<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-KSB

(Mark One)
|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.

For the fiscal year ended JULY 31, 2000
                                       OR

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934.

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

                         Commission File Number 0-22964

                          SEL-DRUM INTERNATIONAL, INC.
                 (Name of Small Business Issuer in Its Charter)

                 NEW YORK                                84-1236134
                 --------                                ----------
     (State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
      Incorporation or Organization)

   501 AMHERST STREET, BUFFALO, NEW YORK                 14207-2913
   -------------------------------------                 ----------
 (Address of Principal Executive Offices)                (Zip Code)

                                 1-800-263-9356
                                 --------------
                 Issuer's Telephone Number, Including Area Code

Securities registered under Section 12(b) of the Exchange Act:

           TITLE OF EACH CLASS       NAME OF EACH EXCHANGE ON WHICH REGISTERED
           -------------------       -----------------------------------------
                  None                               None

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

                          COMMON STOCK $ .01 PAR VALUE
                          ----------------------------
                               Title of Each Class

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

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

The Issuer's revenues for the year ended July 31, 2000 were $15,372,469

As of October 20, 2000 there were 7,417,500 outstanding shares of Common Stock
$.01 par value. The aggregate market value of the voting stock of the registrant
held by non-affiliates on October 19, 2000 based on the average bid and asked
price on such date was $ 190,667.


                                       1
<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL
-------

Sel-Drum International, Inc., a New York Corporation ("Sel-Drum" or the
"Company") is the successor corporation to Dakota Equities, Ltd., a
publicly-held "blind pool." On February 1, 1995, the Company acquired all the
outstanding common shares of Sel-Drum Imaging Corporation, the parent
corporation of a privately held Canadian corporation which was founded in 1978.
The Company amalgamated Micron Imaging Corporation (now the Kelowna Facility)
and Sel-Drum Corporation on November 1, 1996.

Sel-Drum is a leading independent distributor of high mortality copier and
printer replacement parts and supplies. As one of the largest independent high
mortality copier parts distribution companies in North America, Sel-Drum
provides a link between parts manufacturers, sellers and buyers. Sel-Drum is
also developing strong relationships with suppliers who seek advanced inventory
management and order processing. Through its strategic alliance with
Densigraphix Kopi inc.("Densigraphix"), the Company strengthened its hold in
the toner segment of the market and positioned itself for growth in the US
market. Please see below for more details on this transaction.

Through its Sel-Drum Imaging Corporation subsidiary, the Company has two
wholly-owned subsidiaries, Sel-Drum Corporation (U.S.A.), Inc. and Sel-Drum
Corporation. Unless otherwise indicated, all references to "Sel-Drum" or the
"Company" include the Company, Sel-Drum Imaging Corporation, Sel-Drum
Corporation and Sel-Drum Corporation (U.S.A.), Inc. Approximately 95% of the
Kelowna Facility's refurbished products are sold directly to the other operating
divisions. Sel-Drum Corporation (U.S.A.), Inc. and Sel-Drum Corporation employ a
number of sales agents and telemarketers who directly contact the copier machine
dealers throughout North America. There are approximately 7,000 such dealers
marketing various brands of copier products. The Company estimates that the
potential marketplace for high mortality replacement parts, drums and toner, not
controlled by the Original Equipment Manufacturers ("O.E.M's") to be
approximately $750 million in North America.

The Company's primary business is the distribution of high mortality copier and
printer replacement parts and toners. The Company also refurbishes facsimile and
laser printers and fax cartridges. During the course of fiscal 1999, the Company
discontinued its drum manufacturing activities. This decision was motivated by a
change in technology and did not affect the Company's operations, as it had been
ready to use these facilities for its cartridges refurbishing activities. The
technology and equipment have been written off and represented as at July 31,
1999, a loss of $394,006 against earnings. To be able to offer an integrated
service comprehending both a product component and a value added technological
component, the Company has been offering for the past months, through its
Burlington office, specialized technical connectivity (networking) software
services. The Company markets in the United States and Canada through a direct
network of sales agents and telemarketers. Outside of North America, the Company
is represented by several distributors, with their sales accounting for less
than 5% of total revenues.

On March 7, 1997, the Company and certain principal shareholders terminated
discussions with JRCS Corp. regarding the sale of substantially all of the
outstanding capital stock of the Company.

On October 29, 1997, the Company hired Raymond C. Sparks as its Chief Executive
0fficer and President, replacing Brian Turnbull who had agreed to remain with
the Company as a full-time consultant.

In December 1997, the Company reorganized its sales staff and began implementing
this reorganization during the month of January 1998. As expected, sales were
flat during the first nine months as a result of this reorganization of sales
staff.

On January 15, 1998, the Company began funding a repurchase of 172 shares of
Class C and 241 shares of Class D Preferred Stock in the Company's Sel-Drum
Imaging Corporation subsidiary held by two of the Company's former principal
shareholders. The total purchase price was $300,000, of which approximately
$175,000 was delivered during the quarter ended January 31, 1998, and
approximately $125,000 was delivered during the quarter ended April 30, 1998.

In late 1997, the Company initiated a strategic plan, which was designed to
focus on the longer term growth prospects of the Company. This new strategy
called for concentrating future efforts to take advantage of the perceived
potential financial returns presented by existing opportunities within the high
mortality copier replacement part and printer part marketplace. In line with its
aim of bolstering the Company's core business, the Company signed a cartridge
sales contract in January 1999 with an important authorized dealer thus taking
advantage of the


                                       2
<PAGE>


under-utilized Kelowna Facility refurbishing and distribution capacity to
produce re-manufactured cartridges. The second tier of the contract, increasing
the number of cartridges processed in the Kelowna Facility, took effect in early
September 1999. The profitability of the Kelowna Facility is presently dependent
on this contract which can be cancelled on a 3-month notice. At present,
Management has no indication that such a cancellation could be forthcoming.

In the course of the implementation of its strategic plan which included seeking
acquisition candidates, the Company contacted Densigraphix of Montreal, Quebec,
a company specializing in the toner and cartridge distribution business, which
already distributed some of Sel-Drum's products. In view of the complementary
nature of the businesses and the compatible management philosophies, an
agreement was reached between the principal shareholders and related parties of
the companies whereby, C.Cotran Holding inc., a private company wholly-owned by
Camille Cotran, purchased all of the shares held by Sel-Drum's principal
shareholders and related parties. Following this transaction C.Cotran Holding
inc. holds 97% of the voting and participating shares of the common stock of the
Company.

The Company has reviewed all options available to it in terms of securities
markets. After extensive consideration, the Company believes that it is in its
best interest to seek privatization. To this end, it has initiated the process
of applying for termination of registration of its Common Stock under Section 12
of the Securities Exchange Act of 1934.

A new computer system was introduced in 1999. Training is completed. The company
is now taking advantage of the full functionality of the system. A full
e-commerce strategy is currently under development by the Company.

On July 30, 1999, Brian Turnbull and Robert Asseltine, the principal
shareholders of the Company, and other parties related to them disposed of all
their shares in the Company. On July 6, 1999, Messrs. Turnbull and Asseltine
delivered an executed original Term Sheet (the "Term Sheet" among themselves,
Cotran Holding inc. and Densigraphix ("the purchasers"). Pursuant to the Term
Sheet, Messrs. Asseltine and Turnbull agreed to sell to the purchasers all of
the Company's Common Stock beneficially held by them at a price of $.40 US per
share. Additionally, Messrs. Asseltine and Turnbull agreed to deliver and sell
to the purchasers an additional 1,119,000 shares of Common Stock held by family
members or related parties. The Term sheet further provided for the purchaser's
acquisition of all outstanding shares of Preferred Stock held by Messrs.
Asseltine and Turnbull (or their affiliates) in the Company's Sel-Drum Imaging
Corporation subsidiary at a price of $457.90 US per share.

The proposed transaction was contingent upon several items including but not
limited to: the repayment of indebtedness to the Company owed by related
parties(approximately $159,820 owed by two corporations controlled by Mr.
Turnbull); the resignation of current members of the Board of Directors and the
execution of a definitive agreement.

A Stock Purchase Agreement ("Agreement") was executed on July 30, 1999 with
respect to the shares of Common Stock between C. Cotran Holding inc., a company
incorporated under the laws of Canada (the "purchaser") and Robert E. Asseltine,
547118 0ntario Limited represented by Brian F. Turnbull and the other selling
shareholders of the company and with respect to the preferred stock of Sel-Drum
Imaging Corporation, the parties to the Agreement are Densigraphix, a company
incorporated under the laws of Canada (the "purchaser") and Robert E. Asseltine,
Geraldine Asseltine and 547118 Ontario Limited.

The Agreement provided for the acquisition of 97% of the issued and outstanding
common stock of the Company by C. Cotran Holding inc. and all of the outstanding
preferred stock by Densigraphix. Subject to post-closing adjustments, the
aggregate purchase price for the common and preferred stock was US$5,702,472.

The National Bank of Canada ("Bank") agreed to make available a global
financing in the amount of $6,000,000CDN for the acquisition of the Company
through C. Cotran Holding inc., Densigraphix and Sel-Drum Corporation. To secure
the payment of various loans made for the purpose of the acquisition, the 0ffer
of Financing by the Bank provides for certain undertakings by the Company, C.
Cortan Holdings inc., Densigraphix, Sel-Drum Corporation and Sel-Drum
Corporation (U.S.A.) Inc. which include a moveable hypothec with delivery
(pledge) of all the shares of the Company, owned or to be owned, by each of the
respective borrowers.

The Company is currently reviewing options available to it through it's alliance
with Densigraphix to achieve operational economies. These options may include
the consolidation of operations and facilities.


                                       3
<PAGE>

COMPANY STRATEGY
----------------

Through flexibility in sourcing as well as customer service, the Company
continually strives to be a reliable, innovative and cost-effective provider of
high mortality copier and facsimile component products to the approximately $750
million per year market in North America.

The Company's focus since the acquisition has been on the sale of toners in the
US, taking advantage of the synergies created by the strategic alliance with
Densigraphix. The Company will remain attentive to opportunities in the European
and Asia-Pacific regions and take advantage of communications established
through its Website. The Company's strategy for the next year is to consolidate
and reorganize certain operations to fully benefit from its strategic alliance
with Densigraphix. Significant progress was achieved as to the main objectives
of the Company:

-      Provide high quality products and superior customer service. The Company
       has experienced a very low warranty rate as it monitors its sales force
       and the quality of its products on a continuous basis. The Company
       intends to continue its strategy of demanding high quality from its
       vendors.

-      Improve refurbishing flexibility. The company's refurbishing facility in
       Kelowna, British Columbia (the "Kelowna Facility") obtained its ISO 9002
       certification in June 1999. New contracts have permitted a more efficient
       use of its capacity.

-      Establish integrated data system. To date, the basic functions of an
       integrated system have been successfully implemented as planned and
       within budget. The Company is now in a position to benefit from the
       increased flexibility provided by this new system. The implementation of
       additional functions is planned in the course of the year. No assurances
       can be given that such functions will be implemented or if implemented
       will be successful.

-      Customers have access to the Company's Website. Orders are channeled
       through the sales representatives. A business to business e-commerce
       strategy is under development. This will enable direct ordering by
       customers off the Company's web site.

-      The Company will continue to seek the full benefits of its alliance with
       Densigraphix through consolidation of certain operations or
       reorganization of certain functions. At this date, the Company is
       developing definitive plans in that regard.


As a result of the Company's strategic alliance with Densigraphix, its strategy
to promote superior customer service, increase sales in the US and outside of
North America and pursue the development of its integrated data system, the
Company believes it is well positioned to increase sales and profitability. The
Company's strategy is subject to certain conditions outside of its control and
no assurances can be given that the Company will be successful in implementing
any or all of its corporate objectives. See "Investment Considerations."

COPIER, FACSIMILE, AND PRINTER PARTS DISTRIBUTION
-------------------------------------------------

Management believes Sel-Drum is one of the largest independent North American
distributors of high mortality copier parts, drums, toner and related supplies,
serving both the commercial, institutional and general copier after-markets
through authorised and independent dealers. Product lines distributed by
Sel-Drum include a variety of other supplies. Sel-Drum purchases these new parts
from suppliers for its own account and resells such parts to its customers,
which include authorised and independent dealers and other distributors. Seldrum
purchases its generic toner almost exclusively from Densigraphix, the preferred
shareholder of the Company's SelDrum Imaging Corporation subsidiary. The terms
and conditions under which such purchases are made have been reviewed by the
Board of Directors to ensure that these terms and conditions are fair and at
least as advantageous as those Sel-Drum could have obtained if it has dealt at
arms' length with a third party.

