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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 20-F





| ̈ |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THESECURITIES EXCHANGE ACT OF 1934
|- |  | -----------------------------------------------------------------------------------------------

OR



|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
|- |  | -----------------------------------------------------------------------------------

For the fiscal year ended June 30, 2007

OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------

For the transition period from _______________ to _______________

OR



| ̈ |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------------



Date of event requiring this shell company report _______________



Commission file number 0-18760





UNILENS
VISION INC.

|                                                   
|---------------------------------------------------
|(Exact name of Registrant specified in its charter)





UNILENS VISION INC.

|                                               
|-----------------------------------------------
|(Translation of Registrants name into English)





|                                                                    
|--------------------------------------------------------------------
|BRITISH COLUMBIA, CANADA                                            
|(Jurisdiction of incorporation or organization)                     
|                                                                    
|1780-400 Burrard Street Vancouver, British Columbia, Canada, V6C 3A6
|(Address of principal executive offices)                            



|                               
|-------------------------------
|COMMON SHARES WITHOUT PAR VALUE
|(Title of Class)               



Securities registered or to be
registered pursuant to Section 12(b) of the Act:



|                    |  |  |  |                                          
|------------------- |  |  |  | -----------------------------------------
|Title of Each Class |  |  |  | Name of Each Exchange on Which Registered
|                    |  | 
|None                |  |  |  | Not applicable                           

Securities registered or to be registered pursuant to Section 12(g) of the Act:





Common
Shares without Par Value

|                
|----------------
|(Title of Class)



Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.         None

Number of outstanding shares of Unilens Vision
Inc.s capital stock as of June 30, 2007:     4,513,215 Common Shares, Without Par Value

Indicate by check mark if the Registrant
is a well-know seasoned issuer, as defined in Rule 405 of the Securities Act   YES ̈NO x

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.   YES x  NO ̈

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by to Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 ̈

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.
(Check one):

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

Indicate by check mark which financial statement item Registrant has elected to follow: Item 17 x   Item
18 ̈

If this is an annual report, indicate
by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Securities Exchange Act of 1934.   YES ̈NO x

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS)

Indicate by check mark whether Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act
subsequent to the distribution of securities under a plan confirmed by a court.

NOT APPLICABLE



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INTRODUCTION AND USE OF CERTAIN TERMS

As used in this Annual Report for the fiscal year ending June 30, 2007, unless the context otherwise requires, we, us, our, or
Unilens refers to Unilens Vision Inc. and its subsidiaries. In this Form 20-F, references to Cdn$ are to Canadian dollars; and references to U.S. dollars, U.S.$ or $ are to United States
dollars.

FORWARD LOOKING STATEMENTS

IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS STATEMENTS THAT ARE, OR MAY BE DEEMED TO BE, FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE
EXCHANGE ACT, AND ARE MADE IN RELIANCE UPON THE PROTECTIONS PROVIDED BY SUCH ACTS FOR FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT REFLECT OUR CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE.
THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED IN THIS ANNUAL REPORT, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. IN THIS ANNUAL
REPORT, THE WORDS ANTICIPATES, BELIEVES, EXPECTS, INTENDS, FUTURE,. MAY, WILL, WOULD, COULD, SHOULD, EXPECTS,
INTENDS, PLAN, ESTIMATES, PREDICTS, PROJECTS, SEEKS, POTENTIAL, LIKELY, CONTINUE, AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING
STATEMENTS. READERS ARE CAUTIONED TO CONSIDER THE SPECIFIC RISK FACTORS DESCRIBED BELOW AND NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING STATEMENTS CONTAINED IN THIS ANNUAL REPORT. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS ANNUAL REPORT
ARE MADE ONLY AS OF THE DATE OF THIS ANNUAL REPORT, AND WE DO NOT UNDERTAKE ANY OBLIGATION TO PUBLICLY UPDATE OR CORRECT ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES THAT SUBSEQUENTLY OCCUR OR WHICH WE, AFTER THE DATE OF THIS
ANNUAL REPORT, BECOME AWARE OF. YOU SHOULD READ THIS DOCUMENT AND THE DOCUMENTS THAT WE INCORPORATE BY REFERENCE INTO THIS ANNUAL REPORT COMPLETELY AND WITH THE UNDERSTANDING THAT OUR ACTUAL FUTURE RESULTS MAY BE MATERIALLY DIFFERENT FROM WHAT WE
EXPECT. WE MAY NOT UPDATE THESE FORWARD-LOOKING STATEMENTS, EVEN IF OUR SITUATION CHANGES IN THE FUTURE. ALL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US ARE EXPRESSLY QUALIFIED BY THESE CAUTIONARY STATEMENTS.



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TABLE OF CONTENTS



|          |  |                                                                              |  |     
|--------- |  | ---------------------------------------------------------------------------- |  | ----
|          |  |                                                                              |  | Page
|ITEM 1.   |  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        |  | 1   
|          |  |                                                                             
|ITEM 2.   |  | OFFER STATISTICS AND EXPECTED TIMETABLE                                      |  | 1   
|          |  |                                                                             
|ITEM 3.   |  | KEY INFORMATION                                                              |  | 1   
|          |  |                                                                             
|ITEM 4.   |  | INFORMATION ON THE COMPANY                                                   |  | 7   
|          |  |                                                                             
|ITEM 5.   |  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                 |  | 11  
|          |  |                                                                             
|ITEM 6.   |  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   |  | 15  
|          |  |                                                                             
|ITEM 7.   |  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            |  | 19  
|          |  |                                                                             
|ITEM 8.   |  | FINANCIAL INFORMATION                                                        |  | 20  
|          |  |                                                                             
|ITEM 9.   |  | THE OFFER AND LISTING                                                        |  | 21  
|          |  |                                                                             
|ITEM 10.  |  | ADDITIONAL INFORMATION                                                       |  | 22  
|          |  |                                                                             
|ITEM 11.  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  | 31  
|          |  |                                                                             
|ITEM 12.  |  | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 31  
|          |  |                                                                             
|ITEM 13.  |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 31  
|          |  |                                                                             
|ITEM 14.  |  | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 31  
|          |  |                                                                             
|ITEM 15.  |  | CONTROLS AND PROCEDURES                                                      |  | 31  
|          |  |                                                                             
|ITEM 16A. |  | AUDIT COMMITTEE FINANCIAL EXPERT                                             |  | 32  
|          |  |                                                                             
|ITEM 16B. |  | CODE OF ETHICS                                                               |  | 32  
|          |  |                                                                             
|ITEM 16C. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       |  | 32  
|          |  |                                                                             
|ITEM 16D. |  | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   |  | 33  
|          |  |                                                                             
|ITEM 16E. |  | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS       |  | 33  
|          |  |                                                                             
|ITEM 17.  |  | FINANCIAL STATEMENTS                                                         |  | 34  
|          |  |                                                                             
|ITEM 18.  |  | FINANCIAL STATEMENTS                                                         |  | 68  
|          |  |                                                                             
|ITEM 19.  |  | EXHIBITS                                                                     |  | 68  



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PART 1



|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- | -----------------------------------------------------

Not
applicable.



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not applicable.



|ITEM 3. | KEY INFORMATION
|------- | ---------------



|A. | Selected Financial Data
|-- | -----------------------

The following constitutes our selected
consolidated financial data for the fiscal years ended June 30, 2007, 2006, 2005, 2004 and 2003 in U.S. dollars, presented in accordance with United States generally accepted accounting principles. The selected consolidated financial data is
derived from our financial statements for such periods. Certain of the prior years comparative figures have been reclassified to conform to the presentation adopted for the current year. The following is qualified by, and should be read in
conjunction with, the financial statements included in Item 17. All amounts are stated in U.S. dollars.



|                                                                                  |      |               |            |  |      |            |      |   |            |      |   |            |   |  |   |            |  
|--------------------------------------------------------------------------------- | ---- | ------------- | ---------- |  | ---- | ---------- | ---- | - | ---------- | ---- | - | ---------- | - |  | - | ---------- | -
|(U.S. dollars except share amounts)                                               |      | As at June 30 |           
|                                                                                  | 2007 |               | 2006       |  | 2005 |            | 2004 |   |            | 2003 |  
|Balance Sheet Data                                                                |      |               |            |  |      |            |      |   |            |      |   |            |   |  |   |            |  
|Total assets                                                                      |      | $             | 7,987,808  |  | $    | 8,969,222  |      | $ | 7,316,946  |      | $ | 6,095,950  |   |  | $ | 3,466,586  |  
|Working capital (deficiency)                                                      |      |               | 4,949,732  |  |      | 4,747,777  |      |   | 2,540,624  |      |   | 1,381,148  |   |  |   | 1,969,314  |  
|Long-term liabilities                                                             |      |               |           |  |      |           |      |   |           |      |   | 688,139    |   |  |   | 4,474,576  |  
|Total Liabilities                                                                 |      |               | 819,005    |  |      | 997,010    |      |   | 1,082,242  |      |   | 2,085,117  |   |  |   | 5,604,564  |  
|Shareholders equity (deficiency)                                                 |      |               | 7,168,803  |  |      | 7,972,212  |      |   | 6,234,704  |      |   | 4,010,833  |   |  |   | (2,137,978 | )
|Share Capital                                                                     |      |               | 27,596,810 |  |      | 27,575,628 |      |   | 27,434,950 |      |   | 27,432,100 |   |  |   | 27,367,615 |  
|Statement of Operations Data (fiscal year ended)                                  |      |               |            |  |      |            |      |   |            |      |   |            |   |  |   |            |  
|Revenues                                                                          |      |               | 6,370,930  |  |      | 6,110,040  |      |   | 4,971,577  |      |   | 4,074,577  |   |  |   | 3,129,101  |  
|Income (loss) from operations (1)                                                 |      |               | 14,785     |  |      | 53,359     |      |   | 91,580     |      |   | (42,387    | ) |  |   | (272,578   | )
|Income (loss) before tax benefit, discontinued operations and extraordinary items |      |               | 2,179,742  |  |      | 2,018,040  |      |   | 1,710,687  |      |   | 863,121    |   |  |   | (140,730   | )
|Income (loss) before discontinued operations and extraordinary items              |      |               | 1,309,961  |  |      | 1,596,830  |      |   | 2,237,787  |      |   | 4,124,171  |   |  |   | 1,558,270  |  
|Income (loss) for the year                                                        |      |               | 1,309,961  |  |      | 1,596,830  |      |   | 2,237,787  |      |   | 6,076,734  |   |  |   | 1,558,270  |  
|Weighted Average Number of common shares                                          |      |               | 4,546,820  |  |      | 4,522,566  |      |   | 4,458,266  |      |   | 4,114,722  |   |  |   | 3,838,815  |  
|Income (loss) per common share outstanding - basic and diluted:                   |      |               |            |  |      |            |      |   |            |      |   |            |   |  |   |            |  
|Income (loss) before discontinued operations and extraordinary item               |      |               |            |  |      |            |      |   |            |      |   |            |   |  |   |            |  
|Basic                                                                             |      |               | 0.29       |  |      | 0.37       |      |   | 0.53       |      |   | 1.01       |   |  |   | 0.41       |  
|Diluted                                                                           |      |               | 0.29       |  |      | 0.35       |      |   | 0.50       |      |   | 1.00       |   |  |   | 0.41       |  
|Income (loss) for the year                                                        |      |               |            |  |      |            |      |   |            |      |   |            |   |  |   |            |  
|Basic                                                                             |      |               | 0.29       |  |      | 0.37       |      |   | 0.53       |      |   | 1.49       |   |  |   | 0.41       |  
|Diluted                                                                           |      |               | 0.29       |  |      | 0.35       |      |   | 0.50       |      |   | 1.48       |   |  |   | 0.41       |  
|Dividends                                                                         |      |               | 2,134,552  |  |      |           |      |   |           |      |   |           |   |  |   |           |  

Notes:



|(1) | There were no discontinued operations during the periods presented above.
|--- | -------------------------------------------------------------------------



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Dividend Policy

On August 1, 2006 the Board of Directors declared a special cash dividend of $0.25 per common share, paid
August 28, 2006 to stockholders of record at the close of business on August 14, 2006. The Company also announced its intention to begin paying a regular quarterly dividend.

On November 1, 2006 the Board of Directors declared its initial quarterly cash dividend of $0.075 per common
share, paid November 28, 2006 to stockholders of record at the close of business on November 14, 2006. On February 1, 2007 and May 1, 2007 the Board of Directors declared its second and third regular quarterly cash dividends of
$0.075 per common share, payable to stockholders of record at the close of business on February 14, 2007 and May 14, 2007, respectively. These dividends were paid on February 28, 2007 and May 25, 2007

On August 1, 2007 the Board of Directors declared a second special cash dividend of $0.30 per share and its
fourth regular quarterly dividend at an increased rate of $.09 per common share, payable August 28, 2007 to stockholders of record at the close of business on August 14, 2007.

The amount and frequency of future dividends will depend on earnings, cash flow, and all other aspects of our business as determined and declared by the Board of Directors.



|B. | Capitalization and Indebtedness
|-- | -------------------------------

Not applicable.



|C. | Reasons for the Offer and Use of Proceeds
|-- | -----------------------------------------

Not applicable.



|D. | Risk Factors
|-- | ------------

We rely primarily on royalty income from one
source.

In October 2001, we entered into an exclusive worldwide license on one of our patented multi-focal design technologies with
Bausch & Lomb Incorporated (Bausch & Lomb), which generates a significant portion of our net income. We collect royalties based on Bausch & Lomb's worldwide net sales of products utilizing the design
technology. There can be no assurance, however, that Bausch & Lomb will continue to sell products in the future utilizing our technology at the same levels as it currently does or at all.

We rely on one supplier for our molded contact lenses and on one supplier for the raw materials used in the production of most of our soft lathe-cut contact
lenses.

In June 2002, we entered into a supply agreement with one of our suppliers for the manufacture of our Molded C-Vue multifocal lens, which
accounts for a significant portion of our sales (approximately 49% of sales during the 2007 fiscal year). The agreement is renewable from year to year and is terminable pursuant to customary termination clauses. Although to date the supplier has met
our requirements, there can be no assurance that it will continue to meet its obligations under our agreement or as to any renewal of our supply agreement. The supplier is not under any obligation to supply products utilizing other materials or
manufacturing processes, or to meet our possible future requirements for design or material changes and enhancements. While alternate suppliers for the manufacture of specialty molded or partially molded contact lenses have been identified, should
the need arise, there can be no assurance that an alternate supplier can successfully manufacture lenses to our specifications or material requirements on acceptable terms, or within the constraints of our exclusive license agreement with Bausch and
Lomb.

The raw materials used for the production of most of our lathe-cut soft contact lenses are purchased from Benz Research Corporation. Over the past
three years we have not experienced any interruption in the supply of our raw materials. While alternate vendors have been identified, should the need arise, there can be no assurance that an alternate supplier can provide the raw materials in
accordance to our specifications or on acceptable terms.



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We face intense competition, and our failure to compete effectively could have a material adverse effect on our
profitability and results of operations.

The market for soft contact lenses is intensely competitive and many competing products have lower prices
than do ours. Our ability to increase U.S. market penetration is dependent on persuading eye care professionals to recommend our products to consumers, as well as persuading consumers of competing products to switch to our products, on the basis of
quality, features and value. Our products compete with similar products offered by a number of larger companies, including Johnson & Johnson, a unit of Vistakon, Ciba Vision Corporation, a division of Novartis AG, Bausch & Lomb,
and Cooper Vision. Many of our competitors have substantially greater financial, marketing and technical resources, greater market penetration and larger manufacturing capacities and volumes. Among other things, these advantages may afford our
competitors greater ability to manufacture large volumes of lenses, reduce product prices and influence customer buying decisions. We believe that certain of our competitors are expanding, or are planning to expand their manufacturing capacity, and
are implementing automated manufacturing processes, in order to support anticipated increases in volume. Because many of the costs incurred in producing contact lenses are relatively fixed, a manufacturer that can increase its volume can generally
reduce its per unit costs and thereby increase its flexibility to reduce prices. Our competitors could also reduce prices to increase sales volumes, so as to utilize their production capacity, or for other reasons. Price reductions by competitors
could make our products less competitive, and we cannot assure you that we would be able to either match a competitors pricing plan or reduce our prices in response. Our ability to respond to competitive pressures by decreasing our prices
without adversely affecting our gross margins and operating results will depend on our ability to decrease our costs per lens. Any significant decrease in our costs per lens will depend, in part, on our ability to increase sales volume and
production capacity, of which there can be no assurance. Our failure to respond to competitive pressures and particularly price competition in a timely manner could have a material adverse effect on our business, financial condition and results of
operations.

Many of our competitors have access to higher oxygen permeable silicone hydrogel materials, which we currently do not have. Silicone hydrogel
lenses are gaining market acceptance in the specialty lens business and we are not yet able to manufacture and market our own competitive silicone hydrogel specialty products, which could erode our specialty lens market share and margins.
Competition from products manufactured from silicone hydrogel materials may have a material adverse effect on our business, financial condition and results of operations.

We also encounter competition from manufacturers of eyeglasses and from alternative technologies, such as surgical refractive procedures (including new refractive laser procedures such as PRK, or photo refractive
keratectomy, and LASIK, or laser in situ keratomileusis). If surgical refractive procedures become increasingly accepted as an effective and safe technique for permanent vision correction, they could substantially reduce the demand for contact
lenses by enabling patients to avoid the ongoing cost and inconvenience of contact lenses. Accordingly, we cannot assure you that these procedures, or other alternative technologies that may be developed in the future, will not cause a substantial
decline in the number of contact lens wearers and thus have a material adverse effect on our business, financial condition and results of operations.

We depend upon certain key management and technical personnel.

Our future success will depend in part upon our ability to attract
and retain highly qualified personnel. We compete for such personnel with other companies, academic institutions, government entities and other organizations. We cannot assure you that we will be successful in retaining or hiring qualified
personnel. The loss of any of our senior management or other key research, clinical, regulatory, or sales and marketing personnel, particularly to competitors, could have a material adverse effect on our business, financial condition and results of
operations.

Significant changes in beneficial ownership of Company common stock, may effect utilization of deferred tax assets.

Utilization of the deferred tax asset may be subject to limitations in the event of significant changes in the beneficial ownership of the Companys
shares. The Company cannot predict if or when such changes might occur, or their effect, if any, on the deferred tax asset, which will be dependent on such factors as the size of the beneficial ownership change, its timing and the prices at
which shares involved in the change are disposed. The Company is aware, however, that its largest shareholder is the subject of bankruptcy proceedings that conceivably could result in such shareholders disposition of all or a portion of
its Company shares.

Unilens Vision Inc. is a holding company. Unilens Vision Inc.s only source of cash, other than from debt or equity
financings, is from distributions from its subsidiaries and interest earnings of cash invested.

Unilens Vision Inc. is a holding company with
essentially no operations of its own and conducts substantially all of its business operations through one of its subsidiaries, Unilens Corp. USA. Unilens Vision Inc.s only significant



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asset is the outstanding capital stock of such subsidiary. Unilens Vision Inc. is wholly dependent, other than from debt or equity financings, on the cash
flow of such subsidiary and dividends and distributions to it from such subsidiary in order to service any current and future indebtedness obligations it may have.

With our common shares being traded in the U.S. only on the OTC Bulletin Board, the liquidity of our common shares in the U.S. may be limited.

Our common shares trade in Canada on the TSX Venture Exchange and in the United States on the OTC Bulletin Board. Stocks in the OTC Bulletin Board market ordinarily have much lower trading volume than in other
markets, such as the Nasdaq SmallCap Market or the Nasdaq National Market. Very few market makers take interest in shares traded over-the-counter, and accordingly the markets for such shares are less orderly than is usual for Nasdaq stocks. As a
result of the low trading volumes ordinarily obtained in the OTC Bulletin Board market, sales of our common shares in any significant amount could not be absorbed without a dramatic reduction in price. Moreover, thinly traded shares in the OTC
Bulletin Board market are more susceptible to trading manipulations than is ordinarily the case for more actively traded shares.

Penny
stock rules may make buying or selling our common shares difficult, severely limiting the market price of our common shares and the liquidity of our shares in the U.S.

Trading in our common shares is subject to the penny stock regulations adopted by the U.S. Securities and Exchange Commission. These regulations generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors, must, prior to the
sale, make a special written suitability determination for the purchaser and receive the purchasers written agreement to execute the transaction. Unless an exception is available, the regulations require delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer
and registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our stock, which could severely
limit their market price and the liquidity of our stock.

The price of our common shares in the U.S. and Canada continues to be highly volatile.

The market price of our common shares in the U.S. and Canada is, and is likely to continue to be, volatile and may be significantly affected by
factors such as: actual or anticipated fluctuations in our operating results or those of our competitors; competitive factors; trade practice litigation; new products offered by us or our competitors; developments with respect to patents or
proprietary rights; conditions and trends in our industry and other related industries; regulatory actions; adoption of new accounting standards; changes in financial estimates by securities analysts; general market conditions; and other factors.

Dividends to holders of our common shares cannot be assured.

The Company paid a special cash dividend of $0.25 to holders of our common shares in August 2006. In November 2006, the Company paid its initial quarterly cash dividend of $0.075 to holders of our common shares. For
the fiscal year ended June 30, 2007, in addition to the special cash dividend, the Company paid quarterly cash dividends totalling $0.225 per common share. These were the first dividends paid by us. In August 2007, the Company paid a second
special cash dividend of $0.30 per common share and its fourth regular quarterly dividend at an increased rate of $.09 per common share. So far for the fiscal year ending June 30, 2008, in addition to the second special cash dividend, the
Company has paid quarterly cash dividends totalling $0.18 per common share. The amount of future dividends will depend on earnings, cash flow, and all other aspects of our business as determined and declared by the Board of Directors. Accordingly,
there can be no assurance that we can generate sufficient earnings and cash flow to continue paying quarterly dividends.

Our manufacturing facility
located in the U.S. and our products sold in the U.S. are subject to stringent regulation by the Food and Drug Administration.

Under the Food, Drug
and Cosmetic Act (the FDC Act) and implementing regulations, the Food and Drug Administration (the FDA) regulates the testing, manufacturing, labeling, distribution, and promotion of medical devices such as contact lenses.
Noncompliance with applicable requirements can result in, among other things, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of product distribution,



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failure of the government to grant premarket clearance or approval for devices, withdrawal of marketing clearances or approvals, and criminal prosecution.
The FDA also has the authority to request the recall, repair, replacement or refund of the cost of any device manufactured or distributed by us.

Before a
new device can be introduced into the U.S. market, it must receive FDA premarket notification clearance under Section 510(k) of the FDC Act (Section 510(k)) or premarket approval pursuant to the more costly and time-consuming
premarket approval application (PMA) procedure. For devices that are cleared through the Section 510(k) process, modifications or enhancements that could significantly affect safety or effectiveness, or constitute a major change in
the intended use of the device, will require new Section 510(k) submissions. While less expensive and time-consuming than obtaining PMA clearance, securing Section 510(k) clearance may involve the submission of a substantive review of six
months or more. Any products manufactured or distributed pursuant to Section 510(k) clearance are subject to pervasive and continuing regulation by the FDA, including record keeping requirements and reporting of adverse experience with the use
of the device.

We are seeking Section 510(k) clearances for all of the new products we intend to manufacture and market in the U.S. New products may
require clinical studies to support a Section 510(k) clearance or PMA. There is no certainty that clinical studies involving new products will be completed in a timely manner or that the data and information obtained will be sufficient to
support the filing of a PMA or Section 510(k) clearance. We may not be able to obtain necessary clearances and approvals to market new devices or any other products under development on a timely basis, if at all, and delays in receipt or
failure to receive such clearances or approvals, the loss of previously received clearances, or failure to comply with existing or future regulatory requirements could have a material adverse effect on our business, financial condition and results
of operations.

As a manufacturer of medical devices, we are required to register with the FDA and comply with the FDAs Code of Federal Regulations
quality system requirements. If the FDA believes that we may not be operating in compliance with applicable laws and regulations, it can record its observations on a Form FDA 483; place us under observation and re-inspect the facilities; institute
proceedings to issue a warning letter apprising of violative conduct; detain or seize products; mandate a recall; enjoin future violations; and assess civil and criminal penalties against us, our officers or our employees. In addition, in
appropriate circumstances, the FDA could withdraw clearances or approvals. Failure to comply with regulatory requirements or any adverse regulatory action could have a material adverse affect on us.

Manufacturers of medical devices for marketing in the U.S. also must comply with the medical device reporting (MDR) requirements of the FDA, that require
companies report to the FDA any incident in which its product may have caused or contributed to a death or serious injury, or in which its product malfunctioned and, if the malfunction were to recur, it would be likely to cause or contribute to a
death or serious injury. Labeling and promotional activities are subject to scrutiny by the FDA. Current FDA enforcement policy prohibits the marketing of approved medical devices for unapproved uses. We are subject to routine inspection by the FDA
for compliance with quality systems requirements, MDR requirements, and other applicable regulations. We cannot assure you that we will not incur significant costs to comply with laws and regulations in the future or that laws and regulations will
not have a material adverse effect upon our business, financial condition or results of operation.

Our products are subject to stringent regulation
by various foreign jurisdictions in which our products are sold.

Our products also are subject to regulation in other countries in which we sell
our products. The laws and regulations of such countries range from comprehensive medical device approval procedures such as those described above to simple requests for product data or certifications. The number and scope of these laws and
regulations are increasing. In particular, medical devices in the European Union (the EU) are subject to the EUs medical devices directive (the Directive).

Under the system established by the Directive, all medical devices other than active implants and in vitro diagnostic products currently must qualify for CE marking. CE marking means that a
manufacturer certifies that its product bearing the CE mark satisfies all requirements essential for the product to be considered safe and fit for its intended purpose. We have received CE marking authorization for all products that we currently
market in the EU.In addition, medical device sales in the EU require auditing by a certified third party (a Notified Body) to ensure that the manufacturers quality systems are in compliance with the requirements of the ISO
9000 standards.



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Although member countries must accept for marketing medical devices bearing a CE marking without imposing further
requirements related to product safety and performance, each country may require the use of its own language or labels and instructions for use. Authorities who are required to enforce compliance with the requirements of the Directive can restrict,
prohibit and recall CE-marked products if they are unsafe. Such a decision must be confirmed by the European Commission in order to be valid. Member countries can impose additional requirements as long as they do not violate the Directive or
constitute technical barriers to trade.

Additional approvals from foreign regulatory authorities may be required for international sale of our products in
non-EU countries. Failure to comply with applicable regulatory requirements can result in the loss of previously received approvals and other sanctions and could have a material adverse effect on our business, financial condition and results of
operations.

We face an inherent risk of exposure to product liability claims in the event that the use of the products we manufacture or sell
results in personal injury.

