant  advantages in cost, and
proven solutions in its data base, to its clients.

         There are many sources of product design services,  especially internal
designers  of  organizations.  However,  the  Company  believes  that its unique
technology, proprietary software, know-how and methodologies, developed over the
last 12 years, which are continuously updated, provide significant advantages to
the  Company's  clients  over other  alternatives  in cost,  quality  and faster
turnaround, thus reducing the design cycle.


Suppliers

         The  Company  provides  services,  and  the  materials  it  uses in its
business may be obtained from numerous suppliers.


Government Regulation

         The Company's present and proposed activities are not generally subject
to government regulation in the United States or other countries.

         While the Company cannot predict the extent to which it may be affected
by  legislative  or other  regulatory  developments,  it does  believe  that the
current  policies  of OSHA  encourage  the use of the  Company's  services.  The
Company is also of the view that if OSHA continues to focus on ergonomic issues,
it will result in both  industry and the general  public  becoming more aware of
the need for ergonomic services and products. Focus is also occurring at the FDA
to encourage more human factor engineering in the design of medical devices.

         The costs and  effects  of  complying  with  environmental  laws by the
Company are not material.



Proprietary Information

         The patent process is a major protection for the Company's intellectual
property. As of today, the Company has obtained seven patents (six in the United
States  and one  European)  and one  notice of  allowance,  and has  filed  four
additional United States patent applications relating to its IST. This notice of
allowance has special significance because it is a pending software patent filed
prior to the June 22,  1995,  GATT  Treaty,  which  means,  when this  patent is
issued, it will have a 17 year life from time of issue or 20 years from the date
of filing,  whichever  is greater.  One of the four  patents  filed is also very
significant  since it is for a  critical  component  needed to  miniaturize  the
application  of the IST.  Such  miniaturization  will  allow the  Company  to a)
accelerate the  commercialization of many applications,  b) enter the very large
and  expanding   medical  footwear  market  with   applications  for  diabetics,
arthritics  and the  aging  population,  and c)  provide  applications  to other
industries,  such as the hand  tool  industry.  The  Company  also has five U.S.
patents in fields other than IST.

         The  Company  protects  its  proprietary  written  material,  know-how,
computer software and technology,  which it has or may develop,  through the use
of United States copyrights,  common-law trade secret protection, trademarks and
service marks,  and contractual  arrangements.  In addition,  the Company enters
into confidentiality arrangements with its employees, consultants and customers,
and implements  various  measures to maintain "trade secret"  protection for its
products


Major Customers

         During the year ended December 31, 1996, L.A. Rumbold Ltd.,  LILCO, and
Stanley Tools, Inc. accounted for 38%, 18% and 18% respectively,  and 74% in the
aggregate,  of net  revenue.  During  the  year  ended  December  31,  1995,  BE
Aerospace,  Inc.,  Remington,  and  Reebok  accounted  for  29%,  12%  and  11%,
respectively,  and 52%, in the aggregate, of net revenue. During the fiscal year
ended December 31, 1994, an Indonesian  government agency,  Aircraft Industry of
Indonesia   ("IPTN"),   Reebok  and  Lumex   accounted  for  59%,  17%  and  9%,
respectively,  and 85%, in the aggregate, of net revenue. Because the Company is
often  retained to consult  with  respect to  particular  problems or to present
particular  seminars or training  sessions,  it is usually  retained for limited
periods of time and may not perform services pursuant to long-term contracts and
its services  may not  typically be needed by clients  after the  completion  of
particular assignments. No assurance can be given that the Company will continue
to be retained  by any of its major  clients  beyond the current  period or that
such  clients will find  additional  tasks to be performed by the Company in the
future.


Employees

         As of December 31, 1996, the Company had 13 employees and two part-time
positions.  The  functions  include  six in  technical  staff,  two in sales and
marketing, and two senior management members, with the rest being accounting and
administrative  staff.  In addition,  the Company  established  a  collaborative
research &  development  relationship  with the State  University of New York at
Stony  Brook,  with  plans to  establish  additional  relationships  with  other
universities, government laboratories, and other sub-contractors.


         The Company has been able to attract and retain  skilled  employees  by
offering competitive salaries and benefits.  None of the Company's employees are
represented by a labor union and the Company believes that its relationship with
its employees is good.



Forward-Looking Statements

         Information set forth in this Form 10-KSB regarding the Company's plans
for  future  operations  constitutes  "forward-looking  statements"  within  the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange Act of 1934,  as amended.  Any  forward-looking
statements  should  be  considered  in light  of the  factors  set  forth in the
"Factors That May Affect Future Results" section of this Form 10-KSB.




ITEM 2.  DESCRIPTION OF PROPERTY

         Since 1990,  the Company has leased  office  space at 1800 Walt Whitman
Road,  Melville,  New York.  The Company's  lease expires on March 31, 2000. The
current annualized lease rate for this space is approximately $138,000, which is
subject to annual increases.  The facility,  which contains  approximately 8,400
square feet,  includes  biomechanics  research  laboratories and a comprehensive
ergonomic library as well as offices. The laboratories are used both for testing
and for the redesign of products. The facilities are believed to be adequate for
the Company's operations into the foreseeable future.



ITEM 3.  LEGAL PROCEEDINGS

         There are no material legal proceedings pending against the Company.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


         Not applicable.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Common Stock of the Company is quoted primarily on the NASDAQ Small
Cap Market under the symbol BCAM. It is also traded on the Boston Stock Exchange
under the symbol BAM.

         The following  table sets forth the high and low closing bid quotations
for the Common  Stock as reported by NASDAQ and the Boston  Stock  Exchange  for
each  calendar  quarter  during  1996 and 1995.  The  NASDAQ  Small  Cap  market
quotations  reflect  inter-dealer  prices  without  retail  markup,  markdown or
commission and do not necessarily represent actual transactions.


                                              NASDAQ

         1996                       High Bid                 Low Bid

         First Quarter              1 1/4                    29/32
         Second Quarter             1 5/16                   29/32
         Third Quarter              1 23/32                  15/16
         Fourth Quarter             1 7/16                   13/16


         1995                       High Bid                 Low Bid

         First Quarter              1 1/16                   3/4
         Second Quarter             1 9/32                   7/8
         Third Quarter              1 21/32                  31/32
         Fourth Quarter             2                        1


                                      Boston Stock Exchange

   
         1996                       High Sales Price         Low Sales Price

         First Quarter              No Activity              No Activity
         Second Quarter             1 1/4                    1 1/16
         Third Quarter              1 19/32                  1
         Fourth Quarter             1 7/16                   7/8

         1995                       High Sales Price         Low Sales Price

         First Quarter              1 1/16                   13/16
         Second Quarter             1 9/32                   31/32
         Third Quarter              1 1/2                    1
         Fourth Quarter             1 13/16                  1 1/8
    

Holders

         There were  approximately  363 record  holders of the Company's  Common
Stock as of March 21, 1997.


Dividends

         The Company has paid no cash  dividends  on its Common  Stock since its
inception and does not  anticipate  paying cash dividends on its Common Stock in
the foreseeable future.


   
Recent sale of unregistered securities

         Between January 15 and March 28, 1997, in consideration for $1,075,000,
the Company sold to  accredited  investors  an aggregate of 1,075,000  shares of
Common Stock at $1.00 per share, and 1,075,000  Non-Redeemable Class AA Warrants
to purchase an additional  1,075,000 shares of Common Stock at an exercise price
of $.65 per share exercisable through March 31, 2002.

         The purchasers of the securities are set forth in the following table:

                                           Common shares      Common shares
Name of purchaser         Amount paid        issuable         under warrants
-----------------         -----------      -------------      --------------

621 Partners               $ 260,000           260,000            260,000
Appleton Associates          120,000           120,000            120,000
R. Weil & Associates         320,000           320,000            320,000
Karen Weil                   100,000           100,000            100,000
David Latter                  25,000            25,000             25,000
Howard Weingrow               50,000            50,000             50,000
Peter Orr                     50,000            50,000             50,000
Joseph Offenberger            25,000            25,000             25,000
David Schultz                 25,000            25,000             25,000
Howard Seiberman              50,000            50,000             50,000
Joe Schueller                 50,000            50,000             50,000
                          ----------         ---------          ---------
                          $1,075,000         1,075,000          1,075,000

         Kirr Marbach & Company,  LLC ("Kirr  Marbach") is a general  partner of
621  Partners,  Appleton  Associates  and R.  Weil  &  Associates  which  in the
aggregate are entitled to receive,  or to direct the receipt of, dividends from,
and the  proceeds  from sale of,  all of the shares  beneficially  owned by Kirr
Marbach.

         The Registrant  claims exemption from registration of this placement by
virtue of Section 4(2) of the Securities Act of 1933.

    


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

         Except for the historical  information  contained herein, the following
discussion   contains   forward   looking   statements  that  involve  risk  and
uncertainties.  The Company's actual results could differ  materially from those
discussed  herein.  Factors that could cause or contribute  to such  differences
include,  but are not  limited to,  those  discussed  below in Factors  That May
Affect Future Results


Overview

   
         BCAM  International,  Inc.  (the  "Company")  is a software  technology
company,  specializing in ergonomic  (human factor)  solutions for  individuals,
government, and for major corporations.  The Company's focus since 1995 has been
on (I)  accelerating  the  development  and  commercialization  of the Company's
Intelligent  Surface  Technology  ("IST"),  (II)  continuing its  development of
proprietary  software,  which consists of the intelligent part of IST, MQPro(TM)
(formerly Mannequin(R)),  the EARLY(R) process and Back-to-Work(TM) methodology,
and (III)  upgrading  and  marketing its  proprietary  software  ("HumanCAD(R)")
products of MQPro(TM),  EARLY(R) and  Back-to-Work(TM),  and marketing  Software
Based Ergonomic Consulting  Services.  The Company is also committed to continue
to provide its Traditional  Ergonomic  Consulting  Services in Ergonomic Product
Assessment  and Redesign and Ergonomic  Workplace  Assessment,  with emphasis on
broadening  and  strengthening  long term business  relationships  such as joint
ventures, partnerships, licensees and other alliances.

         The  anticipated  acquisition of Drew will enhance its business plan by
providing a base for the commercialization of IST in footwear.  The Company will
then focus on the core business which will include  incorporating IST in seating
products,  exploitation of the medical footwear market and marketing HumanCAD(R)
software and Software Based Consulting Services,  and place less emphasis on the
non-core business of Traditional Ergonomic Consulting Services.
    


