UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 20-F

ANNUAL REPORT

FISCAL YEAR ENDED JUNE 30, 2003



[ ]    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)

OF THE SECURITIES EXCHANGE ACT OF 1934



OR

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934



OR

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ________



Commission file number: 0-20412



INTERNATIONAL BARRIER TECHNOLOGY INC.

(Exact name of Registrant as specified in its charter)



Ontario, Canada

(Jurisdiction of incorporation or organization)



750 West Pender St., #604, Vancouver, British Columbia  V6C 2T7

(Address of principal executive offices)



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

None



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

Common Shares, without par value

(Title of Class)



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



Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.   18,638,355



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



Indicate by check mark which financial statement item the registrant has elected to follow:                                  Item 17 xxx   Item 18 ___



Page 1 of 70

Index to Exhibits on Page 47

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INTERNATIONAL BARRIER TECHNOLOGY INC.

ANNUAL REPORT

FISCAL 2003 ENDED JUNE 30, 2003





TABLE OF CONTENTS





PART I



Item 1.  Identity of Directors, Senior Management and Advisors...........   3

Item 2.  Offer Statistics and Expected Timetable.........................   3

Item 3.  Key Information.................................................   3

Item 4.  Information on the Company......................................   9

Item 5.  Operating and Financial Review and Reports......................  22

Item 6.  Directors, Senior Management and Employees......................  29

Item 7.  Major Shareholders and Related Party Transactions...............  36

Item 8.  Financial Information...........................................  38

Item 9.  The Offer and Listing...........................................  39

Item 10. Additional Information..........................................  43

Item 11. Quantitative and Qualitative Disclosures About Market Risk......  44

Item 12. Description of Securities Other Than Equity Securities..........  44





PART II



Item 13. Default, Dividend Arrearages and Delinquencies..................  45

Item 14. Material Modifications to the Rights of

Security Holders and Use of Proceeds...........................  45

Item 15. Controls and Procedures.........................................  45

Item 16. Reserved

Item 16A.  Audit Committee Financial Expert                                46

Item 16B.  Code of Ethics                                                  46

Item 16C.  Principal Accountant Fees and Services                          46

Item 16D.  Exemptions from the Listing Standards for Audit Committees      46





PART III



Item 17. Financial Statements............................................  46

Item 18. Financial Statements............................................  46

Item 19. Exhibits........................................................  47





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PART I





ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT, AND ADVISORS

Not Applicable



ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable





ITEM 3.  KEY INFORMATION



3.A.1.  Selected Financial Data

3.A.2.  Selected Financial Data

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with US GAAP, except as discussed in footnotes to the financial statements.



The selected financial data of the Company for Fiscal 2003, Fiscal 2002, and Fiscal 2001 ended June 30th was derived from the financial statements of the Company which have been audited by Amisano Hanson, independent Chartered Accountants, as indicated in their audit report which is included elsewhere in this Annual Report.  The selected financial data set forth for Fiscal 2000 and Fiscal 1999 ended June 30th are derived from the Company's audited financial statements, not included herein.



The selected financial data should be read in conjunction with the financial statements and other financial information included elsewhere in the Annual Report.



The Company has not declared any dividends since incorporation and does not anticipate that it will do so in the foreseeable future.  The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.



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Table No. 1 is derived from the financial statements of the Company, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with US GAAP, except as disclosed in footnotes to the financial statements.



Table No. 1

Selected Financial Data

(CDN$ in 000, except per share data)

______________________________________________________________________________

______________________________________________________________________________

Year       Year       Year       Year       Year

Ended      Ended      Ended      Ended      Ended

6/30/2003  6/30/2002  6/30/2001  6/30/2000  6/30/1999

Sales Revenue               $2255      $1860      $1496      $1643      $1514

Operational Profit (Loss)     $47      ($317)     ($454)     ($299)     ($218)

Net Income (Loss)             $47      ($317)     ($454)     ($299)     ($350)

Income (Loss) per Share     $0.00     ($0.03)    ($0.04)    ($0.04)    ($0.06)

Dividends Per Share         $0.00      $0.00      $0.00      $0.00      $0.00



Wtg. Avg. Shares (000)      14057      12415      10878       8374       5964

Period-end Shares O/S       18638      13138      12538      10240       6009

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Working Capital             ($245)     ($704)     ($564)     ($433)     ($705)

Long-Term Debt                $78       $161        149        212        148

Capital Stock              $11649     $11029      10969      10733      10070

Shareholders Equity        ($208)     ($874)      (618)      (313)      (685)

Total Assets                 1306       1210       1398       1564       1373

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(1)  Fiscal 2002 and Fiscal 2001 results restated to conform to Fiscal 2003

presentation format.

(2)  There are no material numerical differences in reported result under US GAAP

than under Canadian GAAP for the last three years.

______________________________________________________________________________

______________________________________________________________________________





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3.A.3.  Exchange Rates

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$).  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).



Table No. 2 sets forth the rate of exchange for the Canadian Dollar at the end of the five most recent fiscal periods ended June 30th, the average rates for the period, and the range of high and low rates for the period.  The data for each month during the previous six months is also provided.



For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The table sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar.  The average rate means the average of the exchange rates on the last day of each month during the period.



Table No. 2

U.S. Dollar/Canadian Dollar

_____________________________________________________________________________

_____________________________________________________________________________

Average     High     Low   Close

November 2003                                           1.34     1.30    1.30

October 2003                                            1.35     1.30    1.32

September 2003                                          1.39     1.35    1.35

August 2003                                             1.41     1.38    1.39

July 2003                                               1.41     1.34    1.41

June 2003                                               1.38     1.33    1.36

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Fiscal Year Ended 6/30/2003                    1.50     1.60     1.33    1.36

Fiscal Year Ended 6/30/2002                    1.57     1.61     1.51    1.52

Fiscal Year Ended 6/30/2001                    1.62     1.58     1.46    1.52

Fiscal Year Ended 6/30/2000                    1.47     1.51     1.44    1.48

Fiscal Year Ended 6/30/1999                    1.51     1.57     1.44    1.51

_____________________________________________________________________________





3.B.  Capitalization and Indebtedness

3.C.  Reasons For The Offer And Use Of Proceeds

Not Applicable



3.D.  Risk Factors

Barriers business is based on the premise that building projects occasionally require fire resistive performance.  Whether based on a requirement of a national or local building code, the possibility for lower insurance rates, or simply the desire for safety by a building owner, Barriers health as a manufacturing company is based on a demand for resistive building products.  Any factor that could mitigate the demand for fire resistive construction could have a negative impact on Barrier.  On the other hand, any factor that would increase the demand for fire resistive building products could have a positive impact.



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Accomplishing Barriers objectives presumes that there will always be a demand for fire-resistant building products.  This demand may be derived either from a mandate in a national or local building code, or simply a desire by a building owner to lower insurance rates or increase his feeling of security related to the building project.  It is felt that the risk of losing business as a result of a relaxation in building code requirements or building owners desire is very low.  On the contrary, it seems that media coverage of fire damage and loss of property and life has only served to increase the awareness of the need for more (not less) fire safety in building products.



Barrier suffers a larger risk in the possibility that a new generation of technology that will impart fire resistance to building products may be developed.  New technology may serve to decrease the demand for Barriers Blazeguard product if the new technology proved to impart either better characteristics of fire performance or was found to be less expensive to produce and market than Blazeguard.  Barriers management team makes a concerted effort to stay abreast of new technologies as they are being developed.  Barrier does this by staying in close contact with the industry via trade associations (e.g. The National Association of Home Builders, NAHB) and the independent research laboratories that are asked to test these new technologies and products as they are developed.  New technologies require years of testing, not only in development, but in use, before they are accepted and evaluated for use by the major building code agencies such as BOCA, SBCCI, and ICBO.



Barriers business is directly related to housing/building starts in the Unites States.  Any factor resulting in a slowdown of economic activity, especially those that result in a increase in interest rates will have a negative impact on Barriers business.  Recently the economic climate in the US has been very positive in its relation to housing/building starts.  The aggressive Federal Reserve has been committed to keeping the economy healthy by maintaining low interest rates.  This increases the incentive for capital development (housing starts) and keeps the demand for Barriers products growing ever stronger.  Should this economic climate change, however, and interest rates were to be increased, there would be a direct impact on housing/building starts and therefore, Blazeguard sales as well.



Barrier presumes that corporate growth will be funded both out of positive cash flow and from the occasional sale of equity to help generate needed capital.  The business plan, however, anticipates a few years of very rapid sales volume increases.  Companies experiencing rapid growth depend upon solid support both in the market place and in the manufacturing facilities themselves.  Insuring that capital is available to increase production capacity and to provide support materials and training in the market place is essential to success.



The Company has had a history of losses and there is no assurance that it can reach profitability in the future.  The Company will require significant additional funding to meet its business objectives.  Capital will need to be available to help expand not only the production capacity of the corporation but also to improve market penetration and sales through an increasing distribution network.  The Company may not be able to obtain additional financing on reasonable terms, or at all.  If equity financing is required, as expected, then such financings could result in significant dilution to existing shareholders.



Barrier is relatively thin in its management and sales team.  As a start-up company, Barrier has intentionally kept the number of middle and upper management and sales people at a minimum in an effort to conserve financial resources.  As the company grows it will be essential to have new talent emerging to help provide leadership in the factories of production and in the market place to introduce the products to new markets:  both in geography and in use.  As long as the management/sales team is thin, the impact of losing a key player is very large.  As the company grows and more talent is trained and has gained experience, this risk will be mitigated.



Despite the Companys Secretary/Administrator spending material portions of this time on businesses other than the Company, the Company believes that he devotes sufficient time to the Company to properly carry out his duties.



Barrier relies on key relationships with industry leaders to maintain its position in the market place.  Barrier is dependent upon suppliers to provide key elements of production at critical times at reasonable prices.  While the majority of these materials are readily available and abundant, without quality suppliers providing reasonable terms of sales, Barrier would not be able to stay in business: there would be no operating or working goods of production to use in the manufacturing process.



Additionally, Barrier has no current outside sales force to use to generate and maintain market share for their products.  Barrier relies on the outside sales force of the existing distribution network to cover that function.  If Barrier should lose the assistance of the distribution network, it would have an immediate and negative impact on sales.  While Barrier remains in a growth mode and has kept a thin sales and marketing team this dependence upon the distribution network will remain.



Broker-Dealers May Be Discouraged From Effecting Transactions In Our Common Shares Because They Are Considered Penny Stocks And Are Subject To The Penny Stock Rules

Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on NASD broker-dealers who make a market in "a penny stock".  A penny stock generally includes any non-NASDAQ equity security that has a market price of less than US$5.00 per share.  Our shares are quoted on the TSX Venture Exchange and the price of our shares ranged from CDN$0.04 (low) to CDN$0.65  (high) during the period from 1/1/2003 to 12/8/2003.  The closing price of our shares on 12/8/2003 was CDN$0.65.  The Common Shares also trade on the NASD Electronic Bulletin Board and the price was US$0.45 on 12/8/2003.  The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.



Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or "accredited investor" (generally, an individual with net worth in excess of US$1,000,000 or an annual income exceeding US$200,000, or US$300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser's written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.



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In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the US Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.



U.S. Investors May Not Be Able to Enforce Their Civil Liabilities Against Us or Our Directors, Controlling Persons and Officers

It may be difficult to bring and enforce suits against the Company.  The Company is a corporation incorporated in the province of British Columbia under theBritish Columbia Company Act.  A majority of the Company's directors must be residents of Canada, and all or a substantial portion of their assets are located outside of the United States.  In addition, a portion of the Company's assets are located in Canada.  As a result, it may be difficult for U.S. holders of our common shares to effect service of process on these persons within the United States or to realize in the United States upon judgments rendered against them.  In addition, a shareholder should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or other laws of the United States.



However, U.S. laws would generally be enforced by a Canadian court provided that those laws are not contrary to Canadian public policy, are not foreign penal laws or laws that deal with taxation or the taking of property by a foreign government and provided that they are in compliance with applicable Canadian legislation regarding the limitation of actions.  Also, a judgment obtained in a U.S. court would generally be recognized by a Canadian court except, for example:



a) where the U.S. court where the judgment was rendered had no jurisdiction

according to applicable Canadian law;

b) the judgment was subject to ordinary remedy (appeal, judicial review and

any other judicial proceeding which renders the judgment not final,

conclusive or enforceable under the laws of the applicable state) or not

final, conclusive or enforceable under the laws of the applicable state;

c) the judgment was obtained by fraud or in any manner contrary to natural

justice or rendered in contravention of fundamental principles of

procedure;

d) a dispute between the same parties, based on the same subject matter has

given rise to a judgment rendered in a Canadian court or has been

decided in a third country and the judgment meets the necessary

conditions for recognition in a Canadian court;

e) the outcome of the judgment of the U.S. court was inconsistent with

Canadian public policy;

f) the judgment enforces obligations arising from foreign penal laws or

laws that deal with taxation or the taking of property by a foreign

government; or

g) there has not been compliance with applicable Canadian law dealing with

the limitation of actions.

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ITEM 4.  INFORMATION ON THE COMPANY



4.A. History and Development of the Company



Introduction

International Barrier Technology Inc. and its subsidiaries are collectively hereinafter referred to as the "Company".



Incorporated in July 1986, pursuant to agreements, the Company acquired the rights to the Pyrotite Technology for Canada in July 1986 and for the United States in March 1992.  The Canadian rights and the US rights under the 1992 agreement were voluntarily terminated in January 1996 due to marketing conflict with a corporation which acquired the licensors rights to the technology.  A new agreement for the rights in the United States was signed in January 1996 and revised in March 1996.  The Company completed construction of a new manufacturing facility in Minnesota, USA in December 1995; the facility was upgraded to include substantial automation, increased capacity and product quality in April/May 2000.



The Company has been involved in the development and manufacturing/marketing of fire-rated building products since 1986, including current products: Pyrotite, a fire-barrier material comprised of the patented formulation reinforced with chopped fiberglass strands and applied by customers directly to wood sheathing designed to prevent ignition and inhibit the spread of flames; and Blazeguard®, a composite fire-rated panel, composed of a coating of the patented formulation adhered to a layer of structural sheathing or oriented strand board (OSB).



The Companys executive office is located at:

750 West Pender Street, #604

Vancouver, British Columbia, Canada  V6C 2T7

Telephone: (604) 689-0188

Facsimile: (604) 689-9773.

e-mail: naramataresorts@home.com

website: www.intlbarrier.com



The Companys registered office is located at:

1750, 750 West Pender St., Vancouver, BC, Canada  V6C 2T8

Telephone: (604) 681-1194; and

Facsimile: (604) 681-9652.



The contact person is:

David Corcoran, Director and Corporate Secretary-Administrator.



The Company's fiscal year ends June 30th.



The Company's common shares trade on the TSX Venture Exchange under the symbol "IBH" and on the NASD Electronic Bulletin Board under the symbol IBTGF.OB.



The Company has 100,000,000 no par common shares authorized.  At 6/30/2003, the end of the Company's most recent fiscal year, there were 18,635,355 common shares issued and outstanding.





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History and Development



Incorporation and Name Changes

The Company was incorporated in British Columbia under the British Columbia Company Act on 7/10/86 under the name "Barrier Technology Inc.; the name was changed to International Barrier Technology Inc. on 3/11/1996.



Subsidiaries:

The Company has two wholly-owned subsidiaries:

a) Pyrotite  Coatings  of Canada Inc.

incorporated in British Columbia on 7/10/1986

b) Barrier Technology Corporation

incorporated in Minnesota, USA on 5/8/1996



Existing Marketing/Licensing Agreements

1. US License Agreement for Pyrotite Technology made between International

Barrier Technology, Inc. Pyrotite Coatings of Canada, Inc., and Pyrotite

Corporation dated January 1, 1996.

2. Japanese territory expansion license dated July 1, 1999.



Pursuant to a revised License Agreement dated 1/1/1996 with Pyrotite Corporation (Licensor) the Company is required to pay a royalty of 3% of USA fire-retardant product gross sales utilizing the Pyrotite Technology, minimum US$100,000 per year from 1/1/1996 onward.  The Company has granted to Licensor the rights to certain technology referred to as IPOSB Technology.  The Licensor is required to pay the Company a royalty of 3% of USA gross sales from the IPOSB Technology, minimum of US$50,000 per year from 1/1/1996 onward.



