SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                           FORM 10-KSB

[X]   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934.

[ ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934.

           For the fiscal year ended December 31, 2002

                 Commission File Number:  0-27351

                     LAZARUS INDUSTRIES, INC.
       ----------------------------------------------------
      (Exact name of Registrant as specified in its Charter)

                 UTAH                               87-0445575
     -------------------------------             ------------------
     (State or other Jurisdiction of             (I.R.S. Employer
     Incorporation or Organization)              Identification No.)


     10 West 100 South, Suite 610, Salt Lake City, Utah 84101
  --------------------------------------------------------------
       (Address of Principal Executive Offices) (Zip Code)


Registrant's Telephone Number including Area Code:  (801) 532-7851

                         (Not applicable)
 ---------------------------------------------------------------
       Former name, former address and former fiscal year,
                   if changed since last report.

Securities Registered Under Section 12(b) of the Exchange Act:  None.

  Securities Registered Pursuant to Section 12(g) of the Act:
                  Common Stock, Par Value $0.001

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, during the past 12
months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes [ X ]     No [  ]

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.  [  ]

State issuer's revenues for its most recent fiscal year.  $0.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed on the basis of the last sale price on February 13,
2003, of $0.11, was $472,491.

As of April 11, 2003, the Registrant had outstanding 7,485,417 shares of its
common stock, par value $0.001.

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

Documents Incorporated by Reference:  None.

<PAGE>

                        TABLE OF CONTENTS

                     ITEM NUMBER AND CAPTION

PART I
------
                                                                      Page No.
                                                                      -------
Item 1.  Description of Business............................................1
Item 2.  Description of Property...........................................10
Item 3.  Legal Proceedings.................................................11
Item 4.  Submission or Matters to a Vote of Security Holders...............11

PART II
-------

Item 5.  Market for Common Equity and Related Stockholder Matters..........11
Item 6.  Management's Discussion and Analysis or Plan of Operation.........12
Item 7.  Financial Statements..............................................14
Item 8.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure..........................................14

PART III
--------

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act.................14
Item 10. Executive Compensation............................................17
Item 11. Security Ownership of Certain Beneficial Owners and
         Management and Related Stockholder Matters........................18
Item 12. Certain Relationships and Related Transactions....................19
Item 13. Exhibits and Reports on Form 8-K..................................20
Item 14. Controls and Procedures...........................................21
Signatures.................................................................22
Certifications.............................................................23

The information contained in this Form 10-KSB for the fiscal year ended
December 31, 2002, is as of the latest practicable date except for financial
information, which relates to the fiscal year.

<PAGE>



                              PART I

                 ITEM 1.  DESCRIPTION OF BUSINESS

HISTORY

     Lazarus Industries, Inc. (the "Company") is a Utah corporation formed on
December 31, 1985.  The Company was originally organized for the purpose of
creating a capital resource fund to seek, investigate, and, if warranted,
acquire or participate in a favorable business opportunity.   In 1988, the
Company entered into a reorganization transaction with Lazarus Medical
Innovations, Inc., to become engaged in the manufacture and marketing of
medical devices.  This business was discontinued in 1991.  The Company was
dormant from 1991 until the end of 1997, when the Company began efforts to
reactivate its business in order to seek a business opportunity to acquire.

     The Company was inactive until January, 2003, when the Company entered
into a Stock Exchange Agreement with American Dairy Holdings, Inc. ("American
Dairy"), a Delaware corporation, and American Dairy's shareholders, providing
for the acquisition of American Dairy in a reverse acquisition, described
below.  Lazarus is a public company whose securities are quoted on the
over-the-counter Bulletin Board under the symbol "LAZS."

DESCRIPTION OF EXCHANGE AGREEMENT

     The Company has entered into an Exchange Agreement with American Dairy
Holdings, Inc. ("American Dairy"), a Delaware corporation, and the
shareholders of American Dairy, providing for the acquisition of all of the
shares of American Dairy, in exchange for the issuance of a total of 9,650,000
post-split shares of common stock of the Company to the American Dairy
shareholders.  Following closing, the American Dairy shareholders will own
approximately 96% of the outstanding stock of the Company.  The Exchange
Agreement contemplates, at closing, a one-for-nineteen reverse split; a change
in the name of the Company to "American Dairy, Inc."; and the approval of the
Company's 2003 Stock Incentive Plan.  These actions have been approved by
holders of approximately 66% of the outstanding stock of the Company.  The
Company plans to mail an Information Statement, concerning this transaction on
or about April 15, 2003 and expects that this transaction will close on
approximately May 6, 2003.  Following the completion of the Acquisition, the
operations of American Dairy will become the principal operations of the
Company.

     American owns 100% of the registered capital and members' equity of
Heilongjiang Feihe Dairy Co., Limited, organized under the laws of the
People's Republic of China ("Feihe Dairy").  Feihe Dairy owns 100% of the
registered capital and members' equity of Heilongjiang Sanhao Dairy Co.,
Limited, organized under the laws of the People's Republic of China ("PRC").
A report on Form 8-K was filed on January 21, 2003, and amended on March 5,
2003, reporting the proposed transaction and is incorporated herein by
reference.

     When the transaction is consummated, the name of Lazarus will be changed
to "American Dairy, Inc." or such similar name as selected by American Dairy.
In addition, it is contemplated that upon closing, officers and directors of
American Dairy will be appointed, and the current officers and directors of
Lazarus will resign.

<PAGE>


     For additional details concerning this transaction, reference is made to
the Company's Information Statement dated April 15, 2003, on file with the
U.S. Securities & Exchange Commission, which is incorporated herein by
reference.

BUSINESS OF AMERICAN DAIRY

General

     American Dairy's operations are conducted through its wholly-owned
subsidiary, Heilongjiang Feihe Dairy Group Limited ("Feihe Dairy"), and
Feihe's subsidiary, Heilongjiang Sanhao Dairy Co., Limited ("Sanhao Dairy"),
both of which are enterprises organized in the People's Republic of China
("PRC").  Feihe Dairy (http://www.feihe.com) is a commercial producer of milk
powder in the PRC.  Feihe Dairy engages in the production and distribution of
milk powder, soybean milk powder and dairy products in the PRC.  The principal
activity of Sanhao Dairy is the production and supply of processed milk to
Feihe Dairy.  The products are sold under the registered trademarks "Feihe",
"Yinhe," "Jinhe" and "Xinghua."

     The production facilities of Feihe Dairy are situated in Qingxiang
Street, Kedong County, QiQiHaEr City of Heilongjiang Province in the Northeast
of the People's Republic of China. Feihe Dairy's production facilities have a
daily processing capability of 35 tons of fresh milk.

     Management of American Dairy believes that there will be increasing
demand for dairy products as the living standards of the general public in the
PRC improve.  American Dairy management believes that with the advantages of
Feihe Dairy's high quality products and reputable and recognizable brands,
combined with its management skills and its sales network, Feihe Dairy is well
positioned to take advantage of the growing market for its series of milk
powder products.

     Feihe Dairy is believed by its management to be the largest privately
owned dairy enterprise in the PRC.  Feihe Dairy has eight production lines for
producing milk powders, three production lines for producing bean-milk
powders, two production lines for producing liquid milk and one production
line for producing milk Crowley bean, milk Crowley, and solid milk, forming a
larger-scale dairy production enterprise with an annual processing power of
112,000 metric tons.  There are approximately 8,500 milk cows in stock in
3,124 million metric units, or Chinese acres, or approximately 514,640 US
acres, of which approximately 27% is arable land or pasture ground, and
approximately 30% is bean and corn planting area in Kedong County, with an
annual milk output of 30,000 metric tons.  Feihe Dairy holds the land use
rights to 47,640 square meters of land in Kedong County.

     Feihe Dairy and Sanhao Dairy currently have approximately 342 employees,
consisting of approximately 63 management, administration and accounting
personnel, 6 people in research and development and 267 production personnel,
together with 1,800 sales and marketing personnel and promoters. Feihe Dairy
has not experienced any significant labor disputes or disruption of its normal
operations.

History and Corporate Structure

     American Dairy was incorporated in Delaware on January 15, 2002, for the
purpose of acquiring the stock of Feihe Dairy.  The directors of American
Dairy are Messrs. Leng You-Bin and Liu Sheng-Hui.  Under a Sale and Purchase
Agreement dated February 1, 2002, between American Dairy and the registered
shareholders of Feihe Dairy, and which Agreement was used solely for the
purpose of filing an application to reorganize Feihe Dairy into a foreign
investment enterprise,  American Dairy agreed to purchase Feihe Dairy at a
consideration of $700,000, and the Board of Feihe Dairy and the Heilongjiang
Provincial

                                2
<PAGE>

Government approved the transfer of ownership on December 24, 2001 and April
27, 2002, respectively. Under a Supplemental Sale and Purchase Agreement dated
February 1, 2002 between American Dairy and the registered shareholders of
Feihe Dairy, American Dairy agreed to purchase Feihe Dairy at a consideration
of $2,586,311 based on the audited net worth of Feihe Dairy as of April 30,
2002. In April 2002, American Dairy and Feihe Dairy completed the
reorganization, as a result of which American Dairy became the holding company
of Feihe Dairy, which in turn owns 99% of Sanhao Dairy.  As a result, Feihe
Dairy and Sanhao Dairy became wholly owned foreign enterprises or subsidiaries
of American Dairy.