Results Of Operations - 1996 vs. 1995

   
         Management  anticipates a significant  contribution from software sales
and Software Based  Ergonomic  Consulting  Services in the future  starting with
1997. Software sales and Software Based Ergonomic Consulting Service contributed
minimal revenue in 1996 and 1995. The Company's Traditional Ergonomic Consulting
Services provided virtually all revenue to the Company from contracts  providing
for a fixed price or a fixed hourly rate.  For the year ended December 31, 1996,
revenue from long-term fixed price contracts  accounted for under the percentage
of completion method of accounting totaled  approximately two thirds of revenues
(See - Note 2 to financial  statements).  In setting its price for services, the
Company  seeks to  estimate  the man hours that will be  required to provide the
services. To the extent that the Company  underestimates the man hours that will
be required, or the expenses it will incur in performing a contract, the Company
could  realize a loss on any  particular  contract.   Net revenue  decreased by
$147,523 in 1996 from 1995.
    

Net revenue includes the following:
                                                        Year Ended December 31,
                                                      --------------------------
                                                          1996            1995
                                                      ----------      ----------
Intelligent Surface Technology(IST)                   $   28,030      $   96,473
Ergonomic Product Assessment and Redesign services       415,160         451,508
Ergonomic Workplace Assessment services                  161,364         204,096
                                                      ----------      ----------
                                                      $  604,554      $  752,077
                                                      ==========      ==========


         Revenue from IST includes the initial payments for licensing the IST as
well as fees  associated with the development of the prototypes for the specific
applications. Revenue from IST in 1996 includes $15,000 connected with the Sealy
option and  development  agreement  signed in 1996. In 1996,  $12,500 of revenue
from the 1994 Lumex  agreement  was  written off after the  termination  of that
agreement.  IST revenue  declined $68,443 in 1996 from 1995 and accounted for 5%
of net  revenue in 1996  versus 13% in 1995.  The  majority  of 1995  revenue is
attributable  to the  licensing  and  development  agreements  with  Reebok  for
Intelligent Footwear and Athletic Sport and Fitness Equipment and Lumex.

         Due to  the  one-time  nature  of  many  of  the  Company's  consulting
contracts,  revenue from Ergonomic Product Assessment and Redesign services, and
Ergonomic  Workplace  Assessment  services  (Traditional   Ergonomic  Consulting
Services)  fluctuates  from  year to  year.  Ergonomic  Product  Assessment  and
Redesign  services  revenue  decreased by $36,348 in 1996 from 1995 and provided
69% of the  Company's  revenue in 1996  compared  to 60% in 1995.  Revenue  from
Ergonomic Workplace  Assessment services decreased $42,732 in 1996 from 1995 and
accounted  for 26% of net  revenue  in 1996  versus  27% in 1995.  Both of these
decreases  reflect a change in the  strategy  to focus on  industries  where the
Company has  significant  expertise,  and to build long-term  relationships  for
future integration of our technology in these companys' products.

         Direct costs  include  salaries,  equipment  purchases  for  contracts,
consulting fees and certain other costs.  Gross profit may fluctuate from period
to period.  Factors  influencing  fluctuations  include the nature and volume of
services  provided to individual  customers which affect contract  pricing,  the
Company's success in estimating contract costs (principally  professional time),
the timing of hiring new professionals,  who may require training before gaining
experience, efficiencies and meeting customer demands.

         Direct costs decreased  $325,290,  to $272,980 in 1996 from $598,270 in
1995  primarily  due to: (i) a more  favorable  mix of internal  versus  outside
resources  in 1996 as compared to 1995,  and (ii) the  elimination  in 1996 of a
reserve for  $149,000  for  Textron  development,  previously  recorded in 1994,
representing estimated expenses for providing additional development services to
Textron. Under the agreed amendment with Textron, signed in August 1996, Textron
may receive a credit for $150,000 from any  royalties  that may be earned by the
Company and will be proportional over a four-year period commencing in the first
year when royalties become payable.

         Gross profit,  as set forth in the table below,  increased by $ 177,767
in 1996 as compared to 1995.  The  increase  was due to the  reduction in direct
costs which more than offset the decline in net revenue.

                                                        Year Ended December 31,
                                                      --------------------------
                                                          1996            1995
                                                      ----------      ----------
Net Revenue                                           $  604,554      $  752,077
Direct Costs                                             272,980         598,270
                                                      ----------      ----------
Gross Profit                                          $  331,574      $  153,807
                                                      ==========      ==========
Gross Profit Percentage                                    55%             20%


   
         Since taking over in 1995, a key objective of the new  management  team
has been to reduce  selling,  general and  administrative  expenses and redirect
such  cash  savings  in the  development  of  core  business  such  as  IST  and
HumanCAD(R)  software.   Selling,   general  and  administrative  expenses  were
$1,801,915 in 1996, which included approximately $355,000 in certain costs which
are non-recurring in nature and reflect certain acquisition, financing and other
strategic  costs,  as  well as  reductions  in  personnel  costs  for  positions
eliminated, among other items. Without these non-recurring expenses the selling,
general and administrative costs in 1996 would have been $1,446,653.  Therefore,
excluding these 1996 non-recurring  items,  selling,  general and administrative
expenses would have been  approximately  $1,446,653 in 1996,  $1,831,494 in 1995
(which includes  approximately  $193,000 of  non-recurring  expenses  consisting
principally  of  non  recurring   consulting  costs)  and  $2,339,225  in  1994,
demonstrating  management's commitment to lower these expenses and redirect cash
into the core technology.
    

         The  Company's  research and  development  costs  decreased  $87,965 to
$97,854 in 1996 from  $185,819 in 1995.  This  decrease is primarily  due to the
capitalization  of $85,191 of development  expenditures  in 1996 relating to the
upgrade of the Company's  MQPro(TM)  software,  released in March 1997. In prior
years,  these  costs were R&D in nature and  accordingly  were  expensed  in the
period they were  incurred.  The  remaining  costs  reflect the  development  of
several components relating to certain  applications of the IST. During 1996 and
1995, the Company made significant  progress in the development of the necessary
components  relating to certain  applications  of the IST,  such as a microvalve
(patent filed in June 1996), a  self-generating  power supply and an intelligent
switch.

         Net interest income decreased $119,971 to $54,055 in 1996 from $174,026
in 1995. The decrease is primarily  attributable to a decrease in cash available
for investment from 1995 to 1996 utilized for operating activities.

         Due to the net  losses  and the  accounting  rules in  accordance  with
Financial Accounting Standards Board ("FASB") Statement No. 109, "Accounting for
Income Taxes", there was no provision for income taxes in 1996 and 1995.

         As a  result  of all of the  above,  the net  loss  in  1996  decreased
$175,340 to $1,514,140 from $1,689,480 in 1995.


Liquidity And Capital Resources

    
         Cash, cash  equivalents and  held-to-maturity  securities  decreased by
$1,682,514  to $526,344 at December 31, 1996,  from  $2,208,858  at December 31,
1995. Net cash used in operating activities,  mainly to cover the 1996 net loss,
was $1,394,584  for the year ended December 31, 1996,  compared to $2,010,346 in
the year ended December 31, 1995.  Financing activities used $98,246 in cash for
the year  ended  December  31,  1996,  compared  to  $59,299  for the year ended
December 31, 1995. This consisted mainly of uses of cash for stock  registration
and issuance  costs,  as well as cash paid for deferred  acquisition and finance
costs associated with the Drew Shoe acquisition.
    

         Accounts  receivable,  net  of the  allowance  for  doubtful  accounts,
decreased to $22,537 at December 31, 1996,  from  $135,995 at December 31, 1995.
Three customers comprised 84% of gross accounts receivable at December 31, 1996.

   
         Unbilled  receivables  decreased  from $173,403 at December 31, 1995 to
$100,362 at  December  31, 1996 due to  fluctuations  in volume of business  and
patterns of billing.


         Prepaid  expenses  and  other  current  assets  increased  to 74,491 at
December 31, 1996, from 60,182 at December 31, 1995.
    

         Accounts payable,  accrued expenses and sundry liabilities decreased to
$285,065 at December 31, 1996,  from $422,671 at December 31, 1995. The decrease
of $137,606  resulted  primarily from the elimination of an accrual for $149,000
relating to the Textron licensing agreement.

   
         Consequently,  working  capital  decreased  $1,717,098  to  $438,669 at
December 31, 1996, from $2,155,767 at December 31, 1995.
    

         The  Company  has  no  material  commitments  for  any  future  capital
expenditures.

         The Company  expects that its working  capital,  together  with revenue
from  operations,  the  proceeds  from a  private  placement  (see  below),  and
potential  exercise of its Class B and Class E Warrants,  will be  sufficient to
meet  liquidity  and  capital   requirements  through  1997.  Longer  term  cash
requirements are dictated by a number of external factors,  which include, among
others,  further  development of and royalties from IST, further development and
product sales of HumanCAD(R) software and the Company's ability to introduce new
competitive products and services.

   
         On March 19,  1997,  the Company  entered  into an  agreement  with the
owners of Drew  whereby,  the Company  will  purchase all of the Common Stock of
Drew for  $4,600,000  subject to financing.  Drew,  of Lancaster  Ohio, is a 125
year-old leading designer,  manufacturer and distributor of medical footwear and
orthotic  products.  This  acquisition  will  complement the Company's  business
strategy.  Drew  represents an  opportunistic  and  synergistic  vehicle for the
Company to  incorporate  IST into medical  footwear and orthotic  products,  for
diabetics, arthritics, and the aging population.
    

         On March 10, 1997, at the National Design  Engineering Show in Chicago,
Illinois,  the Company,  through its HumanCAD(R)  Systems  division,  introduced
MQPro(TM),  a PC-based human modeling and ergonomics design program that creates
accurate, three-dimensional humanoids with point-and-click simplicity. MQPro(TM)
will be the  first  ergonomic  product  in its  series of  computer-aided  human
ergonomic software.

         On January 15, 1997,  the Company  offered a minimum of 400,000  Units,
each consisting of one share of the Company's  Common Stock and a non-redeemable
Class AA  Warrant,  which  entitles  the  holder  to  purchase  one share of the
Company's Common Stock at a price of $1.10 per share,  until March 31, 1999. The
offering was  completed on March 28, 1997,  and  1,075,000  units have been sold
raising $1,075,000 for the Company.

