AMENDED PROSPECTUS 424(b)(3)
File # 333-56390

L.A.M. PHARMACEUTICAL, CORP.

Common Stock

This amended prospectus may be used only in connection with sales of
the common stock of L.A.M. Pharmaceutical, Corp. by Hockbury Limited and five
warrant holders. Hockbury Limited will sell shares of common stock purchased
from L.A.M. under an equity line of credit agreement and up to 482,893 shares of
common stock which may be issued upon the exercise of warrants. The five warrant
holders will sell up to 455,580 shares of common stock from L.A.M., which may be
issued upon the exercise of warrants granted as a placement fee. Hockbury
Limited and the five warrant holders are sometimes referred to in this
prospectus as the selling shareholders.

L.A.M. will not receive any proceeds from the sale of the common stock by
the selling stockholders. L.A.M. will pay for the expenses of this offering.

This amended prospectus updates information concerning L.A.M. contained
in the prospectus dated June 7, 2001, and does not offer any shares for sale in
addition to shares offered in that prospectus.

The following provides information concerning the latest drawdown
requested by L.A.M.

Date of Date of Shares Average Sale Net Proceeds
Request Sale Sold Price Per Share to L.A.M.
------- --------- ------- --------------- ------------

06-04-02 07-08-02 54,222 $0.76 $41,273

The proceeds to L.A.M. are net of the 7% placement agent fee paid to GKN
Securities. GKN Securities is the placement agent which introduced Hockbury
Limited to L.A.M. and is a registered broker-dealer.

L.A.M.'s common stock is quoted on the OTC Bulletin Board under the
symbol "LAMP." On July 9, 2002 the closing bid price for one share of the
L.A.M.'s common stock was $0.78.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.

These securities are speculative and involve a high degree of risk. For
a description of certain important factors that should be considered by
prospective investors, see "Risk Factors" beginning on page 5 of this Prospectus

The date of this amended prospectus is July 15, 2002

PROSPECTUS SUMMARY

L.A.M, Pharmaceutical, Corp. was incorporated in Delaware in July 1998.
In September 1998, L.A.M. acquired all of the issued and outstanding shares of
LAM Pharmaceuticals LLC ("LAM") for 6,000,000 shares of L.A.M.'s common stock.
LAM Pharmaceuticals LLC was organized in Florida in 1994 (initially as a
partnership) to commercialize a new drug delivery system which offers patients,
among other benefits, safer and more effective treatment for a number of serious
diseases. Unless otherwise indicated, all references to L.A.M. include LAM
Pharmaceuticals LLC.

L.A.M. is the owner of a proprietary wound healing and transdermal drug
delivery technology that involves the use of an original Ionic Polymer Matrix
(L.A.M. IPM(TM)) for the purpose of delivering, enhancing and sustaining the
action of certain established therapeutic agents.

The L.A.M. IPM(TM) technology combines in a matrix, in a novel manner,
those drugs that are well established and generally regarded by the public, the
regulatory authorities and pharmaceutical industry as safe. When combined with
the active drug ingredient, the L.A.M. Ionic Polymer Matrix(TM) technology
allows the delivery of greater amounts of drug to the target area than is
otherwise possible. The L.A.M. Ionic Polymer Matrix(TM) technology therefore
offers potential benefits by providing faster and more prolonged therapeutic
activity, less intrusive and less painful methods of delivery and a faster onset
of therapeutic activity.

L.A.M.'s corporate objective is to develop, market and license wound
healing and transdermally delivered drugs, both prescription and
over-the-counter, using the patented L.A.M. Ionic Polymer Matrix(TM)technology.
L.A.M. intends to seek out corporate alliances and co-marketing partnerships
where other drugs and topical products can be enhanced by L.A.M.
IPM(TM)technology.

On April 15, 2002, L.A.M. obtained approval from the U.S. Food and Drug
Administration ("FDA") of its Section 510(k) pre-market notification of intent
(number K020325) to market its proprietary L.A.M. IPM Wound Gel(TM). L.A.M.
expects that commercial sales of this product will begin in August 2002.

With the exception of its IPM Wound Gel(TM), all of L.A.M's other products
are in various stages of development and testing, and L.A.M. has not obtained
FDA approval for any of these other products. As a result, to date L.A.M. has
not generated any significant revenues from the sale of pharmaceutical products,
and expects to incur losses until significant revenues are earned from the sale
of its products.

L.A.M. intends to seek out corporate alliances and co-marketing
partnerships where other drugs and topical products can be enhanced by L.A.M.
IPM(TM)technology.

L.A.M.'s Head Office and Laboratory is located at 755 Center Street,
Lewiston, New York. L.A.M.'s telephone number is (877) 526-7717 and its fax
number is (716) 754-2043.

The Offering

In order to provide an additional source of funding for L.A.M.'s
current activities including the commercialization of its current and planned
products, L.A.M. has entered into an equity line of credit agreement with
Hockbury Limited.

Under the equity line of credit agreement, Hockbury Limited has agreed to
provide L.A.M. with up to $20,000,000 of funding prior to December 25, 2002.
During this period, L.A.M. may request a drawdown under the equity line of
credit by selling shares of its common stock to Hockbury Limited, and Hockbury
Limited will be obligated to purchase the shares. The minimum amount L.A.M. can
draw down at any one time is $100,000, and the maximum amount L.A.M. can draw
down at any one time will be determined at the time of the drawdown request
using a formula contained in the equity line of credit agreement. L.A.M. may
request a drawdown once every 27 trading days, although L.A.M. is under no
obligation to request any drawdowns under the equity line of credit.

During the 22 trading days following a drawdown request, L.A.M. will
calculate the amount of shares it will sell to Hockbury Limited and the purchase
price per share. The purchase price per share of common stock will be based on
the daily volume weighted average price of L.A.M.'s common stock during each of
the 22 trading days immediately following the drawdown date, less a discount of
10%. L.A.M. will receive the purchase price less a placement agent fee payable
to GKN Securities equal to 7% of the aggregate purchase price. Hockbury Limited
may then resell all or a portion of these shares using this prospectus. GKN
Securities is the placement agent which introduced Hockbury Limited to L.A.M.
and is a registered broker-dealer.

For more details on the maximum drawdown amount, the calculation of the
purchase price and the number of shares L.A.M. will sell, see "Equity Line of
Credit Agreement" beginning on page 45 of this prospectus.

L.A.M. is registering the shares of common stock issuable to Hockbury
Limited under the equity line of credit, the 482,893 shares underlying the
warrants that L.A.M. granted to Hockbury Limited, and the 455,580 shares
underlying the warrants that L.A.M. granted GKN Securities. Warrants to purchase
209,500 shares were subsequently assigned to four employees of GKN Securities.
These shares may be offered for sale from time to time by means of this
prospectus by or for the accounts of Hockbury Limited, GKN Securities and the
four other warrant holders. L.A.M. will prepare and file amendments and
supplements to this prospectus as may be necessary in order to keep this
prospectus effective as long as the selling shareholders hold shares of L.A.M.'s
common stock or until these shares can be sold under an appropriate exemption
from registration. L.A.M. has agreed to bear the expenses of registering the
shares, including Hockbury Limited's legal fees of $25,000, but not the expenses
associated with selling the shares, such as broker discounts and commissions.

As of July 10, 2002, L.A.M. had 25,109,740 shares of common stock
issued and outstanding. The number of outstanding shares does not give effect to
shares which may be issued pursuant to the equity-line of credit or upon the
exercise and/or conversion of options, warrants or convertible notes. See
"Comparative Share Data".

L.A.M. will not receive any proceeds from the sale of the shares by selling
shareholders. However, L.A.M. will receive proceeds from any sale of common
stock to Hockbury Limited under the equity line of credit agreement and upon the
exercise of warrants held by Hockbury Limited, GKN Securities and the four other
warrant holders when, and if, they pay the exercise price in cash. L.A.M.
expects to use substantially all the net proceeds for general and administrative
expenses, research, clinical trials and sales and marketing.

The purchase of the securities offered by this prospectus involves a
high degree of risk. Risk factors include the lack of revenues and history of
loss, and the need for additional capital. See the "Risk Factors" section of
this prospectus for additional Risk Factors.

Summary Financial Data

The financial data presented below should be read in conjunction with
the more detailed financial statements and related notes which are included
elsewhere in this prospectus along with the section entitled "Management's
Discussion and Analysis and Plan of Operations."

Results of Operations:
Income Statement Data:

Three Months
Ended March 31, Year Ended Year Ended
2002 December 31, 2001 December 31, 2000
------------------- ----------------- -----------------

Sales $ -- $ -- $ --
Licensing Revenue -- 300,000 --
Operating Expenses 501,919 (2,293,299) (1,926,428)
Financial Accounting Expenses 973,379 (6,450,673) (2,878,841)
Interest Income -- 45,212 28,261
-------------------- -------------- --------------
Net Loss $(1,475,298) $(8,398,760) $(4,777,008)
============ ============ ============
Balance Sheet Data:

March 31, 2002 December 31, 2001 December 31, 2000
-------------- ----------------- -----------------

Current Assets $733,287 $158,811 $2,101,706
Total Assets 1,397,431 769,318 2,457,503
Current Liabilities 610,790 601,999 1,995,734
Total Liabilities 982,187 1,657,396 3,459,209
Working Capital (Deficiency) 122,497 (443,188) 105,972
Stockholders' Equity (Deficit) 415,244 (888,078) (1,001,706)

Forward Looking Statements

This prospectus contains various forward-looking statements that are
based on L.A.M.'s beliefs as well as assumptions made by and information
currently available to L.A.M. When used in this prospectus, the words "believe",
"expect", "anticipate", "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements may include statements
regarding seeking business opportunities, payment of operating expenses, and the

like, and are subject to certain risks, uncertainties and assumptions which
could cause actual results to differ materially from projections or estimates.
Factors, which could cause actual results to differ materially, are discussed at
length under the heading "Risk Factors". Should one or more of the enumerated
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, estimated
or projected. Investors should not place undue reliance on forward-looking
statements, all of which speak only as of the date made.

RISK FACTORS

The securities being offered hereby are highly speculative and
prospective investors should consider, among others, the following factors
related to the business, operations and financial position of L.A.M.

