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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, 1997

                                       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

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, 1997, 8,473,156 shares of the registrant's common stock
were outstanding, and the aggregate market value of common stock held by
non-affiliates of the registrant, computed by reference to the closing price for
the registrant's stock on the American Stock Exchange at that date was
$77,097,219.

                       DOCUMENTS INCORPORATED BY REFERENCE

         1997 definitive proxy statement to be filed with the Commission--
incorporated by reference into Part III.

         1997 Annual Report to Stockholders for the fiscal year ended May 31,
1997 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., which began its business in
1903, 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. In addition, the Company cuts and polishes commercial diamonds which
it markets to wholesalers, distributors and through select retail jewelers.
Those stones purchased by the Company and not selected for manufacturing are
promptly resold as rough diamonds in the marketplace. The Company is also
engaged in the trading of rough diamonds. 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, 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
for its ideal cut diamonds which 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.

                  The Company's principal supplier of rough diamonds is the
Diamond Trading Company (the "DTC"), an affiliate of De Beers Centenary AG.
Based on published reports, the Company believes that the DTC controls
approximately 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 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 this ability to diversify
rough diamond sourcing allows it to maintain quantities and qualities of
polished inventory that best meet its customers' needs.

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                  The Company currently has four 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. This facility generally produces polished diamonds having weights of
1/5 of a carat and greater. In 1993 the Company opened its factory, located in
Molepolole, Botswana, which is operated in partnership with the Government of
Botswana. This state-of-the-art factory expands the Company's product line by
cutting and polishing ideal cut diamonds in smaller sizes (generally smaller
than 1/5 of a carat in size) than those produced in Puerto Rico. The Company's
third manufacturing operation is conducted in cooperation with the Russian
Government agency responsible for diamond exports and the Russian national
stockpile and is located at this agency's facility in Moscow, Russia. The
Company believes this facility, opened in 1991, is one of the largest factories
in the world primarily dedicated to the cutting and polishing of large rough
diamonds. The fourth manufacturing facility is conducted pursuant to an
agreement with AK Almazi Rossii Sakha (ARS) of Russia. The factory, which was
equipped and staffed during fiscal year 1997, has recently completed the
production of its first polished stones. At full capacity, the Company and ARS
expect that the factory will process in excess of $45 million per year of large
rough gem diamonds.

                  Lazare Kaplan International Inc. 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's principal stockholder is
Maurice Tempelsman, the Chairman of the Board. Mr. Tempelsman and his son, Leon
Tempelsman, are the only general partners of Leon Tempelsman & Son ("LTS"), a
New York limited partnership which holds 1,528,416 shares of common stock. In
addition, Maurice Tempelsman is the direct beneficial holder of 1,910,409 shares
of common stock and Leon Tempelsman is the direct beneficial holder of 55,000
shares of common stock. The aggregate number of common shares held by Maurice
Tempelsman and Leon Tempelsman, directly and indirectly, is 3,625,788
constituting 42.8% of the Company's issued and outstanding common stock.

Diamond Supply

                  Rough Diamonds

                  The Company's business is 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, Russia, Sierra Leone,
South Africa and the Republic of the Congo (formerly Zaire) account for more
than 90% of present world rough gem diamond production. The Central Selling
Organization (the "CSO"), which is affiliated with De Beers Centenary AG, a
Swiss company, 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 Diamond Trading
Company (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

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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, the Company's principal supplier of rough
diamonds 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.
The Company's subsidiary in Botswana is also a sightholder.

                  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, 1997, 1996 and 1995,
approximately 40%, 50% and 47%, 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 three buying offices located in Angola, including the office in Luanda, and
intends to establish additional buying offices in the future. The agreement will
run for a term of five years 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 intends to cut and polish 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 is now in an early stage and there can be no assurances
that the Company will be supplied with suitable diamonds for cutting and
polishing, that the Company will be supplied with a sufficient and consistent
quantity of diamonds, or that the feasibility study will result in a
recommendation to proceed with the creation of the polishing operation.