The Company distributes high mortality copier parts from customer service
centers located throughout North America, and to a limited extent in Europe and
the Asia-Pacific region. In the immediate future, the Company intends to focus
its efforts on developing its sales of toner in the US markets building on the
synergies deriving from its strategic alliance with Densigraphix. Prior to the
transaction of July 30, 1999 referred to in Item 1 above, Densigraphix was a
significant distributor of toner to the reprographics industry. The Company also
marketed some


                                       4
<PAGE>

of the Densigraphix toners outside of Quebec. Field sales representatives
located in regions throughout North America call upon current and potential
customers on a regular basis to solicit orders and provide product and
operational information. Each service center is staffed to receive and process
telephone, facsimile and mail orders. A majority of the parts distributed by the
Company are located in its Buffalo, New York warehouse complex, with the
remaining parts distributed from the Company's Burlington, Ontario and Kelowna,
British Columbia facilities. To date sales outside of North America account for
less than 5% of total sales.

Management believes that this diversity distinguishes Sel-Drum from most other
distributors which carry a narrower range of products. Over 2,500 unique part
numbers are sold to approximately 4,500 customers. Refurbished cartridges for
the facsimile and printer market were introduced in August 1995.

Through its Kelowna Facility, the Company markets refurbished cartridge products
to the industry's dealers, vendors and resellers in North America.

SALES AND MARKETING
-------------------

The Company markets and inventories a line of 2,500 high mortality replacements
parts, toner, coin-ops for copier and vending machines, key counters, key pads
and other related accessories and refurbished facsimile and printer cartridges.
Sel-Drum emphasizes breadth of product offering, competitive pricing, attention
to customer service and value-added functions through advanced systems and
inventory management/logistics applications. Sel-Drum's parts distribution
operations serve the different requirements of both the commercial copier and
the general copier after-market sectors.

Sel-Drum's commercial and institutional copier parts distribution sales
operations conduct direct sales and marketing efforts through a team of regional
sales managers and field sales representatives who meet regularly with
Sel-Drum's major customers. Their function is not only to sell and provide
technical support for existing products but also to work with Sel-Drum's
customers and with suppliers in order to identify new market opportunities.

Sel-Drum's general copier parts distribution operations sell through both
employee and third-party sales representatives to meet customer requirements.
The general copier parts distribution staff works closely with the regional
sales staff and the inventory provisioning group to ensure that inventory
availability and customer service levels are maintained. Frequent meetings are
conducted with suppliers to provide new product introductions as well as
marketing and sales training.

Sel-Drum warrants its products to its customers. These product warranties do not
represent a material cost to the Company.

SEASONALITY OF BUSINESS
-----------------------

Although there is no significant fluctuation in the flow of business, revenues
are generally lower during the Company's fourth fiscal quarter. The Company
believes this occurs due to school closings and slow down of business at
government offices in the summer because those institutional customers are
significant users of copying machines producing high volumes of copies and the
recurring need for replacement parts.

COMPETITION
-----------

Sel-Drum's primary competitors for sales of copier parts and supplies are other
independent distributors and the OEMs. While Sel-Drum historically competed in
the parts distribution sector on the basis of price and availability of parts,
management believes that a primary basis for competition today, and a key
differentiating factor in the future, will be the ability to offer value-added
services to accommodate customers, such as broad-based inventory management
services and sophisticated systems capability.

EMPLOYEES
---------

At July 31, 2000, Sel-Drum employed approximately 104 full time employees
located in the United States and Canada up from 93 as at 1999 year-end. The
additional employees were recruited mostly to increase coverage in US sales
territories with support staff. The Company has no employees represented by
unions. The Company believes that its relationship with its employees is
satisfactory.


                                       5
<PAGE>

FORWARD-LOOKING INFORMATION
---------------------------

This document contains, and other materials filed or to be filed by the Company
with the Commission which are incorporated by reference herein, as well as
information included in oral statements or other written statements made or to
be made by the Company, contain or will contain or include, disclosures which
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1934, as amended (the "Act"), and Section 21E of the Exchange
Act. Such forward-looking statements address, among other things, strategic
initiatives (including plans for enhancing the Company's business through new
acquisitions, information technology systems, sales strategies, market growth
plans, margin enhancement initiatives, capital expenditures, and financing
sources). Such forward-looking information is based upon management's current
plans or expectations and is subject to a number of uncertainties and risks that
could significantly affect current plans, anticipated actions and the Company's
future financial condition and results. These uncertainties and risks include,
but are not limited to, those relating to successfully managing program to
acquire and integrate new companies, including technical services risks and
uncertainties relating to conducting operations in a competitive environment;
delays, technological changes, management transitions and employment issues;
debt service requirements (including sensitivity to fluctuation in interest
rates and foreign currency); and general economic conditions. As a consequence,
current plans, anticipated actions and future financial condition and results
may differ from those expressed in any forward-looking statements made by or on
behalf of the Company.

INVESTMENT CONSIDERATIONS
-------------------------

The following factors are important and relevant considerations in evaluating
the business of the Company and a potential investment in the Company's
securities.

PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK
--------------------------------------------

The Company's Common Stock currently trades on the NASD's OTC Bulletin Board.
There can be no assurance that a market for the Common Stock will develop or be
sustained. The stock is thinly traded and as a result is relatively illiquid. As
a result, purchasers of the Company's securities may have difficulty in selling
such securities should they desire to do so.

COMMON STOCK ELIGIBLE FOR RESALE
--------------------------------

Of the 7,417,500 shares of Common Stock presently outstanding, over 7,165,680
shares are "restricted securities" and under certain circumstances may be sold
in compliance with Rule 144 adopted under the Securities Act. Future sales of
such shares are likely to depress the market price of the Company's Common
Stock, which would have an adverse effect on the value of the Company's
securities.

ABILITY TO RESPOND TO RAPID CHANGE
----------------------------------

The Company's future success will depend significantly on its ability to enhance
its current products and develop or acquire and market new products which keep
pace with technological developments and evolving industry standards as well as
to respond to changes in customer needs. The failure of the Company's management
to adapt to changing technological and business conditions, as well as the
growth of its own business, results of operations and prospects, would have a
material adverse effect on the Company's business.

Management Transition; Dependence Upon Key Personnel. The Company's success will
depend in large measure on the efforts of key senior management. Mr. Camille
Cotran became Chief Executive 0fficer of the Company replacing the Company's
founder, Brian F. Turnbull who retired on July 30, 1999. Mr. Raymond C. Sparks
remained as President of the Company. Furthermore, the Company now benefits from
the knowledge and experience of Densigraphix's specialized personnel. With the
alliance with Densigraphix, the company has therefore become less dependent on a
few individuals.

MANAGEMENT OF CHANGE
--------------------

The Company's future performance will depend in part on its ability to manage
changes in its operations and will require the Company to hire additional
management and technical personnel, particularly in the marketing and customer
support areas. In addition, the Company's ability to manage changes in its
operations will require it to



                                       6
<PAGE>

continue to improve its operational and financial control system and to attract,
train, motivate, manage and retain key employees. If the Company's management
were to become unable to manage growth effectively, that would have a material
adverse effect on the Company's financial condition, prospects and operating
results.

POTENTIAL UNSPECIFIED ACQUISITIONS
----------------------------------

The Company is considering acquiring other smaller businesses within its
industry segment from whom economies of scale can be achieved. In the event the
Company determines to acquire such businesses or assets, investors may not have
an opportunity to review the financial statements of such businesses or to vote
on such acquisitions. To date, the Company has not identified any acquisition
candidates and no assurances can be given that any such acquisitions will occur
or if they occur whether such acquisitions will provide the economies of scale
the Company desires from such candidates.

COMPETITION
-----------

The high mortality copier parts business is highly competitive. The Company
believes that competition in the industry is based principally upon experience,
quality, prices and the ability to meet customer delivery requirements. Prior
competition in the industry affects the Company's ability to increase prices on
certain products and, in some cases, subjects the Company to pressure from its
customers to reduce prices. While recently committing its efforts to improve its
refurbishing and assembly processes to permit the Company to reduce costs
through operating efficiencies, thereby improving profitability, there can be no
assurances that these efforts will serve to improve productivity and
profitability. Additionally, some of the Company's competitors have greater
financial resources than the Company and there can be no assurance that the
Company will be able to compete effectively with these competitors.

CONTROL BY MANAGEMENT
---------------------

C.Cotran Holding inc whose sole shareholder is Camille Cotran holds
approximately 97% of the Common Stock of the Company. As a result, C.Cotran
Holding inc. is in a position to control the management and policies of the
Company, including, but not limited to, electing or removing the Company's Board
of Directors, changing the core business of the Company, causing or restricting
the sale of the Company, causing the Company to engage in transactions with
affiliated companies and controlling the Company's dividend policy.

RELIANCE ON QUALITY CONTROL OF UNAFFILIATED MANUFACTURERS
---------------------------------------------------------

Although the Company believes that it maintains good control with respect to
product specifications and quality, there can be no assurance that unaffiliated
manufacturers become unable or unwilling to continue to manufacture the
Company's distributed products that are consistent with the Company's quality
and performance standards. In this regard, the Company has occasionally
received, and may in the future receive, shipments of product from unaffiliated
manufacturers of products that fail to conform to the Company's quality control
standards or are not timely delivered. Although shipments from unaffiliated
manufacturers of products that failed to conform to the Company's standards have
not materially affected the Company's operation, there cannot be any assurance
that such failure in the future would not materially adversely affect the
Company's results of operations or its reputation in the marketplace.

ITEM 2.  DESCRIPTION OF PROPERTY.
---------------------------------

As of July 31, 2000, the Company was utilizing approximately 45,300 square feet
of warehouse and manufacturing space and approximately 6,700 square feet of
office, administrative, training and sales space. The Company believes that its
properties are adequate for its needs. Information with respect to the principal
facilities used by Sel-Drum is set forth below:



                                       7
<PAGE>

<TABLE>
<CAPTION>
ADDRESS                            PRIMARY            USE
<S>                                <C>                <C>
501 Amherst Street                 (1)                Registered Headquarters
Buffalo, N.Y. U.S.A.                                  and U.S.A. Distribution

1370 Artisans Court                (2)                Executive and
Burlington, On. Canada                                Administration Facilities
                                                      Canadian Distribution

1910 Dayton Street                 (3)                Manufacturing Facility
Kelowna, B.C., Canada

1890 Dayton Street                 (3)                Distribution Center
Kelowna, B.C., Canada
</TABLE>


(1) The Company established its U.S.A. distribution facilities in 1982, which it
has agreed to lease through October 2001 at an annual rental of $38,000.

(2) Established in 1978 as the executive and administrative offices, together
with the distribution center for product within Canada. The Company has agreed
to lease the property through February 2004 at an annual rental of $78,000.

(3) The Kelowna Facility occupies two properties, one owned by a former director
Robert Asseltine and the other by a third party. The property owned by Mr.
Asseltine is leased by the Company through April 2002 and has an annual rent of
approximately $52,000. The other property is leased by the Company through April
2002 at an annual rent of $18, 000.

ITEM 3.  LEGAL PROCEEDINGS.
---------------------------

As of July 31, 2000, there are no known material legal proceedings against the
Company or any of its officers or directors.

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

No matters were submitted to a vote of the security holder during the fourth
fiscal quarter of 2000.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
------------------------------------------------------------------

The Common Stock of the Company began trading on the OTC Bulletin Board June
20th, 1995 under the symbol "SDUM". The OTC Bulletin Board is an NASD sponsored
and operated inter-dealer automated quotation system for equity securities not
included in the Nasdaq system. The OTC Bulletin Board has only recently been
introduced as an alternative to "pink sheet" trading of over-the-counter
securities. Consequently, the liquidity and stock price of the Company's
securities in the secondary market may be adversely affected. The range of high
and low bid quotations provided below for the Company's Common Stock for the
last two Fiscal Years were obtained from the NASD and reflect inter-dealer
prices, without retail mark-up, mark-down or commissions, and may not represent
actual transactions. The volume of trading in the Company's Common Stock has
been limited and there is no assurance that a regular trading market will
develop or that, if developed, any such market will be sustained.