Although L.A.M has received approval for L.A.M. IPM Wound Gel(TM) in April 2002,
there is no guarantee that L.A.M. will receive regulatory approval for its other
products. Failure to obtain regulatory approvals for its other products will
prevent L.A.M. from marketing them and may significantly and adversely affect
its future financial performance. The pre-clinical and clinical testing,
manufacturing, and marketing of L.A.M.'s drug delivery systems is subject to
extensive regulation by numerous governmental authorities in the United States
and in other countries, including, but not limited to, the United States Food
and Drug Administration. Among other requirements, FDA approval, including a
review of the manufacturing processes and facilities used to produce drug
delivery products, is required before these products may be marketed in the
United States. Similarly, marketing approval by a foreign governmental authority
is typically required before L.A.M.'s drug delivery systems may be marketed in a
particular foreign country.

With the exception of L.A.M. IPM Wound Gel(TM), L.A.M.'s other products
have not been approved by the FDA or any foreign authority. L.A.M does not
expect to be profitable until significant revenues are generated from marketing
L.A.M. IPM Wound Gel(TM), expected to commence in the second half of 2002, or
unless and until its drug delivery products now under development receive FDA or
foreign regulatory approval and are commercialized successfully. In order to
obtain FDA approval of a product L.A.M. must demonstrate to the satisfaction of
the FDA that the product is safe and effective for its intended uses and that
L.A.M. is capable of manufacturing the product with procedures that conform to
the FDA's regulations, which must be followed at all times. The process of
obtaining FDA approvals can be costly, time consuming, and subject to
unanticipated delay. There can be no assurance that additional approvals will be
granted to L.A.M. on a timely basis, or at all.

In addition to delays in review and approval of pre-clinical and
clinical testing, delays or rejection may also be encountered based upon changes
in applicable law or regulatory policy during the period of product development
and FDA regulatory review. Any failure to obtain, or any delay in obtaining FDA
approvals would adversely affect the ability of L.A.M. to market its other
products. Moreover, even if FDA approval is granted, any approval may include
significant limitations on indicated uses for which a product could be marketed.

Both before and after approval is obtained, a product and its
manufacturer are subject to comprehensive regulatory oversight. Violations of

regulatory requirements at any stage, including the pre-clinical and clinical
testing process, the approval process, or thereafter (including after approval),
may result in adverse consequences, including the FDA's delay in approving or
refusal to approve a product, withdrawal of an approved product from the market,
and/or the imposition of criminal penalties against the manufacturer. In
addition, later discovery of previously unknown problems relating to a marketed
product may result in restrictions on such product or manufacturer including
withdrawal of the product from the market. Also, new government requirements may
be established that could delay or prevent regulatory approval of L.A.M.'s
products under development.

If sales of L.A.M. IPM Wound Gel(TM) do not meet expectations, or cost estimates
for clinical trials and research of L.A.M.'s other products are inaccurate,
L.A.M. will require additional funding. L.A.M.'s estimates of the future sales
of L.A.M. IPM Wound Gel(TM) may be substantially higher than the actual revenues
from this product, and its estimates of the costs associated with future
clinical trials and research may each be substantially lower than the actual
costs of these activities. If L.A.M.'s revenue or cost estimates are incorrect,
L.A.M. will need additional funding for its research efforts.

There can be no assurance that L.A.M. will achieve or maintain a competitive
position or that other technological developments will not cause L.A.M.'s
proprietary technologies to become uneconomical or obsolete. The biomedical
field in which L.A.M. is involved is undergoing rapid and significant
technological change. The successful development of therapeutic agents and
products will depend on L.A.M.'s ability to be in the technological forefront of
this field. There can be no assurance that L.A.M. will achieve or maintain a
competitive position or that other technological developments will not cause
L.A.M.'s proprietary technologies to become uneconomical or obsolete.

L.A.M.'s patents might not protect L.A.M.'s technology from competitors. Certain
aspects of L.A.M.'s technologies are covered by U.S. patents. In addition,
L.A.M. has a number of patent applications pending. There is no assurance that
the applications still pending or which may be filed in the future will result
in the issuance of any patents. Furthermore, there is no assurance as to the
breadth and degree of protection any issued patents might afford L.A.M. Disputes
may arise between L.A.M. and others as to the scope, validity and ownership
rights of these or other patents. Any defense of the patents could prove costly
and time consuming and there can be no assurance that L.A.M. will be in a
position, or will deem it advisable, to carry on such a defense. Other private
and public concerns may have filed applications for, or may have been issued,
patents and are expected to obtain additional patents and other proprietary
rights to technology potentially useful or necessary to L.A.M. The scope and
validity of such patents, if any, are presently unknown. Also, as far as L.A.M.
relies upon unpatented proprietary technology, there is no assurance that others
may not acquire or independently develop the same or similar technology.

L.A.M. has a history of losses and may never be profitable. L.A.M. has never
earned a profit. As of March 31, 2002 L.A.M.'s accumulated deficit was
approximately $(19,690,000). L.A.M. expects to incur additional losses during
the forseeable future. No assurance can be given that the launch of L.A.M. IPM
Wound Gel(TM)will be successful, or that L.A.M.'s other product development
efforts will be completed, that regulatory approvals will be obtained, that they
will be manufactured and marketed successfully, or that L.A.M. will ever earn a
profit.

If L.A.M. cannot obtain additional capital, L.A.M. may have to delay or postpone
development and research expenditures which may influence L.A.M.'s ability to
produce a timely and competitive product.

This offering is being made on behalf of certain selling shareholders.
L.A.M. will not receive any proceeds from the sale of the shares offered by the
selling shareholders. Although the equity line of credit from Hockbury Limited
is a potential source of funding, a decline in the trading volume or price of
L.A.M's common stock may reduce the amount L.A.M. may be able to obtain under
the equity line of credit. In addition, the equity line of credit agreement
limits L.A.M.'s ability to raise capital by selling its securities to third
parties at a discount to the market price during the term of the equity line of
credit. Clinical and other studies necessary to obtain approval of a new drug
can be time consuming and costly. The different steps necessary to obtain
regulatory approval, especially that of the FDA, involve significant costs.
Accordingly, L.A.M. will need additional capital in order to fund the costs of
future clinical trials, related research, and general and administrative
expenses. L.A.M. may be forced to delay or postpone development and research
expenditures if L.A.M. is unable to secure adequate sources of funds. These
delays in development would have an adverse effect on L.A.M.'s ability to
produce timely and competitive products. There can be no assurance that L.A.M.
will be able to obtain the funding which it will require.

L.A.M. may sell shares of its common stock in the future, including shares
issued pursuant to the equity line of credit, and these sales may dilute the
interests of other security holders and depress the price of L.A.M.'s common
stock.

As of July 10, 2002, L.A.M had 25,109,740 outstanding shares of common
stock. As of July 10, 2002, there were outstanding options, warrants and
convertible notes which would allow the holders of these securities to purchase
approximately 13,640,180 additional shares of L.A.M.'s common stock. Additional
shares of common stock, which may be sold by means of this prospectus, are
issuable under the equity line of credit and upon the exercise of warrants held
by Hockbury Limited and GKN Securities. L.A.M. may also issue additional shares
for various reasons and may grant additional stock options to its employees,
officers, directors and third parties. See " Comparative Share Data".

The issuance or even the potential issuance of shares under the equity
line of credit, in connection with any other financing, and upon exercise of
warrants, options or the conversion of promissory notes will have a dilutive
impact on other stockholders and could have a negative effect on the market
price of L.A.M.'s common stock. In addition, the shares issuable to Hockbury
Limited under the equity line of credit will be issued at a discount to the
daily volume weighted average prices of L.A.M.'s common stock during the 22
trading days prior to issuance.

As L.A.M. sells shares of its common stock to Hockbury Limited under
the equity line of credit, and Hockbury Limited sells the common stock to third
parties, the price of L.A.M.'s common stock may decrease due to the additional
shares in the market. If L.A.M. decides to draw down on the equity line of
credit as the price of its common stock decreases, L.A.M. will be required to
issue more shares of its common stock for any given dollar amount invested by
Hockbury Limited, subject to the minimum selling price specified by L.A.M. The
more shares that are issued under the equity line of credit, the more L.A.M.'s
then outstanding shares will be diluted and the more L.A.M.'s stock price may

decrease. Any decline in the price of L.A.M.'s common stock may encourage short
sales, which could place further downward pressure on the price of L.A.M.'s
common stock.

There is, at present, only a limited market for L.A.M.'s common stock and there
is no assurance that this market will continue.

L.A.M.'s common stock is traded on the OTC Bulletin Board. Trades of
L.A.M.'s common stock are subject to Rule 15g-9 of the Securities and Exchange
Commission, which rule imposes certain requirements on broker/dealers who sell
securities subject to the rule to persons other than established customers and
accredited investors. For transactions covered by the rule, brokers/dealers must
make a special suitability determination for purchasers of the securities and
receive the purchaser's written agreement to the transaction prior to sale. The
Securities and Exchange Commission also has rules that regulate broker/dealer
practices in connection with transactions in "penny stocks". Penny stocks
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ system, provided that current price and volume information with respect
to transactions in that security is provided by the exchange or system). The
penny stock rules require a broker/ dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker/dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker/dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker/dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. These disclosure requirements have the effect
of reducing the level of trading activity in the secondary market for L.A.M.'s
common stock. As a result of these rules, investors may find it difficult to
sell their shares.

COMPARATIVE SHARE DATA

As of July 10, 2002, L.A.M. had 25,109,740 outstanding shares of common
stock. The following table illustrates the comparative stock ownership of the
present shareholders of L.A.M., as compared to the investors in this offering,
assuming all shares offered by the selling shareholders are sold.
Number of
Shares

Shares outstanding as of July 10, 2002 25,109,740

Shares offered by selling shareholders:
Hockbury Limited-Equity Line of Credit Not known at this time
Hockbury Limited-Warrants 482,893
GKN Securities-Warrants 455,580

The number of shares outstanding as of July 10, 2002 excludes shares
which may be issued upon the exercise and/or conversion of other options,
warrants and convertible notes issued by L.A.M. See the table below for further
information.

The issuance of additional shares and the eligibility of issued shares
for resale will dilute L.A.M.'s common stock and may lower the price of L.A.M.'s
common stock. Investors in this offering will suffer immediate dilution since
the price paid for the securities offered will likely be more then the net
tangible book value of L.A.M.'s common stock. Net tangible book value is
calculated by dividing L.A.M.'s total assets, less intangible assets and
liabilities, and dividing it by the number of outstanding shares of common
stock.