We face an inherent risk of exposure to product liability claims in the event that the use of the products we
manufacture and/or sell results in personal injury. Although we have not experienced any losses due to product liability claims, we cannot assure you that we will not experience such losses in the future. We maintain insurance against product
liability claims, but we cannot be certain that such coverage will be adequate to cover any liabilities that we may incur, or that such insurance will continue to be available on terms acceptable to us. A successful claim brought against us in
excess of available insurance coverage, or any claim that results in significant adverse publicity against us, could harm our business.

All of our
manufacturing operations are conducted at a single facility.

We conduct all of our manufacturing operations at a single facility in Largo, Florida.
As a result, any prolonged disruption in the operations of our manufacturing facility, whether due to technical or labor difficulties, destruction of or damage to the facility or other reasons, could have a material adverse effect on our business,
financial condition and results of operations. In this regard, because our principal manufacturing facility is located in Largo, Florida, such facility is exposed to the risks of damage from certain weather conditions including, without limitation:
hurricanes, windstorms, and floods. If our facility were to be out of production for an extended period, our business, financial condition and results of operation would be materially adversely affected.

Our manufacturing capacity may not be adequate to meet the demands of our business.

Our products are manufactured in quantities sufficient to satisfy our current level of product sales. If we experience increases in sales, we will need to increase our production beyond our present manufacturing
capacity. The process for transferring the manufacture of our products to new facilities is lengthy and requires regulatory approval, and our manufacturing and related costs could increase as a result of the transaction. Any prolonged disruption in
the operation of our manufacturing facilities or those of our third-party manufacturers, or any significant increase in associated costs, could materially harm our business, financial condition and results of operations.

If we are unable to protect our intellectual property rights, our business and prospects may be harmed.

Our ability to compete effectively is dependent upon the proprietary nature of the designs, processes, technologies and materials owned by, used by or licensed to us.
Although we attempt to protect our proprietary property, technologies and processes both in the U.S. and in foreign countries through a combination of patent law, trade secrets and non-disclosure agreements, these may be insufficient. In addition,
because of the differences in foreign patent and other laws concerning proprietary rights, our products may not receive the same degree of protection in foreign countries as they would in the U.S.

We may be subject to intellectual property litigation and infringement claims, which could cause us to incur significant expenses or prevent us from selling our
products.

There is a substantial amount of litigation over patent and other intellectual property rights in the eye care industry, and in the
contact lens markets particularly. The fact that we have patents issued to us for our products does not mean that we will always be able to successfully defend our patents and proprietary rights against challenges or



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claims of infringement by our competitors. A successful claim of patent or other intellectual property infringement against us could adversely affect our
growth and profitability, in some cases materially. We cannot assure you that others will not claim that our proprietary or licensed products are infringing their intellectual property rights or that we would not in fact be found to infringe those
intellectual property rights. From time to time, we receive notices of claim of potential infringement. There may be intellectual property rights of others that may cover some of our technology and of which we are unaware. If someone claims that our
products infringed their intellectual property rights, any resulting litigation could be costly and time consuming and would divert the attention of management and key personnel from other business issues. The complexity of the technology involved
and the uncertainty of intellectual property litigation increase these risks. Claims of intellectual property infringement also might require us to enter into costly royalty or license agreements. However, we may be unable to obtain royalty or
license agreements on terms acceptable to us or at all. We also may be subject to significant damages or an injunction preventing us from manufacturing, selling or using some or some aspect of our products in the event of a successful claim of
patent or other intellectual property infringement. Any of these adverse consequences could have a material adverse effect on our business and profitability.

If we do not introduce new commercially successful products in a timely manner, our products may become obsolete over time, customers may not buy our products and our revenue and profitability may decline.

Demand for our products may change in ways we may not anticipate because of: evolving customer needs; the introduction of new products and technologies; evolving surgical
practices; and evolving industry standards. Without the timely introduction of new commercially successful products and enhancements, our products may become obsolete over time, in which case our revenue and operating results would suffer. The
success of our new product offerings will depend on several factors, including without limitation our ability to: properly identify and anticipate customer needs; commercialize new products in a timely manner; manufacture and deliver products in
sufficient volumes on time; differentiate our offerings from competitors' offerings; achieve positive clinical outcomes for new products; satisfy the increased demands by healthcare payors, providers and patients for lower-cost products; and
innovate and develop new materials and product designs. Moreover, innovations generally will require a substantial investment in research and development before we can determine the commercial viability of these innovations, and we may not have
the financial resources necessary to fund these innovations. In addition, even if we are able to successfully develop enhancements or new generations of our products, they may not produce revenue in excess of the costs of development, and they may
be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features.



|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------

SUMMARY



|A. | History and Development of the Company
|-- | --------------------------------------



|1. | Our legal name is Unilens Vision Inc.
|-- | ---------------------------------------



|2. | We are incorporated in British Columbia, Canada, pursuant to its Business Corporations Act (the BCBCA). We registered our articles and memorandum on December 20,
1982 under the predecessor statute of the BCBCA. Our duration is perpetual.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. | The address of our registered office is 1780-400 Burrard Street, Vancouver, B.C. V6C 3A6 and our telephone number is
(604) 689-1280. We operate our business in Florida through one of our wholly-owned subsidiaries, Unilens Corp. USA. Unilens Corp. USA's office is located at 10431 72ndStreet North, Largo, Florida 33777 and its telephone number is (727) 544-2531.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. | Important recent events in the development of our business:
|-- | -----------------------------------------------------------

(i) In mid 2001, we began focusing on the licensing of our key technology to interested third parties. In October 2001, we entered into an exclusive worldwide licensing agreement with Bausch & Lomb for one of our patented
multifocal soft lens designs. Under the terms of the agreement, Bausch & Lomb pays us a royalty ranging from two to five percent of its worldwide sales of the product.



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(ii) At the same time, we entered into a supply
agreement for the C-Vue® lens, a molded soft multifocal contact lens launched in September 2002. The C-Vue lens is manufactured for us utilizing one of our patented multifocal soft lens
designs by a third party and is marketed exclusively in the United States to eye care professionals.

(iii) On February 17, 2004, we
entered into an asset purchase agreement to acquire the toric bifocal business owned by the Lifestyle Company, Inc. (Lifestyle Company). Under the terms of the agreement, in consideration for selected fixed assets, regulatory approvals,
and various other assets of the Lifestyle Company, we paid Lifestyle Company $75,000 in cash and pay royalties ranging from 5% to 8% on all sales of acquired products over the next 1 to 4 years. We expect to manufacture the product lines at our
manufacturing facility located in Largo, Florida. The products acquired include a soft bifocal toric contact lens that is marketed worldwide under the LifeStyle MVt trade name, along with certain other bifocal lens designs sold under the
Xtra and 4vue trade names. The soft toric bifocal line addresses the market for patients with astigmatism that require bifocal correction.

(iv) On February 23, 2005, we entered into an asset purchase agreement to acquire the Aquaflex and SoftCon product lines from CIBA Vision Corporation. Under the terms of the agreement, we will pay $350,000 for
inventory, trademarks, regulatory approvals, and various other assets. The Company assigned the $350,000 cost to inventory, of which $150,000 was paid at closing, with the remaining $200,000 to be paid upon the sale of inventory. As part of this
agreement, the Company will also pay a royalty ranging from five percent to eight percent on all future sales of the acquired product lines through February 2010.



|5. | Our principal capital expenditures and divestitures over our 2007, 2006 and 2005 fiscal years were as follows:
|-- | --------------------------------------------------------------------------------------------------------------

Expenditures during the period:



|                                           |  |                    |         |             |   |  
|------------------------------------------ |  | ------------------ | ------- | ----------- | - | -
|Year                                       |  | Plant andEquipment |         | OtherAssets
|Amounts Deferred (capitalized or invested) |  |                    |         |             |   |  
|2007                                       |  | $                  | 184,620 |             | $ | 0
|2006                                       |  | $                  | 337,348 |             | $ | 0
|2005                                       |  | $                  | 122,470 |             | $ | 0

Divestitures: There were no divestitures during the period.



|6. | The principal capital expenditures and divestitures by property currently in progress, including the distribution of these investments geographically and the method of financing are
as follows:
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Expenditures, all of which are in the United States and are financed by the Companys existing cash
balances:



|                |  |                    |         |             |   |      
|--------------- |  | ------------------ | ------- | ----------- | - | -----
|                |  | Plant andEquipment |         | OtherAssets
|2008 Activities |  | $                  | 500,000 |             | $ | 5,000

Divestitures: There are no divestitures currently in progress



|7. | We have not received any indication of any public takeover offers by third parties in respect of our common shares during the last or current fiscal year.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



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|B. | Business Overview
|-- | -----------------



| | 1. | We manufacture, distribute and license specialty lens products using proprietary design and manufacturing technology from our manufacturing distribution and administrative facility
in Largo, Florida. Our lens business is broken down into the following four categories: (i) disposable lenses; (ii) conventional soft lenses; (iii) gas permeable lenses; and (iv) replacement and other lenses.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our disposable lenses line consists of the C-Vue, a mulitfocal cast molded blister-packed box of six lenses sold for frequent
replacement, and the C-Vue Aspheric single vision lens, a single vision disposable soft contact lens sold for 2-week replacement. The C-Vue multifocal lens is manufactured for us by a third party utilizing one of our patented soft lens designs and
is marketed exclusively in the United States to eye care professionals. The C-Vue Aspheric single vision lens is manufactured for us by a third party utilizing Wavefront inspired technology. The cast molded C-Vue Aspheric single vision lens is
marketed to eye care professionals in a blister-packed box of six lenses. We expect our C-Vue multifocal and C-Vue Aspheric single vision lenses will continue to make up an increasing percentage of our sales.

Our conventional soft lenses line of soft lathe-cut multifocal and toric multifocal products
consists of the following: the C-Vue Toric Multifocal, designed for patients with an astigmatism that require bifocal correction; the Unilens, an aspheric multifocal contact lens; the SoftSite®, a highadd multifocal contact lens; the SimulVue®, a simultaneous vision bifocal contact lens with the capabilities for correcting advanced presbyopia; the Unilens EMA, a visibility
tinted multifocal contact lens available in planned replacement modality; and the C-Vue 55, a highadd multifocal contact lens manufactured in a comfortable high-water content material.

Our gas permeable lens line of products consist of the following: the Unilens GP, a multifocal contact lens intended for patients with astigmatism
who need low to moderate presbyopic correction; the Unilens GP Plus, designed to accommodate wearers requiring higher presbyopic correction; and the C-Vue GP, a front aspheric design incorporating the C-Vue design technology.

Our replacement and other lenses line of business primarily consists of the Sof-Form and LifeStyle brand of toric multifocal, toric and spherical daily,
and extended wear lenses marketed under the Lombart brand; the UniVision, an aspheric low vision lens; and the Aquaflex and SoftCon spherical daily and extended wear brand of lenses acquired from CIBA Vision.

Our lens products are marketed, as a family of specialty vision correction products. In October 2001, we licensed the exclusive worldwide rights to one of
our multifocal designs to Bausch & Lomb. Under the terms of the agreement, Bausch & Lomb pays us a royalty ranging from two to five percent of worldwide net sales utilizing the technology. Bausch & Lomb began selling
product utilizing the technology in October 2002. During the fiscal years ended June 30, 2007, 2006 and 2005 we recorded approximately $2,190,000, $1,933,000 and $1,632,000 in royalty income.



| | 2. | We operate within the highly competitive contact lens market. We compete with industry leaders, such as Johnson and Johnson, a unit of Vistakon, Bausch & Lomb, Ciba Vision
Corporation, a division of Novartis AG, and Cooper Vision. Our ability to compete successfully is dependent in part on eye care professionals perception of product quality, product development, technical innovation, and price. We market our
products worldwide. For the fiscal years ending June 30, 2007, 2006 and 2005, approximately 1% of our revenue was derived from sales outside the United States, primarily from sales in Switzerland, Germany, Spain, and Brazil.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Our sales are not substantially subject to seasonality, except that sales during the quarter ending December 31, are normally lower than other quarters due to a decrease in
patient visits to eye care professionals during the Christmas holiday season.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | We rely on one supplier, Benz Research Corporation, for the raw materials used in the production of soft contact lenses. The raw materials are readily available in our industry and
alternate vendors have been identified as potential suppliers with competitive pricing and quality. Over the past three fiscal years, we have not experienced any volatility in the price of raw materials.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 5. | We currently market and distribute our products to qualified practitioners through a combination of authorized independent distributors, authorized manufactures
representatives, and in house sales representatives.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 6. | We are materially dependent on our software and lens design technology. Our technology allows us to license and manufacture high quality reproducible lenses. We have been granted
the following patent for our key technology: U.S. Patent No. 5,754,270 is for a unique aspheric design that may be configured in a soft multifocal, toric, rigid gas permeable lens, or intraocular lens. We have been granted the following U.S.
trademarks for our products: (i) the Unilens mark covers soft and rigid multifocals, (ii) SimulVue is a simultaneous vision bifocal contact lens, (iii) SoftSite is a highadd multifocal contact lens, (iv) UniVision is a aspheric
low vision lens, (v) Sof-Form and Lombart brands are a series of spherical, toric, and extended wear lenses, (iv) C-Vue covers multifocal and toric multifocal lenses utilizing our patented technology and (v) SoftCon and Aquaflex are
replacement extended wear and daily wear lenses.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 7. | We regularly compete with a number of other companies in the contact lens industry that have substantially greater financial resources than we do. Our ability to compete is based
upon marketing quality products to eye care professionals utilizing our patented technology.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 8. | Contact lenses are regulated as medical devices in the U.S., the EU and other countries. In the U.S., all devices must receive pre-market approval by the FDA. There are two review
procedures to gain this pre-market approval: a PMA and a Section 510(k) submission. Under a PMA, the manufacturer must submit to the FDA supporting evidence sufficient to prove the safety and effectiveness of the device. The FDA has 180 days to
review a PMA. Certain products, however, may qualify for a submission authorized by Section 510(k). Under this procedure, the manufacturer gives the FDA a pre-market notification that it intends to commence marketing the product, and that it
has established that the product is substantially equivalent to another product already on the market. The FDA has 90 days to review a Section 510(k) submission. In the EU, the CE mark is required for all medical devices sold. We
hold a CE mark for the classes of contact lenses that we sell. The CE mark allows us to market products upon signing a declaration of conformity with the EUs Medical Device Directive requirements, which we do for each product sold. In
addition, medical device sales in the EU require auditing by a Notified Body to ensure that the manufacturers quality systems are in compliance with the requirements of the ISO 9000 standards. We have a Notified Body which routinely audits our
quality systems. See Item 3(D.) Risk Factors  Our manufacturing facility located in the U.S. and our products sold in the U.S. are subject to stringent regulation by the Food and Drug Administration and Item
3(D.) Risk Factors  Our products are subject to stringent regulation by various foreign jurisdictions in which our products are sold.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|C. | Organizational Structure
|-- | ------------------------

We are incorporated in British Columbia,
Canada. Currently, all of our operations are carried out through a wholly owned subsidiary, Unilens Corp. USA, a Delaware corporation, located in Largo, Florida. Our only other subsidiary, Unilens Contact Lens Laboratory, Inc., a Florida
corporation, does not currently hold any of our assets and we do not currently conduct any of our operations through this subsidiary.



|D. | Property, Plants and Equipment
|-- | ------------------------------

We lease a 27,000 square foot
manufacturing facility in Largo, Florida, pursuant to a Lease Agreement providing for a lease term through September 30, 2008, and current monthly rental payments of $19,176. We also lease a sales office in Clearwater, Florida, pursuant to a
Lease Agreement providing for a lease term through May 31, 2009, and monthly rental payments of $2,497 with an escalation of rental payments based on increases in the landlords operating expenses, utility costs and real estate taxes. Our
executive, administrative, and head office is located in Vancouver, British Columbia. We have no written lease agreement with respect to the use of our Vancouver office, nor did we pay any fees during the fiscal year ended June 30, 2007 for the
use of that office.

We have approximately $4.9 million dollars at cost of specialized manufacturing equipment located in our Largo, Florida manufacturing
facility with a net book value of approximately $250,000 as of June 30, 2007.



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|ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|------- | --------------------------------------------



|A. | Operating Results
|-- | -----------------

Fiscal 2007 Compared to Fiscal 2006

During the 2007 Fiscal Year (the Current Year) we earned income before tax of $2,179,742 compared to income before tax of $2,018,040 for
the 2006 Fiscal Year (the Prior Year). The increase in income before tax during the Current Year of $161,702 as compared to the Prior Year, was primarily due to (i) an increase in expenses of $214,459 as described below, offset by
(ii) an increase in gross margin of $175,885, (iii) an increase in royalty income under our license agreement with Bausch & Lomb of $257,486 to $2,190,428 in the Current Year as compared to $1,932,942 in the Prior Year, and
(iv) a decrease in other items including interest income and other income of $57,210. After recording income tax expense of $869,781, we had net income of $1,309,961 or $0.29 per diluted share for the Current Year. In comparison, in the Prior
Year we had net income of $1,596,830 or $0.35 per diluted share after recording income tax expense of $421,210.

Sales during the Current Year were
$6,370,930, an increase of $260,890 (4.3%), as compared to sales of $6,110,040 during the Prior Year. The disposable lens category increased by 11.7% due to continued sales growth of our best selling lens, the C-Vue disposable multifocal. Our
conventional soft lens category decreased 0.1% due to a decrease in some of our older product lines that are nearing the end of their life cycles offset by an increase in sales of our C-Vue toric multifocal product line despite a price cut in early
November 2006 of over 25%. Our gas permeable lens category decreased, by 6.0%, due to a continued overall decline in gas permeable fits in the contact lens industry. The replacement lens category decreased by 2.9% due to the expected decline in
product lines that are nearing the end of their life cycles. Gross margin increased to 45.2% in the Current Year compared to 44.3% in the Prior Year due to efficiencies gained in our manufacturing operations and to a shift in product mix towards
higher margin products offset by lower prices on our our C-Vue toric multifocal product line.

The increase in expenses during the Current Year, as
compared to the Prior Year, was primarily due to increases in administration expenses and sales and marketing expenses. Administration expenses increased $128,636 due to higher insurance premiums, depreciation and other expenses associated with the
general increase in the Companys business during the Current Year. Sales and marketing expenses increased $129,129 primarily due to salaries associated with additional sales positions and during the Second Quarter, expenses associated with an
industry educational sponsorship.

During the Current Year we recorded income tax expense of $869,781 compared to income tax expense in the Prior Year of
$421,210. We record income tax at the statutory rates, but currently pay no income tax due to the utilization of tax loss carry-forwards. The increase in income tax expense is the result of higher income before tax in the Current Year compared to
the Prior Year and the recognition of income tax loss carry-forwards offset by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income earned during the Prior Year.

Fiscal 2006 Compared to Fiscal 2005

During the 2006 Fiscal Year (the
2006 Year) we earned income before tax of $2,018,040 compared to income before tax of $1,710,687 for the 2005 Fiscal Year (the 2005 Year). The increase in income before tax during the 2006 Year of $307,353, as compared to the
2005 Year, was primarily due to (i) an increase in royalty income, derived from the license agreement with Bausch & Lomb of $300,891 to $1,932,942 during the 2006 Year as compared to $1,632,051 of royalty income earned during the 2005
Year, (ii) an increase in gross margin of $691,884 on higher sales during the 2006 Year, offset by (iii) an increase in expenses of $730,105 as described below, and (iv) a decrease in interest and other expenses together with an
increase in interest income, for a net increase in income of $44,683. After recording income tax expense of $421,210, we had net income of $1,596,830 or $0.35 per diluted share for the 2006 Year. In comparison, in the 2005 Year we had net income of
$2,237,787 or $0.50 per diluted share after recording a net deferred income tax benefit of $527,100.

Sales during the 2006 Year were $6,110,040, an
increase of $1,138,463 (22.9%), as compared to sales of $4,971,577 during the 2005 Year. The disposable lens category increased by 25.1% due to continued sales growth of our best selling lens, the C-Vue disposable multifocal. Our conventional soft
lens category increased by 23.1% due to sales of our C-Vue Toric multifocal which was launched in January 2005. Our gas permeable category as expected decreased, by 5.0%, due to a continued overall decline in gas permeable fits in the contact lens
industry. The replacement lens category increased by 37.9% due to the acquisition of the SoftCon and Aquaflex brands from CIBA Vision at the end of February 2005, which accounted for approximately 11% of our sales during the 2006 Year. Gross margin
increased from 40.5% in the 2005 Year to 44.3% in the 2006 Year due to a shift in product mix towards higher margin products and price increases.



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The increase in expenses during the 2006 Year, as compared to the 2005 Year, was primarily due to increases in sales and
marketing expenses of $374,026 and administration expenses of $264,895. Sales and marketing expenses increased primarily due to increased sales commissions on higher sales, salaries associated with additional sales positions, and costs associated
with an escalation in our marketing campaigns to support existing and new product launches. Administration expenses increased primarily due to increased consulting, legal, and professional fees associated with general regulatory compliance issues
and strategic analysis, increased insurance expense, and additional wages for personnel associated with the general increase in the Companys activities during the year.

During the 2006 Year we recorded income tax expense of $421,210 compared to an income tax benefit in the 2005 Year of $527,100. The income tax benefit is the result of the recognition of income tax loss
carry-forwards, offset by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income earned during the year.

During the 2004 Fiscal Year, a one-time extraordinary gain of $1,952,563 (net of associated expenses and income tax amortizations) was recorded as a result of a settlement agreement signed with Competitive
Technologies Inc. There were no extraordinary items recorded for the 2006 and 2005 Fiscal Years.

Fiscal 2005 Compared to Fiscal 2004

During the 2005 Year we earned net income before tax and extraordinary item of $1,710,687 compared to a net income before tax and extraordinary item of $863,121 for the
2004 Fiscal Year (the 2004 Year). The increase in income before tax and extraordinary item during the 2005 Year of $847,566, as compared to the 2004 Year, was primarily due to (i) an increase in royalty income, derived from the
license agreement with Bausch & Lomb, of $694,657 to $1,632,051 during the 2005 Year as compared to $937,394 of royalty income earned during the 2004 Year, (ii) an increase in gross margin of $353,755 on higher sales during the 2005
Year, and (iii) a decrease in interest and other expense of $18,942, all of which were partially offset by an increase in expenses of $219,788 described below. After recording a net deferred income tax benefit of $527,100, we had net income of
$2,237,787 or $0.50 per diluted share for the 2005 Fiscal Year. In comparison, in the 2004 Year we had net income of $6,076,734 or $1.48 per diluted share after recording a net deferred income tax benefit of $3,261,050 and a one-time extraordinary
gain from the extinguishment of debt of $1,952,563.

Sales during the 2005 Year were $4,971,577, an increase of $897,000 (22.0%), as compared to sales of
$4,074,577 during the 2004 Year. The increase in sales was primarily due to continued growth in the Companys C-Vue disposable multifocal and the C-Vue toric multifocal contact lenses which was partially offset by an expected decline in certain
of the Companys soft lathe-cut product lines that are nearing the end of their life cycle. In addition, we acquired the SoftCon and Aquaflex brands from CIBA Vision at the end of February that account for approximately 6% of sales during the
2005 Year. Gross margin decreased slightly from 40.7% in the 2004 Year to 40.5% in the 2005 Year due to a shift in product mix.

The increase in expenses
during the 2005 Year, as compared to the 2004 Year, was primarily due to increases in sales and marketing expenses of $226,517 which was partially offset by a decrease in administration expenses of $26,291. Sales and marketing expenses increased
primarily due to increased promotional and advertising activity associated with the launch of the C-Vue Toric Multifocal lens in January 2005 along with marketing efforts associated with the acquisition of the SoftCon EW and Aquaflex lenses acquired
from CIBA Vision at the end of February 2005. Administration expenses decreased primarily due to a reduction in amortization of intangibles and lower expense allocations, offset by increased consulting fees associated with general regulatory
compliance issues, increased insurance expense, and additional wages for personnel associated wit the general increase in the Companys activities during the period.

During the 2005 Year we recorded an income tax benefit of $527,100 compared to an income tax benefit in the 2004 Year of $3,261,050. The income tax benefit is the result from the recognition of income tax loss
carry-forwards offset by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income earned during the year.

During the 2004 Year, a one-time extraordinary gain of $1,952,563 (net of associated expenses and income tax amortizations) was recorded as a result of a settlement agreement signed with Competitive Technologies Inc.
There were no extraordinary items recorded for the 2005 and 2003 Fiscal Years.

During the fiscal year ended June 30, 2005, we generated $1,262,375 in
cash from operations. We used cash of $122,470 during the 2005 Year for the purchase of capital additions. In addition, the Company used net cash of $1,235,289 for financing activities during the 2005 Year, primarily consisting of $1,238,139 used
for the early repayment and complete elimination of our term debt.



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|B. | Liquidity and Capital Resources
|-- | -------------------------------

Historical Overview

Through the end of our 1992 fiscal year, we experienced ongoing negative cash flows from operations. During this period, we used a combination of debt
and small equity private placements to fund ongoing operations. Due to this continuing negative operating cash flow, we determined that it was necessary to re-evaluate, on a comprehensive basis, our operations with the goal to develop and implement
a plan to bring us to an ongoing positive cash flow. Accordingly, in early December 1992, we effected a major financial restructuring. The reorganization included a reduction in our personnel from 92 to 53 employees or approximately 43%. Our sales
and marketing efforts were redefined and restructured. Integral to the restructuring was mid-term debt funding in the amount of $450,000 from UNIINVEST Holding AG (Uniinvest, formerly EBC Zürich AG) (See Item 7.  Major
Shareholders and Related Party Transactions), and the renegotiation of long-term debt with our primary creditor, Competitive Technologies, Inc. (CTI, formerly University Patents, Inc.). On September 30, 1993, we completed the
first step of a two step partial settlement with CTI by issuing 275,000 of our common shares at a price of $1.25 per share. The issuance of the stock increased our equity by $343,750. Step two of the partial settlement was completed when $75,000 was
paid to CTI on January 31, 1994. The plan successfully achieved positive operating cash flow for the fiscal years ended June 30, 1997, 1996 and 1995.

However, during the fiscal year 1998 and the first of half of fiscal year 1999, we experienced negative cash flow on decreased sales primarily due to significant price competition in the multifocal marketplace, as well as the entrance of a
molded disposable multifocal lens into the market. Accordingly, during the 1998 and 1999 fiscal years we initiated a sales and marketing restructuring as well as implemented other cost containment initiatives with the goal of generating ongoing
positive cash flows. The restructuring plan of 1998 and 1999 yielded a positive cash flow from operating activities during the fiscal years ending June 30, 2000, 2001 and 2002. During the fiscal year ended June 30, 2003, we incurred
negative cash flow from operations principally due to the funds invested in inventories and receivables in connection with the launching of the C-Vue multifocal product as further described below.