         On December 20, 1996, the Company  extended the expiration  date of the
Company's  Class B Warrants  and Class E Warrants  from  January  17,  1997,  to
January 17, 1998,  and of the Company's  Class C Warrants from January 17, 1997,
to March 18,  1997.  The  conversion  of the  Warrants is a potential  source of
additional capital. The Class C Warrants expired and were not converted.

         The Company's net revenue was $604,554 in 1996.  Revenue is expected to
be higher in 1997 than in 1996 because it will include sales of its  HumanCAD(R)
software,  the start of royalties from Textron (Textron  informed the Company in
1996 that certain 1998 model  automobiles will be introduced in the fall of 1997
incorporating IST in the design of the drivers' and front passenger's seats) and
continued revenues from the Company's  Traditional Ergonomic Consulting Services
as well as the new Software Based Ergonomic Consulting Services.


Factors That May Affect Future Results

         The Company's future  operating  results are dependent on the Company's
ability to (i)  successfully  further  develop  IST and  increase  the number of
licensees,  and the  commercialization  of IST by its  licensees,  (ii)  further
develop and sell its  HumanCAD(R)  software  consisting of  MQPro(TM),  EARLY(R)
process and Back-To-Work(TM) methodology, (iii) successfully market and sell its
new Software Based Consulting Services and its Traditional  Ergonomic Consulting
Services  and  (iv)  complete  the  Company's   acquisition   of  Drew,   future
profitability  of Drew and  introduction of IST in medical footwear and orthotic
products.


ITEM 7.  FINANCIAL STATEMENTS

         The  response  to Item 7 is  submitted  as a  separate  section of this
Report.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

         Not applicable.


                                    PART III


ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
------- ------------------------------------------------------------------------
        WITH SECTION 16(A) OF THE EXCHANGE ACT
        --------------------------------------

Directors and Executive Officers
--------------------------------

     As of  April  28,  1997,  the  directors  and  executive  officers  of BCAM
International, Inc. ("the Company") are as follows:

      Name             Age                   Position With Company
      ----             ---                   ---------------------
Michael Strauss        55    Chairman of the Board of Directors, President,
                             Chief Executive Officer and Chief Operating Officer

Robert P. Wong         55    Vice Chairman of the Board of Directors, Chief
                             Technology Officer, Acting Chief Financial Officer
                             and Treasurer

Norman M. Friedland    49    Secretary

Julian H. Cherubini    61    Director

Joel L. Gold           55    Director

Glenn F. Santmire      55    Director

     The Company's  directors are elected by the Company's  stockholders at each
annual meeting or, in the case of a vacancy, are appointed by the directors then
in office,  to serve until the next annual meeting or until their successors are
elected and qualified.  Officers are appointed by and serve at the discretion of
the Board of Directors.

     Michael Strauss became the Company's  President and Chief Operating Officer
effective  January  2, 1995 and its  Chairman  of the Board and Chief  Executive
Officer on February 16, 1995.  From 1991 to December 31, 1994,  Mr.  Strauss was
President  and Chief  Operating  Officer of Colorado  Prime  Corp.,  a home food
service  company  providing home delivery of high quality,  custom designed food
programs  to retail  customers.  From 1984 to 1991,  he was  Chairman  and Chief
Executive  Officer  of  Capital  Credit  Corporation,   a  subsidiary  of  Union
Corporation,  a New York Stock  Exchange  Company.  Capital  Credit  Corporation
provides  receivables  management  and  consumer  debt  collection  services  to
corporations  in the  financial  services,  telecommunications,  health care and
related  businesses.  On June 18, 1992, Mr. Strauss and his agents and employees
at  Capital  Credit  Corporation  consented  to a final  judgment  of  permanent
injunction  enjoining Mr. Strauss from violating Section 10(b) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5 and 13b2-1 of Sections
3(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13 promulgated
thereunder.  Senior managers at Capital Credit Corporation were also permanently
enjoined  as  provided  above.  Prior to his  tenure at Union  Corporation,  Mr.
Strauss was employed by American  Express  Company in various senior  management
positions  including Executive Vice President of the Financial Services Division
of  Shearson  Lehman  Brothers,  Executive  Vice  President  of  Travel  Related
Services,  and President of American Express Canada,  Inc. Mr. Strauss has a BBA
from the City  University  of New  York and an MBA from the  Baruch  School-City
University of New York.

     In February, 1995, Robert Wong was appointed Vice Chairman of the Board and
Chief  Technology  Officer,  after having become a director in February of 1994.
Since  September,  1996,  Mr.  Wong is also  serving as Acting  Chief  Financial
Officer and Treasurer. Previously, from February 1994 through February 1995, Mr.
Wong worked as a representative for the Prudential  Insurance Company, and was a
private  investor from 1989 to February  1995.  Over the previous 27 years,  Mr.
Wong was founder and president of several technology  companies and president of
several  subsidiaries  of  Coordinated  Apparel,  Inc.  Mr.  Wong  has  an SB in
Electrical   Engineering   and  also  an  SB  in  Industrial   Management   from
Massachusetts Institute of Technology.

     In September,  1996, Norman M. Friedland was appointed Corporate Secretary.
Since 1994,  Mr.  Friedland has been counsel to the law firm of Ruskin,  Moscou,
Evans & Faltischek,  P.C., the Company's general counsel,  and prior to that was
in the private practice of law.

     Joel L. Gold was elected a Director in February  1994.  In April 1996,  Mr.
Gold became Executive Vice President of L.T. Lawrence Co., an investment banking
firm.  From April 1995 to April 1996, Mr. Gold was a managing  director and head
of investment  banking at Fechtor & Detwiler.  From 1993 to 1995, Mr. Gold was a
managing director at Furman Selz Incorporated, an investment banking firm. Prior
to joining  Furman Selz,  from 1991 to 1993, he was a managing  director at Bear
Sterns & Co., an investment  banking firm.  Previously,  Mr. Gold was a managing
director at Drexel Burnham  Lambert for nineteen years. He is currently a member
of the Board of Directors of MSA Realty Corp., Action Industries,  Inc., Concord
Camera,  William Greenberg,  Jr. Desserts and Cakes, Inc., Sterling Vision, Inc.
and Life Medical  Sciences.  Mr. Gold has a law degree from New York  University
and an MBA from Columbia Business School.

     Julian H. Cherubini was elected a director in April 1995. Mr.  Cherubini is
the  President  and Chief  Executive  Officer of AliMed,  Inc.,  a company  that
manufactures   and   distributes  a  broad  range  of  products  for  orthopedic
rehabilitation,  diagnostic imaging,  operating rooms, occupational medicine and
ergonomics.  Mr.  Cherubini  founded AliMed,  Inc. in 1970 and has served as its
President and Chief Executive Officer since its inception. Mr. Cherubini holds a
BS Degree in Metallurgy  from the  Massachusetts  Institute of Technology  and a
Masters Degree in Materials and  Radiochemistry  from the University of Texas at
Oak Ridge.

     Glenn F. Santmire was  appointed a director in October 1995.  Since 1995 he
has been employed by Unisys Corporation as Group Vice President of the Worldwide
Services-Market  Sector  Group.  From  1994  to  1995  he was  President  of GFS
Associates,  Inc.,  a  consulting  firm which he founded.  From 1992 to 1994 Mr.
Santmire was a Senior Vice President at Mastercard  International  and from 1990
to 1992 he was President of Enhanced Telephone  Services,  Inc., a subsidiary of
Citibank.  Mr.  Santmire  possesses  both a BA and an MBA  degree  from New York
University as well as a law degree from George  Washington  University School of
Law.


Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of a registered
class  of  the  Company's  equity  securities   (collectively,   the  "Reporting
Persons"),  to file  reports of  ownership  and  changes in  ownership  with the
Securities  and  Exchange  Commission  and to furnish the Company with copies of
these reports.  Based solely on the Company's review of the copies of such forms
received by it during the  Company's  fiscal year ended  December 31, 1996,  the
Company   believes  that  the  Reporting   Persons   complied  with  all  filing
requirements applicable to them.


ITEM 10. EXECUTIVE COMPENSATION
-------- ----------------------

Executive Compensation
----------------------

     The table set forth below shows information concerning the compensation for
services in all capacities  during the years  indicated paid to or earned by (i)
the Company's  Chief  Executive  Officer and (ii) each executive  officer of the
Company  (other than the Chief  Executive)  whose annual  compensation  exceeded
$100,000 during 1996.
<TABLE>
<CAPTION>

                                           SUMMARY COMPENSATION TABLE

                                                                                     Long Term
                                                  Annual Compensation           Compensation Awards

                                                                Other Annual               All Other
Name and Principal Position        Year     Salary     Bonus    Compensation   Options    Compensation
                                              ($)       ($)         ($)         (#)           ($)
---------------------------        ----       ---       ---         ---         ---      -------------
<S>                                <C>     <C>           <C>      <C>        <C>              <C>
                                                        
Michael Strauss (1)                1996    $200,000      -        $8,280         -             -
Chairman, President,               1995    $200,000      -        $7,743     1,000,000         -
Chief   Executive Officer and      1994        -         -           -           -             -
Chief Operating Officer

Robert Wong (2)                    1996    $102,000      -        $6,000         -             -
Vice Chairman,                     1995    $ 87,000      -        $2,000       492,500         -
Chief Technology Officer and       1994        -         -           -           7,500         -
Acting Chief Financial Officer

(1) Mr.  Strauss  became  employed  by the  Company as its  President  and Chief
    Operating  Officer on January 2, 1995 at an annual  salary of  $200,000.  He
    subsequently  became Chairman and Chief Executive Officer with no additional
    compensation on February 16, 1995.

(2) Mr. Wong was elected a Director in February 1994. He became  employed by the
    Company as its Chief Technology Officer, and was appointed Vice Chairman, on
    February 16, 1995 at an annual salary of $102,000.
</TABLE>

   
Directors' Compensation
----------------------

           Employee-directors  receive no compensation  for serving on the Board
of  Directors  other  than  reimbursement  of  expenses  incurred  in  attending
meetings.  Non-employee directors elected or appointed to the Board of Directors
are paid an annual  director's  fee of $5,000  plus $500 for each Board  meeting
attended and are reimbursed for expenses incurred in attending meetings.
    