     The following chart sets out the corporate structure of the American
Dairy entities following completion of the Acquisition:

        --------------------------
       | Lazarus Industries, Inc. |
       | (to be changed to        |
       | "American Dairy, Inc.")  |
        --------------------------
                   |
            100%   |
                   |
        --------------------------
       |      American Dairy      |
       |      Holdings, Inc.      |
        --------------------------
                   |
            100%   |
                   |
        --------------------------               -----------------------
       |   Heilongjiang Feihe     |    99%      |   Heilongjiang Sanhao |
       |   Dairy Co., Limited     |-------------|   Dairy Co., Limited  |
        --------------------------               -----------------------


*The remaining 1% is held by Fu Man Guo in trust for Feihe Dairy.

     The history of Feihe Dairy commenced in 1962 when its predecessor,
Heilongjiang Zhaoguang Hongguang Dairy Plant ("Hongguang Dairy Plant") was
established as a wholly owned State Enterprise, whose principal activities
were the production and distribution of powered milk in the People's Republic
of China ("PRC").  Hongguang Dairy Plant was located at Zhaoguang Livestock
Farm of ZhaoGuang Agro-Cultivated Bureau and its production capability was 5
tons a day and its main sales territory was Shangdong Province.

     In 1982, Heilongjiang Zhaoguang Dairy Plant ("Zhaoguang Dairy"), another
State Enterprise, was established at Zhaoguang Plantation near BeiAn City.
In 1984, the two Dairy Plants, Hongguang Dairy and Zhaoguang Dairy, were
merged into Heilongjiang Zhaoguang Dairy Plant. The State continued to retain
ownership of the merged Heilongjiang Zhaoguang Dairy Plant and the merged
production capability increased to 20 tons a day.

     In 1997, the merged Heilongjiang Zhaoguang Dairy Plant was further
reorganized and changed its name to Heilongjiang Feihe Dairy Group Limited.
In February 2000, Heilongjiang Feihe Dairy Group Limited completed its share
restructuring to become a private company with a registered capital of
$845,411.

     In March 2001, the restructured Heilongjiang Feihe Dairy Group Limited
changed its name to the present name of Heilongjiang Feihe Dairy Co., Limited
("Feihe Dairy") and acquired all of the fixed assets (including land use
rights, plant and machineries and factory buildings) of Kedong Gongmu Dairy
Plant.  Feihe Dairy holds 99% (1% of the equity is held in trust by Fu Man
Guo) of the registered equity of Sanhao Dairy, which is considered to be a
wholly-owned subsidiary.

                                3
<PAGE>

     In August 2001, Feihe Dairy's new production facilities at Kedong County
commenced production of milk powder.

     Sanhao Dairy was incorporated in March 28, 2001 with a registered capital
of $433,110.  Feihe Dairy owns 99% of Sanhao Dairy and Fu Man Guo owns the
remaining 1% in trust for Feihe Dairy.  Under a Sale and Purchase Agreement
dated February 6, 2001 between Feihe Dairy and Kedong County Economic
Committee, Feihe Dairy agreed to acquire all the fixed assets including land
use rights from Kedong Gongmu Dairy Plant at a consideration of $364,269.
Following the incorporation of Sanhao Dairy, Feihe Dairy, as its contribution
towards the registered capital, injected all the fixed assets from Kedong
Gongmu Dairy Plant, except for the land use rights to 47,640 square meters of
land, into Sanhao Dairy, plus cash of $68,841.

Trademarks and Corporate Reputation

     The "Feihe" trademark has been used since the inception of Heilongjiang
Zhaoguang Hongguang Dairy Plant in 1962 ("Hongguang Dairy Plant").  The
"Feihe" trademark has been registered with the Trademark Bureau of the State
Administration for Industry and Commerce.

     Feihe Dairy's milk powder products marketed under the "Feihe" trademark
were recognized by the China Society Survey Firm as being among the "Famous
Brand Products" in the PRC in 1994.  In 1995, the "Feihe" series of milk
powder was allowed to use of the Green Label on their packaging by China Green
Food Development Center.  On the "Day of International Consumer Rights" on
March 15, 1997, the consumers awarded the "Gold Medal" to the Feihe's series
of milk powder products.  A survey conducted by the National Statistics Bureau
in January 1998 indicated that the sales of the Feihe's series of milk powder
products were ranked among the top 10 of the total milk powder sales in PRC in
1997.  In 1991, "Feihe Whole Fatty Milk Powder" was awarded the "High Quality
Product" by the China Ministry of Agriculture.  In March 2002, the products
were awarded "Product Exemption From Quality Surveillance Inspection" status
by the State General Administration of the People's Republic of China for
Quality Supervision and Inspection and Quarantine.  Other registered
trademarks include Yinhe, Jinhe and Xinghua.

China Dairy Industry Overview - Dairy Production Industry

     Before 1949, there was a limited number of milk processing plants in such
major cities as Beijing, Tianjin, and Shanghai.  By 1982, there were about 500
milk processing plants in China, with daily capacity of 4,000 tons, and an
annual output of 997,000 tons.  In 1996, the number of dairy processing plants
increased to 600.  Several joint venture firms, including Nestle, Unilever,
Kraft, Danone, and China Peregrine, have built plants in certain major cities
in China.

     Generally speaking, China's dairy industry is a relatively small
industry, although it has experienced rapid growth in recent years.

     . In 1978 the annual output of dairy products was 46,500 tons, and by
       2000 it reached 829,000 tons with an average growth rate of 14% per
       year and in 1999 to 2000, the annual growth rate exceeded 20%.

     . In 1996 the total annual output of liquid milk was 519,000 tons, and by
       2000 it grew to 1.5 million tons with the average annual growth rate
       exceeding 30%.


                                4
<PAGE>

    Most of China's milk is produced by small dairy farming households, each
with an average herd of 5 cows or less.  With such small production, it is
difficult to implement advanced technology to improve productivity and
efficiency.  Cows reared by the small households are usually cross breeds with
relatively low productivity yield.  Industry specialists estimate that the
average annual milk yield per cow is approximately 2,200 to 2,800 kilogram in
China, which is only about 35-45% of the production yield in developed
countries of 6,000 to 8,000 kilogram per cow per year.  The average production
cost of dairy milk is about Rmb.1.70 per kilogram, which is about 20% to 30%
higher than the average cost in the developed countries (Rmb.1.30 to Rmb.1.40
per kilogram).

    Geographically, provinces in Northern China produce more milk than
provinces in Southern China.  Heilongjiang Province is the largest producer
with an annual production of 1,428,000 tons in 1999 or about 20% of China's
total production.  After Heilongjiang, three other Provinces, Inner Mongolia,
Hebei and Xinjiang, are the second group of larger producers with an annual
output of 650,000 to 700,000 tons.  These top four provinces produce about 50%
of China's total dairy milk.

    Although dairy products have been very important in the food structure in
Western countries, the level of dairy products consumption has remained low in
China for a long time for historical and political reasons and the low
standards of living.  Nevertheless, China has become increasingly aware that
dairy products are important for supplying people with full nutrition needs,
especially calcium, protein and certain vitamins.  Despite increases in dairy
consumption recently, the per capita consumption rate is only 7.38 kilograms
compared to the world's average of 100 kilograms and the average in developed
countries of 260 kilograms.  It is estimated that urban residents consumed
about 90% of the total dairy products in China.  The average dairy milk
consumption in Beijing and Shanghai was about 26 kilograms per resident in
2000.  In Beijing the total dairy milk consumption per day was 500 tons in
2000, representing a 100% increase from the consumption rate in 1995.  It is
expected that the dairy milk consumption per capita in Beijing will increase
by an average of 10 kilograms in the next three years.

     Industry experts have predicted that the projected growth in annual milk
production would be unable to meet the consumption increases in the near
future.  With China's accession into the World Trade Organization ("WTO"),
imported dairy products will make inroads into the market share of the
domestic processors due to quality, advertisement, management and strong
financial support for their marketing programs. The existing low cost
advantage enjoyed by the domestic dairy producers will eventually disappear
due to the gradual loss of tariff and importation barriers.

     According to an estimate of China's Agriculture Ministry, by the year
2005, China's per capita annual consumption volume will be 10 kilograms, and
the total annual output of dairy products will be 13.5 million tons with a
projected annual growth rate of 8.96%.  By 2030, China's per capita annual
consumption volume is expected to be 25 kilograms, and the total annual output
of dairy products will be 615.01 million tons.


                                5
<PAGE>

      A number of factors will affect future development potential, including:

      .  People's income in rural areas relative to those in the urban areas.
         Currently the consumption volume of dairy products in most cities is
         approximately 15 times higher than that in rural areas.  Increases in
         the rural community people's income will enhance the consumption of
         dairy products.

      .  The encouragement of government and industrial association to promote
         China's dairy products market.