In October 2003, we entered into a settlement agreement with CTI. Under the terms of the agreement, all of our prior obligations to CTI were discharged in exchange for a
$1,250,000 non-interest bearing installment note, secured by our assets. We paid CTI $100,000 on the execution of this agreement and on December 31, 2003 began quarterly payments equal to the greater of $100,000 or an amount equal to 50% of the
royalties received by us from Bausch & Lomb during the quarter ending on the payment due date. We paid this note in full during the year ended June 30, 2005.

Also, in October 2003, we exchanged our $450,000 secured term note payable to Uniinvest, which was due in full for a new secured term note. The new note was in the same principal amount, but payable in quarterly
principal payments in the amount of $25,000 per quarter beginning January 2004 and maturing April 2008, with monthly interest at the rate of prime plus 3%. We repaid this note in full during the year ended June 30, 2005.

On April 28, 2005, we obtained a line of credit of $1,000,000 from a commercial lender with an interest rate of LIBOR plus 2.5 percent and maturing in April 2006.
In April 2006, the line of credit was amended and increased to $1,500,000, with the same interest rate terms and maturing in April 2007. In May 2007, the line of credit was renewed through April 2008. The line is collateralized by a security
interest in all of the assets of our subsidiary Unilens Corp. USA. As of June 30, 2007, the Company does not have any amounts outstanding under this line of credit. Under the related loan agreement, the Company is required to meet specified
financial covenants, with which we were in full compliance at June 30, 2007.

Fiscal 2007 Compared with Fiscal 2006

As of June 30, 2007, the Company had working capital of $4,949,732 representing an increase of $201,955 from our working capital at June 30, 2006. The increase
in working capital was principally due to a decrease in cash from the payment of cash dividends totaling $2,134,552, and a decrease in inventory offset by a decrease in accounts payable. During the Current Year, we generated $2,063,765 in cash from
operations representing a increase of $39,859 from $2,023,906 generated during the Prior Year. We used cash of $184,620 during the Current Year for the purchase of



13



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capital additions, a decrease of $152,728 from the Prior Year. The Company also received cash of $45,121 from capital stock issued from the exercise of stock
options and used cash of $23,939 to repurchase 5,600 shares of common stock during the Current Year. We estimate that we will have sufficient resources to fund our working capital requirements during the year ended June 30, 2008.

Fiscal 2006 Compared with Fiscal 2005

As of June 30, 2006 we
had positive working capital of $4.7 million, which represents an increase of $2.2 million compared to Fiscal Year 2005. The increase in working capital was principally due to an increase in cash (primarily from royalty income) and a decrease in
accrued liabilities. At the end of the 2006 Fiscal Year we had stockholders equity of $8.0 million representing an increase of $1.7 million. The increase in stockholders equity was primarily from operating profits and royalty income
during the 2006 Fiscal Year. During the 2006 Fiscal Year, we generated $2,023,906 in cash from operations representing an increase of $761,531 from $1,262,375 million generated during the 2005 Fiscal Year. We used cash of $337,348 during the 2006
Fiscal Year for the purchase of capital additions, an increase of $214,878 million from the 2005 Fiscal Year. The Company also received cash of $140,678 from capital stock issued from the exercise of stock options during the 2006 Fiscal Year.

Fiscal 2005 Compared with Fiscal 2004

As of
June 30, 2005 we had positive working capital of $2.5 million, which represents an increase of $1.1 million compared to Fiscal Year 2004. The increase in working capital was principally due to a reduction in debt from the early repayment and
complete elimination of our term debt, an increase in receivables on higher sales and royalties, and the increase in the deferred tax asset. At the end of the 2005 Fiscal Year, we had positive stockholders equity of $6.2 million representing
an increase of $2.2 million. The increase in stockholders equity was primarily from operating profits, royalty income and the recognition of deferred tax assets during the 2005 Fiscal Year. Positive cash flow from operating activities totalled
$1,262,375 for the 2005 Fiscal Year, which was primarily used for the repayment of long-term debt of $1,238,139, and for the purchase of capital assets in the amount of $122,470.



|C. | Research Expenditures
|-- | ---------------------

We have ongoing research and development
relating to different contact lens products, other applications of our technology and component materials. We have been granted the following patent for our key technology: U.S. Patent No. 5,754,270 is for a unique aspheric design that may be
configured in a soft multifocal, toric, rigid gas permeable lens, or intraocular lens. Future new product development may involve additional costs including the cost of obtaining FDA approval. Obtaining FDA approval, if required, may take a
significant amount of time. Also, there can be no assurance that such approval can be obtained or that we can successfully develop new products.

Research
and development spending for fiscal years ending June 30, 2007, 2006, and 2005 was $119,558, $162,864 and $71,680, respectively.



|D. | Trend Information
|-- | -----------------

The soft multifocal contact lens business has
been affected over the past several years by the introduction of molding manufacturing technology, allowing for the mass production of most lens types at a fraction of the cost to lathe lenses, the manufacturing method used by us. The entrance of
these molded lenses has created significant price competition in the marketplace. The reduced cost of the molded lens allows for liberal trial lenses to be provided to eye care professionals for a more productive fitting session and immediate
dispensing of lenses. Furthermore, lower manufacturing costs led to the introduction of frequent replacement and disposable lenses, a modality preferred by many consumers. Recognizing this trend, we signed an agreement with a third party in 2002 for
the supply of molded soft contact lenses (C-Vue) utilizing our patented design. See Item 10(C.) - Material Contracts. The C-Vue brand was launched in September 2002, and accounts for a significant portion of our business (approximately
49% of sales during the 2007 fiscal year).



|E. | Off-Balance Sheet Arrangements
|-- | ------------------------------

None.



14



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##### Table of Contents

|F. | Tabular Disclosure of Contractual Obligations
|-- | ---------------------------------------------

The following table
contains a summary of our obligations and commitments to make future payments under contracts, including debt, lease and purchase agreements as of June 30, 2007. Amounts set forth below are expressed in U.S. dollars.



|                         |  |                        |         |               |   |         |  |        |        |               |   |   |  |   |  
|------------------------ |  | ---------------------- | ------- | ------------- | - | ------- |  | ------ | ------ | ------------- | - | - |  | - | -
|                         |  | Payments due by period
|Contractual Obligations: |  | Total                  |         | Less than1 yr |   | 1-3 yrs |  | 3-5yrs |        | Morethan5 yrs
|Long-Term Debt           |  | $                      | 0       |               | $ | 0       |  | $      | 0      |               | $ | 0 |  | $ | 0
|Capital Lease            |  |                        | 0       |               |   | 0       |  |        | 0      |               |   | 0 |  |   | 0
|Operating Lease          |  |                        | 371,381 |               |   | 278,348 |  |        | 93,033 |               |   | 0 |  |   | 0
|Purchase Obligations     |  |                        | 245,020 |               |   | 245,020 |  |        | 0      |               |   | 0 |  |   | 0
|Other                    |  |                        | 0       |               |   | 0       |  |        | 0      |               |   | 0 |  |   | 0
|                         |  |                        |         |               |   |         |  |        |        |               |   |   |  |   |  
|Total                    |  | $                      | 616,401 |               | $ | 523,368 |  | $      | 93,033 |               | $ | 0 |  | $ | 0



|G. | Safe Harbor
|-- | -----------

The safe harbor provided in Section 27A of the
Securities Act and Section 21E of the Exchange Act (statutory safe harbors) shall apply to forward-looking information provided pursuant to Item 5.E and F.



|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------



|A. | Directors and Senior Management
|-- | -------------------------------

Principal Occupation of Our
Current Directors and Management

ALFRED W. VITALE  Director and Chairman of the Board

Mr. Vitale served as our President and as director from December 22, 1994 until his planned retirement on July 31, 2007. Mr. Vitale will remain a
director and Chairman of the Board as well as a consultant and special advisor to the Company and the Board of Directors through December 31, 2007. Mr. Vitale also served as the President and Chief Executive Officer of Unilens Corp. USA
from January 1993 through July 31, 2007. Prior to January 1993, Mr. Vitale served as the President of Whistler Corporation, a management consulting firm. Mr. Vitale is 79 years old.

WILLIAM D. BAXTER  Director

Mr. Baxter has served as one
of our directors since December 22, 1994. From April 1, 2001 until November 30, 2005 Mr. Baxter served as President and Chief Executive Officer of Cascadia Brands, Inc. Prior to April 2001, Mr. Baxter served as the Vice
President of Finance of Cascadia Brands, Inc. Mr. Baxter is 53 years old.

NICHOLAS BENNETT  Director

Mr. Bennett has served as one of our directors since June 7, 2001. From 1995 to March of 2003, Mr. Bennett served as a Director and Vice President of
Operations for Cascadia Brands, Inc. After his retirement in March 2003, Mr. Bennett continued to consult to Cascadia Brands, Inc., until they underwent a change of ownership in September 2005. Mr. Bennett is 65 years old.

ELIZABETH J. HARRISON  Director

Ms. Elizabeth J.
Harrison, Q.C. is Senior Partner of the law firm Farris, Vaughan, Wills & Murphy. She was admitted to the British Columbia Bar in 1973 and was appointed Queens Counsel (Q.C.) in 1986. Ms. Harrison is Chair of the
British Columbia Ferry Authority, the British Columbia Ferry Services Corporation. She has served as one of our directors since February 27, 2006.



15



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WILLIAM S. HARPER, C.A.  Former Secretary

Mr. Harper served as our Secretary from August 26, 1993 until July 31, 2007. Currently, Mr. Harper is the Vice-President Finance and Corporate Secretary of Ondine Biopharma Corporation
(Ondine) (since July 2005). He is also a director of Bell Resources Corporation (since May 2007) and Grandcru Resources Corporation (since August 2007) Mr. Harper was formerly a director of Icon Industries Limited (from August 1998
to July 2007) and of Tri-Gold Resources Corp. (formerly Tri-Alpha Investments Ltd., from July 2001 to May 2007). Prior to joining Ondine, Mr. Harper was a Financial Manager and Accountant for several publicly traded companies; including Icon
Industries Limited (CFO and Secretary from June 1998 to September 2005); Tri-Gold Resources Corp. (CFO and Secretary from August 1998 to July 2005) and Ialta Industries Limited (President from April 1999 to February 2000; CFO and Secretary from
February 2000 to May 2004). He was also a director of Ialta Industries Limited (from January 1995 to March 2005) and the Chief Financial Officer of Fortune Oil and Gas Inc. (from June 2001 to February 2002). Mr. Harper is 59 years old.

MICHAEL J. PECORA  President, Chief Executive Officer

On August 1, 2007 Mr. Pecora was appointed our President and Chief Executive Officer. He has served as Vice President of Unilens Corp, USA since July 2005. Mr. Pecora had served as Chief Financial Officer of Unilens Vision
Inc. and our operating subsidiary, Unilens Corp. USA since August 3, 1994. Prior to 1994, Mr. Pecora was an Accounting Manager for Unisys Corporation. Mr. Pecora is 45 years old.

LEONARD F. BARKER  Vice President Chief Financial Officer and Secretary

On August 1, 2007, Mr. Barker was appointed our Vice President and Chief Financial Officer, Treasurer and Secretary. Prior to joining Unilens Corp, USA as Manager of Accounting in August 2005, Mr. Barker was Manager of
Financial Reporting for Eckerd Corporation and held various accounting positions over a 33-year career with the former Eckerd drug store chain. Mr. Barker holds a Bachelors of Science degree from University at Albany - State University of
New York. Mr. Barker is 59 years old.

KELLY MCKNIGHT-GOELZ  Vice President of Sales and Marketing

On July 7, 2005 Ms. McKnight-Goelz was appointed Vice President of Sales and Marketing of Unilens Corp, USA. Ms. McKnight-Goelz joined Unilens Corp, USA in
November 2004 as Executive Director of Marketing and Sales. Prior to joining Unilens Corp, USA, Ms. McKnight-Goelz was Vice President of Marketing and New Product Development for Renew Life Formulas, Inc (from June 2001 to October 2004). Prior
to June 2001, Ms. McKnight-Goelz served as Vice President for Impact Publishing and Director of Operations for Power-Pak Communications. Ms. McKnight is 39 years old.

There are no family relationships among our directors and senior management.

B. Compensation

The aggregate direct or indirect remuneration paid to our directors and officers as a group during the fiscal years ended June 30, 2007, June 30, 2006 and
June 30, 2005 was $426,492 $390,361 and $308,612, respectively. During the fiscal years ending June 30, 2007, 2006 and 2005, we issued 0, 0 and 20,000 options, respectively, to our officers and directors. Other than as described in the
following paragraph, there were no amounts accrued during the fiscal years ended June 30, 2007, 2006 and 2005 to provide pension, retirement or similar benefits for our directors and executive officers, pursuant to any existing plan provided or
contributed to by us.

On August 1, 2000 and as subsequently amended, we entered into a severance compensation agreement with our past President,
Alfred W. Vitale, pursuant to which, under certain circumstances we were obligated to pay Mr. Vitale or his estate 12 months compensation upon his retirement on December 31, 2006. On July 24, 2007, Mr. Vitale announced his
planned retirement effective as of July 31, 2007. Mr. Vitale remains a Director and Chairman of the Board as well as a consultant and special advisor to the Company and the Board of Directors through December 31, 2007. Under
Mr. Vitales consulting agreement with the Company, he will retain his current salary



16



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for his services as a consultant and special advisor as well as certain benefits payable upon a change-of-control. Mr. Vitales annual compensation
for fiscal year 2007 was $147,625.

Pursuant to a letter agreement, dated March 1, 1999, and as subsequently amended, we are obligated to pay our
President, Michael J. Pecora, nine months compensation should he resign or 24 months compensation if his employment otherwise is terminated or upon a change-of-control of Unilens. Mr. Pecora's annual compensation for fiscal year 2007 was
$99,042.

Pursuant to a letter agreement, dated September 6, 2006, we are obligated to pay our Vice President of Sales and Marketing, Kelly
McKnight-Goelz, 12 months compensation if her employment otherwise is terminated or upon a change-of-control of Unilens. Ms. McKnight-Goelzs annual compensation for fiscal year 2007 was $91,250.

The compensation paid to our directors and officers during our three most recently completed financial years is as set out below:

SUMMARY COMPENSATION TABLE



|                                                                |      |      |           |                     |          |                                        |                             |                                             |                          |                |     |         |     |     |     |     |    
|--------------------------------------------------------------- | ---- | ---- | --------- | ------------------- | -------- | -------------------------------------- | --------------------------- | ------------------------------------------- | ------------------------ | -------------- | --- | ------- | --- | --- | --- | --- | ---
|                                                                |      | Year |           | Annual Compensation |          |                                        | Long Term Compensation      |                                             | All OtherCompensation($)
|                                                                |      |      | Salary($) |                     | Bonus($) |                                        | Other AnnualCompensation($) |                                             |                          | Awards         |     | Payouts |    
|Name and Principal Position                                     |      |      |           |                     |          | SecuritiesUnderOptions/SARs Granted(#) |                             | RestrictedShares orRestrictedShareUnits ($) |                          | LTIPPayouts($) |    
|Alfred W. Vitale, President (1)                                 |      | 2007 |           | 147,625             |          | 46,500                                 |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                | 2006 |      | 130,095   |                     | 50,500   |                                        | Nil                         |                                             |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                | 2005 |      | 91,500    |                     | 61,225   |                                        | Nil                         |                                             |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                |      |      |           |                     |          |                                        |                             |                                            
|Michael J. Pecora, Vice President & Chief Financial Officer (2) |      | 2007 |           | 99,042              |          | 26,125                                 |                             | 5,007                                       | (4)                      |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                | 2006 |      | 83,583    |                     | 29,200   |                                        | 4,511                       | (4)                                         |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                | 2005 |      | 74,000    |                     | 33,728   |                                        | 3,227                       | (4)                                         |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                |      |      |           |                     |          |                                        |                             |                                            
|Kelly McKnight-Goelz, Vice President Sales & Marketing (3)      |      | 2007 |           | 91,250              |          | 15,950                                 |                             | 6,214                                       | (5)                      |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                | 2006 |      | 79,583    |                     | 17,400   |                                        | 2,638                       | (5)                                         |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                | 2005 |      | 38,610    |                     | 4,280    |                                        | Nil                         |                                             |                          | 20,000         |     | Nil     |     | Nil |     | Nil
|                                                                |      |      |           |                     |          |                                        |                             |                                            
|William S. Harper, Secretary                                    |      | 2007 |           | Nil                 |          | Nil                                    |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                | 2006 |      | Nil       |                     | Nil      |                                        | Nil                         |                                             |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                | 2005 |      | 5,269     |                     | Nil      |                                        | Nil                         |                                             |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                |      |      |           |                     |          |                                        |                             |                                            
|William D. Baxter, Director                                     |      | 2007 |           | 2,821               |          | Nil                                    |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                |      | 2006 |           | Nil                 |          | Nil                                    |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                |      | 2005 |           | Nil                 |          | Nil                                    |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                |      |      |           |                     |          |                                        |                             |                                            
|Nicholas Bennett, Director                                      |      | 2007 |           | Nil                 |          | Nil                                    |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                | 2006 |      | Nil       |                     | Nil      |                                        | Nil                         |                                             |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                | 2005 |      | Nil       |                     | Nil      |                                        | Nil                         |                                             |                          | Nil            |     | Nil     |     | Nil |     | Nil
|                                                                |      |      |           |                     |          |                                        |                             |                                            
|Elizabeth J. Harrison, Director                                 |      | 2007 |           | Nil                 |          | Nil                                    |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil
|                                                                |      | 2006 |           | Nil                 |          | Nil                                    |                             | Nil                                         |                          |                | Nil |         | Nil |     | Nil |     | Nil



|(1) | Mr. Vitales salary, was paid (prior to his retirement at the end of July 2007) with respect to his position as the President of our subsidiary, Unilens Corp. USA, which
he joined in January 1993. Mr. Vitale received no compensation during the 2007, 2006, and 2005 years in respect of his position as our President.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Positions are with Unilens Corp. USA. Mr. Pecora was also Chief Financial officer of Unilens Vision Inc.
|--- | --------------------------------------------------------------------------------------------------------



|(3) | Position is with Unilens Corp. USA.
|--- | -----------------------------------



|(4) | These amounts represent contributions under the Companys 401(k) profit-sharing plan.
|--- | -------------------------------------------------------------------------------------



|(5) | These amounts represent $4,394 of contributions under the Companys 401(k) profit-sharing plan and $1,820 for a medical allowance.
|--- | ----------------------------------------------------------------------------------------------------------------------------------



17



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|C. | Board Practices
|-- | ---------------

All of our directors were re-elected at our
February 19, 2007 annual general meeting and have a term of office expiring at the next annual general meeting of our directors scheduled to be held on March 17, 2008. All of our officers have a term of office lasting until the next annual
general meeting of shareholders or their earlier removal or replacement by the board of directors. The number of directors is currently fixed at four.

During the fiscal year ended June 30, 2007, no options were granted to our directors. Messrs. Vitale, Baxter, and Bennett are members of our audit committee. The audit committee is elected annually by our directors at the first meeting
of our board of directors held after our annual general meeting. The audit committee's primary function is to review our financial statements before they are submitted to our board of directors for approval. The audit committee is also available to
assist the board of directors, if required, with matters relating to the appointment of our independent auditor and the overall scope and results of the audit, internal financial controls, and financial information for publication for various
purposes. We do not have a remuneration or nomination committee.



|D. | Employees
|-- | ---------

The total number of our employees, all of whom are
located in our Largo, Florida, facility, for the fiscal years ending June 30, 2007, 2006, and 2005 was 48, 49 and 38, respectively.



|E. | Share Ownership
|-- | ---------------

The following table shows the amount of our common
shares beneficially owned (unless otherwise indicated) as of December 11, 2007 by (1) any person who is known by us to be the beneficial owner of more than 5% of our outstanding common shares, (2) our directors, (3) our executive
officers, and (4) all of our directors and executive officers as a group.



|                                                                                                    |  |                                  |  |         |  
|--------------------------------------------------------------------------------------------------- |  | -------------------------------- |  | ------- | -
|                                                                                                    |  | Common Shares Beneficially Owned | 
|                                                                                                    |  | Number (1)                       |  | Percent |  
|Directors and Other Named Executive Officers                                                        |  |                                  |  |         |  
|Alfred W. Vitale                                                                                    |  | 119,200                          |  | 2.6     | %
|William D. Baxter                                                                                   |  | 68,300                           |  | 1.5     | %
|Nicholas Bennett                                                                                    |  | 24,900                           |  | *       |  
|William S. Harper                                                                                   |  | 47,600                           |  | 1.0     | %
|Elizabeth J. Harrison                                                                               |  | 0                                |  | N/A     |  
|Michael J. Pecora                                                                                   |  | 72,500                           |  | 1.6     | %
|Kelly McKnight-Goelz                                                                                |  | 20,000                           |  | *       |  
|Leonard F. Barker                                                                                   |  | 2,000                            |  | *       |  
|All directors and executive officers as a group (8 persons)                                         |  | 354,500                          |  | 7.8     | %
|Shareholders                                                                                        |  |                                  |  |         |  
|UNIINVEST HOLDING AG IN LIQUIDATION Rechtsanwalte Seefeldstrasse 116 8034 Switzerland               |  | 2,188,861                        |  | 48.1    | %
|Cede & Co. (2) P.O. Box 20 Bowling Green Station New York, New York 10274 USA                       |  | 1,304,904                        |  | 28.7    | %
|CDS & Co. (2) NCI Account 25, The Esplanade P.O. Box 1038 Station A Toronto, Ontario M5W 1G5 Canada |  | 469,117                          |  | 10.3    | %
|Boston Partners Asset Management, LLC (3) 28 State Street, 21stFloor Boston, MA 02109 USA           |  | 332,330                          |  | 7.3     | %

---

|* | Less than 1% of the outstanding common stock
|- | --------------------------------------------



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##### Table of Contents

|(1) | Includes the number of shares subject to currently exercisable options or options exercisable within 60 days of December 7, 2007, as follows: Mr. Vitale,
Mr. Baxter, Mr. Bennett, Mr. Harper, and Ms. Harrison 0 shares; Mr. Pecora and Mr. Barker, 0 shares; Ms. McKnight, 17,500 shares; and all directors and officers as a group, 17,500 shares.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The above information was obtained from our registered shareholders list dated as of December 11, 2007. We have no information as to the beneficial ownership of the
shares held by these parties in street name.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | The above information is as set forth in the Form SC 13G filed February 14, 2007 with the Securities and Exchange Commission.
|--- | -----------------------------------------------------------------------------------------------------------------------------

At our 2003 annual general meeting the shareholders approved and ratified an incentive stock option plan authorizing the issuance of common share purchase options of up
to 10% of our issued and outstanding common shares to directors, employees, and consultants. The number of shares under option from time to time and the exercise prices of such options, and any amendments thereto, will be and have been determined by
the directors in accordance with the policies of the TSX Venture Exchange.

At the annual general meeting of shareholders held on February 27, 2006,
the shareholders voted against the proposal to approve the Unilens Incentive Stock Option Plan-2006, and therefore failed to extend the stock option plan, which has been terminated.



|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------



|A. | Major Shareholders
|-- | ------------------

Our common shares are recorded on the books of
our transfer agent Computershare Trust Company of Canada in registered form, however, the majority of such shares are registered in the name of intermediaries such as brokerage houses and clearing houses on behalf of their respective brokerage
clients, and we do not have knowledge or access to current information about the beneficial owners of the shares held by parties other than our officers and directors and those parties who have furnished statements of beneficial ownership on
schedules 13D or 13G. See Item 6E  Share Ownership for more information regarding our major shareholders. As of December 11, 2007, we had authorized 100,000,000 common shares of which 4,550,715 were issued and outstanding. As
of December 11, 2007, to the best of our knowledge Uniinvest beneficially owned 2,188,861 of our common shares, which represents about 48.1% of such class of stock, and accordingly, control of our Company. We are aware of no significant change
in Uniinvests ownership during the past three years. In addition, as of December 11, 2007, we had authorized capital of 100,000,000 Preference A shares at a par value of Cdn.$10 each and 100,000,000 Preference B
shares at a par value of Cdn.$50 each, of which no shares are issued and outstanding.

Major Shareholders do not have different voting rights.

Under the Securities Act(British Columbia) (the SABC) insiders (generally officers, directors and holders of 10% or more of our
shares) are required to file insider reports of changes in their ownership in the first 10 days of the month following a trade in our securities. Copies of such reports are available for public inspection at the offices of the British Columbia
Securities Commission, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2 (phone (604) 899-6500) or at the British Columbia Securities Commission web site (www.bcsc.bc.ca).

As of December 11, 2007, there were 422 shareholders of record holding a total of 4,550,715 of our common shares. To the best of our knowledge there were 23
shareholders of record with addresses in Canada, 390 shareholders of record with addresses in the U.S. and 9 shareholders of record with addresses in other countries holding approximately 812,771 (17.9%), 1,770,713 (38.9%) and 1,967,231
(43.2%) of the outstanding common shares, respectively. Shares registered in the names of intermediaries were assumed to be held by residents of the same country in which the intermediary was located.



19



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##### Table of Contents

|B. | Related Party Transactions
|-- | --------------------------

No director or senior officer, and no
associate or affiliate of the foregoing persons, no insider and no family member of such persons has or has had any material interest, direct or indirect, in any other transactions, or in any other proposed transaction, which in either such case has
materially affected or will materially affect us or our predecessors during the three-year period ended June 30, 2007 except as follows:

In January
1993, Uniinvest loaned us $450,000. In October 2003, we exchanged the related $450,000 secured term note for a new secured term note. The new note was in the same principal amount, but payable in quarterly principal payments in the amount of $25,000
per quarter beginning January 2004 and maturing April 2008, with interest payable monthly at the rate of prime plus 3%. During the year ended June 30, 2005 we paid or accrued interest of $20,252 (2004$48,483; 2003$44,084) on the
$450,000 term note. All other terms and conditions of the original contract remained unchanged. We paid our indebtedness to Uniinvest in full during the year ended June 30, 2005.

During the year ended June 30, 2007 we paid $2,821 in consulting fees to one of directors, and during the year ended June 30, 2005 we paid or accrued $5,269 in accounting fees to one of our officers, both of
which are included in administrative expense in the respective years.



|C. | Interests of Experts and Counsel
|-- | --------------------------------

Not applicable.



|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------



|A. | Consolidated Statements and Other Financial Information
|-- | -------------------------------------------------------

See
Item 17 Financial Statements with regard to items 1 and 2 of this subsection A.

Legal Proceedings

Other than ordinary routine litigation incidental to our business, there are no material pending legal proceedings to which we are a party or to which any of our
properties is subject.