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                  In November 1993, the Company reached an agreement with the
Ghanaian Government, Ghana Consolidated Diamonds Limited and De Beers Centenary
pursuant to which, the parties would, subject to a feasibility study, form a new
company to acquire, expand and operate the Akwatia/Birim Diamond and Gold
Concessions now owned by Ghana Consolidated Diamonds. In June, 1995 DeBeers
Centenary announced that its feasibility study was complete, and although during
the feasibility period output at the mine increased significantly as a result of
changes made to operations and revenue increased, DeBeers informed the Company
and the Ghanaian Government that it had withdrawn from the project stating its
belief that the cost of its participation will likely outweigh the economic
potential it may realize. During the fourth quarter of fiscal 1997 the Company
decided to discontinue its efforts to organize and participate in the
privatization of the Ghanaian diamond deposits. The nature of these deposits,
consisting of small size low quality stones which continued to be in oversupply
and under price pressure in the marketplace, the continued decline in monthly
mine production, and the inability towards the end of the fiscal year to reach
agreement with the Ghanaian Government on the terms of future marketing rights
were the primary reasons for this decision.

                  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.

Cutting and Polishing

                  The Company and its subsidiaries currently have four primary
cutting and polishing operations, one located in Puerto Rico, one located in
Botswana, and two located in Moscow, Russia, the first of which is conducted in
cooperation with the Russian Government organization responsible for diamond
policy and the Russian national stockpile. Under this arrangement, rough
diamonds supplied by this organization are polished by Russian technicians in
Moscow, under the management and supervision of Company technical personnel and
subsequently marketed by the Company. The diamonds, which are primarily
commercial quality diamonds, are sold through the Company's worldwide
distribution network. The proceeds from the sale of these polished gems are
shared by the parties. In June 1996, the Company renewed its five year contract
calling for the continuation and expansion of this joint cutting facility.
However, due to internal Russian Government delays, there have been no diamonds
officially exported from Russia since the beginning of calendar year 1997. Based
upon statements made by Russian Government officials, the Company believes that
the issuance of a new Presidential Decree and government procedures, which will
facilitate trade and export of finished diamonds, are imminent. In line with the
overall delay of diamond exports from Russia, the Company has not received any
shipment of polished diamonds produced from this facility during the 1997
calendar year. The Company believes that it will recapture lost sales once these
polished diamonds are exported.

                  The second factory in Russia was first announced in July 1996
when the Company announced that it had reached an agreement, for a term of ten
years, with AK Almazi Rossii Sakha (ARS) of Russia for the cutting, polishing
and marketing of large rough gem diamonds. According to published reports, ARS
is the largest producer of rough diamonds in Russia with annual production in
excess of $1.3 billion,

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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 ARS facility in Moscow. This new facility
is staffed by Russian technicians and managed and supervised by Company
personnel. ARS 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. The Company has agreed to sell 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 ARS. The agreement does not require the
Company to advance funds for the purchase of rough diamonds. This agreement will
serve as a long-term off-take arrangement to secure the repayment of the $60
million financing to be received by ARS from a United States commercial bank and
to be guaranteed by the Export-Import Bank of the United States ("Ex-Im") for
the purchase by ARS of U.S. manufactured mining equipment. This equipment will
be used by ARS to increase production in its diamond mines. The Ex-Im has stated
that this agreement is the first transaction approved under the Ex-Im's General
Project Incentive Agreement with the Ministry of Finance and the Central Bank of
the Russian Federation signed in December 1993.

                  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 proportions, or to 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 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.

                  Through its subsidiary, Lazare Kaplan Botswana (Pty) Limited,
the Company, pursuant to a long term license issued by the Government of
Botswana, owns and operates a manufacturing facility in Molepolole, Botswana.
Lazare Kaplan Botswana began operations in this facility in early 1993. The
factory, which is a state-of-the-art facility, uses both automated and manual
equipment and is committed to train and employ Batswana workers. As of July 31,
1997, there were 522 employees at this facility, of whom 25 were trainees. This
factory cuts and polishes rough diamonds to ideal proportions in sizes that
currently are not processed at the Company's facility in Puerto Rico. The
factory is concentrating on the manufacture of rough diamonds of somewhat
smaller size (generally smaller than 1/5 carat in size). The size range
manufactured will

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be expanded as the skills of its employees are developed. During August 1994,
the Company completed its transaction with the Botswana Development Corporation
("BDC") whereby the BDC invested 21.8 pula (approximately $8.0 million) for an
equity position in Lazare Kaplan Botswana (Pty) Ltd. The investment is in the
form of common shares and cumulative, redeemable, non-voting participating
preference shares. As a result of this transaction, the Company owns 60% of
Lazare Kaplan Botswana (Pty) Ltd., the BDC owns 34.9% and the Government of
Botswana owns 5.1%. Lazare Kaplan Botswana purchases rough diamonds on its own
account directly from the DTC, as well as from third party sources, for
manufacture in the Botswana factory. Botswana is widely regarded today as the
most important rough gem diamond producing country in the world.

