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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           ---------------------------
                                    FORM 10-K

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

         For the fiscal year ended     MAY 31, 1998

                                       OR

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

         For the transition period from            to
                                        ----------    ----------

                          Commission file number 1-7848

                        LAZARE KAPLAN INTERNATIONAL INC.
             (Exact name of registrant as specified in its charter)

                 DELAWARE                                   13-2728690
     (State or other jurisdiction of                    (IRS Employer
     incorporation or organization)                     Identification No.)

          529 FIFTH AVENUE, NEW YORK, NY                       10017
     (Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code (212) 972-9700

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

           Title of each class        Name of each exchange on which registered
           -------------------        -----------------------------------------
     COMMON STOCK ($1 PAR VALUE)               AMERICAN STOCK EXCHANGE
     PREFERRED SHARE PURCHASE RIGHTS           AMERICAN STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act: NONE

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_   No ___

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K.   [X]

         As of July 31, 1998, 8,532,549 shares of the registrant's common stock
were outstanding, and the aggregate market value of voting and non-voting common
equity held by non-affiliates of the registrant, computed by reference to the
closing price for the registrant's common equity on the American Stock Exchange
at that date was $49,580,179.

                       DOCUMENTS INCORPORATED BY REFERENCE

         1998 definitive proxy statement to be filed with the
Commission-incorporated by reference into Part III.

         1998 Annual Report to Stockholders for the fiscal year ended May 31,
1998 to be filed with the Commission-incorporated by reference into Parts II and
IV.



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Item 1

          The Company

                  Lazare Kaplan International Inc. ("the Company") was
incorporated in 1972 under the laws of the state of Delaware as the successor to
a business which was founded by Mr. Lazare Kaplan in 1903. The Company is
engaged in the cutting, polishing and selling of ideally proportioned diamonds
which it markets internationally under the brand name "Lazare Diamonds'r'".
Ideally proportioned diamonds are distinguished from non-ideal cut
("commercial") diamonds by the symmetrical relationship of their facets, which
maximizes brilliance, sparkle and fire. Due to these characteristics, Lazare
Diamonds command a premium in the marketplace. The Company believes there are
only a few other companies worldwide engaged primarily in the production of
ideally proportioned diamonds and that it is the largest producer of ideal cut
diamonds through its facility in Puerto Rico. In addition, at its facility in
Moscow, the Company cuts and polishes commercial diamonds which it markets to
wholesalers, distributors and, to a growing extent, through retail jewelers. All
rough stones purchased by the Company are either selected for manufacturing or
resold as rough diamonds in the marketplace. The Company believes that the
combination of its cutting and polishing operations and its trading operations
enables the Company to purchase larger quantities of rough diamonds from which
it may select those rough diamonds best suited for the Company's current needs.

                  The Company's marketing strategy in the selling of Lazare
Diamonds is directed primarily toward quality conscious consumers throughout the
United States, South America, the Far East and Europe. The Company focuses its
distribution efforts for Lazare Diamonds on selectivity with a view to helping
retailers who carry the product maintain a competitive advantage. Lazare
Diamonds can be found at some of the most prestigious jewelry stores around the
world, including those with international reputations and those known only in
their communities as being the highest quality retail jewelers. This strategy
helps ensure that the Company's product is presented in an environment
consistent with its superior quality and image. The Company also sells to
certain jewelry manufacturers and diamond wholesalers. The Company has developed
a comprehensive grading system which, when coupled with the "ideal cut"
standard, allows jewelers to order inventory by category rather than through the
more cumbersome process of visual selection. In addition, the Company designs,
manufactures (through independent contractors) and sells a line of high quality
jewelry which features Lazare Diamonds.

                  An important element of the Company's strategy is the
promotion of the Lazare Diamonds brand name. Every Lazare Diamond bears a laser
inscription on its outer perimeter, invisible to the naked eye, containing the
Lazare Kaplan logo and an identification number unique to the stone. The laser
signature also allows consumers to register their Lazare Diamonds with the
Company under its program, The Lazare Diamond Registry'r', thereby providing
proof of ownership in case of loss or theft.

                  One of the Company's important suppliers of rough diamonds is
the Diamond Trading Company ("DTC"), an affiliate of De Beers Centenary AG, a
Swiss company ("DeBeers"). Based on published reports, the Company believes that
the DTC controls approximately 70-75% of the value of world rough diamond
output. The Company has been a client of the DTC for more than 50 years. In
order to diversify its sources of rough diamond supply, however, the Company has
broadened its purchasing capabilities throughout Africa


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and has an office in Antwerp to supplement its rough diamond needs by secondary
market purchases. The Company also has expanded its operations and entered into
relationships with other primary source suppliers. The Company believes that its
success in maintaining quantities and qualities of polished inventory that best
meet its customers' needs is achieved through its ability to fully integrate its
diverse rough diamond sources.

                  The Company currently has two manufacturing facilities. The
Company's domestic manufacturing operation, located in Puerto Rico, is believed
by the Company to be the largest diamond cutting facility in the United States.
The Company believes its work force in Puerto Rico is the most highly skilled in
the world producing ideal cut diamonds. This facility generally produces
polished diamonds having weights of 1/5 of a carat and greater. The second
manufacturing facility is conducted pursuant to an agreement with AK Almazi
Rossii Sakha (ALROSA) of Russia. The factory, which was equipped and staffed
during fiscal year 1997, is approaching its full anticipated manufacturing
capacity. This is expected to be in excess of $45 million (at rough diamond
cost) per year of large rough gem diamonds. During fiscal year 1998, the Company
sold its shares of Lazare Kaplan Botswana (Pty) Ltd. and no longer has an
interest in the Botswana factory. The Company's manufacturing operation which
was conducted in cooperation with the Russian Government agency responsible for
diamond exports and the Russian national stockpile has suspended production.