Dividend Policy

The Company
paid a special cash dividend of $0.25 to holders of our common shares in August 2006. In November 2006, the Company paid its initial quarterly cash dividend of $0.075 to holders of our common shares. For the fiscal year ended June 30, 2007, in
addition to the special cash dividend, the Company paid quarterly cash dividends totalling $0.225 per common share. These were the first dividends paid by us. In August 2007, the Company paid a second special cash dividend of $0.30 per common share
and its fourth regular quarterly dividend at an increased rate of $.09 per common share. So far for the fiscal year ending June 30, 2008, in addition to the second special cash dividend, the Company has paid quarterly cash dividends totalling
$0.18 per common share. The amount and frequency of future dividends will depend on earnings, cash flow, and all other aspects of our business as determined and declared by the Board of Directors.



|B. | Significant Changes
|-- | -------------------

As of December 11, 2007, there have been
no significant changes to our business since our financial statements dated June 30, 2007.



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|ITEM 9. | THE OFFER AND LISTING
|------- | ---------------------



|A. | Offer and Listing Details
|-- | -------------------------

Trading Markets

CANADIAN MARKETS

TSX Venture
Exchange:

UVI  Trading in Canadian Dollars



|                     |  |         |  |         |  |                  |  |         |  |        
|-------------------- |  | ------- |  | ------- |  | ---------------- |  | ------- |  | -------
|                     |  | High    |  | Low     |  |                  |  | High    |  | Low    
|                     |  | (CDN $) |  | (CDN $) |  |                  |  | (CDN $) |  | (CDN $)
|Annual  Fiscal Year |  |         |  |         |  | By Quarter       |  |         |  |        
|2007                 |  | 5.05    |  | 2.58    |  | Fiscal Year 2006 |  |         |  |        
|2006                 |  | 5.50    |  | 3.53    |  | First Quarter    |  | 4.33    |  | 3.53   
|2005                 |  | 4.30    |  | 1.66    |  | Second Quarter   |  | 5.50    |  | 3.69   
|2004                 |  | 2.20    |  | 0.02    |  | Third Quarter    |  | 5.26    |  | 3.87   
|2003                 |  | 0.19    |  | 0.02    |  | Fourth Quarter   |  | 4.59    |  | 3.63   
|                     |  |         |  |         | 
|By Quarter           |  |         |  |         |  | Monthly          |  |         |  |        
|Fiscal Year 2007     |  |         |  |         |  | July 2007        |  | 3.44    |  | 2.92   
|First Quarter        |  | 4.12    |  | 2.58    |  | August 2007      |  | 4.78    |  | 3.41   
|Second Quarter       |  | 4.51    |  | 3.52    |  | September 2007   |  | 3.85    |  | 3.58   
|Third Quarter        |  | 5.05    |  | 3.96    |  | October 2007     |  | 3.82    |  | 3.54   
|Fourth Quarter       |  | 4.56    |  | 3.06    |  | November 2007    |  | 3.82    |  | 3.35   
|                     |  |         |  |         |  | December 2007    |  | 3.81    |  | 3.45   

U.S. MARKETS

OTC Bulletin Board and Pink Sheets

UVICF/UVICF.PK  Trading in U.S. Dollars



|                     |  |         |  |         |  |                  |  |         |  |        
|-------------------- |  | ------- |  | ------- |  | ---------------- |  | ------- |  | -------
|                     |  | High    |  | Low     |  |                  |  | High    |  | Low    
|                     |  | ($U.S.) |  | ($U.S.) |  |                  |  | ($U.S.) |  | ($U.S.)
|Annual  Fiscal Year |  |         |  |         |  | By Quarter       |  |         |  |        
|2007                 |  | 4.72    |  | 2.62    |  | Fiscal Year 2006 |  |         |  |        
|2006                 |  | 4.99    |  | 3.05    |  | First Quarter    |  | 3.65    |  | 3.05   
|2005                 |  | 3.45    |  | 1.30    |  | Second Quarter   |  | 4.99    |  | 3.05   
|2004                 |  | 1.75    |  | 0.01    |  | Third Quarter    |  | 4.99    |  | 3.51   
|2003                 |  | 0.67    |  | 0.01    |  | Fourth Quarter   |  | 3.90    |  | 3.25   
|                     |  |         |  |         | 
|By Quarter           |  |         |  |         |  | Monthly          |  |         |  |        
|Fiscal Year 2007     |  |         |  |         |  | July 2007        |  | 3.50    |  | 3.02   
|First Quarter        |  | 4.08    |  | 2.62    |  | August 2007      |  | 4.55    |  | 3.81   
|Second Quarter       |  | 4.25    |  | 3.80    |  | September 2007   |  | 3.98    |  | 3.62   
|Third Quarter        |  | 4.72    |  | 3.80    |  | October 2007     |  | 4.05    |  | 3.56   
|Fourth Quarter       |  | 4.09    |  | 3.30    |  | November 2007    |  | 4.24    |  | 3.41   
|                     |  |         |  |         |  | December 2007    |  | 4.00    |  | 3.38   



|B. | Plan of Distribution
|-- | --------------------

Not applicable.



|C. | Markets
|-- | -------

Our shares have traded on the Vancouver Stock Exchange,
its successor, the Canadian Venture Exchange, and its successor the TSX Venture Exchange since March 31, 1992. In addition, there has been a U.S. market for the quotation of our common shares on the OTC Bulletin Board and the "pink sheets", a
centralized quotation service that collects and publishes market maker quotes for certain over the counter securities. Our common shares are subject to the Securities and Exchange Commission rules regarding "penny stocks" which require
broker-dealers who sell relevant securities (securities with a price less than U.S.$5.00) to persons who are not established customers or accredited investors must make specified suitability determinations and must receive the purchaser's written
consent to the transaction prior to the sale.



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|D. | Selling Shareholders
|-- | --------------------

Not applicable.



|E. | Dilution
|-- | --------

Not applicable.



|F. | Expenses of the Issue
|-- | ---------------------

Not applicable.



|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------



|A. | Share Capital
|-- | -------------

Not applicable.



|B. | Memorandum and Articles of Association
|-- | --------------------------------------

Our Articles of Association
and Memorandum (the "Articles") are registered with the British Columbia Registrar of Companies under Corporation No. 257974. A copy of the Articles were filed with our initial registration statement on Form 20-F filed on July 3, 1989.

Objects and Purposes

The Articles do not specify
objects or purposes. Under the BCBCA, a British Columbia corporation has all the legal powers of a natural person.

Directors  Powers and
Limitations

The Articles do not specify a maximum number of directors. The minimum number of directors for a public company under our Articles and
under the BCBCA is three. The Articles also specify that the number of directors shall be the number of directors fixed by shareholders annually or the number which are actually elected at a general shareholders meeting. The number of directors is
determined annually by our shareholders at the annual shareholders meeting and all directors are elected at that time. There are no staggered directorships. Under the Articles the directors are entitled between successive annual general meeting's to
appoint one or more additional directors but not more than one-third of the number of directors fixed at a shareholders meeting or actually elected at the preceding annual general meeting of shareholders. Directors automatically retire at the
commencement of each annual meeting subject to being re-elected.

Under the Articles, a director who is any way directly or indirectly interested in a
proposed contract or transaction with us or who holds any office or possesses any property whereby directly or indirectly a duty might be created which would conflict with his duty or interest as a director, shall declare the nature and extent of
such interest in such contract or transaction to the board of directors. A director shall not vote in respect of any such contract or transaction if he is interested in the transaction and if he should vote his vote shall not be counted but shall be
counted for the purpose of establishing the presence of a quorum at the meeting. Similarly, under the BCBCA directors are obligated to abstain from voting on matters in which they may be financially interested and additionally they must fully
disclose such interest to the full board of directors. Directors must abstain in such circumstances both under the Articles and under the BCBCA.

Under the
BCBCA, directors must be of the age of majority (18), and meet eligibility criteria including: (i) not being mentally infirmed, (ii) undischarged bankrupt and (iii) no fraud related convictions in the previous five years. There is no
mandatory retirement age either under the Articles or the BCBCA.

Directors borrowing powers are not restricted except as may be restricted pursuant
to the BCBCA. The directors may not authorize us to provide financial assistance where we are insolvent or when the providing of a guarantee would render us insolvent. Directors need not own any of our shares in order to qualify as a director.



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Changes to Rights of Common Shareholders

Changes to our Articles require a special resolution passed by not less than 75% of the shares voted in person or by proxy at a duly convened shareholders meeting. Some corporate changes including
amalgamation with another company, sale of substantially all of our assets, re-domiciling out of the jurisdiction of British Columbia, creation of new classes of shares, not only require such 75% approval, but generally also give rise to a dissent
right which is the right to be paid the fair value of the shareholders shares in cash if the required special resolution is actually passed and we elect to proceed with the matter notwithstanding receipt of dissent notices. A notice of a
shareholders meeting at which such an action is intended to be effected must include a prominent notice of the dissent right. The dissent right provisions are governed by the BCBCA and not by the Articles.

Shareholders Meetings

Shareholders meetings are only peripherally
governed by our Articles with most shareholder protections contained in the SABC and the BCBCA. The Articles provide that we will hold an annual general meeting, will provide at least 21 days notice and will provide for certain procedural
matters and rules of order with respect to conduct of such meeting. The SABC and the BCBCA superimpose requirements that generally provide that shareholders meetings require not less than a 60 day period from initial public notice and that we make a
thorough advanced search of intermediary and brokerage registered shareholdings to ascertain the location of beneficial shareholders so that materials can be sent to our shareholders. The form and content of information circulars and proxies and
like matters typically are governed by the SABC. SABC specifies the disclosure requirements for various corporate actions, background information on the nominees for election for director, executive compensation paid in the previous year and full
details of any unusual matters. We must hold an annual general meeting of shareholders at least once in every calendar year and within 15 months of the previous annual general meeting of shareholders and must present audited statements at such
meeting.

Redemption

We have no redeemable securities
authorized or issued.

Pre-emptive Rights

There are no
pre-emptive rights applicable to us, which provide a right to any person to participate in offerings of our securities

Liquidation

All of our common shares participate ratably in any available assets in the event of a winding up or other liquidation.

No Limitation on Foreign Ownership

There are no limitations under
the Articles or the BCBCA on the right of persons who are not citizens of Canada to hold or vote our common shares. (See also Exchange Controls  below.)

Dividends

Dividends may be declared by our board of directors out of available assets and are paid ratably to
holders of common shares. No dividend may be paid if we are, or would thereby become, insolvent. The Company paid a special cash dividend of $0.25 to holders of our common shares in August 2006. In November 2006, the Company paid its initial
quarterly cash dividend of $0.075 to holders of our common shares. For the fiscal year ended June 30, 2007, in addition to the special cash dividend, the Company paid quarterly cash dividends totalling $0.225 per common share. These were the
first dividends paid by us. In August 2007, the Company paid a second special cash dividend of $0.30 per common share and its fourth regular quarterly dividend at an increased rate of $.09 per common share. So far for the fiscal year ending
June 30, 2008, in addition to the second special cash dividend, the Company has paid quarterly cash dividends totalling $0.18 per common share. The amount and frequency of future dividends will depend on earnings, cash flow, and all other
aspects of our business as determined and declared by the Board of Directors.



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Voting Rights

Each
holder of our common shares is entitled to one vote for each common share on matters to which common shares ordinarily vote, including without limitation the election of directors, appointment of independent auditors, approval of corporate changes
and other matters requiring shareholder approval under the BCBCA.

Change in Control

We have not implemented any shareholders rights or other poison pill protection against possible take-overs. Other than as disclosed in this Form 20-F, we do not have any agreements, which are
triggered by a take-over or other change of control. There are no provisions in the Articles triggered by or affected by a change in outstanding shares which gives rise to a change in control.

Share Ownership Reporting

The Articles do not require disclosure of
share ownership. Share ownership of director nominees must be reported annually in proxy materials sent to our shareholders. There are no requirements under the BCBCA to report ownership of our common shares, however, the BCSA requires disclosure of
trading by insiders including holders of 10% of our voting shares within 10 days of the trade. Controlling shareholders (generally those in excess of 20% of our outstanding common shares) must provide seven days advance notice of share sales.



|C. | Material Contracts
|-- | ------------------

Our material contracts are summarized as
follows:



|(a) | On April 28, 2005, we obtained a $1,000,000 line of credit bearing interest at LIBOR plus 2.5 percent and maturing in April 2006. In April 2006, the line of credit was amended
and increased to $1,500,000, with the same interest rate terms of LIBOR plus 2.5 percent and maturing in April 2007. In May 2007, the line of credit was renewed, and matures in April 2008. The line is collateralized by all of the assets of our
subsidiary, Unilens Corp. USA. As of June 30, 2007, we did not have any amounts outstanding under this line of credit. Under the related loan agreement, the Company is required to meet specified financial covenants with which, at June 30,
2007, we were in compliance.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | On February 23, 2005, we entered into an asset purchase agreement to acquire our Aquaflex and SoftCon product lines. Under the terms of the agreement, we will pay $350,000 for
inventory, trademarks, regulatory approvals, and various other assets. The Company assigned the $350,000 cost to inventory, of which $150,000 was paid at closing, with the remaining $200,000 to be paid upon the sale of inventory. At June 30,
2007, the balance due was $36,067. As part of this agreement, the Company will also pay a royalty ranging from five percent to eight percent on all future sales of the acquired product lines over the next five years.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(c) | On February 17, 2004, we entered into an asset purchase agreement to acquire the toric bifocal business owned by the Lifestyle Company, Inc. Under the terms of the agreement,
in consideration for selected capital assets, regulatory approvals, and various other assets of the Lifestyle Company, we paid Lifestyle Company $75,000 in cash, and pay royalties ranging from 5% to 8% on all sales of acquired products over the next
1 to 4 years. We manufacture the product lines at our manufacturing facility located in Largo, Florida. The products acquired include a soft bifocal toric contact lens that is marketed worldwide under the LifeStyle MVt trade name, along with
certain other bifocal lens designs sold under the Xtra and 4vue trade names. The soft toric bifocal line addresses the market for patients with astigmatism that require bifocal correction.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|D. | Exchange Controls
|-- | -----------------

We are a corporation organized under the
provincial laws of British Columbia, Canada. There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder
of common shares, other than withholding tax requirements. Any such remittances to U.S. residents are generally subject to withholding tax. See Taxation below.

There is no limitation imposed by the laws of Canada or by our charter or other constituent documents on the right of a non-resident to hold or vote the common shares, other than as provided in the Investment
Canada Act (Canada)



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(the Investment Act). The following discussion summarizes the material features of the Investment Act for a non-resident who
proposes to acquire a controlling number of common shares. It is general only, it is not a substitute for independent advice from an investors own advisor, and it does not anticipate statutory or regulatory amendments. We do not believe the
Investment Act will have any affect on us or on our non-Canadian shareholders due to a number of factors including the nature of our operations and our relatively small capitalization.

The Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust
or joint venture (each an entity) that is not a Canadian as defined in the Investment Act (a non-Canadian), unless after review the Director of Investments appointed by the minister responsible for the
Investment Act is satisfied that the investment is likely to be of net benefit to Canada. The size and nature of a proposed transaction may give rise to an obligation to notify the Director to seek an advance ruling. An investment in our
common shares by a non-Canadian other than a WTO Investor (as that term is defined in the Investment Act and which term includes entities which are nationals of or are controlled by nationals of member states of the World Trade
Organization) when we were not controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of us and the value of our assets, as determined in accordance with the regulations
promulgated under the Investment Act, was $5 million or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada's cultural heritage or national identity, regardless of the value of our
assets. An investment in our common shares by a WTO Investor, or by a non-Canadian when we were controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of us and the value of our
assets, as determined in accordance with the regulations promulgated under the Investment Act, was not less than a specified amount, which for 2006 exceeds Cdn$237 million. A non-Canadian would acquire control of us for the purposes of the
Investment Act if the non-Canadian acquired a majority of our common shares. The acquisition of less than a majority but one-third or more of our common shares would be presumed to be an acquisition of our control unless it could be
established that, on the acquisition, we were not controlled in fact by the acquiror through the ownership of our common shares.

The foregoing assumes we
will not engage in the production of uranium or own an interest in a uranium producing property in Canada, or provide any financial service or transportation service, as the rules governing these businesses are different.

Certain transactions relating to our common shares would be exempt from the Investment Act, including

(a) an acquisition of our common shares by a person in the ordinary course of that persons business as a trader or dealer in securities,

(b) an acquisition of control of us in connection with the realization of security granted for a loan or other financial assistance and not for a
purpose related to the provisions of the Investment Act, and

(c) an acquisition of control of us by reason of an amalgamation,
merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through the ownership of our common shares, remained unchanged.



|E. | Taxation
|-- | --------

Certain Canadian Federal Income Tax Consequences

The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of shares of our
common stock for a shareholder of ours who is not a resident of Canada but is a resident of the U.S. and who will acquire and hold our common shares as capital property for the purposes of the Income Tax Act (Canada) (the Canadian Tax
Act). This summary does not apply to a shareholder who carries on business in Canada through a permanent establishment situated in Canada or performs independent personal services in Canada through a fixed base in Canada if the
shareholders holding in Unilens is effectively connected with such permanent establishment or fixed base. This summary is based on the provisions of the Canadian Tax Act and the regulations thereunder and on an understanding of the
administrative practices of Canada Customs & Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or regulations made by the Minister of Finance of Canada as of the date hereof. It has been assumed
that there will be no other relevant amendment of any governing law although no assurance can be given in this respect. This discussion is general only and is not, nor is it intended to provide a detailed analysis of the income tax implications of
any particular



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shareholders interest. Investors are advised to obtain independent advice from a shareholders own Canadian and U.S. tax advisors with respect to
income tax implications pertinent to their particular circumstances.

The provisions of the Canadian Tax Act are subject to income tax treaties to which
Canada is a party, including the Canada-United States Income Tax Convention (1980), as amended (the Convention).

Dividends on Common Shares
and Other Income

Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the rate of 25 percent on
dividends paid or deemed to have been paid to him or her by a corporation resident in Canada. We are responsible for withholding of tax at the source. The Convention limits the rate to 15 percent if the shareholder is a resident of the U.S. and the
dividends are beneficially owned by and paid to such shareholder, and to 5 percent if the shareholder is also a corporation that beneficially owns at least 10 percent of the voting stock of the payor corporation.

The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which the paid up or our stated capital had increased by reason of the
payment of such dividend. We will furnish additional tax information to our shareholders in the event of such a dividend. Interest paid or deemed to be paid on our debt securities held by non-Canadian residents may also be subject to Canadian
withholding tax, depending upon the terms and provisions of such securities and any applicable tax treaty.

The Convention generally exempts from Canadian
income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization constituted and operated exclusively to administer a pension, retirement or employee benefit fund or plan, if the
organization is a resident of the U.S. and is exempt from income tax under the laws of the U.S.

Dispositions of Common Shares

Under the Canadian Tax Act, a taxpayers capital gain or capital loss from a disposition of a share of our common stock is the amount, if any, by which his or her
proceeds of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses of disposition. The capital gain or loss must be computed in Canadian currency using a weighted
average adjusted cost base for identical properties. The capital gains net of losses included in income are as follows. For gains net of losses realized before February 28, 2000, as to 75%. For gains net of losses realized after
February 27, 2000 and before October 18, 2000, as to 66 2/3%. For gains net of losses realized after October 17, 2000, as to 50%. There are special transitional rules to apply capital losses against capital gains that arose in
different periods. The amount by which a shareholders capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder in the three previous years or any subsequent year, subject to certain
restrictions in the case of a corporate shareholder.

Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital
gains, and may deduct allowable capital losses, realized on a disposition of "taxable Canadian property." Shares of our common stock will constitute taxable Canadian property of a shareholder at a particular time if the shareholder used the shares
in carrying on business in Canada, or if at any time in the five years immediately preceding the disposition 25% or more of the issued shares of any class or series in our capital stock belonged to one or more persons in a group comprising the
shareholder and persons with whom the shareholder and persons with whom the shareholder did not deal at arms length and in certain other circumstances.

The Convention relieves U.S. residents from liability for Canadian tax on capital gains derived on a disposition of shares unless

(a) the value of the shares is derived principally from real property in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production,

(b) the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding, and at any time during the 10 years
immediately preceding, the disposition and the shares were owned by him when he or she ceased to be resident in Canada, or

(c) the shares
formed part of the business property of a permanent establishment that the holder has or had in Canada within the 12 months preceding the disposition.



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U.S. Tax Consequences

U.S. Federal Income Tax Consequences

The following are the material U.S. federal income tax consequences generally applicable to a
U.S. Holder (as hereinafter defined) of our common shares under current law. This discussion does not address all potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions
of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder. In addition, this discussion does not cover any state, local or foreign tax consequences (see Taxation  Canadian Federal Income
Tax Consequences above). Accordingly, holders and prospective holders of our common shares are urged to consult their own tax advisors about the specific federal, state, local, and foreign tax consequences to them of purchasing, owning and
disposing of our common shares, based upon their individual circumstances.

The following discussion is based upon the sections of the Internal Revenue
Code of 1986, as amended (the Code), Treasury Regulations, published Internal Revenue Service (IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which
could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not consider the potential effects, both adverse and beneficial, of any proposed
legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.

U.S. Holders

As used in this Annual Report, a U.S. Holder means a holder of our common shares who is a citizen or individual resident of the U.S., a corporation or
partnership created or organized in or under the laws of the U.S. or of any political subdivision thereof, an entity created or organized in or under the laws of the U.S. or of any political subdivision thereof which has elected to be treated as a
corporation for U.S. federal income tax purposes (under Treasury Regulation Section 301.7701-3), an estate whose income is taxable in the U.S. irrespective of source or a trust subject to the primary supervision of a court within the U.S. and
control of a U.S. fiduciary as described in Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as
tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers,
non-resident alien individuals, persons or entities that have a functional currency other than the U.S. dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging or
conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services. This summary is limited to U.S. Holders who own common shares as capital assets and
who own (directly and indirectly, pursuant to applicable rules of constructive ownership) no more than 5% of the value of our total outstanding stock. This summary does not address the consequences to a person or entity holding an interest in a
shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares. In addition, this summary does not address special rules applicable to U.S. persons (as defined
in Section 7701(a)(30) of the Code) holding common shares through a foreign partnership or to foreign persons holding common shares through a domestic partnership.

Distributions on Our Common Shares

In general, U.S. Holders receiving dividend distributions (including
constructive dividends) with respect to our common shares are required to include in gross income for U.S. federal income tax purposes the gross amount of such distributions, equal to the U.S. dollar value of such distributions on the date of
receipt (based on the exchange rate on such date), to the extent that we have current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited,
subject to certain limitations, against the U.S. Holders federal income tax liability or, alternatively, may be deducted in computing the U.S. Holders federal taxable income by those who itemize deductions. (See more detailed discussion
at Foreign Tax Credit below). To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a return of capital up to the U.S. Holders adjusted basis in the common shares and
thereafter as gain from the sale or exchange of property. Preferential tax rates for long-term capital gains and qualified dividend income (discussed below) are currently applicable to a U.S. Holder which is an individual, estate or trust. There are
currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.



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In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the
date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including
the exchange for U.S. dollars, will be ordinary income or loss. However, an individual whose realized gain does not exceed $200 will not recognize that gain, provided that there are no expenses associated with the transaction that meet the
requirements for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or as an expense for the production of income.

Dividends paid on our common shares will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder that is a
corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from us (unless we qualify as a passive foreign investment company, as defined below) if such U.S.
Holder owns shares representing at least 10% of our voting power and value. The availability of this deduction is subject to several complex limitations that are beyond the scope of this discussion.

Under current Treasury Regulations, dividends paid on our common shares, if any, generally will not be subject to information reporting and generally will not be subject
to U.S. backup withholding tax. However, dividends and the proceeds from a sale of our common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may
also be subject to the 28% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against
the U.S. Holders U.S. federal income tax liability, provided the required information is furnished to the IRS.

Recent U.S. Tax Law Changes
Applicable to Individuals

U.S. tax legislation enacted in 2003 (the 2003 Tax Act) generally reduced the rates of tax payable by
individuals (as well as certain trusts and estates) on ordinary and other items of income. Under the 2003 Tax Act, the marginal tax rates applicable to ordinary income generally were lowered effective January 1, 2003. In addition, for capital
assets held for over one year and sold or exchanged in taxable years beginning before January 1, 2010, the maximum applicable U.S. federal rate of tax generally is 15% (rather than the higher rates of tax generally applicable to items of
ordinary income). Furthermore, qualified dividend income received by individuals in taxable years beginning before January 1, 2009, generally are taxed at a maximum U.S. federal rate of 15% (rather than the higher rates of tax
generally applicable to other items of ordinary income) provided certain holding period requirements are met. For this purpose, qualified dividend income generally includes dividends paid on stock in U.S. corporations as well as
dividends paid on stock in certain non-U.S. corporations if, among other things, (i) the shares of the non-U.S. corporation (including ADRs backed by such shares) are readily tradable on an established securities market in the U.S., or
(ii) the non-U.S. corporation is eligible with respect to substantially all of its income for the benefits of a comprehensive income tax treaty with the U.S. which contains an exchange of information program. (The Convention has been identified
by the U.S. Treasury as a qualifying treaty). We currently anticipate that if we were to pay any dividends with respect to our shares and ADSs, they should constitute qualified dividend income for U.S. federal income tax purposes and
that U.S. Holders who are individuals should be entitled to the reduced rates of tax, as applicable. You are urged to consult your own tax adviser regarding the impact of the provisions of the 2003 Tax Act on your particular situation.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld
from distributions) Canadian income tax with respect to the ownership of our common shares may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be
more advantageous to claim a credit because a credit reduces U.S. federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayers income subject to tax. This election is made on a year-by-year basis and
generally applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the
proportionate share of the U.S. Holders U.S. income tax liability that the U.S. Holders foreign source income bears to his or its worldwide taxable income. In the determination of the application of this limitation, the various items of
income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific categories of income such as passive
income, and general category income. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific, and U.S. Holders of our common shares should consult their own tax advisors
regarding their individual circumstances.



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Disposition of Our Common Shares

In general, U.S. Holders will recognize gain or loss upon the sale of our common shares equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and
(ii) the shareholders tax basis in our common shares. Preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts. In general, gain or loss on the sale of our common shares will be
long-term capital gain or loss if our common shares are a capital asset in the hands of the U.S. Holder and are held for more than one year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders that are not
corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations subject to Subchapter S of
the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations

Set forth below are certain material
exceptions to the above-described general rules describing the U.S. federal income tax consequences resulting from the holding and disposition of common shares:

Passive Foreign Investment Company

U.S. income tax law contains rules governing passive foreign investment companies
(PFIC) which can have significant tax effects on U.S. Holders of foreign corporations. These rules do not apply to non-U.S. Holders. Section 1297 of the Code defines a PFIC as a corporation that is not formed in the U.S. if, for any
taxable year, either (i) 75% or more of its gross income is passive income, which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the corporation is not
publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of passive income is 50% or more. We do not believe that we are
currently a PFIC and we do not expect to be a PFIC for the fiscal year ended June 30, 2007.

