SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934, for the fiscal year ended May 31, 2001

                            Commission File No. _____

                       L.O.M. MEDICAL INTERNATIONAL, INC.
                       ----------------------------------
             (Exact name of registrant as specified in its charter)
DELAWARE                                                             98-0178784
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(State or other jurisdiction               (I.R.S. Employer Identification No.)
of incorporation or organization)

#3-1482 Springfield Road, Kelowna,
British Columbia, Canada                                                V1Y 5V3
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(Address of registrant's principal executive offices)                (Zip Code)

                                  250.762.7552
                                  ------------
              (Registrant's Telephone Number, Including Area Code)

Check whether the registrant (1) has filed all reports required by Section 13 or
15(d) of the Securities 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 [  ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year: $0.00.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act). As of May 31, 2001, approximately $3,414,588.

The number of shares outstanding of the issuer's only class of Common Stock,
$.001 par value, was 6,152,811 on May 31, 2001.

Documents incorporated by reference. There are no annual reports to security
holders, proxy information statements, or any prospectus filed pursuant to Rule
424 of the Securities Act of 1933 incorporated herein by reference.

Transitional Small Business Disclosure format (check one):
                           Yes [  ]                  No [X]







<PAGE>





PART I.

Item 1.  Description of Business.
---------------------------------

Development of the Company.

L.O.M.  Medical  International Inc., a Delaware corporation  ("Company"),
was incorporated in the State of Delaware on March 17, 1997. Our  executive
offices are located at #3-1482  Springfield  Road,  Kelowna,  B. C. Canada
V1Y 5V3. The Company's  telephone  number is 250.762.7552.

For purposes of clarification, anytime the symbol "US" is used within this
Annual Report of Form 10-KSB, it refers to the currency of the United States.
Anytime the symbol "CDN" is used, it refers to the currency of Canada.

Business of the Company.

The Company was incorporated for the purpose of researching and developing
health care products. The goal is to become an innovator and provider of a
retractable syringe ("Syringe") and related products and technologies to the
health care market. We also hope to successfully market and distribute a line of
eye care products. We plan to develop new and improved products and provide the
health care industry with better, safer products throughout the world.

The Retractable Syringe.

We believe the Syringe will change standard disposal methods for used syringes.
We have developed a product designed to function as a standard hypodermic
syringe that we believe is safer to the caregiver or health care worker. We
believe that the Syringe's unique design will allow health care providers to
avoid direct contact with used needles. The Syringe is covered by United States
Patent No. 5,868,713 dated February 9, 1999, and international patents have been
filed in 84 different countries.

Once the needle is injected, the user simply has to press the plunger top gently
with his or her thumb to automatically retract the needle into its own sealed
chamber. The needle is now hidden where it remains locked in place and cannot be
used again. The Syringe does not require a health care worker to use both hands
to retract the needle after it has been used and withdrawn from the patient. The
Syringe will be produced in standard industry sizes from 1CC to 20 CC,
inclusive.

We intend to promote the Syringe as a safer and less risk-oriented instrument
for hospital staff and health care workers. We are optimistic that doctors,
nurses, and health care workers alike will recognize and appreciate the safety
features of the Syringe because of its ease of "use-and-disposal" and its unique
"contaminate-prevention" characteristics. However, we currently have no
contracts to sell the Syringe and there are no guarantees as to the timing of
any such contracts in the future.

It is anticipated that the products and technologies developed by us will be
offered to distributors on a worldwide basis, with an initial emphasis in Canada
and the United States. It is hoped that new product and technology ideas will be
generated through active dialogues among our potential customers, and our
network of scientific advisors. We also hope to participate in national and
international conferences, and to generate reviews in selected scientific
literature.

Management interacts with a network of scientific advisors within the industry,
including members of academic institutions, as well as potential customers. We
anticipate that these interactions will enable us to identify the specialized
needs of those potential customers and to provide innovative and commercially
acceptable products and technologies. At this time, our relationship with
scientific advisors and academic institutions is limited to an advisory
relationship. We anticipate testing the Syringe in conjunction with teaching
universities in Canada, Britain, and other constituents of the United Kingdom.





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<PAGE>


Over the last 12 months we have been working toward turning the patented concept
of our retractable syringe into a viable product. The challenges of doing this
cost effectively are great. We have manufactured a Proof Of Concept Prototype
("POCP"). A POCP is a device designed to show that the patented idea or
invention can be made into a viable product. The next step is to make a
prototype that is virtually the same as the finished product. We are currently
working on manufacturing 50,000 prototypes.

The first task in the development of the our retractable syringe was to find a
prototype that we would be able to work with. Over 20 companies were researched,
evaluated and contacted before we settled on our current contract developer. We
have entered into preliminary agreements with B.C. Tech Inc. and Philips Plastic
Corporation. We believe those agreements will allow us to complete the
production of the prototype Syringe as well as allow us to produce 50,000 test
units of the Syringe at a cost of approximately US $400,000.00. We plan to meet
our financial obligation under these agreements over the next several months
from existing cash resources. From our inception on March 17, 1997, to May 31,
2001 we have incurred $875,420 related to the development of the Syringe,
including a prototype.


During the year, a propellant was selected from a large pool of possibilities.
This had to meet many criteria. We have found a material that, according to our
preliminary research, meets the desired criteria and has been encapsulated in a
polymer to form a cell. We have not yet completed our research, however, and
unanticipated problems may arise. This cell has proved to generate more than
enough power to retract a needle. We hope to produce a cell with a 2-year shelf
life. Currently we have developed a cell with a 3-6 month shelf.

We have garnered information on syringe design and practicality from
interviewing nursing practitioners. We also determined the thumb-force required
to activate retraction of the needle. We have incorporated the results of our
studies into our POCP.

We believe that the POCP has shown benefits over spring-powered syringes. With
design modifications, we hope to tailor the speed of retraction while
maintaining the smooth retraction of the needle. We hope this will eliminate the
type of blood splattering sometimes experienced with spring-loaded syringes.

We have evaluated many types of syringes. We are in the final stages of design
approval to make 5,000 prototypes for selected trials by physicians, nurses, and
clinics. We hope that the prototypes will be ready within 3-4 months.

Over the next 12 months, we plan to focus our efforts in the following areas:

o  Perform design refinements on the Syringe in an effort to minimize parts and
   make manufacturing as simple and cost effective as possible;

o  Selection of raw materials;

o  Contact the Food and Drug Administration ("FDA") in anticipation of a
   510K submission;

o  Sterilization selection (E beam and Y beam);

o   Material compatibility; and

o   Mould maker selection.




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During the next 12 months we anticipate increases in our staffing levels as the
prototype of the Syringe moves forward. Dr. Simon Wood has agreed to run the
research and development department. Currently, he invoices us on an hourly
basis for work completed. There is no written contract in place with him at this
time. We have subcontracted with Kevin Conway, a mid-level engineer for
services. Mr. Conway performs subcontract work on a hourly basis. He is
assisting with CAD-CAM requirements relating to the development of the Syringe.

We are not currently producing commercial quantities of products or currently
supplying any services to any third parties.

No assurance can be given that we will, on a timely basis, be able to make the
transition from manufacturing testing quantities of the Syringe to commercial
production quantities successfully or be able to arrange for contract
manufacturing.

We anticipate contracting out the first two years of commercial production of
the Syringe. At the end of the second year of production, we anticipate engaging
in significant discussions regarding the potential for the construction of our
own production facility. We recognize that the construction of a production
facility will be contingent upon us having reached our sales and profit
projections. We anticipate this issue will be presented for vote by the Board of
Directors and shareholders. Negotiations to set up a manufacturing plant in
Ireland have begun but have not progressed beyond the preliminary discussions
discussed in our previous filings.

The Eye Care System.

We have invented and developed an insertion and storage device for contact
lenses (the "Eye Care System"), which is a method of handling and inserting
contact lenses. We have developed the following components and solutions that
may be used together with the Eye Care System insertion and storage products:

o        a medical  inserter that will remove contact  lenses in a medical
         emergency situation for use by hospital medical staff and paramedics;
o        disposable and replacement inserter ends;
o        additional storage cups and caps; and
o        all soaking and disinfecting solutions that are to be used with the
         Eye Care System inserter.

The Eye Care System is designed to allow the practitioner to avoid having direct
hand or finger contact with the contact lens when fitting a patient. We believe
that the design of the system will reduce the risk of contamination and
infection to the patient. We have developed a liquid cleaner for the Eye Care
System that quickly cleans contact lenses. We have obtained FDA approval for the
Eye Care System product.

The target markets for the distribution for the Eye Care System product include,
but are not necessarily limited to, hospitals and clinics, including
optometrists and opticians.

We have produced 33,000 units of our eye care inserters, which will be used for
demonstrations. As such, we have not inventoried the units but we have expensed
them in the past financial statements as net realizable value (anticipated to be
nil). We currently have the ability to subcontract out for the production of
commercial quantities of our eye care products. We currently have dies with an
output capacity of 150,000 units. There is a second set of dies designed that
will have a 300,000 unit capacity which would allow the production of a total of
450,000 units of eye care products per month.

We have FDA approval to market our line of eye care products in the United
States and have the necessary Canadian approval to market eye-care products in
Canada. We are reviewing various contracts with third parties to market the Eye
Care System in Canada as well as the United States.


We plan to focus our activities over the next twelve months on the production
and introduction of the Syringe. When that is finalized, we will implement our
marketing plan for the Eye Care System products.



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Skin Care Products.

At this time we are reorganizing our approach to the skin care line. We will not
be pursuing this area aggressively until we have our Syringe production under
way.

Genetic Patents.

We are currently in the first phase of licensing agreements with the owners of
various patents on genetic vectors. As of May 31, 2001 we had advanced $44,020
to pay for patents characterized in our financial statements as advances and
deposits.

Business of the Company's Subsidiary.

There has been no activity in the subsidiary this quarter. For the foreseeable
future the subsidiary will be inactive.

Government Regulation.

United States Governmental Regulation. Virtually all of our products will
-------------------------------------
require regulatory approval by governmental agencies prior to commercialization.
We expect to research and develop products and technologies requiring rigorous
pre-clinical and clinical testing and other approval procedures by the FDA and
similar health authorities in foreign countries. Various federal statutes and
regulations also govern or influence the manufacturing, safety, labeling,
storage, record keeping and marketing of such products. The process of obtaining
these approvals and the subsequent compliance with appropriate federal and
foreign statutes and regulations requires the expenditure of substantial
resources. The effect of government regulations may be to delay for a
considerable period of time or even prevent the marketing of any product that we
may develop and/or to impose costly procedures on our activities. Non-compliance
with applicable requirements can result in, among other things, fines,
injunctions, seizures of products, total or partial suspension of product
marketing, failure of government to grant pre-market approval, withdrawal of
marketing approvals, product recall and criminal prosecution.

On November 28, 1990, the Safe Medical Devices Act ("SMDA") became law. The SMDA
amended the Food, Drug and Cosmetic Act and has several provisions that affect
the medical device industry. Several provisions of the SMDA are self-enacting.
Both distributors and importers of medical devices are affected by the SMDA.