Employment Agreement - Michael Strauss
--------------------------------------

     Mr. Michael Strauss became the President and Chief Operating Officer of the
Company  effective  January 2, 1995  pursuant to an employment  agreement  dated
October 13, 1994. On February 16, 1995 the  employment  agreement was amended to
employ Mr. Strauss as the Chief Executive Officer of the Company and Chairman of
the Board of Directors.  The Company is currently  negotiating a new  employment
agreement with Mr. Strauss to replace the amended  employment  agreement,  which
expired  on January 2, 1997.  Mr.  Strauss  receives a base  salary at a rate of
$200,000  per annum.  Mr.  Strauss  received,  on  January  3, 1995,  options to
purchase  300,000 shares at an exercise price of $1.0313,  on February 16, 1995,
options to purchase 200,000 shares at an exercise price of $0.9219, and, on July
3, 1995,  options to purchase  500,000  shares at an exercise price of $1.04069.
Mr. Strauss is also entitled to  participate in the Company's  benefit plans and
to receive an allowance for the cost of an automobile.


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

     The following table sets forth  information as of April 28, 1997,  based on
information  obtained  from the  records  of the  Company  with  respect  to the
beneficial ownership of shares of Common Stock of the Company by (i) each person
known by the Company to be owners of more than five  percent of the  outstanding
shares of Common  Stock,  (ii) each  director and nominee and certain  executive
officers, and (iii) all officers and directors as a group.

   
                                  Common Stock
                                  ------------
                                     Amount and Nature        Percentage of 
Name and Address of                    of Beneficial           Common Stock
Beneficial Owner                        Ownership (3)             Owned
------------------------------      -------------------       --------------
Kirr, Marbach & Company LLC (1)         2,042,500 (4)             12.3%
Michael Strauss (2)                       425,000 (5)              2.6%
Robert P. Wong (2)                        211,875 (6)              1.3%
Norman M. Friedland (2)                      0                      *
Joel L. Gold (2)                          107,500 (7)               *
Julian H. Cherubini (2)                    25,000 (8)               *
Glenn F. Santmire (2)                      17,500 (9)               *
All officers and directors                786,875 (5,6,7,8,9)      4.7%
 as a group (6 persons) 


1      Kirr Marbach & Company LLC, a beneficial  owner of more than five percent
       of the outstanding shares of Common Stock whose address is 621 Washington
       Street,  Columbus,  IN  47201,  is a  general  partner  of three  limited
       partnerships,  which in the  aggregate  are  entitled to  receive,  or to
       direct the receipt of, dividends from, and the proceeds from sale of, all
       of the shares  beneficially owned by Kirr Marbach.  The economic interest
       of one of such limited  partnerships  (R. Weil &  Associates,  a New York
       limited  partnership) in the Company's  Common Stock relates to more than
       five percent of that class..
    

2    All addresses  are c/o BCAM  International,  Inc.,  1800 Walt Whitman Road,
     Melville, New York 11747.

3    The Company  believes  that all persons named in the table have sole voting
     and   investment   power  with  respect  to  all  shares  of  Common  Stock
     beneficially owned by them.

   
4    Includes  warrants to purchase  700,000 shares of Common Stock  exercisable
     within 60 days of the date hereof
    

5    Includes  options to purchase  425,000  shares of Common Stock  exercisable
     within 60 days of the date  hereof.  Does not  include  options to purchase
     575,000 shares of Common Stock not  exercisable  within 60 days of the date
     hereof.

6    Includes  options to purchase  211,875  shares of Common Stock  exercisable
     within 60 days of the date  hereof.  Does not  include  options to purchase
     288,125 shares of Common Stock not  exercisable  within 60 days of the date
     hereof.

7    Includes  options to purchase  57,500  shares of Common  Stock  exercisable
     within 60 days of the date hereof.

8    Includes  options to purchase  25,000  shares of Common  Stock  exercisable
     within 60 days of the date hereof.

9    Includes  options to purchase  17,500  shares of Common  Stock  exercisable
     within 60 days of the date  hereof.  Does not  include  options to purchase
     7,500  shares of Common  Stock not  exercisable  within 60 days of the date
     hereof.

*    less than 1%


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------- ----------------------------------------------

     None.


<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

                (a)    Exhibits.

   
         3.1           Restated Certificate of Incorporation(1)
         3.2           Restated and Amended By-Laws(1)
         4.1           Underwriter's Unit Purchase Option(4)
         4.2           Finder's Unit Purchase Option(4)
         4.3           Warrant Agreement(4)
         4.4           Form of Senior Secured Convertible Promissory Note (5)
         4.5           Form of Class C common Stock Purchase Warrant(5)
         4.6           Form of Class D Common Stock Purchase Warrant(5)
         4.7           Revised Form of Amendment No. 1 to Warrant Agreement(7)
         4.8           Revised Form of Class E Common Stock Purchase Warrant(7)
         10.1          Stock Redemption Agreement(1)
         10.2          1989 Stock Option Plan(1)
         10.3          Employment Agreement with Dr. Clifford M. Gross(1)
         10.4          Employment Agreement with Arthur Fein(1)
         10.5          Bridge Warrant(1)
         10.6          Bridge Note and Related Loan Agreement(1)
         10.7          Consulting Agreement with Lear Siegler Seating
                       Corporation(1)
         10.8          Extension Agreement to Redemption Agreement (Exhibit
                       10.1)
         10.9          Consulting Agreement dated August 1, 1988 with NRC
                       Resources Group, Inc.(1)
         10.10         General Release of NRC Resources Group, Inc.(1)
         10.11         Mortgage Note and Related Loan Agreement and
                       Mortgage and Security Agreement(1)
         10.12         Second Extension Agreement to Redemption Agreement(4)
         10.13         Merger and Acquisition Agreement with D.H. Blair &
                       Co., Inc.(4)
         10.14         1989 Nonstatutory Stock Option Plan(2)
         10.15         Consulting Agreement with D.H. Blair & Co., Inc.(4)
         10.16         Consulting Agreement with Steelcase, Inc.(2)
         10.17         License and Manufacturing Agreement with MicroComputer
                       Accessories, Inc.(4)
         10.18         Employment Agreement with Cynthia Roth(4)
         10.19         Employment Agreement with Kenneth Goodman(4)
         10.20         Form of Employment Agreement with Ava Stern(4)
         10.21         Form of Employment Agreement with William G. Sirois(4)
         10.22         Lease of Premises at 1800 Walt Whitman Road,
                       Melville, New York(4)
         10.23         Consulting Agreement dated as of February 1, 1990, with
                       NRC Resources Group, Inc.(4)
         10.24         Underwriting Agreement (for IPO) with D.H. Blair &
                       Co., Inc.(4)
         10.25         Securities Purchase Agreement dated June 25, 1991, among
                       the Company, the Purchasers and D.H. Blair & Co., Inc.(5)
         10.26         Security Agreement dated as of June 25, 1991 between the 
                       Company and D.H. Blair & Co., Inc., as Purchasers' 
                       Representative(5)
         10.29         Employment Agreement dated as of June 20, 1991  between
                       David  A.  Deutsch  and the Company(5)
         10.30         Letter of Understanding  between  Kenneth A. Goodman  and
                       the  Company(5)
         10.31         Employment Agreement dated as of August 1, 1991 between  
                       Joel Sher and the  Company(5)
         10.32         Amendment  to 1989 Stock Option Plan(5)
         10.33         Distributor  Agreement with  Techexport,  Inc.(3)
         10.34         Partnership  Agreement  dated  December 28, 1992, for
                       Ergonomic Solutions  Group (ESG)(8)
         10.35         License  Agreement  dated December 28, 1992, between the
                       Company and ESG (8)
         10.36         Development and Licensing Agreement dated March 5, 1993,
                       between the Company and McCord Winn Textron, Inc. (8)
         10.37         Agreement  dated August 22, 1992, between the Company and
                       PT Industry Pesawat Terbang Nusantara (IPTN) (8)
         10.38         Further Amendments to 1989 Stock Option Plan (8)
         10.39         Amendment to Development and Licensing Agreement dated
                       October 27, 1993, between the Company and McCord Winn
                       Textron. (10)
         10.40         Investors Consulting Agreement with Strategic Growth
                       International Inc. (9)
         10.41         Agreement dated December 22, 1993 between the Company and
                       PT Industri Pesawat Terbank Nusantara (IPTN)(9)
         10.42         Agreement dated September 29, 1993, between the Company,
                       McCord Winn Textron, Inc. and Lear Seating Company. (9)
         10.43         Development and Licensing Agreement dated January 4,1994,
                       between the Company and Reebok International Ltd. (9)
         10.44         Development and License Agreement dated September 28,
                       1994, between the Company and Lumex, Inc. (11)
         10.45         Employment Agreement dated October 13, 1994, between
                       Michael Strauss and the Company (10)
         10.46         Letter Agreement dated February 15, 1996, between the
                       Company and McCord Winn Textron, Inc. to extend the 
                       Development and License Agreement dated March 5, 1993(14)
         10.47         Amendment to Employment Agreement between Michael Strauss
                       and the Company (13)
         10.48         1995 Stock Option Plan (13)
         10.49         Amendment letter of agreement dated August 15, 1996
                       between the Company and McCord Winn Textron, Inc. (15)
         10.50         Letter of agreement  terminating the September 28, 1994,
                       Development and License Agreement between the Company and
                       Lumex, Inc.(15)
         10.51         Letter of Agreement with Josephberg & Grosz to provide
                       the Company investment banking services (15)
         10.52         Stock Purchase Agreement  between the Company and the
                       owners of Drew Shoe Corporation (15)
         21.00         Subsidiaries of the Company (12)