      .  The coordination of a dairy management system in the Chinese dairy
         industry.

      Between 1978 and 2000, total annual output of fresh unprocessed milk in
China increased from 970,000 tons to 8,795,000 tons. The average annual growth
rate is approximately 36.67%.  Except for 1993 and 1997, when the fresh
unprocessed milk output showed negative growth because of the dramatic
increases in the costs of feed grains in 1993 and 1997, the other 20 years
from 1978 to 2000 all enjoyed positive growth.  In the past 3 years, although
the base for fresh unprocessed milk output was over 7 million tons, output
still increased at an annual rate of 8% to 9%.

Quality Control

     The Feihe Dairy management believes that Feihe Dairy's commitment to
maintain product quality is one of the key factors contributing to its
success.  Feihe Dairy places great emphasis on quality control of its products
and has established a set of production standards and procedures.  Feihe Dairy
was awarded the ISO9002 quality Assurance Certificate in October 2000 and in
accordance with the ISO9002 requirements, Feihe Dairy has compiled a "Quality
Assurance Handbook" that sets out standardized requirements and procedures
regarding the purchase of raw materials, production processing, storage,
packaging and delivery of products and staff training.

     Feihe Dairy's pre-sale and after-sale services are provided in strict
compliance with the relevant requirements of ISO9002 by a professional service
team who makes regular visits to the customers.

Sales and Marketing

     Feihe Dairy believes it has established good relationships with its
customers.  Revenue from the sales of the Feihe milk powder from Feihe Dairy's
top 18 customers accounted for approximately 35% of its total sales revenues.
Feihe Dairy's customers are mainly located in Anhui, Heilongjiang, Henan,
Liaoning, Jiangsu and Shandong Provinces, and the sales to these Provinces
accounted for approximately 48% of the total sales revenue.  Sales are usually
settled by "delivery upon payment," "payment before delivery" as well as a
deposit of payment is required from certain customers.

                                6
<PAGE>

     Feihe Dairy utilizes sales distributors in 20 Provinces in the PRC to
promote and sell its products.  Feihe Dairy is continually developing and
expanding its sales network and this will be a crucial factor to the growth
and profitability of Feihe Dairy.  Feihe Dairy's sales network covered 20
Provinces with 5 affiliated branches, 17 representative offices, 240 municipal
sales agents, and over 1,800 county sales agents.

     Feihe Dairy promotes its products through its sales personnel for product
promotion and sales activities.  Trade fairs are held each year to promote the
Feihe Dairy's products and to improve communication channels with both
existing and new customers.  In 2002, Feihe Dairy has budgeted Rmb.6.0 million
(approximately $729,000 US), for media advertising.  One TV advertisement is
on Channel 3 of China Central Television, which is one of the best programs in
the PRC.

Research and Development ("R&D")

     Feihe Dairy is committed to research and development of new products and
the R&D Department is mainly responsible for the development of new products
and continuous improvements of production technology.  Feihe Dairy has also
signed technical and new products co-operation agreement with Heilongjiang
Chinese Traditional Medical University ("HCTMU") utilizing their strength to
enhance the research and development capability of Feihe Dairy.

     The focus of R&D for the past three years has been on the development of
functional milk powder such as "Liver Protection" (GanBao) milk powder, a
health food based on modern nutrition and traditional Chinese Medical
theories.  This work is being undertaken in cooperation with certain research
institutions including HCTMU.  There are 5 functional milk powders that have
been registered as the healthcare products and approved by China Health
Ministry.  One of the functional milk powders, GanBao milk power, has received
patent approval from the China Patent Protection Bureau.  This will give Feihe
Dairy the capacity to maintain its competitive advantages compared to its
competitors and the marketing of the healthcare products will contribute to
the profitability of the company.

     Feihe Dairy has, on average, spent approximately $100,000 annually on R&D
and Feihe Dairy also plans to spend not less than $120,000 annually in the
future.

     In order to keep abreast of the latest technological developments and
production technology, the Feihe Dairy R&D team regularly attends technical
conferences at authoritative academic institutions in the PRC and invite
reputable professionals or experts to visit Feihe's production facilities.

Competition

     American Dairy and the Chinese dairy industry in general will face fierce
competition from major multi-national companies after China's November 2001
entry into the WTO.  The Company and its subsidiaries are subject to
competitive conditions in all aspects of their business.  Competitors include
large national and international companies and numerous local and regional
companies. Some competitors may have different profit objectives and some
international competitors may be less susceptible to currency exchange rates.
The Company and its subsidiaries compete primarily on the basis of product
quality, brand recognition, brand loyalty, service, marketing, advertising and
price. Substantial advertising and promotional

                                7
<PAGE>

expenditures are required to maintain or improve a brand's market position or
to introduce a new product.

     According to statistics provided by the China Association of Dairy
Industry, at the end of December 31, 2000, China had more than 1,000 dairy
processing plants with an annual output of 8 million tons.  However, only
about 5% of them have a daily processing capacity of 100 tons or more.  Only
12 enterprises have annual sales revenues of over $12 million.  Small scale
and low production levels will hinder the industry's development.

    China's output of dairy products has increased at an annual rate of 11.6%
in the past 20 years. The output of fresh milk reached 10.82 million tons in
2000, a 34% increase over the previous year.  With a population of some 1.2
billion people, there is still a huge market to develop.  Production and
consumption in China are much less than those of the developed countries.  The
world's average per capita consumption of milk products is over 100 kilograms
while that of China is less than 7 kilograms.  Experts at the China
Association of Dairy Industry have estimated that national consumption would
increase at an annual average rate of 15% in the next five years.

    The output of milk powder is more than 10,000 tons by the ten largest milk
powder producers such as Wandashan Milk Powder Company and Longdan Milk Powder
Company in Heilongjiang Province, Gucheng Milk Powder in Shanxi Province,
Sanlu Milk Powder Company in Shijiazhuang.  Many famous foreign milk powder
producers have set up joint ventures and/or wholly owned foreign enterprises
("WOFE") in China, but the joint ventures and/or WOFE achieved milk powder
output of less than 10,000 tons each.

     Feihe Dairy is a commercial dairy enterprise and is considered to be one
of the top ten milk production enterprises (according to a statistical survey
conducted in 1997) that have the capacity and capability to produce different
milk powder and soybean milk products.  While most of the Chinese
manufacturers including some large State-owned enterprises, are currently
focusing on increasing their scale of production and are just beginning to
undergo technical modifications, the strategy of Feihe Dairy is to produce
high quality products and to develop new products such as functional milk
powder for those health conscious consumers.

     At the end of 2000, there were more than 1,000 dairy processing plants in
China and only about 5% of them have an average daily processing capacity of
100 tons or more each.

     There are several large dairy processors who have become major players in
the China's dairy industry, and compete directly with the Company. The leading
players are:

     .  Guangming Dairy Corporation has a market share of approximately 9% and
        its total sales revenues in 2000 were approximately $181.6 million.
        In Shanghai, Guangming has captured about 80% share in the fresh and
        liquid milk market.

     .  Nestle Dairy Group has a market share of approximately 5.9%.

     .  Sanyuan Dairy Group has a market share of approximately 5.2%.  In
        Beijing, Sanyuan has captured about 80% share in the fresh and liquid
        market.

     .  Danong has a market share of approximately 3.4%.


                                8
<PAGE>

Risk Factors

     The business of American Dairy is subject to a number of risk factors,
described below.

     Change in Political and Economic Conditions

     Since Feihe Dairy's main country of business operations is the PRC,
American Dairy's business operations and financial position are subject, to a
significant degree, to the economic, political and legal development in the
PRC.

     The PRC government started implementing its economic reform policy in
1978, which has enabled the PRC economy to gradually transform from a "planned
economy" to a "socialist market economy."  In 1993, the concept of the
socialist market economy was introduced into the Constitution of the PRC, and
the country has since accelerated development of a market economy.  A
noteworthy phenomenon in the recent development of the PRC economy is that
non-state owned enterprises such as private enterprises play an increasingly
important role in the PRC economy and the degree of direct control by the PRC
government over the economy is gradually declining.

     The PRC government has been taking macro-economic austerity measures to
suppress inflation and curb the pace of economic growth since July 1993.
These measures include raising interest rates, tightening credit supply,
delaying implementation of certain reform policies on pricing, enhancing
financial supervision as well as tightening control on the granting of
approval for property and infrastructure projects.  However, since 1998, there
has been deflation in the PRC economy and the current economic policies of the
PRC mainly focus on stimulating consumption and expansion of domestic demand.

     While the PRC government has not stopped its economic reform policy since
1978, any significant adverse changes in the social, political and economic
conditions of the PRC, may have fundamental changes in the PRC economic reform
policies and thus American Dairy's operations and profits may be adversely
affected.

     Change in Tax Laws and Regulations in the PRC

     Various tax reform policies have been implemented in the PRC in recent
years.  Interpretation of certain tax policies is still awaiting guidance from
the PRC government.  Moreover, there can be no assurance that the existing tax
laws and regulations will not be revised or amended in the future.