                               COMMON STOCK PRICE

<TABLE>
<CAPTION>
                   First Quarter           Second Quarter           Third Quarter            Fourth Quarter

                High        Low         High         Low          High         Low         High       Low
<S>          <C>          <C>          <C>         <C>           <C>         <C>          <C>       <C>
Fiscal
2000         $0.34375     $0.3125        $0.5       $0.25         $0.33      $0.3125      $0.375    $0.375
Fiscal 1999
               $0.375      $0.375      $0.375      $0.375        $0.375       $0.375      $0.375    $0.315
</TABLE>


                                       8
<PAGE>


On October 20, 2000 there were approximately 351 holders of record of the
Company's common stock. The number of shares outstanding was 7,417,500.

The Company has not paid a dividend with respect to its Common Stock nor does
the Company anticipate paying dividends in the foreseeable future.

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

The Company markets and distributes a line of 2,500 high mortality replacement
parts, drums, toner, facsimile and printer cartridges. The replacement parts are
principally manufactured in Japan and Germany, many exclusively to the Company's
specifications. Facsimile and printer cartridges are manufactured for the
Company for distribution to the copier dealer market in North America, by its
Kelowna Facility.


RESULTS OF OPERATIONS
---------------------

The Company's results of operations are affected by numerous factors such as
general economic conditions, competition and inventory costs. The largest
component of the Company's cost of sales is inventory cost, which may vary
slightly from period to period based upon timing of purchases and exchange rate
fluctuations which indirectly affect the Company's inventory costs.

During Fiscal 1999, the Company discontinued its drum operations at its' Kelowna
facility. Information relating to the discontinued operations for the years
ended July 31, 1999 has been shown separately.

The following table sets forth for each of the periods presented, certain income
statement data for the Company expressed as a percentage of net sales.

<TABLE>
<CAPTION>

STATEMENT OF OPERATIONS DATA                                2000             1999             1998
----------------------------                                ----             ----             ----
<S>                                                       <C>               <C>             <C>
Net Sales                                                 100.0%            100.0%          100.0%
As a Percentage of Net Sales:
Cost of Goods Sold                                         70.2%             72.1%           69.8%
Gross Profit                                               29.8%             27.9%           30.2%
Selling, General and Administrative Expenses               23.3%             22.6%           22.1%
Provision for Bad Debt                                         -               .9%             .2%
Income from Operations                                      6.5%              4.4%            7.8%
Other Income (Expense)                                     (.3)%             (.4)%           (.7)%
Income from continuing operations before Taxes              6.2%              4.0%            7.1%
Net Income from continuing operations                       4.0%              2.4%            4.2%
Discontinued operations                                        -            (2.7)%           (.5)%
Net Income                                                  4.0%             (.3)%            3.7%
                                                                             =====
</TABLE>


YEAR ENDED 2000 COMPARED TO YEAR ENDED 1999
-------------------------------------------

Net sales for the year ended July 31, 2000 increased by 5.1% to $15.4 million as
compared with $14.6 million for the year ended July 31, 1999. Sales were
impacted by the following factors:

                      General Economic Conditions: The favorable economic
                      conditions as well as the new digital technology, has led
                      to a greater incidence of new machine placements. Where
                      printers had gained an advantage over copiers in their
                      ability to connect to networks, the new digital


                                       9
<PAGE>

                      copiers with their network capabilities are recapturing
                      some lost markets. New machines require fewer replacement
                      parts initially which impacts parts sales in the early
                      stages after installation. Networked copiers and printers
                      use significantly more toner which increases the
                      opportunities for toner sales.

               -      Competition. The industry continues to witness a
                      consolidation process within the dealers network as well
                      as the introduction of more aggressive programs by the
                      Office Equipment Manufacturers. In spite of these two
                      factors, the company has been able to establish itself as
                      a strong player in this competitive market and to increase
                      sales.

The strategic alliance with Densigraphix has opened up U.S. markets for sales of
toner products. The company foresees a possible increase in sales for Fiscal
2001, although no assurance can be given that this will occur.

Gross profit margin for the year ended July 31, 2000 was 29.8%, as compared to
27.9% for Fiscal 1999. The increase in gross margin is the result of the
improved margins in Kelowna since the discontinuance of the drum recoating
operations as well as favorable exchange rates.

Selling, general, and administrative expenses for the year ended July 31, 2000
increased 8.3% from the prior year and represent 23.3% of net sales for the year
ended July 31, 2000 as compared to 22.6% for Fiscal 1999. The increase resulted
primarily from selling expenses and salaries following the trend in sales,
computer training expenses, software development costs and depreciation on the
new computer system.

The interest expense for the Year 2000 increased by $78,731 as a result of the
new financing put in place October 31, 1999 but was offset by an increase in
interest income.

As a result of the foregoing, net income from continuing operations was $617,507
for the year, an increase of $273,366 in absolute dollars from the previous
year. Net income for the year ended July 31, 2000 at $617,507 represents 4.0% of
net sales. In Fiscal 1999, as a result of discontinuing its drum recoating
division in Kelowna, a non-recurring loss net of taxes of $394,006 was recorded,
bringing the results to a net loss of $49,865.

YEAR 2000 COMPLIANCE ISSUES
---------------------------

In the context of the Year 2000 review and after evaluating the Company's
internal computer systems, it had been decided to change the whole system in
order to be year 2000 compliant. The Company invested approximately $195,000 to
change its computer system. Implementation was completed on time and within the
$200,000 budget. An e-commerce functionality is now being added to the system.

During the year 2000 date change and the leap year 2000, no problems nor
disruptions with respect to the computer systems of vendors or customers were
experienced by the Company.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company's principal capital requirements are to fund its working capital
needs and material inventory requirements and to fund the improvement of
facilities, machinery and equipment. Historically the Company has used income
generated by operations as well as bank financing to fund these capital needs.

Net cash provided by operating activities primarily represents net income plus
changes in working capital positions. Net cash used for operating activities for
the year ended July 31, 2000 was $128,209 compared to funds provided from
operating activities of $783,590 for the previous year. As a result of the
increase in sales, and addition of new products, working capital requirements
increased by an amount of $1,245,000 in Year 2000, to support the increase in
accounts receivable and inventories. Except for a write-off of approximately
$86,000 of inventory, the 1999 non-recurring loss on discontinued operations did
not have any impact on the working capital. The Company's arrangements with its
North American customers typically provide that payments are due within 30 days
following the date of the Company's shipment of goods, while arrangements with
overseas customers are generally on a letter of credit basis or sight draft. Due
to the Company's expansion strategy, management believes that the Company's
working capital requirements will increase and that they can be met with current
resources.


                                       10
<PAGE>

The Company currently has a revolving demand loan arrangement with the National
Bank of Canada in the amount of U.S. $2,826,600 ($4,200,000 Canadian dollars).
These borrowings generally assist the Company with funding of accounts
receivable and inventory purchases.

As at October 29, 1999, the revolving demand loan was increased by U.S. $336,500
($500,000 Canadian dollars) according to the terms of the financing provided by
the National Bank of Canada for the acquisition by C. Cotran Holding and
Densigraphix of Sel-Drum International Inc. In addition, as part of the
financing, a new term loan of U.S. $336,500 ($500,000 Canadian dollars) was
granted to the company.

The additional financing provided by the Bank was used to lend to Densigraphix
an amount of U.S. $1,009,500 ($1,500,000 Canadian dollars). The note receivable
carries an interest rate of prime + 1% and no repayment terms.

As at July 31, 2000 outstanding borrowing of U.S. $1,339,502 existed under this
arrangement. An amount of U.S. $673,000 ($1,000,000 Canadian dollars) was used
as part of the stock purchase financing and the balance U.S. $666,502 ($990,300
Canadian dollars) was used in operations.

In March 2000, Sel-Drum Corporation (USA), Inc. advanced an additional U.S.
$550,000 ($817,000 Canadian dollars) to C. Cotran Holding inc. under the same
terms and conditions of the existing note receivable. This amount was used by
C. Cotran Holding inc. to reimburse part of the acquisition financing to the
National Bank of Canada.

Cash flow from operations coupled with cash flow generated by bank financing
has provided the Company with the cash necessary to meet its cash requirements.

RISKS
-----

Sel-Drum faces the financial risks inherent to the nature of its activities.
The company also faces risks stemming from other factors such as fluctuations
in exchange rates and economic market conditions in general.

YEAR ENDED 1999 COMPARED TO YEAR ENDED 1998
-------------------------------------------

Net sales for the year ended July 31, 1999 were stable at $14.6 million as
compared with $14.1 million for the year ended July 31, 1998. The flatness in
sales is the result of the following factors:

               -      General Economic Conditions. To a certain extent the
                      Company's business is counter cyclical. Purchasers of
                      copier, facsimile and printer high mortality replacement
                      parts tend to eschew such purchases in favor of new
                      machine purchases during favorable economic periods. Parts
                      dealers consequently do not require as high order volume
                      and companies such as Sel-Drum experience lower purchase
                      volumes (and therefore lower revenues) from dealers. The
                      Company experienced this trend to a certain degree during
                      Fiscal 1999.

               -      Movement Toward Digital. The movement away from analogue
                      technology toward a digital technology within the copier,
                      facsimile and printer replacement part marketplace created
                      new copier, facsimile and printer products which did not
                      have an immediate need for replacement parts.

               -      Competition. In the last twelve months the industry has
                      witnessed a consolidation process within the dealers
                      network as well as the introduction of more aggressive
                      programs by the Original Equipment Manufacturers. These
                      two factors account for a more competitive market which
                      impacts on sales.

However for the year to come, the company anticipates that the strategic
alliance with Densigraphix will open up U.S. markets for sales of toner
products. As a result the company foresees a possible increase in sales for
Fiscal 2000, although no assurance can be given that this will occur.

The Company's distribution centers in Burlington, Ontario (Canada) and Buffalo,
New York (USA) showed gross profit margins during the fiscal year ended July 31,
1999 on a combined basis of 28%. The margins at the



                                       11
<PAGE>

Company's Kelowna Facility, showed a gross profit in absolute dollars of
approximately $200,000 compared to a negative margin for Fiscal 1998 as a result
of the Company using the Kelowna facility to remanufacture cartridges instead of
relying upon third party suppliers as was done historically.

Gross profit margin for the year ended July 31, 1999 was 27.9%, as compared to
30.2% for Fiscal 1998. The decrease in gross margin is the result of the
negative impact of the exchange rate between the Canadian and the U.S. dollars
in the first two quarters as well as the increased competitiveness of the market
previously mentioned.

Selling, general, and administrative expenses for the year ended July 31, 1999
increased 6.4% from the prior comparable period. The increase resulted from
sales salaries due to some addition to the sales force, as well as increased
professional fees incurred in the acquisitions research process and in work on
special corporate projects.

As a result of the foregoing, net income from continuing operations was $344,141
for the year, a decrease of $248,630 in absolute dollars from the previous year.
In addition during the year, the company decided to discontinue its drum
recoating division in Kelowna because of the historic losses and decrease in
sales. As a result a non-recurring loss net of taxes of $394,006 was recorded,
bringing the results for Fiscal 99 to a net loss of $49,865. The abandonment of
the business segment has been accounted for as discontinued operations and,
accordingly the results of operations have been excluded from continuing
operations for Fiscal 1999 and 1998.

ITEM 7.   FINANCIAL STATEMENTS
-------------------------------


                                       12
<PAGE>





                          SEL-DRUM INTERNATIONAL, INC.
                                AND SUBSIDIARIES

                              AUDITED CONSOLIDATED
                              FINANCIAL STATEMENTS

                                       AND

                          INDEPENDENT AUDITORS' REPORT

                             JULY 31, 2000 AND 1999




                                      F-1
<PAGE>




                                    CONTENTS

<TABLE>
<CAPTION>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS                                               PAGE
-----------------------------------------                                               ----
<S>                                                                                     <C>
   Independent Auditors' Report                                                          F-3

   Consolidated Balance Sheet                                                            F-4

   Consolidated Statements of Operations                                                 F-6

   Consolidated Statements of Comprehensive Operations                                   F-8

   Consolidated Statements of Changes in Shareholders' Equity                            F-9

   Consolidated Statements of Cash Flows                                                F-11

   Notes to Consolidated Financial Statements                                           F-13
</TABLE>



                                      F-2
<PAGE>






                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



Shareholders and Board of Directors
Sel-Drum International, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Sel-Drum
International, Inc. and Subsidiaries as of July 31, 2000, and the related
consolidated statements of operations, comprehensive operations, changes in
shareholders' equity and cash flows for each of the two years in the period
ended July 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Sel-Drum International, Inc. and Subsidiaries as of July 31, 2000, and the
consolidated results of their operations and their consolidated cash flows for
each of the two years in the period ended July 31, 2000, in conformity with
generally accepted accounting principles.