The actual dilution to investors in this offering will depend on the
price paid for the shares and the actual prices at which L.A.M. sells shares to
Hockbury Limited under the equity line of credit agreement.

Other Shares Which May Be Issued:
- --------------------------------

The following table lists additional shares of L.A.M.'s common stock
which may be issued as the result of the exercise of outstanding options,
warrants or convertible notes:

Number of Note
Shares Reference

Shares issuable upon exercise of options and 12,701,707 A
warrants granted to L.A.M.'s officers, directors,
employees, private investors, and financial consultants.

A. Options and warrants are exercisable at prices between $0.58 and $7.50 per
share and expire between August 2002 and June 2011.

A total of 11,943,850 shares issuable upon the exercise of options and
warrants, and which are referred to in Note A, have been registered for public
sale by means of registration statements filed with the Securities and Exchange
Commission.

Market for Common STOCK.

As of July 10, 2002, there were approximately 160 record owners of
L.A.M.'s common stock. L.A.M.'s common stock is traded on the OTC Bulletin Board
under the symbol "LAMP". Set forth below are the range of high and low bid
quotations for the periods indicated as reported by the OTC Bulletin Board. The
market quotations reflect interdealer prices, without retail mark-up, mark-down
or commissions and may not necessarily represent actual transactions. L.A.M.'s
common stock began trading in August 1999.

Quarter Ending High Low

9/30/99 $ 1.38 $0.60
12/31/99 $ 4.00 $0.88

3/31/00 $10.00 $4.00
6/30/00 $ 9.25 $4.75
12/31/00 $ 4.75 $2.62

3/31/01 $ 6.06 $1.72
6/30/01 $ 2.75 $0.75
9/30/01 $ 0.95 $0.58
12/31/01 $ 0.76 $0.51

3/31/02 $ 0.99 $0.46
6/30/02 $ 1.65 $0.66

Holders of common stock are entitled to receive dividends as may be
declared by the Board of Directors and, in the event of liquidation, to share
pro rata in any distribution of L.A.M.'s assets after payment of liabilities.
The Board of Directors is not obligated to declare a dividend. L.A.M. has not
paid any dividends does not have any current plans to pay any dividends.

USE OF PROCEEDS

L.A.M. will not receive any proceeds from the sale of the shares by
Hockbury Limited, GKN Securities or the four other warrant holders. However,
L.A.M. will receive proceeds from any sale of common stock to Hockbury Limited
under the equity line of credit agreement described in this prospectus and upon
the exercise of the warrants held by Hockbury Limited, GKN Securities or the
four other warrant holders when, and if, they exercise the warrants for cash.

L.A.M. expects to use substantially all the net proceeds for research
and clinical trials, marketing, and general and administrative expenses. The
amounts L.A.M. actually uses for working capital and other purposes may vary
significantly and will depend on a number of factors including, but not limited
to, the actual net proceeds received, the amount of L.A.M.'s future revenues and
other factors described under "Risk Factors." Accordingly, L.A.M.'s management
will retain broad discretion in the allocation of the net proceeds. Pending
these uses, the net proceeds of this offering will be invested in short-term,
interest-bearing, investment-grade securities or guaranteed obligations of the
U.S. government.

Management's discussion and Analysis
AND plan of operationS

The following sets forth certain financial data with respect to L.A.M.
and is qualified in its entirety by reference to the more detailed financial
statements and notes included elsewhere in this prospectus.

Summary Financial Data

With the exception of L.A.M. IPM Wound Gel(TM), all of L.A.M.'s other
products are in the development stage and L.A.M. has not generated any revenues
from the sale of any pharmaceutical products. Revenues since its inception
represent payments received from Ixora Biomedical Company Inc. (Ixora) under
research and development cost reimbursement agreements and interest income on
invested cash balances. See "Business" for further information concerning
L.A.M.'s agreement with Ixora.

Results of Operations:

Income Statement Data:
Three Months
Ended March 31, Year Ended Year Ended
2002 December 31, 2001 December 31, 2000
------------------- ----------------- -----------------

Sales $ -- $ -- $ --
Licensing Revenue -- 300,000 --
Operating Expenses 501,919 (2,293,299) (1,926,428)
Financial Accounting Expenses 973,379 (6,450,673) (2,878,841)
Interest Income -- 45,212 28,261
------------------- ------------- --------------
Net Loss $(1,475,298) $(8,398,760) $(4,777,008)
============ ============ ============
Balance Sheet Data:

March 31, 2002 December 31, 2001 December 31, 2000
-------------- ----------------- -----------------

Results of Operations

Three months ended March 31, 2002 compared with three months ended March 31,
2001

Research and Development Expense

Research and development expenses for the three months ended March 31,
2002 increased 127% to $151,000 from $66,000 for the three months ended March
31, 2001. The increase includes activity to obtain regulatory approval (now
received) for L.A.M. IPM Wound Gel(TM) and scale up production of this product
to commercial batch quantities. Costs associated with these activities tend to
fluctuate from period to period depending on the status and timing of the
individual projects in process.

Marketing and Business Development Expense

Marketing and business development expense for the three months ended
March 31, 2002 increased 417% to $162,000 from $31,000 for the three months
ended March 31, 2001. The increase reflects the build up of marketing management
and resources and promotional activity in preparation for the market launch of
L.A.M. IPM Wound Gel(TM) in June 2002.

General and Administrative Expenses

General and administrative expenses for the three months ended March
31, 2002 decreased 53% to $190,000 from $402,000 for the three months ended
March 31, 2001. The decrease is partially due to costs incurred in 2001 to
arrange the equity line of credit which did not recur in 2002. In addition,
there was a reduction in legal, auditing and other expenditures in connection
with regulatory filings with the Securities and Exchange Commission in the first
quarter of 2002. Investor relations expense also decreased due to non-recurrence
of the exceptional level of activity in the previous year. This was offset by
costs attributable to the new laboratory facility and offices in Lewiston and
additions to the senior management team, to prepare for the market launch of the
L.A.M. IPM Wound Gel(TM) in June 2002.

The primary components of general and administrative expenses for the
three months ended March 31, 2002 and 2001 were as follows:

2002 2001
------------ -----------

Officers' salaries $ 56,000 $ 30,000
Employee salaries and benefits 51,439 16,758
Less: Salaries classified as
Research & Development (15,750) (18,000)
Investor Relations 47,903 92,533
Commissions and other costs in
connection with financings - 25,000
Financial banking and consulting - 147,000
Legal and auditing (including SEC filings) 47,048 74,939
Other expenses 29,115 34,104
----------- -----------
Total $ 215,755 $ 402,334
========= =========

Interest Expense

Interest expense for the three months ended March 31, 2002 decreased
83% to $11,000 from $61,000 for three months ended March 31, 2001 following the
conversion or repayment of all remaining convertible debentures during 2001.

Share and Option Grants

The majority of these costs were attributable to options granted to a
director for services performed, and to the repricing and extension of a number
of existing options to compensate for the earlier fall in L.A.M.'s share price.

Warrants Issued on Equity Line of Credit

The expense of $1,100,000 for the three months ended March 31, 2001
represents the fair value of the warrants issued to Hockbury Limited in
connection with the equity line of credit and the warrants issued to GKN
Securities as placement agent for the equity line.

Year Ended December 31, 2001 compared with Year Ended December 31, 2000

Licensing Revenue

During the year ended December 31, 2001, licensing revenue of $300,000
was received from Ixora Biomedical Company Inc. ("Ixora") under the terms of
their license agreement related to L.A.M.'s sexual dysfunction products.

Interest Expense

Interest expense for the year ended December 31, 2001 decreased 20% to
$233,000 from $292,000 for the year ended December 31, 2000 due to the
conversion of all remaining debentures during 2001.

General and Administrative Expenses

General and administrative expenses for the year ended December 31,
2001 increased 9% to $1,379,000 from $1,261,000 for the year ended December 31,
2000. The increase included costs attributable to increased investor relations
activity; costs of regulatory filings in respect of past and present options,
note conversions, share grants for services and quarterly and yearly filings as
required by the Securities and Exchange Commission; and costs attributable to
the new laboratory facility and offices in Lewiston and additions to the senior
management team, to prepare for the launch of L.A.M.'s first commercial product,
expected in mid-summer 2002. The net reduction in costs in connection with
financings was due to there being no new convertible note financings during

2001. This reduction was partly offset by the costs in that year of arranging
the equity line of credit.

The primary components of general and administrative expenses for the
years ended December 31, 2001 and 2000 were as follows:

2001 2000
---- ----

Officers' salaries $ 245,612 $ 123,000
Employee salaries and benefits 123,113 89,935
Less: Salaries classified as
Research & Development (96,000) (81,000)
Investor Relations 337,680 231,239
Commissions and other costs in
connection with financings 138,863 381,300
Financial Banking and Consulting 197,333 238,894
Legal and Auditing (including SEC filings) 276,415 181,200
Insurance 38,745 11,004
Other Expenses 117,030 85,398
------------- -----------
Total $ 1,378,791 $ 1,260,970
=========== ===========

Marketing and Business Development Expense

Marketing and business development expense for the year ended December
31, 2001 increased 260% to $202,000 from $56,000 for the year ended December 31,
2000. The increase is the result of the increasing activity in promoting L.A.M.
and its products including preparing for L.A.M.'s first commercial product
launch in mid-summer 2002.

Research and Development Expense

Research and development expenses for the year ended December 31, 2001
increased 51% to $480,000 from $317,000 for the year ended December 31, 2000.
The increase is primarily the result of increased clinical studies activity.
Costs associated with these activities tend to fluctuate from period to period
depending on the status and timing of the individual projects in process.

Share and Option Grants

L.A.M. is required to recognize non-cash expenses which represent the
deemed fair value of grants of stock options and of stock for services,
calculated in accordance with US generally accepted accounting principles. These
deemed non-cash costs, which are accounted for by correspondingly increasing the
company's paid in capital, increased to $4,266,000 for the year ended December
31, 2001 compared with $448,000 for the year ended December 31, 2000. This
increase included costs attributed to options and shares granted to consultants
and directors for services performed and in recognition of their additional
efforts now required to bring the company's first product to market; to options
granted in connection with the related strengthening of the management team; to
noteholders who converted their notes into common shares; and to other investors
for their investment support.