     According to the "Circular on Issuing of Several Preferential Policies
for Foreign Investment" by the QiQiHaEr City, (Qi Zheng Fa [2000] No. 51
Document) of the QiQiHaEr Civic People's Government, American Dairy's
companies are entitled to a series of preferential tax and refund policies in
respect of enterprise income tax and value added tax.  Any changes to the
present income tax policies may adversely affect the tax expenses and,
therefore, the profitability of American Dairy.


                                9
<PAGE>

     Change in PRC Legal System

     The PRC legal system is based on statutory law.  Unlike the common law
system, statutory law is based on written statutes.  Prior court decisions may
be cited as persuasive authority but do not have binding effect.  Since 1979,
the PRC government has been promulgating and amending the laws and regulations
regarding economic matters, such as corporate organization and governance,
foreign investment, commerce, taxation and trade.  However, the PRC legal
system is still not as fully developed as those western countries with a
common law legal system.

     Entry Into the WTO

     With China's accession to the World Trade Organization in November 2001,
foreign dairy products will make market inroads into China's dairy industry
and may take certain market share away from the domestic processors due to
quality, brand recognition, management and strong financial support for their
marketing programs.  The existing price advantage accruing to the domestic
processors will eventually disappear due to the gradual loss of tariff and
importation barriers.

     Changes in Currency Conversion Policies in the PRC

     Renminbi (Yuan) is not a freely exchangeable currency.  Since 1998, the
State Administration of Foreign Exchange of China has promulgated a series of
circulars and rules in order to further enhance the verification of the
truthfulness of foreign exchange payments under the current account items of a
PRC enterprise and has imposed strict requirements in respect of borrowings
and repayments of foreign exchange debts from and to foreign creditors under
the capital account items and creation of foreign security in favor of foreign
creditors.

     This may cause complicated procedures in foreign exchange payments to
foreign creditors under the current account items and thus will affect the
restrictions on borrowing of international commercial loans, creation of
foreign security and borrowing of Renminbi loans under guarantees in foreign
currencies.  (The majority of the income from the American Dairy entities is
in Renminbi).  Furthermore, the value of Renminbi (Yuan) is subject to supply
and demand, which could be largely affected by the international economic and
political environment and any fluctuations in the exchange rate of Renminbi
could have an adverse effect on the operational and financial condition of
American Dairy entities.

                 ITEM 2.  DESCRIPTION OF PROPERTY

     The Company owns no properties.  The Company uses offices and related
clerical services at 10 West 100 South, Suite 610, Salt Lake City, Utah 84101,
provided by an officer and director of the Company at a monthly rental rate of
$200.

     As indicated under "Item 1.  Business," the Company expects to close the
Exchange Agreement with American Dairy on or about May 6, 2003.  Feihe Dairy,
a wholly-owned subsidiary of American Dairy, holds the land use rights in the
PRC to 47,640 square meters of land in Kedong County. The land use rights
expire in 2050.  The production facilities of Feihe Dairy are situated in
Qingxiang Street, Kedong County, QiQiHaEr City of Heilongjiang Province in the
Northeast of the People's

                                10
<PAGE>

Republic of China. Feihe Dairy's production facilities have a daily processing
capability of 35 tons of fresh milk.

                    ITEM 3.  LEGAL PROCEEDINGS

      The Company is not a party to any material pending legal proceedings,
and to the best of its knowledge, no such proceedings by or against the
Company have been threatened.

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

      No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fiscal year covered by this
report.

                             PART II

          ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED
                       STOCKHOLDER MATTERS

      Quotations for the Company's common stock have appeared on the OTC
Bulletin Board since November, 2001, under the symbol "LAZS."  However, there
is no established trading market for the common stock.  For the past few
months to the present, transactions in the common stock can only be described
as sporadic.  Consequently, the Company is of the opinion that any published
prices cannot be attributed to a liquid and active trading market and,
therefore, are not indicative of any meaningful value.

      The following table sets forth for the respective period indicated the
prices of the Company's Common Stock in the over-the-counter market, as
reported and summarized by the OTC Bulletin Board.  Such prices are based on
inter-dealer bid and asked prices, without markup, markdown, commissions, or
adjustments and may not represent actual transactions.

Calendar Quarter Ended   High Bid ($)  Low Bid ($)
------------------------ ------------- -----------
December 31, 2001        0.05          0.05
March 31, 2002           0.05          0.05
June 30, 2002            0.06          0.05
September 30, 2002       0.05          0.05
December 31, 2002        0.08          0.05

     As of April 11, 2003, the Company's closing bid price was $0.09.

     Since its inception, no dividends have been paid on the Company's common
stock.  The Company intends to retain any earnings for use in its business
activities, so it is not expected that any dividends on the common stock will
be declared and paid in the foreseeable future.

     As of the date of this Information Statement, there were approximately
234 holders of record of the Company's Common Stock.

                                11
<PAGE>

         ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
                        PLAN OF OPERATION

FORWARD-LOOKING INFORMATION AND CAUTIONARY STATEMENTS

     This report on Form 10-KSB includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934.  These forward-looking statements may
relate to such matters as anticipated financial performance, future revenues
or earnings, business prospects, projected ventures, new products and
services, anticipated market performance and similar matters.  When used in
this report, the words "may," "will," "expect," "anticipate," "continue,"
"estimate," "project," "intend," and similar expressions are intended to
identify forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results,
and financial position.  The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.  To comply with the
terms of the safe harbor, we caution readers that a variety of factors could
cause our actual results to differ materially from the anticipated results or
other matters expressed in our forward-looking statements.  These risks and
uncertainties, many of which are beyond our control, include (i) the
sufficiency of existing capital resources and the Company's ability to raise
additional capital to fund cash requirements for future operations; (ii)
uncertainties involved in the rate of growth of the Company's business and
acceptance of its products and services; (iii) the ability of the Company to
achieve and maintain a sufficient customer base to have sufficient revenues to
fund and maintain operations; (iv) volatility of the stock market; and (v)
general economic conditions.  Although the Company believes the expectations
reflected in these forward-looking statements are reasonable, such
expectations may prove to be incorrect.

PLAN OF OPERATION

     The Company has been inactive for years, and has had no revenue from
operations during the year ended December 31, 2002.

     As indicated under "Item 1.  Business," the Company has entered into an
Exchange Agreement with American Dairy Holdings, Inc., a Delaware corporation,
and the shareholders of American Dairy.  The Company expects this transaction
to close on or about May 6, 2003.  Following the completion of the American
Dairy Acquisition, the operations of American Dairy will become the principal
operations of the Company.

     American Dairy's operations are conducted through its wholly-owned
subsidiary, Feihe Dairy, and Feihe Dairy's subsidiary, Sanhao Dairy, both of
which are enterprises organized and operating in the PRC.  Feihe Dairy engages
in the production and distribution of milk powder, soybean milk powder and
dairy products in the PRC.  The principal activity of Sanhao Dairy is the
production and supply of processed milk to Feihe Dairy.  The products are sold
under the registered trademarks "Feihe", "Yinhe," "Jinhe" and "Xinghua."

     American Dairy and its subsidiaries believe that they have sufficient
capital to meet their cash requirements, at the present level of operations,
over the next twelve months.  However, it is management's plan to expand the
combined operations of American Dairy as quickly as reasonably practicable.
Under these circumstances, American Dairy may need substantial additional
capital to fund such expansion efforts.  American Dairy is currently
contemplating a private offering of the securities of the successor company,
to fund planned expansion.  There

                                12
<PAGE>

can be no assurance that the successor company will be able to raise capital
when desired, or on terms favorable to the Company.

     Management will continue to fund the research and development ("R&D") of
new products at American Dairy, and anticipates that R&D over the next year
will be approximately $120,000.  R&D will focus on the development of
functional milk powder such as "Liver Protection" (GanBao) milk powder, a
health food based on modern nutrition and traditional Chinese Medical
theories.  R&D will, often times, be undertaken in cooperation with various
research institutions, including a pending cooperation agreement with
Heilongjiang Chinese Traditional Medical University.  American Dairy and its
subsidiaries will continue to seek patent protection, when appropriate, of new
products developed through its R&D program.

     American Dairy and its subsidiaries do not anticipate any significant
purchases or sales of plant and equipment during the next twelve months.

American Dairy and its subsidiaries do not anticipate any significant changes
in its number of employees over the next twelve months.

     The Company's plan of operation will depend on its ability to continue
the operations of American Dairy and gain greater market share in the PRC.
There is no assurance that the operations of the Company will be successful.

RESULTS OF OPERATIONS

      The Company had essentially no operations during the fiscal year ended
December 31, 2002.  As of December 31, 2002, the Company had cash of $17,906,
liabilities of $13,623 and no other liquid assets or resources.   It is
expected that all of the Company's cash assets will be expended in connection
with the American Dairy Acquisition described above.