Financings

The Company has financed its operations through borrowings and/or private issuance of common shares:



Fiscal 1999:   warrant exercise,         135,200 shares, $ 20,820



Fiscal 2000:   private placement,      2,000,000 shares, $300,000

conversion of debt,       679,518 shares, $135,904

shares for debt,        1,551,495 shares, $232,724



Fiscal 2001:   stock option exercise,    855,000 shares, $ 91,500

warrant exercise,       1,443,417 shares, $144,342



Fiscal 2002:    stock option exercise,    600,000 shares, $ 60,000



Fiscal 2003:    shares for debt,        2,000,000 shares, $300,000

private placement,      3,500,000 shares, $350,000



Fiscal 2004 to date:

private placement,      1,000,000 shares, $300,000

finders fee,              100,000 shares, $    nil

stock option exercise      21,500 shares, $  2,150



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Capital Expenditures

1998: $   88,601, predominately for capital assets in USA,  railroad spur

improvements financed by additions to capital lease.



1999: $      600, predominately for miscellaneous shop equipment in USA



2000: $  262,114, predominately for capital assets in USA, including

automatic spray guns for production line along with

additional curing oven space; financed by equity sales and

secured loan.



2001: $       $0, ----

2002: $       $0, ----



2003  $   20,016, purchase of capital assets

$   73,390, technology rights



4.B.  BUSINESS OVERVIEW



Company Overview

Barrier obtained the Canadian license rights to the patented Pyrotite technology in 1986 with the goal to develop economically feasible alternatives to fire treated wood building products.  Through the license agreement, Barrier had obtained the exclusive right to manufacture, market and sell in Canada, and a non-exclusive right to market and sell in the US.  After an initial R&D phase where an effective fire barrier laminate was developed for use with wood panel products, Barrier began an association with the Weyerhaeuser Company late in 1989.



Barrier approached Weyerhaeuser, one of the leading producers of wood products in North America, with the Pyrotite Technology and the opportunity of combining it with wood products for sale in North America.  Barrier and Weyerhaeuser did not have a joint venture relationship; but, Barrier granted Weyerhaeuser an exclusive right to sell and market Barriers Pyrotite products developed and manufactured by Barrier in Canada.  Weyerhaeuser developed the Blazeguard® product and registered trademark in response to this development.



The association with Weyerhaeuser resulted in the development of the first surface applied fire treatment to pass the stringent fire testing requirements for a structural building sheathing.  Weyerhaeuser, as part of this endeavor, tested over 80 other emerging technologies for fire treated wood and concluded Pyrotite technology was superior.  Blazeguard® fire rated sheathing was first introduced to the US building products market by Weyerhaeuser in 1990.  In honor of BlazeguardsÒ innovative approach to fire treatment, Barrier and Weyerhaeuser received the coveted Best of Whats New award for new technology by Popular Science in 1991.



Although Weyerhaeuser was purchasing all of its Pyrotite laminate from Barrier in Canada, they separately negotiated with Pyrotite Corporation the exclusive right to manufacture and sell in the USA and a non-exclusive right to market and sell Pyrotite products in the US.  As part of a cyclical restructuring in 1992, Weyerhaeuser elected not to pursue Pyrotite manufacturing in the US and agreed to released and sell to Barrier all of its USA rights to the Pyrotite technology and the Blazeguard(R) product, including the trademark registration, and test results.



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Once Barrier had secured the US rights to the Pyrotite Technology from Weyerhaeuser, a renegotiation with Pyrotite Corporation was begun.  This renegotiation resulted in a new license agreement dated 4/1/1996, which gave Barrier the singular and exclusive rights to use the patented Pyrotite technology in the US building products industry.  The way in which Barrier utilizes the technology is further delineated in the process-oriented patents.



Barrier now manufactures BlazeguardÒ in a newly constructed manufacturing facility in Watkins, Minnesota.  Current markets include: multifamily roof deck applications; the thermal barrier for structural insulated panels (SIPs); commercial roof deck applications; fire-rated wall assemblies and, specialty markets such as electrical panel boxes for the telecommunications industry.



The term Pyrotite technology refers to a patented process of producing fire-resistant building materials.  The term PyrotiteÔ refers to the generic product/material that results when all of the ingredients delineated in the patent are mixed together.  When Pyrotite is applied to building products, such as plywood or oriented strand board sheathing (OSB), the original sheathing is rendered resistant to fire.  The composite material, the sheathing coated with Pyrotite, has been trademarked Blazeguardâ fire-rated sheathing.



The 1996 license obtained by Barrier gives Barrier the exclusive right to use the patented Pyrotite technology in the US building products industry.  Barrier owns the rights to the registered Trademark Blazeguard.  The way in which Barrier utilizes the technology is how it is delineated in the process-oriented patents.  No one else has the right to use this technology in this, or any other manner.



Production

In order to reduce costs, increase manufacturing productivity, improve Blazeguard® quality, and centralize the sales, marketing and office operations, Barrier has phased out the manual production of Blazeguard® and consolidated operations in a newly constructed 22,000 sq. ft. production facility in Watkins, Minnesota, USA.  The building was designed to Barriers specifications and is serviced by nearby inter-state highways and a spur on CP Rail.  The new Blazeguard® manufacturing facility is now capable of producing 24 million sq. ft. of Blazeguard® annually following product line improvements completed in the spring of 2000.



Competitive Advantage

As would be expected in any industry whose markets are of such importance to human life and safety, the research and development requirements of fire retardant materials for applications in building construction are very costly, time consuming and extensive.  There are very few products in the development and testing stages which are targeted at the same markets as Blazeguard®.  Blazeguard® has obtained code evaluation reports and product listings from BOCA, SBCCI ICBO, Underwriters Laboratories, and Omega Point Laboratories.  Blazeguard® and the Pyrotite technology are protected by patents worldwide.  To the best of Barriers knowledge, there are no other products currently available, at a competitive cost to BlazeguardÒ, that are capable of meeting relevant building code standards in the target markets mentioned.  Based on the foregoing, Barrier believes significant market opportunities continue to exist for Blazeguard® and for Barriers Pyrotite technology.

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There exist three major Model Building Codes in the United States.  Each of these building codes is administered by an affiliated agency whose purpose it is to provide both interpretations of the code, and the products being used to satisfy the codes respective requirements.  Products evaluated for suitability under the building code are issued an Evaluation Services Report which specifies how the product has been evaluated for use.  These reports are significant because they are costly and time-consuming to obtain and are only issued to products that have passed the most stringent tests of use and performance.  The evaluation services reports allow local building code officials and building inspectors to use evaluated products with confidence.



Blazeguard technology has been evaluated and received reports by all three of the model building codes:

National Building Code (NE US)  administered by the Building Officials & Code Administrators, Inc. (BOCA) located in Country Club Hills, IL;

Standard Building Code  (SE US)  administered by the Southern Building Code Congress International (SBCCI) in Birmingham, AL;

Uniform Building Code (western US)  administered by the International Conference of Building Officials (ICBO) located in Whittier, California.



The building standards being referred to are the ones listed above. They are US standards that are commonly adopted and administered at either/or State and Municipal levels.



Products



Pyrotite

Pyrotite is a non-toxic, non-combustible, inorganic fire barrier material designed to prevent ignition and inhibit the spread of flames.  The base component is a powder consisting of a blended mixture of inorganic cementicious components, which, when mixed with a liquid component, cures to form a solid coating with excellent fire barrier properties.  Products have been researched and tested over twelve years utilizing Pyrotite as a coating, an integral treatment, a structural laminate, a foam, and a cured and pulverised powder, mostly in applications to enhance the fire retardant properties of wood construction materials.



The Pyrotite treatment developed and currently in use by Barrier is comprised of the patented Pyrotite formulation reinforced with chopped fiberglass strands and applied directly to wood sheathing.  The Pyrotite fiberglass coating bonds to the surface of plywood or Oriented Strand Board (OSB).  The coating is chemically inert and does not in any way deleteriously affect the structural properties of the underlying wood.  The composite panel is, in fact, significantly stronger than the substrate to which it has been attached.



Pyrotites fire performance characteristics are created by providing both a non-combustible barrier between fire and the wood substrate and by releasing chemically bound water molecules in the heat of a fire.  Fire endurance properties are enhanced by the chemically bound water molecules locked in Pyrotite.  These water molecules are held by a crystal structure until they are released and immediately transformed into vapor by the high temperatures in a fire.  Each 4' x 8' sheet of 0.045 Pyrotite has been evaluated to contain approximately 2 quarts of water.  As this water is released the fire is cooled temporarily and the transmission of heat through the panel is significantly decreased.  Since Pyrotite is a non-combustible material, flame will not attach to it and the spread of flame along the surface of the panel is zero.

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During the next few years, Barrier intends to direct available resources to research and development activities focused toward spray-on techniques that can occur on-the-job site rather than in a factory.  In addition, Barrier intends to study mold-injection processes that will result in panels comprised of pure Pyrotite 1-3 in thickness.  These thick panels will then be tested in fire-resistant wall assemblies rated for three-four hours duration.



Blazeguard(R)



Product Description.  Blazeguardâ derives its performance attributes directly from the patented Pyrotite technology.  Pyrotite is an inorganic, cementicious type compound that acts as a non-combustible shield between fire and wood.  Additionally, the compound binds water in a tightly held molecular bond, which is released only in the heat of a fire.  The water is released as a cooling vapor, absorbing and cooling the heat of a fire.  As a result, wood panel products are able to achieve a Class A, structural flame spread rating (as measured by ASTM E-84 extended to 30 minutes), and the burn-through resistance rating of wood panels is nearly tripled (measured by ASTM E-119).



During fire treatment, unlike less effective pressure-impregnated, FRT products, Blazeguardâ experiences no loss of strength: in fact the panel is stronger after it is treated.  It is resistant to periodic wetting, so rainstorms on the job site do not require redrying as it does for FRT.  Blazeguardâ waste (from board trimmings) is environmentally friendly and safe for landfill anywhere within the United States.  Blazeguardâ is easy to handle, install, and is resistant to damage.



Blazeguardâ is used in building applications where either a Class A flame spread, or a burn through resistance rating is required by building code, or where building owners desire an added sense of protection from fire.  Insurance rates may be reduced if the fire safety of a building is enhanced by materials like Blazeguardâ.



Its made by coating 4x8, 4x9 or 4x10 plywood or OSB panels with a Its made by coating 4x8, 4x9 or 4x10 plywood or OSB panels with a thin (0.060 - 0.080) ceramic laminate. OSB in sizes up to 8 X 24 can also be treated coated.  Two-sided coating is available.



Locked into the ceramic crystals that make up the laminate of a 4x8 sheet of the coating are no less than two quarts of water.  At elevated temperatures, the laminate begins to release water.  As the temperature rises to 600°F, all the water is released.  As the water is released, the fire is cooled significantly slowing its spread.



Applications.  The administering agencies of the three model building codes listed above rely on certified independent testing agencies to provide unbiased testing and reporting for products being evaluated.  Independent testing laboratories such as Underwriters Laboratories (UL) and Omega Point Laboratories provide the testing and test data required by the evaluation services organizations to conduct their analysis.



Blazeguard has been tested in a variety of situations including fire resistance, flame spread, toxicity, corrosiveness, strength and other criteria deemed important either for building code compliance or for marketing reasons.  When an independent laboratory conducts these tests, and the material passes the relevant test standard, the product may be certified as having met the test standard and then listed in the independent laboratories catalogues as having met the standard.

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Typically, the model building code evaluation services agencies require testing and continuous certification by the independent laboratory to ensure that plant procedures are being followed that insure compliance to the test standards of relevance.  Blazeguard technology and products have been tested by a variety of certified testing laboratories including Underwriters Laboratories and Omega Point Laboratories.  Ongoing listing services are currently provided to Barrier by both UL and Omega Point.



Blazeguard® fire rated sheathing is a structural wood panel that has received certification and independent laboratory listings as a fire resistive material as well as, a structural Class A flame spread panel.  Fire resistive ratings refer to the ability of a material (assembly of materials) to inhibit the pass through of heat or fire.  Flame spread rating, in contrast, is the ability of a material to inhibit the spread of fire along its surface.  Since Blazeguard® is rated as both, it has market opportunities in a variety of applications where fire performance is important.



Fire-rated materials are used in building applications if they are required by code, or, if the property owner desires the added security fire resistive materials can provide.  This added sense of security is enhanced by the possibility of reduced insurance premiums often available for fire resistive construction.



While there are a myriad of possible applications for the Pyrotite technology and Blazeguard®, five main areas have been targeted for marketing and sales in the short term (Schedule A).  These markets, which all have fire rated requirements in the model building code, are:

1. Multi-Family Residential Roof Decks

2. Structural, Insulated Foam Core Panels

3. Fire Resistive, Structural Wall Assemblies

4. Commercial Roof Decks

5. Specialty Applications



AFM Corporation is a company that manufactures and sells building products and a proprietary system of building technology (R-Controlâ).  AFM Corporation manufactures building panels by laminating expended polystyrene (EPS) foam between two layers of OSB sheathing.  The resulting panels are called structural insulated panels (SIPs).  These panels are linked together in a process proprietary to AFM.  Other manufacturers of SIP panels incorporate similar technology under a variety of brand names with separate trademarks.



US model-building codes require SIP panels to have a fire (thermal) barrier to protect the structural integrity of the panel during a fire.  The Pyrotite technology provides this thermal barrier requirement.  In order to differentiate the AFM panel from other Blazeguardâ products in the marketplace, and other SIPs panels, AFM has elected to utilize their own trademark: FireFinishä.  FireFinish and Blazeguard are otherwise and essentially the same.



Barriers relationship with AFM is defined by a supply agreement that provides ongoing details of product specifications, terms of sale, shipping details, as well as provisions for the protection of proprietary technology for both AFM and Barrier.  AFM has also provided short-term low interest loans to help Barrier fund the direct applied and automated improvement capital projects.  These loans were guaranteed by future product sales and equipment purchased during the capital improvement projects.

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Multi-family Residential Roof Decks.Fire retardant treated ("FRT") wood has been a significant component of building construction in the United States for the past decade.  FRT plywood was permitted to meet fire safety requirements for roof sheathing in many areas of the American Midwest, Northeast, and Southeast, to satisfy fire protection requirements for multifamily residential dwellings such as apartments and town homes as well as institutional and commercial buildings.  It was also used to obtain favorable insurance rates for certain other structures.











FRT plywood is plywood that is impregnated with fire retardant chemicals so that it meets strict standards regarding flame spread and progressive combustion.  Various treatment companies carry out the fire retardant treating of plywood by pressure impregnating the plywood after it is manufactured.



Structural, Insulated Foam Core Panels.Rigid foam core panels (also known as structural, insulated foam core panels, or SIPs) provide the basis for a relatively new form of building construction in the United States.  This building construction is done without the use of the more common 2'x4' stud wall construction.  SIPs are formed by laminating 46 of expanded polystyrene (foam) between two sheets of 7/16 OSB.  Panels may be any size from 4x8 to 8x24 in dimension.  The structural strength of SIPs is provided in the skin, or envelope of the building.  It is in the interconnection of these panels, through splines and/or camlocks, that the strength of the building is actually enhanced over stud wall construction.



Advantages of stress skin panel building construction include: improved sheer strength; greater insulation properties (less energy required to heat and cool); less time to construct in-the-field (most of the building construction is completed within a factory); and, a closer match to designed building specifications (enhanced ability to precision build within a factory versus in the field).  All of these factors have served to enable SIP engineered buildings to obtain a greater and greater market share of single family and commercial building construction in the United States.







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Blazeguard® provides an easily shipped, lightweight, impact resistant, paintable, interior wall surface to be used as the interior thermal wall in SIP production.  Blazeguard®, in this application, replaces the use of gypsum wall board as the interior surface of the wall serving as the thermal barrier that is required.  Pyrotite, effectively is the layer that replaces the sheet rock. The 7/16" OSB remains unaffected as the structural membrane of the wall.  Pyrotite, itself, is more expensive that gypsum wall board, but when on site labor, shipping, and repair costs are taken into consideration, Blazeguard® is a very economic and effective alternative.



Uniform surface characteristics of the Pyrotite in addition to the ability to produce jumbo panels (up to 8' x 24'), are very important to the stress-skin panel industry.  Since Pyrotite will provide the interior surface of the walls of the building, having a uniform and attractive surface is considered a necessity for effective marketing in this industry.  Barriers semi-automated, direct applied manufacturing line has been engineered to accommodate jumbo panels as well as to provide for a very acceptable interior wall surface.



Blazeguard® (trademarked FirefinishÔ by AFM) has been utilized in a variety of SIP applications in both commercial and light commercial buildings since the execution of the AFM supply agreement in 1996.  These projects have demonstrated Blazeguards versatility and value to this industry.