                  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, 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. 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

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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 losses, 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, 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 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 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 a domestic patent-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.

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                  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. The
advertising program includes usage of a toll-free number which consumers may
call to receive additional information about the product and to be referred to
jewelers carrying Lazare Diamonds and Lazare Diamond jewelry in their geographic
area. 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) and, to a lesser extent, to jewelry manufacturers and wholesalers.
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, Thailand, Korea, Malaysia and Indonesia. 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. The
Company plans to form a joint venture in Japan with Aiwa (to be know as Lazare
Kaplan Japan) to provide promotional and other support services to Seiko. This
joint venture will implement an arrangement whereby Seiko will distribute,
market and promote Lazare Diamonds in Japan. 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. Aiwa, with a distribution network
of over 150 retailers and wholesalers, will continue to be an important customer
of the Company's non-branded polished diamonds.

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                  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:

                                                          Years ended May 31,
                                                       1995      1996      1997
                                                        ---       ---       ---
Percentage of Net Sales to Customers

      United States                                      25%       23%       22%
      Far East                                           13%        8%        9%
      Europe, Israel & other                             62%       69%       69%
                                                        ---       ---       ---
                                                        100%      100%      100%
                                                        ===       ===       ===

                  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. The foreign sales in 1995
reflects lower rough diamond sales in 1995 as compared to 1996. In 1996, due to
an increase in production and sales of polished diamonds, the Company sold a
greater portion of its polished diamonds domestically than it had in prior
years. Offsetting this percentage increase in domestic sales was a continued
increase in rough diamond sales to foreign customers.

                  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 cut 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 gauge and monitor the manufacturing and
distribution network.

Employees

                  At July 31, 1997, the Company had 682 full-time employees. The
Company also has 6 regional sales representatives. 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 also has a program in
Botswana through which it trains cutters and polishers. 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 $43,000
(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, 1998 at an annual rental rate of approximately $50,000
(384,800 Hong Kong dollars).

                  The Company leases land in Botswana for a nominal amount for a
term of 50 years with the right to renew for an additional 50 years. The Company
has constructed its cutting and polishing factory on such land. The facility is
approximately 4,300 square meters.

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

                                       11






<PAGE>
<PAGE>


Item 3.  Legal Proceedings

         The Company is not involved in any significant legal proceedings.

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.

NAME                           POSITION                        AGE

Maurice Tempelsman       Chairman of the Board                  68

Leon Tempelsman          Vice Chairman of the                   41
                         Board and President

George R. Kaplan         Vice Chairman of the                   79
                         Board

Sheldon L. Ginsberg      Executive Vice President and           43
                         Chief Financial Officer

Robert Speisman          Vice President - Sales                 44

         All officers were elected at the Annual Meeting of Stockholders held in
November 1996, and hold office until 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.

                                       12






<PAGE>
<PAGE>



                  George R. Kaplan has been Vice Chairman of the Board since
1984 and a director of the Company since 1972.

                  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.

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 from page 1 of
the Registrant's Annual Report.

Item 6.   Selected Financial Data

                  Selected financial data are hereby incorporated by reference
from page 4 of 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 from pages 5 to
9 of the Registrant's Annual Report.

                                       13






<PAGE>
<PAGE>


Item 8.   Financial Statements and Supplementary Data

                  (a) The following financial statements and supplementary data
are hereby incorporated by reference from pages 10 to 24 of the Registrant's
Annual Report.

                  (i)      Report of Ernst & Young LLP

                  (ii)     Consolidated Statements of Operations for each of the
                           three years in the period ended May 31, 1997.

                  (iii)    Consolidated Statements of Stockholder's Equity for
                           each of the three years in the period ended May 31,
                           1997.

                  (iv)     Consolidated Balance Sheets as at May 31, 1997 and
                           May 31, 1996.

                  (v)      Consolidated Statements of Cash Flows for each of the
                           three years in the period ended May 31, 1997.

                  (vi)     Notes to Consolidated Financial Statements.


                                       14






<PAGE>
<PAGE>


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 from 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, 1997.

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,
                           1997.

                           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.

                                       15






<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, 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
                                                            --------         --------      -----------     --------         --------

YEAR ENDED MAY 31, 1995:

Allowance for doubtful accounts                             $165,169         $ 70,000      $    --         $ 15,123(A)      $220,046
                                                            --------         --------      -----------     --------         --------

</TABLE>


(A) Amounts written off

                                       16









<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, 1997.

         (c)      Exhibits

         (3) (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) 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.