     The Company has had no revenue from continuing operations and incurred
expenses during the year ended December 31, 2002, of $19,018, in accounting,
legal and other general and administrative expenses in connection with the
Company's continuing efforts to file necessary periodic reports and to
reactivate its business operations, and in reviewing a number of possible
business opportunities during the fiscal year.  For the years ended December
31, 2002 and 2001, the Company has incurred net losses of $18,920 and $6,356,
respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

     The Company adopted the provisions of FASB Statement No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," FASB Statement No.145,
"Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement
No. 13, and Technical Corrections," FASB Statement No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities," FIN 44, "Accounting for
Certain Transactions Involving Stock Compensation (an interpretation of APB
Opinion No. 25)," and FASB Statement No. 147, "Acquisitions of Certain
Financial Institutions   an amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9." The effect of these adopted provisions on the
Company's financial statements was not significant.

     In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation   Transition and Disclosure   an amendment of FASB
Statement No. 123" (SFAS 148).  SFAS 148 is effective for fiscal years
beginning after December 15, 2003.  The Company is currently reviewing SFAS
148.

                                13
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

     The following financial statements required by this Item 7 begin on Page
F-1 and are located following the signature page and officer certifications.
All information that has been omitted is either inapplicable or not required.

     Independent Auditors' Reports....................................... F-1

     Balance Sheet as of December 31, 2002............................... F-2

     Statements of Operations for the years ended December 31, 2002
     and December 31, 2001 ...............................................F-3

     Statements of Stockholders' Equity from inception on
     December 31, 1985 through December 31, 2002......................... F-4

     Statements of Cash Flows for the years ended December 31, 2002
     and December 31, 2001............................................... F-7

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


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

     There have been no changes in or disagreements with accountants since the
Company's organization.

                             PART III


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

DIRECTORS AND OFFICERS

Current Management of the Company

     Current management of the Company is set forth below:


     Name              Age    Positions                          Since
    ------           ------   ----------                        -------

 Jack M. Gertino       64     President and Director             1997

 Chase Kimball         48     Secretary/Treasurer and Director   2001

 Sandra Speciale       55     Director                           1997


                                14
<PAGE>

     The following is information on the business experience of each director
and officer.

     Jack M. Gertino has been a private investor and business consultant in
Salt Lake City, Utah, for the past five years.  During this time, he has been
engaged in the private development of, and investment in, commercial and
residential real estate in Utah and Arizona.  He currently provides consulting
services for financial institutions.  Mr. Gertino has been involved in private
and public financings over the past twenty years.  From February 1992 to the
present, he has served as a director of Red Horse Entertainment Corporation, a
publicly held shell corporation seeking a business acquisition.  Since
February, 1986, he has also served as an officer and director of Comet
Technologies, Inc., a publicly held shell corporation seeking a business
acquisition.

     Chase Kimball, an attorney, has been practicing law in the state of Utah
since 1985.  Mr. Kimball has been a senior litigator in the Law Offices of
Randal L. Meek since November, 1999, where he concentrates his practice in the
areas of general civil litigation, personal injury, domestic and business law.
Mr. Kimball was a solo practitioner from August, 1998, to November, 1999.  Mr.
Kimball was a senior associate in the firm of Woodbury & Kesler from
1992-1998.  From 1990 to 1992, Mr. Kimball was an associate and chief of
litigation in the firm of Lewis & Lehman.  From 1988 to 1990, Mr. Kimball was
an associate attorney with Spafford & Spafford.  Mr. Kimball served as
in-house counsel for Collett's Home Furnishings from January 1988 to August
1988. From July 1987 to July 1998, Mr. Kimball worked as a solo practitioner
with M. Dirk Eastmond.  Mr. Kimball served as a hearing officer in 1987 and
1988.  From October 1985 to July, 1987, Mr. Kimball was an attorney and law
clerk for Arron Jepson, assisting with general civil and commercial law cases.
Mr. Kimball graduated from the University of Utah in 1976 with an
undergraduate degree in musicology and in 1981 with an undergraduate degree in
education.  Mr. Kimball received his juris doctorate degree from the
University of Utah in 1986.

     Sandra Speciale has managed a medical office for the past two years.
Since 1989, she has been an independent consultant, focusing primarily on the
marketing of medical products.  From 1985 to 1989, she was a partner in
Advanced Marketing, a consumer electronics firm, where she was instrumental in
taking this marketing organization from $1,000,000 to $40,000,000 in annual
sales.  She worked as an independent marketing representative and consultant
in the consumer electronics business from 1978 to 1985.  She attended the
University of Utah from 1968 to 1978, taking various courses in theater arts,
and business, but did not receive a degree.  She continues to attend seminars
and conferences in the medical products industry.


                                15
<PAGE>

Proposed New Management

      At or shortly following Closing of the American Dairy Acquisition, it is
anticipated that the current board of directors will appoint the designees of
American Dairy as new directors.  Following such appointment, the current
board of directors will resign their positions with the Company.  Two of these
individuals are expected to become executive officers of the Company at the
Closing of the Acquisition.  The individuals who it is currently expected will
be directors and officers of the Company following Closing are set forth
below.


       Name                Age                Positions
      ------               ----               ----------

    Leng You-Bin            33        Chief Executive Officer, President and
                                      Chairman of the Board

    Liu Sheng-Hui           32        Chief Financial Officer and Director

    Lee Hui-Lan             52        Director


     The following is information on the business experience of each director
and officer.

     Leng You-Bin is the Chairman and General Manager of American Dairy and
Feihe Dairy. He is responsible for the overall strategic planning, management
and business development of Feihe Dairy.  Mr. Leng has been in the dairy
industry for more than 13 years.  He obtained his Bachelor of Science degree
in Food Engineering from Northeast Agriculture University, China.  From 1989
to 1997, Mr. Leng acted as technician, deputy director and director of
ZhaoGuang Dairy Plant, the predecessor of Feihe Dairy.  From 1997 to 2000, Mr.
Leng was the General Manager of Feihe Dairy.  He became the Chairman and
General Manager in 2000.  He has researched and patented the "liver protection
milk powder" (GanBao Milk Powder).

     Liu Sheng-Hui is the Deputy General Manager and Chief Financial Officer
of American Dairy and Feihe Dairy. He is responsible for the overall financial
planning and management of Feihe Dairy. Mr. Liu graduated from Northeast
Agriculture University with a bachelor of economics degree in Economic
Management in 1992. Mr. Liu has 10 years experience in the areas of finance
and accounting. He joined Feihe Dairy in 1992.  He has held his current
position since 1998.

     Lee Hui-Lan (also known as "Tracy Lee") has been Tax Manager of Watson
Pharmaceuticals, Inc., since October 26, 1996.  From 1979 to 1996, Ms. Lee was
employed by major fortune 500 companies including The Flying Tiger Line Inc.
(a Tiger International Company), Quotron Systems, Inc. (a subsidiary of the
Citigroup, Inc.) and Lear Siegler, Inc. in various management positions.  Ms.
Lee holds a Master of Science degree in Taxation from Golden Gate University,
and a Master of Business Administration degree from Indiana University.

                                16
<PAGE>

OTHER SHELL COMPANY ACTIVITIES

      Mr. Gertino is currently a director of Red Horse Entertainment
Corporation and Comet Technologies, Inc., both publicly held shell
corporations seeking a business acquisition.  The possibility exists that one
or more of the officers and directors of the Company could become officers
and/or directors of other shell companies in the future, although they have no
intention of doing so at the present time.  Certain conflicts of interest are
inherent in the participation of the Company's officers and directors as
management in other shell companies, which may be difficult, if not
impossible, to resolve in all cases in the best interests of the Company.
Failure by management to conduct the Company's business in its best interests
may result in liability of management of the Company to the shareholders.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

      Chase Kimball, Secretary/Treasurer, filed a late Form 3, in March, 2002.
To the best knowledge of the Company, except for these late filings, there are
no other required reports that have not been filed or filed untimely.

                 ITEM 10.  EXECUTIVE COMPENSATION

     The following table provides certain summary information concerning
compensation earned, for services rendered in all capacities to the Company,
for the fiscal years ended December 31, 2002, 2001 and 2000.

<TABLE>
<CAPTION>

                          SUMMARY COMPENSATION TABLE

                                                              LONG TERM COMPENSATION
                                 ANNUAL COMPENSATION                AWARDS            PAYOUTS
-------------------------------------------------------------------------------------------------------
                                                                           Securities         All
                                                  Other        Restricted  Underlying LTIP    Other
Name and                                          Annual ($)   Stock       Options/   Payouts Compensa-
Principal Position       Year  Salary($) Bonus($) Compensation Award(s)($) SARs ($)   ($)     tion ($)
------------------------ ----- --------- -------- ------------ ----------- ---------- ------- ----------
<S>                      <C>   <C>       <C>      <C>          <C>         <C>        <C>     <C>
Jack M. Gertino (1)      2002      0         0         0           0           0         0         0
CEO, CFO and President   2001      0         0         0           0           0         0         0
                         2000      0         0         0           0           0         0         0

Chase Kimball (1)        2002      0         0         0           0           0         0         0
Secretary/Treasurer,     2001      0         0         0           0           0         0         0
Director                 2000      0         0         0           0           0         0         0

Sandra Speciale (1)      2002      0         0         0           0           0         0         0
Director                 2001      0         0         0           0           0         0         0
                         2000      0         0         0           0           0         0         0

James C. Lewis (2)       2002      0         0         0           0           0         0         0
                         2001      0         0         0           0           0         0         0
                         2000      0         0         0           0           0         0         0
--------------------------------------------------------------------------------------------------------
</TABLE>

     (1) The officers and directors will be compensated for services in
         connection with the American Dairy transaction at a rate of $30 per
         hour.