In addition, to compensate for the fall in L.A.M.'s share price during
the year, a number of existing options were repriced or had their maturity dates
extended. Costs attributed to these amended terms totaled $354,000 during 2001.

Conversion Premium

During the years ended December 31, 2001 and 2000, conversion premiums
of $1,057,844 and $2,395,093 respectively were charged to expense.

The charge in 2001 represented the deemed fair value of the enhanced
terms granted in August of that year to note holders who agreed to convert their
outstanding notes during the year.

The charge in 2000 related to the sale of convertible notes during that
year, and represented the difference between the deemed fair value of L.A.M.'s
common stock and the conversion price of the convertible notes sold.

The conversion premiums did not require the use of cash.

Warrants Issued on Equity Line of Credit

The expense of $1,100,000 for the year ended December 31, 2001
represents the fair value of the warrants issued to Hockbury Limited in
connection with the equity line of credit and the warrants issued to GKN
Securities as placement agent for the equity line.

Year Ended December 31, 2000 compared with Year Ended December 31, 1999

Interest Expense

Interest expense increased 142% to $292,000 for the year ended December
31, 2000 from $121,000 for the year ended December 31, 1999. The increase is due
to the sale of convertible notes between September 1999 and November 2000.

General and Administrative Expenses

General and administrative expenses for the year ended December 31,
2000 increased 255% to $1,261,000 from $356,000 for the year ended December 31,
1999. The increase is primarily a result of sales commissions paid in connection
with the sale of L.A.M.'s convertible notes, additional administrative personnel
and increased legal expenses.

The primary components of general and administrative expenses for the
years ended December 31, 2000 and 1999 were as follows:

2000 1999
---- ----

Officers' salaries $ 123,000 $ 50,000
Employee salaries and benefits 89,935 16,336
Less: Salaries classified as
Research & Development (81,000) (0)
Investor Relations 231,239 91,941
Commissions and other costs in
Connection with financings 381,300 27,471
Financial Banking and Consulting 238,894 42,876
Legal and Auditing (including SEC filings) 181,200 95,091
Insurance 11,004 11,178
Other Expenses 85,398 20,682
------------ -----------
Total $ 1,260,970 $ 355,575
=========== =========

Marketing and Business Development Expense

Marketing and business development expense for the year ended December
31, 2000 increased 132% to $56,000 from $24,000 for the year ended December 31,
1999. The increase is the result of the increasing activity in promoting L.A.M.
and its products.

Research and Development Expense

Research and development expenses for the year ended December 31, 2000
increased 71% to $317,000 from $185,000 for the year ended December 31, 1999.
The increase is primarily due to the start of clinical trials in Toronto, Canada
as well as deferred compensation paid to L.A.M.'s president. The clinical trials
pertain to L.A.M.'s arthritic pain drug.

Conversion Premium

During the years ended December 31, 2000 and 1999 conversion premiums
of $2,395,093 and $1,252,000, respectively, relating to the sale of convertible
notes were charged to expense. The conversion premium represents the difference
between the fair value of L.A.M.'s common stock and the conversion price of the
convertible notes sold during the year.

The conversion premium did not require the use of cash.

Liquidity and Sources of Capital

Three Months Ended March 31, 2002

L.A.M's primary source of liquidity was cash and cash equivalents which
as of March 31, 2002 was approximately $268,000, compared with approximately
$11,000 at December 31, 2001. Working capital (deficiency) improved from
approximately $(443,000) as of December 31, 2001 to $122,000 as of March 31,
2002.

L.A.M.'s operations used approximately $680,000 in cash during the
three months ended March 31, 2002. This included a $191,000 increase in prepaid
expenses connected with preparation for launch of L.A.M. IPM Wound Gel(TM),
partly offset by smaller reductions in other receivable and inventory and a
small increase in accounts payable and accrued expenses.

During this period L.A.M. also spent $68,000 for patents, trademarks, and
equipment purchases.

Cash required during the three months ended March 31, 2002 came
principally from proceeds from the exercise of stock options amounting to
$913,000 and from the sale of shares under the equity line of credit agreement
amounting to $92,000.

Year Ended December 31, 2001

L.A.M.'s primary source of liquidity as of December 31, 2001 was cash
and cash equivalents of $11,284. Working capital, exclusive of convertible
debentures converted, decreased from approximately $1,775,000 as of December 31,
2000 to $(443,000) as of December 31, 2001.

L.A.M.'s operations used approximately $1,713,000 in cash during the
year ended December 31, 2001. This was offset by decreases in accounts
receivable and inventory and an increase in accounts payable and accrued
expenses in the amount of $258,000, which provided cash.

During this period, L.A.M. also spent $282,000 for patents, trademarks, and
equipment purchases.

L.A.M. redeemed all of the remaining debentures during 2001, $108,500 of
which was repaid in cash. In addition, during 2001, L.A.M. advanced $1,075,000
in short-term loans to an officer and director of L.A.M. The amounts borrowed by
the officer and director were used to purchase shares of L.A.M.'s common stock
in an effort to stabilize L.A.M.'s stock price in the face of extensive short
selling. $435,000 of these advances were repaid during 2001.

Cash required during the year ended December 31, 2001 came from the use
of existing cash balances, the exercise of stock options amounting to $112,000
and proceeds from the sale of shares under the Equity Line of Credit Agreement
amounting to $484,000.

On January 24, 2001, L.A.M entered into an equity line of credit
agreement with Hockbury Limited in order to establish a possible source of
funding for the development of L.A.M.'s technology. The equity line of credit
agreement establishes what is sometimes also referred to as an equity drawdown
facility.

Under the equity line of credit agreement, Hockbury Limited has agreed
to provide L.A.M. with up to $20,000,000 of funding during the 20-month period
following the date of an effective registration statement. During this 20-month
period, L.A.M. may request a drawdown under the equity line of credit by selling
shares of its common stock to Hockbury Limited, and Hockbury Limited will be
obligated to purchase the shares. L.A.M. may request a drawdown once every 27
trading days, although L.A.M. is under no obligation to request any drawdowns
under the equity line of credit.

During the 22 trading days following a drawdown request, L.A.M. will
calculate the amount of shares it will sell to Hockbury Limited and the purchase
price per share. The purchase price per share of common stock will based on the
daily volume weighted average price of L.A.M.'s common stock during each of the
22 trading days immediately following the drawdown date, less a discount of 10%.
L.A.M. will receive the purchase price less a placement fee payable to GKN
Securities equal to 7% of the aggregate purchase price. Hockbury Limited may
then resell all or a portion of these shares in the public market. GKN
Securities is the placement agent which introduced Hockbury Limited to L.A.M.
and is a registered broker-dealer.

The minimum amount L.A.M. can drawdown at any one time is $100,000. The
maximum amount L.A.M. can drawdown at any one time is the lesser of $1,000,000
or the amount equal to:

o 4.5% of the weighted average price of L.A.M.'s common stock for the 60
calendar days prior to the date of the drawdown request.
o Multiplied by the total trading volume of L.A.M.'s common stock for the 60
calendar days prior to the date of the drawdown request.

L.A.M. may request a drawdown by sending a drawdown notice to Hockbury
Limited, stating the amount of the drawdown and the lowest daily volume weighted
average price, if any, at which L.A.M. is willing to sell the shares. The
minimum volume weighted average price will be set by L.A.M.'s President in his
sole and absolute discretion.

L.A.M. had issued 439,021 shares of common stock and received $483,636 in
net proceeds as of December 31, 2001 under the equity line of credit agreement.

Subsequent to December 31, 2001, L.A.M. raised additional equity of
$1,017,725 through the exercise of their stock options. In connection with these
option exercises, 1,755,000 new common shares were issued.

Subsequent to December 31, 2001, L.A.M. raised a further $446,091, net
of related commissions and costs, through a drawdown under the equity line of
credit. In connection with this drawdown, 559,934 new common shares were issued.

Year Ended December 31, 2000

L.A.M.'s operations and an increase in inventories used approximately
$1,760,000 in cash during the year ended December 31, 2000. This was offset by a
decrease in notes receivable and an increase in accounts payable and accrued
expenses in the amount of $201,000, which provided cash.

During this period, L.A.M. also spent $155,000 for patents, trademarks, and
equipment purchases.

Cash required during the year ended December 31, 2000 was generated
through sales of convertible debentures amounting to $2,466,000 and the exercise
of stock options amounting to $189,000.

Plan of Operation

During the twelve months ending December 31, 2002 L.A.M. will:

o Begin sales of its IPM Wound Gel(TM) in August, 2002.

o Continue its program to develop and commercialize other products based on
its wound healing technology

o Continue supporting the next phase of Ixora's program to commercialize
L.A.M.'s sexual dysfunction products

o Continue to develop its motion sickness patch systems in cooperation with
major multinational partners

o Continue testing L.A.M.'s skin care products with a view to licensing
L.A.M. Ionic Polymer Matrix(TM) technology to third parties for use in
products which will be classified as cosmetics or OTC drugs.

o Continue to seek and develop strategic relationships with companies
interested in using the L.A.M. Ionic Polymer Matrix(TM) technology in
conjunction with existing and future ethical, OTC and cosmetic products.

During this twelve-month period, L.A.M. anticipates hiring up to four
additional technical and marketing employees.

During this period, L.A.M. expects that it will spend between $300,000
and $400,000 on research, development, and clinical studies relating to the
L.A.M. Ionic Polymer Matrix(TM) technology, and $600,000 to $800,000 on
marketing and business development, in particular in respect of the market
launch of L.A.M. IPM Wound Gel(TM). L.A.M. plans to use its existing financial
resources as well as the proceeds from the sale of its common stock under the
equity line of credit agreement with Hockbury Limited to fund its capital
requirements during this period. It should be noted that substantial funds may
be needed for more extensive research and clinical studies before L.A.M. will be
able to sell other products on a commercial basis.

Other than funding requirements in respect of the market launch of
L.A.M. IPM Wound Gel(TM), for its research and development activities in respect
of its L.A.M. Ionic Polymer Matrix(TM) technology and for general operating
losses, L.A.M. does not have any material capital commitments.

Due to the previous lack of any significant revenues, to date L.A.M.
has relied upon proceeds realized from the public and private sale of its common
stock and convertible debentures to meet its funding requirements. Funds raised
by L.A.M. have been expended primarily in connection with research, development,
clinical studies and administrative costs. Until significant revenues commence
from commercial sale of its products, commencing with L.A.M. IPM Wound Gel(TM)
in the second half of 2002, L.A.M. will require to fund its operations through
the sale of securities, debt financing or other arrangements. However, there can
be no assurance that such financing will be available or be available on
favorable terms.