U.S. Holders owning shares of a PFIC are subject to a
special tax and to an interest charge based on the value of deferral of U.S. tax attributable to undistributed earnings of a PFIC for the period during which the shares of the PFIC are owned. This special tax would apply to any gain realized on the
disposition of shares of a PFIC. In addition, the gain is subject to U.S. federal income tax as ordinary income, taxed at top marginal rates, rather than as capital gain income. The special tax would also be payable on receipt of excess
distributions (any distributions received in the current year that are in excess of 125% of the average distributions received during the 3 preceding years or, if shorter, the shareholders holding period). However, if the U.S. Holder makes a
timely election to treat a PFIC as a qualified electing fund (QEF) with respect to such shareholders interest therein, the above-described rules generally will not apply. Instead, the electing U.S. Holder would include annually in
his gross income his pro rata share of the PFICs ordinary earnings and any net capital gain regardless of whether such income or gain was actually distributed. A U.S. Holder of a QEF can, however, elect to defer the payment of United States
Federal income tax on such income inclusions. Special rules apply to U.S. Holders who own their interests in a PFIC through intermediate entities or persons.

U.S. Holders who hold, actually or constructively, marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market (a mark-to-market election). If such an election is made, such U.S.
Holder will not be subject to the special taxation rules of PFIC described above for the taxable years for which the mark-to-market election is made. A U.S. Holder who makes such an election will include in income for the taxable year an amount
equal to the excess, if any, of the fair market value of our common shares as of the close of such tax year over such U.S. Holders adjusted basis in such shares. In addition, the U.S. Holder is allowed a deduction for the lesser of
(i) the excess, if any, of such U.S. Holders adjusted tax basis in the shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any of (A) the mark-to-market gains for our common
shares included by such U.S. Holder for prior tax years, including any amount which would have been included for any prior year but for Section 1291 interest on tax deferral rules discussed above with respect to a U.S. Holder, who has not made
a timely QEF election during the year in which he holds (or is deemed to have held) our common shares and the Company is a PFIC (Non-Electing U.S. Holder), over (B) the mark-to-market losses for shares that were allowed as
deductions for prior tax years. A U.S. Holders adjusted tax basis in our common shares will be increased or decreased to reflect the amount included or deducted as a result of mark-to-market election. A mark-to-market election will apply to
the tax year for which the election is made and to all later tax years, unless the PFIC stock ceases to be marketable or the IRS consents to the revocation of the election.



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The IRS has issued proposed regulations that, subject to certain exceptions, would treat as taxable certain transfers of
PFIC stock by a Non-Electing U.S. Holder that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. Generally, in such cases, the basis of our common shares in the hands of the
transferee and the basis of any property received in the exchange for those shares would be increased by the amount of gain recognized. A U.S. Holder who has made a timely QEF election (as discussed above) will not be taxed on certain transfers of
PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. The transferees basis in this case will depend on the manner of the transfer. The specific tax effect to the U.S. Holder and the transferee may
vary based on the manner in which the common shares are transferred. Each U.S. Holder should consult a tax advisor with respect to how the PFIC rules affect their tax situation.

The PFIC and QEF election rules are complex. U.S. Holders should consult a tax advisor regarding the availability and procedure for making the QEF election as well as the applicable method for recognizing gains or
earnings and profits under the foregoing rules.

Controlled Foreign Corporation

If more than 50% of the total combined voting power of all classes of shares entitled to vote or the total value of our common shares is owned, actually or constructively, by citizens or residents of the U.S., U.S.
domestic partnerships or corporation, or estates or trusts other than foreign estates or trusts (as defined by Code Section 7701(a)(31)), each of which owns, actually or constructively, 10% or more of our total combined voting power of all
classes of shares entitled to vote (U.S. Shareholder), we would be treated as a controlled foreign corporation (CFC) under Subpart F of the Code. This classification could effect many complex results, one of which is the
inclusion by the U.S. shareholders of certain income of a CFC which is subject to current U.S. tax. The U.S. generally taxes U.S. Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such U.S. Shareholders are
generally treated as having received a current distribution out of the CFCs Subpart F income and are also subject to current U.S. tax on their pro rata shares of increases in the CFCs earnings invested in U.S. property. The foreign tax
credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares of the CFC by a U.S. Holder which is or was a U.S. Shareholder at any time during the
five-year period ending on the date of the sale or exchange is treated as ordinary income to the extent of earnings and profits of the CFC attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign
corporation generally will not be treated as a PFIC with respect to U.S. Shareholders of the CFC. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion. We do not believe that we
currently qualify as a CFC. However, there can be no assurance that we will not be considered a CFC for the current or any future taxable year.



|F. | Dividends and Paying Agents
|-- | ---------------------------

Not applicable.



|G. | Statement by Experts
|-- | --------------------

Not applicable.



|H. | Documents on Display
|-- | --------------------

Exhibits attached to this Form 20-F are also
available for viewing at our offices, Suite 1780  400 Burrard Street, Vancouver, British Columbia V6C 3A6 or on request of Unilens at 604-689-1280, Attention: Leonard F. Barker. Copies of our financial statements and other continuous
disclosure documents required under the BCSA are available for viewing on the Internet at www.sedar.com.



|I. | Subsidiary Information
|-- | ----------------------

Not applicable.



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##### Table of Contents

|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------



|(a) | Quantitative Information About Market Risk
|--- | ------------------------------------------

Our operations do not
employ financial instruments or derivatives, which are market sensitive, and accordingly, we are not exposed to the financial market risks related to such instruments.



|(b) | Qualitative Information About Market Risk
|--- | -----------------------------------------

Our financial statements
are reported in U.S. Dollars, the same as the currency of our operating subsidiary, Unilens Corp. USA. The effects of exchange rate fluctuations related to the US dollar is therefore limited to the assets and liabilities related to our
administrative office. Included in our long term debt at June 30, 2004 was a $450,000 non-revolving term note carrying an interest rate of the Citibank base rate plus 3%, payable monthly. The interest rate on the loan is adjusted based on the
effective date of any change in the Citibank base rate. Accordingly, monthly interest paid fluctuated based on the corresponding change in the Citibank base rate. The Company paid the full amount due on this note during the year ended June 30,
2005.



|(c) | Interim Periods
|--- | ---------------

Not applicable.



|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------

Not
applicable.

PART II



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------

Not applicable.



|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ----------------------------------------------------------------------------

Under the terms of the loan from Uniinvest we were not permitted, without the prior written consent of Uniinvest, to declare or pay or set aside for payment any dividend on our common shares or voluntary purchase,
redeem, accrue, or retire any of our common shares. As we repaid the full amount of this loan during the year ended June 30, 2005, this restriction no longer applies. (See Item 7  Major Shareholders and Related Party
Transactions.)



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

In accordance with Rules 13a-15 and 15d-15
under the Securities Exchange Act of 1934 (the Exchange Act), our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of
the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(f) under the Securities Exchange Act) as of the end of the period covered by this Annual Report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2007.

Disclosure controls and
procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commissions rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed
under the Exchange Act is accumulated and communicated to management, including our President and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There has been no change in the Companys internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during the period covered by this
Annual Report that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting



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|ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT
|--------- | --------------------------------

Our board of directors has
determined that Alfred W. Vitale because of his accounting and financial management expertise is a audit committee financial expert as that term is defined under the Securities Exchange Act of 1934 and, accordingly, that at least one
audit committee financial expert is serving on our audit committee. Mr. Vitale is not, however, independent, as the term is defined in the Rules of the Nasdaq Market.



|ITEM 16B. | CODE OF ETHICS
|--------- | --------------

We have adopted a Code of Business Conduct and
Ethics (the Code) that applies to all directors and officers, including our Chief Executive Officer, Chief Financial Officer and principal accounting officer. The text of such Code is available on the Companys Internet website at
www.unilens.com. We will provide to any person, without charge, upon request, a copy of the Code. A person may request a copy by telephoning us at (604) 689-1280, or by writing to us at Suite 1780-400 Burrard Street, Vancouver, British
Columbia V6C 3A6, Attn: Leonard F Barker.



|ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|--------- | --------------------------------------

The aggregate amounts
billed by Pender Newkirk & Company LLP and Davidson & Company LLP for each of the fiscal years ended June 30, 2007 (Fiscal 2007) and 2006 for audit fees, audit-related fees, tax fees and all other fees are set
forth below:



|                       |  |                         |        |                         |   |       
|---------------------- |  | ----------------------- | ------ | ----------------------- | - | ------
|                       |  | Year EndedJune 30, 2007 |        | Year EndedJune 30, 2006
|Audit Fees (1)         |  | $                       | 90,041 |                         | $ | 24,500
|Audit-Related Fees (2) |  |                         | 0      |                         |   | 0     
|Tax Fees (3)           |  |                         | 8,190  |                         |   | 7,950 
|Totals                 |  | $                       | 98,231 |                         | $ | 32,450

NOTES:



|(1) | Audit Fees represent fees for the audit of our annual financial statements, and consulting in connection with our statutory and regulatory filings.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Audit-Related Fees represent fees for assurance and related services that are related to the performance of the audit, including an impact study of decrease in stock
option exercise price, and consultation with the audit committee concerning our financial statements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Tax Fees represent fees for tax compliance, tax advice and tax planning including analysis relating to stock option matters and relating to tax on sale of short-term
investments.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Audit Committee has adopted procedures requiring Audit Committee review and approval in advance of all
particular engagements for services provided by our independent auditors. Consistent with applicable laws, the procedures permit limited amounts of services, other than audit, review or attest services, to be approved by one or more members of the
Audit Committee pursuant to authority delegated by the Audit Committee, provided the Audit Committee is informed of each particular service. All of the engagements and fees for Fiscal 2007 were approved by the Audit Committee. The Audit Committee
reviews with Pender Newkirk & Company LLP and Davidson & Company LPP whether the non-audit services to be provided are compatible with maintaining the auditors independence. Our board of directors has determined that,
starting in the fiscal year ending June 30, 2005, fees paid to the independent auditors for non-audit services in any year will not exceed the fees paid for audit services during the year. Permissible non-audit services will be limited to fees
for tax services, accounting assistance or audits in connection with acquisitions, and other services specifically related to accounting or audit matters such as audits of employee benefit plans.



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|ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|--------- | ----------------------------------------------------------

As our
common shares are not listed on a national securities exchange or listed in an automated inter-dealer quotation system of a national securities association as provided under Rule 10A-3 under the Exchange Act, the requirements of that Rule are not
applicable to us and, as such, there is no requirement to provide any information under this Item.



|ITEM 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|--------- | ----------------------------------------------------------------------

On August 9, 2006 the TSX Venture Exchange approved a normal course issuer bid whereby we may purchase for cancellation up to 224,190 of our common shares, representing 5% of the then current issued and outstanding common shares. The
bid commenced on August 21, 2006 and ended on August 20, 2007. All share purchases were effected solely through the facilities of the TSX Venture Exchange. The Company purchased 4,600 and 1,000 of its common shares at $4.73 Cdn on
August 30, 2006 and September 14, 2006, respectively.



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##### Table of Contents

PART III



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

The following attached financial statements
and schedule are incorporated in this Annual Report:



|(1) | Auditors Report on the consolidated balance sheets as at June 30, 2007 and 2006, and the consolidated statements of operations, stockholders equity (deficiency) and
cash flows for the year ended June 30, 2007 and 2006;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Auditors Report on the consolidated balance sheet as at June 30, 2005, and the consolidated statements of operations, stockholders equity (deficiency) and cash
flows for the year ended June 30, 2005;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Consolidated balance sheets as at June 30, 2007 and 2006;
|--- | ---------------------------------------------------------



|(4) | Consolidated statements of operations for each of the years ended June 30, 2007, 2006 and 2005;
|--- | -----------------------------------------------------------------------------------------------



|(5) | Consolidated statements of stockholders equity (deficiency) for the periods referred to in (4) above;
|--- | ------------------------------------------------------------------------------------------------------



|(6) | Consolidated statements of cash flows for the periods referred to in (4) above;
|--- | -------------------------------------------------------------------------------



|(7) | Notes to the consolidated financial statements;
|--- | -----------------------------------------------



|(8) | Report of independent registered public accounting firm on Schedule.
|--- | --------------------------------------------------------------------



|(9) | Schedule of valuation and qualifying accounts;
|--- | ----------------------------------------------



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##### Table of Contents

Financial Statements of

UNILENS VISION INC.

Years ended June 30, 2007 and 2006

Report date  October 5, 2007



35



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Unilens Vision Inc.

We have audited the accompanying consolidated balance sheets of Unilens Vision Inc. as of June 30, 2007 and 2006 and the related consolidated statements of
operations, changes in stockholders equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the management of Unilens Vision Inc. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required at this time, to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Unilens Vision Inc. as of June 30, 2007 and 2006 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

Pender Newkirk & Company LLP

Certified Public Accountants

Tampa, Florida

October 5, 2007



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##### Table of Contents

|                       |  |                       |  |                                            
|---------------------- |  | --------------------- |  | -------------------------------------------
|DAVIDSON & COMPANY LLP |  | Chartered Accountants |  | A Partnership of Incorporated Professionals

INDEPENDENT AUDITORS REPORT

To the Stockholders of

Unilens Vision Inc.

We have audited the consolidated statements of operations, stockholders' equity (deficiency) and cash flows of Unilens Vision Inc. for the year ended June 30, 2005.
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 audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards and with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in all material respects, the results of the Companys operations and its cash flows for the year ended June 30, 2005 in accordance
with generally accepted accounting principles in the United States of America.

DAVIDSON & COMPANY LLP



|                  |  |                      
|----------------- |  | ---------------------
|Vancouver, Canada |  | Chartered Accountants
|                  | 
|October 20, 2005  |  |                      

A Member of SC INTERNATIONAL

---

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6

Telephone (604) 687-0947 Fax (604) 687-6172



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##### Table of Contents

UNILENS VISION INC.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

AS AT JUNE 30



|                                                                                                                                                          |  |      |             |   |      |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                          |  | 2007 |             |   | 2006 |  
|ASSETS                                                                                                                                                    |  |      |             |   |      |   |             |  
|Current                                                                                                                                                   |  |      |             |   |      |   |             |  
|Cash and cash equivalents                                                                                                                                 |  | $    | 1,961,712   |   |      | $ | 2,195,633   |  
|Accounts receivable, net of allowance of $315,166 and $341,625 at June 30, 2007 and 2006, respectively                                                    |  |      | 923,817     |   |      |   | 822,589     |  
|Royalties and other receivables                                                                                                                           |  |      | 644,382     |   |      |   | 517,438     |  
|Inventories (Note 3)                                                                                                                                      |  |      | 790,389     |   |      |   | 962,665     |  
|Prepaid expenses                                                                                                                                          |  |      | 94,427      |   |      |   | 33,072      |  
|Deferred tax asset  current (Note 15)                                                                                                                    |  |      | 1,354,010   |   |      |   | 1,213,390   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total current assets                                                                                                                                      |  |      | 5,768,737   |   |      |   | 5,744,787   |  
|Property, plant, and equipment, net (Note 4)                                                                                                              |  |      | 491,069     |   |      |   | 508,467     |  
|Other assets                                                                                                                                              |  |      | 63,902      |   |      |   | 41,468      |  
|Deferred tax asset (Note 15)                                                                                                                              |  |      | 1,664,100   |   |      |   | 2,674,500   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total assets                                                                                                                                              |  | $    | 7,987,808   |   |      | $ | 8,969,222   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                      |  |      |             |   |      |   |             |  
|Current                                                                                                                                                   |  |      |             |   |      |   |             |  
|Accounts payable                                                                                                                                          |  | $    | 228,528     |   |      | $ | 497,423     |  
|Accrued liabilities                                                                                                                                       |  |      | 590,477     |   |      |   | 499,587     |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total current liabilities                                                                                                                                 |  |      | 819,005     |   |      |   | 997,010     |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total liabilities                                                                                                                                         |  |      | 819,005     |   |      |   | 997,010     |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Commitments (Note 9)                                                                                                                                      |  |      |             |   |      |   |             |  
|Stockholders equity                                                                                                                                      |  |      |             |   |      |   |             |  
|Capital stock (Note 10)                                                                                                                                   |  |      |             |   |      |   |             |  
|Preference A shares, par value $10 Cdn. per share; 100,000,000 shares authorized; no shares issued and outstanding                                      |  |      |            |   |      |   |            |  
|Preference B shares, par value $50 Cdn. per share; 100,000,000 shares authorized; no shares issued and outstanding                                      |  |      |            |   |      |   |            |  
|Common shares, no par value; 100,000,000 shares authorized; shares issued and outstanding 4,513,215 and 4,441,315 at June 30, 2007 and
2006, respectively |  |      | 27,596,810  |   |      |   | 27,575,628  |  
|Additional paid-in capital                                                                                                                                |  |      | 8,970       |   |      |   | 8,970       |  
|Deficit                                                                                                                                                   |  |      | (20,436,977 | ) |      |   | (19,612,386 | )
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total stockholders equity                                                                                                                                |  |      | 7,168,803   |   |      |   | 7,972,212   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  
|Total liabilities and stockholders equity                                                                                                                |  | $    | 7,987,808   |   |      | $ | 8,969,222   |  
|                                                                                                                                                          |  |      |             |   |      |   |             |  

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



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UNILENS VISION INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)



|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|YEAR ENDED JUNE 30                                  |  | 2007 |           |   | 2006 |   |           | 2005 | 
|Sales                                               |  | $    | 6,370,930 |   |      | $ | 6,110,040 |      |  | $ | 4,971,577 |  
|Cost of sales                                       |  |      | 3,489,836 |   |      |   | 3,404,831 |      |  |   | 2,958,252 |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Gross profit                                        |  |      | 2,881,094 |   |      |   | 2,705,209 |      |  |   | 2,013,325 |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Expenses:                                           |  |      |           |   |      |   |           |      |  |   |           |  
|Administration                                      |  |      | 1,229,365 |   |      |   | 1,100,729 |      |  |   | 835,834   |  
|Research and development                            |  |      | 119,558   |   |      |   | 162,864   |      |  |   | 71,680    |  
|Sales and marketing                                 |  |      | 1,517,386 |   |      |   | 1,388,257 |      |  |   | 1,014,231 |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|                                                    |  |      | 2,866,309 |   |      |   | 2,651,850 |      |  |   | 1,921,745 |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Income from operations                              |  |      | 14,785    |   |      |   | 53,359    |      |  |   | 91,580    |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Other items:                                        |  |      |           |   |      |   |           |      |  |   |           |  
|Royalty income (Note 5)                             |  |      | 2,190,428 |   |      |   | 1,932,942 |      |  |   | 1,632,051 |  
|Other (expense) income                              |  |      | (71,812   | ) |      |   | 9,509     |      |  |   | 7,267     |  
|Remeasurement income (loss)                         |  |      | 304       |   |      |   | (5,905    | )    |  |   |          |  
|Interest income (expense)                           |  |      | 46,037    |   |      |   | 28,135    |      |  |   | (20,211   | )
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|                                                    |  |      | 2,164,957 |   |      |   | 1,964,681 |      |  |   | 1,619,107 |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Income before income tax (expense) benefit          |  |      | 2,179,742 |   |      |   | 2,018,040 |      |  |   | 1,710,687 |  
|Net deferred income tax (expense) benefit (Note 15) |  |      | (869,781  | ) |      |   | (421,210  | )    |  |   | 527,100   |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Income for the year                                 |  |      | 1,309,961 |   |      |   | 1,596,830 |      |  |   | 2,237,787 |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Other comprehensive loss:                           |  |      |           |   |      |   |           |      |  |   |           |  
|Foreign currency translation adjustment             |  |      |          |   |      |   |          |      |  |   | (16,766   | )
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Comprehensive income for the year                   |  | $    | 1,309,961 |   |      | $ | 1,596,830 |      |  | $ | 2,221,021 |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Income per common share:                            |  |      |           |   |      |   |           |      |  |   |           |  
|Basic                                               |  | $    | 0.29      |   |      | $ | 0.37      |      |  | $ | 0.53      |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  
|Diluted                                             |  | $    | 0.29      |   |      | $ | 0.35      |      |  | $ | 0.50      |  
|                                                    |  |      |           |   |      |   |           |      |  |   |           |  

Weighted average number of common shares (Note 17)

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



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UNILENS VISION INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(Expressed in U.S. Dollars)



|                                                                                                |  |                 |  |                          |            |                                 |   |       |         |   |         |       |  |   |             |   |  |   |           |  
|----------------------------------------------------------------------------------------------- |  | --------------- |  | ------------------------ | ---------- | ------------------------------- | - | ----- | ------- | - | ------- | ----- |  | - | ----------- | - |  | - | --------- | -
|                                                                                                |  | Common Stock    |  | AdditionalPaid-inCapital |            | CumulativeTranslationAdjustment |   |       | Deficit |   |         | Total | 
|                                                                                                |  | Number ofshares |  | Amount                   |            |                                 |   |      
|Balance, June 30, 2004                                                                          |  | 4,178,815       |  | $                        | 27,432,100 |                                 | $ | 8,970 |         | $ | (2,156  | )     |  | $ | (23,428,081 | ) |  | $ | 4,010,833 |  
|Common stock issued for cash from exercise of stock options at $0.19 per share in March 2005    |  | 15,000          |  |                          | 2,850      |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 2,850     |  
|Cumulative translation adjustment                                                               |  |                 |  |                          |            |                                 |   |       |         |   | (16,766 | )     |  |   |             |   |  |   | (16,766   | )
|Income for the year                                                                             |  |                 |  |                          |            |                                 |   |       |         |   |         |       |  |   | 2,237,787   |   |  |   | 2,237,787 |  
|                                                                                                |  |                 |  |                          |            |                                 |   |       |         |   |         |       |  |   |             |   |  |   |           |  
|Balance, June 30, 2005                                                                          |  | 4,193,815       |  |                          | 27,434,950 |                                 |   | 8,970 |         |   | (18,922 | )     |  |   | (21,190,294 | ) |  |   | 6,234,704 |  
|Common stock issued for cash from exercise of stock options at $0.48 per share in July 2005     |  | 10,000          |  |                          | 4,800      |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 4,800     |  
|Common stock issued for cash from exercise of stock options at $0.71 per share in July 2005     |  | 7,500           |  |                          | 5,325      |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 5,325     |  
|Common stock issued for cash from exercise of stock options at $0.48 per share in February 2006 |  | 105,000         |  |                          | 50,400     |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 50,400    |  
|Common stock issued for cash from exercise of stock options at $0.54 per share in February 2006 |  | 60,000          |  |                          | 32,286     |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 32,286    |  
|Common stock issued for cash from exercise of stock options at $0.71 per share in February 2006 |  | 50,000          |  |                          | 35,500     |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 35,500    |  
|Common stock issued for cash from exercise of stock options at $0.82 per share in February 2006 |  | 15,000          |  |                          | 12,367     |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 12,367    |  
|Cumulative translation adjustment                                                               |  |                 |  |                          |            |                                 |   |       |         |   | 18,922  |       |  |   | (18,922     | ) |  |   |          |  
|Income for the year                                                                             |  |                 |  |                          |            |                                 |   |       |         |   |         |       |  |   | 1,596,830   |   |  |   | 1,596,830 |  
|                                                                                                |  |                 |  |                          |            |                                 |   |       |         |   |         |       |  |   |             |   |  |   |           |  
|Balance, June 30, 2006                                                                          |  | 4,441,315       |  |                          | 27,575,628 |                                 |   | 8,970 |         |   |        |       |  |   | (19,612,386 | ) |  |   | 7,972,212 |  
|Common stock issued for cash from exercise of stock options at $0.48 per share in July 2006     |  | 5,000           |  |                          | 2,400      |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 2,400     |  
|Common stock issued for cash from exercise of stock options at $0.71 per share in July 2006     |  | 22,500          |  |                          | 15,975     |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 15,975    |  
|Common stock issued for cash from exercise of stock options at $0.84 per share in July 2006     |  | 15,000          |  |                          | 12,600     |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 12,600    |  
|Common stock issued for cash from exercise of stock options at $0.21 per share in October 2006  |  | 10,000          |  |                          | 2,146      |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 2,146     |  
|Common stock issued for cash from exercise of stock options at $0.48 per share in February 2007 |  | 25,000          |  |                          | 12,000     |                                 |   |       |         |   |         |       |  |   |             |   |  |   | 12,000    |  



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##### Table of Contents

UNILENS VISION INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Continued)

(Expressed in U.S. Dollars)



|                                 |  |                 |   |  |                          |            |                                 |  |         |       |  |       |   |  |   |             |   |  |   |            |  
|-------------------------------- |  | --------------- | - |  | ------------------------ | ---------- | ------------------------------- |  | ------- | ----- |  | ----- | - |  | - | ----------- | - |  | - | ---------- | -
|                                 |  | Common Stock    |   |  | AdditionalPaid-inCapital |            | CumulativeTranslationAdjustment |  | Deficit |       |  | Total |  
|                                 |  | Number ofshares |   |  | Amount                   |            |                                 |  |         |      
|Common stock buybacks for cash   |  | (5,600          | ) |  |                          | (23,939    | )                               |  |         |       |  |       |   |  |   |             |   |  |   | (23,939    | )
|Common stock cash dividends paid |  |                 |   |  |                          |            |                                 |  |         |       |  |       |   |  |   | (2,134,552  | ) |  |   | (2,134,552 | )
|Income for the year              |  |                 |   |  |                          |            |                                 |  |         |       |  |       |   |  |   | 1,309,961   |   |  |   | 1,309,961  |  
|                                 |  |                 |   |  |                          |            |                                 |  |         |       |  |       |   |  |   |             |   |  |   |            |  
|Balance, June 30, 2007           |  | 4,513,215       |   |  | $                        | 27,596,810 |                                 |  | $       | 8,970 |  | $     |  |  | $ | (20,436,977 | ) |  | $ | 7,168,803  |  
|                                 |  |                 |   |  |                          |            |                                 |  |         |       |  |       |   |  |   |             |   |  |   |            |  

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



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UNILENS VISION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)



|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|------------------------------------------------------------ |  | ---- | ---------- | - | ---- | - | --------- | ---- |  | - | ---------- | -
|YEAR ENDED JUNE 30                                           |  | 2007 |            |   | 2006 |   |           | 2005 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                         |  |      |            |   |      |   |           |      |  |   |            |  
|Income for the year                                          |  | $    | 1,309,961  |   |      | $ | 1,596,830 |      |  | $ | 2,237,787  |  
|Items not affecting cash:                                    |  |      |            |   |      |   |           |      |  |   |            |  
|Depreciation and amortization                                |  |      | 170,020    |   |      |   | 118,886   |      |  |   | 79,177     |  
|Deferred tax expense (benefit)                               |  |      | 869,781    |   |      |   | 421,210   |      |  |   | (527,100   | )
|Remeasurement (gain) loss                                    |  |      | (304       | ) |      |   | 5,905     |      |  |   |           |  
|Change in non-cash working capital items (Note 11)           |  |      | (285,693   | ) |      |   | (118,925  | )    |  |   | (527,489   | )
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|Net cash provided by operating activities                    |  |      | 2,063,765  |   |      |   | 2,023,906 |      |  |   | 1,262,375  |  
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                         |  |      |            |   |      |   |           |      |  |   |            |  
|Purchase of property, plant and equipment and other assets   |  |      | (184,620   | ) |      |   | (337,348  | )    |  |   | (122,470   | )
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|Net cash used in investing activities                        |  |      | (184,620   | ) |      |   | (337,348  | )    |  |   | (122,470   | )
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                         |  |      |            |   |      |   |           |      |  |   |            |  
|Payments on long-term debt  related party (Note 8)          |  |      |           |   |      |   |          |      |  |   | (400,000   | )
|Principal payments on long-term debt                         |  |      |           |   |      |   |          |      |  |   | (838,139   | )
|Common stock issued for cash from exercise of stock options  |  |      | 45,121     |   |      |   | 140,678   |      |  |   | 2,850      |  
|Common stock repurchased                                     |  |      | (23,939    | ) |      |   |          |      |  |   |           |  
|Common stock dividends paid                                  |  |      | (2,134,552 | ) |      |   |          |      |  |   |           |  
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|Net cash (used in) provided by financing activities          |  |      | (2,113,370 | ) |      |   | 140,678   |      |  |   | (1,235,289 | )
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|Change in cash and cash equivalents during the year          |  |      | (234,225   | ) |      |   | 1,827,236 |      |  |   | (95,384    | )
|Effect of exchange rate changes on cash and cash equivalents |  |      | 304        |   |      |   | (5,905    | )    |  |   | (2,753     | )
|Cash and cash equivalents, beginning of year                 |  |      | 2,195,633  |   |      |   | 374,302   |      |  |   | 472,439    |  
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|Cash and cash equivalents, end of year                       |  | $    | 1,961,712  |   |      | $ | 2,195,633 |      |  | $ | 374,302    |  
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|Cash paid during the year for interest                       |  | $    |           |   |      | $ |          |      |  | $ | 20,252     |  
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  
|Cash paid during the year for income taxes                   |  | $    |           |   |      | $ |          |      |  | $ |           |  
|                                                             |  |      |            |   |      |   |           |      |  |   |            |  

Supplemental disclosure with respect to cash flows (Note 11)

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



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

JUNE 30, 2007



|1. | NATURE OF BUSINESS
|-- | ------------------

The business of Unilens Vision
Inc. and subsidiary (the Company) is to develop and sell optical products using proprietary design and manufacturing technology. The Companys products are being sold primarily in the United States through a network of national
distributors, independent sales representatives and in house sales personnel. The Company also licenses one of its patented multifocal designs on an exclusive basis to Bausch and Lomb Inc. (Bausch and Lomb) (Note 5).



|2. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------

These consolidated
financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP) and in United States dollars

The significant accounting policies adopted by the Company are as follows:

Consolidation

These consolidated financial statements include the accounts of Unilens Vision Inc.
and its wholly-owned subsidiary, Unilens Corp. USA.