     (2) In March, 2001, Mr. Lewis resigned as an officer and director of the
         Company, and Chase Kimball was appointed Secretary/Treasurer and a
         director of the Company.

                                17
<PAGE>

     In connection with the American Dairy transaction, Danbury Properties,
L.L.C., a Utah limited liability company of which Jack M. Gertino and James C.
Lewis are members, has entered into a Consulting Agreement with the company
and American Dairy, under which Danbury will receive stock and consulting
fees.  (See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS").  Except as
stated above, the Company has no agreement or understanding, express or
implied, with any officer, director, or principal stockholder, or their
affiliates or associates, regarding employment with the Company or
compensation for services.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                 AND RELATED STOCKHOLDER MATTERS

     The following table sets forth as of the date of this report, and prior
to the American Dairy Acquisition, the number and percentage of the
outstanding pre-split shares of common stock which, according to the
information supplied to the Company, were beneficially owned by (i) each
person who is currently a director of the Company, (ii) each executive
officer, (iii) all current directors and executive officers of the Company as
a group and (iv) each person who, to the knowledge of the Company, is the
beneficial owner of more than 5% of the outstanding common stock.  Except as
otherwise indicated, the persons named in the table have sole voting and
dispositive power with respect to all shares beneficially owned, subject to
community property laws where applicable.


Name and                         Common                       Percent
Address                          Shares        Options(1)     of Class(2)
-----------------------------   ------------   -------------  -----------

Jack M. Gertino (3)
10 West 100 South, Suite 610
Salt Lake City, Utah 84101        1,176,915     100,000        16.83%

Sandra Speciale (3)
853 13th Avenue
Salt Lake City, Utah 84103          901,000           0        12.04%

Chase Kimball (3)
1403 Linda Rosa
Salt Lake City, Utah 84106            5,210           0         0.07%

James C. Lewis
10 West 100 South, Suite 600
Salt Lake City, Utah 84101        1,106,915     100,000        16.12%

All Executive officers
and Directors as a Group
(3 persons)                       2,083,125     100,000        28.78%

(1) These figures represent options that are vested or will vest within 10
years from the date as of which information is presented in the table.  These
options will be canceled in connection with the American Dairy Acquisition.

(2) These figures represent the percentage of ownership of the named
individuals assuming each of them alone has exercised his or her options, and
percentage ownership of all officers and directors of a group assuming all
such purchase rights held by such individuals are exercised.

(3) Messrs. Gertino and Kimball and Ms. Speciale are current officers and
directors of the Company.

                                18
<PAGE>

     As indicated, under "Item 1.  Business," the Company expects to complete
the terms of an Exchange Agreement with American Dairy on or about May 6,
2003.  Upon completion of this transaction, the Company will change its name
to "American Dairy, Inc.," and the Company will effect a one-for-nineteen
reverse split (the "Reverse Split") of the outstanding stock.  The following
table sets forth information concerning the ownership of Common Stock of the
Company, after giving effect to the Reverse Split, with respect to
shareholders who will own beneficially more than 5% of the Common Stock
immediately after the American Dairy transaction and the individuals who it is
anticipated will be the officers and directors after the American Dairy
transaction.

     Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to such shares of Common Stock.

     Name and Address                     Common Shares       Percent of Class
     ----------------                     -------------       ---------------
     Leng You-Bin*
     1st Qingxiang Street
     Kedong County
     Heilongjiang Province, China             8,129,032           81.10

     Liu Sheng-Hui*
     1st Qingxiang Street
     Kedong County
     Heilongjiang Province, China               387,476            3.86

     Lee Hui-Lan*
     1st Qingxiang Street
     Kedong County
     Heilongjiang Province, China                     0               0

     All Executive officers and
     Directors as a Group (3 persons)         8,516,508           84.94


* These individuals are the principal shareholders of American Dairy.  It is
anticipated that the individuals will be appointed as new members of the Board
of Directors at or following Closing.  (See "MANAGEMENT").

     ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In connection with the closing of the Exchange Agreement with American
Dairy, the Company and American Dairy have entered into a consulting agreement
(the "Consulting Agreement") with Danbury Properties, LLC, a Utah limited
liability company ("Danbury"), of which Jack M. Gertino, President of the
Company and James C. Lewis, a former director of the Company, are members.
During the one year period of Danbury's engagement, Danbury has agreed to
provide to the Company and American Dairy consulting services in the areas of
financial and management planning, financing assistance and capital formation.
In exchange for such services, Danbury will receive $60,000 in cash
compensation, and 240,000 shares of post-split common stock.  In addition, the
Company has agreed to pay the sum of $12,000 for the cancellation of all
outstanding options held by Messrs. Gertino and Lewis.  This transaction
cannot be considered the result of arms' length negotiations.


                                19
<PAGE>

     In connection with the American Dairy transaction, 16 individuals and/or
entities, including the officers and directors, who hold a total of 258,623
post-split shares of restricted common stock of the Company acquired since
1997, have entered into a Stock Purchase Agreement with the Company and
American Dairy, under the terms of which they have agree to transfer all of
their stock to the Company for cancellation, for the total sum of $20,000.

     Except the transactions described above, there are no proposed
transactions and no transactions during the past two years to which the
Company was a party and in which any officer, director, or principal
shareholder, or their affiliates or associates, was also a party.

      A principal shareholder of the Company, James C. Lewis, has provided
legal services in connection with the American Dairy transaction, and will be
compensated at his normal rates for such services.

            ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits.

3.1   Articles of Incorporation of the Company, as amended (incorporated by
      reference to Exhibit 3.1 to the Company's Registration Statement on Form
      10-SB, as filed with the Securities and Exchange Commission on September
      16, 1999).

3.2   Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the
      Company's Registration Statement on Form 10-SB, as filed with the
      Securities and Exchange Commission on September 16, 1999).

10.1  Option granted to Jack M. Gertino dated August 10, 1999 (incorporated by
      reference to Exhibit 10.1 to the Company's Registration Statement on
      Form 10-SB, as filed with the Securities and Exchange Commission on
      September 16, 1999).

10.2  Option granted to James C. Lewis dated August 10, 1999 (incorporated by
      reference to Exhibit 10.2 to the Company's Registration Statement on
      Form 10-SB, as filed with the Securities and Exchange Commission on
      September 16, 1999).

10.3* Consulting Agreement by and between the Company, American Dairy
      Holdings, Inc., and Danbury Properties, L.L.C., dated March 28, 2003.

10.4* Stock Purchase Agreement by by and between the Company, American Dairy
      Holdings, Inc. and certain Company shareholders dated March 28, 2003.

2.1   Stock Exchange Agreement dated January 15, 2003 (incorporated by
      reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, as
      filed with the Securities and Exchange Commission on January 21, 2003).

                                20
<PAGE>


2.2   Amendment to Stock Exchange Agreement dated March 5, 2003 (incorporated
      by reference to Exhibit 2.2 of the company's Current Report on Form 8-K,
      as filed with the Securities and Exchange Commission on March 5, 2003).

*Filed as exhibits to this annual report on Form 10-KSB.

(b) Reports on Form 8-K.

    During the fiscal year ended December 31, 2002, the Company filed no
reports on Form 8-K.  However, on January 21, 2003, the Company filed a report
on Form 8-K, reporting the signing of a Stock Exchange Agreement among the
Company, American Dairy Holdings, Inc., a Delaware corporation, and the
shareholders of American.  This report on Form 8-K was later amended on March
5, 2003.

                ITEM 14.  CONTROLS AND PROCEDURES

    Evaluation of Disclosure Controls and Procedures.  Based upon an
evaluation under supervision and with the participation of Registrant's
management, as of a date within 90 days of the filing date of this Annual
Report on Form 10-KSB, Registrant's principal executive officer and principal
financial officer has concluded that the Registrant's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c)) under the Securities
Exchange Act of 1934, are effective to ensure that information required to be
disclosed (in reports that we file or submit under that Exchange Act) is
recorded, processed, summarized and reported within the  time periods
specified in SEC rules and forms.

    Changes in Internal Accounting.  There were no significant changes in
Registrant's internal controls or other factors that could significantly
affect these controls subsequent to the date of their evaluation.  There were
no significant deficiencies or material weaknesses, and therefore there were
no corrective actions taken.  However, the design of any system of controls is
based in part upon the assumptions about the likelihood of future events, and
there is no certainty that any design will succeed in achieving its stated
goal under all potential future considerations, regardless of how remote.

                                21
<PAGE>


                            SIGNATURES

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


                            LAZARUS INDUSTRIES, INC.


Date: April 14, 2003        By: /s/ Jack M. Gertino
                               ------------------------------------
                               Jack M. Gertino
                               CEO, CFO, President and Director

     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.