Beginning on November 28, 1990, medical facilities are now required to report
patient deaths attributed to devices to the manufacturers and the Food and Drug
Administration ("FDA"). Medical facilities are also now required to report
serious injuries and serious illnesses contributed or caused by medical devices
to the manufacturers. Because the SMDA user facility reporting requirement is
self-implementing and contains limited procedures for reporting, the FDA issued
interim guidance for user facilities in order to comply with the SMDA. The
guidance includes a test reporting form that the facilities may use to report
incidences to manufacturers. SMDA Section 519(d) or 21 U.S.C. 360(i)(d),
requires that manufacturers, importers and distributors annually certify to the
FDA the number of MDR reports they have submitted in a year or that no such
reports were submitted. Moreover, distributors will be required to report
incidents to manufacturers and to the FDA under Section 519(a)(6) or 21 U.S.C.
360(i)(a)(6). They will also be required to register with the FDA.

There are also two provisions in the SMDA that affect product removal and
correction. The first section is Section 519(f) or 21 U.S.C. 360(i)(f). In this
section, a firm is required to report to the FDA when it removes or corrects a
distributed product when those actions are intended to reduce risk to public
health posed by a device or to remedy a violation of the SMDA that may present a
risk to public health. If a product removal or correction is reported under the
MDR with an incident report, it does not have to be reported a second time to
the FDA. The second provision is Section 303(j) or 21 U.S.C. 333(j). This
provision became effective November 28, 1990. The agency now has the authority
under certain conditions to order manufacturers, importers, distributors or
retailers of devices to immediately cease distribution of a volatile product. It
can also order notification to health care professionals and user facilities to



                                       5
<PAGE>



cease use of a product when there is a reasonable probability that it would
cause serious adverse health consequences or death. The person subject to the
order has the opportunity for an informal hearing within 10 days after the date
of the issuance on the actions required by the order and whether the device
should be recalled.

Manufacturers of devices that are reasonably likely to have adverse health
consequences and are permanent implants or life sustaining or life supporting
and are used outside of a device user facility are required to develop device
tracking system. This language appears in Section 519(e) or 21 U.S.C. 360(i)(e).

Canadian Governmental Regulation. In Canada, all products that require approval
---------------------------------
for marketing and sales must be submitted to the Health Production Branch
Tunney's Pasture Ottawa ("Branch Tunney's"). Testing by Branch Tunney's includes
the testing of:

o        a product's design function;
o        a product's materials;
o        method of product sterilization;
o        sample of the product's packaging;
o        a product's labeling;
o        indications of lot numbers;
o        size;
o        manufacturers names and/or place of production; and
o        projected run date.

Trial runs of the Syringe will be carried out through hospitals, where product
performance will be evaluated. For the market and distribution of the Syringe,
we are in the process of obtaining Health Canada and Food and Drug
Administration Approval Numbers. We will also need to acquire DIN numbers and
UPC codes. Finally, we will have to obtain national drug codes.

We are also subject to the provisions of the Canadian Food and Drug Act
("CFDA"). Chapter F-27 of the CFDA regulates the advertisement and sale of food,
drugs, cosmetics and medical device products. Specifically, this section of the
CFDA restricts the labeling, packaging, and treatment process and sale or
advertisement of any medical device in a manner that is false, misleading or
deceptive or is likely to create an erroneous impression regarding its design,
construction, performance, intended use, quantity, character, value,
composition, merit or safety. Moreover, the regulation provides that where a
standard has been prescribed for a device, no person shall label, package, sell
or advertise any article in any manner that is likely to be mistaken for such a
device unless the article complies with the prescribed standard. Part II of the
Chapter F-27 of the CFDA also explains the administration and enforcement powers
of inspectors working under the CFDA. Specifically, the CFDA gives inspectors
the right to, at any reasonable time, enter any place where on reasonable
grounds the inspector believes any article is manufactured, prepared, packaged,
preserved or stored, and examine any such article and make or take samples
thereof and anything the inspector reasonably believes is used or capable of
being used for such manufacture, preparation, preservation, packaging or
storing. The inspector will also have the power and authority to open and
examine any receptacle or package that on reasonable grounds he believes any
article to which the CFDA or the regulations apply. Finally, the inspector shall
have the power to seize and obtain for such time reasonably necessary any
article by means of or in relation to which he reasonably believes any provision
of the CFDA or regulations have been violated.

We are also subject to the provisions of Chapter 871 of the CFDA specifically
relating to the medical device regulations. Specifically, Chapter 871 of the
CFDA addresses the labeling of medical devices.

Part I of Chapter 871 provides that labeling on medical devices must contain:

o        the name of the device;
o        name and address of the manufacturer, distributor or importer of the
         device;
o        a lot number or serial number of the device;



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o        the model designation of the device;
o        the precise nature of the benefits claimed to be obtainable through
         the use of the device;
o        directions for use of the device;
o        information as to whether a device is sterile;
o        the expiration date of the device if applicable; and
o        a list of the contents of the package and the number of complete units
         contained therein.

Part I of Chapter 871 of the CFDA also contains extensive and involved
regulations concerning the specific nature and quality of any labeling on
medical devices, including but not limited to, warnings, language, position of
label and any required symbols. This same section also addresses product testing
before sale. Specifically, the CFDA provides that no manufacturers of a device
or person who has imported into Canada a device for sale shall sell the device
unless tests have been conducted with respect thereof and the tests indicate
that the nature of the benefits claimed to be obtainable through the use of the
device and the performance characteristics claimed by the device are justified
as shown by the evidence available in Canada to the manufacturer or the person
importing the device.

Employees. We currently have three employees and several consultants on staff.
We also use consultants for business, accounting, engineering, and legal
services as required. Our management has experience and background in
manufacturing medical products and obtaining patents internationally, as well as
obtaining medical approvals worldwide.

Our 3 employees are Maria Klippenstein, John Klippenstein and Tia Issak. Mrs.
Klippenstein is the Secretary and Treasurer of our subsidiary as well as our
Secretary and Treasurer. Her day-to-day duties include monitoring accounts
payable and receivable, reporting to our stock transfer agent, shareholder
relations and reporting to our corporate securities attorney. Mr. Klippenstein
is our President and Chief Executive Officer. He performs all the duties of that
office. Ms. Issak handles office administration and secretarial duties.

We have also hired Peter McFadden, Chartered Accountant as a consultant. Peter
McFadden performs the duties of Chief Financial Officer of our subsidiary. Mr.
McFadden's day-to-day duties include corporate finances, accounting and
communications with our auditors, corporate reporting and annual tax filings,
financial reporting to our Board of Directors, corporate financial advising,
organization and reporting on annual shareholder meetings, and corporate tax
planning. Tonya Sedlacek also provides, as a subcontractor, accounting services
to us. Finally, Kevin Conway provides us with engineering on a subcontract
basis.

Our subsidiary has also entered into a subcontractor's agreement with PK
management owned by Pam Klippenstein, the daughter-in-law of Mr. and Mrs. John
Klippenstein. Ms. Klippenstein's duties include managing our Vancouver office,
general office duties, drafting and review of our newsletters, general
correspondence, directors' meetings including minutes and reports, and mailroom
and website updates.

Our  subsidiary  has also entered into a contract with Dr. Jeffrey Berg, Sr. Dr.
Berg's duties include  product analysis and strategic alliances with medical
publications, product evaluation and reports, negotiating  strategic alliances
and brokerage liaisons.

Competition. Competition in the medical products industry is intense and we
expect the competition to increase. We will compete directly with other
companies and businesses that have developed and are in the process of
developing technologies and products which will be competitive with the products
developed and offered by us. There can be no assurance that other technologies
or products which are functionally equivalent or similar to our technologies and
products have not been developed or are not in development. We expect that there
are companies or businesses which may have developed or are developing such
technologies and products as well as other companies and businesses which have
the expertise which would encourage them to develop and market products directly
competitive with those developed and marketed by us. Many of these competitors
have greater financial and other resources, and more experience in research and
development than us. To the extent that customers exhibit loyalty to the
supplier that first supplies them with a particular product or technology, our
competitors may have an advantage over us with respect to products and
technologies first developed by such competitors. As a result of their size and
breadth of their product offerings, certain of these competitors have been and
will be able to establish managed accounts by which, through a combination of
direct computer links and volume discounts, they seek to gain a disproportionate



                                       7
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share of orders for health care products and technologies from prospective
customers. Such managed accounts present significant competitive barriers to us.
It is anticipated that we will benefit from our participation in niche research
markets which, as they expand, may attract the attention of our competitors.

There can be no assurance that competitors have not or will not succeed in
developing technologies and products that are more effective than any which have
been or are being developed by us or which would render our products obsolete
and noncompetitive. Many of our competitors have substantially greater
experience, financial and technical resources and production, marketing and
development capabilities than us. If we commence commercial sales of our
products, we will also be competing with respect to manufacturing efficiency and
sales and marketing capabilities.

Our strategy for growth is substantially dependent upon our ability to market
and distribute products successfully. Other companies, including those with
substantially greater financial, marketing and sales resources, compete with us,
and have the advantage of marketing existing products with existing production
and distribution facilities. There can be no assurance that we will be able to
market and distribute products on acceptable terms, or at all. Our failure to
market our products successfully could have a material adverse effect on our
business, financial condition or results of operations.

Specifically, when we applied for our United States patents in 1997, a United
States Patent search revealed 7 separate patents which related to different
safety syringes. We also caused the preparation of a market report issued by
Frost & Sullivan entitled "U.S. Disposable Needle, Syringe, and Related
Products, Markets" Publication No. 5341-54. The market report described the
market, pricing and the specific competition. We believe that there is virtually
no competition other than one syringe manufacturer, presently located in Texas.
The company which manufacturers this syringe is called Retractable Technologies
Inc. ("RTI"). The syringe manufactured by RTI works on a pre-tension stainless
spring which releases once the medicine chamber is emptied. The plunger will
trigger the retraction by applying additional pressure. The price of this
syringe is US$0.52 per 3CC syringe, whereas standard 3CC syringes sell at
US$0.26. The syringe manufactured by RTI is currently marketed only in
California because RTI is not able to produce enough product to satisfy the
demand because the RTI design is labor intensive and does not allow on-line high
speed production. We believe that the Syringe has the distinct design advantage
in that the Syringe was designed and engineered for high speed production and
its cost and is much more cost effective and not as labor intensive as the
syringe produced by RTI.

Item 2. Description of Property.

Property held by the Company. The Company holds no property at this time.

The Company's Facilities. We lease office space located at 3-1482 Springfield
Road, Kelowna, Canada from Tech-Nacan Consultants ("Tech-Nacan"). Tech-Nacan is
a company owned by John Klippenstein, the Company's President, Chief Executive
Officer and a director, and Maria Klippenstein, Secretary and the Treasurer of
the Company. We also lease office space at 885 Dunsmuir Street in Vancouver,
Canada from an unrelated third party. In addition we lease storage space in
Great Plains Industrial Park in Saskatchewan for the assembly and storage of the
Lens-O-Matic product, from an unrelated third party. For the year ended May 31,
2000, we paid a total of US$35,350 toward the rental of our Kelowna and
Vancouver offices. For the year ended May 31, 2001, we paid US$45,227 toward the
rental of our Kelowna and Vancouver offices. With regard to the Great Plains
storage we pay $113CDN per month. The lease is from month-to-month. We are
obligated to make future lease payments as follows:


         Year                                             Payment
         ----                                            --------
         2002                                            US$20,805
         2003                                            US$20,805
         2004                                            US$20,805
         2005                                            US$20,805



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Item 3. Legal Proceedings

Litigation Involving Our Subsidiary.