Diamond Supply

                  The Company's overall revenues are dependent upon the
availability of rough diamonds, the world's known sources of which are highly
concentrated. Based upon published reports, the Company believes that Angola,
Australia, Botswana, Brazil, Ghana, Guinea, Ivory Coast, Namibia, Republic of
the Congo, Russia, Sierra Leone and South Africa account for more than 90% of
present world rough gem diamond production. In addition, according to published
reports, diamond production is expected to commence in Canada during calendar
year 1998, and is expected to reach $500 million annually. The Central Selling
Organization ("CSO"), which is affiliated with De Beers, is the primary
world-wide marketing mechanism of the diamond industry. The CSO seeks to
maintain an orderly and stable market for diamonds by regulating the quantity
and selection of diamonds that reach the market. This is achieved either by
directly owning diamond mines, entering into multi-year purchase agreements with
host governments, or by purchasing diamonds in the secondary market. Sales for
the CSO are made in London by the DTC to a select group of clients
("sightholders") which, according to published reports, number approximately
160, including the Company. Based upon published reports, the Company believes
that approximately 70-75% of the world diamond output is purchased for resale by
the DTC and its affiliated companies. In order to maintain their purchasing
relationship, the DTC's clients have traditionally been expected to purchase all
of the diamonds offered to them by the DTC. Companies that are not sightholders
must either purchase their requirements from sightholders or seek access to that
portion of the world supply not marketed by the DTC.

                  Historically, an important supplier of rough diamonds to the
Company has been the DTC, which periodically invites its clients to submit their
requirements as to the amount and type of stones they wish to purchase.
Employees of the Company attend offerings of rough diamonds ("sights") held by
the DTC periodically during the year in London. At sights, the Company
purchases, at the DTC's stated price, an assortment of rough diamonds known as a
"series", the composition of which attempts to take into account the qualitative
and quantitative requirements of the Company based on requests submitted to the
DTC by the Company. The Company has been a sightholder for more than 50 years.


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                  In order to diversify its sources of supply, the Company has
entered into arrangements with other primary source suppliers, has expanded its
rough diamond purchasing capabilities throughout Africa, and has established an
office in Antwerp to supplement its rough diamond needs by making purchases in
the secondary market. For the three years ended May 31, 1998, 1997 and 1996,
approximately 25%, 40% and 50%, respectively, of the Company's rough diamond
purchases were from the DTC.

                  In December 1994 the Company reached an agreement with the
Empresa Nacional de Diamantes de Angola ("Endiama"), Angola's national diamond
mining company, pursuant to which the Company was granted a license to purchase
rough diamonds from local Angolan miners and export such diamonds for resale.
This is one of three such licenses granted by Endiama. The agreement entitles
the Company to establish buying offices throughout Angola, the first of which
was set up during 1995 in Luanda, the capital of Angola. The Company currently
has five buying offices located in Angola, including the office in Luanda, and
anticipates establishing additional buying offices in the future. The agreement
has a term of five years ending in 1999, and is subject to renewal thereafter.

                  In July 1996 the Company signed a five year agreement,
approved by the Government of Angola, for the supply of a portion of the rough
diamonds mined in Angola and the joint cutting, polishing and marketing of a
portion of that production. The agreement, entered into with Endiama and
Sociedade Angolana de Exploracao, Lapidacao e Commercializacao de Diamantes, a
company owned by a consortium of Angolan investors, provides for Endiama to sell
to the Company a portion of the rough diamonds mined in Angola consisting of
sizes and qualities selected by the Company as being suitable for cutting and
sale as polished diamonds, or for resale as rough diamonds. Purchases under this
arrangement began in August 1996. The Company has cut and polished the rough
diamonds at its existing facilities. After an agreed period of consistent,
uninterrupted supply of rough diamonds, a feasibility study will be undertaken
by the Company to examine the economic viability of establishing a diamond
cutting factory in Angola. In the agreement, the parties acknowledge that it is
their long-term intention to create a diamond polishing facility in Angola with
the capacity for polishing at least $40 million of rough diamonds per year.
However, the arrangement remains in an early stage and the Company has not yet
been supplied with suitable quantities of rough diamonds for cutting and
polishing.

                  The Company believes that it has good relations with its
suppliers, that its trade reputation and established customer base will continue
to assure access to primary sources of diamonds and that its sources of supply
are sufficient to enable the Company to meet its present and foreseeable needs.
However, the Company's sources of supply could be affected by political and
economic developments in producing countries over which the Company has no
control. While the Company believes that alternative sources of supply may be
available, any significant disruption of the Company's access to its primary
source suppliers could have a material adverse effect on its ability to purchase
rough diamonds.

                  The Company has rough diamond supply arrangements in Russia
for the cutting and polishing of diamonds in Russia. See "Cutting and
Polishing".

Cutting and Polishing

                  The Company and its subsidiaries currently have two primary
cutting and polishing operations,


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one located in Moscow, Russia and one located in Puerto Rico.

                  The factory in Russia was first announced in July 1996 when
the Company reached an agreement, for a term of ten years, with AK Almazi Rossii
Sakha (ALROSA) of Russia for the cutting, polishing and marketing of large rough
gem diamonds. According to published reports, ALROSA is the largest producer of
rough diamonds in Russia with annual production in excess of $1.4 billion,
accounting for over 20% of the world's supply of diamonds. Under the terms of
the agreement, the Company has equipped a diamond cutting factory which was
completed in February 1997 within the ALROSA facility in Moscow. This facility
is staffed by Russian technicians and managed and supervised by Company
personnel. ALROSA has agreed to supply a minimum of $45 million per year of
large rough gem diamonds selected by the Company as being suitable for
processing in this facility. In May 1997, the facility completed production of
its first polished stones and the Company received its first shipment of
polished stones produced at this facility during November 1997. The Company
sells the resulting polished diamonds through its worldwide distribution
network. The proceeds from the sale of these polished diamonds, after
reimbursement of costs incurred by each of the parties, generally will be shared
equally with ALROSA. The agreement does not require the Company to advance funds
for the purchase of rough diamonds. This agreement serves as a long-term
off-take arrangement to secure the repayment of the $62 million financing which
has begun to be received by ALROSA from a United States commercial bank and to
be guaranteed by the Export-Import Bank of the United States ("Eximbank") for
the purchase by ALROSA of U.S. manufactured mining equipment. This equipment is
used by ALROSA to increase production in its diamond mines. Eximbank has stated
that this agreement is the first transaction approved under Eximbank's General
Project Incentive Agreement with the Ministry of Finance and the Central Bank of
the Russian Federation signed in December 1993.