(1)      Filed as an Exhibit to Registrant's Registration Statement on Form S-18
        (file no. 33-31282) and incorporated herein by reference thereto.
(2)      Filed as an Exhibit to Registrant's Annual Report on Form 10-K for the
         fiscal year ended December 31, 1989 (file no. 0-18109) and incorporated
         herein by reference thereto.
(3)      Filed as an Exhibit to the Registrant's Annual Report on Form 10-K for
         the fiscal year ended December 31, 1991 (file no. 0-18109) and
         incorporated herein by reference thereto.
(4)      Filed as an Exhibit to Registrant's Registration  Statement on Form S-1
        (file no. 33-38204) and incorporated herein by reference thereto.
(5)      Filed as an Exhibit to Post Effective Amendment No. 1 to Registrant's
         Registration Statement on Form S-1 (file no. 33-38204) and incorporated
         herein by reference thereto.
(6)      Filed as an Exhibit to Post Effective Amendment No. 2 to Registrant's
         Registration Statement on Form S-1 (file no. 33-38204) and incorporated
         herein by reference thereto.
(7)      Filed as an Exhibit to Post-Effective Amendment No. 3 to Registrant's
         Registration Statement on Form S-1 (file no. 33-38204) and incorporated
         herein by reference thereto.
(8)      Filed as an Exhibit to Registrant's Annual Report on Form 10-KSB for
         the fiscal year ended December 31, 1992 (file no. 0-18109) and
         incorporated herein by reference thereto.
(9)      Filed as an Exhibit to Registrant's Annual Report on Form 10-KSB for
         the fiscal year ended December 31, 1993 (file no. 0-18109) and
         incorporated by reference thereto.
(10)     Filed as an Exhibit to  Registrant's  Form 10-QSB/A  filed  December 5,
         1994 amending the Form 10-QSB for quarterly  period ended September 30,
         1994 (file no. 0-18109) and incorporated by reference thereto.
(11)     Filed as an Exhibit to Registrant's Form 10-QSB/A for the fiscal
         year ended December 31, 1993 (file no. 0-18109) and incorporated by
         reference thereto.
(12)     Filed as an Exhibit to Registrant's Form 10-KSB for the fiscal
         year ended December 31, 1994 (file no. 0-18109) and incorporated by
         reference thereto.
(13)     Filed as an Exhibit to Registrant's Form 10-QSB for the quarter
         ended June 30, 1995 (file no. 0-18109) and incorporated by
         reference thereto.
(14)     Filed as an Exhibit to Registrant's Form 10-KSB for the fiscal
         year ended December 31, 1995 (file no. 0-18109) and incorporated by
         reference thereto.
(15)     Filed as an Exhibit to Registrant's Form 10-KSB for the fiscal
         year ended December 31, 1996 (file no. 0-18109) and incorporated by
         reference thereto.
    


AVAILABLE INFORMATION

         Registrant will furnish any exhibits listed but not contained herein to
any beneficial  owner of its securities  upon receipt of a written  request from
such person.  Requests should be directed to Shareholder  Relations  Department,
BCAM International, Inc., 1800 Walt Whitman Road, Melville, New York 11747.

         (b) During the fourth quarter of the period covered by this Report, the
Company filed no reports on Form 8-K.


<PAGE>


                                                     SIGNATURES


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

                                           BCAM International, Inc.




   
                                  By:      /s/ Michael Strauss
                                           ---------------------
                                           Michael Strauss
                                           Chairman of the Board of Directors
                                           Chief Executive Officer
                                           (Principal Executive Officer)
                                           Date:  October 24, 1997



                                  By:      /s/ Robert P. Wong
                                           ----------------------
                                           Robert P. Wong
                                           Vice Chairman,
                                           Chief Technology Officer and
                                           Acting Chief Financial Officer
                                           (Acting Principal Accounting Officer)
                                           Date:  October 24, 1997
    



<PAGE>



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



   
/s/ Michael Strauss        Chairman of the Board                October 24, 1997
-----------------------    of Directors
Michael Strauss            and Chief Executive Officer
                           (Principal Executive Officer)

/s/ Robert P. Wong         Director, Vice Chairman,             October 24, 1997
-----------------------    Chief Technology Officer and
Robert P. Wong             Acting Chief Financial Officer    
                           (Acting Principal Accounting 
                           Officer)

/s/ Norman Friedland       Corporate Secretary                  October 24, 1997
-----------------------
Norman Friedland

 
                           Director                             October 24, 1997
-----------------------
Julian H. Cherubini


/s/ Joel L. Gold           Director                             October 24, 1997
-----------------------
Joel L. Gold


/s/ Glenn F. Santmire      Director                             October 24, 1997
-----------------------
Glenn F. Santmire
    



                                       
<PAGE>









                          Annual Report On Form 10-KSB
                           Item 7, Item 13(a) and (b)
                          List Of Financial Statements
                                Certain Exhibits
                        Consolidated Financial Statements
                          Year ended December 31, 1996
                            BCAM International, Inc.
                               Melville, New York


<PAGE>


                        Form 10-KSB - Item 13(a) and (b)

                            BCAM International, Inc.

                          Index of Financial Statements


The following consolidated  financial statements of BCAM International,  Inc are
included in Item 7:

   Report of Independent Auditors........................................    F-1

   Consolidated balance sheet - December 31, 1996.........................   F-2

   Consolidated statements of operations-
     Years ended December 31, 1996 and 1995..............................    F-3

   Consolidated statements of common shareholders' equity-
     Years ended December 31, 1996 and 1995............... ..............    F-4

   Consolidated statements of cash flows -
     Years ended December 31, 1996 and 1995 .............................    F-5

   Notes to consolidated financial statements............................    F-6



<PAGE>









                                            Report of Independent Auditors

Shareholders and Board of Directors
BCAM International, Inc.

We  have  audited  the   accompanying   consolidated   balance   sheet  of  BCAM
International,  Inc.,  as of December  31,  1996,  and the related  consolidated
statements of  operations,  shareholders'  equity and cash flows for each of the
two years in the period ended December 31, 1996. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of BCAM
International,  Inc. at December 31, 1996, and the consolidated results of their
operations and cash flows for each of the two years in the period ended December
31, 1996, in conformity with generally accepted accounting principles.


                                                      /s/Ernst & Young LLP

Melville, New York
February 27, 1997, except for 
 Note 10, as to which the date
 is March 28, 1997


                                      F-1
<PAGE>
<TABLE>
<CAPTION>


                                             BCAM International, Inc.

                                            Consolidated Balance Sheet
                                            
                                                 December 31, 1996
<S>                                                                                     <C>
          

   
Assets
Current assets:
   Cash and cash equivalents                                                            $         526,344
   Accounts receivable - trade, less allowance for doubtful accounts
     of $11,245                                                                                    22,537
Unbilled receivables                                                                              100,362
Prepaid expenses and other current assets                                                          74,491
                                                                                        -------------------
Total current assets                                                                              723,734 
Property, plant and equipment, at cost:
   Furniture and fixtures                                                                         220,318
   Equipment                                                                                      593,542
   Leasehold improvements                                                                          50,519
                                                                                        -------------------
                                                                                                  864,379
   Less accumulated depreciation and amortization                                                 670,591
                                                                                        -------------------
                                                                                                  193,788
Deferred finance and acquisition costs                                                            158,624
Other assets, principally patents (net of accumulated amortization
   of $263,874)                                                                                   228,535
                                                                                        -------------------
Total assets                                                                            $       1,304,681
                                                                                        ===================
Liabilities and shareholders' equity Current liabilities:
   Accounts payable                                                                     $         118,501
   Accrued expenses and sundry liabilities                                                        166,564
                                                                                        -------------------
Total current liabilities                                                                         285,065
Other liabilities                                                                                   4,289
Commitments and contingencies                                                                           -
Acquisition preferred stock, par value $.01 per share--authorized 750,000
   shares, no shares issued or outstanding                                                              -
Common shareholders' equity:
   Common stock, par value $.01 per share--authorized 40,000,000 shares,
     15,642,915 shares issued and 14,879,733 shares outstanding                                   156,429
   Paid-in surplus                                                                             14,959,288
   Deficit                                                                                    (13,201,290)
                                                                                        -------------------
                                                                                                1,914,427
  Less 763,182 treasury shares                                                                   (899,100)
                                                                                        -------------------
                                                                                                1,015,327
                                                                                        ===================
Total liabilities and shareholders' equity                                              $       1,304,681
                                                                                        ===================
    

See accompanying notes.
</TABLE>

                                      F-2
<PAGE>
<TABLE>
<CAPTION>


                                             BCAM International, Inc.

                                       Consolidated Statements of Operations


                                                                             Year ended December 31
                                                                            1996                1995
                                                                   --------------------------------------
<S>                                                                <C>                   <C>    

Net revenue                                                         $       604,554      $      752,077

Costs and expenses:
   Direct costs of revenue                                                  272,980             598,270
   Selling, general and administrative                                    1,801,915           1,831,494
   Research and development                                                  97,854             185,819
                                                                   --------------------------------------
                                                                          2,172,749           2,615,583
                                                                   --------------------------------------
Net loss from operations                                                 (1,568,195)         (1,863,506)

Interest income, net of interest expense of $14,579 in 1996                  54,055             174,026
                                                                   ======================================
Net loss                                                            $    (1,514,140)     $   (1,689,480)
                                                                   ======================================

Net loss per share                                                  $       (0.10)       $      (0.11)
                                                                   ======================================

Weighted average number of common shares and
   common equivalent shares outstanding                                  14,868,128          14,818,055
                                                                   ======================================



See accompanying notes.

</TABLE>

                                      F-3
<PAGE>
<TABLE>
<CAPTION>



                                                                   BCAM International, Inc.

                                                    Consolidated Statements of Common Shareholders' Equity


                              Common Stock $.01 par value                                                 Shares held
                              ---------------------------   Paid-in                                           in
                                  Shares        Amount      surplus        Deficit          Subtotal       Treasury      Total
                              ------------------------------------------------------------------------------------------------------
<S>                              <C>           <C>         <C>            <C>              <C>            <C>           <C>

Balance at January 1, 1995       15,520,415    $155,204    $14,994,058    $ (9,997,670)    $ 5,151,592    $(899,100)    $ 4,252,492
Shares issued in connection 
  with conversion  of  BCA 
  Services, Inc. stock              100,000       1,000         99,000               -         100,000            -         100,000
Registration and issuance 
  costs                                   -           -        (59,299)              -         (59,299)           -         (59,299)
Net loss                                  -           -              -      (1,689,480)     (1,689,480)           -      (1,689,480)
                              ------------------------------------------------------------------------------------------------------
Balance at December 31, 1995     15,620,415     156,204     15,033,759     (11,687,150)      3,502,813     (899,100)      2,603,713
Exercise of common stock 
  warrants                           22,500         225         20,520               -          20,745            -          20,745
Registration and issuance 
  costs                                   -           -        (94,991)              -         (94,991)           -         (94,991)
Net loss                                  -           -              -      (1,514,140)     (1,514,140)           -      (1,514,140)
                              ------------------------------------------------------------------------------------------------------
Balance at December 31, 1996     15,642,915    $156,429    $14,959,288    $(13,201,290)    $ 1,914,427    $(899,100)    $ 1,015,327
                              ======================================================================================================

See accompanying notes.