All significant inter-company accounts and transactions have been eliminated.

Use of estimates

The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenues and expenses during the period. Actual results could differ from these estimates.

Currency

These financial statements are expressed in United States dollars, as the Companys operations are based
predominately in the United States. Any amounts expressed in Canadian dollars are indicated as such.

The Companys functional currency
is the United States dollar. The Company follows the remeasurement method of translation since the Canadian records are kept in Canadian dollars. This method translates foreign monetary assets and liabilities at the rate of exchange at the balance
sheet date. Foreign nonmonetary assets, liabilities, and stockholders equity are translated at the appropriate historical rate. Revenues and expenses from Canadian operations, other than those related to nonmonetary assets and liabilities, are
translated at the weighted average exchange rate for the period. The resulting remeasurement gain or loss is taken directly to the income statement.

Financial instruments

The Companys financial instruments consist of cash and cash equivalents,
accounts receivable, royalties and other receivables, accounts payable and accrued liabilities. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from
these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.

Cash and cash equivalents

Cash and cash equivalents include short-term, highly liquid investments that are both readily
convertible to known amounts of cash and whose original maturity is three months or less when purchased.



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



Accounts receivable

Accounts receivable consist of contact lens sales to customers. The Company records an allowance for doubtful accounts to allow for any amounts that may
not be recoverable, which is based on an analysis of the Companys prior collection experience, customer credit worthiness, and current economic trends. Also included in this allowance is an amount for product returns, based on an analysis of
the Companys history of credit memos issued. Based on managements review of accounts receivable, an allowance for doubtful accounts of $315,166 and $341,625 at June 30, 2007 and 2006, respectively, is considered adequate.
Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables.

Inventories

Inventories are carried at the lower of cost or net realizable value. Cost is determined
on a first-in, first-out basis. The Company provides reserves for inventory that management believes to be obsolete or slow moving.

Property, plant and equipment and intangible assets

Property, plant and equipment are recorded at cost less accumulated
depreciation. Plant and equipment and office equipment are depreciated on a straight-line basis over the shorter of 5 years or the estimated useful life of the asset. Leasehold improvements are depreciated over the shorter of the term of the lease
or the estimated useful life of the asset. Expenditures for certain maintenance and repairs are charged to expense as incurred, and renewals and betterments are capitalized. Gains and losses on disposals are credited or charged to operations. For US
income tax purposes, the Company uses accelerated methods of depreciation for all assets.

Patents and trademarks totalling $1,407,811 are
recorded at cost and are amortized over their estimated useful lives of up to 10 years on a straight-line basis. At June 30, 2007 and 2006, the patents and trademarks are fully amortized. Amortization expense of patents and trademarks was $0,
$0 and $6,915 during 2007, 2006 and 2005, respectively.

In accordance with Statement of Financial Accounting Standards (SFAS)
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS No. 144), the carrying values of property, plant and equipment, and intangible assets are reviewed by the Company for impairment whenever events or
changes in circumstances indicate that the carrying amount of these assets may not be recoverable. In performing the review of recoverability, the Company estimates the future cash flows that are expected to result from the use of the assets and
their eventual disposition. Because events and circumstances frequently do not occur as expected, there will usually be differences between the estimated and actual future cash flows, and these differences may be material. If an asset is determined
to be impaired, the Company recognizes a loss being the difference between the carrying amount and the fair value of the asset. The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, fair value
is based on discounting the estimated future cash flows. During the periods presented, the Company determined that its property, plant and equipment and intangible assets were not impaired.

Revenue recognition and discounts

The Company recognizes revenue on sales of optical products upon shipment, when title passes, and ultimate collection is reasonably assured. At the same time, the Company charges operations for the estimated cost of future returns based on
historical experience for the respective product types. The Company offers discounts on its products. The costs of these discounts are recognized at the date at which the related sales revenue is recognized and are recorded as a reduction of sales
revenue.



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##### Table of Contents

UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



Royalty income

The Company recognizes royalty income at the end of each quarter based on the net sales of licensed products sold during the quarter, which is provided by the licensee, times the royalty rate. Royalty income is
included in other items on the consolidated statement of operations.

Shipping and handling

The Company records amounts billed to customers for shipping and handling costs as sales revenue. Costs incurred by the Company for shipping and handling
are included in cost of sales.

Advertising costs

The Company expenses costs when incurred. Advertising expense was approximately $307,947, $325,005 and $217,409 for the years ended June 30, 2007, 2006 and 2005, respectively; there were no advertising costs that
met the criteria for capitalization.

Research and development costs

Research and development costs are expensed as incurred. The amounts charged to operations during the years ended June 30, 2007, 2006 and 2005 were
$119,558, $162,864 and $71,680, respectively. For tax purposes, the Company capitalizes these costs and amortizes them over 10 years.

Income per common share

Basic income per common share is calculated by dividing the income for the year by the
weighted-average number of common shares outstanding during the year.

Diluted income per common share is calculated using the treasury
stock method. Under the treasury stock method, the weighted average number of common shares outstanding used for the calculation of diluted income per share assumes that the proceeds to be received on the exercise of dilutive stock options and
warrants are used to repurchase common shares at the average market price during the year.

Stock-based compensation and stock options

Effective July 1, 2005, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (Revised),
Share-Based Payment, (SFAS 123R), which requires the use of the fair value method of accounting for stock options. The statement was adopted using the modified prospective method of application. Under this method, in addition to
reflecting compensation expense for new share-based awards, expense is also recognized to reflect the remaining vesting period of awards that had been included in pro-forma disclosures in prior periods. There was no compensation expense attributable
to stock options charged against income for the years ended June 30, 2007 and 2006 since no options were granted during the years, and all options outstanding at the beginning of the years were fully vested.

Prior to adoption of SFAS 123R, the Company accounted for stock-based compensation using Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, (APB 25) and accordingly, did not recognize any compensation expense for stock option grants since compensation cost for stock options is measured as the excess, if any, of the quoted market price of
the Companys stock at the date of grant that is over the amount employees are required to pay for the stock. Also, the Company previously accounted for stock-based compensation issued to non-employees in accordance with the provisions of SFAS
123 Accounting for Stock Based Compensation, and the consensus in Emerging Issues Task Force No. 96-18, Accounting for Equity Instruments that are issued to Other Than Employees for Acquiring or in Conjunction with Selling,
Goods or Services.



45



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



The following table illustrates the effect on income and income per share for the year ended
June 30, 2005 (year prior to adoption of SFAS 123) if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation.



|                                                                                                                              |  |      |           |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | -
|                                                                                                                              |  | 2005 |          
|Income as reported:                                                                                                           |  | $    | 2,237,787 |  
|Add: total stock-based employee compensation expense included in income (loss), as reported determined under APB 25           |  |      |          |  
|Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of taxes |  |      | (21,356   | )
|                                                                                                                              |  |      |           |  
|Pro-forma income                                                                                                              |  | $    | 2,216,431 |  
|                                                                                                                              |  |      |           |  
|Income per common share, as reported                                                                                          |  |      |           |  
|Basic                                                                                                                         |  | $    | 0.53      |  
|                                                                                                                              |  |      |           |  
|Diluted                                                                                                                       |  | $    | 0.50      |  
|                                                                                                                              |  |      |           |  
|Pro-forma income per common share                                                                                             |  |      |           |  
|Basic                                                                                                                         |  | $    | 0.53      |  
|                                                                                                                              |  |      |           |  
|Diluted                                                                                                                       |  | $    | 0.50      |  
|                                                                                                                              |  |      |           |  

See Note 10 for additional disclosure on the Companys stock-based compensation.

Income taxes

Deferred tax assets
and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized as income in the period that included the enactment date.

Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than 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.

Recent accounting pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, (FIN 48) Accounting for uncertainty in income taxes  an interpretation of SFAS
No. 109. This Interpretation provides guidance for recognizing and measuring uncertain tax positions, as defined in FASB No. 109, Accounting for income taxes. FIN 48 prescribes a threshold condition that
a tax position must meet for any of the benefit of an uncertain tax position to be recognized in the financial statements. Guidance is also provided regarding derecognition, classification and disclosure of uncertain tax positions. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Company does not expect that this Interpretation will have a material impact on their financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157 (SFAS 157), Fair Value Measurements. SFAS 157 clarifies the principle
that fair value should be based on the assumptions that market participants would



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



use when pricing an asset or liability. Additionally, it establishes a fair value hierarchy that prioritizes the information used to develop those
assumptions. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company does not expect the adoption of SFAS 157 to have a material impact on their financial position, results of
operations or cash flows.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB)
No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Current Year Misstatements. SAB No. 108 requires analysis of misstatements using both an income statement (rollover) approach and a balance sheet
(iron curtain) approach in assessing materiality and provides a one-time cumulative effect transition adjustment. The provisions of SAB No. 108 became effective during the second quarter of 2007, and had no impact on the financial
position, or operating results of the Company.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 provides the option to report certain financial assets and liabilities at fair value, with the intent to mitigate volatility in financial reporting that can occur
when related assets and liabilities are recorded on different bases. SFAS 159 also amends SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, by providing the option to record unrealized gains and
losses on held-for-sale and held-to-maturity securities currently. The effective date of FAS 159 is for fiscal years beginning after November 15, 2007. The implementation of FAS 159 is not expected to have a material impact on our
results of operations or financial position.



|3. | INVENTORIES
|-- | -----------



|                                |  |      |           |      |   |          
|------------------------------- |  | ---- | --------- | ---- | - | ---------
|                                |  | 2007 |           | 2006
|Raw materials                   |  | $    | 288,631   |      | $ | 262,262  
|Work in progress                |  |      | 24,579    |      |   | 20,962   
|Finished goods                  |  |      | 964,947   |      |   | 1,189,441
|                                |  |      |           |      |   |          
|                                |  |      | 1,278,157 |      |   | 1,472,665
|Less allowance for obsolescence |  |      | 487,768   |      |   | 510,000  
|                                |  |      |           |      |   |          
|                                |  | $    | 790,389   |      | $ | 962,665  
|                                |  |      |           |      |   |          

All inventories are pledged as collateral on loans (Notes 7 and 8).



|4. | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------



|                       |  |      |           |                         |   |                |  |      |         |                         |   |                |  |   |           |  |   |        
|---------------------- |  | ---- | --------- | ----------------------- | - | -------------- |  | ---- | ------- | ----------------------- | - | -------------- |  | - | --------- |  | - | -------
|                       |  | 2007 |           | 2006                   
|                       |  | Cost |           | AccumulatedDepreciation |   | Net Book Value |  | Cost |         | AccumulatedDepreciation |   | Net Book Value
|Plant and equipment    |  | $    | 4,953,213 |                         | $ | 4,717,694      |  | $    | 235,519 |                         | $ | 4,918,878      |  | $ | 4,635,313 |  | $ | 283,565
|Office equipment       |  |      | 509,936   |                         |   | 295,795        |  |      | 214,141 |                         |   | 404,254        |  |   | 240,197   |  |   | 164,057
|Leasehold improvements |  |      | 233,048   |                         |   | 191,639        |  |      | 41,409  |                         |   | 220,442        |  |   | 159,597   |  |   | 60,845 
|                       |  |      |           |                         |   |                |  |      |         |                         |   |                |  |   |           |  |   |        
|                       |  | $    | 5,696,197 |                         | $ | 5,205,128      |  | $    | 491,069 |                         | $ | 5,543,574      |  | $ | 5,035,107 |  | $ | 508,467
|                       |  |      |           |                         |   |                |  |      |         |                         |   |                |  |   |           |  |   |        



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



Depreciation expense of property, plant and equipment was $170,020, $118,886 and $72,262 during 2007,
2006 and 2005, respectively. All property, plant and equipment is pledged as collateral on loans (Notes 7 and 8).



|5. | ROYALTY AGREEMENT
|-- | -----------------

On October 26, 2001,
Bausch & Lomb licensed the exclusive worldwide rights to the Companys multi-focal soft contact lens design. Under the terms of the agreement, Bausch & Lomb will develop, manufacture, and market a cast-molded multi-focal soft
contact lens using the Companys technology. For this, Bausch & Lomb will pay the Company a royalty ranging from two to five percent of the products worldwide net sales for as long as they manufacture and sell products utilizing
the technology. During the years ended June 30, 2007, 2006 and 2005, the Company recorded $2,190,428 $1,932,942 and $1,632,051, respectively, in Bausch & Lomb royalty revenues.



|6. | ASSET PURCHASE AGREEMENT
|-- | ------------------------

On February 23,
2005, the Company entered into an asset purchase agreement to acquire the Aquaflex and SoftCon product lines. Under the terms of the agreement, the Company will pay up to $350,000 for inventory, trademarks, regulatory approvals, and various other
assets. The Company assigned the $350,000 cost to inventory, of which $150,000 was paid at closing, with the remaining $200,000 to be paid upon the sale of inventory. At June 30, 2007 and 2006, the balance due was $36,067 and $68,593. As part
of this agreement, the Company will also pay a royalty ranging from five percent to eight percent on all future sales of the acquired product lines over the next three years.



|7. | LINE OF CREDIT
|-- | --------------

During 2005, the Company obtained a
line of credit of $1,000,000, with interest rate terms of LIBOR plus 2.5 percent. In April 2006, the line of credit was amended and increased to $1,500,000, with the same interest rate terms of LIBOR plus 2.5 percent. In May 2007, the $1,500,000
line of credit was amended with the same interest rate and matures in May 2008. The line is collateralized by all assets of Unilens Corp. USA. As of June 30, 2007, the Company does not have any amounts outstanding on this line of credit. Under
the credit agreement, the Company is required to meet specified financial covenants. At June 30, 2007, the Company was in compliance with these covenants.



|8. | NOTE PAYABLE, RELATED PARTY
|-- | ---------------------------

At June 30, 2004,
the Company had a note payable with a related party in the amount of $400,000. The note was collateralized by the assets of its subsidiary Unilens Corp. USA. and guaranteed by the Company. The note was originally due, but not paid, on
January 31, 1995. The Company paid interest monthly at prime plus three percent through December 2003. During October 2003, this note was amended and the payment terms of the note changed to quarterly instalments of $25,000 plus interest
starting January 2004 and maturing April 2008. The Company paid the full amount due on this note during the year ended June 30, 2005.

The terms and conditions of the above related party debt are not necessarily indicative of the terms and conditions that would have been incurred had comparable transactions been entered into with independent parties.



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



|9. | OPERATING LEASES
|-- | ----------------

The Company leases, through
Unilens Corp. USA, a combined office and manufacturing facility in Largo, Florida and a sales office in Clearwater, Florida. The Largo lease agreement, which is guaranteed by the Company, provides for escalation of rental payments based on taxes and
increases in the Consumer Price Index. The lease term is through September 30, 2008 and calls for approximate monthly rental payments of $17,000 with an adjustment effective September 30, 2007. These adjustments will be based on the
Consumer Price Index, not to exceed three percent. The Clearwater lease agreement calls for approximate monthly rental payments of $2,497, with an escalation of rental payments based on increases in the landlords operating expenses, utility
costs and real estate taxes. The lease term is through May 31, 2009.

The Company also rents certain office equipment under operating
leases with lease terms of less than one year.

Rent expense under all operating leases was approximately $250,000, $224,000 and $221,000
for the years ended June 30, 2007, 2006 and 2005, respectively.

Minimum future lease payments under operating leases, which have an
initial or remaining non-cancelable lease term in excess of one year, over the next three years and thereafter are approximately as follows:



|                    |  |                  |        
|------------------- |  | ---------------- | -------
|Year ended June 30, |  | Operating leases
|2008                |  | $                | 278,348
|2009                |  |                  | 93,033 
|                    |  |                  |        
|Total               |  | $                | 371,381
|                    |  |                  |        



|10. | CAPITAL STOCK AND SUBSEQUENT EVENTS
|--- | -----------------------------------

On
March 24, 2005, the Company issued 15,000 common shares on exercise of employee stock options at an exercise price of $0.19 per share raising gross proceeds of $2,850.

On July 18, 2005, the Company issued 10,000 and 7,500 common shares on exercise of employee stock options at exercise prices of $0.48 and $0.71 per
share raising gross proceeds of $4,800 and $5,325, respectively.

On February 17, 2006, the Company issued 105,000, 60,000, 50,000 and
15,000 common shares on exercise of employee stock options at exercise prices of $0.48, $0.5381 ($0.62Cdn.), $0.71 and $0.8245 ($0.95Cdn.) per share raising gross proceeds of $50,400, $32,286, $35,500 and $12,367, respectively.

On July 27, 2006, the Company issued 5,000, 22,500 and 15,000 common shares on exercise of employee stock options at exercise prices of $0.48, $0.71
and $0.8400 ($0.95Cdn.) per share raising gross proceeds of $2,400, $15,975 and $12,600, respectively.

On October 3, 2006 the Company
issued 10,000 common shares on exercise of employee stock options at an exercise price of $0.2146 ($0.25Cdn.) per share raising gross proceeds of $2,146.

On February 1, 2007 the Company issued 25,000 common shares on exercise of consultants stock options at an exercise price of $0.48 per share raising gross proceeds of $12,000.

Common stock

The common stock of the
Company is all of the same class, is voting and entitles the stockholders to receive dividends. In the event of a liquidation, dissolution or winding up, the common stockholders are entitled to receive equal distribution of net assets or any
dividends, which may be declared.

On August 1, 2006 the Board of Directors
declared a special cash dividend of $0.25 per common share, paid August 28, 2006 to stockholders of record at the close of business on August 14, 2006. The Company also stated its plan to begin paying a regular quarterly dividend. On
November 1, 2006 the Board of



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



Directors declared its initial quarterly cash dividend of $0.075 per common share, paid November 28, 2006 to stockholders of record at the close of
business on November 14, 2006. On February 1, 2007 the Board of Directors declared its regular quarterly cash dividend of $0.075 per common share, payable February 28, 2007 to stockholders of record at the close of business on
February 14, 2007. On May 1, 2007 the Board of Directors declared its regular quarterly cash dividend of $0.075 per common share, payable May 25, 2007 to stockholders of record at the close of business on May 14, 2007. On
August 1, 2007 the Board of Directors declared a special cash dividend of $0.30 per share and its regular quarterly dividend of $.09 per common share, payable August 28, 2007 to stockholders of record at the close of business on
August 14, 2007. The amount of future dividends will depend on earnings, cash flow, and all other aspects of our business as determined and declared by the Board of Directors.

On August 9, 2006 it was announced that the TSX Venture Exchange had approved its normal course issuer bid whereby the Company may purchase for
cancellation up to 224,190 of its common shares, representing 5% of the current issued and outstanding common shares of the Company. The bid commenced on August 21, 2006 and ended on August 20, 2007. All shares purchased were effected
solely through the facilities of the TSX Venture Exchange. The Company purchased 4,600 and 1,000 of its common shares at $4.73 Cdn on August 30, 2006 and September 14, 2006, respectively.

Stock option plan and stock options

The Company has adopted a stock option plan (the Stock Option Plan). The purpose of the Stock Option Plan is to advance the interests of the Company by providing directors, officers, employees and consultants with a financial
incentive for the continued improvement in the performance of the Company and encouragement for them to remain with the Company. The term of any option granted under the Stock Option Plan may not exceed 5 years. The exercise price of each option
must equal or exceed the market price of the Companys stock as calculated on the date of grant. In connection with stock options granted to employees and consultants who are normally compensated by the Company in US dollars, the Company has
clarified its Stock Option Plan that the exercise price is set in US dollars, based on the exchange rate at the date of grant, as was intended. The maximum number of common shares of the Company reserved for issuance under the Stock Option Plan
cannot exceed ten percent of the Companys issued and outstanding common shares. Options, in general, vest immediately except for options granted to consultants performing investor relations activities, which vest at 25% at the grant date and
at 25% at the end of each three month period thereafter. No more than 5% of the issued and outstanding capital of the Company may be granted to any one individual in any 12 month period and no more than 2% of the issued and outstanding capital of
the Company may be granted to any one consultant in any 12 month period.

At the Annual General Meeting of Shareholders held on
February 27, 2006, the shareholders voted against the proposal to approve the Unilens Incentive Stock Option Plan-2006, and therefore failed to extend the stock option plan, which is currently terminated.

The following table, which is presented in US dollars, describes the number and the exercise price of options that have been granted, exercised, or
cancelled during the year ended June 30, 2007



|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|-------------------------------- |  | ---------------- | - |  | ---------------------------------- | ---- | ------------------------------------------ | --- | ---------------------------- | - | -------
|                                 |  | Number ofOptions |   |  | Weighted AverageExercise Price (1) |      | Weighted Average RemainingContractual Term |     | Aggregate IntrinsicValue (1)
|Outstanding, beginning of year   |  | 132,500          |   |  | $                                  | 0.79 |                                            |     |                              |   |        
|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|Exercised                        |  | (77,500          | ) |  | $                                  | 0.58 |                                            |     |                              |   |        
|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|Granted                          |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|Employees                        |  |                 |   |  |                                    |     |                                            |     |                              |   |        
|Consultants                      |  |                 |   |  |                                    |     |                                            |     |                              |   |        
|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|Sub-total granted                |  |                 |   |  |                                    |     |                                            |     |                              |   |        
|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|Expired/cancelled                |  |                 |   |  |                                    |     |                                            |     |                              |   |        
|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|Outstanding, end of year         |  | 55,000           |   |  | $                                  | 1.12 |                                            | 2.2 |                              | $ | 130,300
|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        
|Options exercisable, end of year |  | 55,000           |   |  | $                                  | 1.12 |                                            | 2.2 |                              | $ | 130,300
|                                 |  |                  |   |  |                                    |      |                                            |     |                              |   |        



|(1) | For the purpose of calculating the weighted average exercise prices and aggregate intrinsic values in the above table, options exercisable in Canadian dollars have been converted to
US dollars based on the exchange rate on the applicable dates. The intrinsic value of a stock option is the amount by which the market value (closing price at June 30, 2007 - $3.49) exceeds the exercise price.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



The weighted-average grant date fair value of stock options granted during the three years ended
June 30, 2007, 2006 and 2005 was $0.00 (no options granted), $0.00 (no options granted) and $1.07, respectively.

Cash proceeds, tax
benefits and intrinsic value related to options exercised during the three years ended June 30, 2007, 2006 and 2005 are provided in the following table:



|                                               |  |      |         |      |   |         |  |   |       
|---------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | ------
|                                               |  | 2007 |         | 2006 |   | 2005   
|Proceeds from stock options exercised          |  | $    | 45,121  |      | $ | 140,678 |  | $ | 2,850 
|Tax benefit related to stock options exercised |  | $    | 0       |      | $ | 0       |  | $ | 0     
|Intrinsic value of stock options exercised     |  | $    | 242,044 |      | $ | 768,597 |  | $ | 35,250

The following table describes the number of options, exercise price, and expiry date of the share
purchase options granted by the Company that were outstanding at June 30, 2007:



|                  |  |        |  |                |      |             |                 
|----------------- |  | ------ |  | -------------- | ---- | ----------- | ----------------
|Number of Options |  | Vested |  | Exercise Price |      | Expiry Date
|20,000            |  | 20,000 |  | Cdn. $         | 0.62 |             | December 9, 2008
|15,000            |  | 15,000 |  | Cdn. $         | 0.95 |             | March 3, 2009   
|20,000            |  | 20,000 |  | US $           | 2.07 |             | January 4, 2010 
|                  |  |        |  |                |      |             |                 
|55,000            |  | 55,000 |  |                |      |             |                 
|                  |  |        |  |                |      |             |                 

The Company uses the Black-Scholes pricing model to estimate the fair value of stock-based awards.
The expected volatilities are based on the historical volatility of the Companys stock price. Historical data is used to estimate option exercises and employee terminations within the valuation model. The expected term of options granted is
based on historical exercise patterns of employees and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U S Treasury
yield curve in effect at the time of the grant.