                  In July 1998 the Company announced the expansion of its
relationship with ALROSA. In accordance with a Memorandum of Understanding
signed by Eximbank, ALROSA and the Company, Eximbank has stated its willingness
to lend an additional several hundred million dollars to ALROSA for the
continued expansion of its mining capacity. Lazare Kaplan will act as the
off-take partner of this arrangement, and with ALROSA, has agreed to establish a
new polishing factory in Russia with an annual capacity to cut and polish up to
$150 million of rough diamonds. This factory will be in addition to the existing
facility, described above, which is equipped to cut and polish $45 million per
year of rough diamonds.

                  In addition, the Company had another facility located in
Moscow which was conducted in cooperation with the Russian Government
organization responsible for diamond policy and the Russian national stockpile.
Production from this facility has been suspended and there have been no diamonds
exported from this facility since the beginning of calendar year 1997, including
those that are already polished and awaiting export. The Company believes that
it will recapture lost sales once these polished diamonds are exported.

                  The Company believes that its factory in Puerto Rico is the
largest cutting and polishing facility in the United States. Each rough diamond
received in Puerto Rico is evaluated against strict management standards
designed to maximize its potential economic contribution to the Company. Expert
technicians, assisted by proprietary computer software, determine whether to cut
the rough diamond to ideal or commercial proportions or resell the rough
diamond. The shape of the rough diamond, its color, clarity, size, potential
profitability and salability are among the criteria used in making such
determinations. The Company's production workers are compensated principally on
a piece rate basis. The Company has an incentive program


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that rewards its factory managers and supervisors for maximizing the
manufactured results based on the following criteria: gross margin, yield (rough
weight to polished weight conversion) and efficiency.

                  Rough diamonds selected for cutting are analyzed and where
desirable are sorted for sawing or cleaving to achieve the desired shape and to
eliminate imperfections. They are then cut and polished into finished gems. Each
finished ideal cut diamond (weighing .18 carats and larger) which is marketed as
a Lazare Diamond is then inscribed with the Lazare Kaplan logo and its own
identification number by the Company's patented laser inscription process. All
of these operations are performed by the Company's employees. The Company
believes its work force in Puerto Rico is the most highly skilled in the diamond
industry. The Company has undertaken a worker training program at its facility
in Puerto Rico to ensure a constant flow of skilled labor to satisfy its needs
for further growth.

                  In March 1998, the Company completed a transaction for the
sale of its 60% interest in Lazare Kaplan Botswana (Pty) Ltd. for $11.1 million,
resulting in a gain of $3.7 million (net of $485,000 of Botswana taxes). The
Company established a cutting factory in Botswana in 1990 in partnership with
the Government of Botswana and successfully undertook intensive start-up and
training programs. The Botswana factory employed more than 500 local workers and
produced small size (melee) ideal cut diamonds. The Company intends to meet the
requirements of its customers for this product through its existing facilities
and through continued purchases of polished diamonds from Botswana.

                  The Company believes that it is recognized in the diamond
industry for the high quality and brilliance of the gems it cuts and that it
also enjoys a reputation as an imaginative and innovative cutter of large and
difficult diamonds.

Pricing

         Rough Diamond Prices

                  Through its control of approximately 70-75% of the value of
the world diamond output, the DTC can exert significant control over the pricing
of rough and polished diamonds to maintain an orderly market by adjusting
supplies in the marketplace. Rough diamond prices established by the DTC have
been characterized historically by steady increases over the long term; however,
prices in the secondary market have experienced a greater degree of volatility,
particularly during the late 1970's. Traditionally, the Company has been able to
pass along such price increases to its customers. From time to time, however,
the Company has absorbed these price increases in the short term to maintain an
orderly pricing relationship with its customers. This has, in the past, caused
temporary adverse effects on the Company's earnings. However, a large rapid
increase in rough diamond prices could materially adversely affect the Company's
revenue and operating margins if the increased cost of rough diamonds could not
be passed along to its customers in a timely manner.

                  According to published reports, during 1995 there was an
emergence of a two-tier market for rough diamonds. The first tier is comprised
of better quality rough diamonds, for which the DTC continues to maintain an
orderly market. The Company conducts its cutting and polishing operations almost
exclusively in this segment of the market. The second tier is comprised of
small, less expensive, imperfect rough diamonds. The prices for these diamonds
are determined principally by supply and demand. Consequently,


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there has been considerable volatility in the prices of less expensive diamonds
since 1995. Because the Company focuses primarily on better quality rough
diamonds, this volatility has not had a significant effect on the Company.

         Polished Diamond Prices

                  Over the past 60 years, increases in the price of rough
diamonds have generally resulted in a corresponding increase in the price of
polished diamonds. However, during periods of economic uncertainty, there may be
a time lag before the Company is able to increase polished diamond prices.
During the period of high inflation in the late 1970's, investors speculated in
hard assets, driving polished diamond prices to exceptionally high levels which
in turn caused significant increases in the cost of rough diamonds. However, the
moderation of inflation during the early 1980's resulted in a sudden and massive
shift of investments from hard assets to financial instruments, resulting in
dramatic price declines for polished diamonds which caused a market liquidity
crisis as prices of some categories of polished diamonds fell below the
inventory costs of such diamonds. Since this period in the early 1980's, the
Company believes the pricing of polished diamonds has returned to its historical
pattern of responding to increases in the pricing of rough diamonds. However,
there can be no assurance that volatility in the price of polished diamonds
could not occur again. Any rapid decrease in the price of polished diamonds
could have a material adverse effect on the Company in terms of inventory
reserves, lower sales and lower margins.

                  The Company has broadened its sales base and implemented
strict inventory, pricing and purchasing controls which it believes could lessen
the impact of fluctuations in the price of rough and polished diamonds. These
include computerized rough diamond evaluation programs, automatic economic order
quantity models and inventory utilization programs.