At the present time our subsidiary has been named in small claims court as a
defendant regarding a suit over certain architectural drawings. The claim
relates to allegedly excessive charges of approximately $5,000CDN that was
invoiced to our subsidiary without approval. We have attempted to settle this
with the claimant several times with little success. The matter has been brought
before the small claims court. A claim in small claims court cannot exceed
$10,000CDN. We hope to settle the claim for less than the invoiced amount.

British Columbia Securities Commission.

We have been engaged in discussions with staff of the British Columbia
Securities Commission ("BCSC") concerning the distribution of the Company's
common stock to certain residents of British Columbia. Staff of the BCSC has
taken the position that the distribution of certain shares may not have, in all
circumstances, satisfied the prospectus exemption requirements under the
Securities Act of British Columbia. In order to resolve the concerns of staff of
the BCSC, we have agreed to make an offer of rescission (the "Rescission Offer")
to purchasers of the Company's common stock residing in British Columbia. The
Rescission Offer was mailed to the British Columbia shareholders on August 10,
2001. Such Rescission Offer will be open for acceptance until September 10, 2001
Under the Rescission Offer, the recipient may elect to retain their shares in
the Company or to rescind their original purchase and return the shares to the
Company and receive from the Company, the purchase price originally paid for the
shares. Any shares returned to the Company pursuant to the Rescission Offer will
be cancelled. Should every shareholder residing in British Columbia accept the
Rescission Offer, we will be required to pay approximately $1,400,000.

There are no other legal actions pending against the Company nor are any other
such legal actions contemplated.

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

Within the last fiscal year, we did not submit any matters to a vote of security
holders.

PART II.

Item 5.   Market for Common Equity and Related Stockholder Matters

Reports to Security Holders. We are a reporting company with the Security and
Exchange Commission ("Commission") and thus required to file those reports
required by the Commission, including, but not limited to, an annual report to
our security holders, which will include audited financial statements, as well
as quarterly reports which will include management prepared, auditor reviewed,
financial statements. The public may read and copy any materials filed with the
Commission, including our Registration Statement on Form 10-SB, and all
exhibits, schedules and amendments thereto, at the Commission's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. Copies of all or any part
thereof may be obtained from such office after payment of fees prescribed by the
Commission. The public may also obtain information on the operation of the
Public Reference Room by calling the Commission at 1-800-SEC-0330. The
Commission maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the Commission. The address of that site is
http://www.sec.gov.

We are authorized to issue 50,000,000 shares of common stock, $.001 par value,
each share of common stock having equal rights and preferences, including voting
privileges. We are also authorized to issue 5,000,000 shares of preferred stock
with a par value of $.001. As of May 31, 2001 6,152,811 shares of the Company's
common stock were issued and outstanding. As of May 31, 2001, 301,727 of our
redeemable preferred stock were issued and outstanding.



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The shares of $.001 par value common stock of the Company constitute equity
interests in the Company entitling each shareholder to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
the Company's common stock are entitled to one vote for each share of record on
all matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of directors of the Company or any other matter, with
the result that the holders of more than 50% of the shares voted for the
election of those directors can elect all of the directors. The holders of the
Company's common stock are entitled to receive dividends when, as and if
declared by our Board of Directors from funds legally available therefor;
provided, however, that cash dividends are at the sole discretion of our Board
of Directors. In the event of liquidation, dissolution or winding up of the
Company, the holders of common stock are entitled to share ratably in all assets
remaining available for distribution to them after payment of liabilities of the
Company and after provision has been made for each class of stock, if any,
having preference in relation to the Company's common stock. Holders of the
shares of the Company's common stock have no conversion, preemptive or other
subscription rights, and there are no redemption provisions applicable to the
Company's common stock. All of the outstanding shares of the Company's common
stock are duly authorized, validly issued, fully paid and non-assessable.

Dividend Policy. Any payment of dividends will be at the sole and absolute
discretion of our Board of Directors and will depend upon earnings, financial
condition, capital requirements, amount of indebtedness, contractual
restrictions with respect to payment of dividends, and other factors. Any such
dividends may be paid in cash, property or shares of the Company's capital
stock. We have not paid any dividends since the Company's formation, and it is
not probable that any dividends on the Company's common stock will be declared
at any time in the foreseeable future. Any future dividends will be subject to
the discretion of our Board of Directors, and will depend upon, among other
things, the operating and financial condition of the Company, the Company's
capital requirements and general business conditions. Therefore, there can be no
assurance that any dividends on the Company's common stock will be paid in the
future.

Sale of Securities. During the fiscal year ended May 31, 2001, the Company sold
80,001 shares of common stock pursuant to Regulation D and Rule 506 promulgated
thereunder. The common stock was sold for $3.25 per share. The net proceeds to
the Company after costs of $80,227, was $179,776. The Company sold to
"accredited investors" only as that term is defined in Rule 501 of the
Securities Exchange Act of 1934.

Stock Options. Our Board of Directors has adopted a stock option plan ("Stock
Option Plan"). The Stock Option Plan is designed to retain qualified and
competent officers, employees and directors of the Company. Our Board of
Directors, or a committee thereof, shall administer the Stock Option Plan and is
authorized, in its sole and absolute discretion, to grant options to all
eligible employees of the Company, including officers and directors (whether or
not employees) of the Company. During the year ended May 31, 2001, 340,417 stock
options were granted in accordance with the Stock Option Plan (for further
details, please refer to Note 5 of the consolidated financial statements
attached hereto). Options granted pursuant to the Stock Option Plan will be
exercisable within the period specified in the stock option agreement. Options
granted under the Stock Option Plan will not be exercisable after the expiration
of ten (10) years from the date of grant for shareholders with less than 10%
ownership and five (5) years for shareholders with 10% or more share ownership.
The Stock Option Plan will also authorize us to make loans to optionees to
enable them to exercise their options.

Warrants. We have offered to all shareholders of record, one warrant for every
two shares held by each shareholder. Each warrant entitles the holder of such
warrant to purchase one share of our common stock for $5.00 per share. Each
warrant expires by its own terms ninety days after the first transaction in the
Company's shares occurs on the Over-the-Counter Bulletin Board.

As of May 31, 2001, there were 3,076,405 warrants outstanding. Each of these
warrants expire by their own terms 90 days after the first trade of the
Company's stock on the Over-the-Counter Bulletin Board. Each warrant grants the
holder the right to purchase one share of the Company's common stock for US$5.00
per share. Each warrant was issued pursuant to Rule 506 of Regulation D
promulgated by the Securities and Exchange Commission.



                                       10
<PAGE>


Item 6. Management's Discussion and Analysis or Plan of Operation.

THIS ANNUAL REPORT SPECIFIES FORWARD-LOOKING STATEMENTS OF OUR MANAGEMENT
("FORWARD-LOOKING STATEMENTS") INCLUDING, WITHOUT LIMITATION, FORWARD-LOOKING
STATEMENTS REGARDING OUR EXPECTATIONS, BELIEFS, INTENTIONS AND FUTURE
STRATEGIES. FORWARD-LOOKING STATEMENTS ARE STATEMENTS THAT ESTIMATE THE
HAPPENING OF FUTURE EVENTS AND ARE NOT BASED ON HISTORICAL FACTS.
FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY, SUCH AS "COULD", "MAY", "WILL", "EXPECT", "SHALL", "ESTIMATE",
"ANTICIPATE", "PROBABLE", "POSSIBLE", "SHOULD", "CONTINUE", "INTEND" OR SIMILAR
TERMS, VARIATIONS OF THOSE TERMS OR THE NEGATIVE OF THOSE TERMS. THE
FORWARD-LOOKING STATEMENTS SPECIFIED IN THIS ANNUAL REPORT ON FOR 10-KSB HAVE
BEEN COMPILED BY US ON THE BASIS OF ASSUMPTIONS MADE BY US AND CONSIDERED BY US
TO BE REASONABLE. OUR FUTURE OPERATING RESULTS, HOWEVER, ARE IMPOSSIBLE TO
PREDICT AND NO REPRESENTATION, GUARANTY, OR WARRANTY IS TO BE INFERRED FROM
THOSE FORWARD-LOOKING STATEMENTS.

THE ASSUMPTIONS USED FOR PURPOSES OF THE FORWARD-LOOKING STATEMENTS REPRESENT
ESTIMATES OF FUTURE EVENTS AND ARE SUBJECT TO UNCERTAINTY AS TO POSSIBLE CHANGES
IN ECONOMIC, LEGISLATIVE, INDUSTRY, AND OTHER CIRCUMSTANCES. AS A RESULT, THE
IDENTIFICATION AND INTERPRETATION OF DATA AND OTHER INFORMATION AND THEIR USE IN
DEVELOPING AND SELECTING ASSUMPTIONS FROM AND AMONG REASONABLE ALTERNATIVES
REQUIRE THE EXERCISE OF JUDGMENT. TO THE EXTENT THAT THE ASSUMED EVENTS DO NOT
OCCUR, THE OUTCOME MAY VARY SUBSTANTIALLY FROM ANTICIPATED OR PROJECTED RESULTS,
AND, ACCORDINGLY, NO OPINION IS EXPRESSED ON THE ACHIEVABILITY OF THOSE
FORWARD-LOOKING STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT ANY OF THE
ASSUMPTIONS RELATING TO THE FORWARD-LOOKING STATEMENTS SPECIFIED IN THIS REPORT
ARE ACCURATE, AND WE ASSUME NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING
STATEMENTS.

General.

We are not currently producing commercial quantities of our products nor are we
currently supplying any services to any third parties. No assurance can be given
that we will, in a timely fashion, be able to make the transition from
manufacturing testing quantities of the Syringe to commercial production
quantities successfully or be able to arrange for contract manufacturing.

We have produced 33,000 units of our eye care products. Our current production
capacity does allow for the production of commercial quantities of our eye care
products. We believe that we can increase our output to 150,000 units. We have
designed a second set of dies that we believe will have a 300,000 unit capacity
which would allow the production of a total of 450,000 units of our eye care
products per month.

We are concentrating the majority of our efforts on the development of the
Syringe.

We anticipate that we will contract out the first two years of production of the
Syringe. At the end of the second year of production, we anticipate we will
engage in significant discussions regarding the potential for the construction
of our own production facility. We recognize that the construction of our own
production facility will be contingent upon us having reached our sales and
profit projections. We anticipate that we will present this issue for vote by
our Board of Directors and shareholders. In this regard, we anticipate that we
will locate our production facilities in North America, specifically, the state
of Washington, due to its strategic location for penetration into the United
States and Canadian markets.

In the past we began negotiations with the Irish Development Board in Ireland
("Development Board"). Representatives from the Development Board have met with
our Board of Directors on 3 different occasions and have offered to assist us in
establishing a production facility in Ireland. We have already sent
representatives to Ireland to discuss production of the Syringe as well as
strategic alliances for market distribution of our products.