                                           /s/ Mengel, Metzger, Barr & Co. LLP


Rochester, New York
September 29, 2000




                                      F-3
<PAGE>


                  SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
                  ---------------------------------------------

                           CONSOLIDATED BALANCE SHEET
                           --------------------------

                                  JULY 31, 2000
                                  -------------


<TABLE>
<CAPTION>
<S>                                                                                           <C>

                                      ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                                                       $ 32,190
  Accounts receivable, net of allowance for doubtful
    accounts of $33,460                                                                          2,268,265
  Inventories                                                                                    3,861,037
  Deferred income taxes                                                                             25,000
  Other current assets                                                                             130,989
                                                                                                ----------
                                                                          TOTAL CURRENT ASSETS   6,317,481

PROPERTY
  Equipment                                                                                      1,081,604
  Vehicles                                                                                          13,922
  Furniture and fixtures                                                                            84,487
  Leasehold improvements                                                                           417,848
                                                                                               -----------
                                                                                                 1,597,861
  Less accumulated depreciation and amortization                                                 1,110,904
                                                                                               -----------
                                                                                                   486,957

OTHER ASSETS
  Non-competition agreement, net of
    accumulated amortization of $31,170                                                             12,468
  Sundry, principally deposits                                                                      11,170
  Notes receivable from related parties                                                          1,559,500
                                                                                               -----------
                                                                                                 1,583,138
                                                                                               -----------
                                                                                               $ 8,387,576
                                                                                               -----------
                                                                                               -----------

</TABLE>



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




                                      F-4
<PAGE>


<TABLE>
<CAPTION>
<S>                                                                                           <C>
                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Line of credit borrowings                                                                     $1,339,502
  Current portion of long-term debt                                                                 67,296
  Accounts payable                                                                                 401,262
  Income taxes payable                                                                             133,464
  Other current liabilities                                                                        487,127
                                                                                               -----------
                                                                TOTAL CURRENT LIABILITIES        2,428,651

LONG-TERM DEBT                                                                                     218,731

SHAREHOLDERS' EQUITY
  Common stock                                                                                      74,175
  Additional paid-in capital                                                                       609,096
  Preferred stock                                                                                4,499,805
  Retained earnings                                                                                828,729
  Accumulated other comprehensive loss                                                            (271,611)
                                                                                               -----------
                                                                                                 5,740,194


                                                                                               -----------
                                                                                                $8,387,576
                                                                                               -----------
</TABLE>



                                      F-5
<PAGE>


                  SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
                  ---------------------------------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------


<TABLE>
<CAPTION>
<S>                                                                       <C>                 <C>
Other income (expense):
  Interest income                                                             81,784              1,325
  Interest expense                                                          (132,437)           (53,706)
  Gain (loss) on disposal of property                                         14,793             (2,241)
  Foreign currency transaction loss                                          (12,489)            (9,465)
                                                                          ----------          ----------
                                                                             (48,349)           (64,087)
                                                                          ----------          ----------
                              INCOME FROM CONTINUING OPERATIONS
                                            BEFORE INCOME TAXES              949,293            576,027

Income tax expense (benefit):
  Current                                                                    318,786            235,886
  Deferred                                                                    13,000             (4,000)
                                                                          ----------          ----------
                                                                             331,786            231,886
                                                                          ----------          ----------
                          NET INCOME FROM CONTINUING OPERATIONS              617,507            344,141

Discontinued operations:
  Loss from operations of drum recoating division
    (net of income tax benefit of $13,222 in 1999)                                 -            (19,833)

  Write-off of assets related to drum recoating division
    (net of income tax benefit of $49,725 in 1999)                                -            (374,173)
                                                                          ----------          ----------
                                                                                 -             (394,006)
                                                                          ----------          ----------
                                              NET INCOME (LOSS)           $  617,507          $ (49,865)
                                                                          ----------          ----------
                                                                          ----------          ----------
</TABLE>



                                      F-6
<PAGE>


                  SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF OPERATIONS, CONT'D



<TABLE>
<CAPTION>
                                                                                  Year ended July 31,
                                                                            ---------------------------------
                                                                                 2000              1999
                                                                            ---------------   ---------------
<S>                                                                             <C>              <C>
Net income (loss) per common share:
  Basic and diluted:
    Continuing operations                                                           $ 0.08            $ 0.04
    Discontinued operations:
      Loss from operations                                                               -                 -
      Write-off of assets                                                                -             (0.05)
                                                                            ---------------   ---------------
                                  NET INCOME (LOSS) PER COMMON SHARE                $ 0,08           $ (0,01)
                                                                            ---------------   ---------------
                                                                            ---------------   ---------------

Weighted average:
  Common shares                                                                  7,417,500         7,542,158
  Dilutive stock options                                                                  -                -
                                                                            ---------------   ---------------
                            COMMON SHARES AND DILUTIVE STOCK OPTIONS             7,417,500         7,542,158
                                                                            ---------------   ---------------
                                                                            ---------------   ---------------
</TABLE>




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




                                      F-7
<PAGE>


                  SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
                  ---------------------------------------------

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
               ---------------------------------------------------


<TABLE>
<CAPTION>

                                                                                   Year ended July 31,
                                                                             ---------------------------------
                                                                                  2000              1999
                                                                             ---------------   ---------------
<S>                                                                              <C>               <C>
Net income (loss)                                                                $ 617,507         $ (49,865)

Other comprehensive income:
  Foreign currency translation adjustment                                            3,007                25
                                                                                 ---------         ---------


                                       COMPREHENSIVE INCOME (LOSS)               $ 620,514         $ (49,840)
                                                                                 ---------         ---------
                                                                                 ---------         ---------
</TABLE>





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




                                      F-8
<PAGE>


                  SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
                  ---------------------------------------------

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
           ----------------------------------------------------------



<TABLE>
<CAPTION>
                                                                         Additional
                                                         Common           paid-in          Preferred          Retained
                                                         stock            capital            stock            earnings
                                                    ----------------  ----------------  ----------------  ----------------
<S>                                                        <C>              <C>              <C>                <C>
Balance at
  August 1, 1998                                           $ 76,425         $ 706,846        $4,499,805         $ 261,087

Net loss for the year                                             -                 -                 -           (49,865)

Current year other comprehensive income                           -                 -                 -                 -

Repurchase of 100,000 common shares
  subject to "put rights" at $.50 per share                       -                 -                 -                 -

Reversal of balance of common shares
  previously subject to "put rights", resulting
  from third party transaction, as described
  in Note I                                                       -                 -                 -                 -

Repurchase of 125,000 common shares
  at $.40 per share
                                                                  -                 -                 -                 -
                                                           --------         ---------        ----------         ---------

                         BALANCE AT
                      JULY 31, 1999                          76,425           706,846         4,499,805           211,222

Net income for the year                                           -                 -                 -           617,507

Current year other comprehensive income                           -                 -                 -                 -

Retirement of 225,000 shares of
  treasury stock                                             (2,250)          (97,750)               -                 -
                                                           --------         ---------        ----------         ---------
                         BALANCE AT
                      JULY 31, 2000                        $ 74,175         $ 609,096        $4,499,805         $ 828,729
                                                           --------         ---------        ----------         ---------
                                                           --------         ---------        ----------         ---------
</TABLE>




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



                                      F-9
<PAGE>

<TABLE>
<CAPTION>
         Accumulated          Common            Common
            other             stock,             stock             Total
         comprehensive      subject to       in treasury -     shareholders'
            loss           "put rights"         at cost            equity
      -----------------   ---------------   ---------------   ----------------
<S>          <C>               <C>               <C>               <C>
             $(274,643)        $(172,500)        $ -               $5,097,020

                     -                 -                 -            (49,865)

                    25                 -                 -                 25


                     -            50,000           (50,000)                 -




                     -           122,500                 -            122,500




                     -                 -           (50,000)           (50,000)
      -----------------   ---------------   ---------------   ----------------
              (274,618)                -          (100,000)         5,119,680

                     -                 -                 -            617,507

                 3,007                 -                 -              3,007


                     -                 -           100,000                 -
      -----------------   ---------------   ---------------   ----------------

             $(271,611)        $ -               $ -               $5,740,194
      -----------------   ---------------   ---------------   ----------------
      -----------------   ---------------   ---------------   ----------------
</TABLE>



                                      F-10
<PAGE>

                  SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
                  ---------------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------


<TABLE>
<CAPTION>
<S>                                                                             <C>              <C>
  Net income (loss)                                                             $   617,507      $   (49,865)
  Adjustments to reconcile net income (loss) to net cash (used for)
    provided from operating activities:
      Bad debts                                                                         348          130,326
      Depreciation and amortization                                                 184,456          167,867
      Deferred income taxes                                                          13,000          (53,913)
      (Gain) loss on disposal of property                                           (14,793)           2,241
      Write-off of assets related to drum recoating division                           --            423,898
      Changes in certain assets and liabilities affecting operations:
        Accounts receivable                                                        (391,563)        (180,484)
        Inventories                                                                (853,440)         364,073
        Refundable income taxes                                                      49,027           72,124
        Other current assets                                                        (29,279)           6,120
        Deposits                                                                        715              (74)
        Accounts payable                                                             (2,900)        (285,034)
        Income taxes payable                                                        133,464             --
        Other current liabilities                                                   165,249          186,311
                                                                                -----------      -----------
                                    NET CASH (USED FOR) PROVIDED FROM
                                                 OPERATING ACTIVITIES              (128,209)         783,590

CASH FLOWS - INVESTING ACTIVITIES
  Purchases of property                                                             (94,568)        (205,026)
  Proceeds on disposal of property                                                   14,793            2,312
                                                                                -----------      -----------
                                                    NET CASH USED FOR
                                                 INVESTING ACTIVITIES               (79,775)        (202,714)

CASH FLOWS - FINANCING ACTIVITIES
  Decrease in bank overdraft                                                           --           (315,284)
  Net increase (decrease) in short-term financing                                 1,339,502         (310,043)
  Repayments on long-term debt                                                      (82,300)         (98,439)
  Proceeds from long-term debt                                                      336,500             --
  (Increase) decrease in notes receivable from related parties                   (1,559,500)         160,084
  Purchase of treasury stock                                                           --           (100,000)
                                                                                -----------      -----------
                                    NET CASH PROVIDED FROM (USED FOR)
                                                 FINANCING ACTIVITIES                34,202         (663,682)

Effect of exchange rate changes on cash                                               3,007               21
                                                                                -----------      -----------
                                                      NET DECREASE IN
                                            CASH AND CASH EQUIVALENTS              (170,775)         (82,785)
Cash and cash equivalents at beginning of year                                      202,965          285,750
                                                                                -----------      -----------
                                            CASH AND CASH EQUIVALENTS
                                                       AT END OF YEAR           $    32,190      $   202,965
                                                                                -----------      -----------
                                                                                -----------      -----------
</TABLE>



                                      F-11
<PAGE>



                  SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
                  ---------------------------------------------

                  CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT'D
                  ---------------------------------------------


<TABLE>
<CAPTION>
                                                                                Year ended July 31,
                                                                          ---------------------------------
                                                                               2000              1999
                                                                          ---------------   ---------------
<S>                                                                             <C>          <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

  Cash paid during the year for:

    Interest                                                                    $130,976     $ 53,706
                                                                                ========     ========

    Income taxes                                                                $132,633     $150,536
                                                                                ========     ========
</TABLE>


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



                                      F-12
<PAGE>


NOTE A:   THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------

     DESCRIPTION OF BUSINESS
     -----------------------
     Sel-Drum International, Inc. (the "Company") is a United States holding
     company, which owns 100% of the common stock of Sel-Drum Imaging
     Corporation (a Canadian holding company). Sel-Drum Imaging Corporation owns
     100% of the common stock of Sel-Drum Corporation (U.S.A.), Inc. (a United
     States operating company) and Sel-Drum Corporation (a Canadian operating
     company).

     Sel-Drum Corporation (U.S.A.), Inc. operates from a warehouse located in
     Buffalo, New York. Sel-Drum Corporation's facility for its wholesale
     distribution operations, which includes warehouse space and administrative
     offices, is located in Burlington, Ontario, Canada. Sel-Drum Corporation
     also has a manufacturing facility and administrative offices in Kelowna,
     British Columbia, Canada.