Marketing, Sales and Distribution

         Marketing Strategy

                  The Company's sales strategy is directed primarily toward
quality conscious consumers throughout the United States, South America, the Far
East and Europe. The Company focuses its distribution efforts for Lazare
Diamonds on selectivity with a view to helping retailers who carry the product
maintain a competitive advantage. Lazare Diamonds can be found at some of the
most prestigious jewelry stores around the world, including both those with
international reputations and those known only in their communities as being the
highest quality retail jewelers. This strategy helps ensure that the Company's
product is presented in an environment consistent with its superior quality and
image.

                  The Company also sells to certain jewelry manufacturers and
diamond wholesalers. The Company has developed a comprehensive grading system
for its diamonds which, when coupled with the "ideal cut" standard, allows
jewelers to order inventory by category rather than through the more cumbersome
process of visual selection. In addition, the Company designs, manufactures
(through independent contractors) and sells a line of high quality jewelry that
features Lazare Diamonds.

                  A key element of the Company's strategy is the promotion of
the Lazare Diamonds brand name


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directly to consumers. The Company is able to market its diamonds under a brand
name to retailers because (a) the ideal cut differentiates the Company's
diamonds from commercial diamonds in the marketplace and (b) each Lazare Diamond
is inscribed with the Company's logo and identification number using the
Company's unique laser inscription process, thus authenticating the diamonds.
The Company holds a domestic patent, which expires in 2000, and various
international patents for this process. In addition, the Company has domestic
and international patents-pending for a new and improved laser inscription
process.

                  The Company's decision to pursue the brand name strategy is
reinforced by two factors - a rising trend among informed consumers to purchase
quality, brand name products, and the need among upscale jewelers to set
themselves apart in an increasingly competitive market by carrying and promoting
a highly differentiated product.

                  Building awareness and acceptance of Lazare Diamonds is
accomplished through a comprehensive marketing program which includes sales
training, cooperative advertising, sales promotion and public relations. A wide
assortment of sales promotion materials has been designed to facilitate
jewelers' sales of the Company's diamonds and fine jewelry line to consumers.
Public relations events are offered which help build traffic in retail stores.
The Company believes these marketing programs have been and will continue to be
instrumental in increasing sales. The Company has no current plans to sell its
diamonds directly to consumers and intends to continue concentrating its
marketing efforts towards the quality retail jeweler.

                  The Lazare Diamond Registry program has been established by
the Company to enable consumers to register their Lazare Diamonds with the
Company using the laser inscribed identification number, thereby providing proof
of ownership in case of loss or theft.

Sales and Distribution

                  While the purchase and sale of rough diamonds is concentrated
among relatively few parties, industry wide retailing of polished diamonds
occurs through over 40,000 jewelry stores in the United States, over 25,000
retailers in Japan and over 60,000 retail stores in Europe. The Company's sales
efforts for its polished diamonds are directed primarily toward the fine quality
segment of these retailers (the majority of which are independently owned and
operated), wholesalers and distributors and, to a lesser extent, to jewelry
manufacturers. Full time regional sales representatives located throughout the
United States, Hong Kong and Antwerp, are compensated on a commission basis and
handle sales throughout their respective territories.

                  The Company's sales force is supported by a New York based
telemarketing department. Sales to certain of the Company's largest accounts are
handled by headquarters personnel. Most of the Company's major accounts are
customers of long standing.

                  The Company has been actively working to expand its foreign
business activities, particularly in the Far East countries of Japan, Hong Kong,
Singapore, Taiwan, Korea and Malaysia and recently throughout South America. In
October 1996, Aiwa Co., Ltd. ("Aiwa"), the Japanese distributor with whom the
Company has had a marketing relationship since 1972, announced that it entered
into an agreement in Japan with Seiko Corporation ("Seiko"), one of the world's
largest watchmakers. In connection with this agreement, the Company and Aiwa
intend that Seiko will act as the exclusive distributor in Japan for Lazare
Diamonds.


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It is anticipated that Seiko will ultimately supply Lazare Diamonds to 300-400
retailers in Japan. Seiko is generally recognized as a leader in consumer brand
marketing and has a well developed network of contacts and retailers.

                  The Company uses a comprehensive sorting and inventory
classification system for grading color and clarity of its ideal cut polished
diamonds. This system, combined with the fact that the Company's stones are
uniformly cut to ideal proportions, reduces and in some cases eliminates the
need for customers to view diamonds before placing orders. The system enables
customers to standardize their inventories, order by mail or telephone and
minimize their inventory investment.

                  The percentages of the Company's total domestic and foreign
net sales to its customers, which include a combination of both rough diamonds
and polished diamonds sales taken together, for the past three fiscal years are
set forth below:

<TABLE>
<CAPTION>
                                                  Years ended May 31,
                                                ----------------------
                                                1998     1997     1996
                                                ----     ----     ----
<S>                                               <C>     <C>      <C>
Percentage of Net Sales to Customers
            United States                         28%      22%      23%
            Far East                               7%       9%       8%
            Europe, Israel & other                65%      69%      69%
                                                ----     ----     ----
                                                 100%     100%     100%
                                                ====     ====     ====
</TABLE>

                  The world's rough diamond trading market is primarily located
in Belgium and Israel; therefore, the majority of the Company's rough diamond
sales have been transacted with foreign customers. In 1998, due to an increase
in demand in the United States combined with a weaker market in the Far East,
the Company sold a greater percentage of its polished diamonds domestically than
it had in prior years. In addition, due to the overall decrease in rough diamond
sales in 1998 as compared to the prior years, the Company's sales to Europe,
Israel & other were lower as a percentage of total sales in 1998.

                  The Company believes that due to the possible international
resale of diamonds by its customers, the above percentages may not represent the
final location of retail sales of its product. As all foreign sales are
denominated in United States dollars, the Company does not experience any
foreign currency exposure on its foreign revenue. The profitability of foreign
sales of either polished or rough diamonds is consistent with that of domestic
sales of similar merchandise.

Competition

                  The polished and rough diamond business is highly competitive.
While the Company believes that it has achieved a reputation as a leading cutter
and distributor of high quality diamonds, it faces competition in sales to its
customers in the United States and abroad from many other suppliers. In
addition, the Company sells rough diamonds in the competitive world market. A
substantial number of cutters and polishers and traders, some of which the
Company believes to be larger or to have greater financial resources than the
Company, sell diamonds of all qualities to the Company's customers.