Fire Resistive, Structural Wall Assemblies.Fire resistance is the ability of a material or an assembly of materials to prevent or retard the passage or heat or flame.  A fire resistance rating is the time, in minutes or hours, that a material or an assembly will prevent flame or high temperature (an increase of 325°F) from passing through.  Standard fire tests exist which rate either heat transfer through an individual panel or the longevity of a complete wall constructed and placed under load.  These fire tests are among the most stringent with respect to getting building materials accepted for particular uses.  Once completed, however, they provide a very powerful tool for marketing and sales.



Fire resistant wall assemblies are required by code where the containment of fire is desired either between dwellings or use units within a building or between structures.  Examples of where rated fire separation walls are required include: the party wall between units in multifamily residential construction; between a garage and living space in all residential buildings; walls in public buildings such as hospitals, day-care centers, and retirement homes; and, the exterior walls of buildings of defined hazardous use groups; or, the exterior walls of buildings within five feet of a property line.



The fire resistance rating of many fire-rated wall assemblies in the United States is provided through the use of gypsum wallboard (sheet rock).  Sheet rock is a readily available commodity panel product that is relatively inexpensive ($9-$12 per sheet).  As an alternative to Blazeguard®, 1/2" sheet rock has very similar burn through ratings at less than one half the material cost per sheet.  Gypsum wallboard, however, is difficult to handle in some applications and damages easily in use.  Labor cost savings are provided when Blazeguard® is used in some applications which have been shown to offset some of the additional materials cost in comparison to sheetrock.  Generally if both sheetrock and plywood have been designed into a wall Blazeguard® has been found to be a lower cost alternative (labor included).



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Gypsum wallboard has poor impact resistance and has very low structural strength.  Gypsum wallboard, therefore, is only used in structural, load-bearing walls, or in walls that require impact resistance, if it is used in combination with structural sheathing or in combination with bracing techniques such as sway or corner bracing.  FRT is not utilized in fire resistive assemblies because its resistance to burn through is actually no better, and sometimes less, than untreated plywood.



For this reason, FRT cannot compete with Blazeguard® as an alternate structural component in these fire-rated wall assembles.  Blazeguard® is attractive to builders because it provides structural strength, impact resistance and fire resistance all in a one-step application process.  Additionally, Blazeguard® withstands the dynamics of the jobsite environment (rain, heat, and handling) better than either sheetrock or FRT.



Commercial Roof Decks.Most of the materials utilized to build the roof decks in commercial buildings are required to be non-combustible.  There are, however, certain criteria regarding building height, number of stories, square footage, and building use/occupancy that if met, allow the use of alternative products such as FRT as: ...an acceptable material.  In addition to meeting these very specific criteria, which are interpreted differently within each code jurisdiction, these alternative products require the approval of the most local building code official when the building plans are submitted.











Blazeguard® has been used as an alternative to FRT plywood in commercial roof deck applications where FRT had been accepted as an alternative to a non-combustible requirement.  Specific projects include a variety of school buildings as well as the roof deck in the Henry Ford Retirement Complex in Dearborn, Michigan, and the Merck Day-Care Center in Maryland.



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Specialty Applications.In addition to such specialty, value added opportunities such as mezzanine floors, and interior liner panels for remote equipment shelters, Blazeguard® also has continuing opportunity in the area of interior wall surfaces (school corridor walls, prisons, hospitals, etc.) and fire rated packaging.  Surface characteristics are important to interior finish walls, as well as shelving and packaging applications.  Tens of millions of square feet of fire resistant and impact resistant building materials are required for this industry annually.  Blazeguard® provides an attractive and economical alternative to fire rated plastics (Class A FRP); fire rated particleboard, and intumescent paints in these markets.



United States vs. Foreign Sales/Assets

During Fiscal 2003/2002, all sales were in the United States.  During Fiscal 2001, $180,000 of sales revenue was generated in Japan with the rest in the United States.



At 6/30/2003. 6/30/2002 and 6/30/2001, $1,142,503, $1,208,895 and $1,397,536 of the assets were located in the United States and $163,291, $1,096 and $112,520 were located in Canada, respectively.



Seasonality

The building products industry in the United States does experience seasonality with housing starts generally depressed in winter months.  Barriers Blazeguardâ product, however, is sold in housing markets that have excellent winter business, including the state of Florida. Also, much of the modular housing, including the foam core panel market, performs a considerable amount of their required construction inside factories. Since the work is done within protected environments they tend to be less impacted by the winter season than typical building projects. Seasonality, therefore, is not considered to be a major impediment to Barriers success in the US market place.



Dependency upon Patents/Licenses/Contracts/Processes

All of the patents that deal the Pyrotite technology, whether those patents deal with surface applied or integral technology have been assigned to the Pyrotite Corporation.  Neither Barrier, nor its subsidiaries, holds patents.  Patent and technology rights are provided via the 1996 License Agreement with Pyrotite Technology Corporation.  Barrier utilizes patented manufacturing technology that is licensed to them by Pyrotite Corporation, as well as manufacturing know-how and trade secrets that have been developed and are closely protected by Barrier.



The manufacturing process for the BlazeguardÒ product is totally protected by patents, licenses, contracts for sale and trade secrets in the production process.  International Barrier Technology, Inc. and Barrier Technology Corporation are, in that regard, totally dependent upon these things for success in the business.



All employees are required to sign a Confidentiality Agreement that incorporates a do not compete clause.  As these clauses pertain to Barriers employees at the US operations, they have been drafted to conform to the strictest interpretation under Minnesota law.



Through the 1996 License Agreement, Barrier holds the exclusive rights to utilize Pyrotite manufacturing technology in the USA.  Barrier also holds the exclusive right to market and sell Pyrotite products in the USA.  For that right, the license agreement stipulates that Barrier will pay a 5% royalty to Pyrotite Corporation quarterly, with a minimum annual royalty of US$100,000.

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The license agreement segregates the Pyrotite technology into two categories: surface applied and integral.  Surface applied technology refers to a process where Pyrotite materials are applied to the surface of another building material.  Integral technology refers to a manufacturing process where the Pyrotite materials are incorporated uniformly inside the building material as it is being manufactured.  Pyrotite Corporation elected to reserve the rights to the integral technology.  For that right, and for as long as they choose to exercise that right, Pyrotite Corporation reduces the royalty paid by Barrier from 5% to 3% and the minimum annual royalty from US$100,000 to US$50,000.  Additionally, Pyrotite Corporation has agreed to pay Barrier a royalty of 3% of sales on any integrally treated product sold or manufactured in the US.  License fees revenue is recognized when the licensor records the sale of products.



Both companies have the right to sublicense their respective rights to the Pyrotite technology, with approval from the other party.  In other words, Barrier has the right to sublicense the rights to the surface applied products in the USA and Pyrotite has the right to sublicense integral rights as long as the other party provided written permission.  Sublicense agreements have specified royalty fees associated with them.  The fee is 40% of any downpayment and an additional 3% of gross sales due to the other party.



Both companies have the right to sublicense the Pyrotite technology, with approval from the other party.  Sublicense fees carry a 40% royalty payment due to the other party.



Pyrotite Corporation is required to keep all patents in good standing and to protect the patents/technology if it is found that infringements might have occurred.  The license agreement term lasts until 1/1/2015.  After that date, Barrier receives the irrevocable right to utilize the technology royalty free.



Rights to expand the territory defined in the 1996 License were provided in a letter dated 6/1/1999.  Effectively, Barrier was granted the rights to market and sell Pyrotite based products in Japan on a temporary basis with a first right of refusal on the long term rights should another party become interested.  AFM Corporation was defined as Barriers agent in Japan because of their relationship and existing manufacturing presence their.



The territory expansion agreement represented a good faith trial to see if the Pyrotite products might have a significant opportunity in Japan.  While there seemed to be initial interest, sales to Japan have fallen dramatically since January 2001.  As a result, the Japanese market is not considered of material interest at this time.



Barrier is precluded from engaging in competitive business (fire-rated building products that contain a chemical constituency similar to the Pyrotite formulation) for the life of the License Agreement and for three years subsequent to the termination of the License Agreement.  Pyrotite has cause for termination if Barrier does not pay its required royalty, discontinues the manufacturing of the products, or declares bankruptcy.



Sources/Availability of Raw Materials

Material Effects of Government Regulations

All of the raw materials utilized in the manufacturing process are widely available and government regulations concerning these materials or their availability, do not have a material affect on our business.



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4.C. Organization Structure



Incorporation and Name Changes

The Company was incorporated in British Columbia under the British Columbia Company Act on 7/10/86 under the name Barrier Technology Inc.; the name was changed to International Barrier Technology Inc. on 3/11/1996.



Subsidiaries:

The Company has two wholly-owned subsidiaries:

a)  Pyrotite  Coatings  of Canada Inc.

incorporated in British Columbia on 7/10/1986

b)  Barrier Technology Corporation

incorporated in Minnesota, USA on 5/8/1996



4.D.  Property, Plant and Equipment

The Companys executive offices are located in rented premises of approximately 800 sq. ft. at 750 West Pender Street, #604, Vancouver, British Columbia  Canada  V6C 2T7.  The Company began occupying these facilities in August 1992.



The Companys operating and manufacturing facilities are located in leased premises at 510 Fourth Street N., Watkins, Minnesota. Barrier engaged in a 20-year capital lease beginning 6/1/1995.  The lease allows Barrier to purchase the facility for a small transfer fee once the 20-year lease is up and the industrial development bonds the City of Watkins issued to fund the project are paid in full.



The production plant itself is 22,000 sq.ft. with an ample covered loading dock and an active railroad siding.  Attached to the production plant is an office building containing approximately 2,500 sq.ft. of office space and lunch/locker rooms for the hourly employees.  These premises provide adequate space for the near future.



The manufacturing process includes a batch mixing station, an automated spray apparatus, and a set of infra-red curing ovens. The product being treated is carried automatically through the system on conveying chains and rollers.  The line has been designed to run at a maximum of ten lineal feet per minute.  The line has been designed to run materials through at a net width of eight feet.  At full speed, the line has the capacity to produce approximately 10 million sq. ft. per shift.  On three full shifts, operating at 100 percent efficiency, the existing production line could produce nearly 30 million square feet per year.



Currently, the production line is running between 65% and 70% efficient (6.5  7.0 feet per minute).  The slower line speed allows for better quality control and still more than adequately allows Barrier to produce the required amount of product that has been sold to date.  Barrier is confident that as market demand increases there will be sufficient idle capacity to accommodate it in the near term.  Additional lines will be added as the market demands additional capacity.  The existing building has the space for one additional line.  Other capacity will be added in other facilities as needed.  It is presumed that these new facilities will be strategically located near captive markets.



The production process for the Pyrotite technology contains no hazardous or controlled substances that raise environmental concerns.  The majority of materials used in the production of Pyrotite are naturally occurring and are therefore landfillable locally.  Handling instructions for Barriers finished product are no more stringent than those required for handling other wood based building products.

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ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS



The following discussion for the fiscal years ended 6/30/2003, 6/30/2002 and 6/30/2001 should be read in conjunction with the consolidated financial statements of the Company and the notes thereto.



Fiscal 2003 Ended 6/30/2003

International Barrier Technology Inc. (the Company) manufactures and sells fire-rated building materials primarily in the U.S.A.



Salesreported for Fiscal 2003 were $2,254,562, a 21.2% increase over the previous year and record high sales of Barriers fire resistant Blazeguard panels.  Gross profit was up slightly to $487,570.  The gross margin of 21.6% compared to 23.6% in Fiscal 2002.  Barrier realized a net income of $46,775 compared to a ($317,041) net loss in the prior year.  Cash flow from operations was $43,657 for the fiscal year, up slightly from last year.



Sales as measured by surface footage of product shipped increased to 2.11 million square feet from 1.77 million square feet, an increase of 19.1%.  A substantial sales volume increase of 77% was experienced in Florida, where two manufacturers representatives are helping to sell Blazeguard to townhome builders.  Volume increased 21% through Lowes Companies, Inc. Contractor Yards.  Lowes continues to sell Blazeguard exclusively as its selected fire-rated sheathing product.  The only declining market area was New Jersey, where Manufacturers Reserve Supply (MRS) sells Blazeguard to the roof repair market (replacing failed fire retardant treated plywood from other vendors) but has not focused on the new construction market.



Cost of goods soldincreased to $1,766,992 from $1,421,028 (up 24.3%).  This increase resulted predominantly from increased sales volume, but also from higher material costs as the building products industry experienced historically high prices for wood sheathing (OSB and plywood) beginning in the spring of 2003. Prices have remained at high levels through the remainder of the year.  Direct labor costs, per unit of material produced, have remained relatively constant throughout the year.



Operating expensesincluding license fees/revenues and R&D decreased to $65,131 from $114,467 the previous year.  These costs include the annual minimum royalty net expense of $75,540 (US$50,000) discussed in Note 14.  Research and development expenses of $25,850 were predominantly for fire tests and material samples in support of new product/market development, in particular for roof deck assemblies for mobile offices/modular buildings.  During the year, Barrier received a royalty payment of $36,259 (US $24,000) for its share of a potential license agreement negotiated by its Licensor (Pyrotite Corporation) for the IPOSB technology. Pyrotite Corporation continues to seek other applications and opportunities for the IPOSB technology.



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General and administrative expensesincreased to $518,971 from $477,264 last year, a decrease to 23.0% as a percentage of sales compared to 25.7% in the prior year. Consulting fees, legal fees, and investor relations expenses increased to $70,375 from $5,320 last year.  This change is due to Barriers increasing effort to communicate to shareholders and the public the Companys business development initiatives and market opportunities for its products. Wages and management fees were relatively unchanged at $181,037.



Other expensesinclude non-cash items such as foreign exchange gain (loss), amortization, and stock based compensation.  Barrier realized a foreign exchange gain of $153,202 as the stronger Canadian dollar effectively reduced the value of US$-denominated liabilities when translated into Canadian dollars for reporting purposes.  Barrier negotiated a forgiveness of debt with AFM Corporation on funds provided in 1995 and 1996.  These funds were used to modify the Companys production line to accommodate jumbo (8 x 24) panels and automate the production process.



Operating and net income.Barrier achieved a notable reduction of its operating loss to $96,532 in Fiscal 2003 compared to an operating loss of $152,592 the prior year. For the first time in Barriers corporate history the company reported an annual net profit.  Net income of $46,775 compares to a loss of $317,041 in Fiscal 2002.



New product and market developmentinitiatives continue to provide opportunities for sales expansion and growth.  Significant progress was made in the effort to develop fire rated roof assemblies for commercial modular buildings such as job-site trailers and semi-permanent buildings for school and hospital sites.  Barrier, and its partner in this development endeavor (one of the largest US distributors of building products to the modular industry), successfully passed stringent fire and wind load tests at Underwriters Laboratories, Inc. (UL).  UL will certify and list in their directory both A and C roof deck assemblies utilizing Barriers Blazeguard product as a key component.  Sales are expected to commence in late 2003 with significant sales volume expected in 2004.  As a part of this process, Barrier has completed production line improvements that increase production capacity for this market application by more than 30%.



Barrier has improved the ability to finish interior wall panels by painting them on the existing production line.  While two-part epoxy paints are utilized to create a finish that is competitive to plastic overlaid panels (FRP), other paint systems are being utilized to create a variety of finishes that in time will create opportunities to sell into residential markets as well as commercial and institutional buildings.  Tnemec Company, a respected producer of paint systems for commercial applications in the United States, has been instrumental in helping Barrier develop different finishing/painting technologies required to provide panels meeting a variety of needs.



Roof decking for multi-family residential buildings is Barriers largest and most stable existing market application, and represents the majority of sales. Barriers Florida wholesale distributor is currently purchasing product at a rate higher than ever and Florida has become the most important US state market for Blazeguard.  Sales into Florida increased by 394,100 square feet or 77%, after growing 11% the previous year.  Management expects sales in 2004 to continue growing as more builders make Blazeguard their preferred fire-rated sheathing.



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Lowes Contractor Yards continues to inventory Blazeguard at more of their locations. Lowes Companies, Inc. will not allow chemically treated fire rated sheathing to be sold at any of their locations.  This provides a compelling reason for local yard managers to market and sell Blazeguard to their many builder customers across the US.  In Fiscal 2003, sales to Lowes were up 93,740 sq.ft. (21%) after growing nearly 200,000 square feet in 2002.  Despite the high prices of substrate panels used in Blazeguard and distributors current tendency to hold less inventory (out of fear that prices could potentially fall quickly), sales continue to grow at a significant rate. Lowes has been instrumental in building Barriers sales in Maryland, Virginia, and North Carolina.