     Sel-Drum Corporation (U.S.A.), Inc. and the Burlington division of Sel-Drum
     Corporation are engaged in the wholesale distribution of parts and supplies
     used in the reprographic industry. The Kelowna division of Sel-Drum
     Corporation is engaged in the re-manufacture of cartridges used in laser
     printers and facsimile machines. The Kelowna division of Sel-Drum
     Corporation discontinued the commercial production and distribution of
     photocopier drums used in duplicating machinery as of January 1999. The
     financial impact of the discontinued segment is detailed in Note N.

     The Company grants credit to customers which are located throughout the
     United States and Canada, and arranges for letters of credit and sight
     drafts with international customers.

     PRINCIPLES OF CONSOLIDATION
     ---------------------------

     The accompanying consolidated financial statements include the accounts of
     Sel-Drum International, Inc. and its wholly-owned subsidiaries (through
     Sel-Drum Imaging Corporation), Sel-Drum Corporation (U.S.A.), Inc. and
     Sel-Drum Corporation. All material intercompany balances and transactions
     have been eliminated in consolidation.

     CASH AND CASH EQUIVALENTS
     -------------------------
     The Company's policy is to invest cash in excess of operating requirements
     in income producing investments. Cash equivalents are highly liquid
     investments purchased with original maturities of three months or less.
     Cash equivalents generally consist of investments in term deposit accounts
     at a Canadian financial institution. At July 31, 2000, there was no excess
     cash invested in these term deposit accounts.

     CONCENTRATION OF CREDIT RISK  - CASH
     ------------------------------------
     The Company maintains cash balances at financial institutions located in
     New York and Canada. Accounts at the New York institution are insured by
     the Federal Deposit Insurance Corporation up to $100,000. Accounts at the
     Canadian institutions are insured by the Canadian Deposit Insurance
     Corporation up to approximately $40,000 ($60,000 Canadian). Uninsured
     balances aggregated approximately $211,000 at July 31, 2000. The Company
     has not experienced any losses in such accounts and believes that there is
     no exposure to significant credit risk in this regard.

     INVENTORIES
     -----------

     Inventories are valued at the lower of cost, determined by the first-in,
     first-out (FIFO) method, or market.


                                      F-13
<PAGE>


NOTE A:   THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Cont'd
---------------------------------------------------------------------

     PROPERTY
     --------
     Property is stated at cost less accumulated depreciation and amortization.
     Depreciation and amortization are computed using accelerated and
     straight-line methods over the estimated useful lives of the related
     assets, which are as follows:

<TABLE>
<CAPTION>
<S>                                                          <C>
         Equipment                                           5 - 10 Years
         Vehicles                                                 5 Years
         Furniture and fixtures                                   5 Years
         Leasehold improvements                                  10 Years
</TABLE>


     Major renewals and betterments are capitalized, while maintenance and
     repairs are charged to operations as incurred. Upon sale or retirement, the
     related cost and accumulated depreciation or amortization are removed from
     the accounts and the related gain or loss is reflected in operations.

     NON-COMPETITION AGREEMENT
     -------------------------
     The non-competition agreement is being amortized on a straight-line basis
     over 42 months through July 31, 2001.

     FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
     ---------------------------------------------
     Sel-Drum International, Inc. and Sel-Drum Corporation (U.S.A.), Inc.
     maintain their accounting records in U.S. dollars, while Sel-Drum Imaging
     Corporation and Sel-Drum Corporation maintain their accounting records in
     Canadian dollars. The accompanying consolidated financial statements are
     presented in U.S. dollars. Accordingly, all balance sheet accounts of
     Sel-Drum Imaging Corporation and Sel-Drum Corporation are translated into
     U.S. dollars at period-end exchange rates, and statement of operations
     items are translated at weighted average exchange rates. The resulting
     translation adjustments are made directly to accumulated other
     comprehensive loss. Gains or losses from foreign currency transactions,
     such as those resulting from the settlement of foreign receivables or
     payables, are included in the statements of operations.

     CHANGE IN OWNERSHIP
     -------------------
     On July 30, 1999, 7,173,680 shares of the issued and outstanding common
     stock of Sel-Drum International, Inc. were acquired by C. Cotran Holding,
     Inc. (a Canadian holding company). Further, on July 30, 1999, 100% of the
     issued and outstanding preferred shares of Sel-Drum Imaging Corporation
     (Class C and Class D) were acquired by Densigraphix Kopi, Inc. (a
     wholly-owned subsidiary of C. Cotran Holding, Inc.).

     REVENUE RECOGNITION
     -------------------
     Revenue is recognized by the Company when products are shipped to
     unaffiliated customers, with appropriate provision for uncollectible
     accounts.

     ADVERTISING COSTS
     -----------------
     The Company's policy is to expense advertising costs as incurred.
     Advertising costs for the fiscal years ended July 31, 2000 and 1999
     approximated $112,000 and $104,000, respectively.


                                      F-14
<PAGE>


NOTE A:   THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Cont'd
---------------------------------------------------------------------

     INCOME TAXES
     ------------
     Deferred income tax assets and liabilities arise from temporary differences
     associated with differences between the financial statement and tax basis
     of assets and liabilities, as determined by the enacted rates which are
     expected to be in effect when these differences reverse. Deferred tax
     assets and liabilities are classified as current or noncurrent, depending
     on the classification of the assets and liabilities to which they relate.
     Deferred tax assets and liabilities not related to an asset or liability
     are classified as current or noncurrent depending on the periods in which
     the temporary differences are expected to reverse. The principal types of
     temporary differences between assets and liabilities for financial
     statement and tax return purposes are detailed in Note F.

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

     FAIR VALUE OF FINANCIAL INSTRUMENTS
     -----------------------------------
     Statement of Financial Accounting Standards Number 107, "Disclosures about
     Fair Value of Financial Instruments," requires the Company to disclose
     estimated fair values for its financial instruments. The carrying amounts
     reported in the accompanying consolidated balance sheet for cash, accounts
     receivable, line of credit borrowings, accounts payable and other current
     liabilities approximate fair value because of the short maturity period of
     those instruments. In addition, the carrying amounts of notes receivable
     from related parties and long-term debt approximate fair value based on
     the current terms of these instruments.

     STOCK OPTIONS
     -------------
     In October 1995, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards Number 123 (SFAS 123) "Accounting for
     Stock-Based Compensation". This statement established accounting and
     reporting standards for stock-based employee compensation plans. As
     permitted by the Statement, the Company continues to account for such
     arrangements under Accounting Principles Board Opinion Number 25,
     "Accounting for Stock Issued to Employees", and related interpretations.
     Accordingly, no compensation expense is recognized for stock-option grants
     because the exercise price of the stock options equals the market price of
     the underlying stock on the date of grant.

     NET INCOME (LOSS) PER COMMON SHARE
     ----------------------------------
     Basic net income (loss) per common share is determined by dividing net
     income (loss) by the weighted average number of common shares outstanding.
     As of July 31, 2000 and 1999 there are no dilutive potential common shares.

NOTE B:  INVENTORIES
--------------------

     The components of inventories at July 31, 2000 are as follows:

<TABLE>
<CAPTION>
<S>                                          <C>
          Raw materials                      $  185,569
          Finished goods                      3,675,468
                                              ---------
                                             $3,861,037
                                             ==========
</TABLE>




                                      F-15
<PAGE>


NOTE C:  NOTES RECEIVABLE FROM RELATED PARTIES
----------------------------------------------

Notes receivable from related parties (see Notes A and L) are summarized as
follows:

<TABLE>
<CAPTION>
<S>                                                                    <C>
    Note receivable from C. Cotran Holding, Inc., bearing interest
    at the Canadian prime rate minus 1% (an effective rate of 6.5%
    at July 31, 2000)                                                  $  550,000

    Note receivable from Densigraphix Kopi, Inc., bearing interest
    at the Canadian prime rate plus 1% (an effective rate
    of 8.5% at July 31, 2000)                                           1,009,500
       ---          --- ----                                            ---------
                                                                       $1,559,500
                                                                       ==========
</TABLE>


There are currently no principal repayment terms for these notes receivable. The
Company received interest income of approximately $76,000 from the notes
receivable from related parties during the year ended July 31, 2000. The Company
advanced an additional $336,500 to Densigraphix Kopi, Inc. in August 2000.

NOTE D:  LINE OF CREDIT
-----------------------

     Sel-Drum Corporation has an operating line of credit available for up to
     $2,826,600 ($4,200,000 Canadian dollars) through the National Bank of
     Canada. The arrangement provides for interest to be paid monthly at the
     bank's prime rate plus .50% (an effective rate of 8% at July 31, 2000).
     Sel-Drum Corporation may use the credit facility for working capital and
     to issue letters of credit for the purchase of inventories, up to a
     maximum amount of $1,009,500 ($1,500,000 Canadian dollars). Issued letters
     of credit will reduce the amounts available to the Company to borrow for
     working capital needs under the facility. At July 31, 2000, the Company
     had $1,339,502 ($1,990,345 Canadian dollars) outstanding under the
     arrangement. In addition, at July 31, 2000, the Company
     had outstanding letters of credit aggregating $27,600 ($40,800 Canadian
     dollars). Accordingly, as of July 31, 2000, the Company had $1,459,498
     available for borrowing under the arrangement.

     The line is secured by substantially all assets of Sel-Drum Corporation and
     Sel-Drum Corporation (USA), Inc., the limited corporate guarantees of
     Sel-Drum International, Inc. and Sel-Drum Imaging Corporation, each in the
     amount of $3,365,000 ($5,000,000 Canadian dollars), and the limited
     corporate guarantee of Sel-Drum Corporation (USA), Inc. in the amount of
     $1,346,000 ($2,000,000 Canadian dollars). The guarantee by Sel-Drum
     Corporation (USA), Inc. is supported by a first ranking security interest
     on all assets of Sel-Drum Corporation (USA), Inc. The line also has an
     unconditional letter of guarantee from C. Cotran Holding, Inc. in the
     amount of $3,365,000 ($5,000,000 Canadian dollars).


                                      F-16
<PAGE>

NOTE E:  LONG-TERM DEBT
-----------------------

     Long-term debt is summarized as follows:


<TABLE>
<CAPTION>
<S>                                                                             <C>
     Term loan of $336,500 ($500,000 Canadian dollars) payable to
     the National Bank of Canada, due in monthly installments of
     $5,608 ($8,333 Canadian dollars) through October 2005, plus
     interest at the bank's prime rate plus 1.5% (an effective rate
     of 9% at July 31, 2000)                                                    $286,027

      Less:  Current portion of long-term debt                                    67,296
                                                                                  ------
                                                                                $218,731
                                                                                ========
</TABLE>

The Company shall be entitled to use this credit facility for working capital
and for the issuance of letters of credit, which are used primarily for the
purchase of inventories from foreign suppliers.

Annual maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
          Year ending July 31,                                     Amount
          -------------------                                 ----------------
<S>               <C>                                             <C>
                  2001                                            $ 67,296
                  2002                                              67,296
                  2003                                              67,296
                  2004                                              67,296
                  2005                                              16,843
                                                                  --------
                                                                  $286,027
                                                                  ========
</TABLE>


The above-cited term loan is secured by substantially all assets of Sel-Drum
Corporation and Sel-Drum Corporation (USA), Inc., the limited corporate
guarantees of Sel-Drum International, Inc. and Sel-Drum Imaging Corporation,
each in the amount of $3,365,000 ($5,000,000 Canadian dollars), and the limited
corporate guarantee of Sel-Drum Corporation (USA), Inc. in the amount of
$1,346,000 ($2,000,000 Canadian dollars). The loan is also secured by an
unconditional letter of guarantee from C. Cotran Holding, Inc. in the amount of
$3,365,000 ($5,000,000 Canadian dollars).