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                  The Company believes there are significant barriers to entry
by potential competitors into the business of manufacturing ideally proportioned
diamonds. Among the most important of these barriers are the need for
significant working capital to purchase rough diamonds and hold polished
inventory, the access to adequate supplies of rough diamonds, the limited number
of persons with the skills necessary to consistently cut significant amounts of
ideally proportioned diamonds, the difficulty in obtaining access to upscale
channels of distribution, the importance of public recognition of an established
brand name and the establishment of computer systems to report on and monitor
the manufacturing and distribution network.

Employees

                  At July 31, 1998, the Company had 165 full-time employees and
6 regional sales representatives. In March 1998, the Company sold its interest
in Lazare Kaplan Botswana (Pty) Ltd. which employed in excess of 500 local
workers. The Company maintains an apprenticeship program at its facility in
Puerto Rico, through which it trains its cutters, who are highly skilled
workmen. The Company provides paid vacations, sick leave, group life,
disability, hospitalization and medical insurance for its employees. The Company
has a 401(k) retirement plan for its U.S. and Puerto Rico employees. The Company
believes that it has satisfactory relationships with its employees. None of the
Company's employees is represented by a union.


Item 2. Properties

                  The Company leases office space, a portion of which is devoted
to sales rooms, at 529 Fifth Avenue, New York City, for a term expiring
September 30, 2003 at an annual rental rate of approximately $278,000 (subject
to escalations). The Company also subleases space at the same address to LTS for
a like term at a rental rate per square foot which is the same as the Company is
paying to the landlord.

                  The Company also owns a manufacturing facility in Caguas,
Puerto Rico. The Caguas facility consists of approximately 7,500 square feet.

                  The Company leases office space in Antwerp, Belgium for a term
expiring May 31, 2003 at an annual rental rate of approximately $41,000
(1,500,000 Belgian francs).

                  The Company also has a 40% ownership interest in a 330 square
meter office in Antwerp, Belgium, a portion of which is devoted to sales rooms.

                  The Company leases office space in Hong Kong for a term
expiring April 30, 2000 at an annual rental rate of approximately $46,000
(354,000 Hong Kong dollars).

                  The Company believes that its facilities are fully equipped
and adequate to fulfill its operating and manufacturing needs.


Item 3.  Legal Proceedings

                  The Company is not involved in any significant legal
proceedings.


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

                  None

Executive Officers of the Registrant

                  The following table sets forth information regarding executive
officers of the Company.

<TABLE>
<CAPTION>
NAME                                POSITION                           AGE
----                                --------                           ---
<S>                                  <C>                               <C>
Maurice Tempelsman                  Chairman of the Board              69

Leon Tempelsman                     Vice Chairman of the               42
                                    Board and President

Sheldon L. Ginsberg                 Executive Vice President and       44
                                    Chief Financial Officer

Robert Speisman                     Vice President - Sales             45
</TABLE>

         All officers were elected by the Board of Directors at its meeting
following the Annual Meeting of Stockholders held in November 1997, and hold
office until the Board of Directors meeting following the next Annual Meeting of
Stockholders and until their respective successors have been duly elected and
qualified.

         Maurice Tempelsman is the Chairman of the Board and a director of the
Company and a general partner of Leon Tempelsman & Son, a partnership with
interests in the international diamond and mining industries. He has held these
positions since 1984. Maurice Tempelsman is the father of Leon Tempelsman and
the father-in-law of Robert Speisman.

         Leon Tempelsman is the Vice Chairman of the Board, the President and a
director of the Company and a general partner of Leon Tempelsman & Son. He has
held these positions since 1984. Leon Tempelsman is the son of Maurice
Tempelsman and the brother-in-law of Robert Speisman.

         The Company believes that neither the Tempelsmans nor LTS currently
engages directly or indirectly in any activities competitive with those of the
Company.

         Sheldon L. Ginsberg has been Executive Vice President and Chief
Financial Officer since February 1996. He was the Vice President and Chief
Financial Officer from April 1991 until February 1996. Mr. Ginsberg has been a
director of the Company since 1989.

         Robert Speisman has been the Vice President - Sales of the Company
since 1986. Mr. Speisman has been a director of the Company since 1989. Mr.
Speisman is the son-in-law of Maurice Tempelsman and the brother-in-law of Leon
Tempelsman.


                                       11



<PAGE>
<PAGE>





Part II

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

                 The Registrant's common stock (par value $1 per share) is
traded on the American Stock Exchange.

                  Market prices and other information with respect to the
Registrant's common stock are hereby incorporated by reference to the
Registrant's Annual Report.


Item 6.   Selected Financial Data

                  Selected financial data are hereby incorporated by reference
to the Registrant's Annual Report.


Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations

                  Management's discussion and analysis of financial condition
and results of operations is hereby incorporated by reference to the
Registrant's Annual Report.


Item 8.   Financial Statements and Supplementary Data

                  (a) The following financial statements and supplementary data
are hereby incorporated by reference to the Registrant's Annual Report.

                  (i)   Report of Ernst & Young LLP

                  (ii)  Consolidated Statements of Income for each of the three
                        years in the period ended May 31, 1998.

                  (iii) Consolidated Balance Sheets as at May 31, 1998 and May
                        31, 1997.

                  (iv)  Consolidated Statements of Stockholder's Equity for each
                        of the three years in the period ended May 31, 1998.

                  (v)   Consolidated Statements of Cash Flows for each of the
                        three years in the period ended May 31, 1998.

                  (vi)  Notes to Consolidated Financial Statements.


                                       12



<PAGE>
<PAGE>




Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosures

                  Not applicable.


Part III

                  Except for information regarding Executive Officers of the
Registrant, which, in accordance with Instruction G to Form 10-K, is included in
Part I hereof, the information called for by Part III (Items 10, 11, 12 and 13)
is incorporated by reference herein to the Registrant's definitive proxy
statement to be filed with the Commission within 120 days after the close of its
fiscal year ended May 31, 1998.


Part IV

Item 14.  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K

         (a) 1. The response to this portion of Item 14 is set forth in Item 8
                of Part II hereof.

             2. Financial Statement Schedule

                Schedule II - Valuation and Qualifying Accounts for each of the
                three years in the period ended May 31, 1998.