Barrier anticipates that it can also extend its business from Lowes Contractor Yards into Lowes Home Improvement Warehouses.  Lowes has a total of 875 stores in 45 states (www.lowes.com).  Most Lowes Home Improvement Warehouses have commercial sales departments that cater to the builder community.  These commercial sales departments contact Barrier on a regular basis seeking information and price quotes on Blazeguard.  Some of these inquiries are translating into orders and Barrier is convinced this business is poised to grow in the coming year.  As interest builds in the Lowes Home Improvement Warehouses network, it is possible that Lowes will elect to inventory Blazeguard at central intra-company distribution centers.  These centralized distribution centers serve to minimize transportation and handling costs to the Home Improvement Warehouses, making the product more economic and competitive.



Sales to Manufacturers Reserve Supply, Barriers wholesale lumber distributor in New Jersey and eastern Pennsylvania, declined 42.7% to 373,700 sq. ft.  They have remained focused on roof replacement projects resulting from the premature failure of fire retardant treated plywood (FRT) rather than pursuing valuable opportunities in new construction.  Many of the remaining FRT replacement projects have been completed and the State of New Jersey has terminated its program of funding FRT replacement projects with public money. Barrier continues to support MRS but is focusing on growth markets such as Florida, Georgia, Virginia, and Texas, where the majority of multi-family housing starts are occurring.



Material transactions.On 3/5/2003, Barrier announced a letter of intent to purchase the worldwide technology rights (including all relevant patents) to the Pyrotite technology, which represents the foundation of Barriers business, from Pyrotite Corporation, Inc. Barrier agreed to pay US$1,000,000 for these rights and made a non-refundable payment of US$50,000 (see Note 6). Negotiations extended beyond the originally intended September 30th closing date.  Final negotiations are in progress.  Management is focused on successfully concluding this transaction.  Given the expected successful conclusion to this transaction, Barrier intends to raise sufficient capital to complete the transaction within a period defined in the purchase agreement.





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MD&A -- Fiscal 2002 Ended June 30, 2002

Sales reported for year ended 6/30/2002 were $1,860,167 representing a 24.4% increase over the previous year.  Gross profit on sales was stable at $439,139 with a gross margin of 23.6% compared to a gross margin of 29.4% for last fiscal year.  Barrier reported a ($317,041) net loss for Fiscal 2002 compared to a net loss of ($453,979) in the previous year.  Cash flows from operating activities were $42,739 for Fiscal 2002, an increase of $294,832 over the prior year.



Sales as measured by surface footage of product shipped decreased to 1.77 million square feet from 2.15 million square feet, a decrease of 17.7%.  The reason volume decreased while dollar sales increased is due to a changing mix of product, moving towards higher margin sales.  A significant amount of discount-priced product was shipped during Fiscal 2001, destined for Japanese markets; sales to Japanese markets dropped from 710,840 square feet in Fiscal 2001 to 69,850 square feet this year; a reduction in sales of 90.2%.  Sales volume in the United States actually increased this year by 18.4% to 1,703,000 square feet from 1,438,520 square feet.



Cost of goods sold increased to $1,421,028 from $1,055,351 (34.6%).  Barrier now purchases all of the wood sheathing used in the production of Blazeguard, except for that destined for Japan.  The cost of sheathing, therefore, in this year was based on purchases of 1.7 million square feet versus 1.4 million square feet last year.



Operating expenses in the current year declined to $112,704 from $162,525 in the previous year.  Operating costs include $36,082 in research and development and $78,385 in license fees for the US rights to the Pyrotite technology.  License fees are 3% of gross sales with a $50,000 US minimum.



General and administrative expenses decreased to $467,751 from $561,594 last year.  Barrier did not incur any investor relations costs this year compared to $28,890 last year.  Foreign exchange decreased $61,074 as compared to the previous year.  There was an increase in accounting and audit fees of $12,404 as Barrier continues to use an outside accounting firm for bookkeeping for the US operation.  Travel and promotion fees declined as less travel in support of the business occurred.  Filing fees increased this year as a result of acquiring approval to list the Companys shares for trading on the NASD Electronic OTC Bulletin Board.



There were no changes to the Companys board of directors during the year.  Related party charges for wages, management fees and interest on loans increased to $198,605 for the current year compared to $192,743 in the prior year.





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MD&A -- Fiscal 2001 Ended June 30th

Revenue reported for the fiscal year was $1,495,608.  While sales revenue fell 12.6% compared to last year, sales as measured by volume shipped were up about 3.9% to a total of 2,150,000 sq.ft.



However, sales for the three-month-period ended 3/31/2001 declined $100,464 to a quarterly total of $362,952.  Sales for the three-month-period ended 6/30/2001 declined $116,543 to a quarterly total of $243,517.  These sales revenue reduction was due to a decline in Blazeguard® sales volume shipped for the last half of the fiscal year.  In the first half of the fiscal year, Barrier shipped a volume of 1,3120,00 sq.ft. with nearly 475,000 sq.ft. being shipped to Japan.  In the second half of the fiscal year a total of 832,200 sq.ft. was shipped with less than 100,000 sq.ft. being shipped to Japan. The two main reasons for the decline in sales from the first half compare to the second half were the harsh winter weather conditions experienced in the Northeastern US and the declining economy in Japan and the USA.



Target Markets             Approximate FY2001 Percentage of Sales

Multi-family residential roof decks                           70%

Structural Insulative Panels                                  25%

Fire resistive wall assemblies                                 2%

Commercial roof decks                                          2%

Specialty Applications                                         1%



Gross profit margin (gross profit divided by sales revenue) slipped to 29.4% for Fiscal 2001 compared to 29.6%, positively reflecting the improvements to the manufacturing facility and the changing product mix and negatively reflecting slowed shipments and introductory pricing to help AFM launch the SIP building technology to some of the largest home builders in Japan.  Research/Development expenses were stable at $84,493 vs. $84,779.  Royalty fees fell to $75,895 versus $76,365, reflecting the 15% reduction in fire retardant treatment costs (TSO).  Barrier does not pay royalty on the cost of the plywood or oriented strand board sheathing that is used as the substrate panel for Blazeguard.  While some of Barriers customers purchase their own substrate, some customers prefer that Barrier provide this service.  While the pass through cost of the substrate is reflected in the sales portion of the financial statement, the costs are not included in the formula (3% of TSO sales) used to determine royalty owed in that period.



The Company reported a consolidated net loss of ($428,872) or ($0.04) per share for Fiscal 2001 compared to a loss of ($290,638) or ($0.04) per share for last year.

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Liquidity and Capital Resources



During Fiscal 2001, the Company raised $144,342 from the exercise of 1,443.317 stock options and raised $91,500 from the exercise of 855,000 share purchase warrants.



During Fiscal 2002, the Company raised $60,000 from the exercise of 600,000 stock options.



During Fiscal 2003, the Company raised $350,000 from a private placement of 3,500,000 common shares, a 100,000 common share finders fee was paid.  Also, 2,000,000 common shares were issued to settle $300,000 in debt with officers and Directors.



During Fiscal 2004, the Company has raised $300,000 from a private placement of 1,000,000 common shares; a 100,000 common share finders fee was paid.  Also, the Company has raised $2,150 from the exercise of 21,500 stock options.





Fiscal 2003 Ended 6/30/2003

The Company had a working capital deficiency of ($245,303) as at 6/30/2003.  Cash Provided by Fiscal 2003 Operating Activities totaled $43,657, including the $46,775 Net Income.  Significant adjustments included: $88,405 gain on forgiveness of debt and $98,300 from amortization and ($13,013) in net changes in non-cash working capital items.  Cash Used in Fiscal 2003 Investing Activities was $93,406 for purchase of capital assets and technology rights.  Cash provided from Fiscal 2003 Financing Activities was $148,701, including: ($4,798) decrease in unearned income; ($17,272) decrease in long-term debts; ($181,770) decrease in capital lease obligations; $320,000 from equity financings described above; and $32,541 increase in bank indebtedness.  Management believes that it will be necessary to raise additional working capital to provide for all planned requirements and anticipates that such funds will be provided through private sales of equity and loans from insiders, although all current negotiations are preliminary.



Fiscal 2002 Ended 6/30/2002

The Company had a working capital deficiency of ($703,915) as at 6/30/2002.  Cash Provided by Fiscal 2002 Operating Activities totaled $42,739, including the ($317,041) Net Loss.  Significant adjustments included: $175,725 in amortization of capital assets and $184,055 in net changes in non-cash working capital items.  Cash Used in Fiscal 2002 Investing Activities was nil.  Cash Used in Fiscal 2002 Financing Activities was ($42,739), including: $60,000 raised from the exercise of 600,000 directors stock options; ($57,781) decrease in bank indebtedness; ($26,452 decrease in capital lease obligations; ($14,704) decrease in long-term debts; and ($3,802) in unearned income.  Management believes that it will be necessary to raise additional working capital to provide for all planned requirements and anticipates that such funds will be provided through private sales of equity and loans from insiders, although all current negotiations are preliminary.



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Research and Development, Patents, and Licenses, Etc.

During 2003/2002/2001/2000/1999/1998, the Company expended $25,850, $36,082, $84,493, $84,779, $68,700 and $46,369 on research and development, respectively.  These expenditures were primarily for the manufacturing process conversions required to switch first from laminate to direct applied technology and then to the automated process.  Barrier continues to expend resources on R&D in an ongoing effort to improve production efficiencies and quality.  In addition, Barrier is often faced with questions regarding the applicability of the BlazeguardÒ technology for ancillary markets (mezzanine floors, electrical equipment panels, modular housing, etc.).  The requests to consider different market applications typically come from existing or potential customers and are taken very seriously.  To the extent that the inquiry requires expenditure of resources, these expenditures are charged to R&D.



Patents:

The Pyrotite Technology licensed by the Company is protected by US Patents: #4,661,398; #4,562,862; #4,818,595; and #5,434,200. The patents are held by Pyrotite Corporation, Seattle, Washington and licensed to International Barrier Technology, Inc.



Trademarks:

International Barrier Technology owns the registered trademark Blazeguardâ: US Trademark Registration No. 1,693,014.  Pyrotite Corporation owns the unregistered rights to the trademark name PyrotiteÔ.



For information regarding the Companys licenses refer to ITEM 4.1, Information on the Company, History and Development of the Company, History and Development.

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ITEM 6.  DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES



6.A.  Directors and Senior Management



Table No. 3

Directors and Senior Management

December 13, 2003

_______________________________________________________________________________

_______________________________________________________________________________

Date of

First

Election or

Name                       Position                        Age      Appointment

David J. Corcoran (1)(2)   Administrator/Director           55        July 1986

Michael D. Huddy (1)(3)    President/Director               51    February 1993

Lindsey Nauen              Corporate Secretary              52    December 2003

Victor A. Yates (1)(4)     Director                         57    November 1987

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

(1)  Member of Audit Committee.

(2)  He spends less tan 25% of his time on the affairs of the Company.

Business Address: c/o International Barrier Technology Inc..

750 West Pender Street, #604

Vancouver, British Columbia  V6C 2T7

(3)  He spends full time on the affairs of the Company.

Business Address: c/o Barrier Technology Corp.

510 4th Street North, Watkins, Minnesota, USA  55389

(4)  Business Address: c/o Barrier Technology Inc.

510 4th Street North, Watkins, Minnesota, USA  55389

She spends less than 10% of her time on the affairs of the Company.

_______________________________________________________________________________

_______________________________________________________________________________





David J. Corcoran, Administrator and Director, is a member of the Institute of Chartered Accountants in British Columbia, Canada, with over twenty-five years of experience in industry and commerce.  Prior to 1976, Mr. Corcoran spent over five years gaining experience in marketing, sales and product distribution while he worked in sales with several major companies including Scott Paper and Bristol Myers.  His career in accounting began in 1976 when he joined Touche Ross and Company.  In 1979, he founded Corcoran and Company, Chartered Accountants.  From 1979 to 1990, his firm secured a wide variety of business clients whom he advised regarding their management and business planning.  In 1991, he joined the management of the Company on a full-time basis.  Mr. Corcoran brings to the organization specific business experience in both sales and public finance.  He has been an officer and director of the Company since it inception in 1986.



Lindsey Nauen, Corporate Secretary, received her MBA from the University of Minnesota in 1988.  She also received a B.A. in psychology in 1971 and a M.A. in Library Science in 1974.  For the last eleven years she has been the owner of Nauen Mobil Accounting, providing accounting and business consulting services to small businesses.  In that capacity, she has been providing accounting services to the Company since 1999.





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Michael D. Huddy, President and Director, joined the Company in February 1993 as President of the newly-formed US Subsidiary, Barrier Technology Corporation.  Dr. Huddy was elected President of the Company and a Director in July 1994.  Dr. Huddy had been in charge of marketing and sales of Blazeguardâ with Citadel and Weyerhaeuser.  He was part of Weyerhaeusers research/development team established to develop the Blazeguardâ product.  Dr. Huddy brings sales, marketing and general management experience.  He joined Weyerhaeusers Architectural Products Group in 1988, after two years as General Manager of Weyerhaeusers Northwest Hardwoods operations in Wisconsin.  Before joining Weyerhaeuser, Dr. Huddy worked for Crown Zellerbach Corporation for seven years.  Dr. Huddy holds a Bachelor of Science degree in Biological Sciences with a minor in Chemistry from Lake Superior State College; a Masters of Science degree in Resource Administration; and a Ph.D. in Natural Resource Economics with a minor in Business Management from Michigan State University.



Victor A. Yates, Director, is a self-employed businessman involved in real estate, construction of multi-family and commercial developments.  He holds a degree in Real Estate Appraisal and is a Licensed Real Estate Agent.  He 25 years experience in operating a variety of business ventures brings to the Board an entrepreneurial and construction and financial perspective.



The Directors have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-Laws of the Company.



The Senior Management serves at the pleasure of the Board of Directors with management service contracts but without term of office, except as disclosed in ITEM #6B below.



Despite the Companys Secretary/Administrator spending material portions of this time on businesses other than the Company, the Company believes that he devotes sufficient time to the Company to properly carry out his duties.



No Director and/or Executive Officer has been the subject of any order, judgment, or decree of any governmental agency or administrator or of any court or competent jurisdiction, revoking or suspending for cause any license, permit or other authority of such person or of any corporation of which he is a Director and/or Executive Officer, to engage in the securities business or in the sale of a particular security or temporarily or permanently restraining or enjoining any such person or any corporation of which he is an officer or director from engaging in or continuing any conduct, practice, or employment in connection with the purchase or sale of securities, or convicting such person of any felony or misdemeanor involving a security or any aspect of the securities business or of theft or of any felony.



There are no arrangements or understandings between any two or more Directors or Executive Officers, pursuant to which he was selected as a Director or Executive Officer.  There are no family relationships between any two or more Directors or Executive Officers.





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6.B.  Compensation



Cash Compensation.  Total compensation paid/accrued (directly/indirectly) to all Directors/Senior Management during Fiscal 2003 ended 6/30/2003 was CDN$181,037, including CDN$145,037 paid to Michael D. Huddy and CDN$36,000 paid indirectly to David Corcoran (refer to ITEM #7B).  In addition, the granting of stock options resulted in non-cash compensation of $12,000.



Michael Huddy provides his services pursuant to a management agreement dated 2/13/1993; the terms of the agreement have been revised although no new formal agreement has been signed.  The current terms require that Mr. Huddy provide full-time service to Barrier in an executive capacity (CEO) and to be fully responsible for Barriers activities in the USA.  The original agreement was for a term of four years but was to renew automatically ever two years unless written notice of the intent to terminate was given by either party to the other.  Terms of compensation are to be given prior to any renewal period.



The employment agreement specifies employer termination provisions including: material breach of any provision of the contract; inability to perform the duties under the agreement; fraud or serious neglect or misconduct; personal bankruptcy.



The duties are complete as to those of a Chief Executive Officer (President) and include: Administration of the day to day affairs of the Employer Development of Financial, manufacturing, and marketing plans; Communication with Employer and Shareholders on a timely basis; and, Formulation and execution of a proposed budget approved by the Employer.  The Employment Agreement contains a Confidentiality Provision that precludes the sharing of confidential information to third parties not requiring the information to conduct business with Barrier.  The confidentiality provision extends beyond the time limit of the agreement until the information or knowledge becomes part of the public domain.



Director Compensation.  The Company has no formal plan for compensating its Directors for their service in their capacity as Directors.  Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors.  The Board of Directors may award special remuneration to any Director undertaking any special services on behalf of the Company other than services ordinarily required of a Director.  Other than indicated below no Director received any compensation for his services as a Director, including committee participation and/or special assignments.



Stock Options.  The Company grants stock options to Directors, Senior Management and employees; refer to ITEM #6.E., "Share Ownership".



Change of Control Remuneration.  The Company has no plans or arrangements in respect of remuneration received or that may be received by Executive Officers of the Company in Fiscal 2004 to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds US$60,000 per Executive Officer.