                                       17






<PAGE>
 

<PAGE>


             (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)      Agreement, dated December 5, 1990, by and between the
                      Registrant and the Government of the Republic of Botswana
                      - incorporated herein by reference to Exhibit 10(f) 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.

             (h)      Subscription Agreement, dated August 24, 1994 among the
                      Registrant and the Botswana Development Corporation
                      incorporated herein by reference to Exhibit 10(h) to
                      Report on Form 10-K of the Registrant for the fiscal year
                      ended May 31, 1994 filed with the Commission on August 31,
                      1994.

             (i)      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.

                                       18






<PAGE>
 

<PAGE>


             (j)      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).

             (k)      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).

             (l)      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 December 11,
                      1996.

             (m)      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.

             (n)      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.

             (o)      Leon Tempelsman Retirement Benefit Plan of Lazare Kaplan
                      International Inc.

             (p)      Sheldon L. Ginsberg Retirement Benefit Plan of Lazare
                      Kaplan International Inc.

             (q)      Robert Speisman Retirement Benefit Plan of Lazare Kaplan
                      International Inc.

(13) 1997 Annual Report to Security Holders - incorporated herein by reference
to the 1997 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

                                       19






<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/ Leon Tempelsman
                             ___________________________________________________

                             Leon Tempelsman, Vice Chairman and President
                              (principal executive officer)

                           By /s/ Sheldon L. Ginsberg
                             ___________________________________________________
                              Sheldon L. Ginsberg, Executive Vice President and
                              Chief Financial Officer (principal financial
                              officer)

Dated:  August 28, 1997

                                       20






<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, 1997
---------------------------------              Board of Directors
Maurice Tempelsman) 

(s) Leon Tempelsman                            Vice Chairman of the              August 28, 1997
---------------------------------              Board of Directors
(Leon Tempelsman)
(s) George R. Kaplan                           Vice Chairman of the              August 28, 1997
---------------------------------              Board of Directors
(George R. Kaplan)

(s) Lucien Burstein                            Director                          August 28, 1997
---------------------------------
(Lucien Burstein)

(s) Myer Feldman                               Director                          August 28, 1997
---------------------------------
(Myer Feldman)

(s) Michael W. Butterwick                      Director                          August 28, 1997
---------------------------------
(Michael W. Butterwick)

(s) Sheldon L. Ginsberg                        Director                          August 28, 1997
---------------------------------
(Sheldon L. Ginsberg)

(s) Robert Speisman                            Director                          August 28, 1997
---------------------------------
(Robert Speisman)
</TABLE>

                                       21






<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, 1997
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

         Exhibit                                                                         Page No.

<S>       <C>                                                                            <C>
(3)      (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)      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.

                                       22





<PAGE>
 

<PAGE>


         Exhibit                                                                         Page No.

          (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 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.


                                       23






<PAGE>
 

<PAGE>



         Exhibit                                                                         Page No.

          (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)     Agreement, dated December 5, 1990, by and between the
                  Registrant and the Government of the Republic of Botswana -
                  incorporated herein by reference to Exhibit 10(f) 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.

          (h)     Subscription Agreement, dated August 24, 1994 among the
                  Registrant and the Botswana Development Corporation
                  incorporated herein by reference to Exhibit 10(h) to Report on
                  Form 10-K of the Registrant for the fiscal year ended May 31,
                  1994 filed with the Commission on August 31, 1994.

         (i)      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.

         (j)      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).


                                       24






<PAGE>
 

<PAGE>


</TABLE>
<TABLE>
<CAPTION>

                                                                                          Page No.
                                                                                          --------

<S>               <C>
         (k)      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).

         (l)      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
                  December 11, 1996.

         (m)      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.

         (n)      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.                 26

         (o)      Leon Tempelsman Retirement Benefit Plan of Lazare Kaplan
                  International Inc.                                                         41

         (p)      Sheldon L. Ginsberg Retirement Benefit Plan of Lazare Kaplan
                  International Inc.                                                         80

         (q)      Robert Speisman Retirement Benefit Plan of Lazare Kaplan
                  International Inc.                                                        119

(13)     1997 Annual Report to Security Holders - incorporated
         herein by reference to the 1997 Annual Report to Stock
         holders of the Registrant to be filed with the Commission.                         158

(21)     Subsidiaries                                                                       184

(23)     Consent of Ernst & Young LLP                                                       185

(27)     Financial Data Schedule                                                            186

</TABLE>



                                       25



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

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





<PAGE>