                All other schedules are omitted because they are not applicable,
                or not required, or because the required information is included
                in the consolidated financial statements or notes thereto.


                                       13



<PAGE>
<PAGE>




                        LAZARE KAPLAN INTERNATIONAL INC.
                                AND SUBSIDIARIES

                  SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
      COLUMN A                       COLUMN B                  COLUMN C                 COLUMN D         COLUMN E
      --------                       --------                  --------                 --------         --------
                                                               Additions
                                                     -----------------------------
                                    Balance at       Charged to       Charged to                        Balance at
                                    beginning        costs and      other accounts     Deductions          end
      Description                   of period         expenses         describe         describe        of period
      -----------                   ----------       ----------     --------------     ----------       ----------
<S>                                  <C>              <C>              <C>              <C>              <C>
YEAR ENDED MAY 31, 1998:
Allowance for doubtful accounts      $162,487         $ 60,000         $   --           $ 79,367(A)      $143,120
                                     --------         --------         --------         --------         --------

YEAR ENDED MAY 31, 1997:
Allowance for doubtful accounts      $281,265         $(25,000)        $   --           $ 93,778(A)      $162,487
                                     --------         --------         --------         --------         --------

YEAR ENDED MAY 31, 1996:
Allowance for doubtful accounts      $220,046         $ 70,000         $   --           $  8,781(A)      $281,265
                                     --------         --------         --------         --------         --------
</TABLE>


(A)      Amounts written off


                                       14



<PAGE>
<PAGE>




Item 14.  Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K (continued)

         (b)      Reports on Form 8-K - No reports on Form 8-K were filed during
                  the fourth quarter of the fiscal year ended May 31, 1998.

         (c)      Exhibits

(3)      Articles of Incorporation and Bylaws

         (a)      Certificate of Incorporation, as amended - incorporated herein
                  by reference to Exhibit 3(a) to Report on Form 10-K of the
                  Registrant for the fiscal year ended May 31, 1987 filed with
                  the Commission on August 26, 1987, as amended on January 14,
                  1988.

         (b)      Certificate of Amendment of Certificate of Incorporation filed
                  with the Secretary of State of the State of Delaware on
                  November 1, 1990 - incorporated herein by reference to Exhibit
                  (3)(b) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1992 filed with the Commission on August
                  28, 1992.

         (c)      Certificate of Amendment of the Certificate of Incorporation
                  filed with the Secretary of State of the State of Delaware on
                  November 6, 1997 - incorporated by reference to Exhibit 4.1(a)
                  (iii) to Company's Registration Statement for the Lazare
                  Kaplan International Inc. 1997 Long Term Stock Incentive Plan
                  on Form S-8 filed with the Commission on November 14, 1997.

         (d)      Certificate of Designations of Series A Junior Participating
                  Preferred Stock filed with the Secretary of State of the State
                  of Delaware on November 6, 1997 - incorporated by reference to
                  Exhibit 4.1(b) to the Company's Registration Statement on Form
                  S-8 filed with the Commission on November 14, 1997.

         (e)      By-laws, as amended - incorporated herein by reference to
                  Exhibit 3(b) to Report on Form 10-K of the Registrant for the
                  fiscal year ended May 31, 1987 filed with the Commission on
                  August 26, 1987, as amended on January 14, 1988.

(10)     Material Contracts

         (a)      Lazare Kaplan International Inc. Amended and Restated 1988
                  Stock Option Incentive Plan - incorporated herein by reference
                  to Exhibit 4.1 to Registration Statement on Form S-8 of the
                  Registrant filed with the Commission on November 5, 1990.

         (b)      Note Agreement dated as of May 15, 1991 by and between the
                  Registrant, Allstate Life Insurance Company, Monumental
                  Insurance Company and PFL Life Insurance Company incorporated
                  herein by reference to Exhibit 28 to Report on Form 8-K dated
                  May 23, 1991 filed with the Commission on June 4, 1991.


                                       15



<PAGE>
<PAGE>




         (c)      First Amendment to Note Agreement, dated as of February 28,
                  1992, by and between the Registrant, Allstate Life Insurance
                  Company, Monumental Life Insurance Company and PFL Life
                  Insurance Company incorporated herein by reference to Exhibit
                  10(d) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1992 filed with the Commission on August
                  28, 1992.

         (d)      Second Amendment to Note Agreement, dated as of March 25, 1992
                  by and between the Registrant, Allstate Life Insurance
                  Company, Monumental Life Insurance Company and PFL Life
                  Insurance Company incorporated herein by reference to Exhibit
                  10(e) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1992 filed with the Commission on August
                  28, 1992.

         (e)      Third Amendment to the Note Agreement, dated as of December 1,
                  1992 by and between the Registrant, Allstate Life Insurance
                  Company, Monumental Life Insurance Company and PFL Life
                  Insurance Company incorporated herein by reference to Exhibit
                  10(f) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1993 filed with the Commission on August
                  30, 1993.

         (f)      Fourth Amendment to the Note Agreement, dated as of August 25,
                  1995 by and between the Registrant, Allstate Life Insurance
                  Company, Monumental Life Insurance Company and PFL Life
                  Insurance Company incorporated herein by reference to Exhibit
                  10 to Report on Form 10-Q of the Registrant for the quarterly
                  period ended August 31, 1995 filed with the Commission on
                  October 13, 1995.

         (g)      Loan Agreement, dated May 14, 1996 among the Registrant, Fleet
                  Bank, N.A. and Bank Leumi Trust Company of New York
                  incorporated herein by reference to Exhibit 10(i) to Report on
                  Form 10-K of the Registrant for the fiscal year ended May 31,
                  1996 filed with the Commission on August 28, 1996.

         (h)      Cooperation Agreement, dated July 5, 1996, among the
                  Registrant, Empresa Nacional de Diamantes de Angola and
                  Sociedade Angolana de Exploracao, Lapidacao e Commercializacao
                  de Diamantes - incorporated herein by reference to Exhibit (1)
                  to Current Report on Form 8-K of the Registrant filed with the
                  Commission on October 31, 1996 (certain portions of this
                  agreement are subject to confidential treatment).