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Other Compensation.  No Executive Officer/Director received other compensation in excess of the lesser of US$25,000 or 10% of such officer's cash compensation, and all Executive Officers/Directors as a group did not receive other compensation which exceeded US$25,000 times the number of persons in the group or 10% of the compensation.



Bonus/Profit Sharing/Non-Cash Compensation.  Except for the stock option program discussed in ITEM #6.E., the Company has no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to the Company's Directors or Executive Officers.



Pension/Retirement Benefits.  No funds were set aside or accrued by the Company during Fiscal 2003 to provide pension, retirement or similar benefits for Directors or Executive Officers.



6.C.  Board Practices

6.C.1.  Terms of Office.  Refer to ITEM 6.A.1.

6.C.2.  Directors Service Contracts.  --- Not Applicable ---

6.C.3.  Board of Director Committees.

The Company has only an Audit Committee, which recommends to the Board of Directors the engagement of the independent auditors of the Company and reviews with the independent auditors the scope and results of the Companys audits, the Companys internal accounting controls, and the professional services furnished by the independent auditors to the Company.  The Audit Committee met once in Fiscal 2003 and met at the 12/12/2003 Annual Meeting.  The current members of the Audit Committee are: David Corcoran, Michael Huddy and Victor Yates.



6.D.  Employees

As of 11/30/2003, the Company had thirteen active employees, including the two Senior Management.  As of 6/30/2003, 6/30/2002, and 6/30/2001, there were 13, 11, and 11 employees (including the Senior Management), respectively.  None of the Company's employees are covered by collective bargaining agreements.



6.E.  Share Ownership

Table No. 4 lists, as of 12/13/2003, Directors and Executive Officers who beneficially own the Company's voting securities and the amount of the Company's voting securities owned by the Directors and Executive Officers as a group.  Table No. 4 includes all persons/companies where the Company is aware that they have 5% or greater beneficial interest in the Companys securities.







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Table No. 4

Shareholdings of Directors and Executive Officers

Shareholdings of 5% Shareholders

_____________________________________________________________________________

_____________________________________________________________________________

Title                                             Amount and Nature   Percent

of                                                 of Beneficial        of

Class    Name of Beneficial Owner                         Ownership   Class #

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

Common   David Corcoran (1)                               2,482,035     12.5%

Common   Michael Huddy (2)                                1,981,000     10.0%

Common   Victor Yates (2)                                   608,122      3.1

Common   Lindsey Nauen                                    25,000     0.0%

Total Directors/Officers                                  5,096,157     25.6%

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

(1)   360,000 represent currently exercisable stock options.

1,940,637 shares are held indirectly through Corcoran Enterprises Ltd.,

a private company controlled by Mr. Corcoran.

42,807 shares are escrowed and contingently cancelable where release

is controlled by Canadian regulatory authorities

Excludes 1,438,685 shares owned by family members, where he disavows

beneficial interest and does not have voting or disposition control.



(2)  100,000 represent currently exercisable stock options



(3)   150,000 represent currently exercisable stock options.

458,122 shares are held indirectly through Continental Appraisal Ltd.,

a private company controlled by Mr. Yates.

Excludes 1,523,424 shares owned by family members, where he disavows

beneficial interest and does not have voting or disposition control.



#  Based on 19,759,855 shares outstanding as of 12/13/2003 and share purchase warrants and stock options held by each beneficial holder exercisable within sixty days.

_____________________________________________________________________________

_____________________________________________________________________________



Options/SARs Granted/Exercised During The Most Recently Completed Fiscal Year

During the most recently completed fiscal year, the following incentive stock options were granted to Senior Management, Directors and employees.  No SARs (stock appreciation rights) were granted during this period.



Table No. 5

Stock Option Grants in Fiscal 2003 Ended 6/30/2003

_____________________________________________________________________________

_____________________________________________________________________________

Percentage               Market Value of Securities

Number        of   Exer.               Underlying Options

of     Total  Price                           on Date

Options   Options    Per      Grant      Expr    of Grant

Name               Granted   Granted  Share       Date       Date   Per Share

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

Paul J. Louie (2)  200,000       33%  $0.10   3/5/2003   3/5/2008       $0.11

Management Total   200,000       33%

Employees/Others   400,000      67%  $0.10   3/5/2003   3/5/2008       $0.11

Total              600,000      100%

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

(1)  Options have vesting provisions varying from 4-18 months.

(2)  Former Director, until 12/12/2003.

_____________________________________________________________________________

_____________________________________________________________________________

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Stock Options.  The terms of incentive options granted by the Company are done in accordance with the rules and policies of the TSX Venture Exchange, including the number of common shares under option, the exercise price and expiry date of such options, and any amendments thereto.  The Company adopted a formal written stock option plan (the Plan) on 12/12/2003.



Such terms and conditions, including the pricing of the options, expiry and the eligibility of personnel for such stock options; and are described below.



The principal purposes of the Companys stock option program are to (a) promote a proprietary interest in the Company among the officers, directors and employees of the Company and its affiliates, (b) retain and attract the qualified officers, directors and employees the Company requires, (c) provide a long-term incentive element in overall compensation, and (d) promote the long-term profitability of the Company.



Number of Shares Reserved.  The number of common shares which may be issued pursuant to options granted under the Plan may not exceed 10% of the issued and outstanding shares of the Company from time to time at the date of granting of options (including all options granted by the Company under the Plan).



Maximum Term of Options.  The term of any options granted under the Plan is fixed by the Board of Directors and may not exceed five years from the date of grant, or 10 years if the Company is classified as a Tier 1 issuer under the policies of the TSX Venture Exchange.  The options are non-assignable and non-transferable.



Exercise Price.  The exercise price of options granted under the Plan is determined by the Board of Directors, provided that it is not less than the discounted market price, as that term is defined in the TSX Venture Exchange policy manual or such other minimum price as is permitted by the TSX Venture Exchange in accordance with the policies from time to time, or, if the shares are no longer listed on the TSX Venture Exchange, then such other exchange or quotation system on which the shares are listed or quoted for trading.



Reduction of Exercise Price.  The exercise price of stock options granted to insiders may not be decreased without disinterested shareholder approval, as described below.



Termination.  Any options granted pursuant to the Plan will terminate generally within 90 days of the option holder ceasing to act as a director, officer, or employee of the Company or any of its affiliates, and within generally 30 days of the option holder ceasing to act as an employee engaged in investor relations activities, unless such cessation is on account of death.  If such cessation is on account of death, the options terminate on the first anniversary of such cessation.  If such cessation is on account of cause, or terminated by regulatory sanction or by reason of judicial order, the options terminate immediately.  Options that have been cancelled or that have expired without having been exercised shall continue to be issuable under the Plan.  The Plan also provides for adjustments to outstanding options in the event of any consolidation, subdivision, conversion or exchange of Companys shares.



Administration. The Plan is administered by the Board of Directors of the Company or senior officer or employee to which such authority is delegated by the Board from time to time.

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Board Discretion. The Plan provides that, generally, the number of shares subject to each option, the exercise price, the expiry time, the extent to which such option is exercisable, including vesting schedules, and other terms and conditions relating to such options shall be determined by the Board of Directors of the Company or senior officer or employee to which such authority is delegated by the Board from time to time and in accordance with TSX Venture Exchange policies.  The number of option grants, in any 12-month period, may not result in the issuance to any one optionee which exceed 5% of the outstanding common shares of the Company (unless the Company is a Tier 1 issuer and has obtained the requisite disinterested shareholder approval), or the issuance to a consultant or an employee engaged in investor relations activities which exceed 2% of the outstanding common shares of the Company.



Disinterested shareholder approval will be sought in respect of any material amendment to the Plan.



The names and titles of the Directors/Executive Officers of the Company to whom outstanding stock options have been granted and the number of common shares subject to such options are set forth in Table No. 6 as of 12/13/2003, as well as the number of options granted to Directors and all employees as a group.



Table No.  6

Stock Options Outstanding

_____________________________________________________________________________

_____________________________________________________________________________

Number of Shares of    CDN$

Common    Exer.       Grant  Expirn

Name                                      Stock    Price        Date     Date

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

David Corcoran                          360,000    $0.10     6/05/02  6/05/07

Victor Yates                            150,000    $0.10     6/05/02  6/05/07

Michael Huddy                           100,000    $0.26     7/10/03  7/10/05

Lindsey Nauen                         nil

Total Officers/Directors                610,000

Total Employees/Consultants             798,000

Total Officers/Directors/Employees    1,408,500

_____________________________________________________________________________

_____________________________________________________________________________



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ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



7.A.  Major Shareholders.



7.A.1.a.  Holdings By Major Shareholders.

Refer to ITEM #6.E. and Table No. 7.



7.A.1.b.  Significant Changes in Major Shareholders Holdings.

The participation in private placements of equity by the Company and exercise of stock options/share purchase warrants has lead over the last several year to some significant changes in the holdings of major shareholders; table reflects direct holdings of common shares, refer to Table No. 4 for additional information.

_____________________________________________________________________________

Shares      Shares      Shares

Owned       Owned       Owned

6/30/2003   6/30/2002   6/30/2001

David Corcoran                              2,122,035   1,998,215   1,798,215

Michael Huddy                               1,807,960   1,197,607   1,197,607

Victor Yates                                  458,122     877,229     676,229





7.A.1.c.  Different Voting Rights.  The Companys major shareholders do not have different voting rights.



7.A.2.  Canadian Share Ownership.  On 11/7/2003, the Companys shareholders list showed 19,759,855 common shares outstanding and 92 registered shareholders, with 16,662,494 shares owned by forty-five registered shareholders resident in Canada.



Based on this research and other research into the indirect holdings of other financial institutions, the Company believes that it has approximately 750 beneficial owners of its common shares.



7.A.3.  Control of Company.  The Company is a publicly-owned Canadian corporation, the shares of which are owned by U.S. residents, Canadian residents and other foreign residents.  The Company is not controlled by any foreign government or other person(s) except as described in ITEM #4.A., History and Development of the Company, and ITEM #6.E., Share Ownership.



7.A.4.  Change of Control of Company Arrangements.

-- No Disclosure Necessary ---





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7.B.  Related Party Transactions



David Corcoran, Corporate Secretary-Administrator/Director

Mr. Corcoran is compensated for his managerial services to the Company indirectly through Corcoran Enterprises Ltd., a private company controlled by Mr. Corcoran.  During Fiscal 2003/2002/2001, $36,000, $36,000, and $36,000, were paid/accrued to Corcoran Enterprises Ltd., respectively.



In addition, stock options intended for Mr. Corcoran have been granted to Corcoran Enterprises Ltd.  During Fiscal 2003/2002/2001/2000, nil, 415,000, 450,000, and 335,000 stock options were granted to Corcoran Enterprises Ltd., respectively.



Victor Yates, Director

Stock options intended for Mr. Yates have been granted to Continental Appraisals Ltd., a private company controlled by Mr. Yates.  During Fiscal 2003/2002/2001: nil, 415,000 and 315,000 stock options were granted to Continental Appraisals Ltd., respectively.



Michael Huddy, President/Director

In the past, Mr. Huddy utilized 473240 B.C. Ltd. to facilitate the advance of funds to the Company and other inter-company transactions, including the holding of common shares of the Company.  473240 B.C. Ltd. was a private company controlled by Mr. Huddy.  This private company was terminated in 2000 and all Company common shares being held were sold to Mr. Huddy at the current market rate applicable at the time.  During Fiscal 2003/2002/2001: nil, nil and 315,000 stock option were granted to 473240 B.C. Ltd.



Funds Owed to Officers/Directors

Officers/Directors have lent the Company funds during the last several years to alleviate the corporate need for working capital; this has included interest/non-interest-bearing advances and convertible promissory notes.  Funds owed totalled:



Name                                          6/30/2003  6/30/2002  6/30/2001

Corcoran Enterprises Ltd. (1)                   $18,000    $39,515    $34,000

Corcoran Enterprises Ltd. (1)                       ---   $112,741    $71,300

473240 B.C. Ltd. (2)                                ---    $36,487    $34,000

Michael Huddy                                       ---    $ 1,513    $ 1,375

Continental Appraisals Ltd. (3)                     ---    $27,000    $23,600

(1) Controlled by David Corcoran

(2) Controlled by Michael Huddy

(3) Controlled by Victor Yates



Interest Payable to Officers/Directors

Officers/Directors have lent the Company funds during the last several years to alleviate the corporate need for working capital; this has included interest/non-interest-bearing advances and convertible promissory notes.  Interest payable totalled:



Name                                          6/30/2003  6/30/2002  6/30/2001

Corcoran Enterprises Ltd. (1)                      $225     $8,305     $5,045

Corcoran Enterprises Ltd. (1)                       ---    $11,462     $3,000

473240 B.C. Ltd. (2)                                ---    $11,998     $8,898

Continental Appraisals Ltd. (3)                     ---     $5,160     $3,000

(1) Controlled by David Corcoran

(2) Controlled by Michael Huddy

(3) Controlled by Victor Yates

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During April 2003, the Company issued 2,000,000 common shares to officers/directors directly/indirectly to settle $300,000 of debt:

David Corcoran:   1,163,820 shares; $174,573

Michael Huddy:      650,353 shares; $ 97,553

Victor Yates:       185,827 shares; $ 27,874





Other than as disclosed above, there have been no transactions since 6/30/2000, or proposed transactions, which have materially affected or will materially affect the Company in which any director, executive officer, or beneficial holder of more than 10% of the outstanding common stock, or any of their respective relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest.  Management believes the transactions referenced above were on terms at least as favorable to the Company as the Company could have obtained from unaffiliated parties.



7.C.  Interests of Experts and Counsel  --- Not Applicable ---







ITEM 8.  FINANCIAL INFORMATION



8.A.  Consolidated Statements and Other Financial Information

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.



The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit report of Amisano Hanson, independent Chartered Accountants, are included herein immediately preceding the financial statements and schedules.



Audited Financial Statements

for Fiscal 2003 , Fiscal 2002, and Fiscal 2001





8.A.7.  Legal/Arbitration Proceedings

The Directors and the management of the Company know of no material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.



The Directors and the management of the Company know of no active or pending proceedings against anyone that might materially adversely affect an interest of the Company.



8.B.  Significant Changes

No undisclosed significant change has occurred since the date of the annual financial statements.





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ITEM 9.  THE OFFER AND LISTING



9.A.4.  Common Share Trading Information

The Company's common shares began trading on the TSX Venture Exchange (formerly the Canadian Venture Exchange) in Toronto, Ontario, Canada, under its former name Barrier Technology Inc. in September 1986.  The current stock symbol is IBH.  The CUSIP number is #458968-10-4.



The Companys common shares began trading on the NASD Electronic Bulletin Board in August 2002 under the symbol IBTGF.OB.



Table No. 7 lists the volume of trading and high, low and closing sales prices on the TSX Venture Exchange for the Company's common shares for: the last six months, the last eight fiscal quarters; and the last five fiscal years.



Table No. 7

TSX Venture Exchange

Common Shares Trading Activity

_____________________________________________________________________________

_____________________________________________________________________________

- Sales -

Period                                                       Canadian Dollars

Ended                                Volume            High     Low   Closing

Monthly

11/30/2003                           340,400          $0.58   $0.39     $0.55

10/31/2003                           111,100           0.39    0.30      0.39

9/30/2003                           177,000           0.43    0.36      0.39

8/31/2003                           62,010x           0.40    0.36      0.39

7/31/2003                           660,655           0.47    0.335     0.40

6/30/2003                           145,700           0.335   0.23      0.30

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

Quarterly

6/30/2003                           483,660          $0.34   $0.22     $0.30

3/31/2003                         3,055,100           0.42    0.04      0.30

12/31/2002                            50,090           0.15    0.04      0.07

9/30/2002                           273,660           0.10    0.06      0.08



6/30/2002                          180,220           $0.10   $0.05     $0.08

3/31/2002                           28,100            0.09    0.07      0.08

12/31/2000                            3,100            0.09    0.07      0.09

9/30/2001                          118,100            0.13    0.13      0.13

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

Yearly

6/30/2003                        3,862,510           $0.42   $0.04     $0.36

6/30/2002                          329,520            0.13    0.05      0.08

6/30/2001                        1,940,069            0.19    0.08      0.08

6/30/2000                        4,442,428            0.48    0.08      0.20

6/30/1999                          506,900            0.29    0.06      0.09

_____________________________________________________________________________

_____________________________________________________________________________







---







Table No. 8 lists the volume of trading and high, low and closing sales prices on the NASD Electronic Bulletin Board for the Company's common shares for: the last fiscal year, the last four fiscal quarters, and the last six months.