The assumptions used and the estimated weighted-average fair values of the options issued,
using the Black-Scholes option pricing model, during the last three fiscal years were:



|                                                        |  |          |  |          |  |      |         |  
|------------------------------------------------------- |  | -------- |  | -------- |  | ---- | ------- | -
|                                                        |  | 2007 (1) |  | 2006 (1) |  | 2005 |        
|Risk free interest rate                                 |  | N/A      |  | N/A      |  |      | 4       | %
|Expected life of options                                |  | N/A      |  | N/A      |  |      | 5 years |  
|Expected volatility                                     |  | N/A      |  | N/A      |  |      | 56      | %
|Expected dividend yield                                 |  | N/A      |  | N/A      |  |      | Nil     |  
|Weighted average estimated fair value per option issued |  | N/A      |  | N/A      |  | US $ | 1.07    |  



|(1) | There were no options granted in 2007 or 2006.
|--- | ----------------------------------------------



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



|11. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
|--- | --------------------------------------------------



|                                             |  |      |          |   |      |   |          |      |  |   |          |  
|-------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                             |  | 2007 |          |   | 2006 |   |          | 2005 | 
|Cash provided by (used in):                  |  |      |          |   |      |   |          |      |  |   |          |  
|Accounts and royalties and other receivables |  | $    | (228,172 | ) |      | $ | (16,019  | )    |  | $ | (442,421 | )
|Inventories                                  |  |      | 172,276  |   |      |   | (95,507  | )    |  |   | (163,405 | )
|Prepaid expenses and other assets            |  |      | (83,790  | ) |      |   | (21,882  | )    |  |   | (3,942   | )
|Accounts payable and accrued liabilities     |  |      | (146,007 | ) |      |   | 14,483   |      |  |   | 82,279   |  
|                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Change in non-cash working capital items     |  | $    | (285,693 | ) |      | $ | (118,925 | )    |  | $ | (527,489 | )
|                                             |  |      |          |   |      |   |          |      |  |   |          |  

At June 30, 2007 and 2006, the Company has recorded $6,715 and $38,713 of accounts payable in
connection with the acquisition of equipment.

During the years ended June 30, 2007, 2006 and 2005 there were no significant non-cash
investing or financing activities.



|12. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

Related party
transactions entered into during the year ended June 30, 2007 not elsewhere disclosed herein are as follows:



| | i) | the Company paid or accrued accounting fees to an officer of the Company, which is included in administrative expense in the amounts of $2,821, $0, and $5,269 during the years ended
June 30, 2007, 2006, and 2005, respectively;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | the Company paid or accrued interest on a note payable to an affiliated company (Note 8) in the amounts of $0, $0, and $20,252 during the years ended June 30, 2007, 2006, and
2005, respectively.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Except as elsewhere disclosed herein, these transactions were in the normal course of operations and were
measured at the exchange value, which represented the amount of consideration established and agreed to by the related parties.



|13. | CONCENTRATIONS
|--- | --------------

Credit risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash investments and trade
receivables. The Company places its temporary cash investments with a high credit quality financial institution. Concentrations of credit risk with respect to uncollateralized trade receivables are limited due to the Companys large number of
customers and their geographic dispersion. The Company uses an allowance for doubtful accounts on an item-by-item basis to cover any collectibility issues. As a consequence, concentrations of credit risk, which could subject the Company to a loss
are limited and are consistent with managements expectations as reflected in the consolidated financial statements.



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



Volume of business risk

The Company has a supply agreement with one supplier for the manufacture of its molded C-Vue multifocal lens, which currently accounts for approximately
49% of the Companys sales. The agreement is renewable from year to year and is terminable pursuant to customary termination clauses. The Company has concentrations in the volume of purchases it conducts with this supplier. For the year ended
June 30, 2007, the Company purchased approximately 17% of its inventory from this supplier (2006-22%, 2005-28%). At June 30, 2007, the Company owed this supplier approximately $45,000 (2006- $112,000).



|14. | SEGMENTED INFORMATION
|--- | ---------------------

Substantially all of the
Companys assets are located in the United States. The Company currently conducts substantially all of its operations in the United States in one business segment. Revenue consists of the following lens categories for the years ended
June 30:



|                             |  |      |           |      |   |           |  |   |          
|---------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|                             |  | 2007 |           | 2006 |   | 2005     
|Disposable lenses            |  | $    | 3,229,418 |      | $ | 2,891,727 |  | $ | 2,312,152
|Conventional soft lenses     |  |      | 1,320,376 |      |   | 1,322,303 |  |   | 1,073,740
|Gas permeable lenses         |  |      | 604,154   |      |   | 642,651   |  |   | 676,670  
|Replacement and other lenses |  |      | 1,216,982 |      |   | 1,253,359 |  |   | 909,015  
|                             |  |      |           |      |   |           |  |   |          
|Total sales                  |  | $    | 6,370,930 |      | $ | 6,110,040 |  | $ | 4,971,577
|                             |  |      |           |      |   |           |  |   |          



|15. | INCOME TAXES
|--- | ------------

A reconciliation of income taxes
(recovery) at the United States statutory rate to the Companys effective rate is as follows:



|                                                               |  |      |         |   |      |   |          |      |  |   |            |  
|-------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | -------- | ---- |  | - | ---------- | -
|                                                               |  | 2007 |         |   | 2006 |   |          | 2005 | 
|Statutory expense (benefit) at the federal rate of 34%         |  | $    | 741,113 |   |      | $ | 686,134  |      |  | $ | 581,634    |  
|State tax expense (benefit), net of federal effect             |  |      | 83,904  |   |      |   | 75,400   |      |  |   | 64,500     |  
|(Deductible) non-deductible expenses                           |  |      | (357    | ) |      |   | 19,676   |      |  |   | (14,800    | )
|Increase (decrease) in deferred income tax valuation allowance |  |      | 45,121  |   |      |   | (360,000 | )    |  |   | (1,158,434 | )
|                                                               |  |      |         |   |      |   |          |      |  |   |            |  
|                                                               |  | $    | 869,781 |   |      | $ | 421,210  |      |  | $ | (527,100   | )
|                                                               |  |      |         |   |      |   |          |      |  |   |            |  

The income tax expense (benefit) for the years ended June 30, 2007, 2006 and 2005 consists of
recording deferred taxes in the amount of $869,781, $421,210 and ($527,100), respectively.



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



Amounts of deferred tax assets and liabilities are as follows:



|                                                  |  |      |            |   |      |   |            |  
|------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                  |  | 2007 |            |   | 2006 |  
|Deferred tax assets                               |  |      |            |   |      |   |            |  
|Inventory allowance                               |  | $    | 183,500    |   |      | $ | 191,900    |  
|Allowance for bad debt, returns, and allowances   |  |      | 118,600    |   |      |   | 128,500    |  
|Other timing differences                          |  |      | 304,610    |   |      |   | 237,500    |  
|Loss carry forward - United States                |  |      | 2,431,300  |   |      |   | 3,365,090  |  
|Loss carry forward - Canada                       |  |      | 183,000    |   |      |   | 137,879    |  
|                                                  |  |      |            |   |      |   |            |  
|                                                  |  |      | 3,221,010  |   |      |   | 4,060,869  |  
|Valuation allowance                               |  |      | (183,000   | ) |      |   | (137,879   | )
|                                                  |  |      |            |   |      |   |            |  
|                                                  |  |      | 3,038,010  |   |      |   | 3,922,990  |  
|Deferred tax liability                            |  |      |            |   |      |   |            |  
|Tax amortization of property, plant and equipment |  |      | (19,900    | ) |      |   | (35,100    | )
|                                                  |  |      |            |   |      |   |            |  
|Net deferred tax asset                            |  |      | 3,018,110  |   |      |   | 3,887,890  |  
|Less current portion                              |  |      | (1,354,010 | ) |      |   | (1,213,390 | )
|                                                  |  |      |            |   |      |   |            |  
|Long-term portion                                 |  | $    | 1,664,100  |   |      | $ | 2,674,500  |  
|                                                  |  |      |            |   |      |   |            |  

As of June 30, 2007, the deferred tax asset is primarily the result of net operating loss
carryforwards which are available in future years to offset taxable income. Realization of that asset is dependent on the Company, generating future taxable income against which its loss carryforwards can be offset before they expire. The Company
estimated its future taxable income for the next ten fiscal years, assuming improvements over current levels of pretax income. It then compared its projected taxable income against its net operating loss schedule and determined an allowance against
the deferred tax asset was not necessary. Based on all positive and negative evidence available, including sales trends and outlook data, the Company believes it is more likely than not that it will be able to increase its current level of taxable
income, thereby fully realizing its deferred tax asset relating to its United States activity recorded at June 30, 2007. An allowance could be required if near-term estimates of future taxable income during the carryforward periods are changed.
Utilization of the deferred tax asset may be subject to limitations in the event of significant changes in the beneficial ownership of the Company's shares. The Company cannot predict if or when such changes might occur, or their effect, if
any, on the deferred tax asset, which will be dependent on such factors as the size of the beneficial ownership change, its timing and the prices at which shares involved in the change are disposed. The Company is aware, however, that its
largest shareholder is the subject of bankruptcy proceedings that conceivably could result in such shareholder's disposition of all or a portion of its Company shares.

The Company has a deferred tax asset for a Canadian net operating loss. Consistent with prior years, the Company has recorded a full valuation allowance against the Canadian net operating loss, since the loss may
never be utilized.



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



The Company has unused operating loss carryforwards available at June 30, 2007 that may be
applied against future taxable income which expire as follows:



|                    |  |   |          
|------------------- |  | - | ---------
|Year ended June 30, |  |  
|2008                |  | $ | 1,723,451
|2009                |  |   | 923,057  
|2010                |  |   | 1,230,135
|2011                |  |   | 1,111,012
|2012-2022           |  |   | 1,473,162
|                    |  |   |          
|Total               |  | $ | 6,460,817
|                    |  |   |          

The Company also has approximately Cdn $389,060 of unused non-capital loss carryforwards in Canada
available at June 30, 2007 which expire from 2008 to 2016.



|16. | RETIREMENT PLANS
|--- | ----------------

The Company maintains a 401(k)
profit-sharing plan that covers substantially all of its employees. Contributions are to be made at the discretion of the Companys board of directors. For the years ended June 30, 2007, 2006 and 2005, the Company contributed to the plan
$49,911, $44,165, and $28,248 respectively. The Company does not have any liabilities for the plan as of June 30, 2007.



|17. | WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|--- | ----------------------------------------------------



|                           |  |           |  |           |  |          
|-------------------------- |  | --------- |  | --------- |  | ---------
|                           |  | 2007      |  | 2006      |  | 2005     
|Basic                      |  | 4,493,626 |  | 4,294,836 |  | 4,182,842
|Effect of dilutive options |  | 53,194    |  | 227,730   |  | 275,424  
|                           |  |           |  |           |  |          
|Diluted                    |  | 4,546,820 |  | 4,522,566 |  | 4,458,266
|                           |  |           |  |           |  |          



|18. | DIFFERENCES BETWEEN UNITED STATES AND CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
|--- | ---------------------------------------------------------------------------------------

These consolidated financial statements have been prepared in conformity with US GAAP. Prior to the year ended June 30, 2004 the Company prepared its
consolidated financial statements in United States dollars in accordance with generally accepted accounting principles in Canada (Cdn GAAP). Material variations in the accounting principles, practices and methods used in preparing these
financial statements from Cdn GAAP are described and quantified below.

Except as disclosed hereunder, there are no material differences
between US GAAP and Cdn GAAP in connection with the Companys consolidated balance sheets as at June 30, 2007 and 2006 and, for the years ended June 30, 2007, 2006 and 2005, for the consolidated statements of operations, cash
flows and stockholders equity (deficiency).

Stock-based compensation

There were no material differences in the treatment of stock-based compensation under US GAAP and Cdn GAAP for the year ended June 30, 2004.
However, under Cdn GAAP, commencing July 1, 2004, the Company is required to record stock-based compensation for all options granted to employees. For the purpose of determining the material differences between US GAAP and Cdn GAAP and as
permitted under Cdn GAAP, the Company would apply this difference in accounting policy on a retroactive basis with the accumulated deficit balance and additional paid-in-capital balance being adjusted by $114,991 for the



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UNILENS VISION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in U.S. Dollars)

JUNE 30, 2007



cumulative effect of the charges for the fiscal years ended prior to July 1, 2004. Stock based compensation charges for the years ended June 30,
2007 and 2006 were $0 (no options were granted during the years ended June 30, 2007 and 2006). The stock based compensation charges for the years ended June 30, 2007 and 2006 had no effect on basic or diluted income per common share.



|19. | CONTINGENCY
|--- | -----------

The Company has employment agreements
with two members of senior management. These agreements contain terms for which certain benefits are payable upon termination or a change-of-control.



|20. | SUBSEQUENT EVENT
|--- | ----------------

On July 24, 2007, Alfred W.
Vitale President and Chief Executive Officer of the Company announced his planned retirement effective July 31, 2007. Mr. Vitale will remain a Director and Chairman of the Board as well as a consultant and special advisor to the Company
and the Board of Directors through December 31, 2007. Under Mr. Vitales consulting agreement with the Company, he will retain his current salary for his services as a consultant and special advisor as well as certain benefits payable
upon a change-of-control.



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##### Table of Contents

Report of Independent Registered Public Accounting Firm on Schedule

Board of Directors and Stockholders

Unilens Vision Inc.

In connection with our audit of the consolidated financial statements of Unilens Vision Inc. referred to in our report dated October 5, 2007, we have also audited
Schedule I for the year ended June 30, 2007. In our opinion, this schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

Pender Newkirk & Company LLP

Certified Public
Accountants

Tampa, Florida

October 5, 2007



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Unilens Vision Inc.

Schedule I

Valuation and Qualifying Accounts

Years Ended June 30, 2007 and 2006



|                                                  |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|------------------------------------------------- |  | ----------------------- | ------- | ------------------------ | - | ------- | ----------------------- |  | - | ---------- | --- |  | ------------------ | ---------- | - |  | - | -------
|                                                  |  |                         |         | Additions                |   |         |                         |  |   |           
|                                                  |  | BalanceBeginningof Year |         | Chargedto CostandExpense |   |         | Charged toOtherAccounts |  |   | Deductions |     |  | BalanceEnd of Year
|June 30, 2007                                     |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|Allowance for doubtful accounts                   |  | $                       | 188,000 |                          | $ | 6,813   | (1)                     |  |   |            |     |  | $                  | (12,396    | ) |  | $ | 182,417
|Allowance for returns                             |  |                         | 153,625 |                          |   |         |                         |  | $ | 1,522,498  | (2) |  |                    | (1,543,374 | ) |  |   | 132,749
|                                                  |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|Total allowance for doubtful accounts and returns |  |                         | 341,625 |                          |   | 6,813   |                         |  |   | 1,522,498  |     |  |                    | (1,555,770 | ) |  |   | 315,166
|Allowance for inventory                           |  |                         | 510,000 |                          |   | 46,034  | (3)                     |  |   |            |     |  |                    | (50,265    | ) |  |   | 505,769
|                                                  |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|Total                                             |  | $                       | 851,625 |                          | $ | 52,847  |                         |  | $ | 1,522,498  |     |  | $                  | (1,606,035 | ) |  | $ | 820,935
|                                                  |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|June 30, 2006                                     |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|Allowance for doubtful accounts                   |  | $                       | 175,000 |                          | $ | 18,381  | (1)                     |  |   |            |     |  | $                  | (5,381     | ) |  | $ | 188,000
|Allowance for returns                             |  |                         | 130,000 |                          |   |         |                         |  | $ | 1,735,694  | (2) |  |                    | (1,712,069 | ) |  |   | 153,625
|                                                  |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|Total allowance for doubtful accounts and returns |  |                         | 305,000 |                          |   | 18,381  |                         |  |   | 1,735,694  |     |  |                    | (1,717,450 | ) |  |   | 341,625
|Allowance for inventory                           |  |                         | 459,495 |                          |   | 146,188 | (3)                     |  |   |            |     |  |                    | (95,683    | ) |  |   | 510,000
|                                                  |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        
|Total                                             |  | $                       | 764,495 |                          | $ | 164,569 |                         |  | $ | 1,735,694  |     |  | $                  | (1,813,133 | ) |  | $ | 851,625
|                                                  |  |                         |         |                          |   |         |                         |  |   |            |     |  |                    |            |   |  |   |        



|(1) | Uncollected receivables written-off, net of recoveries.
|--- | -------------------------------------------------------



|(2) | Returned product, offset to sales.
|--- | ----------------------------------



|(3) | Obsolete inventory written-off.
|--- | -------------------------------



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FORM 51-102F1

UNILENS VISION INC.

MANAGEMENT DISCUSSION & ANALYSIS  JUNE 30, 2007

The following management discussion and analysis (MDA) provides information on the activities of Unilens Vision Inc. As used in this MDA, unless the
context otherwise requires, "we", "us", "our", the Company or "Unilens" refers to Unilens Vision Inc. and its subsidiaries and should be read in conjunction with the annual financial statements and notes thereto for the year ended
June 30, 2007 (the Financial Statements). The Financial Statements have been prepared in United States dollars and in conformity with United States generally accepted accounting principles (US GAAP). Note 19 to the
Financial Statements describes any material differences between the amounts reported therein and the amounts that would have been reported had the Financial Statements been prepared in conformity with Cdn GAAP. Unless otherwise indicated, all dollar
amounts disclosed in this MDA are expressed in United States Dollars. Readers are cautioned that managements discussion and analysis contains forward-looking statements and that actual events may vary from managements expectations.

Description of Business and Report Date

We
manufacture, distribute and license specialty optical products using proprietary design and manufacturing technology from our manufacturing, distribution, and administrative facility in Largo, Florida. Our products are sold primarily in the United
States through inside sales representatives and independent sales brokers, and a network of distributors. In mid 2001, we entered into an exclusive worldwide license agreement with Bausch and Lomb for our key multifocal technology. Under the terms
of the agreement, Bausch and Lomb will pay us a royalty ranging from two to five percent of their sales of products utilizing the technology.

Our lens business is broken down into the following four categories: (i) disposable lenses;
(ii) conventional soft lenses; (iii) gas permeable lenses; and (iv) replacement and other lenses. Our disposable lenses line consists of the C-Vue®, a mulitfocal cast molded
blister-packed box of six lenses sold for frequent replacement. The C-Vue lens is manufactured for us by a third party utilizing one of our patented soft lens designs and is marketed exclusively in the United States to eye care professionals. In
February 2006, we launched the C-Vue Aspheric single vision lens, a single vision disposable soft contact lens sold for 2-week replacement. The C-Vue Aspheric single vision lens is manufactured for us by a third party utilizing Wavefront inspired
technology. The cast molded C-Vue Aspheric single vision lens is marketed to eye care professionals in a blister-packed box of six lenses. We expect the C-Vue multifocal and the C-Vue Aspheric single vision lenses will make up an increasing
percentage of our future sales. Our conventional soft lenses line of soft lathe-cut multifocal and toric multifocal products consists of the following: the C-Vue Toric Multifocal, designed for patients with an astigmatism that require bifocal
correction; the Unilens, a aspheric multifocal contact lens; the SoftSite, a highadd multifocal contact lens; the SimulVue, a simultaneous vision bifocal contact lens with the capabilities for correcting advanced presbyopia; the
Unilens EMA, a visibility tinted multifocal contact lens available in planned replacement modality; and the C-Vue 55, a highadd multifocal contact lens manufactured in a comfortable high-water content material. Our gas permeable lens line of
products consist of the following: the Unilens GP, a multifocal contact lens intended for patients with astigmatism who need low to moderate presbyopic correction; the Unilens GP Plus, designed to accommodate wearers requiring higher
presbyopic correction; and the C-Vue GP, a front aspheric design incorporating the C-Vue design technology. Our replacement and other lenses line of business primarily consists of the Sof-Form and LifeStyle brand of toric multifocal, toric and
spherical daily, and extended wear lenses marketed under the Lombart brand; the UniVision, an aspheric low vision lens; and the Aquaflex and SoftCon spherical daily and extended wear brand of lenses acquired from CIBA Vision. Our lens products are
marketed, as a family of vision correction products that can serve the majority of the populations vision correction needs.

The following MDA is for
the fiscal year ended June 30, 2007 (the 2007 Fiscal Year or Current Year) and includes relevant information up to October 29, 2007 (the Report Date).



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Overall Performance

Revenue
derived from the C-Vue disposable multifocal, continues to steadily increase, and accounts for approximately 49% of our Current Year revenue. Revenue from the C-Vue Toric multifocal product line, which accounts for approximately 12% of our revenue
for the Current Year, continues to increase in unit sales, and had a quarter over quarter and comparable Current Year revenue increase even with a price cut in early November 2006 of over 25%. We anticipate unit sales of the C-Vue Toric multifocal
will continue to increase, resulting in continued comparable revenue increases in the future for this product line. As expected, we experienced a Current Year 6% decline in our gas permeable product segment consistent with the overall decline of gas
permeable fits within the industry. Royalty income from the license of our key technologies, is a major component of our profitability, and continues to grow. During the 2007 Fiscal Year we were debt free, and paid $2,134,552 in common stock
dividends.

Sales for the 2007 Fiscal Year increased by 4% to $6.4 million, compared to $6.1million for the fiscal year ended June 30, 2006 (the
2006 Fiscal Year or Prior Year). The increase was primarily due to revenue growth in the sales of the C-Vue disposable multifocal, and the C-Vue Toric multifocal which showed net revenue gains even with the price cut in the C-Vue Toric
multifocal in November, 2006, offset by the expected decline in the sales of some of our gas permeable and other replacement soft lathe-cut product lines that are nearing the end of their life cycle. Income before income taxes for the Current Year
increased by $0.2 million to $2.2 million from 2.0 million in the Prior Year, primarily resulting from an increase in royalty income. Income from operations in the Current Year decreased $.039 million as compared to the Prior Year primarily due
to higher margins derived from efficiency gains in our manufacturing operations and from product mix shift to higher margin products, offset by higher administrative expenses. As of June 30, 2007 we had positive working capital of $4.9 million,
which represents an increase of $0.2 million compared to the Prior Year. The increase in working capital was principally due to a decrease in cash (primarily from royalty income offset by the payment of cash dividends) and a decrease in inventory
and accounts payable.

At the end of the 2007 Fiscal Year we had stockholders equity of $7.2 million representing a decrease of $0.8 million compared
to the 2006 Fiscal Year. The decrease in stockholders equity was primarily from income before income taxes (primarily royalty income), offset by cash dividend payments totaling $2.135 million.

Selected Annual Information

The following table sets out selected
financial information for Unilens Vision Inc., which has been derived from our audited financial statements as at and for the fiscal years ended June 30, 2007, 2005, and 2004. These financial statements were prepared in accordance with
accounting principles generally accepted in the United States and are in United States dollars.



|                                                         |  |           |  |           |  |          
|-------------------------------------------------------- |  | --------- |  | --------- |  | ---------
|For the year ended June 30                               |  | 2007 ($)  |  | 2006 ($)  |  | 2005 ($) 
|Income Statement Data                                    |  |           |  |           |  |          
|Revenues                                                 |  | 6,370,930 |  | 6,110,040 |  | 4,971,577
|Income (loss) from operations                            |  | 14,785    |  | 53,359    |  | 91,580   
|Income (loss) before tax benefit                         |  | 2,179,742 |  | 2,018,040 |  | 1,710,687
|Income for the year                                      |  | 1,309,961 |  | 1,596,830 |  | 2,237,787
|Income per common share outstanding - basic and diluted: |  |           |  |           |  |          
|Income for the year                                      |  |           |  |           |  |          
|Basic                                                    |  | 0.29      |  | 0.37      |  | 0.53     
|Diluted                                                  |  | 0.29      |  | 0.35      |  | 0.50     
|Dividends                                                |  | 2,134,552 |  |          |  |         



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|                      |  |            |  |            |  |           
|--------------------- |  | ---------- |  | ---------- |  | ----------
|As at June 30         |  | 2007 ($)   |  | 2006 ($)   |  | 2005 ($)  
|Balance Sheet Data    |  |            |  |            |  |           
|Total assets          |  | 7,987,808  |  | 8,969,222  |  | 7,316,946 
|Working capital       |  | 4,949,732  |  | 4,747,777  |  | 2,540,624 
|Long-term liabilities |  |           |  |           |  |          
|Total liabilities     |  | 819,005    |  | 997,010    |  | 1,082,242 
|Capital stock         |  | 27,596,810 |  | 27,575,628 |  | 27,434,950
|Stockholders equity  |  | 7,168,803  |  | 7,972,212  |  | 6,234,704 

Factors That Affect the Comparability of the Annual Financial Data Disclosed Above

On October 25, 2001 we licensed the exclusive worldwide rights for one of our patented soft multifocal contact lens designs to Bausch and Lomb. Under the terms of
the agreement we will receive a royalty payment ranging from two to five percent of Bausch and Lombs product sales utilizing the technology. We began receiving royalty payments in February of 2003 and recorded royalty income totaling
$2,190,428, $1,932,942, and $1,632,051 for the 2007, 2006 and 2005 Fiscal Years, respectively.

In the 2005 Fiscal Year we recorded a net income tax
benefit of $527,100. The income tax benefit is the result of the recognition of income tax loss carry-forwards, offset by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income
earned during the year.

In the 2006 Fiscal Year we recorded a net income tax expense of $421,210. The income tax expense is the result of the recognition
of income tax loss carry-forwards, offset by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income earned during the year.

In the Current Year we recorded a net income tax expense of $869,781. The income tax expense is the result of the recognition of income tax loss carry-forwards, offset
by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income earned during the year.