</TABLE>

                                      F-4
<PAGE>
<TABLE>
<CAPTION>




                                                                   BCAM International, Inc.

                                                             Consolidated Statements of Cash Flows
                                                                    

                                                                                Year ended December 31
                                                                                1996             1995
                                                                       ------------------------------------
<S>                                                                       <C>              <C>
   
Operating activities
Net loss                                                                  $  (1,514,140)   $  (1,689,480)
Adjustments to reconcile net loss to net cash used in operating
   activities:
     Provision for doubtful accounts                                                  -           34,726
     Depreciation                                                                86,220          103,479
     Amortization                                                               103,895           63,648
     Interest accreted on held-to-maturity securities                                 -         (114,370)
     Changes in operating assets and liabilities:
        Accounts receivable, billed and unbilled                                186,499         (156,769)
        Prepaid expenses and other current assets                               (14,309)         102,798
        Accounts payable, accrued expenses and sundry liabilities              (239,195)        (277,998)
         (less amount accrued for finance and acquisition costs)
        Other liabilities                                                        (3,554)         (26,888)
                                                                       ------------------------------------
Net cash used in operating activities                                        (1,394,584)      (1,960,854)
                                                                       ------------------------------------

Investing activities
Purchases of property, plant and equipment                                       (6,031)          (5,188)
Investment in software technology                                              (150,618)         (49,492)
Proceeds from sale of equipment                                                       -            1,200
Purchases of held-to-maturity securities                                              -       (2,799,782)
Proceeds from sale of held-to-maturity securities                             1,507,172        4,535,000
Cash paid for deferred acquisition costs                                        (33,035)               -     
                                                                       ------------------------------------
Net cash provided by investing activities                                     1,317,488        1,681,738
                                                                       ------------------------------------

Financing activities
Proceeds from note payable                                                      400,000                -
Repayment of note payable                                                      (400,000)               -
Net proceeds from exercise of stock options                                      20,745                -
Payment of stock registration and issuance costs                                (94,991)         (59,299)
Cash paid for deferred finance costs                                            (24,000)               -
                                                                       ------------------------------------
Net cash used in financing activities                                           (98,246)         (59,299)
                                                                       ------------------------------------
Decrease in cash and cash equivalents                                          (175,342)        (338,415)
Cash and cash equivalents at beginning of year                                  701,686        1,040,101
                                                                       ====================================
Cash and cash equivalents at end of year                                  $     526,344    $     701,686
                                                                       ====================================
    

See accompanying notes.

</TABLE>

                                      F-5
<PAGE>





                            BCAM International, Inc.

                   Notes to Consolidated Financial Statements

                                December 31, 1996


1. Description of Business and Principles of Consolidation

   
BCAM  International,  Inc.  (the  "Company") is a software  technology  company,
specializing in ergonomic (human factor) solutions for individuals,  government,
and for major  corporations.  The  Company's  focus  since  1995 has been on (i)
accelerating the development and  commercialization of the Company's Intelligent
Surface  Technology  ("IST"),  (ii)  continuing  its  development of proprietary
software, which consists of IST, MQPro(TM) (formerly Mannequin(R)), the EARLY(R)
process and Back-to-Work(TM)  methodology, and (iii) upgrading and marketing its
proprietary software products, and marketing Software Based Ergonomic Consulting
Services.  The  Company  also  provides  its  Traditional  Ergonomic  Consulting
Services in Ergonomic  Product  Assessment and Redesign and Ergonomic  Workplace
Assessment,  with emphasis on broadening and  strengthening  long-term  business
relationships  such  as  joint  ventures,  partnerships,   licensees  and  other
alliances.
    

The   consolidated   financial   statements   include   the   accounts  of  BCAM
International,   Inc.  and  its  subsidiaries,  BCA  Services,  Inc.,  and  BCAM
Technologies,  Inc.,  collectively  referred to as the "Company".  BCA Services,
Inc.  was   established   in  December  1993  to  directly  focus  on  providing
comprehensive ergonomic laboratory assessment services to U.S. manufacturing and
service  industries for measuring the potential risk of  muscoloskeltal  injury.
The operations of BCAM  Technologies,  Inc., formed in December 1992, which were
not significant, were terminated in December 1993.

2. Summary of Significant Accounting Policies

Cash Equivalents

The Company  considers  all highly liquid  investments  with a maturity of three
months or less when purchased to be cash equivalents.  Cash and cash equivalents
at December 31, 1996 consist of demand and money market accounts with U.S. banks
($56,759)  and a  money  market  account  with  a  U.S.  investment  institution
($469,585).

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts  reported in the financial  statements and footnotes.  Actual
results could differ from those estimates.


                                      F-6
<PAGE>





                            BCAM International, Inc.

             Notes to Consolidated Financial Statements (continued)




2. Summary of Significant Accounting Policies (continued)

Revenue

   
The Company's  revenues are derived  primarily  from  ergonomic  (human  factor)
engineering  consulting  services  and from  license  of related  software.  The
majority of engineering consulting contracts are fixed price contracts. Revenues
from long term  engineering  fixed price  contracts are recognized  based on the
percentage  of  completion  method in the ratio that costs  (principally  labor)
incurred bear to estimated  total costs.  Adjustments to cost estimates are made
periodically  and related changes  reflected in operations as they become known.
Losses expected to be incurred are charged to operations in the period that such
losses  become known.  Engineering  revenues for contracts of less than one year
duration are accounted for under the accrual method based upon engineering labor
expended  utilizing  calculations  which are  similar to  percentage  completion
accounting (based upon labor expended).  This method is used because  management
considers  it the best  available  measure of progress on these  contracts.  The
aggregate  costs  incurred and income  recognized  on  uncompleted  contracts in
excess of related  billings  is shown as a current  asset and the  aggregate  of
billings on uncompleted contracts in excess of related costs incurred and income
recognized  is shown as a current  liability.  Billings on contracts are made in
accordance with the terms of the underlying contracts.


Software license fee revenue is recorded when the software has been delivered to
the value added reseller. There are no significant after sale obligations on the
Company for the license of its software and there is no special customization of
the  software  necessary  for the user.  The Company  does not  presently  offer
maintenance  contracts to customers who license its software.  Through  December
31, 1996, software revenues have been immaterial.
    

Property, Plant and Equipment

Depreciation  is computed using the  straight-line  method at rates based on the
estimated  useful lives of the related  assets.  The estimated  useful lives for
furniture  and  fixtures  is  10  years  and  equipment  is 7  years.  Leasehold
improvements  are amortized over the lease term or estimated  useful life of the
improvements, whichever is shorter.

Other Assets

   
The costs of acquiring or processing  (principally  professional  and government
fees) patents,  trademarks and other intellectual  properties are capitalized at
cost.  This amount  ($143,344 at December 31, 1996) is being amortized using the
straight-line method over the estimated useful lives of the underlying assets of
approximately 5 years.

In 1996, the Company capitalized software development costs of $85,191 for costs
incurred subsequent to establishing  technological  feasibility and prior to the
product being  available for general  release to customers.  These costs will be
amortized  over  two  years,  the  estimated  life  of the  product,  using  the
straight-line method commencing when the software is deemed available for sale.
    

Research and Development

Research and development costs are charged to operations in the period incurred.

Income Taxes

The Company accounts for income taxes using Financial Accounting Standards Board
("FASB") Statement No. 109, "Accounting for Income Taxes." At December 31, 1996,
the Company has net operating loss  carryforwards of  approximately  $13,741,000
for income tax purposes, expiring through 2011.


                                      F-7
<PAGE>


2. Summary of Significant Accounting Policies (continued)

At December 31, 1996 and 1995, deferred tax assets approximating  $4,672,000 and
$4,129,000,  respectively, arising from the future availability of net operating
loss  carryforwards  have  been  offset  in  full  by  valuation  allowances  in
accordance with FASB Statement No. 109.

Net Loss Per Share

Net loss per share has been computed on the basis of the weighted average number
of common  shares  outstanding.  Common  stock  equivalents  have been  excluded
because their effect is antidilutive.

Stock-Based Compensation

In  1996,  the  Company  adopted  SFAS  No.  123,  "Accounting  for  Stock-Based
Compensation." In accordance with the standard,  the Company elected to continue
to account for its stock-based  compensation  under Accounting  Principles Board
Opinion  No.  25,  "Accounting  for  Stock  Issued  to  Employees"  and  related
interpretations  (APB  25).  Under APB 25,  because  the  exercise  price of the
Company's stock options granted equals the market price of the underlying  stock
on the date of the grant, no compensation expense is required to be recognized.

Accounting Change

In 1996, the Company  adopted  Statement of Financial  Accounting  Standards No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed Of," which  requires  impairment  losses to be recorded on
long-lived  assets used in operations  when indicators of impairment are present
and the  undiscounted  cash flows  estimated to be generated by those assets are
less  than the  assets'  carrying  amount.  This  adoption  had no effect on the
consolidated financial statements.

Reclassification

Certain  amounts in the 1995  financial  statements  have been  reclassified  to
conform with the 1996 presentation.


                                      F-8
<PAGE>


3. Acquisition Preferred Stock

The Company is authorized to issue 750,000 shares of its  acquisition  preferred
stock, $.01 par value,  none of which are presently issued and outstanding.  The
acquisition  preferred  stock is only  permitted  to be issued as  consideration
pursuant to (i) a statutory  merger or  consolidation as to which the Company is
the surviving  entity,  (ii) the acquisition by the Company of substantially all
the assets or business of another entity or (iii) the acquisition by the Company
of 50% or more of the voting  securities  of  another  entity.  The  acquisition
preferred  stock is issuable from time to time in one or more series.  The Board
of Directors is authorized to fix, before issuance,  the voting powers,  if any,
the designations, preferences and any other rights, qualifications,  limitations
and  restrictions  applicable  to each series of  acquisition  preferred  stock,
including,   without  limitation,   dividend  rates  and  conditions,   dividend
preferences, conversion and redemption rights and liquidation preferences.