         (i)      Cooperation Agreement, dated July 15, 1996 between the
                  Registrant and AK Almazi Rossii Sakha - incorporated herein by
                  reference to Exhibit (2) to Current Report on Form 8-K/A of
                  the Registrant filed with the Commission on November 18, 1996
                  (certain portions of this agreement are subject to
                  confidential treatment).

         (j)      Amendment No. 1, dated as of November 29, 1996, to Loan
                  Agreement, dated May 14, 1996, among the Registrant, Fleet
                  Bank, N.A. and Bank Leumi Trust Company of New York - 
                  incorporated herein by reference to Exhibit 10(1) to Amendment
                  No. 2 to Registration Statement on Form S-2 of the Registrant
                  filed with the Commission on


                                       16



<PAGE>
<PAGE>




                  December 11, 1996.

         (k)      Amendment No. 2, dated as of May 30, 1997, to Loan Agreement,
                  dated May 14, 1996, among the Registrant, Fleet Bank, N.A. and
                  Bank Leumi Trust Company of New York incorporated herein by
                  reference to Exhibit 10(n) to Report on Form 10-K of the
                  Registrant for the fiscal year ended May 31, 1997 filed with
                  the Commission on August 28, 1997.

         (l)      Rights Agreement, dated as of July 31, 1997, between the
                  Registrant and ChaseMellon Shareholder Services, LLC
                  incorporated herein by reference to Exhibit 99.1 to Form 8-A
                  of the Registrant filed with the Commission on August 26,
                  1997.

         (m)      Leon Tempelsman Retirement Benefit Plan of Lazare Kaplan
                  International Inc. incorporated herein by reference to Exhibit
                  10(o) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1997 filed with the Commission on August
                  28, 1997.

         (n)      Sheldon L. Ginsberg Retirement Benefit Plan of Lazare Kaplan
                  International Inc. incorporated herein by reference to Exhibit
                  10(p) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1997 filed with the Commission on August
                  28, 1997.

         (o)      Robert Speisman Retirement Benefit Plan of Lazare Kaplan
                  International Inc. incorporated herein by reference to Exhibit
                  10(q) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1997 filed with the Commission on August
                  28, 1997.

(13)     1998 Annual Report to Security Holders - incorporated herein by
         reference to the 1998 Annual Report to Stockholders of the Registrant
         to be filed with the Commission.

(21)     Subsidiaries

(23)     Consent of Ernst & Young LLP

(27)     Financial Data Schedule


                                       17



<PAGE>
<PAGE>




                                    SIGNATURE

                  Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

                                LAZARE KAPLAN INTERNATIONAL INC.
                                By (s) Sheldon L. Ginsberg
                                  ----------------------------------------------
                                Sheldon L. Ginsberg, Executive Vice President
                                and Chief Financial Officer (principal financial
                                and accounting officer)

Dated:  August 28, 1998


                                       18



<PAGE>
<PAGE>




Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                           Title                                  Date
---------                           -----                                  ----
<S>                                 <C>                                    <C> 

(s) Maurice Tempelsman              Chairman of the                        August 28, 1998
-------------------------           Board of Directors
(Maurice Tempelsman)

(s) Leon Tempelsman                 Vice Chairman of the                   August 28, 1998
-------------------------           Board of Directors and
(Leon Tempelsman)                   President (principal
                                    executive officer)

(s) Lucien Burstein                 Director                               August 28, 1998
-------------------------
(Lucien Burstein)

(s) Myer Feldman                    Director                               August 28, 1998
-------------------------
(Myer Feldman)

(s) Michael W. Butterwick           Director                               August 28, 1998
-------------------------
(Michael W. Butterwick)

(s) Sheldon L. Ginsberg             Director and Executive                 August 28, 1998
-------------------------           Vice President and Chief
(Sheldon L. Ginsberg)               Financial Officer (principal
                                    financial and accounting
                                    officer)

(s) Robert Speisman                 Director                               August 28, 1998
-------------------------
(Robert Speisman)
</TABLE>


                                       19



<PAGE>
<PAGE>




                        LAZARE KAPLAN INTERNATIONAL INC.
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                             Commission File No. 1-7848
May 31, 1998

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

<TABLE>
<CAPTION>
         Exhibit                                                                    Page No.
         -------                                                                    --------
<S>      <C>                                                                        <C>
(3)      Articles of Incorporation and Bylaws

         (a)      Certificate of Incorporation, as amended incorporated herein
                  by reference to Exhibit 3(a) to Report on Form 10-K of the
                  Registrant for the fiscal year ended May 31, 1987 filed with
                  the Commission on August 26, 1987, as amended on January 14,
                  1988.

         (b)      Certificate of Amendment of Certificate of Incorporation filed
                  with the Secretary of State of the State of Delaware on
                  November 1, 1990 incorporated herein by reference to Exhibit
                  (3)(b) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1992 filed with the Commission on August
                  28, 1992.

         (c)      Certificate of Amendment of the Certificate of
                  Incorporation filed with the Secretary of State of the
                  State of Delaware on November 6, 1997 -
                  incorporated by reference to Exhibit 4.1(a) (iii) to
                  Company's Registration Statement for the Lazare
                  Kaplan International Inc. 1997 Long Term
                  Stock Incentive Plan on Form S-8 filed with the
                  Commission on November 14, 1997.

         (d)      Certificate of Designations of Series A Junior Participating
                  Preferred Stock filed with the Secretary of State of the State
                  of Delaware on November 6, 1997 - incorporated by reference to
                  Exhibit 4.1(b) to the Company's Registration Statement on Form
                  S-8 filed with the Commission on November 14,
</TABLE>


                                       20



<PAGE>
<PAGE>




<TABLE>
<S>      <C>                                                                        <C>
                  1997.

         (e)      By-laws, as amended - incorporated herein by reference to
                  Exhibit 3(b) to Report on Form 10-K of the Registrant for the
                  fiscal year ended May 31, 1987 filed with the Commission on
                  August 26, 1987, as amended on January 14, 1988.

(10)     Material Contracts

         (a)      Lazare Kaplan International Inc. Amended and Restated 1988
                  Stock Option Incentive Plan incorporated herein by reference
                  to Exhibit 4.1 to Registration Statement on Form S-8 of the
                  Registrant filed with the Commission on November 5, 1990.