Date: April 14, 2003           /s/ Jack M. Gertino
                               ---------------------------------
                               Jack M. Gertino
                               CEO, CFO, President and Director


Date: April 14, 2003           /s/ Chase Kimball
                               ---------------------------------
                               Chase Kimball
                               Secretary/Treasurer and Director


Date: April 14, 2003           /s/ Sandra Speciale
                               ---------------------------------
                               Sandra Speciale, Director










                                22
<PAGE>




  CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
    PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jack M. Gertino, certify that:

1. I have reviewed this annual report on Form 10-KSB of Lazarus Industries,
Inc.;

2.  Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

4.  As the certifying officer of the Registrant, I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:

    a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;

    b. evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

    c. presented in this annual report Registrant's conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5.  I have disclosed, based on the most recent evaluation, to the Registrant's
auditors and the audit committee of Registrant's board of directors (or
persons performing the equivalent functions):

    a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and

    b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls;
and

6.  I have indicated in this annual report whether there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: April 14, 2003            /s/ Jack M. Gertino
                                Jack M. Gertino
                                Chief Executive Officer and Chief Financial
                                Officer


                                23
<PAGE>



                    CERTIFICATION PURSUANT TO
          18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
          SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of Lazarus Industries, Inc. (the
"Company") on Form 10-KSB for the period ending December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Jack M. Gertino, Chief Executive Officer and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant of
Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my
knowledge and belief:

     (1)  The Report fully complies with the requirements of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
          material respects, the financial condition and results of operations
          of the Company.



Date:  April 14, 2003     /s/ Jack M. Gertino
                          -------------------------------------------------
                          Jack M. Gertino
                          Chief Executive Officer and Chief Financial Officer


                                24
<PAGE>



                   INDEPENDENT AUDITORS' REPORT


Board of Directors
Lazarus Industries, Inc.
(A Development Stage Company)
Salt Lake City, Utah

We have audited the accompanying balance sheet of Lazarus Industries, Inc. (a
development stage company) as of December 31, 2002 and the related statements
of operations, stockholders' equity, and cash flows for the years ended
December 31, 2002 and 2001, and from the date of inception on December 31,
1985 through December 31, 2002. These financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lazarus Industries, Inc. as
of December 31, 2002 and the results of its operations and its cash flows for
the years ended December 31, 2002 and 2001, and from the date of inception on
December 31, 1985 through December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating revenues to date, which raises substantial doubt about
its ability to continue as a going concern.  Management's plans in regard to
these matters are also described in Note 3.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.


/S/ HJ & Associates LLC

HJ & Associates, LLC
Salt Lake City, Utah
March 7, 2003


                               F-1
<PAGE> 25

                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
                          Balance Sheet


                              ASSETS

                                                           December 31,
                                                               2002
                                                           -------------

CURRENT ASSETS

 Cash in bank                                              $     17,906
                                                           -------------

   Total Current Assets                                          17,906
                                                           -------------

   TOTAL ASSETS                                            $     17,906
                                                           =============


               LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES

 Accounts payable                                          $      9,123
 Accounts payable  - related party                                4,500
                                                           -------------

   Total Current Liabilities                                     13,623
                                                           -------------

   Total Liabilities                                             13,623
                                                           -------------
STOCKHOLDERS' EQUITY

 Common stock, $0.001 par value, 50,000,000 shares
  authorized; 7,485,417 issued and outstanding                    7,486
 Additional paid-in capital                                     285,028
 Deficit accumulated during the development stage              (288,231)
                                                           -------------

    Total Stockholders' Equity                                    4,283
                                                           -------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $     17,906
                                                           =============



The accompanying notes are an integral part of these financial statements.

                               F-2
<PAGE> 26



                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
                     Statements of Operations

                                                                 From
                                                                 Inception on
                                                                 December 31,
                                         For the Years Ended     1985 through
                                            December 31,         December 31,
                                         2002          2001      2002
                                     ------------- ------------- ------------

REVENUES                             $          -  $          -  $         -
                                     ------------- ------------- ------------
EXPENSES
  General and administrative               19,018         6,911      137,060
                                     ------------- ------------- ------------

    Total Expenses                         19,018         6,911      137,060
                                     ------------- ------------- ------------

LOSS FROM OPERATIONS                      (19,018)       (6,911)    (137,060)
                                     ------------- ------------- ------------

OTHER INCOME (EXPENSE)

  Interest income                              98           555        4,095
  Interest expense                              -             -         (352)
  Loss from discontinued operations             -             -     (154,914)
                                     ------------- ------------- ------------

    Total Other Income (Expense)               98           555     (151,171)
                                     ------------- ------------- ------------

NET LOSS                             $    (18,920) $     (6,356) $  (288,231)
                                     ============= ============= ============

BASIC LOSS PER SHARE                 $      (0.00) $      (0.00)
                                     ============= =============
WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                     7,485,417     7,485,417
                                     ============= =============



The accompanying notes are an integral part of these financial statements.

                               F-3

<PAGE> 27
<TABLE>
<CAPTION>


                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
                Statements of Stockholders' Equity
  From Inception on December 31, 1985 through December 31, 2002

                                                                         Deficit
                                                                         Accumulated
                                                            Additional   During the
                                        Common Stock        Paid-in      Development
                                    Shares         Amount   Capital      Stage
                                 ------------- ------------ ------------ -------------
<S>                              <C>           <C>          <C>          <C>
Balance, December 31, 1985                  -  $         -  $         -  $          -

Shares issued for cash at $0.05        160,000         160        7,840          (433)

Shares issued through public
 offering at $0.25 per share           555,523         556      138,325             -

Capital contributed by
 shareholders                                -           -       54,077             -

Net loss from inception on
 December 31, 1985 through
 December 31, 1987                           -           -            -          (735)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1987             715,523         716      200,242        (1,168)

Shares issued to public at $0.25
 per share                              44,480          44       11,086             -

Shares issued in acquisition of
  wholly-owned subsidiary at
  $0.001 per share                   2,036,800       2,037            -             -

Shares issued for finders fee
 at $0.001 per share                   152,000         152            -             -

Shares issued to public at
 $0.10 per share for cash                3,280           3          325             -

Public offering costs                        -           -      (44,059)            -

Net loss for the year ended
 December 31, 1988                           -           -            -       (98,275)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1988           2,952,083       2,952      167,594       (99,443)

Net loss for the year ended
 December 31, 1989                           -           -            -       (39,018)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1989           2,952,083 $     2,952  $   167,594  $   (138,461)
                                 ------------- ------------ ------------ -------------



The accompanying notes are an integral part of these financial statements.

                               F-4
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
          Statements of Stockholders' Equity (Continued)
  From Inception on December 31, 1985 through December 31, 2002

                                                                         Deficit
                                                                         Accumulated
                                                            Additional   During the
                                        Common Stock        Paid-in      Development
                                    Shares         Amount   Capital      Stage
                                 ------------- ------------ ------------ -------------
<S>                              <C>           <C>          <C>          <C>
Balance, December 31, 1989           2,952,083 $     2,952  $   167,594  $   (138,461)

Assets distributed to shareholders          -           -       (15,632)           -

Net loss for the year ended
 December 31, 1990                          -           -            -        (17,153)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1990           2,952,083       2,952      151,962      (155,614)

Net loss for the year ended
 December 31, 1991                          -           -            -           (100)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1991           2,952,083       2,952      151,962      (155,714)

Net loss for the year ended
 December 31, 1992                          -           -            -           (100)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1992           2,952,083       2,952      151,962      (155,814)

Net loss for the year ended
 December 31, 1993                          -           -            -           (100)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1993           2,952,083       2,952      151,962      (155,914)

Net loss for the year ended
 December 31, 1994                          -           -            -           (100)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1994           2,952,083       2,952      151,962      (156,014)

Net loss for the year ended
 December 31, 1995                          -           -            -           (100)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1995           2,952,083       2,952      151,962      (156,114)

Net loss for the year ended
 December 31, 1996                          -           -            -           (452)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1996           2,952,083 $     2,952  $   151,962  $   (156,566)
                                 ------------- ------------ ------------ -------------

The accompanying notes are an integral part of these financial statements.

                               F-5


</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
          Statements of Stockholders' Equity (Continued)
  From Inception on December 31, 1985 through December 31, 2002


                                                                         Deficit
                                                                         Accumulated
                                                            Additional   During the
                                        Common Stock        Paid-in      Development
                                    Shares         Amount   Capital      Stage
                                 ------------- ------------ ------------ -------------
<S>                              <C>           <C>          <C>          <C>
Balance, December 31, 1996          2,952,083  $     2,952  $   151,962  $   (156,566)

December 2, 1997 shares issued to
 officers at $0.03 per share for
 services                           3,000,000        3,000       87,000             -

Net loss for the year ended
  December 31, 1997                        -            -            -        (90,669)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1997          5,952,083        5,952      238,962      (247,235)

January 12, 1998 shares issued
 for cash at $0.03 per share        1,116,667        1,117       32,382             -

March 10, 1998 shares issued for
 cash at $0.03 per share              416,667          417       12,084             -

Net loss for the year ended
 December 31, 1998                         -            -            -         (5,785)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1998          7,485,417        7,486      283,428      (253,020)

Net loss for the year ended
 December 31, 1999                          -            -            -        (6,550)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 1999          7,485,417        7,486      283,428      (259,570)

Contributed capital                         -            -        1,600             -

Net loss for the year ended
 December 31, 2000                          -            -           -         (3,385)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 2000          7,485,417        7,486      285,028      (262,955)

Net loss for the year ended
 December 31, 2001                          -            -            -        (6,356)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 2001          7,485,417        7,486      285,028      (269,311)

Net loss for the year ended
 December 31, 2002                          -            -            -       (18,920)
                                 ------------- ------------ ------------ -------------

Balance, December 31, 2002          7,485,417  $     7,486  $   285,028  $   (288,231)
                                 ============= ============ ============ =============




The accompanying notes are an integral part of these financial statements.