Our plans to construct our own production facility are merely preliminary. As
such, we have not reached an estimation of the capital resources necessary to
fund such a project nor have we determined how long such a project would take to
complete. We anticipate that at the end of the projected two-year period of
production, we will have a sufficient revenue stream to finance, at least
partially, the construction of the proposed production facilities. However,
there can be no assurance that we will have the necessary funds at the end of
the two-year period to construct our proposed production facilities. Should we
not have the necessary funds, we anticipate that we will continue to cause our
products to be produced on a contract basis.



                                       11
<PAGE>


Future Capital Requirements.

As discussed above, we are in the process of offering rescission to our British
Columbia security holders. Even assuming that all or substantially all of our
British Columbia security holders do not accept the Rescission Offer, we will
still require additional cash to implement our business strategies, including
cash for (i) payment of increased operating expenses and (ii) further
implementation of our business strategies. If all or substantially all of the
British Columbia security holders accept the Rescission Offer, our operations
would likely be materially adversely affected.

No assurance can be given that we will have access to the capital markets in the
future, or that financing will be available on acceptable terms to satisfy our
cash requirements necessary to implement the business strategies. The inability
to access the capital markets or obtain acceptable financing could have a
material adverse effect on our results of operations and financial condition.

Our forecast of the period of time through which the financial resources will be
adequate to support the operations is a forward-looking statement that involves
risks and uncertainties, and actual results could vary as a result of a number
of factors.

We anticipate having to raise additional capital over the next several months in
order to develop, promote, produce and distribute our proposed products. Such
additional capital may be raised through additional public or private
financings, as well as borrowings and other resources. To the extent that
additional capital is raised through the sale of equity or equity-related
securities, the issuance of such securities could result in dilution of the
stockholders.

If adequate funds are not available, we may be required to curtail operations
significantly or to obtain funds through entering into arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our products. We believe that we are poised to maintain our long-term
liquidity. We believe we have raised enough capital to allow us to meet our
financial obligations for a period of at least twelve (12) months from May 31,
2001. However, our forecast for the period of time through which our financial
resources will be adequate to support our operations is a forward-looking
statement that involves risks and uncertainties, and actual results could fail
as a result of a number of factors.


Our auditors report includes a paragraph explaining that we have generated no
revenues and accumulated a deficit since inception of $2,882,529, factors that
raise substantial doubt about our ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Business Risks.

Because of the nature of our business, the Company will be exposed to a variety
of business risks, some of which are inherent to all competitive commercial
enterprises and others that are specific to the medical products industry. We
will attempt to limit all specific risk factors through our disciplined
management of our operations and our financial strategies.

Financial Risks.

We believe our business planis aggressive in nature. Rapid business expansion
and the results of our British Columbia rescission offer may consume valuable
working capital and result in significant demand on cash flow from operations
over the next few quarters. Management expects that existing capital resources
will not be sufficient to fund the business plans as represented without
assembling additional funds from external sources.



                                       12
<PAGE>



Business Cycles and Risks of Cost Overruns.

The successful sale and implementation of our products will require reasonable
market penetration. Failure to secure reasonable market penetration could have
adverse effects on our business , results of operations and our financial
condition.

Fluctuations in Financial Results.

Our operating results will fluctuate, depending on factors such as the demand
for products, the size and timing of contracts, new products and enhancements,
price competition, changes in operating expenses and personnel and general
economic factors. Therefore, actual financial results may vary significantly
from those projected by us.

Third-Party Claims for Infringement.

We are not aware that any of our products infringe on the proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim such infringements by the Company with respect to current or future
products. Any such claims, with or without merit, could be time consuming,
result in costly litigation, or cause product or shipment delays. Any of the
foregoing could have adverse effects on our business, results of operations or
financial condition.

Dependence of Single Product Line.

Concentration of sales in a single product line for the medical health industry
represents a substantial risk should market conditions deteriorate.

Foreign Currency.

Our business plan primarily focuses on product penetration into worldwide
markets, therefore, we will be subject to the risk of foreign currency
fluctuations.

Dependence on Large Distributors.

We anticipate that we will rely in part on business partners for the
distribution of our products. This could include a few large distributors in the
United States. We may be impacted by negative business cycles or events
experienced by these distributors. This may lead to a short or long term
reduction in revenue.

Human Resource Risks and Growth.

Our success is largely dependent on the performance of our key employees.
Failure to attract and retain key employees with necessary skills could have an
adverse impact upon our growth and profitability. Our business is expected to
grow over the next three years. If this expansion occurs, it will likely result
in substantial growth in the number of employees, the scope of our operating and
financial systems and the geographic area of our operations. This will increase
the responsibilities for both existing and new management personnel, if any. Our
ability to support such growth, if it occurs, will be dependent upon having
highly trained personnel in place to conduct pre-sales activities, product
implementation and other customer support services. Future operating results
will depend on the ability of our key managers and employees to continue to
implement and improve our operations, customer support and financial systems.
There can be no assurance that we will be able to manage any future expansion
successfully, and if we cannot manage such growth, our results of operations and
financial health could be adversely affected.

Changes in Number of Employees.

During the next 12 months, depending on the success of our marketing plan, we
may be required to hire additional employees; however, we are not able to
provide a reasonable estimate of the number of such additional employees which
may be required at this time.



                                       13
<PAGE>


Production and Quality Control.

The manufacturing of products involves a number of steps and requires compliance
with stringent quality control specifications imposed on us by various
regulators. We may not be able to quickly arrange for replacement manufacturing
if our manufacturers are unable to use their manufacturing facilities as a
result of a fire, natural disaster (including earthquake), equipment failure or
other difficulty, or if such facilities are deemed not in compliance with the
various regulators' requirements and the non-compliance could not be rapidly
rectified. The inability or reduced capacity to manufacture or have manufactured
any of our products would have a material adverse effect on the business and
results of operations.


Product Liability Risk

Our business will expose us to potential product liability risks that are
inherent in the testing, manufacturing and marketing of medical products. We do
not currently have product liability insurance, and there can be no assurance
that we will be able to obtain or maintain such insurance on acceptable terms
or, if obtained, that such insurance will provide adequate coverage against
potential liabilities.

We face an inherent business risk of exposure to product liability and other
claims in the event that the development or use of our technology or products is
alleged to have resulted in adverse effects. Such risk exists even with respect
to those products that are manufactured in licensed and regulated facilities or
that otherwise possess regulatory approval for commercial sale. There can be no
assurance that we will avoid significant product liability exposure. There can
be no assurance that insurance coverage will be available in the future on
commercially reasonable terms, or at all, or that such insurance will be
adequate to cover potential product liability claims or that a loss of insurance
coverage or the assertion of a product liability claim or claims would not
materially adversely affect our business, financial condition and results of
operations.

While we have taken, and will continue to take, what we believe are appropriate
precautions, there can be no assurance that we will avoid significant liability
exposure. An inability to obtain product liability insurance at acceptable cost
or to otherwise protect against potential product liability claims could prevent
or inhibit the commercialization of the products. A product liability claim
could have a material adverse effect on the business, financial condition and
results of operations.

Marketing and Channels of Distribution.

The Syringe. We anticipate that we will obtain the necessary plastic for the
injection molds used to manufacture the Syringe from various domestic and
international suppliers. The engineering for the molds and dyes are near
completion. We believe we will be able to readily obtain the necessary packaging
for the Syringe. We do not believe that our sales will be affected by seasonal
factors. Subject to appropriate capitalization, we believe that prototypes of
the Syringe will be ready for testing within the next year. Shortly after the
prototypes are ready for testing, we believe we will be able to complete testing
in Canada and gain the necessary regulatory approvals. We believe we will
complete the necessary United States testing as well as secure the required
United States regulatory approval within the next year.

Once testing of the Syringe is completed, and assuming FDA approval is received,
we hope to manufacture, or cause to be manufactured, a specified number of units
of the Syringe, which will be provided, at no charge, to a target group of
physicians for testing. We plan to provide units to various individuals who are
to form part of the testing group. These individuals will be asked to try the
Syringe and report their findings. We will then utilize professionals such as
doctors and related health care professionals who approve, recommend and endorse
our products, including the Syringe. Thereafter, we anticipate that the Syringe
will be supplied to large national distributors within specific regions all over
the world. We anticipate that the distributors will thereafter market the
Syringe to pharmacy and medical supply companies. Our overall operating plan is
to act as a manufacturer, selling directly and only to distributors and retail
chains. We hope that the product will gain acceptance in the medical community
and that our skill in positioning and merchandising our products and technology
will enable us to acquire a commercially reasonable portion of the market.



                                       14
<PAGE>



We plan to focus our initial marketing efforts in Canada and the United States.
We hope to eventually expand our product marketing and sales into Europe, South
America, Central America, Mexico and Asia. We plan to market our products by
advertising in catalogs and medical journals, by distributing brochures (both
written and video), by direct mail and by posters. Follow-up calls will be made
to promising prospects. This approach will be our primary marketing method. It
is expected that our personnel will attend various trade shows and medical
conventions in order to introduce the Syringe with the hope of gaining
endorsements and approvals. There can be no assurance that we will be able to
successfully establish other methods of marketing and sales of our products
should it become necessary or desirable in the future. A significant portion of
our sales may be made through independent distributors over which we have no
control and who also will represent products of other companies. We recognize
that in order to increase market awareness and the marketing potential of our
products, we must hire adequate personnel and institute effective advertising in
the most cost effective way.

Liquidity and Capital Resources.

We believe that we are poised to maintain long-term liquidity. This is based
upon cash flow projections prepared by us. We believe we have raised enough
capital to allow us to meet the financial obligations for a period of at least
twelve (12) months from May 31, 2001. However, the forecast for the period of
time through which the financial resources will be adequate to support our
operations is a forward-looking statement that involves risks and uncertainties,
and actual results could fail as a result of a number of factors.

We had cash resources of $741,152 at May 31, 2001. At May 31, 2000, we had cash
resources of $959,318. On May 31, 2001, total current assets of were $790,713
and total current liabilities were $112,083. At May 31, 2001, total current
assets exceeded total current liabilities by $678,630. At May 31, 2000, total
current assets were $987,208 and total current liabilities were $27,791. At May
31, 2000, total current assets exceeded total current liabilities by $959,417.
Cash and equivalents constitute our current internal sources of liquidity.
Because we are not generating any revenues from the sale or licensing of our
products, our only external source of liquidity is the sale of our capital
stock.

Operations Review.

May 31, 2001 and 2000 Audited Financial Statements.
---------------------------------------------------

 We have attached audited financial statements as at May 31, 2001 and May 31,
2000 to this Annual Report on Form 10-KSB. The balance sheet as at May 31, 2001
shows a cash balance of $741,152 compared to a $959,318 cash balance at the same
time in the previous year. Amounts receivable at May 31, 2001 were $48,106
compared to a $21,070 balance at the same time in the previous year. Product
rights as at May 31, 2001 were valued at $8,336 down slightly from the
$12,504.00 reported in the previous year due to amortization.

During 2001, through the sale of our capital stock, we increased our additional
paid in capital from $2,201,056 to $3,408,435. The accumulated deficit during
that period increased from $1,666,401 to $2,882,529. The majority of the loss
was related to ongoing business expenses, including, but not limited to:

o        General and administration expenses were $927,601, up from $456,517 in
         the previous year. Included in this year's figures was the effect of
         stock options issued to various consultants in the amount of $295,269
         for services (nil in 2000);
o        Research and development expenses were $341,275, up from $73,332 the
         previous year. Most of these funds have been expensed on the
         development of the Syringe to the point of proof of concept.