BUSINESS

L.A.M. Pharmaceutical, Corp. was incorporated in Delaware in July 1998. In
September 1998, L.A.M. acquired all of the issued and outstanding shares of LAM
Pharmaceuticals LLC for 6,000,000 shares of L.A.M.'s common stock. LAM
Pharmaceuticals LLC was organized in Florida in 1994 (initially as a
partnership) to commercialize a new drug delivery system which offers patients,
among other benefits, safer and more effective treatment for a number of serious
diseases. Unless otherwise indicated, all references to L.A.M. include LAM
Pharmaceuticals LLC.

On April 15, 2002, L.A.M. obtained approval from the U.S. Food and Drug
Administration ("FDA") of its Section 510(k) pre-market notification of intent
(number K020325) to market its proprietary L.A.M. IPM Wound Gel(TM). L.A.M. will
commence marketing this product in June 2002.

All of L.A.M's other products are in various stages of development and
testing, and L.A.M. has not obtained FDA approval for any of these other
products. As a result, to date L.A.M. has not generated any significant revenues
from the sale of pharmaceutical products, and expects to incur losses until
significant revenues are earned from marketing L.A.M. IPM Wound Gel(TM) or other
products, expected to commence in the second half of 2002.

L.A.M. intends to seek out corporate alliances and co-marketing
partnerships where other drugs and topical products can be enhanced by L.A.M.
IPM(TM)technology.

In order to fully understand and appreciate the significance and
effectiveness of L.A.M.'s drug delivery technology it is important to understand
how various drug-based formulations are applied to the skin and the ways that
substances applied to the skin are absorbed by the skin and other structures of
the body.

For many years, lotions, creams, suspensions and solutions of various
natural (herbal) and therapeutic (drug) substances have been applied to the
skin. When it comes to treating pain, sexual dysfunction and other disease
states which emanate from structures of the body below the skin, topical therapy
is not effective unless the therapeutic agent can penetrate the outer layer of
the skin (stratum corneum) which acts as a protective barrier. This layer
consists of numerous dead cells and cells in transition, which collectively form
an effective barrier to penetration of substances, such as bacteria, in the air
or in water. Thus the stratum corneum plays an important role in protecting the
body from invasion by harmful substances.

It is this same protective role which has posed a major challenge over
the years regarding devising a mechanism that can effectively penetrate the
stratum corneum for the purpose of delivering therapeutic substances to
structures deep within the body.

In 1994, L.A.M.'s scientists discovered that certain molecules called
polymers were found to possess strong electrical charges which, when combined
with other polymers of a specific electrical charge, are able to effectively
penetrate the outer layers of the skin. In addition, these molecules are able to
attach or surround other molecules such as therapeutic drug molecules and carry
them within a matrix through the outer layers of the skin into the deeper
structures below. L.A.M.'s scientists recognized that these discoveries would be
of great significance to the delivery of therapeutic agents. This phenomenon,
which is the basis for the L.A.M. Ionic Polymer Matrix(TM) (L.A.M. IPM(TM))
delivery system, is covered by ten U.S. patents which are owned by L.A.M.

The L.A.M. Ionic Polymer Matrix(TM) technology combines in a matrix, in
a novel manner, those drugs that are well established and generally regarded by
the public, the regulatory authorities and pharmaceutical industry as safe. When
combined with the active drug ingredient, the L.A.M. Ionic Polymer Matrix(TM)
technology allows the delivery of greater amounts of drug to the target area
than is otherwise possible. The L.A.M. Ionic Polymer Matrix(TM) technology
therefore offers potential benefits by providing faster and more prolonged
therapeutic activity, less intrusive and less painful methods of delivery and
faster onset of therapeutic activity.

L.A.M.'s products are regulated in the United States by the FDA.
L.A.M's first product, L.A.M. IPM Wound Gel(TM) falls into the hydrogel and burn
dressing group as defined by the FDA, and is therefore considered a Class I
device (pursuant to FDA ruling of November 4, 1999). Class I devices are subject
to "general controls". This is the lowest level of FDA control that focuses on
basic factors such as quality regulation.

L.A.M. is of the opinion that other products which it is developing
will be classified as cosmetics, OTC drugs, or new drugs. Products classified as
cosmetics or OTC drugs may be marketed without FDA approval. New drugs that are
not cosmetics and that are not considered an OTC drug must be approved by the
FDA prior to marketing in the United States. Before human testing can begin with
respect to a new drug in the United States preclinical studies are conducted in
laboratory animals to evaluate the potential efficacy and the safety of a
product. Human clinical studies generally involve a three-phase process. The
initial clinical evaluation, Phase I, consists of administering the product and
testing for safe and tolerable dosage levels. Phase II trials continue the
evaluation of safety and determine the appropriate dosage for the product,
identify possible side effects and risks in a larger group of subjects, and
provide preliminary indications of efficacy. Phase III trials consist of testing

for actual clinical efficacy within an expanded group of patients at
geographically dispersed test sites.

L.A.M. believes that its L.A.M. IPM(TM) technology, when used with
prescription drugs, will be regulated as an unapproved new drug and will require
approval by the FDA. Conversely, L.A.M.'s IPM technology, when used with a
cosmetic or an OTC drug, could be marketed without FDA approval.

Production scale up and manufacture of L.A.M. IPM Wound Gel(TM) has
been contracted to an independent FDA approved manufacturer. The first
production batch of L.A.M. IPM Wound Gel(TM) was produced in April 2002.

L.A.M. has developed a comprehensive marketing strategy for L.A.M. IPM
Wound Gel(TM) that covers direct sales to wound healing centers and other
specialized medical practices, Internet sales, sales through contract sales
organizations and licensing.

L.A.M. is also evaluating a limited number of IPM/drug formulations
that have shown promise during preliminary clinical investigation. L.A.M.'s
preferred course for these formulations is to negotiate licensing agreements
and/or joint ventures with larger pharmaceutical companies which have the
financial resources to fund the research and/or clinical trials necessary to
complete the development of L.A.M.'s products.

If the results of the clinical trials involving these formulations are
promising, L.A.M. may then be in a position to negotiate licenses which would
generate sufficient revenue so as to allow L.A.M. to exploit the L.A.M. IPM(TM)
technology using a variety of other drugs. It should be emphasized that a number
of risks may be associated with this approach. While preliminary results have
been promising, there is no certainty that the efficacy of the IPM/drug
formulations currently being tested will be borne out in subsequent clinical
trials. In addition, more clinical studies may be requested by a potential
licensee before it is willing to enter into an agreement.

L.A.M.'s objective is to raise sufficient capital to enable it to
sustain ongoing research, marketing and administrative overhead as well as to
enable it to undertake the work necessary to obtain FDA approval for new
products, if required, and to license the products to third parties.

The longer L.A.M. is able to fund development and the clinical trials
for its products and thereby establish their efficacy, the greater their value
will be to a potential licensee given the reduced risk of failure. Consequently,
the longer L.A.M. retains sole ownership of the products the greater will be its
bargaining position with prospective licensees and strategic alliance partners.
Indeed, the industry places incrementally larger different values on drugs as
they progress through the clinical trials required by the FDA.

L.A.M. plans to market its products in any country where a suitable market
exists and which has approved L.A.M.'s products for sale.

At the present time L.A.M. is focusing its efforts on the following
projects:

WOUND HEALING

In mid-April 2002, L.A.M.'s 510(k) Pre-Marketing Notification
submission (K020325) to the FDA for L.A.M. IPM Wound Gel(TM) was approved. This
approval gives the Company the ability to market L.A.M. IPM Wound Gel(TM) as a
Class 1 OTC device, while also acting as a platform to enable the Company to
market the product internationally.

L.A.M. IPM Wound Gel(TM) is designed to deliver high concentrations of
sodium Hyaluronate to an ulcer bed, providing an optimal environment for wound
healing. L.A.M. IPM Wound Gel(TM) takes full advantage of the proprietary L.A.M.
Ionic Polymer Matrix(TM) technology to saturate an ulcer bed with the L.A.M.
IPM(TM) active ingredient, hyaluronic acid, a highly purified derivative of
sodium Hyaluronate, derived from avian sources.

QST Consultations Ltd., an independent consulting firm based in
Allendale, Michigan, reported very positive results of L.A.M.'s clinical trials
in the treatment of hard to heal skin ulcers. By the end of the study, 47 of the
53 ulcers (89%) reported in the study, had healed within twenty-five weeks of
applying L.A.M. IPM Wound Gel(TM). The mean time to healing was 12 weeks and the
median time was 8.2 weeks.

Because of poor circulation, diabetics are prone to the development of
severe and hard to treat ulcers in the extremities, particularly in the area of
the lower legs. Based on review of the data, L.A.M. has contracted DPT
Laboratories in San Antonio, Texas to initially produce commercial quantity
batches of L.A.M. IPM Wound Gel(TM). L.A.M. is expected to accelerate its
wound-healing product for the purpose of slow healing diabetic ulcers, which
have not responded to previous treatment.

As a derivative of L.A.M. IPM Wound Gel(TM), L.A.M. is also developing
a wound healing matrix designed to be used on incisions following surgical
procedures. One of the most common post-surgical complications is the
development of scar tissue, in tissue sutured or stapled following surgery.
Adhesions often form and result in a painful condition, which sometimes requires
surgical treatment. The availability of a product which could reduce such
complications will reduce the cost of post-operative care significantly. L.A.M.
believes its wound healing matrix has potential as an effective post-operative
treatment for the prevention of adhesions and scar tissue following surgery.

SEXUAL DYSFUNCTION

Female sexual dysfunction matrix

L.A.M.'s Personal Female Lubricant (Sexual Dysfunction) Matrix is a
highly viscoelastic (lubricating) liquid incorporating proprietary L.A.M.
IPM(TM) technology. The matrix provides enhanced lubrication while Vitamin B3
(Niacin), encapsulated in the technology, stimulates the tissues of the female
genitalia. Vitamin B3 has long been associated with a process known as
"flushing", whereby the blood supply in the stimulated area is increased.