                                      F-17
<PAGE>



NOTE F:  INCOME TAXES
---------------------

     The total tax provisions are different from the amount that would have been
     recorded by applying the U.S. statutory federal income tax rate to income
     before income taxes. The reconciliation of these differences is as follows:

<TABLE>
<CAPTION>
                                                                               July 31,
                                                                   ----------------------------------
                                                                        2000              1999
                                                                   ----------------  ----------------
<S>                                                                        <C>           <C>
     Statutory U.S. tax rate                                               34.0 %        34.0 %
     State income taxes, net of federal tax benefit                          2.0          2.0
     Other                                                                  (1.0)         4.3
                                                                            ----          ---
                                                     EFFECTIVE TAX RATE     35.0 %       40.3 %
                                                                            ====         ====
</TABLE>


     The tax effects of temporary differences that give rise to the current
     deferred tax asset as of July 31, 2000 are presented below:

<TABLE>
<CAPTION>
                                                                      Assets/
                                                                    (Liability)
                                                                  ----------------
<S>                                                                   <C>
     Allowance for doubtful accounts receivable                       $ 13,300
     Capitalization of overhead costs under Section 263A                17,000
     Depreciation                                                       24,000
                                                                      --------
                                                                        54,300
     Less:  Valuation allowance                                        (29,300)
                                                                      --------
                                                                      $ 25,000
                                                                      ========
</TABLE>





                                      F-18
<PAGE>


NOTE G:  COMMON AND PREFERRED STOCK
-----------------------------------

     The following is certain information regarding common and preferred stock
as of July 31, 2000:

<TABLE>
<CAPTION>
<S>                                                                       <C>
               Par value                                                  $      0.01
               Shares authorized                                          100,000,000
               Shares issued                                                7,417,500

             Preferred Stock
             ---------------
               Par value                                                  $      0.01
               Shares authorized                                           10,000,000
               Shares issued and outstanding                                     None

     Sel-Drum Imaging Corporation
     ----------------------------

             Preferred Stock
             ---------------
               Class A (5% non-cumulative):
                 Par value                                                       None
                 Stated value                                             $    727.30
                 Shares authorized                                              2,000
                 Shares issued and outstanding                                   None

               Class B (5% non-cumulative):
                 Par value                                                       None
                 Stated value                                             $    727.30
                 Shares authorized                                              5,000
                 Shares issued and outstanding                                   Npne

               Class C (5% non-cumulative):
                 Par value                                                       None
                 Stated value                                             $    727.30
                 Shares authorized                                             10,000
                 Shares issued and outstanding                                  1,588

               Class D (5% non-cumulative):
                 Par value                                                       None
                 Stated value                                             $    727.30
                 Shares authorized                                             10,000
                 Shares issued and outstanding                                  4,599
</TABLE>



                                      F-19
<PAGE>



NOTE H:   COMMITMENTS AND CONTINGENCIES
---------------------------------------

     LEASE COMMITMENTS
     -----------------
     Sel-Drum Corporation leases its facility in Burlington, Ontario, Canada at
     a base monthly rental approximating $6,500 through February 2004. In
     addition to the base rental, the Company is responsible for property taxes,
     insurance, utilities and repairs and maintenance.

     Sel-Drum Corporation also leases two facilities in Kelowna, British
     Columbia, Canada. The base monthly rental on one facility is approximately
     $4,300 per month through the expiration of the lease in April 2002. The
     base monthly rental on its other facility is approximately $1,500 per month
     through the expiration of the lease in April 2002. In addition to the base
     rental, the Company is responsible for property taxes, insurance, utilities
     and repairs and maintenance.

     Sel-Drum Corporation (U.S.A.), Inc. leases its facility at a base monthly
     rental approximating $3,200 through the expiration of the lease in October
     2001. The base monthly rental includes property taxes.

     Total rent expense for the Company's facilities approximated $215,000 and
     $209,000 for the years ended July 31, 2000 and 1999, respectively.

     In addition, the Company has operating lease agreements for certain
     vehicles and equipment, which expire in various years through 2003.

     Total minimum future rental payments required under all non-cancelable
     leases are approximately as follows:


<TABLE>
<CAPTION>
              Year ending July 31,                      Amount
                                                   ----------------
<S>                                                  <C>

                     2001                             $202,000
                     2002                              152,000
                     2003                               86,000
                     2004                               46,000
                                                      --------
                                                      $486,000
                                                      --------
                                                      --------
</TABLE>

     The amounts included in the minimum future rental payments above for the
     Company's Canadian facilities have been converted to U.S. dollars using the
     appropriate period-end exchange rates.

     EMPLOYMENT CONTRACTS
     --------------------
     Employment contracts exist with the President, Vice President - Sales and
     Vice President - Finance of Sel-Drum International, Inc. These contracts
     provide for minimum annual salaries plus bonuses.



                                      F-20
<PAGE>


NOTE I:  COMMON STOCK REPURCHASE AND NON-COMPETITION AGREEMENT
--------------------------------------------------------------

         On February 1, 1998, the Company entered into a common stock repurchase
         and non-competition agreement with a key employee ("Seller") who owned
         345,000 shares of the Company's common stock. The agreement provided
         that the Company would be obligated to repurchase 100% of this common
         stock from the Seller at various times through August 1, 2000 for $1.00
         per share. The agreement also allowed the Seller to sell the shares to
         a third-party if the Seller so desired. In the event that a third-party
         were to purchase such shares from the Seller, the Company's obligation
         to the Seller would be reduced accordingly. On August 1, 1998, the
         Company acquired 100,000 shares of common stock from the seller for
         $100,000. Of this amount, $50,000 was allocated to the fair market
         value of the stock and $50,000 was allocated to a non-competition
         agreement (which included $43,638 for the non-competition agreement
         itself, and $6,362 of accrued interest). On July 30, 1999, the seller
         sold his remaining 245,000 shares of common stock to a then major
         shareholder of the Company for $1 per share, thereby relieving the
         Company of its obligation to repurchase such shares from the Seller.

         Accounting standards under rules and regulations issued by the
         Securities and Exchange Commission require that common stock subject to
         "put rights" (which are exercisable under certain circumstances
         pursuant to the above-cited common stock repurchase agreement) be
         presented separately from common stock which is not subject to "put
         rights" in order to distinguish it from permanent capital. At February
         1, 1998, management determined that the Company's common stock had a
         fair market value of $.50 per share. Accordingly, the Company had
         recorded a liability of $172,500 to the above-cited Seller (345,000
         shares x $.50 per share) in the Company's consolidated balance sheet at
         July 31, 1998 and reduced shareholders' equity by a similar amount. As
         a result of the acquisition of the Seller's outstanding stock during
         fiscal 1999, there were no remaining common shares subject to "put
         rights" at July 31, 1999.

         As part of the original common stock repurchase agreement, the Company
         also entered into a non-competition agreement with the Seller for a
         period which the Company expected to last through August 1, 2002. As a
         result of the entire purchase of the Seller's outstanding common stock
         (as cited above), the non-competition agreement will expire on July 31,
         2001. The Company expected to pay a total of $172,500 to the Seller for
         this non-competition agreement and, accordingly, recorded an asset and
         corresponding liability of $147,050 on February 1, 1998 (the original
         date of the agreement) to reflect the then present value of the
         expected payments to be made under the agreement. However, the Company
         was only required to pay $43,638 for the non-competition agreement (on
         August 1, 1998, as described above) and had no additional liability to
         the Seller for such agreement. Accordingly, the remaining asset and
         liability previously cited have been eliminated during the year ended
         July 31, 1999.



                                      F-21
<PAGE>


NOTE J:  STOCK OPTION PLANS
---------------------------

       On November 24, 1995, the Company's shareholders approved the Sel-Drum
       International, Inc. 1995 Employee and Non-Employee Director Stock Option
       Plan (the "Plan"). The Plan is designed to attract and retain key
       employees, directors or advisors of the Company and to encourage them to
       contribute to the Company's success by providing the opportunity for
       stock ownership. The Plan originally provided for the grant of incentive
       stock options and nonstatutory stock options to key employees, directors
       and advisors of the Company to purchase up to an aggregate of 500,000
       shares of the Company's common stock. On December 1, 1998, the Company's
       shareholders approved an amendment to the Plan to increase the number of
       shares available for option grants under the Plan to 700,000 shares. The
       Plan is administered by a Stock Option Committee, which is authorized to
       determine the recipients of options, the type of options granted, the
       number of shares subject to each option, the term of each option,
       exercise prices and other option features. The term of an option may not
       exceed 5 years where the optionee would thereafter own stock possessing
       more than 10% of the combined voting power of the common stock ("a 10%
       Shareholder"). The exercise price must at least equal the fair market
       value of the common stock on the date of the grant of the option, except
       that if an incentive stock option is granted to a 10% Shareholder, the
       exercise price shall be no less than 110% of the fair market value of the
       common stock on the date of the grant of the option. Stock option grants
       generally have a contractual life of ten years and vest over a period of
       two years from the grant date. There were 601,500 shares subject to
       options under the Plan at July 31, 2000.

       On November 3, 1997, the Company granted a non-incentive stock option to
       the President of the Company to purchase 250,000 shares of the Company's
       common stock. The exercise price for the shares subject to this option
       was equal to the fair market value of the common stock on the date of the
       grant. This option has a contractual life of five years and vested 100%
       at the grant date.

       The following table summarizes stock option activity:

<TABLE>
<CAPTION>
                                                            Weighted-
                                            Shares           average
                                           subject           exercise
                                          to options          price
                                       ----------------  ----------------

<S>                                          <C>           <C>
     Outstanding at July 31, 1999            699,500       $   0.46
     Granted                                 190,000       $   0.50
     Forfeited                               (38,000)      $   0.50
                                             -------
     Outstanding at July 31, 2000            851,500       $   0.47
                                             -------
     Exercisable at July 31, 2000            724,834       $   0.47
                                             -------
     Exercisable at July 31, 1999            563,000       $   0.46
                                             -------
</TABLE>



                                      F-22
<PAGE>

NOTE J:  STOCK OPTION PLANS, Cont'd
----------------------------

         The following table summarizes information about stock options
outstanding at July 31, 2000:

<TABLE>
<CAPTION>
                                Options outstanding                                       Options exercisable
                        --------------------------------------------------------  ------------------------------------
                                                                  Weighted-
                                               Weighted-           average                               Weighted-
                                                average           remaining                               average
        Exercise             Shares            exercise          contractual           Shares            exercise
          price            subject to            price             life in           subject to            price
        per share            options           per share            years              options           per share
    -----------------   -----------------  -----------------  ------------------  -----------------  -----------------
<S>                          <C>              <C>                    <C>              <C>                 <C>
       $   .40               250,000          $    .40               2.3              250,000             $   .40

       $   .50               601,500          $    .50               7.8              474,834             $   .50
                             -------                                                  -------

                             851,500          $    .47               5.8              724,834             $   .47
                             -------                                                  -------
</TABLE>




         Pro forma information regarding net income (loss) and basic and diluted
         net income (loss) per share is required by SFAS No. 123, and has been
         determined as if the Company had accounted for its employee stock
         options under the fair value method of that Statement. This disclosure
         may not be representative of the effects on reported pro forma net
         income (loss) and basic and diluted net income (loss) per share for
         future years, because of the various vesting schedules of the stock
         options and the fact that additional awards may be made in the future.
         The Company's pro forma net income (loss) and basic and diluted net
         income (loss) per share are as follows:

<TABLE>
<CAPTION>
                                                                   Year ended July 31,
                                                            ---------------------------------
                                                                 2000                1999
                                                            ---------------     ---------------
<S>                                                         <C>                  <C>
     Pro forma net income (loss)                            $      628,391       $     (62,555)
                                                            ==============       =============
     Pro forma basic net income (loss) per share            $         0.08       $       (0.01)
                                                            ==============       =============
     Pro forma diluted net income (loss) per share          $         0.08       $       (0.01)
                                                            ==============       =============
</TABLE>


         For purposes of pro forma disclosures, the estimated fair value of a
         stock option is amortized to expense over the option's vesting period.
         The fair value of these stock options was estimated at the date of
         grant using facts and circumstances available to the Company for its
         common stock, which is thinly traded.



                                      F-23
<PAGE>


NOTE K:  MAJOR CUSTOMER AND SUPPLIERS
-------------------------------------

         For the fiscal years ended July 31, 2000 and 1999, approximately 34%
         and 24%, respectively, of net sales were made to one customer. At July
         31, 2000, total amounts due from this customer of approximately
         $810,000 are included in accounts receivable, as reflected in the
         accompanying consolidated balance sheet.

         During fiscal years ended July 31, 2000 and 1999, the Company purchased
         approximately 32% and 31%, respectively, from two suppliers. At July
         31, 2000, total amounts due to these suppliers of approximately $48,000
         are included in accounts payable, as reflected in the accompanying
         consolidated balance sheet.

NOTE L:  RELATED PARTY TRANSACTIONS
-----------------------------------

         SALES
         The Company had sales of approximately $315,000 and $330,000 to
         Densigraphix Kopi, Inc. during the years ended July 31, 2000 and 1999,
         respectively. At July 31, 2000, total amounts from Densigraphix
         Kopi, Inc. of approximately $118,000 are included in accounts
         receivable, as reflected in the accompanying consolidated balance
         sheet.