During the year ended 2001 the Company incurred a net loss of $1,216,128
compared to a net loss of $508,835 for the year-ended May 31, 2000. The increase
in the loss can, at least partially, be attributed to a $295,269 compensation
cost for stock options issued and an additional $267,943 spent for research and
development. The total effect of these two items was $563,212 greater loss than
would have otherwise occurred.



                                       15
<PAGE>



Our Plan of Operation For Next 12 Months.

During the next 12 months, we plan to continue moving forward with the prototype
version of the Syringe. We hope that our efforts will allow us to develop
markets in other jurisdictions. We cannot guarantee, however, that we will be
able to acquire the necessary regulatory approval to market the Syringe in
additional markets. We anticipate developing relationships with certain
distributors who we hope will facilitate the distribution of our products in
various markets. We will also continue to research ways to improve the
attractiveness of the product and the appeal to the medical community. We will
also pursue other opportunities as they arise.

Item 7.  Financial Statements


AUDITOR'S REPORT TO THE STOCKHOLDERS


We have audited the consolidated balance sheets of L.O.M. Medical International
Inc., a development stage enterprise, as at May 31, 2001 and 2000 and the
consolidated statements of loss and cash flows for the years then ended and for
the cumulative period from inception (March 17, 1997) to May 31, 2001 and the
consolidated statements of stockholders' equity and comprehensive income for the
period from inception on March 17, 1997 to May 31, 2001. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of L.O.M. Medical
International Inc. as at May 31, 2001 and 2000 and the results of its operations
and its cash flows for the years then ended and for the cumulative period from
inception (March 17, 1997) to May 31, 2001, in accordance with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the consolidated financial
statements, the Company has generated no revenues and accumulated a deficit
since inception of $2,882,529. These factors as discussed in Note 1 a) raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 1a).
The financial statements do not include any adjustments that might result from
the outcome of these uncertainties.

signed "KPMG LLP"

Chartered Accountants



Kelowna, Canada

June 22, 2001



                                       16
<PAGE>

L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Consolidated Balance Sheets
$ United States

May 31, 2001 and 2000
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                                  2001              2000
---------------------------------------------------------------------------------------------------------------
 <S>                                                                              <C>                <C>
Assets

Current assets
     Cash and cash equivalents                                          $      741,152    $      959,318
     Amounts receivable                                                         48,106            21,070
     Prepaid expenses                                                            1,455             6,820
---------------------------------------------------------------------------------------------------------------
                                                                               790,713           987,208

Advances and deposits (note 2)                                                 161,415            42,000

Fixed assets (note 3)                                                           40,809            47,124

Patent costs                                                                     8,336            12,504

---------------------------------------------------------------------------------------------------------------
                                                                        $    1,001,273    $    1,088,836
---------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Current liabilities
     Accounts payable and accrued liabilities                           $      112,083    $       27,791

Minority interest (note 4)                                                     301,727           301,727

Share subscriptions (note 5(a))                                                 22,100           185,513

Stockholders' equity
     Capital stock  (notes 5 and 9)
            5,000,000 preferred shares with a par value of $0.001
                       per share authorized, nil issued
           50,000,000 common shares with a par value of $0.001
                       per share authorized, 6,152,811 issued
                       (May 31, 2000 - 5,846,459 issued)                         6,154             5,847
     Additional paid in capital                                              3,408,434         2,201,055
     Deficit accumulated during the development stage                       (2,882,529)       (1,666,401)
     Accumulated other comprehensive income                                     33,304            33,304
---------------------------------------------------------------------------------------------------------------
                                                                               565,363           573,805
Contingent liability (note 9)
---------------------------------------------------------------------------------------------------------------
                                                                        $    1,001,273    $    1,088,836
---------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements

On behalf of the board:

                             Director
---------------------------


                                       17
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Consolidated Statements of Loss
$ United States

For the years ended May 31, 2001 and 2000 and cumulative from inception (March
17, 1997) to May 31, 2001
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                        >From inception
                                                       (March 17, 1997)
                                                        to May 31, 2001            2001              2000
----------------------------------------------------------------------------------------------------------------
   <S>                                                        <C>                  <C>                <C>
     General and administration                      $    2,121,049      $      927,601    $      456,517
     Research and development                               875,420             341,275            73,332
----------------------------------------------------------------------------------------------------------------
                                                          2,996,469           1,268,876           529,849

----------------------------------------------------------------------------------------------------------------
Loss from operations                                     (2,996,469)         (1,268,876)         (529,849)

Other income
     Interest income                                        113,940              52,748            21,014

----------------------------------------------------------------------------------------------------------------
Net loss                                             $   (2,882,529)     $   (1,216,128)   $      (508,835)
----------------------------------------------------------------------------------------------------------------


Loss per common share, basic and diluted             $        (0.61)     $        (0.20)   $         (0.09)

Weighted average common shares,
   basic and diluted                                      4,731,320            6,047,271         5,611,927
----------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements



                                       18
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Consolidated Statements of Cash Flows
$ United States

For the years ended May 31, 2001 and 2000 and cumulative from inception (March
17, 1997) to May 31, 2001
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
                                                          >From inception
                                                        (March 17, 1997)
                                                          to May 31, 2001                2001              2000
--------------------------------------------------------------------------------------------------------------------
        <S>                                                      <C>                     <C>                <C>

Operating activities
   Net loss for the period                                 $   (2,882,529)     $   (1,216,128)   $     (508,835)

   Items not involving cash
     Amortization                                                  66,554              19,994            17,991
     Gain on sale of fixed assets                                  (2,659)                  -                 -
     Write down of product rights and patent costs                374,128                   -                 -
     Compensation cost of stock options issued
       for services                                               295,269             295,269                 -

   Changes in non-cash working capital
     Amounts receivable                                           (48,106)            (27,036)            5,372
     Prepaid expenses                                              (1,455)              5,365            (3,467)
     Accounts payable and accrued liabilities                     112,083              84,292            (8,613)
--------------------------------------------------------------------------------------------------------------------
                                                               (2,086,715)           (838,244)         (497,452)
Financing
     Issuance of capital stock                                  2,266,075             726,904           967,643
     Proceeds from subscriptions for shares                       875,344              22,100           185,513
--------------------------------------------------------------------------------------------------------------------
                                                                3,141,419             749,004         1,153,156
Investing
     Advances and deposits                                       (161,415)           (119,415)          (42,000)
     Proceeds on disposition of fixed assets                        6,189                   -                 -
     Acquisition of fixed assets                                 (101,230)             (9,511)          (11,187)
     Acquisition of product rights                                (90,577)                  -                 -
--------------------------------------------------------------------------------------------------------------------
                                                                 (347,033)           (128,926)          (53,187)

Effect of change in exchange rates on cash and
cash equivalents                                                   33,481                   -            10,155
--------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents                  741,152            (218,166)          612,672

Cash and cash equivalents, beginning of period                          -             959,318           346,646

--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                   $      741,152      $      741,152    $      959,318
--------------------------------------------------------------------------------------------------------------------

Supplementary information:
   Interest paid                                           $           -       $           -     $            -
   Income taxes paid                                                   -                   -                  -
Non-cash financing and investing activities:
   Issuance of redeemable preferred shares
     to minority interest for product rights                     309,677                   -                  -
-----------------------------------------------------------------------------------------------------------------------
   Common shares issued on conversion of
     share subscriptions                                         853,244             185,513             62,731
-----------------------------------------------------------------------------------------------------------------------
   Compensation cost of stock options
     issued for services                                         295,269             295,269                  -
</TABLE>
See accompanying notes to consolidated financial statements



                                       19
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Consolidated Statements of Stockholders' Equity and Comprehensive Income
$ United States

For the period from inception on March 17, 1997 to May 31, 2001
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                              Capital Stock                         Deficit
                                         ----------------------                 Accumulated     Accumulated
                                             Number                Additional    During the           Other          Total
                                          of Common                   Paid in   Development   Comprehensive  Stockholders'
                                             Shares      Amount       Capital         Stage          Income         Equity
-----------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>          <C>           <C>           <C>             <C>           <C>
Common shares issued on incorporation             3  $        1  $        -    $        -    $          -    $           1

Comprehensive income (loss):
  Loss                                          -           -             -       (138,272)             -         (138,272)
  Foreign currency translation                  -           -             -             -            13,582         13,582
-----------------------------------------------------------------------------------------------------------------------------
Comprehensive loss                                                                                                (124,690)

-----------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1997                             3           1           -       (138,272)          13,582       (124,689)

Common shares issued to founders
  and others at $0.001                    4,210,090       4,210           -             -               -            4,210

Common shares issued at $1.00
net of share issue costs                    668,154         668       469,887           -               -          470,555

Common shares issued at $1.00 on
  conversion of share subscriptions         605,000         605       604,395           -               -          605,000

Comprehensive income (loss):
  Loss                                          -           -             -       (293,239)             -         (293,239)
  Foreign currency translation                  -           -             -             -           (7,294)         (7,294)
-----------------------------------------------------------------------------------------------------------------------------
Comprehensive loss                                                                                                (300,533)

-----------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1998                     5,483,247       5,484     1,074,282     (431,511)           6,288        654,543

Common shares issued on
  November 30, 1998 at $3.25
  net of share issue costs                   36,300          36        96,726          -               -            96,762

Comprehensive income (loss):
  Loss                                         -           -             -        (726,055)            -          (726,055)
  Foreign currency translation                 -           -             -             -             17,038         17,038
-----------------------------------------------------------------------------------------------------------------------------
Comprehensive loss                                                                                                (709,017)

-----------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1999                     5,519,547       5,520     1,171,008   (1,157,566)          23,326         42,288

Common shares issued on
  April 17, 2000 at $3.25
  net of share issue costs                  307,610         308       967,335           -               -          967,643

Common shares issued on
  May 10, 2000 at $3.25 on
  conversion of share
  subscriptions                              19,302          19        62,712           -               -           62,731

Comprehensive income (loss):
  Loss                                          -           -             -       (508,835)             -         (508,835)
  Foreign currency translation                  -           -             -             -             9,978          9,978
-----------------------------------------------------------------------------------------------------------------------------
Comprehensive loss                                                                                                (498,857)
-----------------------------------------------------------------------------------------------------------------------------

Balance, May 31, 2000                     5,846,459  $    5,847  $  2,201,055  $(1,666,401)    $     33,304  $     573,805
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>





                                       20
<PAGE>




L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Consolidated Statements of Stockholders' Equity and Comprehensive Income
(continued) $ United States

For the period from inception on March 17, 1997 to May 31, 2001
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                              Capital Stock                         Deficit
                                         ----------------------                 Accumulated     Accumulated
                                             Number                Additional    During the           Other          Total
                                          of Common                   Paid in   Development   Comprehensive  Stockholders'
                                             Shares      Amount       Capital         Stage          Income         Equity
------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>           <C>            <C>             <C>           <C>
Balance, May 31, 2000,
  carried forward                         5,846,459  $    5,847  $  2,201,055  $(1,666,401)  $       33,304  $     573,805

Common shares issued on
  September 22, 2000 for
  cash at $3.25 net of share
  issue costs                               249,271         250       726,654           -               -          726,904

Common shares issued on
  December 19, 2000 at $3.25
  on conversion of share
  subscriptions                              57,081          57       185,456           -               -          185,513

Compensation costs for
  stock options issued for
  services (note 5(b))                          -           -         295,269           -               -          295,269

Comprehensive income (loss):
  Loss                                          -           -             -     (1,216,128)             -       (1,216,128)
  Foreign currency translation                  -           -             -             -               -              -
------------------------------------------------------------------------------------------------------------------------------
Comprehensive loss                                                                                              (1,216,128)

------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 2001                     6,152,811  $    6,154  $  3,408,434  $(2,882,529)    $     33,304  $     565,363
------------------------------------------------------------------------------------------------------------------------------
</TABLE>




                                       21
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 1
($ United States)

Years ended May 31, 2001 and 2000 and cumulative from inception (March 17, 1997)
to May 31, 2001

--------------------------------------------------------------------------------

L.O.M.  Medical  International Inc. was incorporated on March 17, 1997 under the
General  Corporation Laws of Delaware.  It conducts  research and development on
new products in the medical field including a retractable syringe.