4. Common Shareholders' Equity

On January 24, 1990, the Company  issued and sold 1,100,000  units for $4.00 per
unit in connection with a public  offering.  The net proceeds,  after accounting
for direct expenses of the offering, were approximately  $3,397,000. On February
26, 1990, the underwriter  issued and sold an additional  165,000 units at $4.00
per unit resulting from the exercise of the overallotment option and the Company
received net proceeds of $574,200.  Each unit consists of three shares of common
stock and two Class A warrants.  Each Class A warrant is exercisable to purchase
one share of common  stock and one Class B warrant at a price of $2.00,  subject
to adjustment,  commencing one year from the date of the Prospectus (January 17,
1990) until  January 17, 1997  (extended  from  January 16,  1995)  subject,  in
certain circumstances,  to earlier redemption by the Company. As a result of the
dilutive effects of private  placements (see Note 7) and the Discounted  Warrant
Plan (see below),  the number of shares issuable under and the exercise price of
the Company's Class B warrants,  which may be exercised commencing upon issuance
until January 17, 1998 (extended from January 17, 1997), have been adjusted such
that each Class B warrant, as adjusted,  entitles the holder to purchase one and
two tenths  (1.2) shares  (originally  one share) of Common stock at an adjusted
price that  varies  from $2.69 to $3.23 to January  17, 1997 and $1.50 per share
thereafter  (originally  $3.33  to  $4.67).  As a  result  of  the  issuance  of
approximately  1,717,000  Class E warrants  pursuant to the  Discounted  Warrant
Plan, each Class A warrant remaining  unexercised entitles the holder thereof to
purchase one and two-tenth  (1.2)  (originally one share) shares of common stock
and one Class B warrant  at an  adjusted  price per  share,  subject  to further
adjustment,  of  $1.72.  Since  the  Company  has  satisfied  the  condition  of
redemption,

                                      F-9
<PAGE>


4. Common Shareholders' Equity (continued)

namely the closing  Sales Price price of common  stock of the Company  exceeding
$2.67  for a period of 30  consecutive  business  days,  the  remaining  Class A
Warrants  were called  effective  November  19, 1993.  The Company  extended the
redemption date to December 20, 1993 and 807,659 Class A Warrants were exercised
resulting in the issuance of 969,191  shares of common stock and 807,659 Class B
Warrants  exercisable to purchase  969,191 shares of common stock and receipt by
the Company of net proceeds of $1,667,008.

In connection with the public  offering,  the Company sold 110,000 Unit Purchase
Options (the "Unit Options") to the underwriter and a finder on January 24, 1990
for a nominal  consideration.  The units  purchasable  upon exercise of the Unit
Options are identical to the units sold in the public offering,  except that the
warrants  included therein are not redeemable.  The Unit Options are exercisable
at  130%  of  the  public   offering  price  subject  to  certain   antidilution
adjustments.  The Unit  Options  are  exercisable  during the  five-year  period
(originally  three-years)  commencing  two  years  from the  date of the  public
offering,  expiring January 17, 1997. As a result of the dilutive effects of the
private placement,  the number of Unit Options has been increased to 127,547 and
the unit price adjusted to $4.35 per unit (originally $5.20 per unit).  Pursuant
to a settlement  agreement certain Unit Purchase Option holders  surrendered for
exercise in full 30,369 units in a cashless  transaction that provided them with
85,674 shares of common stock  representing  the excess of the fair market value
of the common stock and Class A warrants,  over the exercise  price of the Unit.
At December 31,  1996,  there were 97,178  units  (underwriter)  and 1,568 units
(finder) outstanding.

In October  1991,  the Board of Directors  of the Company  approved a Discounted
Warrant Plan,  providing for 1) a reduction in the price of each Class A warrant
which was exercised during the Class A Limited Exercise Period (expired in 1992)
from $2.00 to the  discounted  price of $1.50 per share of common stock,  and 2)
the issuance to each holder who  exercised a discounted  Class A warrant  during
the Class A Limited  Exercise  Period,  a Class E warrant,  in lieu of a Class B
warrant, which has the same terms and conditions as the Class B warrants, except
that the price of each Class E warrant  was reduced to the  discounted  price of
$1.25 per share of common  stock until the  expiration  date on January 17, 1998
(extended from January 16, 1995).

Pursuant  to the  Discounted  Warrant  Plan,  approximately  1,717,000  Class  A
warrants were  exercised  resulting in the issuance of  approximately  1,717,000
shares of common stock and 1,717,000  Class E warrants  exercisable  to purchase
approximately 1,888,700 shares of

                                      F-10
<PAGE>


4. Common Shareholders' Equity (continued)

common  stock and the  receipt by the Company of net  proceeds of  approximately
$2,500,000.  During the year ended December 31, 1993, 1,022,825 Class E warrants
were exercised  resulting in an issuance of 1,125,109 shares of common stock and
receipt by the Company of net proceeds of  $1,406,464.  In  connection  with the
exercise of the E warrants,  options to purchase 38,508  unregistered  shares of
common stock  exercisable  at prices  ranging from $3.31 through $3.44 per share
were issued to two  registered  brokerage  houses,  as an  inducement  for their
exercise of the  aforementioned  Class E warrants.  The options were exercisable
for 18 months from the dates of exercise of the Class E warrants (October 1993).
In addition,  through December 31, 1992, 202,588 Class E warrants were exercised
resulting in the issuance of  approximately  223,000  shares of common stock and
the  receipt by the  Company  of net  proceeds  of  approximately  $280,000.  In
connection  with the Discounted  Warrant Plan, the Board of Directors  issued in
1992 an aggregate of 166,154 restricted shares of common stock of the Company to
two  registered  brokers,  in full  payment  of the  compensation  due  them for
soliciting the exercise of the Class A warrants.

In June 1991,  Class D warrants  exercisable  over a five-year  term to purchase
176,250  shares  of  common  stock at  $2.00  per  share  and  Class C  warrants
exercisable  over a five and one-half year term  (originally  five-year term) to
purchase  200,000  shares of common  stock at $1.00  per  share  were  issued in
connection with the private  placement (see Note 7). As a result of the exercise
of Class E warrants and pursuant to  provisions  for  adjustment of the exercise
price of the  Company's  Class D  warrants,  each Class D warrant  entitles  the
holder to purchase  approximately  two and  three-tenths  (2.3)  (originally one
share) shares of common stock at an adjusted price per share, subject to further
adjustment, of approximately $.88 per share and each Class C warrant to purchase
228,571 (originally  200,000) shares of common stock at $.88 per share.  Through
December 31, 1996, 173,750 Class D warrants have been exercised  resulting in an
issuance  of 397,143  shares of common  stock and the  receipt by the Company of
$347,500  and  63,334  Class C  warrants  have been  exercised  resulting  in an
issuance  of 72,334  shares of common  stock and the  receipt by the  Company of
$63,344.  The Class C warrants still outstanding which were to expire on January
17,  1997 were  extended to March 18, 1997 and the price was reduced to $.75 per
share. Such warrants expired unexercised.

Effective June 22, 1995, the Company's shareholders voted to increase the number
of authorized common stock from 20 million shares to 40 million shares.


                                      F-11
<PAGE>


4. Common Shareholders' Equity (continued)

Common  shares  reserved  for  future  issuance  as of  December  31,  1996  are
approximately as follows:

Units sold in public offering in 1990:
   Class B warrants                                                     969,000
   Class E warrants                                                     541,000
Third party options (Note 5)                                            500,000
Unit Options                                                            766,000
1989 Stock Option Plan (Note 5)                                         432,000
1989 Nonstatutory Plan (Note 5)                                         100,000
1995 Stock Option Plan                                                1,761,000
Warrants issued in private placement in 1991 (Note 7):                        0
   Class C warrants                                                     156,000
   Class D warrants                                                       6,000
                                                                 ===============
                                                                      5,231,000
                                                                 ===============

5. Stock Options

In June 1995, the  shareholders of the Company approved the adoption of the 1995
Stock Option Plan (the "1995 Plan").  The 1995 Plan provides for the granting of
incentive stock options ("ISOs") and/or nonqualified stock options to employees,
directors  or  consultants  of the Company to purchase an aggregate of 2,000,000
shares  of the  Company's  common  stock.  The  option  price per share for ISOs
granted  under the 1995 Plan shall not be less than the fair market value of the
Company's common stock on the date of grant.  Furthermore,  the option price per
share  shall be  determined  by the Board of  Directors.  Options  vest based on
certain  provisions  related   principally  to  future  services.   Options  are
exercisable  over  various  periods up to ten years  from the date of grant.  No
option may be granted under the 1995 Plan after June 2005. At December 31, 1996,
there were 219,500  shares  available for granting of future  options.  The 1995
Plan  replaced  all prior  option  plans and no further  options will be granted
under the prior option plans.

In 1989, the  shareholders of the Company  approved the adoption of a 1989 Stock
Option  Plan (the "1989  Plan").  The 1989 Plan  provided  for the  granting  of
incentive stock options and/or  nonqualified  stock options to key employees and
consultants  to purchase  shares of the  Company's  common  stock at a price per
share not less than the fair market value on the date

                                      F-12
<PAGE>


5. Stock Options (continued)

of grant.  In 1992, the Plan was amended to (a) increase the number of shares to
1,565,957,  (b) permit the granting of nonqualified stock options at a price per
share less than the fair market value of the Company's  common stock on the date
of  grant  and  (c)  permit  options  to be  exercised  up to  two  years  after
termination  of employment  under certain  circumstances.  Options vest based on
certain  provisions  related   principally  to  future  services.   Options  are
exercisable  over  various  periods  up to six  years  from the  date of  grant.
Pursuant to the terms of the 1995 Plan, no options may be granted under the 1989
Plan subsequent to June 22, 1995.

In 1989,  the Company also adopted a  Nonstatutory  Stock Option Plan (the "1989
Nonstatutory Plan") for directors. Under the 1989 Nonstatutory Plan, the Company
could grant options for the purchase of an aggregate of 355,000 shares of common
stock at not less  than fair  market  value at the date of  grant.  The  options
expire at various dates.  Pursuant to the terms of the 1995 Plan, no options may
be granted under the 1989 Nonstatutory Plan subsequent to June 22, 1995.