         PURCHASES
         The Company made purchases of inventory of approximately $1,550,000
         and $465,000 from Densigraphix Kopi, Inc. during  the
         years ended July 31, 2000 and 1999, respectively. At July 31,
         2000, total amounts due to Densigraphix Kopi, Inc. of approximately
         $79,000 are included in accounts payable, as reflected in the
         accompanying consolidated balance sheet.

         CONSULTING
         ----------
         Effective August 1, 1999, Sel-Drum Corporation entered into an
         agreement with C. Cotran Holding, Inc. Under terms of the agreement,
         which was amended on September 15, 2000, C. Cotran Holding, Inc.
         provides consulting, advisory support and administrative services for
         an annual fee of $201,900 ($300,000 Canadian dollars), plus
         out of pocket expenses. The agreement renews annually, unless notice
         is given by either party at least six months before the end of the
         renewal period.

NOTE M:  SEGMENT FINANCIAL INFORMATION
--------------------------------------

         The Company's two business segments, as further described in Note A,
         are wholesale distribution and manufacturing. The reportable segments
         are each managed separately because they offer and provide different
         products and services.

         The accounting policies of the reportable segments are the same as
         those described in the summary of significant accounting policies (see
         Note A). The Company evaluates segment performance and allocates
         resources based on profit and loss from operations before income taxes.
         Identifiable assets are those directly used in the operations of each
         segment.

         The wholesale distribution segment's activities are carried on in the
         United States and Canada. The manufacturing segment operates
         exclusively at the Company's British Columbia, Canada location.



                                      F-24
<PAGE>

NOTE M:  SEGMENT FINANCIAL INFORMATION, Cont'd
---------------------------------------

         The following tables present sales and other financial information by
         geographic region and business segment for the years ended July 31,
         2000 and July 31, 1999:

<TABLE>
<CAPTION>
                                                  United States          Canada         Eliminations       Consolidated
                                                 -----------------   ---------------   ---------------   -----------------
<S>                                                 <C>               <C>               <C>                <C>
     July 31, 2000:
       Sales to unaffiliated customers              $ 8,452,647       $ 6,919,822       $      --          $15,372,469
       Intercompany sales                             2,021,624         2,690,928        (4,712,552)              --
       Gross profit                                   2,889,029         1,647,057            42,671          4,578,757
       Operating earnings                               482,182           515,460              --              997,642
       Identifiable assets                            4,133,287         4,241,821              --            8,375,108
       Capital expenditures                              21,424            73,144              --               94,568
       Depreciation and amortization                     89,506            94,950              --              184,456

     July 31, 1999:
       Sales to unaffiliated customers              $ 8,550,672       $ 6,080,563       $      --          $14,631,235
       Intercompany sales                             1,980,590         3,088,095        (5,068,685)              --
       Gross profit                                   2,737,534         1,444,349          (105,914)         4,075,969
       Operating earnings                               385,105           255,009              --              640,114
       Identifiable assets                            3,043,658         2,808,953              --            5,852,611
       Capital expenditures                               5,778           199,248              --              205,026
       Depreciation and amortization                     51,605            83,876              --              135,481
</TABLE>





                                      F-25
<PAGE>


NOTE M:  SEGMENT FINANCIAL INFORMATION, CONT'D
---------------------------------------

<TABLE>
<CAPTION>
                                                                 Year ended July 31,
                                                       ------------------------------------
                                                               2000               1999
                                                       -----------------  -----------------
<S>                                                         <C>                <C>
       Net sales:
          Wholesale distribution                            $13,307,788        $13,132,839
          Manufacturing                                       2,064,681          1,498,396
                                                            -----------        -----------
                                                            $15,372,469        $14,631,235
                                                            ===========        ===========

       Gross profit:
          Wholesale distribution                            $ 4,275,567        $ 3,848,302
          Manufacturing                                         303,190            227,667
                                                            -----------        -----------
                                                            $ 4,578,757        $ 4,075,969
                                                            ===========        ===========

       Operating earnings:
          Wholesale distribution                            $   878,578        $   588,981
          Manufacturing                                         119,064             51,133
                                                            -----------        -----------
                                                            $   997,642        $   640,114
                                                            ===========        ===========

       Tangible assets:
          Wholesale distribution                            $ 7,851,126        $ 5,332,161
          Manufacturing                                         523,982            520,450
                                                            -----------        -----------
          Total identifiable assets                           8,375,108          5,852,611
          Non-competition agreement, net                         12,468             24,936
                                                            -----------        -----------
                                                            $ 8,387,576        $ 5,877,547
                                                            ===========        ===========

       Capital expenditures:
          Wholesale distribution                            $    81,682        $   173,343
          Manufacturing                                          12,886             31,683
                                                            -----------        -----------
                                                            $    94,568        $   205,026
                                                            ===========        ===========

       Depreciation and amortization:
          Wholesale distribution                            $   132,143        $    75,447
          Manufacturing                                          52,313             60,034
                                                            -----------        -----------
                                                                184,456            135,481
          Discontinued operations                                  --               32,386
                                                            -----------        -----------
                                                            $   184,456        $   167,867
                                                            ===========        ===========
</TABLE>




                                      F-26

<PAGE>


NOTE N:  DISCONTINUED OPERATIONS
--------------------------------

         During fiscal 1999, the Company discontinued its commercial production
         and distribution of photocopier drums used in duplicating machinery.
         The abandonment of this business segment has been accounted for as a
         discontinued operation and, accordingly, the results of operations have
         been excluded from continuing operations for this business segment in
         the accompanying consolidated statements of operations for all periods
         presented. Information relating to the discontinued operations of the
         business segment for the year ended July 31, 1999 is as follows:

<TABLE>
<CAPTION>
<S>                                                                                      <C>
         Net sales                                                                       $ 48,266

         Cost of goods sold                                                                75,635
                                                                                          -------
                                                                       GROSS LOSS         (27,369)

         Selling, administrative and general expenses                                       5,686
                                                                                          -------
         Loss before income taxes                                                         (33,055)

         Income tax benefit                                                                13,222
                                                                                          -------
                                                                         NET LOSS        $(19,833)
                                                                                         ========
</TABLE>




         The above-cited business segment ceased accepting new business during
         January 1999 and, accordingly, the assets used in the commercial
         production and distribution of photocopier drums were written down to
         their estimated net realizable value as of January 31, 1999. The charge
         to discontinued operations had no effect on the cash flow of the
         Company and increased net loss per common share for fiscal 1999 by
         $.05. The write-off of identifiable assets used in the production of
         the photocopier drums was as follows:



<TABLE>
<CAPTION>
<S>                                                                           <C>
         Inventories                                                          $ 85,902
         Equipment, net of accumulated depreciation of $255,109                292,744
         Purchased and developed technology, net of accumulated
           amortization of $40,443                                              39,117
         Organization costs, net of accumulated amortization of $6,346           6,135
                                                                              --------
                                                                               423,898
         Less income tax benefit                                                49,725
                                                                              $374,173
                                                                              ========
</TABLE>



                                      F-27
<PAGE>


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

        None

                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSON.
----------------------------------------------------------------------

A.       DIRECTORS

The following individuals are the current directors of the Company who will hold
office for a term expiring in 2001 or until their successors are duly elected
and qualify.

<TABLE>
<CAPTION>
                          NAME AND BACKGROUND                                             DIRECTOR
                          -------------------                                             SINCE
                                                                                          --------
<S>                                                                                       <C>
  CAMILLE COTRAN, age 55, has over 30 years of experience in the photocopy                1999
  industry since 1966 when he worked for a local photocopy dealer as
  Account Manager. From 1973 to 1979, he held the position of Vice-President,
  Manufacturing at Cancoat Papers specializing in the manufacture of zinc oxide
  photocopy papers. In 1979 Mr. Cotran founded Densigraphix Kopi inc. which
  became a major player in the imaging industry in North America and abroad
  selling compatible toners for copiers and laser printers. Mr. Cotran is
  Chairman and President of Densigraphix Kopi inc.

  LOUISE VAILLANCOURT-CHATILLON, age 48, is President of LVConseils                       1999
  Institutionnels inc. which provides corporate services to small and
  medium sized corporations in Canada and abroad. Mrs.Chatillon has extensive
  legal and management experience acquired in various positions held from 1975
  to 1995. She was Vice-President, Legal Affairs and Secretary of the National
  Bank of Canada until she was appointed Secretary of the Bank of Canada in 1988
  and subsequently acquired additional responsibilities as Adviser to the
  Governor in 1989. In 1992 Mrs. Chatillon was appointed Director of the Ecole
  Polytechnique de Montreal responsible for financial services and property
  administration. Mrs. Chatillon is a member of the Board of Directors of the
  Trust Company of Bank of Montreal and of Sel-Drum International, Inc. Mrs.
  Chatillon graduated from the University of Ottawa with a B.C.L. and LL.B and
  is a member of the Bar of Quebec.

  JOHN BROHMAN, age 45, is Vice-President, Sales of Densigraphix Kopi inc. since          1999
  1980. Prior to that he was Sales Manager of Cancoat Papers specializing
  in the manufacture of zinc oxide photocopy papers. Mr. Brohman has 22 years
  experience in the imaging related industry. He was instrumental in introducing
  in 1990 the line of laser products which was a major step forward to
  Densigraphix revenue. Mr. Brohman holds a B. Com. Degree from Concordia
  University.
</TABLE>

B.       EXECUTIVE OFFICERS

The Company is currently served by three executive officers, who are elected
annually by the Board of Directors and serve until their successors are elected
and qualify:

CAMILLE COTRAN, age 55, is Chairman of the Board and Chief Executive Officer
since July 30, 1999. Mr. Cotran began his career in the photocopy industry since
1966 working for a local photocopy dealer as Account Manager. From 1973-1979 he
was Vice-President, Manufacturing for Cancoat Papers manufacturing zinc oxide
photocopy papers. In 1979 Mr. Cotran founded Densigraphix Kopi inc. which became
a major player in the imaging industry in North America and abroad selling
compatible toners for copiers and laser printers.

RAYMOND C. SPARKS, age 50, has been the Company's President and Chief Executive
Officer since November 1, 1997. Since July 30, 1999 he was appointed President
and Chief Operating Officer. From 1993 to 1997, Mr.


                                      13
<PAGE>

Sparks was the President, Chairman of the Board and Chief Executive Officer
of The Village Green Bookstores, Inc., a publicly-held specialty retailer. Mr.
Sparks has eight years of public accounting experience in South Africa with
Ernst & Young and later, with Webb & Company. Since 1979, Mr. Sparks has been
engaged in the retail industry, primarily in supermarket and specialty stores,
in both operational and financial capacities. Mr. Sparks was Financial Director
for Burlington Industries in Cape Town until 1983. From 1983 to 1987, Mr. Sparks
was Divisional Financial Manager for Checkers Supermarkets Ltd. in Cape Town.
Mr. Sparks moved to the United States in 1987, and became Chief Financial
Officer of Checkers Restaurants, Brooklyn, New York. In 1989, he was named Vice
President of Finance at Tie Rack (U.S.) Inc. Mr. Sparks was the Chief Operating
and Chief Financial Officer of Burke & Burke (New York) in 1991. Mr. Sparks was
Vice President of Conston Corporation, an apparel retailer located in
Philadelphia before he joined Village Green in June 1993. Mr. Sparks holds the
professional qualification of Chartered Accountant (C.A.(S.A.)), and was awarded
a Bachelor of Commerce (with honors) degree in Financial Accounting by the
University of Cape Town, South Africa.

JOHN C. HALL, age 57, joined the Company in 1985 as the Financial Manager. On
February 1, 1995, he was appointed Director of Finance, and on November 1, 1997
he was elected Vice President of Finance. Previously, he was employed for five
years by Butler Metals Co., an automotive related company in the position of
Manager of Accounting. Prior to his employment with Butler, he was employed by
T.R.W. in Canada in the capacity of Chief Accountant. Mr. Hall earned his C.M.A.
in 1972.

DIRECTORS' COMPENSATION

Directors are reimbursed for their reasonable expenses incident to travel and
attendance at meetings. Directors do not receive any other compensation for
attendance at meetings. External directors will be paid $4,000 a year.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company believes that all reports required to be filed during or with
respect to Fiscal 2000 by its directors and executive officers were made on a
timely basis. In making this statement, the Company has relied on the written
representations of its directors and executive officers.

ITEM 10. EXECUTIVE COMPENSATION
-------------------------------

Shown on the table below is information on the annual and long-term compensation
for services rendered to the Company in all capacities, for the fiscal years
ended July 31, 2000, 1999 and 1998, paid by the Company to those persons who
served as the Chief Executive Officer and each other person who was an executive
officer of the Company at July 31, 2000, whose salary and bonus exceeded
$100,000 (collectively, the "Named Executives").