1.   Significant accounting policies:

a)       Going concern

         These financial statements have been prepared by management on the
         going concern basis in accordance with generally accepted accounting
         principles in the United States of America, which assumes the
         realization of assets and liquidation of liabilities and commitments in
         the normal course of business. As shown in the consolidated financial
         statements, to date, the Company has generated no revenues and has
         accumulated a deficit since inception of $2,882,529. These factors,
         among others, raise substantial doubt about the Company's ability to
         continue as a going concern. The Company's ability to continue as a
         going concern is dependent on its ability to generate future profitable
         operations and receive continued financial support from its
         stockholders and other investors.

         Management's plans with respect to generating future profitable
         operations include future sales of the retractable syringe as well as
         additional funding from stockholders in the form of additional share
         subscriptions. There can be no assurance that a market will develop for
         the retractable syringe or that additional share financings will be
         available. Failure to obtain adequate financing will cause the Company
         to curtail operations.

b)       Basis of presentation and consolidation

         The consolidated  financial statements include the accounts of the
         Company and its 96% owned subsidiary,  L.O.M.  Laboratories Inc. All
         material intercompany transactions and balances have been eliminated.

c)       Translation of financial statements

         The Company's functional currency is the United States dollar.
         Subsequent to May 31, 2000, the Company's subsidiary, L.O.M.
         Laboratories Inc., has a United States dollar functional currency. To
         May 31, 2000, the functional currency of the subsidiary was the
         Canadian dollar. Accordingly, the net adjustment to May 31, 2000
         arising from the translation was recorded as a translation adjustment
         which is included in accumulated other comprehensive income. The change
         in the subsidiary's functional currency resulted as transactions it now
         enters into are denominated in United States dollars.

         Where the functional currency is the United States dollar, the method
         of translation of Canadian dollar balances into the United States
         dollar is as follows:

i)       Monetary assets and liabilities are translated at the rate of exchange
         in effect at the balance sheet date,  being US $1.00 per Cdn $1.5699
         (2000 - $1.4715).
ii)      Non-monetary assets and liabilities are translated at the rate of
         exchange in effect at the date the transaction occurred.
iii)     Revenues and expenses are translated at the exchange rate in effect at
         the transaction date.
iv)      The net adjustment arising from the translation is included in the
         consolidated statement of loss.



                                       22
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 2
$ United States

Years ended May 31, 2001 and 2000 and cumulative from inception (March 17, 1997)
to May 31, 2001

-------------------------------------------------------------------------------

1.   Significant accounting policies (continued):

d)       Cash and cash equivalents

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

e)       Fixed assets

         Fixed assets are recorded at cost. Amortization is provided using the
         following methods and annual rates which are intended to amortize the
         cost of the assets over their estimated useful life:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
         Asset                                                                                     Method             Rate
------------------------------------------------------------------------------------------------------------------------------
         <S>                                                                                        <C>                <C>
         Leasehold improvements                                                             Straight-line              20%
         Computer software                                                              Declining balance              50%
         Equipment                                                                      Declining balance              30%
         Furniture and fixtures                                                         Declining balance              20%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

f)       Patent costs

         Patent costs relate to amounts paid to acquire the rights to produce
         and distribute products as well as the costs associated with patent
         applications. These costs are being amortized on a straight-line basis
         over five years.

g)       Research and development

         Research and development costs are expensed as incurred.

h)       Income taxes

         The Company accounts for income taxes by the asset and liability
         method. Under the asset and liability method, deferred tax assets and
         liabilities are recognized for the future tax consequences attributable
         to differences between the financial statement carrying amounts of
         existing assets and liabilities and their respective tax bases and
         operating loss and tax credit carryforwards. 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 in income in the
         period that includes the enactment date. To the extent that it is not
         considered to be more likely than not that a deferred tax asset will be
         realized, a valuation allowance is provided.

i)       Management estimates

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


<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 3
($ United States)

Years ended May 31, 2001 and 2000 and cumulative from inception (March 17, 1997)
to May 31, 2001

--------------------------------------------------------------------------------

1.   Significant accounting policies (continued):

j)       Financial instruments

         The fair values of the Company's cash and cash equivalents, amounts
         receivable and accounts payable and accrued liabilities approximate
         their carrying values due to the relatively short periods to maturity
         of the instruments. It is not possible to arrive at a fair value for
         redeemable preferred shares as a public market for this stock does not
         exist. The maximum credit risk exposure for all financial assets is the
         carrying amount of those assets.

k)       Loss per share

         Loss per share has been calculated using the weighted average number
         of common shares outstanding during the period.

l)       Stock option plan

         During the year ended May 31, 2001, the Company adopted a stock option
         plan whereby employees of the Company, directors, consultants and other
         persons could be granted options to subscribe for common shares of the
         Company. The aggregate number of common shares which may be issued upon
         exercise of all options pursuant to the Plan shall not exceed
         3,000,000. Options granted pursuant to this plan vest on issuance and
         have exercise periods of not more than ten years from the date of
         grant. The exercise price of the options is as follows:
         i)    For incentive stock options granted to an employee who, at the
               time the option is granted, owns shares, possessing less than 10%
               of the total combined voting power of all classes of stock of the
               Company, the exercise price shall not be less than 100% of the
               fair market value of the Company's common shares at the date of
               grant.
         ii)   For incentive stock options granted to an employee who, at the
               time the option is granted, owns shares, possessing more than 10%
               of the total combined voting power of all classes of stock of the
               Company, the exercise price shall not be less than 110% of the
               fair market value of the Company's common shares at the date of
               grant, and such options shall expire no later than 5 years from
               the grant date.
         iii)  For all other stock options, the exercise price shall not be less
               than 85% of the fair market value of the Company's common shares
               at the date of grant.

         The Company applies APB Opinion No. 25 in accounting for stock options
         granted to employees whereby compensation cost is recorded only to the
         extent that the market price exceeds the exercise price at the date of
         grant. Options granted to non-employees are accounted for at their fair
         value as the related services are provided.

2.   Advances and deposits:

     Advances and deposits represent amounts that have been advanced to arms
     length parties and are unsecured, non-interest bearing and repayable upon
     demand.



                                       23
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 4
$ United States

Years ended May 31, 2001 and 2000 and cumulative from inception (March 17, 1997)
to May 31, 2001

--------------------------------------------------------------------------------


3.   Fixed assets:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
                                                                                            2001
----------------------------------------------------------------------------------------------------
                                                                   Accumulated          Net book
                                                        Cost      amortization             value
----------------------------------------------------------------------------------------------------
         <S>                                            <C>            <C>                  <C>
----------------------------------------------------------------------------------------------------
     Leasehold improvements                     $     27,919      $     16,751      $     11,168
----------------------------------------------------------------------------------------------------
     Computer software                                 9,093             4,262             4,831
     Equipment                                        29,844            18,482            11,362
     Furniture and fixtures                           23,975            10,527            13,448

----------------------------------------------------------------------------------------------------
                                                $     90,831      $     50,022      $     40,809
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
                                                                                            2000
----------------------------------------------------------------------------------------------------
                                                                   Accumulated          Net book
                                                        Cost      amortization             value
----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------
     Leasehold improvements                     $     27,919      $     11,167      $     16,752
----------------------------------------------------------------------------------------------------
     Computer software                                 5,446             1,254             4,192
     Equipment                                        26,842            14,254            12,588
     Furniture and fixtures                           21,113             7,521            13,592

----------------------------------------------------------------------------------------------------
                                                $     81,320      $     34,196      $     47,124
----------------------------------------------------------------------------------------------------

4.   Minority interest:

     The Company's subsidiary has redeemable preferred shares outstanding as
follows:

----------------------------------------------------------------------------------------------------
                                                                          2001              2000
----------------------------------------------------------------------------------------------------

     Issued:
         4,000 Class C preferred shares with a par value of $100 Cdn redeemable
         at $110.16 Cdn per share at the option of the holder. Each share is
         entitled to a fixed non-cumulative dividend at the rate of 9% per annum
         payable at such
         times as determined by the Directors.                         301,727            301,727
----------------------------------------------------------------------------------------------------
</TABLE>

5.   Capital stock:

a)       Share subscriptions:

         Subsequent to May 31, 2001 (2000), the Company issued 6,800 (2000 -
         57,081) common shares at $3.25 per share for net proceeds of $22,100
         (2000 - $185,513), which were received prior to May 31, 2001.




                                       24
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 5
$ United States

Years ended May 31, 2001 and 2000 and cumulative from inception (March 17, 1997)
to May 31, 2001

--------------------------------------------------------------------------------

5.   Capital stock (continued):

     b)   Stock options:

         The Company has the following stock options:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                   2001                               2000
                                                                       Weighted average                   Weighted average
                                                           Shares        exercise price        Shares       exercise price
------------------------------------------------------------------------------------------------------------------------------
            <S>                                              <C>                   <C>           <C>                  <C>
         Balance, beginning of year                           -                     -             -                    -
         Issued                                           340,417                 $3.36           -                    -
         Exercised                                            -                     -             -                    -
         Expired or cancelled                                 -                     -             -                    -
------------------------------------------------------------------------------------------------------------------------------
         Balance, end of year                             340,417                 $3.36           -                    -
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
         At May 31, 2001, all options were exercisable. The weighted average
         remaining contractual life of the outstanding options was 7.8 years.

         The Company applies APB Opinion No. 25 in accounting for its stock
         options issued to directors, and employees and, accordingly, because
         options granted to these individuals have been granted at the market
         price of its common shares on the grant date, no compensation cost has
         been recognized for its stock options in the consolidated financial
         statements. Had the Company determined compensation costs based on the
         fair value of its stock options at the grant date under SFAS No. 123,
         the Company's loss for the years ended May 31, 2001 and 2000 would have
         been increased to the pro forma amounts below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                                     2001             2000
------------------------------------------------------------------------------------------------------------------------------
        <S>                                                                                          <C>               <C>
         Loss
           As reported                                                                     $    1,216,128    $     508,835
           Pro forma                                                                            1,493,186          508,835
         Loss per share, basic and diluted
           As reported                                                                              $0.20            $0.09
           Pro forma                                                                                $0.25            $0.09
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         During the year ended May 31, 2001, 206,667 options were issued to
         directors and employees. The fair value of the options has been
         determined under the Black Scholes Method using the expected life of
         the options, a volatility of 50%, a risk-free rate of 5.39% and no
         assumed dividends.