Table No. 8

NASD Electronic Bulletin Board

Common Shares Trading Activity

_____________________________________________________________________________

_____________________________________________________________________________

- Sales -

Period                                                           US Dollars

Ended                              Volume           High     Low   Closing

Monthly

11/30/2003                           372,519          $0.47   $0.27     $0.47

10/31/2003                           264,300           0.31    0.22      0.29

9/30/2003                           894,200           0.32    0.26      0.26

8/31/2003                           207,200           0.31    0.28      0.30

7/31/2003                           516,000           0.35    0.22      0.35

6/30/2003                           302,700           0.26    0.18      0.21

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

Quarterly

6/30/2003                         1,553,800          $0.26   $0.18     $0.21

3/31/2003                           280,500           0.26    0.05      0.26

12/31/2002                           118,100           0.05    0.02      0.05

9/30/2002                               300           0.06    0.06      0.06

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

Yearly

6/30/2003                         1,952,700          $0.26   $0.02     $0.05

_____________________________________________________________________________

_____________________________________________________________________________





The TSX Venture Exchange



The TSX Venture Exchange is a result of the acquisition by the Toronto Stock Exchange of the Canadian Venture Exchange (CDNX) from its member firms on 8/1/2001.  The CDNX resulted from the merger between the Vancouver Stock Exchange and the Alberta Stock Exchange that took place on 11/29/1999, to form the CDNX.  The TSX Venture Exchange currently operates as a complementary but independent exchange from its parent, the Toronto Stock Exchange.



The initial roster of the CDNX was made up of venture companies previously listed on the Vancouver Stock Exchange or the Alberta Stock Exchange and later incorporated junior listings from the Montreal Stock Exchange, the Winnipeg Stock Exchange, and the CDN Over-The-Counter Market.  The TSX Venture Exchange is a venture market as compared to the TSX Stock Exchange that is Canadas senior market and the Montreal Exchange that is Canadas market for derivatives products.



The TSX Venture Exchange currently has five service centers: Calgary, Toronto, Vancouver, Winnipeg and Montreal.  These service centers provide corporate finance, surveillance and marketing expertise.  The corporate office for the TSX Venture Exchange is located in Calgary and the operations office is located in Vancouver.



---







The TSX Venture Exchange is a self-regulating organization owned and operated by the Toronto Stock Exchange, which in turn is owned by its member brokerage firms.  It is governed by representatives of member firms and the public.



Organizationally, the TSX Venture Exchange is comprised of seven business areas: Corporate Finance Services, Trading Services and Market Information Services, Compliance, Marketing, Technology, Corporate Affairs and Human Resources.



The TSX Venture Exchange acts as a business link between TSX members, listed companies and investors.  TSX Venture Exchange policies and procedures are designed to accommodate companies still in their formative stages and recognize those that are more established.  Listings are predominately small and medium sized companies.



Investors in Canada are protected by the Canadian Investor Protection Fund (CIPF). The CIPF is a private trust fund established to protect customers in the event of the insolvency of a member of any of the following self-regulatory organizations: the TSX Venture Exchange; the Montreal Exchange; the Toronto Stock Exchange; the Toronto Futures Exchange; and the Investment Dealers Association of Canada.



Post-trade monitoring of market activity occurs in the market surveillance department.  Sophisticated software analyses trade data from TRADETSX to detect possible market improprieties.  A variety of surveillance and investigative tools allow the TSX Venture Exchange to perform electronic market monitoring and trade reviews.



The surveillance department is also responsible for monitoring and reviewing listed company activities and detecting breaches of the listing policies or the listing agreement.  Market surveillance and listed company surveillance activities are closely coordinated.



Enforcement action taken by the surveillance department may include the following:



1) forcing companies to correct misleading or inaccurate disclosure which

includes new releases or internet postings:

2) requiring the resignation of unacceptable directors and officers;

3) requiring cancellation and return shares to treasury;

4) requiring undertakings from directors and officers that they

will ensure compliance with the listing agreement and listings policies in

the future;

5) requiring the termination of unacceptable investor relations services;

6) halting and suspending trading in the shares of companies;

7) de-listing companies that have contravened exchange by-laws, rules or

policies.



The market surveillance department issues TSX notices to inform the public of halts, suspensions, de-lists and other enforcement actions.  All TSX notices can be found on the TSX website or INFOTSX.  In the public interest, trading halts or suspensions are maintained until the surveillance department is satisfied that there is adequate disclosure of the companys affairs and a level playing field for investors.



---







In addition to market surveillance, the TSX Venture Exchanges compliance department is comprised of an investigative services team that conducts investigations into alleged violations of securities trading.  The TSX Venture Exchange Conduct Review Committee determines whether a case for discipline exists.  Disciplinary cases either result in a settlement reached between TSX Venture Exchange and the respondent or they proceed to a disciplinary hearing.  The public can attend disciplinary hearings, view the exhibits filed and obtain copies of the decisions issued by the panel.  If the hearing panels decision is not acceptable to either TSX Venture Exchange or the respondent, an appeal process may be initiated.





9.A.5.  Common Share Description



Registrar/Common Shares Outstanding/Shareholders

The Company's common shares are issued in registered form and the following information is taken from the records of Pacific Corporate Trust Company (located in Vancouver, British Columbia, Canada), the registrar and transfer agent for the common shares.



On 11/07/2003, the shareholders' list for the Company's common shares showed 92 registered shareholders and 19,759,855 shares issued and outstanding.  Based on this research and other research into the indirect holdings of other financial institutions, the Company believes that it has about 750 beneficial owners of its common shares.





Escrowed Common Shares



On 5/15/1987, the Company issued 296,500 shares of Principal Escrow common stock at $0.01 per share.  173,452 of these shares are still escrowed and outstanding.  On 11/30/2003, these are held:

Continental Appraisals Ltd....................................   6,115 shares

James Stewart.................................................  10,000 shares

Prime Equities International Corp.............................  24,461 shares

Pyrotite Corporation..........................................  26,685 shares

Corcoran Enterprises Ltd......................................  42,807 shares

Chet Idziszek.................................................  63,384 shares



The escrow restrictions provide that the shares may not be traded in, dealt with in any manner whatsoever, or released, nor may the Company, its transfer agent or escrow holder make any transfer or record any trading of these shares without the consent of the Superintendent of Brokers for British Columbia.  The terms of the escrow agreements provide that a portion of the consideration for the original issuance of the escrowed shares is to encourage the escrow shareholders to act in the best interests of the Company, and if the Company becomes successful, due in part to the efforts of the escrow shareholders, or any one of them, the escrow shareholders shall be entitled to maintain their ownership of the escrowed shares and to a release of the shares from the terms of the escrow agreements, from time to time, in accordance with the general policies of the Superintendent of Brokers or the Canadian Venture Exchange.  All shares not released from escrow (originally 1993 but extended) are to be cancelled.  The deadline has passed and cancellation is pending.



---







Share Purchase Warrants/Convertible Debenture

As of 11/30/2003, no share purchase warrants/convertible debentures were outstanding.



9.A.6.  Differing Rights  --- Not Applicable ---

9.A.7.a.  Subscription Warrants/Right  --- Not Applicable ---

9.A.7.b.  Convertible Securities/Warrants  --- Not Applicable ---



9.C.  Stock Exchanges Identified

The common shares trade on the TSX Venture Stock Exchange.

The common shares trade on the NASD Electronic Bulletin Board.

Refer to ITEM #9.A.4.







ITEM 10.  ADDITIONAL INFORMATION



10.A.  Share Capital

10.B.  Memorandum and Articles of Association

10.C.  Material Contracts

--- No Disclosure Necessary ---



10.D.  Exchange Controls

Canada has no system of exchange controls.  There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors.  There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of the Company's securities, except as discussed in ITEM 10.E.Taxation below.



Restrictions on Share Ownership by Non-Canadians

There are no limitations under the laws of Canada or in the organizing documents of the Company on the right of foreigners to hold or vote securities of the Company, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of the Company by a "non-Canadian".  The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of the Company.  "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.



10.E.  Taxation

The following is a brief summary of some of the principal Canadian federal income tax consequences to a holder of common shares of the Company (a "U.S. Holder") who deals at arm's length with the Company, holds the shares as capital property and who, for the purposes of the Income Tax Act (Canada) (the "Act") and the Canada  United States Income Tax Convention (the "Treaty"), is at all relevant times resident in the United States, is not and is not deemed to be resident in Canada and does not use or hold and is not deemed to use or hold the shares in carrying on a business in Canada. Special rules, which are not discussed below, may apply to a U.S. Holder that is an insurer that carries on business in Canada and elsewhere.



This summary is of a general nature only and is not, and should not be interpreted as, legal or tax advice to any particular U.S. Holder and no representation is made with respect to the Canadian income tax consequences to any particular person.  Accordingly, U.S. Holders are urged to consult their own tax advisors with respect to their particular circumstances.

---





Under the Act and the Treaty, a U.S. Holder of common shares will generally be subject to a 15% withholding tax on dividends paid or credited or deemed by the Act to have been paid or credited on such shares.  The withholding tax rate is 5% where the U.S. Holder is a corporation that beneficially owns at least 10% of the voting shares of the Company and the dividends may be exempt from such withholding in the case of some U.S. Holders such as qualifying pension funds and charities.



In general, a U.S. Holder will not be subject to Canadian income tax on capital gains arising on the disposition of shares of the Company unless (i) at any time in the five-year period immediately preceding the disposition, 25% or more of the shares of any class or series of the capital stock of the Company was owned by (or was under option of or subject to an interest of) the U.S. holder or persons with whom the U.S. holder did not deal at arm's length, and (ii) the value of the common shares of the Company at the time of the disposition derives principally from real property (as defined in the Treaty) situated in Canada.  For this purpose, the Treaty defines real property situated in Canada to include rights to explore for or exploit mineral deposits and other natural resources situated in Canada, rights to amounts computed by reference to the amount or value of production from such resources, certain other rights in respect of natural resources situated in Canada and shares of a corporation the value of whose shares is derived principally from real property situated in Canada.



The US Internal Revenue Code provides special anti-deferral rules regarding certain distributions received by US persons with respect to, and sales and other dispositions (including pledges) of stock of, a passive foreign investment company.  A foreign corporation, such as the Company, will be treated as a passive foreign investment company if 75% or more of its gross income is passive income for a taxable year or if the average percentage of its assets (by value) that produce, or are held for the production of, passive income is at least 50% for a taxable year.  The Company believes that it was not a passive foreign investment company for the taxable year ended 6/30/2003 and, furthermore, expects to conduct its affairs in such a manner so that it will not meet the criteria to be considered passive foreign investment company in the foreseeable future.



10.F.  Dividends and Paying Agents   --- No Disclosure Necessary ---

10.G.  Statement by Experts          --- No Disclosure Necessary ---

10.H.  Document on Display           --- No Disclosure Necessary ---



10.I.  Subsidiaries

The Company has two wholly-owned subsidiaries:

a)  Pyrotite  Coatings  of Canada Inc.

incorporated in British Columbia on 7/10/1986

b)  Barrier Technology Corporation

incorporated in Minnesota, USA on 5/8/1996







ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

--- No Disclosure Necessary ---



ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A.  Debt Securities              --- No Disclosure Necessary ---

12.B.  Warrants and Rights          --- No Disclosure Necessary ---

12.C.  Other Securities             --- No Disclosure Necessary ---

12.D.  American Depository Shares   --- No Disclosure Necessary ---

---







PART II



ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

--- No Disclosure Necessary ---



ITEM 14.  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY

HOLDERS AND USE OF PROCEEDS  --- No Disclosure Necessary ---



ITEM 15.  CONTROLS AND PROCEDURES

The Board of Directors has overall responsibility for reviewing the Company's disclosure to ensure the Company provides full and plain disclosure to shareholders and other stakeholders.  The Board discharges its responsibilities through its committees, specifically, with respect to financial disclosure to the Audit Committee, which is responsible for reviewing the Company's financial reporting procedures and internal controls to ensure full and accurate disclosure of the Company's financial position.



Under the supervision and with the participation of the Company's management, including its Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-14(c) under the Exchange Act as of a date (the "Evaluation Date") within 90 days prior to the filing date of this report.  Based upon that evaluation, the Chief Financial Officer concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective in timely alerting them to the material information relating to the Company (or its consolidated subsidiaries) required to be included in the Company's periodic SEC filings.



There were no significant changes made in the Company's internal controls during the period covered by this annual report on Form 20-F or, to the Company's knowledge, in other factors that could significantly affect these controls subsequent to the date of their execution.



The Company's management, including the Chief Financial Officer, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

---







ITEM 16.  RESERVED

ITEM 16A.  Audit Committee Financial Expert   ---Not Applicable ---

ITEM 16B.  Code of Ethics   ---Not Applicable ---

ITEM 16C.  Principal Accountant Fees and Services   ---Not Applicable ---

ITEM 16D.  Exemptions from the Listing Standards for Audit Committees

---Not Applicable ---







PART III



ITEM 17.  FINANCIAL STATEMENTS

The Company's financial statements are stated in Canadian Dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.



The financial statements as required under ITEM #17 are attached hereto and found immediately following the text of this Annual Report.  The audit report of Amisano Hanson, independent Chartered Accountants, are included herein immediately preceding the financial statements and schedules.



Audited Financial Statements

Auditor's Report, dated 10/17/2003



Consolidated Balance Sheets at 6/30/2003 and 6/30/2002



Consolidated Statements of Operations

for the years ended 6/30/2003, 6/30/2002, and 6/30/2001



Consolidated Statements of Deficit

for the years ended 6/30/2003, 6/30/2002, and 6/30/2001



Consolidated Statements of Cash Flows

for the years ended 6/30/2003, 6/30/2002, and 6/30/2001



Consolidated Statements of Shareholders Equity

for the years ended 6/30/2003, 6/30/2002, and 6/30/2001



Notes to Consolidated Financial Statements





ITEM 18.  FINANCIAL STATEMENTS

The Company has elected to provide financial statements pursuant to ITEM #17.





---







ITEM 19.  EXHIBITS

Page





1. Articles of Incorporation/Bylaws as currently in effect:

--- Incorporated by reference to Form 20-F Registration Statement and

Form 6-K;s ---



2.  Instruments defining the rights of holders of equity or

debt securities being registered.

--- Refer to Exhibit No. 1 ---



3.  Voting Trust Agreements:             No Disclosure Necessary



4.  Material Contracts:

--- Incorporated by reference to Form 20-F Registration Statement and

Form 6-K;s ---



5.  Foreign Patents:                     No Disclosure Necessary

6.  Earnings Per Share Calculation:      No Disclosure Necessary

7.  Ratio of Earnings To Fixed Charges:  No Disclosure Necessary



8.  List of Subsidiaries

--- Incorporated by reference to Form 20-F Registration Statement and

Form 6-K;s ---



9.   Statement Regarding Date of Financial Statements:No Disclosure Necessary

10.  Notice Required by Rul3e 104 of Regulation BTR:  No Disclosure Necessary

11.  Code of Ethics as required by ITEM No. 16:       No Disclosure Necessary



12:  The certifications required by Rule 13a-14(a) or Rule 15d-14(a)......  70



13.  The certifications required by Rule 13a-14(b) or Rule 15d-14(b) and

Section 1350 of Chapter 63 of Title 18 of the United States Code:

--- No Disclosure Necessary ---



14.  Additional Exhibits:

--- Incorporated by reference to Form 20-F Registration Statement and

Form 6-K;s ---



































---

































INTERNATIONAL BARRIER TECHNOLOGY INC.

REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2003 and 2002

(Stated in Canadian Dollars)





































































---













AUDITORS REPORT



To the Shareholders,

International Barrier Technology Inc.

We have audited the consolidated balance sheets of International Barrier Technology Inc. as at June 30, 2003 and 2002 and the consolidated statements of operations, deficit and cash flows for the years ended June 30, 2003, 2002 and 2001.  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 in Canada and the United States of America.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at June 30, 2003 and 2002 and the results of its operations and its cash flows for the years ended June 30, 2003, 2002 and 2001 in accordance with generally accepted accounting principles in Canada.  As required by the British Columbia Company Act, we report that, in our opinion, these principles have been applied on a consistent basis.



|Vancouver, Canada | Amisano Hanson     
|----------------- | ---------------------
|October 17, 2003  | Chartered Accountants



COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA  U.S. REPORTING CONFLICT

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Companys ability to continue as a going concern.  The accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the realization of assets and discharge of liabilities in the normal course of business.  As discussed in Note 1 to the accompanying financial statements and in respect of the Companys working capital deficiency and continuing losses from operations, substantial doubt about the Companys ability to continuing as a going concern exists.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our report to the shareholders dated October 17, 2003 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors report when these are adequately disclosed in the consolidated financial statements.



|Vancouver, Canada | Amisano Hanson     
|----------------- | ---------------------
|October 17, 2003  | Chartered Accountants



---

INTERNATIONAL BARRIER TECHNOLOGY INC.