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                  ANNUAL COMPENSATION                        LONG TERM
                                      ----------------------------------------------        COMPENSATION
NAME AND                    YEAR      SALARY ($)(1)  BONUS  ($)(1)      OTHER ANNUAL      OPTION GRANTS #       ALL OTHER
PRINCIPAL POSITION                                                      COMPENSATION                          COMPENSATION
<S>                         <C>         <C>             <C>                   <C>                <C>               <C>
Camille Cotran              2000(2)        -0-           -0-                 -0-                -0-               -0-
Chairman and Chief          1999           -0-           -0-                 -0-                -0-               -0-
Executive Officer

Raymond C. Sparks,          2000        $130,000        $39,726              -0-                -0-               -0-
President and Chief         1999        $125,000        $19,729              -0-                -0-               -0-
Operating Officer           1998       $  93,750(3)      -0-                 -0-              250,000             -0-
</TABLE>

(1)   Does not include the value of perquisites and other personal benefits
      because the aggregate amount of such compensation for any year does not
      exceed 10% of the total amount of annual salary and bonus for any Named
      Executive.


                                      14
<PAGE>

(2)   Mr. Cotran is Chairman of the Board and Chief Executive Officer of the
      Company since July 30, 1999.

(3)   Mr. Sparks has served as President and Chief Executive Officer of the
      Company since November 1, 1997. Since July 30, 1999 he was appointed
      President and Chief Operating Officer. Mr. Sparks' Employment Agreement
      with the Company provides for a term of three years, subject to
      termination as provided in the Agreement, and provides that as
      compensation under the Agreement, he will be paid $125,000 (U.S.) annual
      salary. The Employment Agreement also provides for a $25,000 relocation
      allowance, fringe benefits, including health insurance, on terms which may
      be agreed to from time to time by the Company and Mr. Sparks. Pursuant to
      the terms of the Agreement, Mr. Sparks was granted a non-incentive option
      to purchase 250,000 shares of the Company's $.01 par value Common Stock,
      at an exercise price of forty cents ($0.40) per share.

STOCK OPTIONS

Raymond C. Sparks was granted a non-incentive option to purchase 250,000 shares
of the Company's Common Stock pursuant to an Employment Agreement between the
Company and Mr. Sparks. This option was not issued under the 1995 Employee and
Non-Employee Director Stock Option Plan.

OPTION GRANTS IN FISCAL 2000

No stock options were granted to or exercised by the Named Executives during
Fiscal 2000, and the Company has no provision for stock appreciation rights.

Shown below is information with respect to the unexercised option to purchase
Common Stock held by the Named Executive at July 31, 2000.

AGGREGATED OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                  SHARES           VALUE
                               ACQUIRED ON        REALIZED    UNEXERCISED OPTIONS HELD
         NAME                  EXERCISE (#)         ($)              AT FY-END (#)
----------------------         ------------         ---       ------------------------
<S>                                 <C>                       <C>             <C>
                                                              Exercisable     Unexercisable
Raymond C. Sparks                  -0-               -        250,000  (1)         -0-
</TABLE>

The option shown on the table has an exercise price ($0.40 per share) which is
greater than the market value of the common stock at July 31, 2000 ($0.38 per
share) (1).


ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------------------------------------------------------------------------

The following table sets forth certain information as of October 19, 2000
regarding the Common Stock held by (i) each person known to the Company to be
the beneficial owner of more than 5% of the Common Stock, (ii) each director of
the Company, (iii) each "Named Executive" (see "EXECUTIVE COMPENSATION"), and
(iv) all directors and executive officers of the Company as a group.


<TABLE>
<CAPTION>
            NAME AND ADDRESS OF                   NUMBER OF SHARES OF COMMON STOCK      PERCENT OF
            BENEFICIAL OWNER (1)                       BENEFICIALLY OWNED (2)           CLASS (2)
            --------------------                       ----------------------           ---------
<S>                                                           <C>            <C>          <C>
C.Cotran Holding inc.                                         7,173,680      (3)          96.71
Raymond C. Sparks                                               250,000      (4)           3.26
Camille Cotran                                                        0      (3)            -
Louise Vaillancourt-Chatillon                                         0                     -
John Brohman                                                          0      (5)            -
All directors and executive officers as a group               7,423,680                   96.82
(4 persons)
</TABLE>


                                      15
<PAGE>

(1)      The address of each of the directors and executive officers is c/o
         Sel-Drum International, Inc., 501 Amherst Street, Buffalo, New York
         14207-2913.
(2)      As reported by such persons as of October 19, 2000, with percentages
         based on 7,417,500 shares issued and outstanding, except where the
         issuance of shares pursuant to presently exercisable options indicated
         in the other footnotes hereto would increase the number of shares owned
         by such person and the number of shares outstanding.
(3)      Shares owned of record by C.Cotran Holding inc., a Canadian
         corporation controlled by Mr. Camille Cotran.
(4)      A presently exercisable option to purchase 250,000 shares of Common
         Stock at $0.40 per share.
(5)      John Brohman is Vice-President, Sales at Densigraphix Kopi inc. a
         Canadian corporation controlled by Mr. Camille Cotran.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

PREFERRED STOCK

On July 30, 1999, a Stock Sale and Purchase Agreement provided for the
acquisition by Densigraphix Kopi inc. of 1,324 Class C shares of Preferred Stock
representing 83% of the issued and outstanding Class C shares of Sel-Drum
Imaging Corporation held by Robert E. Asseltine and 264 Class C shares of
Preferred Stock representing 17% of the issued and outstanding Class C shares of
Sel-Drum Imaging Corporation held by Geraldine Asseltine. In addition the said
Agreement also provided for the acquisition by Densigraphix Kopi inc. of 4,599
Class D shares of Preferred Stock representing 100% of the issued and
outstanding Class D shares of Sel-Drum Imaging Corporation held by Brian F.
Turnbull.

LEASES

Mr. Asseltine, through Reaton Leasing Ltd., a corporation he controls, leases to
the Company a 12,000 square foot facility at 1890 Dayton Street for one of the
Company's facilities in Kelowna, British Columbia. Annual lease payments are
approximately $52,000 per year.

The Company leases its 21,600 square foot Burlington facility from a company
controlled by Mr. Turnbull pursuant to a lease terminating in February 2004.
Annual lease payments are approximately $78,000.

CONTRACT FOR SERVICES

A contract for services between C.Cotran Holding inc.("Holding") and Seldrum
Corporation (the "Corporation") dated August 1, 1999 provides for consulting,
advisory, support and administrative services to be rendered by Holding to the
Corporation in payment of $150,000 CDN to Holding annually. The Corporation is a
subsidiary of Sel-Drum Imaging Corporation which is a wholly owned subsidiary of
Sel-Drum International, Inc. Holding is the majority shareholder (owning 97% of
the Common Stock ) of Sel-Drum International, Inc. This contract was amended as
of September 15, 2000 to increase the amount of the payment by the Corporation
to Holding from $150,000 to $300,000 CDN for the year ended July 31, 2000.


LOANS AND NOTES RECEIVABLE

Loan to Densigraphix Kopi, inc. by Sel-Drum Corporation, in October 1999, in
an amount of US $1,009,500 ($1,500,000 Canadian dollars). The Note receivable
from Densigraphix Kopi, inc. carries an interest rate of prime plus 1% and no
principal repayment terms. Densigraphix Kopi, inc. is a Canadian corporation
controlled by Mr. Camille Cotran who is the Chairman and CEO of the Company.
Sel-Drum Corporation is a subsidiary of Sel-Drum Imaging Corporation, which
is a wholly owned subsidiary of the Company.

Loan by Sel-Drum Corporation (USA), Inc. of US $550,000 in March 2000, to C.
Cotran Holding, inc. Note receivable from C. Cotran Holding, inc. carries
interest rate of prime minus 1% and no principal repayment terms. Sel-Drum
Corporation (USA), Inc. is a subsidiary of Sel-Drum Imaging Corporation which
is a wholly owned subsidiary of the Company. C. Cotran Holding, Inc. is a
majority shareholder (owning 97% of the Common stock of the Company.


                                      16

<PAGE>

ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

        (a)   See Index to Exhibits

        (b)   Reports on Form 8-K

There was no report on Form 8-K filed for the last quarter of the fiscal year
ended July 31, 2000.


                                      17

<PAGE>


SIGNATURES

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

                              SEL-DRUM INTERNATIONAL, INC.


Dated:  October 27, 2000      By: /s/ Camille Cotran
                                 -----------------------------------------------
                                       Camille Cotran, Chairman of the Board
                                       and Chief Executive Officer
                                       (Principal Executive Officer)


        In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
        SIGNATURE AND TITLE                                    DATE
        -------------------                                    ----
<S>                                                            <C>
/s/ Camille Cotran
---------------------------------                              October 27, 2000
Camille Cotran, Director


/s/ John Brohman
---------------------------------                              October 27, 2000
John Brohman, Director


/s/ Louise Vaillancourt-Chatillon
---------------------------------                              October 27, 2000
Louise Vaillancourt-Chatillon, Director
and Secretary


/s/ John C. Hall
---------------------------------                              October 27, 2000
John C. Hall
Vice President - Finance  (Principal Accounting Officer)
</TABLE>




                                      18
<PAGE>


INDEX TO EXHIBITS


  (2)    PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
         SUCCESSION

         Not applicable.

  (3)     (A)       ARTICLES OF INCORPORATION

                    Articles of Incorporation are incorporated herein by
                    reference to Exhibit 3.1 to the Registrant's Form 10-KSB
                    filed for the fiscal year ended July 31, 1996.

          (B)       BY-LAWS

                    By-laws are incorporated herein by reference to Exhibit 3.2
                    to the Registrant's Form 10-KSB filed for the fiscal year
                    ended July 31, 1996.

  (4) INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS, INCLUDING INDENTURES

          (A) The documents listed under Item (3) of this Index are incorporated
herein by reference.

  (9)    VOTING TRUST AGREEMENT

         Not applicable.

  (10)   MATERIAL CONTRACTS

                    (a)  Employment Contract dated as of November 1, 1997,
                         between Sel-Drum International, Inc., and Raymond C.
                         Sparks is incorporated herein by reference to Exhibit
                         10(a) to the Company's Form 10-QSB for the quarter
                         ended January 31, 1998.

                    (b)  Non-Incentive Stock Option Grant granted as of November
                         3, 1997, by Sel-Drum International, Inc., to Raymond C.
                         Sparks is incorporated herein by reference to Exhibit
                         10(b) to the Company's Form 10-QSB for the quarter
                         ended January 31, 1998.

                    (c)  Sel-Drum International, Inc. 1995 Employee and
                         Non-Employee Director Stock Option Plan is incorporated
                         herein by reference to Exhibit 99.1 to the Company's
                         Registration Statement on Form S-8 (Registration No.
                         333-57885).

                    (d) Stock Sale and Purchase Agreement among the Selling
                        Shareholders of Sel-Drum International, Inc and
                        Densigraphix Kopi inc, and C.Cotran Holding inc. dated
                        July 10, 1999 is incorporated herein by reference to
                        Exhibit 2.1 to the Company's Report on Form 8-K dated
                        July 30, 1999.

                    (e) Offering Letter by the National Bank of Canada to
                        Sel-Drum International inc. is incorporated herein by
                        reference to Exhibit 10 (e) to the Company's Report on
                        Form 10 KSB for the fiscal year ended July 31, 1999.

  (11)   STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS

         Computation can be clearly determined from the Financial Statements and
         Notes thereto included herein.

  (13)   ANNUAL OR QUARTERLY REPORTS, FORM 10-Q AND FORM 10-QSB

         Not applicable.

  (16)   LETTER ON CHANGE IN CERTIFYING ACCOUNTANT



                                      19
<PAGE>

         Not applicable.

(18)     LETTER ON CHANGE IN ACCOUNTING PRINCIPLES

         Not applicable.

*(21)    SUBSIDIARIES OF THE REGISTRANT

(22)     PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO VOTE

         Not applicable.

*(23)    CONSENT OF EXPERTS AND COUNSEL

         23.1  Consent of Mengel, Metzger, Barr & Co. LLP

(24)     POWER OF ATTORNEY

         Not applicable.

*(27)    FINANCIAL DATA SCHEDULE

         The Financial Data Schedule is included herein as Exhibit 27.

(99)     ADDITIONAL EXHIBITS

         Not applicable.


* Exhibit filed with this Report




                                      19