         During the year ended May 31, 2001, the Company granted 133,750 common
         share options with an exercise price of $3.25 per share to
         non-employees for services rendered. The fair value of the options and
         stock rights, calculated as $295,629, has been recorded using the Black
         Scholes Method using the expected life of the options, a volatility of
         50%, a risk-free rate of 5.39% and no assumed dividends.

     c)  Warrants:

         3,076,405 warrants were issued during fiscal 2001 to existing
         shareholders representing 1/2 warrant for each common share held. Each
         warrant entitles the holder of such warrant to purchase one common
         share for $5.00 per share. Each warrant expires ninety days after the
         first transaction in the Company's shares occurs on the
         Over-the-Counter Bulletin Board.



                                       25
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 6
$ United States

Years ended May 31, 2001 and 2000 and cumulative from inception (March 17, 1997)
to May 31, 2001

--------------------------------------------------------------------------------

6.   Related party transactions:

     The Company entered into the following transactions with related parties:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                                                                     2001             2000
------------------------------------------------------------------------------------------------------------------------------
      <S>                                                                                           <C>               <C>
     Accounting fees paid to a director                                                    $       26,059    $      14,997
     Management fees paid to president                                                            138,564          151,751
     Office and administration fees paid to president's spouse                                     35,713           38,810
     Office and administration fees paid to an individual related to the president                 19,109           17,041
     Management fees paid to a company controlled by the president                                 20,000                -
     Rent paid to a company controlled by the president                                            29,489           19,397
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
     These transactions are in the normal course of operations and are measured
     at the exchange amount of consideration established and agreed to by the
     related parties.

7.   Commitments:
     The Company is obligated to make future minimum operating lease payments
     for it's offices as follows:

         2002                                        $      20,805
         2003                                        $      20,805
         2004                                        $      20,805
         2005                                        $      20,805

8.   Income taxes:

     At May 31, 2001, the Company had a net operating loss carryforward for
     United States income tax purposes of approximately $2,800,000. The net
     operating loss expires in increments beginning in 2008. No amount has been
     reflected on the balance sheet for future income taxes as any future income
     tax asset has been fully offset by a valuation allowance.

9.   Contingent liability:

The Company has been engaged in discussions with staff of the British Columbia
Securities Commission (the "BCSC") concerning the distribution of the Company's
common stock to certain residents of British Columbia. Staff of the BCSC has
taken the position that the distribution of certain shares may not have, in all
circumstances, satisfied the prospectus exemption requirements under the
Securities Act (British Columbia). In order to resolve the concerns of staff of
the BCSC, the Company has agreed to make an offer of rescission (the "Rescission
Offer") to purchasers of its common stock residing in British Columbia. The
Company intends to mail the Rescission Offer in early August 2001 and such
Rescission Offer will be open for acceptance for a period of 30 days. Under the
Rescission Offer, the recipient may elect to retain their shares in the Company
or to rescind their original purchase and return the shares to the Company and
receive from the Company, the purchase price originally paid for the shares. Any
shares returned to the Company pursuant to the Rescission Offer will be
cancelled. The Rescission Offer will be mailed to stockholders who have acquired
common stock from the Company for aggregate proceeds of approximately
$1,400,000.



                                       26
<PAGE>



L.O.M. MEDICAL INTERNATIONAL INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 7
$ United States

Years ended May 31, 2001 and 2000 and cumulative from inception (March 17, 1997)
to May 31, 2001

--------------------------------------------------------------------------------


10.  Comparative figures:

Certain of the prior years' figures have been restated to comply with the
financial statement presentation adopted in the current year.


Item 8.  Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.

There have been no changes in or disagreements with our accountants since the
formation of the Company required to be disclosed pursuant to Item 304 of
Regulation S-B except for the following:

On November 17, 1999,  we dismissed  our former independent auditor Joe Maciel
Inc., Chartered  Accountants ("Joe Maciel, Inc."), based on our agreement with
Mr.  Maciel that such action  would be in the best  interest of both Joe Maciel,
Inc., and the Company. Effective as of that date, we engaged KPMG LLP ("KPMG")
as our new independent auditor. The decision to end our relationship  with Joe
Maciel, Inc. and to engage  KPMG was unanimously approved  by our  Board of
Directors.

Over the course of Joe Maciel, Inc.'s engagement, the Company and Joe Maciel,
Inc. had no disagreements on any matters of accounting principles or practices,
financial statement disclosure, auditing scope or procedure, which disagreement,
if not resolved to the satisfaction of Joe Maciel, Inc. would have caused it to
make reference to the subject matter of the disagreement in connection with any
report or opinion it might have issued. Furthermore, neither of Joe Maciel
Inc.'s reports on the Company's financial statements for the past two years
contained an adverse opinion, disclaimer of opinion, or modification or
qualification of opinion.

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

Our directors and principal executive officers are as specified on the following
table:
<TABLE>
<CAPTION>
===================== ========= =========================================================== =====================================
<S>                     <C>      <C>                                                           <C>
---------------------   Age     Position                                                    Term as Director
Name
--------------------- --------- ----------------------------------------------------------- -------------------------------------
John Klippenstein        62     President, Chief Executive Officer and Director             From inception to present
--------------------- --------- ----------------------------------------------------------- -------------------------------------
Peter McFadden           45     Vice President, Chief Financial Officer and Past Director   From  October  27,  1997 to December
                                                                                            31, 2000
--------------------- --------- ----------------------------------------------------------- -------------------------------------
Maria Klippenstein       60     Secretary and Treasurer                                     From inception to present
--------------------- --------- ----------------------------------------------------------- -------------------------------------
David A. Gramlich        60     Director                                                    From inception to present
--------------------- --------- ----------------------------------------------------------- -------------------------------------
Colin Lee                63     Director                                                    From inception to present
--------------------- --------- ----------------------------------------------------------- -------------------------------------
Dr. Harold Punnett       44     Director                                                    From March 2, 2001 to present
--------------------- --------- ----------------------------------------------------------- -------------------------------------
Dr. Jeffrey Berg         58     Director                                                    From February 28, 2000 to present
===================== ========= =========================================================== =====================================
</TABLE>




                                       27
<PAGE>




John Klippenstein is our President, Chief Executive Officer and a member of our
Board of Directors. He received his education in Winnipeg and received a
Certified Engineering Technician degree in 1964 from Red River College in
Winnipeg, Manitoba. From 1980 to present, Mr. Klippenstein has been the
President and owner of Tech-Nacan Consultants. From 1994 to present, Mr.
Klippenstein has been the President of our subsidiary, L.O.M. Laboratories, Inc.
Mr. Klippenstein is currently a director of Highland Security Corporation and
has been since 1996. Mr. Klippenstein has also worked for several land
development companies until 1969 when he started his personal land development
and construction management company, which still has holdings in Kelowna,
British Columbia. As owner of Tech-Nacan Consultants Inc., Mr. Klippenstein has
developed and built many large commercial and industrial projects including
health care facilities, clinics, schools, institutional buildings, senior
citizen housing, high rise apartment complexes, recreational complexes, and food
processing facilities in Manitoba, Saskatchewan and Alberta.

Peter McFadden is consultant and is our Chief Financial Officer. Mr. McFadden
began his university education in 1979. He received his Bachelor of Science
degree at McMaster University, and a Masters Degree in Business Administration
from the University of Windsor in 1982. From 1994 to present, Mr. McFadden has
operated his own public accounting firm under the name of Peter McFadden Inc.
Chartered Accountants. Prior to establishing his own accounting practice, Mr.
McFadden spent 12 years as a Senior Manager for a national public accounting
firm. Mr. McFadden is also a lecturer at Okanagan University.

Maria Klippenstein is our Secretary and Treasurer. Mrs. Klippenstein has
completed university level studies in industrial accounting including
bookkeeping, accounts receivable and accounts payable, and banking. From 1980 to
present, Mrs. Klippenstein has been the Secretary and Treasurer of Tech-Nacan
Consultants. From 1994 to present, Mrs. Klippenstein has been the Secretary and
Treasurer of L.O.M. Laboratories, Inc., our subsidiary. Mrs. Klippenstein has 20
years of experience in accounting and is proficient in AccPac accounting
software and cost accounting. Mrs. Klippenstein is also an accomplished artist
and photographer.

David A. Gramlich is a member of our Board of Directors. Mr. Gramlich began his
business career in 1968 in the field of real estate. From 1968 to 1979, he
worked as a manager of several real estate firms. From 1979 to 1998, Mr.
Gramlich was a self-employed businessman specializing in real estate and
development. Mr. Gramlich also owned Video Max, a company that owned and
operated four video stores in the City of Langley, British Columbia. Since 1998,
Mr. Gramlich has been employed by Canadian R.V. Centre as a sales and lease
consultant. Mr. Gramlich has participated in industrial, commercial and
institutional transactions.

Colin Lee, M. D., is a member of our Board of Directors. Dr. Lee came to Canada
in 1968 after having received his medical degree from Capetown University in
South Africa in 1966. Since his arrival in Canada, Dr. Lee has worked in the
specialty of radiology. Dr. Lee owns and operates 5 radiology clinics in
Vancouver Island and Victoria, British Columbia, in partnership with Dr. Sidney
Joss. Dr. Lee not only brings his medical knowledge to the Company, but also his
investment experience.

Jeffrey Berg, Ph.D., is a member of our Board of Directors. Dr. Berg is a senior
research analyst as well as a prime consultant to medical companies located
within the United States, including, but not limited to, Johnson & Johnson and
Bausch & Lomb. Dr. Berg typically associates himself with companies offering
pharmaceutical, biotechnological and medical-device and diagnostic products. Dr.
Berg has also been published in medical publications. Dr. Berg is the owner and
President of Health Care Insights. Health Care Insights has offices in Edison,
New Jersey.

Dr. Harold Punnett, is a member of our Board of Directors. Dr. Punnett has had
his own dental practice in the Vancouver area since 1984. For the past ten years
he has been an active participant in the investment community. Presently Dr.
Punnett is part of a private venture capital group based in Europe as well as
serving as a member on the Board of Directors of Red Emerald Resources, a
company listed on the CDNX exchange under the symbol "RED".



                                       28
<PAGE>



John Klippenstein and Maria Klippenstein are husband and wife. Other than the
persons listed above, there are no significant employees expected by us to make
a significant contribution to our business. All of our directors will serve
until the next annual meeting of stockholders. Our executive officers are
appointed by our Board of Directors and serve at the discretion of the Board of
Directors.

There are no orders, judgments, or decrees of any governmental agency or
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities
business or in the sale of a particular security or temporarily or permanently
restraining Mr. Klippenstein, Mr. McFadden, Mr. Gramlich, Dr. Lee, Dr. Berg, Dr.
Punnett or Mrs. Klippenstein from engaging in or continuing any conduct,
practice or employment in connection with the purchase or sale of securities, or
convicting such person of any felony or misdemeanor involving a security, or any
aspect of the securities business or of theft or of any felony, nor are Mr.
Klippenstein, Mr. McFadden, Mr. Gramlich, Dr. Lee, Dr. Berg, Dr. Punnett, or
Mrs. Klippenstein the officers or directors of any corporation or entity so
enjoined.