CONSOLIDATED BALANCE SHEETS

June 30, 2003 and 2002

(Stated in Canadian Dollars)



|ASSETS                                                      | 2003         | 2002        
|----------------------------------------------------------- | ------------ | ------------
|Current                                                     |              |             
|Cash                                                        | $98,952      | $-          
|Accounts receivable                                         | 132,133      | 125,529     
|Inventory  Note 3                                          | 75,816       | 84,658      
|Prepaid expenses and deposits                               | 13,110       | 9,127       
|                                                            |              |             
|                                                            | 320,011      | 219,314     
|Capital assets  Note 4                                     | 912,392      | 990,676     
|License and technology rights Note 5                       | 73,391       | 1           
|                                                            |              |             
|                                                            | $1,305,794   | $1,209,991  
|                                                            |              |             
|LIABILITIES                                                
|Current                                                     |              |             
|Bank indebtedness  Note 6                                  | $101,899     | $69,358     
|Accounts payable and accrued liabilities  Note 11          | 355,778      | 468,015     
|Unearned income                                             | -            | 8,942       
|Due to related parties  Note 11                            | 18,225       | 217,256     
|Current portion of long-term debts  Note 7                 | 25,052       | 44,048      
|Current portion of obligation under capital leases  Note 8 | 64,360       | 115,610     
|                                                            |              |             
|                                                            | 565,314      | 923,229     
|Long-term debts  Note 7                                    | 78,793       | 161,330     
|Obligation under capital leases  Note 8                    | 869,654      | 1,000,174   
|                                                            |              |             
|                                                            | 1,513,761    | 2,084,733   
|                                                            |              |             
|SHAREHOLDERS DEFICIENCY                                   
|Share capital  Note 9                                      | 11,649,276   | 11,029,276  
|Deficit                                                     | (11,857,243) | (11,904,018)
|                                                            |              |             
|                                                            | (207,967)    | (874,742)   
|                                                            |              |             
|                                                            | $1,305,794   | $1,209,991  
|                                                            |              |             

Nature and Continuance of Operations  Note 1

Commitments  Notes 7, 8, 9, 14 and 16

Subsequent Events  Note 16



|APPROVED BY THE DIRECTORS: |  |                         
|-------------------------- |  | ------------------------
|                           |  |                         
|David Corcoran, Director |  | Victor Yates, Director
|DAVID CORCORAN             |  | VICTOR YATES            



SEE ACCOMPANYING NOTES







---



INTERNATIONAL BARRIER TECHNOLOGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended June 30, 2003, 2002 and 2001

(Stated in Canadian Dollars)



|                                              |             |             | (Restated  
|--------------------------------------------- | ----------- | ----------- | -----------
|                                              |             |             |  Note 15) 
|                                              | 2003        | 2002        | 2001       
|Sales                                         | $2,254,562  | $1,860,167  | $1,495,608 
|Cost of sales                                 | (1,766,992) | (1,421,028) | (1,055,351)
|                                              |             |             |            
|Gross margin                                  | 487,570     | 439,139     | 440,257    
|                                              |             |             |            
|Licence fee revenue                           | 36,259      | -           | -          
|Research and development costs  Note 10      | (25,850)    | (36,082)    | (84,493)   
|License fee expense  Note 14                 | (75,540)    | (78,385)    | (75,895)   
|                                              |             |             |            
|                                              | (65,131)    | (114,467)   | (160,388)  
|                                              |             |             |            
|General and Administrative Expenses           |             |             |            
|Accounting and audit fees                     | 36,095      | 28,705      | 16,301     
|Consulting fees  Note 11                     | 35,420      | 786         | -          
|Filing fees                                   | 10,274      | 16,691      | 23,435     
|Insurance                                     | 27,475      | 27,025      | 25,527     
|Interest and bank charges  Note 11           | 28,169      | 42,463      | 36,588     
|Interest on long-term debt  Note 8           | 62,944      | 80,951      | 81,698     
|Investor relations                            | 16,000      | -           | 28,890     
|Legal fees                                    | 18,955      | 4,534       | 9,721      
|Office and miscellaneous                      | 48,195      | 53,118      | 52,858     
|Telephone                                     | 9,631       | 7,355       | 8,531      
|Transfer agent fees                           | 6,986       | 3,646       | 1,639      
|Travel, promotion and trade shows             | 37,790      | 32,326      | 46,140     
|Wages and management fees  Note 11           | 181,037     | 179,664     | 182,605    
|                                              |             |             |            
|                                              | 518,971     | 477,264     | 513,933    
|                                              |             |             |            
|Loss before other                             | (96,532)    | (152,592)   | (234,064)  
|Other                                         |             |             |            
|Foreign exchange gain (loss)                  | 153,202     | 11,276      | (49,798)   
|Gain on forgiveness of debt                   | 88,405      | -           | -          
|Amortization  Note 4                         | (98,300)    | (175,725)   | (170,117)  
|                                              |             |             |            
|Net income (loss) for the year                | $46,775     | $(317,041)  | $(453,979) 
|                                              |             |             |            
|Basic and diluted income (loss) per share     | $0.00       | $(0.03)     | $(0.04)    
|                                              |             |             |            
|Weighted average number of shares outstanding | 14,056,684  | 12,414,903  | 10,878,803 
|                                              |             |             |            



SEE ACCOMPANYING NOTES



---

INTERNATIONAL BARRIER TECHNOLOGY INC.

CONSOLIDATED STATEMENTS OF DEFICIT

for the years ended June 30, 2003, 2002 and 2001

(Stated in Canadian Dollars)





|                                                     |               |               | (Restated    
|---------------------------------------------------- | ------------- | ------------- | -------------
|                                                     |               |               |  Note 15)   
|                                                     | 2003          | 2002          | 2001         
|                                                     |               |               |              
|Deficit, beginning of the year, as previously stated | $(11,904,018) | $(11,475,260) | $(11,046,388)
|                                                     |               |               |              
|Prior period restatement  Note 15                   | -             | (111,717)     | (86,610)     
|                                                     |               |               |              
|Deficit, beginning of the year, restated             | (11,904,018)  | (11,586,977)  | (11,132,998) 
|                                                     |               |               |              
|Net income (loss) for the year                       | 46,775        | (317,041)     | (453,979)    
|                                                     |               |               |              
|Deficit, end of the year                             | $(11,857,243) | $(11,904,018) | $(11,586,977)
|                                                     |               |               |              

























































SEE ACCOMPANYING NOTES







---

INTERNATIONAL BARRIER TECHNOLOGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended June 30, 2003, 2002 and 2001

(Stated in Canadian Dollars)



|                                                                    |           |            | (Restated 
|------------------------------------------------------------------- | --------- | ---------- | ----------
|                                                                    |           |            |  Note 15)
|                                                                    | 2003      | 2002       | 2001      
|Operating Activities                                                |           |            |           
|Net income (loss) for the year                                      | $46,775   | $(317,041) | $(453,979)
|Items not involving cash:                                           |           |            |           
|Gain on forgiveness of debt                                         | (88,405)  | -          | -         
|Amortization                                                        | 98,300    | 175,725    | 170,117   
|                                                                    |           |            |           
|                                                                    | 56,670    | (141,316)  | (283,862) 
|Changes in non-cash working capital balances
related to operations: |           |            |           
|Accounts receivable                                                 | (6,604)   | 38,604     | (86,382)  
|Inventory                                                           | 8,842     | 13,750     | (6,868)   
|Prepaid expenses and deposits                                       | (3,983)   | (8,000)    | 2,290     
|Accounts payable and accrued liabilities                            | (29,493)  | 86,720     | 91,434    
|Due to related parties                                              | 18,225    | 52,981     | 31,295    
|                                                                    |           |            |           
|                                                                    | 43,657    | 42,739     | (252,093) 
|                                                                    |           |            |           
|Investing Activities                                                |           |            |           
|Purchase of capital assets                                          | (20,016)  | -          | -         
|Technology rights                                                   | (73,390)  | -          | -         
|                                                                    |           |            |           
|                                                                    | (93,406)  | -          | -         
|                                                                    |           |            |           
|Financing Activities                                                |           |            |           
|Decrease in unearned income                                         | (4,798)   | (3,802)    | (24,481)  
|Decrease in long-term debts                                         | (17,272)  | (14,704)   | (41,105)  
|Increase (decrease) in capital lease obligations                    | (181,770) | (26,452)   | 3,604     
|Common shares issued for cash                                       | 320,000   | 60,000     | 235,842   
|Increase (decrease) in bank indebtedness                            | 32,541    | (57,781)   | 78,233    
|                                                                    |           |            |           
|                                                                    | 148,701   | (42,739)   | 252,093   
|                                                                    |           |            |           
|Change in cash during the year                                      | 98,952    | -          | -         
|                                                                    |           |            |           
|Cash, beginning of the year                                         | -         | -          | -         
|                                                                    |           |            |           
|Cash, end of the year                                               | $98,952   | $-         | $-        
|                                                                    |           |            |           
|Supplementary Cash Flow Information                                 |           |            |           
|Cash paid for Interest                                              | $76,425   | $100,764   | $97,639   
|                                                                    |           |            |           
|Cash paid for Income taxes                                          | $-        | $-         | $-        
|                                                                    |           |            |           

Non-cash Transactions  Note 12



SEE ACCOMPANYING NOTES



---



INTERNATIONAL BARRIER TECHNOLOGY INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIENCY

for the years ended June 30, 2003, 2002 and 2001

(Stated in Canadian Dollars)



|                                                                     | Common Stock | (Restated  |              
|-------------------------------------------------------------------- | ------------ | ----------- | -------------
|                                                                     | Issued       |             | Note 15)     
|                                                                     | Shares       | Amount      | Deficit      
|Balance, June 30, 2000                                               | 10,239,938   | $10,733,434 | $(11,132,998)
|Issue of shares for cash pursuant to exercise of  warrants at $0.10 | 1,443,417    | 144,342     | -            
|Issue of shares for cash pursuant to exercise of options at $0.10   | 735,000      | 73,500      | -            
| at $0.15                                                           | 120,000      | 18,000      | -            
|Net loss for the year                                                | -            | -           | (453,979)    
|                                                                     |              |             |              
|Balance, June 30, 2001                                               | 12,538,355   | 10,969,276  | (11,586,977) 
|Issue of shares for cash pursuant to exercise of options  at $0.10  | 600,000      | 60,000      | -            
|Net loss for the year                                                | -            | -           | (317,041)    
|                                                                     |              |             |              
|Balance, June 30, 2002                                               | 13,138,355   | 11,029,276  | (11,904,018) 
|Issue of shares for cash pursuant to a private placement at $0.10   | 3,500,000    | 350,000     | -            
|Less:  finders fees                                                  | -            | (30,000)    | -            
|Issue of shares pursuant to debt settlement agreements at $0.15     | 2,000,000    | 300,000     | -            
|Net income for the year                                              | -            | -           | 46,775       
|                                                                     |              |             |              
|Balance, June 30, 2003                                               | 18,638,355   | $11,649,276 | $(11,857,243)
|                                                                     |              |             |              















SEE ACCOMPANYING NOTES







---

INTERNATIONAL BARRIER TECHNOLOGY INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2003 and 2002

(Stated in Canadian Dollars)





Note 1

Nature and Continuance of Operations



The Company was incorporated under the British Columbia Company Act and is publicly traded on the TSX Venture Exchange in Canada and the OTC Bulletin Board in the United States of America.



The Companys principal business activity is the manufacture and sale of fire-rated building materials in the United States of America.



These consolidated financial statements have been prepared on a going concern basis.  The Company has a working capital deficiency of $245,303 as at June 30, 2003 and has accumulated $11,857,243 of losses since inception.  The Companys ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.



Note 2

Significant Accounting Policies



These consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in Canada and are stated in Canadian dollars.  Except as disclosed in Note 18, these financial statements conform in all material respects with GAAP in the United States of America.  Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement.  Actual results could differ from these estimates.



The financial statements have, in managements opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:



(a)Principles of Consolidation

These consolidated financial statements include the accounts of International Barrier Technology Inc. and its wholly-owned subsidiaries, Pyrotite Coatings of Canada Inc., a British Columbia company and Barrier Technology Corporation, a US company.  All inter-company transactions and balances have been eliminated.



(b)Inventory

Inventory is valued by management at the lower of average cost and net realizable value.

---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 2

Significant Accounting Policies  (contd)



(c)Capital Assets and Amortization

Capital assets are recorded at cost.  Amortization is provided using the following methods and rates:



Manufacturing equipmentstraight line over 5 years

Equipment and furniture20% - declining balance

Computer equipment30% - declining balance

Railway spur 4% - declining balance

Equipment under capital lease20% - declining balance

Building under capital leasestraight line over 20 years



(d)Leases

Leases are classified as capital or operating leases.  A lease that transfers substantially all of the benefits and risks incidental to the ownership of property is classified as a capital lease.  At the inception of a capital lease, an asset and an obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payment and the propertys fair value at the beginning of the lease.  All other leases are accounted for as operating leases wherein rental payments are expensed as incurred.



(e)Foreign Currency Translation

Monetary assets and liabilities denominated in United States dollars are translated into Canadian dollars at the exchange rate prevailing at the end of the year.  Non-monetary assets and liabilities and revenues and expenses are translated at the exchange rate prevailing at the respective transaction dates.  Translation gains and losses are recognized in the current year.



(f)Research and Development Costs

Research and development costs are expensed in the year in which they are incurred.



(g)Basic and Diluted Loss Per Share

Basic earnings per share are computed by dividing the loss for the year by the weighted average number of common shares outstanding during the year.  Diluted earnings per share reflect the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock.  The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the if converted method.  Fully dilutive amounts are not presented when the effect of the computations are anti-dilutive due to the losses incurred.  Accordingly, there is no difference in the amounts presented for basic and diluted loss per share.

---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 2

Significant Accounting Policies  (contd)



(h)Fair Value of Financial Instruments

The Companys financial instruments consist of cash, accounts receivable, bank indebtedness, accounts payable and accrued liabilities, due to related parties, long-term debt and obligation under capital leases.  The fair values of these financial instruments approximate their carrying values.  Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.



(i)Unearned Income

Unearned income represents a prepayment in respect to a contract for future sales.  Revenue is recognized on this prepayment at a rate of 3% of sales to the customer.



(j)Stock-based Compensation



The Company has a share purchase option plan which is described in Note 9. No compensation expense is recognised for this plan when shares or share purchase options are issued to employees or directors. Any consideration paid by employees or directors on exercise of share purchase options or purchase of shares is credited to share capital. If shares or share purchase options are repurchased from employees or directors, the excess of the consideration paid over the carrying amounts of the shares or share purchase options cancelled is charged to deficit.



Effective for fiscal years beginning on or after January 1, 2002, public companies are required to adopt the new recommendations of the Canadian Institute of Chartered Accountants regarding accounting for Canadian Stock-based Compensation. These new requirements require that all stock based payments to non-employees and direct awards of stock to employees be accounted for using a fair value based method of accounting. However, the new standard permits the Company to continue its existing policy of not recording compensation cost on the grant of stock options to employees with the addition of pro forma information. The Company has elected to apply the pro forma disclosure provisions of the new standard to awards granted on or after July 1, 2002.



(k)Revenue Recognition

(i)Building Supplies

Revenue is recognized upon shipment, when the rights of the ownership of the building supplies are transferred to the purchaser.



Shipping and handling costs billed to customers have been included in revenue and shipping and handling costs expense have been included in cost of sales.



(ii)License Fees

License fees revenue is recognized when the licensor records the sale of products from IPOSB technology.

---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 2

Significant Accounting Policies  (contd)



(l)Income Taxes

The Company follows the liability method of accounting for income taxes.  Under this method, current income taxes are recognized for the estimated income taxes payable for the current year.  Future income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes.  Future income tax assets and liabilities are measured using tax rates and laws expected to apply in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on future income tax assets and liabilities is recognized in operations in the year of change.