The L.A.M. IPM(TM) - Personal Female Lubricant (Sexual Dysfunction)
Matrix is designed primarily to address the problems of mature women who often
experience post-menopausal problems that may inhibit their intimate
relationships. Specifically, the matrix acts to either eliminate or at least

substantially minimize post-menopausal symptoms including vaginal dryness, pain
during intercourse and absence of feeling or sensation.

L.A.M. IPM(TM) - Personal Female Lubricant (Sexual Dysfunction) Matrix
is not classified as a drug. The product uses substances which have been
approved by the regulatory authorities for many applications. Vitamin B3, for
example, forms a part of B Complex taken orally as a daily supplement by
millions of people worldwide. The phenomenon of flushing is not only harmless,
but has been declared by several regulatory authorities as beneficial.
Consequently, L.A.M. believes that FDA approvals are not required for this
product. L.A.M. will ensure, however, that the matrix is manufactured to Good
Manufacturing Standards and that the product is safe and performs to its
specifications.

Male Sexual Dysfunction Gel

L.A.M. will continue to study the combination of Alprostadil and the
L.A.M. IPM(TM) technology. L.A.M.'s technology has been successfully used to
develop a topical gel which, when applied to the genitals, provides a safe and
effective treatment for male impotency, a problem affecting 140 million men
worldwide. The gel is applied easily and without discomfort to the outside skin
of the male genitals a few minutes before sexual intercourse. The side-effects
experienced with tablets or intra-urethral treatments are minimized and are of a
minor and infrequent nature. L.A.M.'s IPM matrix utilizes an established agent
which has been approved for over 15 years.

L.A.M.'s gel offers several major advantages over current treatments
(Viagra, Muse, etc.). The gel is applied directly to the outside skin of the
male genitals. Thus pain associated with invasive therapy is eliminated.
Furthermore, side-effects associated with tablets (drug interactions) are
reduced to a very low incidence and are very mild when they infrequently occur.
Sexual activity can commence almost immediately after application of the gel
(within 2 to 3 minutes).

Licensing of Sexual Dysfunction Products

In December 1997, L.A.M. granted an exclusive worldwide license to Ixora
Bio-Medical Co. ("Ixora") for the marketing, sale and distribution of certain of
its transdermal drugs for the treatment of male and female sexual dysfunction.
L.A.M. has received licensing payments of $500,000 from Ixora. Ixora is required
to reimburse L.A.M. for all costs of clinical studies and related research
required by the FDA or other government agencies as well as patent procurement
and maintenance costs, provided however that after January 1, 2000 Ixora is not,
without its consent, obligated to reimburse L.A.M. for costs in excess of
$10,000 per quarter. L.A.M. will receive the following royalties on sales by
Ixora:

o 9% of all Net Sales of licensed products approved by the FDA and for which
the patent rights have not expired.

o 6.5% of all Net Sales of all licensed products which did not require FDA
approval and for which the patent rights have not expired.

o 4.5% of all Net Sales of all licensed products for which the patent rights
have expired or have been held to be invalid.

For purposes of the license agreement the term "Net Sales" means
gross sales less advertising/promotion expenses not exceeding 8%
of gross sales and sales taxes.

In January 1998, L.A.M. acquired a 45% interest in Ixora for $207,360. As a
result of subsequent sales by Ixora of its common stock to other persons,
L.A.M., as of May 15, 2002, owned 18% of Ixora's common stock.

EXTREME DRY SKIN

L.A.M.'s IPM matrix spreads easily over large areas of skin, making it
ideal for use as a cosmetic in various applications to the skin. Cosmetics are a
multi-billion dollar a year industry that do not require approval before
marketing, although cosmetics must be safe, contain appropriate cosmetic
ingredients and be labeled properly. Various uses for L.A.M.'s product include
controlling body odors, relief of dryness, and for moisturization. For example,
the IPM matrix could be used as a lubricant, to replenish moisture and general
skin conditioning, particularly because it is non-staining and non-irritating.
When used with a fragrance, it could control odor. When combined with certain
over-the-counter (OTC) drugs, L.A.M.'s IPM-drug matrix could be marketed as a
cosmetic.

Certain products marketed in the United States are considered cosmetics
and OTC drugs because they make cosmetic claims as well as therapeutic claims
and are intended to treat or prevent disease. Examples of such products include,
but are not limited to, anti-dandruff shampoos; sunscreens; make-ups,
moisturizers and skin care products that bear sunscreen, skin protectant or acne
claims; products that make breath-freshening or whitening claims;
antiperspirants that bear deodorant claims; and anti-microbial soaps. These
products must comply with the FDA requirements for both cosmetics and OTC drugs.

As a cosmeceutical, a combination of an OTC drug and a cosmetic
product, the IPM matrix can be used for a variety of topical and other uses.
These include use with certain antibiotic first aid products, antifungal drugs,
dandruff, dermatitis and psoriasis control products, external analgesics, skin
protectant-type products, such as for poison ivy and fever blisters and cold
sores, first aid antiseptics, and anorectal products. Preliminary skin care
trials have been successfully completed on approximately twenty patients in the
Redding, California area by a cutaneous surgeon and dermatologist. Since L.A.M.
is of the opinion that its skin care products will be classified as a cosmetic
or an OTC drug, these skin care trials are being conducted without FDA approval.

MOTION SICKNESS

L.A.M. has signed a product development and licensing agreement with a
Canadian subsidiary of a U.S. based multinational pharmaceutical corporation to
develop and market a motion sickness patch that will incorporate their version
of dimenhydrinate with L.A.M.'s patented L.A.M. Ionic Polymer Matrix(TM)
technology. Delivering the drug using L.A.M IPM(TM) technology is expected to
achieve controlled release of the drug over a 24-hour period, thus providing the
patch wearer with the maximum protection against motion sickness. Using the

L.A.M. IPM(TM) transdermal method also requires substantially smaller amount of
the drug per dose than if the same drug were taken orally. As a result, persons
using the patch experience little or no drowsiness.

Working with its partner, L.A.M. believes this project will result in a
product that is substantially superior to the original offering. Preliminary
results have shown a faster onset, prolonged therapeutic effect, and minimal
unpleasant side effects all with a reduced dosage as compared to the original
oral application. Key meetings have taken place in the partner's sister company
in Milan, Italy in November 2001 to discuss the design of the commercial version
of the motion sickness patch.

L.A.M. and its partner have agreed to work jointly toward the full approval
of the motion sickness patch by the Canadian Therapeutic Products Directorate.
As a first step in this process, L.A.M. will conduct bioavailability and product
safety trials, expected to commence in the second half of 2002.

GOVERNMENT REGULATION

L.A.M.'s drug and cosmetic products are regulated in the United States
under the Federal Food, Drug and Cosmetic Act (FD&C Act), the Public Health
Service Act, and the laws of certain states. The FDA exercises significant
regulatory control over drugs manufactured and/or sold in the United States,
including those that are unapproved.

Federal laws such as the FD&C Act cover the testing, manufacture,
distribution, marketing, labeling, advertising (for prescription drugs), of all
new drugs. Drug registration and listing requirements also exist.

L.A.M. is of the opinion that the products being developed by L.A.M. will
be subject to one or more of the following FDA classifications:

Cosmetics

Cosmetics are generally the least regulated by the FDA compared to
other products subject to the FD&C Act. The legal distinction between cosmetics
and drugs is typically based on the intended use of the product, which is
normally discerned from its label or labeling. Cosmetic products are those
intended for "cleansing, beautifying, promoting attractiveness, or altering
appearance" whereas drugs are those intended for "diagnosis, cure, mitigation,
treatment, or prevention of disease", or that "affect the structure or any
function of the body".

A claim suggesting that a product affects the body in some
"physiological" way usually renders the product a drug - even if the effect is
temporary. A claim that the product penetrates and affects layers beneath the
skin's surface most likely would be viewed by the FDA as a drug claim. However,
claims that a product affects appearance through a "physical" effect are
generally considered cosmetic claims. The FDA's rationale for this distinction
is that a claim of a physiological effect is a claim that the product "affects"
the structure or function of the body, which is one element of the statutory
definition of a drug. A claim indicating that a product's effects are on the
surface of the skin can be a cosmetic claim.

Although cosmetics may be marketed without FDA approval, in order to be
marketed lawfully as a cosmetic, the product must be properly labeled and each
ingredient and each finished cosmetic product must be adequately substantiated
for safety prior to marketing.

Products which are not cosmetics, and which are marketed in the United
States, must either comply with specified OTC drug regulations (monographs) or
be specifically approved through the New Drug Application (NDA) or biologic
licensure process.

OTC Drugs

OTC drugs generally are defined as those drug products that can be used
safely and effectively by the general public without seeking treatment by a
physician or other health care professional. Thus, they do not require a
prescription by a health care professional and are available at retail
establishments. An OTC drug may be marketed without FDA approval if it conforms
to a particular product monograph as described below and otherwise meets the
requirements of the FD&C Act.

OTC monographs list active ingredients, their dosage levels, and uses
(claims) for which OTC drug products are considered generally recognized as safe
and effective for specific use and are not misbranded. If a particular level of
an active ingredient and claim are allowed by a monograph, then a manufacturer
may market a product containing that ingredient and bearing that claim without
specific FDA approval, subject to compliance with other requirements of the
monographs and FD&C Act, including drug registration and listing obligations.
Aspirin is a common drug allowed by a monograph.

If a drug product does not conform to a particular OTC monograph, then
typically a New Drug Application must be reviewed and approved by the FDA prior
to marketing. Unlike prescription drugs, OTC drugs must bear adequate directions
for safe and effective use and warnings against misuse.

New Drug Applications and Biologic License Applications

New drugs and products that are not cosmetics or devices and that are
not covered by an OTC monograph must be approved by the FDA prior to marketing
in the United States. Pre-clinical testing programs on animals, followed by
three phases of clinical testing on humans, are typically required by the FDA in
order to establish product safety and efficacy. L.A.M. believes that its L.A.M.
IPM(TM) technology, when used with approved or unapproved prescription drugs or
biologics, will be regulated as an unapproved new drug or unapproved biologic
and will require approval by the FDA.

It is also possible that the L.A.M. IPM(TM) technology may be regulated
as a combination drug and medical device, in which case it would be subject both
to medical device and drug regulation.

Medical device regulation is based on classification of the device into
three classes, I, II, or III. Class III medical devices are regulated much like
drugs, whereas Class I and II devices are subject to abbreviated clearance
procedures. It is also possible that the use of the L.A.M. IPM(TM) technology
with a monographed OTC drug could render the product an unapproved new drug,

which would mean that the product is subject to new drug application approval
requirements before marketing.