Capital Shares and Options

As at the Report date, the Company had the following:



|                                  |  |                                                            
|--------------------------------- |  | -----------------------------------------------------------
|Capital Shares                    |  |                                                            
|                                  | 
|Authorized Common Shares:         |  | 100,000,000 common shares with no par value                
|Issued Common Shares:             |  | 4,550,715 common shares                                    
|Shares in escrow                  |  | None                                                       
|                                  | 
|Authorized Preference A Shares: |  | 100,000,000 Preference A shares at par value Cdn.$10 each
|Issued Preference A Shares:     |  | None                                                       
|Shares in escrow                  |  | None                                                       
|                                  | 
|Authorized Preference B Shares: |  | 100,000,000 Preference B shares at par value Cdn.$50 each
|Issued Preference B Shares:     |  | None                                                       
|Shares in escrow                  |  | None                                                       
|                                  | 
|Convertible Securities            |  |                                                            
|                                  | 
|None                              |  |                                                            



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On August 1, 2006 the Board of Directors
declared a special cash dividend of $0.25 per common share, payable August 28, 2006 to stockholders of record at the close of business on August 14, 2006. Gross disbursements for the common share dividends paid totaled $1,120,954. On
November 1, 2006 the Board of Directors declared its initial quarterly cash dividend of $0.075 per common share, payable November 28, 2006 to stockholders of record at the close of business on November 14, 2006. Gross disbursements
for the common share dividends paid totaled $336,616. On February 1, 2007 the Board of Directors declared its regular quarterly cash dividend of $0.075 per common share, payable February 28, 2007 to stockholders of record at the close of
business on February 14, 2007. Gross disbursements for the common share dividends paid totaled $338,491. On May 1, 2007 the Board of Directors declared its regular quarterly cash dividend of $0.075 per common share, payable May 25,
2007 to stockholders of record at the close of business on May 14, 2007. Gross disbursements for the common share dividends paid totaled $338,491. On August 1, 2007 the Board of Directors declared a special cash dividend of $0.30 per share
and its regular quarterly dividend of $.09 per common share, payable August 28, 2007 to stockholders of record at the close of business on August 14, 2007. Gross disbursements for the common share dividends paid totaled $1,174,779.

On August 9, 2006 it was announced that the TSX Venture Exchange had approved its normal course issuer bid whereby the Company may
purchase for cancellation up to 224,190 of its common shares, representing 5% of the current issued and outstanding common shares of the Company. The bid commenced on August 21, 2006 and ended on August 20, 2007. All shares purchased were
effected solely through the facilities of the TSX Venture Exchange. The Company purchased 4,600 and 1,000 of its common shares at $4.73 Cdn on August 30, 2006 and September 14, 2006, respectively.

Options

The following table shows
the number of options, vested options, exercise price and expiry date of the share purchase options granted by the Company that were outstanding as of the report date:



|                  |  |        |  |                |  |                
|----------------- |  | ------ |  | -------------- |  | ---------------
|Number of Options |  | Vested |  | Exercise Price |  | Expiry Date    
|17,500            |  | 17,500 |  | US$2.07        |  | January 4, 2010
|                  |  |        |  |                |  |                
|17,500            |  | 17,500 |  |                |  |                
|                  |  |        |  |                |  |                

The above common shares issued and options table both as of the report date, reflect 37,500 options
exercised and shares issued, subsequent to the end of the Current Year. Gross proceeds raised from the options exercised totaled $30,563.

At the Annual General Meeting of Shareholders held on February 27, 2006, the shareholders voted against the proposal to approve the Unilens Incentive Stock Option Plan-2006, and therefore failed to extend the stock option plan,
which is currently terminated.

The Unilens Vision Incentive Stock Option Plan allows for the issuance of common share purchase options of
up to 10% of the issued and outstanding common shares to directors, employees, and consultants. The number of shares under option from time to time and the exercise prices of such options, and any amendments thereto, will be and have been determined
by the directors in accordance with the policies of the TSX Venture Exchange.

Common shares issued by the Company during the Current Year:



|                 |  |                     |  |                 |  |                     |      |                     |   |                      |  |                 |  |    
|---------------- |  | ------------------- |  | --------------- |  | ------------------- | ---- | ------------------- | - | -------------------- |  | --------------- |  | ---
|Date of Issue    |  | Type of Issue       |  | Number ofShares |  | Ave. PricePer Share |      | Total GrossProceeds |   | Type ofConsideration |  | CommissionsPaid
|July 27, 2006    |  | Exercise of options |  | 22,500          |  | $                   | 0.71 |                     | $ | 15,975               |  | Cash            |  | Nil
|July 27, 2006    |  | Exercise of options |  | 5,000           |  | $                   | 0.48 |                     | $ | 2,400                |  | Cash            |  | Nil
|July 27, 2006    |  | Exercise of options |  | 15,000          |  | $                   | 0.84 |                     | $ | 12,600               |  | Cash            |  | Nil
|October 3, 2006  |  | Exercise of options |  | 10,000          |  | $                   | 0.21 |                     | $ | 2,146                |  | Cash            |  | Nil
|February 1, 2007 |  | Exercise of options |  | 25,000          |  | $                   | 0.48 |                     | $ | 12,000               |  | Cash            |  | Nil
|Total            |  |                     |  | 77,500          |  | $                   | 0.58 |                     | $ | 45,121               |  |                 |  |    



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Options granted by the Company during the fiscal year ending June 30, 2007  None

Shares in escrow or subject to pooling as at June 30, 2007  None

Results of Operations

Current Quarter

During the three months ended June 30, 2007 (the Current Quarter) we earned income before tax of $670,471 compared to income before tax of $490,328 for the three months ended June 30, 2006 (the Prior
Quarter). The increase in income before tax during the Current Quarter of $180,143 as compared to the Prior Quarter, was primarily due to (i) an increase in gross margin of $18,877, (ii) an increase in royalty income under the
license agreement with Bausch & Lomb of $161,436 to $630,932 in the Current Quarter as compared to $469,496 in the Prior Quarter, (iii) a decrease in expenses of $70,486 as described below, and (iv) a decrease in other items
including interest income and other income of $70,656. After recording income tax expense of $264,207, we had net income of $406,264 or $0.09 per diluted share for the Current Quarter. In comparison, in the Prior Quarter we had net income of
$655,266 or $0.14 per diluted share after recording an income tax benefit of $164,938.

Sales during the Current Quarter were $1,693,572, an increase of
$143,218 (9.2%), as compared to sales of $1,550,354 during the Prior Quarter. The disposable lens category increased by 13.4% due to continued sales growth of our best selling lens, the C-Vue disposable multifocal. Our conventional soft lens
category increased 7.1% due to an increase in our C-Vue toric multifocal product line partially offset by some of our older product lines that are nearing the end of their life cycle. Our gas permeable lens category was up slightly, increasing only
0.7%, reflecting the overall decline in gas permeable fits in the contact lens industry. The replacement lens category increased by 5.1% due to some price increases, and growth of our C-Vue custom toric lens, offset by the expected decline in
product lines that are nearing the end of their life cycle. Gross margin decreased to 45.7% in the Current Quarter compared to 48.7% in the Prior Quarter due primarily to a shift in product mix and costs associated with various manufacturing systems
upgrades.

The decrease in expenses during the Current Quarter, as compared to the Prior Quarter, was primarily due to decreases in administration
expenses. Administration expenses decreased $62,830 even with higher insurance premiums, depreciation and other expenses associated with the general increase in the Companys business during the Current Quarter due primarily to higher general
legal expenses in the Prior Quarter. Sales and marketing expenses increased $21,047 due primarily to increases from salaries associated with additional sales positions, slightly higher promotional and advertising spending.

The decrease in other items was primarily from expenses related to investment banking services with regard to valuation and strategic alternatives pertaining to
shareholder value.

During the Current Quarter we recorded income tax expense of $264,707 compared to income tax benefit in the Prior Quarter of $164,938.
We record income tax at the statutory rates, but currently pay no income tax due to the utilization of tax loss carry-forwards. The increase in income tax expense is the result of higher income before tax in the Current Quarter compared to the Prior
Quarter. The income tax benefit in the Prior Quarter results from the recognition of income tax loss carry-forwards offset by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income
earned during the quarter.

Current Year

During the
twelve months ended June 30, 2007 we earned income before tax of $2,179,742 compared to income before tax of $2,018,040 for the twelve months ended June 30, 2006. The increase in income before tax during the Current Year of $161,702 as
compared to the Prior Year, was primarily due to (i) an increase in expenses of $214,459 as described below, offset by (ii) an increase in gross margin of $175,885, (iii) an increase in royalty income under the license agreement with
Bausch & Lomb of $257,486 to $2,190,428 in the Current Year as compared to $1,932,942 in the Prior Year, and (iv) a decrease in other items including interest income and other income of $57,210. After recording income tax expense of
$869,781, we had net income of $1,309,961 or $0.29 per diluted share for the Current Year. In comparison, in the Prior Year we had net income of $1,596,830 or $0.35 per diluted share after recording income tax expense of $421,210.



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Sales during the Current Year were $6,370,930, an increase of $260,890 (4.3%), as compared to sales of $6,110,040 during
the Prior Year. The disposable lens category increased by 11.7% due to continued sales growth of our best selling lens, the C-Vue disposable multifocal. Our conventional soft lens category decreased 0.1% due to a decrease in some of our older
product lines that are nearing the end of their life cycle offset by an increase in sales of our C-Vue toric multifocal product line even with the price cut in early November 2006 of over 25%. Our gas permeable lens category decreased, by 6.0%, due
to a continued overall decline in gas permeable fits in the contact lens industry. The replacement lens category decreased by 2.9% due to the expected decline in product lines that are nearing the end of their life cycle. Gross margin increased to
45.2% in the Current Year compared to 44.3% in the Prior Year due to efficiencies gained in the manufacturing operations and to a shift in product mix towards higher margin products offset by lower prices on our our C-Vue toric multifocal product
line.

The increase in expenses during the Current Year, as compared to the Prior Year, was primarily due to increases in administration expenses and sales
and marketing expenses. Administration expenses increased $128,636 due to higher insurance premiums, depreciation and other expenses associated with the general increase in the Companys business during the Current Year. Sales and marketing
expenses increased $129,129 primarily due to salaries associated with additional sales positions and during the Second Quarter, expenses associated with an industry educational sponsorship.

During the Current Year we recorded income tax expense of $869,781 compared to income tax expense in the Prior Year of $421,210. We record income tax at the statutory
rates, but currently pay no income tax due to the utilization of tax loss carry-forwards. The increase in income tax expense is the result of higher income before tax in the Current Year compared to the Prior Year and the recognition of income tax
loss carry-forwards offset by a reduction in the deferred income tax asset due to the application of tax loss carry forwards against the taxable income earned during the Prior Year.

Seasonality

The results of operations for the Current Quarter and Current Year are not necessarily indicative of the
results for the entire fiscal year. While our sales are not substantially subject to seasonality, sales during the quarter ending December 31, historically are normally lower than other quarters due to a decrease in patient visits to eye care
professionals during the Christmas holiday season.

Summary of Quarterly Results

Results for the eight most recent quarters ending with the Current Quarter are:



|                                                        |  |                                         |  |              |  |              |   |  |              |  |              |  |              |  |              |   |  |             
|------------------------------------------------------- |  | --------------------------------------- |  | ------------ |  | ------------ | - |  | ------------ |  | ------------ |  | ------------ |  | ------------ | - |  | ------------
|                                                        |  | For the Three Months Ending (Unaudited)
|                                                        |  | June 30,2007                            |  | Mar. 31,2007 |  | Dec. 31,2006 |   |  | Sep. 30,2006 |  | June 30,2006 |  | Mar. 31,2006 |  | Dec. 31,2005 |   |  | Sep. 30,2005
|                                                        |  | ($)                                     |  | ($)          |  | ($)          |   |  | ($)          |  | ($)          |  | ($)          |  | ($)          |   |  | ($)         
|Income Statement Data                                   |  |                                         |  |              |  |              |   |  |              |  |              |  |              |  |              |   |  |             
|Total revenues                                          |  | 1,693,572                               |  | 1,634,429    |  | 1,438,153    |   |  | 1,604,776    |  | 1,550,354    |  | 1,585,086    |  | 1,405,486    |   |  | 1,569,114   
|Operating income (loss) for the quarter                 |  | 93,748                                  |  | 80,919       |  | (181,321     | ) |  | 21,439       |  | 4,385        |  | 15,514       |  | (46,613      | ) |  | 80,073      
|Income (loss) before tax benefit                        |  | 670,471                                 |  | 635,197      |  | 358,891      |   |  | 515,183      |  | 490,328      |  | 513,808      |  | 485,696      |   |  | 528,208     
|Income for the period                                   |  | 406,264                                 |  | 372,355      |  | 220,850      |   |  | 310,492      |  | 655,266      |  | 314,689      |  | 297,399      |   |  | 329,476     
|Income per common share outstanding  basic and diluted |  |                                         |  |              |  |              |   |  |              |  |              |  |              |  |              |   |  |             
|Net income per common share for the period              |  |                                         |  |              |  |              |   |  |              |  |              |  |              |  |              |   |  |             
|Basic                                                   |  | 0.09                                    |  | 0.08         |  | 0.05         |   |  | 0.07         |  | 0.15         |  | 0.07         |  | 0.07         |   |  | 0.08        
|Diluted                                                 |  | 0.09                                    |  | 0.08         |  | 0.05         |   |  | 0.07         |  | 0.14         |  | 0.07         |  | 0.07         |   |  | 0.07        

The financial data presented above is derived from the Companys financial statements and is prepared in
conformity with accounting principles generally accepted in the United States and in United States dollars.



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Factors That Affect the Comparability of the Quarterly Financial Data Disclosed Above

On October 25, 2001 we licensed the exclusive worldwide rights for one of our patented soft multifocal contact lens designs to Bausch and Lomb. Under the terms of
the agreement we will receive a royalty payment ranging from two to five percent of Bausch and Lombs product sales utilizing our technology. During the Quarter ended June 30, 2006, the contractual royalty rate received on Bausch and Lomb
product sales utilizing this technology decreased 14%. The next contractual decrease will occur in the quarter ending December 2016. The quarterly results in the above table include royalty income as follows:



|               |  |                             |  |              |  |              |  |              |  |              |  |              |  |              |  |             
|-------------- |  | --------------------------- |  | ------------ |  | ------------ |  | ------------ |  | ------------ |  | ------------ |  | ------------ |  | ------------
|               |  | For the Three Months Ending
|               |  | June 30,2007                |  | Mar. 31,2007 |  | Dec. 31,2006 |  | Sep. 30,2006 |  | June 30,2006 |  | Mar. 31,2006 |  | Dec. 31,2005 |  | Sep. 30,2005
|               |  | ($)                         |  | ($)          |  | ($)          |  | ($)          |  | ($)          |  | ($)          |  | ($)          |  | ($)         
|Royalty income |  | 630,932                     |  | 545,293      |  | 537,653      |  | 476,550      |  | 469,496      |  | 489,551      |  | 526,809      |  | 447,086     

In the quarter ending June 30, 2006 we recorded approximately $0.4 million in income tax benefits that
resulted from the recognition of deferred tax assets expected to be realized in the future, which was offset by a reduction in the deferred income tax asset during the quarter.

In the quarter ending June 30, 2007 we recorded approximately $ .05 million in income tax expense that resulted from the change in deferred tax assets expected to be realized in the future, which was offset
by a increase in the deferred income tax asset during the quarter.

Liquidity and Capital Resources

Current Quarter

As of June 30, 2007, the Company had working
capital of $4,949,732, representing an increase of $475,414 from our working capital at March 31, 2007. Positive cash flow from operating activities totaled $546,016, and we used cash of $43,479 for the purchase of capital additions during the
quarter ending June 30, 2007.

Current Year

As of
June 30, 2007, the Company had working capital of $4,949,732 representing an increase of $201,955 from our working capital at June 30, 2006. The increase in working capital was principally due to a decrease in cash from the payment of cash
dividends totaling $2,134,552, and a decrease in inventory offset by a decrease in accounts payable. During the Current Year, we generated $2,063,765 in cash from operations representing a increase of $39,859 from $2,023,906 generated during the
prior year period ended June 30, 2006. We used cash of $184,620 during the Current Year for the purchase of capital additions, a decrease of $152,728 from the Prior Year. The Company also received cash of $45,121 from capital stock issued from
the exercise of stock options and used cash of $23,939 to repurchase 5,600 shares of common stock during the Current Year.

Related Party Transactions

During the Current Year, we incurred $2,821 (2006$0) in fees to, William Baxter, a director of the Company, for consulting services and
incurred interest expense of $0 (2006$0) on a note payable owed to Uniinvest Holdings AG, a related financial institution.

Trend Information

The soft multifocal contact lens business has been impacted over the past several years by the introduction of molding manufacturing technology,
allowing for the mass production of most lens types at a fraction of the cost to lathe lenses. The entrance of these molded lenses has created significant price competition in the marketplace. The



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reduced cost of the molded lens allows for liberal trial lenses to be provided to eye care professionals for a more productive fitting session and immediate
dispensing of lenses. Furthermore, lower manufacturing costs led to the introduction of frequent replacement and disposable lenses, a modality preferred by many consumers. Recognizing this trend, we signed an agreement with a third party in 2002 for
the supply of molded soft contact lenses (C-Vue) utilizing our patented design. The C-Vue brand was launched to eye care professionals in the United States during September of 2002. In February 2006, we announced the launch of the first aspheric,
single vision daily wear, two week disposable soft contact lens ever available under the C-Vue brand. The C-Vue Aspheric single vision lens is manufactured by a third party utilizing Wavefront inspired technology. The cast molded C-Vue Aspheric
single vision lens was launched to eye care professionals in the United States in the middle of February 2006. During the Current Year the Companys C-Vue disposable products accounted for approximately 51% of sales. The Company expects the
sales of the C-Vue brand multifocal and single vision lenses will make up an increasing percentage of its future sales.

Risk Factors

A significant portion of the Companys net income is derived from the Companys exclusive license of one of its patented multifocal designs to Bausch and Lomb.
The Company collects royalties based on Bausch and Lombs worldwide net sales of products utilizing the Companys technology. There can be no assurances that Bausch and Lomb will continue to sell products in the future utilizing the
Companys technology.

The Company entered into a supply agreement with one supplier for the manufacture of its molded C-Vue multifocal lens, which
currently accounts for approximately 49% of the Companys sales. The agreement is renewable from year to year and is terminable pursuant to customary termination clauses. Although to date the supplier has met the Companys requirements,
there can be no assurances that they will be able to continue to meet their obligations under the current agreement or any renewal of the agreement. Furthermore, there are no assurances that the supplier will meet the Companys possible future
requirements for design or material changes and enhancements. Alternative suppliers for the manufacture of the C-Vue multifocal contact lens have been identified. However, there can be no assurances that an alternate supplier can successfully
manufacture the lens to the Companys specifications, on acceptable terms, or within the constraints of the exclusive license agreement with Bausch and Lomb.

Financial Instruments

The Companys financial instruments consist of cash and cash equivalents, accounts receivable, royalties and
other receivables, accounts payable and accrued liabilities. It is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these
financial instruments approximates their carrying values.

Outlook

We anticipate solid growth in income before income taxes for the fiscal year ending June 30, 2008. This earnings growth will be derived primarily from royalty income from increasing demand for our licensed
multifocal technology, and from growth of our family of C-Vue brand contact lenses.

Other

Investor relations are done internally and consist of responding to inquiries from potential investors and stockholders as well as the dissemination of Company news and
information. During the third quarter of the Current Year, we terminated the services of RJ Falkner and Company as our investor relations counsel, and have retained the services of Newport Capital Consultants, Inc. (Newport) as our
broker relations counsel. We pay Newport a monthly consulting fee, and reimburse Newport for pre-approved expenses incurred in providing us services.

Disclosure Controls and Procedures

As at the fiscal year ended June 30, 2007, an evaluation was carried out, under the supervision of
and with the participation of Company management, including the President and Chief Executive Officer, and Chief Financial



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Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, the President and Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as at June 30, 2007 to provide reasonable assurance that material information relating to the Company would be made known to
them by others within the Company.

Additional Information

Additional information is available concerning the Company and its operations on SEDAR at www.sedar.com and on our web site at www.unilens.com. Additional financial information concerning the Company is provided in its audited comparative
financial statements for the Companys most recently completed financial year. Copies of this information are available by contacting the Company at 800-446-2020.

Directors and Officers

The Companys directors and officers as at the Report Date are:



|                      |  |                                                                     
|--------------------- |  | --------------------------------------------------------------------
|Directors:            |  | Officers:                                                           
|Alfred W. Vitale      |  | Michael J. Pecora  President & Chief Executive Officer             
|William D. Baxter     |  | Leonard F. Barker  Chief Financial Officer, Treasurer and Secretary
|Nick Bennett          |  |                                                                     
|Elizabeth J. Harrison |  |                                                                     

Board Approval

The contents of this management discussion and analysis have been approved and its mailing has been authorized by the board of directors of the Company.



ON BEHALF OF THE BOARD OF DIRECTORSMichael J. PecoraMICHAEL J. PECORA, PRESIDENT




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|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

Not Applicable. See Item 17.



|ITEM 19. | EXHIBITS
|-------- | --------

Exhibits attached to this Annual Report on Form 20-F are
as follows:



|                |  |                                                                                                                                                                   
|--------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Type ofDocument |  | Description                                                                                                                                                       
|                | 
|1.1             |  | * Memorandum, Certificate of Incorporation and Articles of Association of Unilens Vision Inc.                                                                     
|                | 
|2.1             |  | **Loan Agreement, dated January 19, 1993, between Unilens Corp. USA, Unilens Vision Inc. and UNIINVEST Holding AG (formerly EBC Zürich AG)                        
|                | 
|2.2             |  | ***Amendment to Loan Agreement, dated as of October 28, 2003, between UNIINVEST Holding AG, Unilens Corp. USA and Unilens Vision Inc.                             
|                | 
|2.3             |  | *****Loan and Security Agreement, dated April 28, 2005 by and between RBC Centura Bank and Unilens Corp. USA.                                                     
|                | 
|2.4             |  | ******First Amendment to Loan and Security Agreement, dated April 25, 2006 by and between RBC Centura Bank and Unilens Corp. USA.                                 
|                | 
|4.1             |  | **License Agreement, dated October 25, 2001.                                                                                                                      
|                | 
|4.2             |  | **Private Label Supply Agreement dated June 4, 2002, between Unilens Vision Inc. and Bausch & Lomb Incorporated.                                                  
|                | 
|4.3             |  | *Lease Agreement, dated February 25, 1983, between Bryan Dairy Limited, as Lessor, and University Optical Products Co., as Lessee                                 
|                | 
|4.4             |  | **Amendment to Lease, dated March 29, 1991, between Unilens Corp. USA and Dr. Klaus R. Hoffman and Mrs. Ursula Hoffman                                            
|                | 
|4.5             |  | **Second Amendment to Lease, dated September 30, 1993, between Unilens Corp. USA and Dr. Klaus R. Hoffman and Mrs. Ursula Hoffman                                 
|                | 
|4.6             |  | **Third Amendment to Lease, dated August 28, 1997, between Unilens Corp. USA and Dr. Klaus R. Hoffman and Mrs. Ursula Hoffman                                     
|                | 
|4.7             |  | **Fourth Amendment to Lease, dated December 28, 1999, between Unilens Corp. USA and Five and Two Associates                                                       
|                | 
|4.8             |  | **Severance Compensation Agreement, dated August 1, 2000, between Unilens Vision, Inc., Unilens Corp. USA and Alfred W. Vitale (including four amendments thereto)
|                | 
|4.9             |  | ***Fifth Amendment to Severance Compensation Agreement, dated April 21, 2004, between Unilens Vision Inc., Unilens Corp. USA and Alfred W. Vitale.                



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|     |  |                                                                                                                                          
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|     | 
|4.10 |  | **Offer Letter, dated March 1, 1999, by Unilens Corp. USA to Michael J. Pecora (including an amendment dated July 10, 2003)              
|     | 
|4.11 |  | ***Unilens Vision Inc. Incentive Stock Option Plan  2004                                                                                
|     | 
|4.12 |  | ***Settlement Agreement, dated as of October 17, 2003, between Competitive Technologies, Inc., Unilens Corp. USA and Unilens Vision Inc. 
|     | 
|4.13 |  | ****Asset Purchase Agreement, dated as of February 2, 2004, between Unilens Corp. USA and THE LIFSTYLE COMPANY, INC.                     
|     | 
|4.14 |  | *****Asset Purchase Agreement, dated as of February 23, 2005, by and between Unilens Corp. USA and CIBA Vision Corporation.              
|     | 
|4.15 |  | *****Severance Compensation Agreement, dated July 1, 2005, between Unilens Corp. USA, Unilens Vision Inc. and Michael J. Pecora.         
|     | 
|4.16 |  | ******Severance Compensation Agreement, dated September 6, 2006, between Unilens Corp. USA, Unilens Vision Inc. and Kelly McKnight-Goelz.
|     | 
|4.17 |  | ******Lease Agreement, dated May 4, 2006 between, Center Family, LTD. as Landlord, and Unilens Corp. USA as Tenant.                      
|     | 
|4.18 |  | Consulting Agreement dated July 2, 2007 between Unilens Vision Inc. and Alfred W. Vitale.                                                
|     | 
|8.1  |  | List of Subsidiaries                                                                                                                     
|     | 
|11.1 |  | ****Code of Ethics                                                                                                                       
|     | 
|12.1 |  | Certification of Michael J. Pecora Pursuant to Rule 13a-14(a)                                                                            
|     | 
|12.2 |  | Certification of Leonard F. Barker Pursuant to Rule 13a-14(a)                                                                            
|     | 
|13.1 |  | Certification of Michael J. Pecora Pursuant to 18 U.S.C. Section 1350                                                                    
|     | 
|13.2 |  | Certification of Leonard F. Barker Pursuant to 18 U.S.C. Section 1350                                                                    

---

|* | Previously filed as an exhibit to our registration statement on Form 20-F, filed with the Commission on July 3, 1989.
|- | ---------------------------------------------------------------------------------------------------------------------



|** | Previously filed as an exhibit to our registration statement on Form 20-F for the year ended June 30, 2002, filed with the Commission on March 15, 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------



|*** | Previously filed as an exhibit to our registration statement on Form 20-F for the year ended June 30, 2003, filed with the Commission on March 15, 2004
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



|**** | Previously filed as an exhibit to our registration statement on Form 20-F for the year ended June 30, 2004, filed with the Commission on December 30, 2004
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



|***** | Previously filed as an exhibit to our registration statement on Form 20-F for the year ended June 30, 2005, filed with the Commission on December 30, 2005
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



|****** | Previously filed as an exhibit to our registration statement on Form 20-F for the year ended June 30, 2006, filed with the Commission on December 29, 2006
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Unilens Vision Inc. certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



|                                 
|---------------------------------
|UNILENS VISION INC.              
|                                 
|/s/ Michael J. Pecora            
|Michael J. Pecora                
|President/Chief Executive Officer

DATED: December 28, 2007



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