Note 3

Inventory



|               | 2003    | 2002   
|-------------- | ------- | -------
|Raw materials  | $71,397 | $73,683
|Finished goods | 4,419   | 10,975 
|               |         |        
|               | $75,816 | $84,658
|               |         |        



Note 4

Capital Assets



|                           |            | 2003         |          |  | 2002    
|-------------------------- | ---------- | ------------ | -------- |  | --------
|                           |            | Accumulated  |          |  |         
|                           | Cost       | Amortization | Net      |  | Net     
|Manufacturing equipment    | $559,242   | $541,227     | $18,015  |  | $29,019 
|Equipment and furniture    | 14,064     | 12,048       | 2,016    |  | 2,521   
|Computer equipment         | 18,867     | 18,079       | 788      |  | 1,125   
|Railway spur               | 132,449    | 27,625       | 104,824  |  | 109,192 
|                           |            |              |          |  |         
|                           | 724,622    | 598,979      | 125,643  |  | 141,857 
|Assets under capital lease |            |              |          |  |         
|Equipment                  | 43,190     | 21,790       | 21,400   |  | 28,336  
|Land                       | 74,434     | -            | 74,434   |  | 74,434  
|Building                   | 1,102,673  | 411,758      | 690,915  |  | 746,049 
|                           |            |              |          |  |         
|                           | $1,944,919 | $1,032,527   | $912,392 |  | $990,676
|                           |            |              |          |  |         



Amortization of assets under capital leases included in amortization expense for the year ended June 30, 2003 is $66,438 (2002:  $62,218;  2001:  $56,057).

---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 5

License and Technology Rights- Note 14



| |                                          | 2003      | 2002     
| | ---------------------------------------- | --------- | ---------
| | Cost                                     | $868,351  | $794,961 
| | Less:Accumulated Amortization            | (234,895) | (234,895)
| | Write-off - terminated License Agreement | (560,065) | (560,065)
| |                                          |          
| |                                          | $73,391   | $1       
| |                                          |          



Pursuant to a revised License Agreement dated January 1, 1996 with Pyrotite Corporation (Licensor), the Company was granted the rights to use certain Licensor patents, trademarks and know-how to manufacture and sell certain Pyrotite products and substances in the territory of the USA.  This agreement expires January 1, 2015.



In a previous year, the Company wrote-off its license fees, in the amount of $560,065, directly associated with the purchase of the rights to manufacture fire retardant application products in the USA, acquired pursuant to a terminated License Agreement dated March 27, 1992.



During the year ended June 30, 2003, the Company paid $73,390 (US$50,000) as a non-refundable deposit with respect to the proposed acquisition of all of the Licensors right, title and interest worldwide in and to the Fire Retardant Technology and Trademark for a total purchase price of US$1,000,000. The Company is currently in negotiations with the Licensor to formalize the terms of the agreement but it is uncertain if an agreement will be reached.



Note 6

Bank Indebtedness



| |                           | 2003     | 2002   
| | ------------------------- | -------- | -------
| | Current account overdraft | $-       | $38,807
| | Operating loan            | 101,899  | 30,551 
| |                           |         
| |                           | $101,899 | $69,358
| |                           |          |        

The operating loan payable in US dollars (US$75,621) bears interest at 9.50% per annum, is secured by accounts receivable and is due on demand.

---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 7

Long-term Debts



| |                                                                                                                                                                                                                       | 2003     | 2002    
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------
| | Loan payable in US dollars (US $26,451) is unsecured, repayable in monthly amounts of US $510 including interest at 4% per annum, due March 10, 2008                                                                  | $35,643  | $-      
| |                                                                                                                                                                                                                       |          |         
| | Loan payable in US dollars was repayable in monthly amounts of US$1,063 including interest at 10.5% per annum and was secured by a floating charge over inventory and capital assets                                  | -        | 14,779  
| |                                                                                                                                                                                                                       |          |         
| | Loan payable in US dollars (US$14,214) is secured by a directors guarantee and is repayable in monthly amounts of US$487 including interest at 10.5% per annum, due April 1, 2006                                    | 19,153   | 27,759  
| |                                                                                                                                                                                                                       |          |         
| | Promissory note payable in US dollars was secured by capital assets and was repayable in monthly amounts of US$833 including interest at 6% per annum.  This promissory note payable was forgiven as of June 30, 2003 | -        | 93,853  
| |                                                                                                                                                                                                                       |          |         
| | Loan payable in US dollars (US$36,400) is non-interest bearing, repayable in quarterly amounts of US$2,275 and is secured by a lien on the railway spur, due January 10, 2007                                         | 49,049   | 68,987  
| |                                                                                                                                                                                                                       |         
| |                                                                                                                                                                                                                       | 103,845  | 205,378 
| | Less:  current portion                                                                                                                                                                                                | (25,052) | (44,048)
| |                                                                                                                                                                                                                       |         
| |                                                                                                                                                                                                                       | $78,793  | $161,330
| |                                                                                                                                                                                                                       |          |         



Principal payments for the next five years are as follows:



| | 2004 |  | $25,052 
| | ---- |  | --------
| | 2005 |  | 25,948  
| | 2006 |  | 26,659  
| | 2007 |  | 20,099  
| | 2008 |  | 6,087   
| |      |  |         
| |      |  | $103,845
| |      |  |         



---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 8

Obligation Under Capital Leases



Future minimum lease payments on the obligation under capital leases together with the obligation due under capital leases are as follows:



|2004                                |  | $119,200 
|----------------------------------- |  | ---------
|2005                                |  | 119,200  
|2006                                |  | 110,146  
|2007                                |  | 110,146  
|2008                                |  | 107,411  
|Thereafter                          |  | 744,048  
|                                    |  |          
|                                    |  | 1,310,151
|Less:  amount representing interest |  | (376,137)
|                                    |  |          
|                                    |  | 934,014  
|Less:  current portion              |  | (64,360) 
|                                    |  |          
|Long-term portion                   |  | $869,654 
|                                    |  |          



The capital leases bear interest at various rates from 6% to 13.5%.



Interest on capital leases included in interest on long-term debt for the year ended June 30, 2003 is $63,878 (2002:  $69,346;  2001:  $66,322).



Note 9

Share Capital



a)Authorized:

100,000,000 common shares without par value



b)Escrow:

At June 30, 2003, 173,452 shares are held in escrow by the Companys transfer agent.  The release of these shares is subject to the direction or determination of the relevant regulatory authorities.



c)Commitments:

Stock-based Compensation Plan

At June 30, 2003, the Company has granted options to purchase 1,110,000 common shares of the Company.  The options are granted with an exercise price equal to the market price of the Companys shares on the date of the grants.

---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 9

Share Capital  (contd)



c)Commitments:  (contd)

Stock-based Compensation Plan

A summary of the status of companys share purchase option plan as of June 30, 2003 and 2002 and changes during the years ending on those dates is presented below:



|                                                             | 2003      |          | 2002
|------------------------------------------------------------ | --------- | -------- | ----
|                                                             |           | Weighted |     
|                                                             |           | Average  |     
|                                                             | Number    | Exercise |     
|                                                             | of Shares | Price    |     
|Options outstanding and
exercisable at beginning of the year | 1,310,000 | $0.10    |     
|Granted                                                      | 600,000   | $0.10    |     
|Expired or cancelled                                         | (800,000) | $0.10    |     
|Exercised                                                    | -         | -        |     
|                                                             |           |          |     
|Options outstanding and
exercisable at end of the year       | 1,110,000 | $0.10    |     
|                                                             |           |          |     



The following summarizes information about share purchase options outstanding as at June 30, 2003:



| |           | Exercise | Expiry         | 
| | --------- | -------- | -------------- | 
| | Number    | Price    | Date           | 
| | 510,000   | $0.10    | June  5, 2007  | 
| | 600,000   | $0.10    | March  5, 2008 | 
| |           |          |                | 
| | 1,110,000 |          |                | 
| |           |          |                | 



---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 9

Share Capital  (contd)



c)Commitments:  (contd)

Stock-based Compensation Plan  (contd)

A non-cash compensation charge of $32,000 associated with the granting of options to consultants will be recognized in the financial statements of the Company over the vesting period (next 16 months).  A compensation charge associated with directors options in the amount of $16,000 will not be recognized in the financial statements, but will be included in the pro forma disclosure.  The pro forma amounts disclosed below include a compensation charge of $12,000.  This amount represents the vested portion to June 30, 2003.  These compensation charges have been determined under the fair value method using the Black-Scholes option pricing model with the following assumptions:



|Expected dividend yield | 0.0% 
|----------------------- | -----
|Expected volatility     | 94.6%
|Risk-free interest rate | 3.5% 
|Expected term in years  | 5    



Had the fair value method been used for those options issued to employees and directors, the Companys net income and earnings per share would have been adjusted to the pro forma amounts indicated below:



|                                     |             | Year ended   
|------------------------------------ | ----------- | -------------
|                                     |             | June 30, 2003
|Net income for the year              | As reported | $46,775      
|                                     | Pro forma   | $34,775      
|Basic and diluted earnings per share | As reported | $0.00        
|                                     | Pro forma   | $0.00        



Note 10

Research and Development Costs



Research and development expense consists of the following for the years ended June 30, 2003, 2002 and 2001:



| |                  | 2003    | 2002    | 2001   
| | ---------------- | ------- | ------- | -------
| | Salaries         | $-      | $21,707 | $58,286
| | Testing services | 25,850  | 14,375  | 28,207 
| |                  |         |        
| |                  | $25,850 | $36,082 | $84,493
| |                  |         |        



---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 11

Related Party Transactions



The Company was charged the following by directors or private companies with common directors during the years ended June 30, 2003, 2002 and 2001:



| |                           | 2003     | 2002     | 2001    
| | ------------------------- | -------- | -------- | --------
| | Consulting fees           | $5,000   | $-       | $-      
| | Interest and bank charges | 8,470    | 21,512   | 19,943  
| | Wages and management fees | 181,037  | 177,093  | 172,800 
| |                           |          |         
| |                           | $194,507 | $198,605 | $192,743
| |                           |          |         



These charges were measured by the exchange amount, which is the amount agreed upon by the transacting parties.



Included in accounts payable and accrued liabilities is $3,166 (2002:  $62,097) owing to directors of the Company.



The amount due to related parties of $18,225 (2002:  $217,256) consists of amounts due to directors or private companies with common directors with respect to unpaid managements fees, interest and advances.  These amounts are unsecured, have no specific terms of repayment and bear interest at 10% per annum.



Note 12

Non-cash Transactions



Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows.  During the years ended June 30, 2003 and 2002, the following transactions were excluded from the statements of cash flows:



June 30, 2003

–

the Company issued 2,000,000 common shares at $0.15 per share to settle accounts payable and amounts due to related parties totalling $300,000.



June 30, 2002

–

the Company acquired a capital asset with a cost of $31,731 by way of a capital lease.



Note 13

Income Taxes



The Company has non-capital losses in Canada totalling $659,582 which expire in 2010 and non-capital losses in the United States totalling $750,415 which expire in 2023.  In addition, the Company has Scientific Research and Experimental Development Expenditures in Canada of $1,087,818 which may be carried forward indefinitely to reduce taxable income in future years.  The potential future income tax benefit is not reflected in these financial statements.

---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 13

Income Taxes  (contd)



Significant components of the Companys future income tax assets are as follows:



| |                                                           | 2003        | 2002       
| | --------------------------------------------------------- | ----------- | -----------
| | Non-capital losses carried forward                        | $515,433    | $818,989   
| | Scientific Research and Experimental Development expenses | 387,480     | 387,480    
| | Net carrying amount of capital assets                     | 1,627,717   | 1,627,717  
| |                                                           |             |            
| |                                                           | 2,530,630   | 2,834,186  
| | Less valuation allowance                                  | (2,530,630) | (2,834,186)
| |                                                           |             |            
| |                                                           | $-          | $-         
| |                                                           |            



The amount taken into income as a future tax asset must reflect that portion of the tax asset which is likely to be realized from future operations. Considering the Companys cumulative losses in recent years, the Company has chosen to provide an allowance of 100% against all available tax assets, regardless of their terms of expiry.



Note 14

Commitments



Technology Royalty

Pursuant to a revised License Agreement dated January 1, 1996 with Pyrotite Corporation (Licensor) the Company is required to pay a royalty of 3% of USA fire retardant product gross sales, minimum US$100,000 per annum from January 1, 1996 onward.  The Company has granted to the Licensor the rights to certain technology referred to as IPOSB Technology.



The Licensor is required to pay the Company a royalty of 3% of USA gross sales from the IPOSB technology, minimum of US$50,000 per annum from January 1, 1996 onward.

License fee expense consists of the following for the years ended June 30, 2003, 2002 and 2001:



| |                     | 2003     | 2002     | 2001    
| | ------------------- | -------- | -------- | --------
| | License fee expense | $151,080 | $156,770 | $151,790
| | License fee revenue | (75,540) | (78,385) | (75,895)
| |                     |          |         
| |                     | $75,540  | $78,385  | $75,895 
| |                     |          |         



---

International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 15

Prior Period Restatement



The Company changed its accounting policy with respect to the deferral and amortization of foreign exchange gains/losses on long-term debt in accordance with the Canadian Institute of Chartered Accountants recommendations.  The new recommendations require the inclusion in current income of all foreign exchange gains/losses on long-term debt instruments.  As a result of this retroactive adjustment, the opening deficits for the years ended June 30, 2002 and 2001 were increased by $111,717 and $86,610 respectively.  In addition, the net loss for the year ended June 30, 2001 was increased by $25,107.



Note 16

Subsequent Events



Subsequent to June 30, 2003, the Company:



i)

completed a private placement of 1,000,000 common shares at $0.30 per share for proceeds of $300,000;

ii)

issued 100,000 common shares as finders fees related to the above private placement;

iii)

issued 21,500 common shares at $0.10 per share pursuant to the exercise of share purchase options;  and

iv)

granted 320,000 share purchase options to directors and consultants entitling the holders thereof the right to purchase one common share for each option held at $0.26 per share until July 10, 2005.



Note 17

Comparative Figures



Certain comparative figures have been restated to conform with the presentation adopted for the current year.



Note 18

Differences Between Canadian and United States of America Accounting Principles



The financial statements have been prepared in accordance with accounting principles generally accepted in Canada (Canadian GAAP) which differ in certain respects with those principles and practices that the Company would have followed had its financial statements been prepared in accordance with accounting principles and practices generally accepted in the United States of America (US GAAP).



The Companys accounting principles generally accepted in Canada differ from accounting principles generally accepted in the United States of America as follows:

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International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 18

Differences Between Canadian and United States of America Accounting Principles  (contd)



a)Stock-based Compensation

The Company grants stock options at exercise prices equal to the fair market value of the Companys stock at the date of the grant.  Pursuant to APB 25, the compensation charge associated with non-employees options is recorded in the reconciling items.  The compensation charge for employees is not recognized in this circumstance. Under SFAS 123, it is required to present pro-forma information as to the effect on income and earnings per share as if the Company had accounted for its employee stock options under the fair value method of that statement. Had compensation cost been determined based on the fair value at the grant dates for those options issued to directors and employees, the Companys net loss and loss per share for the years ended June 30, 2002 and 2001 would have been increased to the pro-forma amounts indicated below:



|                                                              | 2002       | 2001      
|------------------------------------------------------------- | ---------- | ----------
|Net loss in accordance with US GAAP as reported
(Note 18 (b)) | $(317,041) | $(453,979)
|Pro-forma adjustment for SFAS-123                             | (41,500)   | (54,000)  
|                                                              |            |           
|Pro-forma net loss                                            | $(358,541) | $(507,979)
|                                                              |            |           
|Pro-forma net loss per share                                  | $(0.03)    | $(0.05)   
|                                                              |            |           



The fair value of these options was estimated at the date of the grant using the following weighted average assumptions:

|                                                                 | Years ended June 30,
|---------------------------------------------------------------- | --------------------
|                                                                 | 2002                
|Volatility fact of expected market price of the Companys
shares | 76.5%               
|                                                                 |                     
|Dividend yield                                                   | 0%                  
|                                                                 |                     
|Weighted average expected life of stock options                  | 5 yrs               
|                                                                 |                     
|Risk-free interest rate                                          | 3%                  



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International Barrier Technology Inc.

Notes to the Consolidated Financial Statements

June 30, 2003 and 2002

(Stated in Canadian Dollars)



Note 18

Differences Between Canadian and United States of America Accounting Principles  (contd)



b)The impact of the above on the financial statements for the fiscal years ended June 30 are as follows:

|                                                        | 2003    | 2002       | 2001      
|------------------------------------------------------- | ------- | ---------- | ----------
|Net income (loss) for the year per Canadian and US GAAP | $46,775 | $(317,041) | $(453,979)
|                                                        |         |            |           
|Basic income (loss) per share per Canadian and US GAAP  | $0.00   | $(0.03)    | $(0.04)   
|                                                        |         |            |           









































































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SIGNATURE PAGE



Pursuant to the requirements of Section 12g of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.



International Barrier Technologies Inc.  SEC File #0-20412

Registrant









Dated: December 30, 2003   By /s/ Michael Huddy

Michael Huddy, President/CEO/Director





Dated: December 30, 2002   By /s/ David Corcoran

David Corcoran, CFO/Secretary/Director