The FDA may choose to regulate certain uses of the L.A.M. IPM(TM)
technology as a medical device if it determines that the mechanism by which the
L.A.M. IPM(TM) technology exerts its effects meets the definitional requirements
of a medical device. A medical device is a product that, among other
requirements, does not achieve its primary intended purposes through chemical
action within or on the human body and is not dependent upon being metabolized
for the achievement of its primary intended purposes. Although L.A.M. expects
that most uses of the L.A.M. IPM(TM) technology will be regulated as a drug,
which is in essence a product that usually achieves its effects by chemical
action or physiological action in or on the body, to the extent that the L.A.M.
IPM(TM) technology is used to deliver pharmaceutically active ingredients, it
can be subject to both medical device and drug regulation.

The first stage of evaluation, pre-clinical testing, must be conducted
in animals. After safety has been demonstrated, the test results are submitted
to the FDA (or a state regulatory agency) along with a request for authorization
to conduct clinical testing, which includes the protocol that will be followed
in the initial human clinical evaluation. If the applicable regulatory authority
does not object to the proposed study, the investigator can proceed with Phase I
trials. Phase I trials consist of pharmacological studies on a relatively few
number of human subjects under rigidly controlled conditions in order to
establish lack of toxicity and a safe dosage range.

After Phase I testing is completed, one or more Phase II trials are
conducted in a limited number of patients to continue to test the product's
safety and also its efficacy, i.e. its ability to treat or prevent a specific
disease. If the results appear to warrant further studies, the data are
submitted to the applicable regulatory authority along with the protocol for a
Phase III trial. Phase III trials consist of extensive studies in large
populations designed to assess the safety of the product and the most desirable
dosage in the treatment or prevention of a specific disease. The results of the
clinical trials for a new drug are submitted to the FDA as part of a New Drug
Application ("NDA").

Biological drugs, such as vaccines, are subject to Biologics License
Applications (BLAs), not NDAs as are other drugs. They must be safe, pure and
potent. Generic competition does not exist for biologics, as it does for other
drugs. Biological drugs are generally subject to the same testing,
manufacturing, distribution, marketing, labeling, advertising and other
requirements for other drugs.

To the extent all or a portion of the manufacturing process for a
product is handled by an entity other than L.A.M., the manufacturing entity is
subject to inspections by the FDA and by other Federal, state and local agencies
and must comply with FDA Good Manufacturing Practices ("GMP") requirements. In
complying with GMP regulations, manufacturers must continue to expend time,
money and effort in the area of production, quality control and quality
assurance to ensure full compliance.

L.A.M. may undertake extensive and costly clinical testing to assess
the safety and efficacy of its potential drug delivery systems. Failure to
comply with FDA regulations applicable to such testing can result in delay,
suspension or cancellation of testing, and refusal by the FDA to accept the
results of the testing. In addition, the FDA may suspend clinical studies at any

time if it concludes that the subjects or patients participating in trials are
being exposed to unacceptable health risks. Further there can be no assurance
that human clinical testing will show any of L.A.M.'s drug delivery systems to
be safe and effective or that data derived from any testing will be suitable for
submission to the FDA.

The processes required by European regulatory authorities before
L.A.M.'s systems can be marketed in Western Europe are similar to those in the
United States. First, appropriate pre-clinical laboratory and animal tests must
be done, followed by submission of a clinical trial exemption or similar
documentation before human clinical studies can be initiated. Upon completion of
adequate and well controlled clinical studies in humans that establish that the
drug is safe and efficacious, regulatory approval of a Market Authorization
Application must be obtained from the relevant regulatory authorities. As with
the FDA review process, there are numerous risks associated with the Market
Authorization Application review. Additional data may be requested by the
regulatory agency reviewing the Market Authorization Application to demonstrate
the contribution of a product component to the clinical safety and efficacy of a
product, or to confirm the comparable performance of materials produced by a
changed manufacturing process or at a changed manufacturing site.

The process of biologic and new drug development and regulatory
approval or licensure requires substantial resources and many years. There can
be no assurance that regulatory approval will ever be obtained for products
developed by L.A.M. Authorization for testing, approval for marketing of drugs,
including biologics, by regulatory authorities of most foreign countries must
also be obtained prior to initiation of clinical studies and marketing in those
countries. The approval process varies from country to country and the time
period required in each foreign country to obtain approval may be longer or
shorter than that required for regulatory approval in the United States.

There are no assurances that clinical trials conducted in foreign
countries will be accepted by the FDA for approval in the United States. Product
approval or licensure in a foreign country does not mean that the product will
be approved or licensed by the FDA and there are no assurances that L.A.M. will
receive any approval or license by the FDA or any other governmental entity for
the marketing of a drug product. Likewise product approval by the FDA does not
mean that the product will be approved or licensed by any foreign country.

Product Status

L.A.M. has completed development of L.A.M. IPM Wound Gel(TM)and obtained
approval (number K020325) from the FDA on April 15, 2002 to market the product.

All of L.A.M.'s other products are in various stages of development and
testing and the commercial sale of any of these products may not occur until
2003 at the earliest. As a result, L.A.M. expects to incur significant product
development costs for the foreseeable future. L.A.M.'s estimates of the costs
associated with future research and clinical studies may be substantially lower
than the actual costs of these activities. If L.A.M.'s cost estimates are
incorrect, L.A.M. will need additional funding for its research efforts. There
can be no assurance that L.A.M.'s other products will prove to have any
therapeutic or other value.

The following is a summary of the status of the products which are
being developed by L.A.M.:

Projected Cost Projected Date
Anticipated FDA Needed to Complete of Completion
Product Name Classification Studies/Trials of Studies/Trials

Wound Healing Cosmetic/OTC Drug $1,000,000(1) Completed
Male Sexual Dysfunction Prescription Drug $2,000,000 Dec. 2002 (2)
Female Sexual Dysfunction Cosmetic/OTC Drug $1,500,000 Dec. 2002 (2)
Extreme Dry Skin Cosmetic/OTC Drug $1,500,000 (3)
Motion Sickness OTC Drug $ 500,000 Dec. 2002

(1) Projected costs associated with the wound healing product include costs for
scaling up production.

(2) L.A.M. has licensed this product to Ixora. Pursuant to the terms of the
Licensing Agreement, Ixora is responsible for all the costs required to
obtain regulatory approval of this product.

(3) Beginning in July or August 2002 L.A.M. plans an aggressive sampling
program for its Extreme Dry Skin product with consumers, doctors and skin
care professionals.

Research and Development

As part of its ongoing research and development program, L.A.M. intends
to develop and commercialize as many products as possible based on its L.A.M.
IPM(TM) technology. L.A.M.'s long-range goal is to exploit other uses of its
matrix drug delivery system to improve the therapeutic effects of various drugs.

During the years ended December 31, 1999, 2000 and 2001 L.A.M. spent
approximately $185,000, $317,000, and $480,000 respectively on research and
development. L.A.M.'s research and development expenditures do not include
research and development expenses relating to L.A.M.'s Sexual Dysfunction Drug
which were paid by Ixora.

Patents and Trademarks

As of July 10, 2002, L.A.M. owned ten U.S. patents, two U.S. patent
applications and twelve international patent applications designating over 100
foreign countries with claims relating to its sustained release delivery matrix
system, systems containing drug preparations, uses of the systems for various
treatment therapies and addiction therapeutic program.

L.A.M.'s patents will expire between 2015 and 2017.

Employees

As of July 10, 2002, L.A.M. had eight full time employees and one part time
employee.

offices and facilities

In the fourth quarter of 2001, L.A.M. consolidated its research, pilot
production and head office activities into its 3,500 square foot facility in
Lewiston, New York. This facility is leased at a rate of $1,700 per month. The
lease on this space expires in 2003.

L.A.M. continues to maintain a business office at 800 Sheppard Avenue West,
Commercial Unit 1, Toronto, Ontario, Canada. L.A.M. has leased this space at
$4,675 per month until August 31, 2004.

Management

Name Age Position

Joseph T. Slechta 53 President, Chief Operating Officer and
Director
Alan Drizen 62 Chief Executive Officer and Director
Peter Rothbart, M.D. 63 Treasurer and Director
Gary M. Nath 57 Secretary and Director

Joseph T. Slechta has been L.A.M.'s Chief Operating Officer since
November 2000. Mr. Slechta was appointed a director and became L.A.M.'s
President on May 11, 2001. Between November 1998 and November 2000, Mr. Slechta
was a consultant to L.A.M. Between 1994 and 2000 Mr. Slechta assisted corporate
clients in financing, reorganization, expansion and improving operations. From
1987 to 1992, Mr. Slechta held executive management positions with three
Canadian corporations. His corporate assignments included the management and
financing of a high-technology company, the reorganization and sale of a
helicopter company and financial consulting services to a major Canadian life
insurance company. From 1979 to 1986 Mr. Slechta managed the treasury operations
of Continental Bank.

Alan Drizen has been a director of L.A.M. since its inception. Prior to
May 12, 2001 Mr. Drizen was L.A.M.'s President. On May 12, 2001 Mr. Drizen
became L.A.M.'s Chief Executive Officer. Mr. Drizen has spent 30 years in senior
positions including Chairman of the Board and a director of a number of
pharmaceutical companies. He was educated in England, the United States and
Canada and trained as a biochemist. Mr. Drizen has both technical and managerial
expertise in the development and commercialization of new drugs. In the late
1980's, Mr. Drizen and his team of scientists characterized molecules known as
mucopolysaccharides which led to the founding of Hyal Pharmaceutical
Corporation, a public company listed on the Toronto Stock Exchange and NASDAQ.
The analytical standard, developed by his team, for one particular molecule,
sodium hyaluronate, now a component of many pharmaceutical preparations, is
still used by the Canada Health Protection Branch as the official standard for
this drug. Mr. Drizen's interest in polymer chemistry eventually led to his
collaboration with Dr. Peter Rothbart and to the discoveries on which L.A.M.'s
technologies are based.

Peter Rothbart, M.D., Medical Director, has been a director and Treasurer
of L.A.M. since its inception. He has been a consulting anesthetist for over 20
years and is a leading pain specialist and principal of the Rothbart Pain
Management Clinic in Ontario, Canada. Dr. Rothbart is currently President of the
North American Cervicogenic Headache Society, an association of specialists in

the treatment of cervicogenic headaches. He was also recently elected Chair of
the Chronic Pain Section of the Ontario Medical Association. In collaboration
with Alan Drizen, Dr. Rothbart discovered the IPM delivery system.