                               F-6
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>

                        LAZARUS INDUSTRIES, INC.
                      (A Development Stage Company)
                        Statements of Cash Flows



                                                                               From
                                                                               Inception on
                                                                               December 31,
                                                        For the Years Ended    1985 through
                                                           December 31,        December 31,
                                                        2002          2001     2002
                                                   ------------- ------------- -------------

                                                <c>           <c>           <c>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                         $    (18,920)  $    (6,356) $   (288,231)
  Adjustments to reconcile net loss to
   net cash used by operating activities:
    Stock for services                                        -             -        90,000
  Change in operating assets and liabilities:
    Increase in taxes payable                                 -             -          (100)
    Increase in accounts payable - related party          4,500             -         4,722
    Increase (decrease) in accrued liabilities             (426)            -          (118)
    Increase in accounts payable                          9,123             -         9,119
                                                   ------------- ------------- -------------

      Net Cash (Used) by Operating Activities            (5,723)       (6,356)     (184,608)
                                                   ------------- ------------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES                          -             -             -
                                                   ------------- ------------- -------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net stock offering proceeds                                 -             -       200,914
  Contributed capital                                         -             -         1,600
                                                   ------------- ------------- -------------

      Net Cash Provided by Financing Activities               -             -       202,514
                                                   ------------- ------------- -------------

INCREASE (DECREASE) IN CASH                              (5,723)       (6,356)       17,906

CASH AT BEGINNING OF PERIOD                              23,629        29,985             -
                                                   ------------- ------------- -------------

CASH AT END OF PERIOD                              $     17,906  $     23,629  $     17,906
                                                   ============= ============= =============

CASH PAID FOR:

  Taxes                                            $          -  $          -  $      1,400
  Interest                                         $          -  $          -  $        130

SCHEDULE OF NET CASH FINANCING ACTIVITIES

  Common stock issued for services                 $          -  $          -  $     90,000




The accompanying notes are an integral part of these financial statements.

                                   F-7
</TABLE>
<PAGE> 31

                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
                  Notes to Financial Statements
                    December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.  Organization

Lazarus Industries, Inc. (the "Company") was incorporated under the laws of
the State of Utah on December 31, 1985.  The Company was incorporated for the
purpose of engaging in the business of developing, manufacturing and marketing
proprietary medical devices.  In 1991, the Company discontinued its
operations, and liquidated its assets leaving the Company dormant until 1996
when the Company began to seek merging with an existing, operating company.

b.  Provision for Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences.  Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases.  Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely that not that some portion or all of the
deferred tax assets will not be realized.  Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.

Net deferred tax assets consist of the following components as of December 31,
2002 and 2001:


                                                      2002         2001
                                                 ------------- -------------
   Deferred tax assets:
    NOL Carryover                                $     51,827  $     43,355

    Deferred tax liabilities                                -             -

   Valuation allowance                                (51,827)      (43,355)
                                                 ------------- -------------
   Net deferred tax asset                        $          -  $          -
                                                 ============= =============

The income tax provision differs from the amount of income tax determined by
applying a combination of the U.S. federal and state income tax rates of 39%
to pretax income from continuing operations for the years ended December 31,
2002 and 2001 due to the following:

                                                       2002        2001
                                                 ------------- -------------
   Book income                                   $     (7,378) $     (2,416)
   Other                                                  (50)            -
   Valuation allowance                                  7,428         2,416
                                                 ------------- -------------
                                                 $          -  $          -
                                                 ============= =============

At December 31, 2002, the Company had net operating loss carryforwards of
approximately $132,800 that may be offset against future taxable income from
the year 2002 through 2022.  No tax benefit has been reported in the December
31, 2002 financial statements since the potential tax benefit is offset by a
valuation allowance of the same amount.


                               F-8
<PAGE> 32

                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
                  Notes to Financial Statements
                    December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

b.  Provision for Taxes (Continued)

Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carryforwards for Federal income tax reporting purposes are
subject to annual limitations.  Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future years.

c.  Accounting Method

The financial statements are prepared using the accrual method of accounting.
The Company has elected a calendar year end.

d.  Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the Unites States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.  Actual results could differ from
those estimates.

e.  Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

f.  Basic Loss Per Share

The computation of basic (loss) per share of common stock is based on the
weighted average number of shares issued and outstanding during the period of
the financial statements as follows:


                                                         December 31,
                                                      2002         2001
                                                 ------------- -------------
    Numerator - (loss)                           $    (18,920) $     (6,356)
    Denominator - weighted average number of
     shares outstanding                             7,485,417     7,485,417
                                                 ------------- -------------
    Basic loss per share                         $      (0.00) $      (0.00)
                                                 ============= =============


                               F-9

<PAGE> 33

                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
                  Notes to Financial Statements
                    December 31, 2002 and 2001

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

g.  Newly Issued Accounting Pronouncements

The Company adopted the provisions of FASB Statement No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets," FASB Statement No.145,
"Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement
No. 13, and Technical Corrections," FASB Statement No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities," FIN 44, "Accounting for
Certain Transactions Involving Stock Compensation (an interpretation of APB
Opinion No. 25)," and FASB Statement No. 147, "Acquisitions of Certain
Financial Institutions   an amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9." The effect of these adopted provisions on the
Company's financial statements was not significant.

In December 2002, the FASB issued Statement No. 148, "Accounting for
Stock-Based Compensation   Transition and Disclosure   an amendment of FASB
Statement No. 123" (SFAS 148).  SFAS 148 is effective for fiscal years
beginning after December 15, 2003.  The Company is currently reviewing SFAS
148.

h.  Revenue Recognition

The Company currently has no source of revenues.  Revenue recognition policies
will be determined when principal operations begin.

NOTE 2 -  DISCONTINUED OPERATIONS

On March 29, 1988, Gaslight, Inc. (Gaslight) consummated an exchange agreement
(the "Exchange Agreement"), with Lazarus and the shareholders of Lazarus
providing for the acquisition of Lazarus as a wholly-owned subsidiary of
Gaslight.

Under the terms of the Exchange Agreement, Gaslight was required to call and
convene a meeting of its stockholders for the purpose of submitting to its
stockholders for approval proposals for a 25-to-1 reverse stock split or share
consolidation of the 19,000,000 shares of Gaslight s common stock issued and
outstanding at March 18, 1988; approval of the Exchange Agreement, amendment
of Gaslight's Articles of Incorporation to change its name to "Lazarus
Industries, Inc." and the election of five designees of Lazarus to the Board
of Directors of Gaslight.  In connection with the acquisition of Lazarus,
Gaslight issued 2,036,800 post-split shares of its restricted common stock,
par value $0.001 to the stockholders of Lazarus in exchange for all the issued
and outstanding capital stock of Lazarus.  Consequently, Lazarus became a
wholly-owned subsidiary of Gaslight.  In 1991, the Company discontinued all
operations and dissolved the subsidiary.


                               F-10

<PAGE>


                     LAZARUS INDUSTRIES, INC.
                  (A Development Stage Company)
                  Notes to Financial Statements
                    December 31, 2002 and 2001

NOTE 3 - GOING CONCERN

The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business.  The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern.  The ability of the Company
to continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable.  If the Company
is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, develop a reliable source of
revenues, and achieve a profitable level of operations the Company will need,
among other things, additional capital resources.  Management's plans to
continue as a going concern include raising additional capital through sales
of common stock.  However, management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain
profitable operations.  The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue
as a going concern.

NOTE 4 - SUBSEQUENT EVENT

On January 15, 2003, the Company entered into a Stock Exchange Agreement with
American Dairy Holdings, Inc. (American) and the shareholders of American.  If
consummated, the shareholders of American have agreed to sell to the Company,
and the Company has agreed to purchase all of the outstanding shares of
American, in exchange for shares representing ninety six percent (96%) of the
total outstanding common shares of the Company, including presently
outstanding warrants and stock options of the Company.  This exchange would
take place following a one-for-nineteen (1 for 19) reverse stock split of the
presently issued and outstanding common stock of the Company, including its
outstanding warrants and stock options.  If the transaction is consummated,
the Company will change its name and the majority of the current officers and
directors of the Company will resign and be replaced by officers and directors
of American.  As a result of the stock exchange, American will become a
wholly-owned subsidiary of the Company.




                               F-11

<PAGE> 34