Option  activity  during each of the two years ended  December  31, 1996 for the
1989 Plan and the 1989 Nonstatutory Plan is summarized as follows:

<TABLE>
<CAPTION>
                                    1989 Nonstatutory Plan                    1989 Plan
                                      Shares Under Option                Shares Under Option
                                 ------------------------------------------------------------------------
                                                                                Weighted 
                                                     Number                     Average       Number
                                 Option price per      of      Option price     Exercise        of
                                       share         Shares      per share       Price        Shares
                                 ------------------------------------------------------------------------
<S>                              <C>                 <C>         <C>               <C>    <C> 
Balance at January 1, 1995                           190,833                                  988,008
Granted                                                    -             $ .92                119,000
Cancelled/expired                $1.13 to $2.56      (90,833)    $.92 to $3.47               (655,008)
                                                                                          ---------------
Balance at December 31,1995                          100,000                       $1.95      452,000
Exercised                                                  -             $ .92     $ .92       (2,500)
Cancelled                                                  -     $.92 to $3.13     $2.18      (17,500)
                                                     -------                              ---------------
Balance at December 31,1996                          100,000                       $1.94      432,000
                                                     =======                              ===============

</TABLE>

                                      F-13
<PAGE>


5. Stock Options (continued)

Option  activity  during each of the two years ended  December  31, 1996 for the
1995 Plan is summarized as follows:

<TABLE>
<CAPTION>
                                                                   1995 Plan
                                                              Shares Under Option
                                            --------------------------------------------------------
                                                                    Weighted            Number
                                             Option price per        Average              of
                                                  share          Exercise Price         shares
                                            --------------------------------------------------------

<S>                                         <C>                          <C>       <C>
       Balance at January 1, 1995                                                             -
       Granted                              $0.92 to $1.68                              1,962,500
       Cancelled/expired                             $0.92                                (30,000)
                                                                                   -----------------
       Balance at December 31, 1995                                      $1.04          1,932,500
                                                                                   -----------------
       Granted                              $0.95 to $1.20               $1.09            198,000
       Cancelled/expired                             $0.92               $1.09           (350,000)
       Exercised                                     $0.92               $0.92            (20,000)
                                                                                   -----------------
       Balance at December 31, 1996                                                     1,760,500
                                                                                   =================
</TABLE>

During 1996, the Company granted 100,000 fully vested nonstatutory stock options
at fair market value to a third party, which are exercisable for a period of ten
years at a price of $1.17 per share.  In  addition,  during  1995,  the  Company
granted 300,000 fully vested  nonstatutory stock options at fair market value to
a third party,  which are exercisable for a period of eighteen months at a price
of $1.05 per share, and 5,000 nonstatutory stock options at fair market value to
a third  party,  which were  cancelled  in 1996.  Further,  in 1994 the  Company
granted  100,000  nonstatutory  stock  options at fair  market  value to a third
party,  which vest  ratably over two years and are  exercisable  for a period of
five years at a price of $1.69 per share. At December 31, 1996, 500,000 of these
options are outstanding.

                                 * * * * * * * *

Pro forma information regarding net income and earnings per share is required by
FASB Statement No. 123, "Accounting for Stock-Based compensation" which requires
that the information be determined as if the Company has accounted for its stock
options granted

                                      F-14
<PAGE>


5. Stock Options (continued)

subsequent  to December 31, 1994 under the fair value method of that  statement.
The fair value for these  options was estimated at the date of the grant using a
Black-Scholes option pricing model. The Company's pro forma information follows:


                                                        December 31
                                                1996                   1995
                                         -----------------      ----------------

       Pro forma net loss                 $   (1,861,660)       $    (1,876,559)
       Pro forma loss per share           $         (.13)       $          (.13)

The fair value of these options at the date of the grant was estimated  with the
following  weighted  average  assumptions  for 1996 and 1995: risk free interest
rates ranging from 5.7% to 7.1%,  no dividend  yield,  volatility  factor of the
expected  market  price of the  Company's  common  stock of 49%,  and a weighted
average  expected life of the options  ranging from six to eight years.  Because
Statement 123 is applicable only to options  granted  subsequent to December 31,
1994 and  employee  stock  options  granted  vest over a period from one to four
years, its pro forma effect will not be fully reflected in pro forma net income.

The following table summarizes  information  about stock options  outstanding at
December 31, 1996:
<TABLE>
<CAPTION>
                                   Options Outstanding               Options Exercisable
                                 -------------------------         -----------------------
                                         Weighted
                           Number         Average      Weighted      Number       Weighted
           Range of      Outstanding     Remaining     Average     Outstanding    Average
           Exercise      at December    Contractual    Exercise    at December    Exercise
            Price         31, 1996         Life         Price       31, 1996       Price
          -----------    -----------    -----------    --------    -----------    ---------
<S>       <C>            <C>            <C>            <C>         <C>            <C>  
          $0.92-$1.00      495,500      8.0 years      $0.92         157,250      $0.92
          $1.01-$2.00    1,589,000      6.8 years      $1.12         708,375      $1.12
          $2.01-$3.22      208,000      0.2 years      $2.64         205,000      $2.65
          -----------    -----------    -----------    --------    -----------    ---------
          $0.92-$3.22    2,292,500      2.5 years      $1.22       1,070,625      $1.38
          ===========    ===========    ===========    ========    ===========    =========

The weighted  average fair value of all stock  options  granted in 1996 was $.70
per share.

</TABLE>

                                      F-15
<PAGE>


6. Leases

The Company leases its office space for a term extending through March 31, 2000.
In August, 1996, this lease was modified to reflect a reduction in leased space.
Additionally,  the  Company  has  entered  into  various  operating  leases  for
equipment.  Future minimum  payments under  noncancellable  operating leases for
years ending December 31 are as follows:

                               1997                           $150,674
                               1998                            155,146
                               1999                            155,865
                               2000                             39,316
                                                         =================
                                                              $501,001
                                                         =================

Rent expense in 1996 and 1995,  under all operating  leases,  was  approximately
$168,000 and $179,000, respectively.

7. Private Placements

On June 25,  1991,  the Company  completed a private  placement,  for which D.H.
Blair and Co. Inc.  ("Blair")  acted as placement  agent,  of  $1,762,500 of its
securities,  consisting of $1,101,562 of Senior Secured  Convertible  Promissory
Notes (the "Notes")  convertible  into Common Stock at $1.00 per share,  660,937
shares  of  common  stock  at $1.00  per  share  and  176,250  Class D  warrants
exercisable over a five-year term at $.88 per share (originally $2.00 per share)
for 402,731 shares (originally 176,250 shares) of common stock. These securities
had been sold pursuant to a Securities Purchase Agreement among the Company, the
purchasers and Blair as purchasers'  representative (the "Purchase  Agreement"),
in a total of 35.25 Units of $50,000 each,  consisting of a $31,250 Note, 18,750
shares of common stock and 5,000 Class D warrants.  The Company paid Blair a fee
of  $176,250  and  expenses  of $56,750  and  issued to Blair,  Class C warrants
exercisable over a five-year term to purchase 228,571 shares (originally 200,000
shares) of common stock at $.88 (originally  $1.00 per share).  All of the Notes
were converted or redeemed in 1992.

During the period  commencing  in June 1993 and ending in  September  1993,  the
Company completed four separate private placements ("Private Placements"), of an
aggregate of 1,843,873  shares of the Company's  common stock at prices  ranging
from $1.10 to $1.15 per

                                      F-16
<PAGE>


7. Private Placements (continued)

share for net proceeds of $2,039,925. The Company paid commissions in the amount
of $35,075 to an individual, granted 100,000 shares of unregistered common stock
and options to purchase an additional  425,000  shares of common stock at prices
ranging from $1.31 to $3.47 per share, in consideration of services  rendered in
connection with the Private Placements.

8. Deferred Revenue

On December 27, 1993,  the Company  sold 100,000  shares (2.4%  interest) of its
subsidiary  BCA  Services,  Inc.  to Polaris  Partners  for the sum of  $100,000
resulting in the Company recording such amount as deferred revenue.  Pursuant to
an exchange  agreement  dated April 6, 1995,  the Company agreed to exchange the
100,000 shares of BCA Services,  Inc. for 100,000 shares of BCAM  International,
Inc.,  at which time  $99,000 of the  deferred  revenue was  credited to paid-in
surplus and $1,000 was credited to common stock.

9. Significant Customers

The  Company  generated a  significant  percentage  of its revenue  from a small
number  of  customers.   In  1996,   revenue  from  three  customers   comprised
approximately  74% of total  revenue (38%,  18% and 18%). In 1995,  revenue from
four customers  comprised  approximately 62% of total revenue (29%, 12%, 11% and
10%).

At December 31, 1996,  three customers  accounted for  approximately  84% of the
Company's  gross  accounts  receivable.   Consistent  with  industry  standards,
receivables  are generally  payable  within 90 to 120 days and collateral is not
required.

10. Subsequent Events

On March 19, 1997 the Company  entered  into an agreement  with another  company
(the  "acquiree")  to  purchase  all of the  common  stock of the  acquiree  for
approximately  $4,600,000.  This  commitment  is  contingent  upon  the  Company
obtaining  the necessary  financing to fund the  purchase.  The Company does not
have any obligations  under this agreement should management be unable to obtain
this financing.

                                      F-17
<PAGE>


10. Subsequent Events (continued)

On January  15,  1997,  the  Company  offered a minimum of 400,000  units,  each
consisting of one share of the Company's common stock and a non-redeemable Class
AA warrant  which  entitles  the holder to purchase  one share of the  Company's
Common Stock at a price of $1.10 per share,  until March 31, 1999.  The offering
was  completed  on March 28,  1997,  and the Company  sold  1,075,000  units for
$1,075,000.  The funds will be used for the advancement of various  technologies
as well as for working capital.

   
11. Restatement Of December  31, 1996 Balance Sheet Classification

The  previously  filed Balance Sheet  contained in the Form 10-KSB filed for the
year ended December 31, 1996 included the costs  associated with the acquisition
and financing of Drew Shoe  Corporation as a component of current assets.  These
costs are more  appropriately  classified as non-current  assets under generally
accepted  accounting  principles.  The Balance Sheet as of December 31, 1996 has
been restated to reflect the correct  classification of these costs. Such change
has an effect on the  Statement  of Cash Flows for the year ended  December  31,
1996, which has similarly been restated. As a result, the working capital of the
Company at December 31, 1996, which was previously recorded as $597,293,  is now
correctly recorded as $438,669 after the reclassification (restatement).

    

                                      F-18