Section 16(a) Beneficial Ownership Reporting Compliance. We believe that all of
our officers, directors and principal shareholders have filed all reports
required to be filed by those persons on, respectively, Form 3 (Initial
Statement of Beneficial Ownership of Securities), Form 4 (Statement of Changes
of Beneficial Ownership of Securities), or Form 5 (Annual Statement of
Beneficial Ownership of Securities). ---------------------------------
-----------------------------------

Executive Compensation.

Item 10. Executive Compensation.

Any compensation received by our officers, directors, and management personnel
will be determined from time to time by our Board of Directors. Our officers,
directors, and management personnel will be reimbursed for any out-of-pocket
expenses incurred on our behalf. Compensation to our officers is specified on
the chart below.

The table set forth below summarizes the annual and long-term compensation for
services in all capacities to the Company payable to our President and our other
executive officers whose total annual salary and bonus to exceeded US$50,000
during the year ending May 31, 2001.

<TABLE>
<CAPTION>
========================================== ============================================ =========================
<S>                                          <C>                                               <C>
Name of Individual or Identity of Group    Capacities   in  which   Remuneration   was  Aggregate Remuneration
                                           received
------------------------------------------ -------------------------------------------- -------------------------
John Klippenstein                          President and Chief Executive Officer        US$158,564
========================================== ============================================ =========================
</TABLE>


Shares Issued as Compensation for Services. During the fiscal year ended May 31,
2001, we did not issue any shares of our $.001 par value common stock as
compensation for consulting and other services.

Compensation of Directors. Our directors who are also our employees receive no
extra compensation for their service on our Board of Directors. Each of our
directors receives reimbursement for actual and necessary expenses incurred in
attending meetings of the Board of Directors.

Stock Options Issued. During the fiscal year ended May 31, 2001, we issued stock
options to directors, employees, and consultants. The details of these options
are explained in Note 5 of the financial statements.



                                       29
<PAGE>



Item 11.  Security Ownership of Certain Beneficial Owners and Management.

The following tables set forth certain information regarding the beneficial
ownership of the Company's common stock as of May 31, 2001, by:

o        each person or entity known by us to be the beneficial owner of more
         than 5% of the outstanding shares of common stock;
o        each of the Company's directors and named executive officers; and
o        all directors and executive officers of the Company as a group.

As of May 31, 2001, there were 6,152,811 shares of the Company's common stock
issued and outstanding. As of May 31, 2001, there were 340,417 options
outstanding.

(a) Security Ownership of Certain Beneficial Owners.  Other than officers and
directors, there are no other persons who are beneficial owners of 5% or more
of our issued and outstanding common stock.

(b) Security Ownership of Management. Our directors and principal executive
officers directly or beneficially own, in the aggregate, 3,733,739 shares of our
common stock and 307,000 stock options, or approximately 65.7 % of the issued
and outstanding common stock, as set forth on the following table (percentages
are rounded off to the nearest one-tenth of one percent):

<TABLE>
<CAPTION>
  Title of             Name of Beneficial Owner               Amount              Options           Percent of Issued Shares And
  ---------            ------------------------               ------              -------           -----------------------------
    Class                                                                                                      Options
    -----                                                                                                      -------
<S>                      <C>                                   <C>                 <C>                            <C>
Common Stock          David E. Gramlich, Director             40,000              18,000                         .9%
                       122 - 5360 - 201st Street
                             Langley, B.C.
                                V3A 1T7

Common Stock            Dr. Colin Lee, Director               55,000              18,000                         1.1%
                           2749 McCall Place
                            Victoria, B.C.
                                V8N 5Y8

Common Stock      Peter McFadden, Vice President, and         4,100             118,000(3)                       2.0%
                        Chief Financial Officer
                           418 Oakview Road
                             Kelowna, B.C.
                                V1W 4K2

Common Stock      John Klippenstein, President, Chief     3,629,779 (1)         138,000(1)                      61.2%
                    Executive Officer and Director
                          494 Casa Rio Drive
                             Kelowna, B.C.
                                V1Z 3L6

Common Stock   Maria Klippenstein, Secretary, Treasurer   3,629,779 (2)         138,000(2)                      61.2%
                          494 Casa Rio Drive
                             Kelowna, B.C.
                                V1Z 3L6

Common Stock          Dr. Jeffrey Berg, Director               Nil                15,000                         .2%
                            3 Fairhill Road
                          Edison NJ USA 08817

   Common            Dr. Harold Punnett, Director             4,860                 Nil                          .08%
    Stock                   9066 Gay Street
                          Fort Langley, B. C.
                                V1M 2S5
</TABLE>




                                       30
<PAGE>




(1) Includes 1,814,884 shares of our common stock and 20,000 options owned by
Mr. Klippenstein's wife, Maria Klippenstein.

(2) Includes 1,814,895 shares of our common stock and 118,000 options owned by
Mrs. Klippenstein's husband, John Klippenstein.

(3) Peter McFadden provides services to the company through a corporation and is
therefore considered to be an independent contractor. Accordingly, for
accounting purposes, he is considered to be a non-employee.

Changes in Control. We are not aware of any arrangements which may result in
"changes in control" as that term is defined by the provisions of Item 403(c) of
Regulation S-B.

Item 12. Certain Relationships and Related Transactions.

Related Party Transactions. Related Party Transactions. On or about January 1,
1998, prior to becoming our subsidiary, L.O.M. Laboratories Inc., purchased from
John Klippenstein all product rights to the Lens-O-Matic. L.O.M. Laboratories
Inc. paid a purchase price of CDN$542,000 allocated as follows:

o        L.O.M. Laboratories Inc. forgave John Klippenstein's debt of
         CDN$101,329; and
o        L.O.M. Laboratories Inc. issued, to John Klippenstein, 4000 of the
         Company's Class "C" Preferred Shares valued at CDN$440,671.

At the time of the transaction, John Klippenstein was serving as our President,
Chief Executive Officer and a director as well as serving as President and a
director of L.O.M. Laboratories Inc. John Klippenstein signed the Purchase and
Sale Agreement in his individual capacity as seller and as the authorized
officer of L.O.M. Laboratories Inc. At the time of the transaction, Mr.
Klippenstein's wife, Maria Klippenstein, was our Secretary and Treasurer as well
as Secretary and Treasurer of L.O.M. Laboratories Inc. The value of the
investment will ultimately be determined by the acceptance of the product in the
market place which is uncertain at this time. For financial statement purposes
this investment has been written down to nil.

On or about June 1, 1997, the Company agreed to purchase 4,800 of the 5,000
total issued and outstanding shares of L.O.M. Laboratories Inc.'s Class "A"
common shares; however, the effective date of such purchase was not until
January 13, 1998, when the shareholders and directors of L.O.M. Laboratories,
Inc., approved the sale. We agreed to pay US$1.00 per share. The 4,800 shares
represent a 96% interest in L.O.M. Laboratories Inc. The other 200 issued and
outstanding common shares are owned by John and Maria Klippenstein. At the time
of the transaction, John Klippenstein was serving as our President, Chief
Executive Officer and was a member of our Board of Directors as well as the
President and a director of L.O.M. Laboratories Inc. At the time of the
transaction, Mr. Klippenstein's wife, Maria Klippenstein, was the Secretary and
the Treasurer of L.O.M. Laboratories Inc., and our Secretary Treasurer.

We lease office space from 494040 B.C. Ltd. ("Tech-Nacan Consultants").
Tech-Nacan Consultants, a British Columbia corporation, is a real estate
development company owned by John Klippenstein, our President, Chief Executive
Officer and a member of our Board of Directors, and Maria Klippenstein, our
Secretary and Treasurer. For the year ended May 31, 2001, we paid US$29,489.00
for that office space.

On or about October 27, 1997, with the Board of Director's approval, the Company
and John Klippenstein executed a five-year employment contract. Under the
agreement, John Klippenstein is to provide us with management services for which
we agreed to pay Mr. Klippenstein US$120,000 for the first year with a US$10,000
increase every year thereafter, resulting in a final fifth year salary of
US$160,000. John Klippenstein is our President, Chief Executive Officer and a
member of our Board of Directors. During the year ended May 31, 2001, we paid
US$158,564.00 to Mr. Klippenstein.





                                       31
<PAGE>



During the year ended May 31, 2001, we paid Peter McFadden Inc, fees of
US$26,059 for accounting services. Peter McFadden is a Vice President and our
Chief Financial Officer.

During the year ended May 31, 2001, we paid Maria Klippenstein, our Secretary
and Treasurer, US$35,713 in office and administrative fees.

During the year ended May 31, 2001, we paid Pam Klippenstein, relative of Maria
and John Klippenstein, fees of US$19,109.00 for office management fees for the
management of our subsidiaries' office.


The persons serving as our officers and directors have existing responsibilities
and, in the future, may have additional responsibilities, to provide management
and services to other entities in addition to the Company. As a result,
conflicts of interest between the Company and the other activities of those
persons may occur from time to time. We will attempt to resolve any such
conflicts of interest in favor of the Company. Our officers and directors are
accountable to the Company and its shareholders as fiduciaries, which requires
that such officers and directors exercise good faith and integrity in handling
our affairs. A shareholder may be able to institute legal action on behalf of
the Company or on behalf of that shareholder and all other similarly situated
shareholders, to recover damages or for other relief in cases of the resolution
of conflicts in any manner prejudicial to the Company.


Item 13.  Exhibits and Reports on Form 8-K

         (a) Exhibits

Exhibit No.
-----------

3.1            Certificate of Incorporation
                   (Charter Document)*

3.2            Amendment to Certificate of Incorporation
               (Charter Document)*

3.3            Amendment to Certificate of Incorporation
               (Charter Document)*

3.4            Bylaws*

4.             Instruments Defining the Rights of Holders (Not Applicable)



                                       32
<PAGE>





11.            Statement Re: Computation of Per Share Earnings (Loss)**

16.            Letter on change in certifying accountant (Not Applicable)

18.            Letter on Change in Accounting Principles (Not Applicable)

21.            Subsidiaries of the Registrant**

22.            Published Report Regarding Matters Submitted to Vote
               (Not Applicable)

23.1           Consent of Auditors (Not Applicable)

23.2           Consent of Counsel (Not Applicable)

24.            Power of Attorney (Not Applicable)

99.            Additional Exhibits (Not Applicable)

*Previously filed as Exhibits to Registration Statement on Form 10-SB and all
amendments thereto filed with the Commission.

**Included in consolidated financial statements filed herewith.

*** Will be filed as an exhibit to an amended 10KSB.

         (b) Reports on Form 8-K

         Two reports on Form 8-K have been filed. Both Form 8-K's announced the
resignation of directors (Peter McFadden and Dr. John Gergely). Please refer to
the SEC website for the full text of the Form 8-K's.



                                       33
<PAGE>






                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned in the City of
Kelowna, British Columbia, Canada, on August 14, 2001.

                                        L.O.M. Medical International, Inc.,
                                        a Delaware corporation

                                        By:  /s/ John Klippenstein
                                           --------------------------------
                                                 John Klippenstein
                                        Its:     President