          (b)     Note Agreement dated as of May 15, 1991 by and between the
                  Registrant, Allstate Life Insurance Company, Monumental
                  Insurance Company and PFL Life Insurance Company incorporated
                  herein by reference to Exhibit 28 to Report on Form 8-K dated
                  May 23, 1991 filed with the Commission on June 4, 1991.

          (c)     First Amendment to Note Agreement, dated as of
                  February 28, 1992, by and between the Registrant,
                  Allstate Life Insurance Company, Monumental Life
                  Insurance Company and PFL Life Insurance
                  Company incorporated herein by reference to
                  Exhibit 10(d) to Report on Form 10-K of the
                  Registrant for the fiscal year ended May 31, 1992
                  filed with the Commission on August 28, 1992.

         (d)      Second Amendment to Note Agreement, dated as of
                  March 25, 1992 by and between the
                  Registrant, Allstate Life Insurance Company,
                  Monumental Life Insurance Company and PFL Life
                  Insurance Company incorporated herein by reference
                  to Exhibit 10(e) to Report on Form 10-K of the
                  Registrant for the fiscal year ended May 31, 1992
                  filed with the Commission on August 28, 1992.

         (e)      Third Amendment to the Note Agreement, dated as
</TABLE>


                                       21



<PAGE>
<PAGE>




<TABLE>
<S>      <C>                                                                        <C>
                  of December 1, 1992 by and between the Registrant, Allstate
                  Life Insurance Company, Monumental Life Insurance Company and
                  PFL Life Insurance Company incorporated herein by reference to
                  Exhibit 10(f) to Report of Form 10-K of the Registrant for the
                  fiscal year ended May 31, 1993 filed with the Commission on
                  August 30, 1993.

          (f)     Fourth Amendment to the Note Agreement, dated as
                  of August 25, 1995 by and between the Registrant,
                  Allstate Life Insurance Company, Monumental Life
                  Insurance Company and PFL Life Insurance
                  Company incorporated herein by reference to
                  Exhibit 10 to Report on Form 10-Q of the Registrant
                  for the quarterly period ended August 31, 1995 filed
                  with the Commission on October 13, 1995.

         (g)      Loan Agreement, dated May 14, 1996 among the Registrant, Fleet
                  Bank, N.A. and Bank Leumi Trust Company of New York
                  incorporated herein by reference to Exhibit 10(i) to Report on
                  Form 10-K of the Registrant for the fiscal year ended May 31,
                  1996 filed with the Commission on August 28, 1996.

         (h)      Cooperation Agreement, dated July 5, 1996, among
                  the Registrant, Empresa Nacional de Diamantes de
                  Angola and Sociedade Angolana de Exploracao,
                  Lapidacao e Commercializacao de Diamantes -
                  incorporated herein by reference to Exhibit (1) to
                  Current Report on Form 8-K of the Registrant filed
                  with the Commission on October 31, 1996 (certain
                  portions of this agreement are subject to confidential
                  treatment).

         (i)      Cooperation Agreement, dated July 15, 1996 between the
                  Registrant and AK Almazi Rossii Sakha - incorporated herein by
                  reference to Exhibit (2) to Current Report on Form 8-K/A of
                  the Registrant filed with the Commission on November 18, 1996
                  (certain portions of this agreement are subject to
                  confidential treatment).

         (j)      Amendment No. 1, dated as of November 29, 1996,
</TABLE>


                                       22



<PAGE>
<PAGE>




<TABLE>
<S>      <C>                                                                        <C>
                  to Loan Agreement, dated May 14, 1996, among the Registrant,
                  Fleet Bank, N.A. and Bank Leumi Trust Company of New York - 
                  incorporated herein by reference to Exhibit 10(1) to Amendment
                  No. 2 to Registration Statement on Form S-2 of the Registrant
                  filed with the Commission on December 11, 1996.

         (k)      Amendment No. 2, dated as of May 30, 1997, to
                  Loan Agreement, dated May 14, 1996, among the
                  Registrant, Fleet Bank, N.A. and Bank Leumi Trust
                  Company of New York incorporated herein by
                  reference to Exhibit 10(n) to Report on Form 10-K
                  of the Registrant for the fiscal year ended May 31,
                  1997 filed with the Commission on August 28, 1997.

         (l)      Rights Agreement, dated as of July 31, 1997, between the
                  Registrant and ChaseMellon Shareholder Services, LLC - 
                  incorporated herein by reference to Exhibit 99.1 to Form 8-A
                  of the Registrant filed with the Commission on August 26,
                  1997.

         (m)      Leon Tempelsman Retirement Benefit Plan of Lazare Kaplan
                  International Inc. incorporated herein by reference to Exhibit
                  10(o) to Report on Form 10- K of the Registrant for the fiscal
                  year ended May 31, 1997 filed with the Commission on August
                  28, 1997.

         (n)      Sheldon L. Ginsberg Retirement Benefit Plan of Lazare Kaplan
                  International Inc. incorporated herein by reference to Exhibit
                  10(p) to Report on Form 10- K of the Registrant for the fiscal
                  year ended May 31, 1997 filed with the Commission on August
                  28, 1997.

         (o)      Robert Speisman Retirement Benefit Plan of Lazare Kaplan
                  International Inc. incorporated herein by reference to Exhibit
                  10(q) to Report on Form 10-K of the Registrant for the fiscal
                  year ended May 31, 1997 filed with the Commission on August
                  28, 1997.
</TABLE>


                                       23



<PAGE>
<PAGE>




<TABLE>
<S>      <C>                                                                        <C>
(13)     1998 Annual Report to Security Holders - incorporated herein by
         reference to the 1998 Annual Report to Stockholders of the Registrant
         to be filed with the Commission.                                           25

(21)     Subsidiaries                                                               51

(23)     Consent of Ernst & Young LLP                                               52

(27)     Financial Data Schedule                                                    53
</TABLE>


                                       24


                          STATEMENT OF DIFFERENCES
                          ------------------------

The trademark symbol shall be expressed as ........................... 'TM' 
The registered trademark symbol shall be expressed as ................ 'r' 



<PAGE>