Gary M. Nath has been Secretary and a director of L.A.M. since its
inception. He has a BS degree in Biology and Chemistry, two years of
post-graduate work in Biochemistry and a law degree. Mr. Nath has worked in the
patent and trademark law departments of FMC Corporation, NL Industries, and
Warner Lambert Company in the capacities of patent attorney, group patent and
trademark counsel and general patent counsel, respectively. Mr. Nath is the
founding and managing partner of the intellectual property law firm Nath &
Associates located in Washington, DC. He counsels a wide range of domestic and
international clients across a broad range of technologies, including chemical,
pharmaceutical, biotechnical and mechanical fields. He has published extensively
and has spoken on intellectual property law procurement, enforcement and
transfer before numerous professional and lay groups in the United States and
Japan. He is a member of the American Bar Association, the New Jersey Bar
Association, the American Intellectual Property Law Association, the
International Patent Association, the Association of University Technology
Managers, and is admitted to practice before the U.S. Patent and Trademark
Office, Canadian Patent Office and numerous courts around the United States.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and 10% or greater shareholders of L.A.M. to file with the
Securities and Exchange Commission initial reports of ownership (Form 3) and
reports of changes in ownership of equity securities of L.A.M. (Form 4 and Form
5) and to provide copies of all such forms as filed to L.A.M. To L.A.M.'s
knowledge, the following persons did not file all reports required by Section
16(a) during the fiscal year ended December 31, 2001.

Number of
Type Number of Transactions
Name of Report Reports Not Filed Not Reported
---- --------- ----------------- ------------

Alan Drizen Form 4 17 681

Peter Rothbart Form 4 8 17

Executive Compensation.

The following table sets forth in summary form the compensation earned
or received by (i) the Chief Executive Officer of L.A.M. and (ii) by each other
executive officer of L.A.M. who earned or received in excess of $100,000 during
the fiscal years ended December 31, 1999, 2000 and 2001.

Annual Compensation Long Term Compensation
---------------------------------------- -----------------------------------------
All
Re- Other
Other stric- Com-
Name and Compen- Stock Options pensa-
Principal Fiscal Salary Bonus sation Awards Granted tion
Position Year (1) (2) (3) (4) (5) (6)
- ----------- ----- ------- ------- ---------- --------- ---------- --------

Joseph Slechta 2001 $103,000 $25,000 -- $85,000 3,600,000 --
President and
Chief Operating
Officer

Alan Drizen, 2001 $120,000 -- -- -- 300,000 --
Chief Executive 2000 $120,000 -- -- -- -- --
Officer 1999 $110,000 -- -- -- -- --

(1) The dollar value of base salary (cash and non-cash) received or earned.
(2) The dollar value of bonus (cash and non-cash) received.
(3) Any other annual compensation not properly categorized as salary or
bonus, including perquisites and other personal benefits, securities or
property.
(4) During the period covered by the foregoing table, the shares of
restricted stock issued as compensation for services. The table below
shows the number of shares of L.A.M.'s common stock owned by the officers
listed above, and the value of such shares as of December 31, 2001:

Name Shares Value

Joseph Slechta 120,000 $ 68,400
Alan Drizen 1,608,000 $916,560

(5) The shares of common stock to be received upon the exercise of all stock
options granted during the period covered by the table
(6) All other compensation received that L.A.M. could not properly report in
any other column of the table.

The following shows the amounts which L.A.M. expects to pay to its officers
during the twelve month period ending December 31, 2002, and the time which
L.A.M.'s executive officers plan to devote to L.A.M.'s business. L.A.M. does not
have employment agreements with any of its officers.

Proposed Time to be Devoted
Name Compensation To Company's Business

Joseph Slechta $120,000 100%
Alan Drizen $120,000 100%
Peter Rothbart -- 5%
Gary M. Nath -- 15%

L.A.M.'s Board of Directors may increase the compensation paid to
L.A.M.'s officers depending upon the results of L.A.M.'s future operations.

Gary Nath provides legal services to L.A.M. See "Certain Relationships and
Transactions" below. During the year ending December 31, 2002, L.A.M. expects
that it will continue to use the services of Mr. Nath's law firm.

L.A.M. does not have any employment agreements with any of its executive
officers.

Long Term Incentive Plans - Awards in Last Fiscal Year

None.

Employee Pension, Profit Sharing or Other Retirement Plans

L.A.M. does not have a defined benefit, pension plan, profit sharing or
other retirement plan, although L.A.M. may adopt one or more of such plans in
the future.

Compensation of Directors

Standard Arrangements. At present, L.A.M. does not pay its directors for
attending meetings of the Board of Directors, although L.A.M. may adopt a
director compensation policy in the future. L.A.M. has no standard arrangement
pursuant to which directors of L.A.M. are compensated for any services provided
as a director or for committee participation or special assignments.

Other Arrangements. During the year ended December 31, 2001, and except as
disclosed elsewhere in this registration statement, no director of L.A.M.
received any form of compensation from L.A.M.

See " Stock Option and Bonus Plans" below for information concerning
stock options and stock bonuses granted to L.A.M.'s officers and directors.

Stock Option and Bonus Plans

L.A.M. has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. A summary description of each Plan follows. In some
cases these three Plans are collectively referred to as the "Plans".

Incentive Stock Option Plan. The Incentive Stock Option Plan authorizes
the issuance of options to purchase up to 1,000,000 shares of L.A.M.'s Common
Stock, less the number of shares already optioned under both this Plan and the
Non-Qualified Stock Option Plan. The Incentive Stock Option Plan became
effective on March 15, 2000 and will remain in effect until March 15, 2010
unless terminated earlier by action of the Board. Only officers, directors and
key employees of L.A.M. may be granted options pursuant to the Incentive Stock
Option Plan.

In order to qualify for incentive stock option treatment under the
Internal Revenue Code, the following requirements must be complied with:

1. Options granted pursuant to the Plan must be exercised no later than:

(a) The expiration of thirty (30) days after the date on which an option
holder's employment by L.A.M. is terminated.

(b) The expiration of one year after the date on which an option holder's
employment by L.A.M. is terminated, if such termination is due to the
Employee's disability or death.

2. In the event of an option holder's death while in the employ of L.A.M., his
legatees or distributees may exercise (prior to the option's expiration)
the option as to any of the shares not previously exercised.

3. The total fair market value of the shares of Common Stock (determined at
the time of the grant of the option) for which any employee may be granted
options which are first exercisable in any calendar year may not exceed
$100,000.

4. Options may not be exercised until one year following the date of grant.
Options granted to an employee then owning more than 10% of the Common
Stock of L.A.M. may not be exercisable by its terms after five years from
the date of grant.

5. The purchase price per share of Common Stock purchasable under an option is
determined by the Committee but cannot be less than the fair market value
of the Common Stock on the date of the grant of the option (or 110% of the
fair market value in the case of a person owning L.A.M.'s stock which
represents more than 10% of the total combined voting power of all classes
of stock).

Non-Qualified Stock Option Plan. The Non-Qualified Stock Option Plan
authorizes the issuance of options to purchase up to 8,000,000 shares of
L.A.M.'s Common Stock less the number of shares already optioned under both this
Plan and the Incentive Stock Option Plan. The Non-Qualified Stock Option Plan
became effective on March 15, 2000 and will remain in effect until March 15,
2010 unless terminated earlier by the Board of Directors. L.A.M.'s employees,
directors, officers, consultants and advisors are eligible to be granted options
pursuant to the Plan, provided however that bona fide services must be rendered
by such consultants or advisors and such services must not be in connection with
the offer or sale of securities in a capital-raising transaction. The option
exercise price is determined by the Committee but cannot be less than the market
price of L.A.M.'s Common Stock on the date the option is granted.

Options granted pursuant to the Plan not previously exercised terminate
upon the date specified when the option was granted.

Stock Bonus Plan. Up to 2,000,000 shares of Common Stock may be granted
under the Stock Bonus Plan. Such shares may consist, in whole or in part, of
authorized but unissued shares, or treasury shares. Under the Stock Bonus Plan,
L.A.M.'s employees, directors, officers, consultants and advisors are eligible
to receive a grant of L.A.M.'s shares; provided, however, that bona fide

services must be rendered by consultants or advisors and such services must not
be in connection with the offer or sale of securities in a capital-raising
transaction.

Other Information Regarding the Plans. The Plans are administered by
L.A.M.'s Board of Directors. The Board of Directors has the authority to
interpret the provisions of the Plans and supervise the administration of the
Plans. In addition, the Board of Directors is empowered to select those persons
to whom shares or options are to be granted, to determine the number of shares
subject to each grant of a stock bonus or an option and to determine when, and
upon what conditions, shares or options granted under the Plans will vest or
otherwise be subject to forfeiture and cancellation.

In the discretion of the Board of Directors, any option granted
pursuant to the Plans may include installment exercise terms such that the
option becomes fully exercisable in a series of cumulating portions. The Board
of Directors may also accelerate the date upon which any option (or any part of
any options) is first exercisable. Any shares issued pursuant to the Stock Bonus
Plan and any options granted pursuant to the Incentive Stock Option Plan or the
Non-Qualified Stock Option Plan will be forfeited if the "vesting" schedule
established by the Board of Directors at the time of the grant is not met. For
this purpose, vesting means the period during which the employee must remain an
employee of L.A.M. or the period of time a non-employee must provide services to
L.A.M. At the time an employee ceases working for L.A.M. (or at the time a
non-employee ceases to perform services for L.A.M.), any shares or options not
fully vested will be forfeited and cancelled. At the discretion of the Board of
Directors, payment for the shares of Common Stock underlying options may be paid
through the delivery of shares of L.A.M.'s Common Stock having an aggregate fair
market value equal to the option price, provided such shares have been owned by
the option holder for at least one year prior to such exercise. A combination of
cash and shares of Common Stock may also be permitted at the discretion of the
Board of Directors.

Options are generally non-transferable except upon death of the option
holder. Shares issued pursuant to the Stock Bonus Plan will generally not be
transferable until the person receiving the shares satisfies the vesting
requirements imposed by the Board of Directors when the shares were issued.

L.A.M.'s Board of Directors of L.A.M. may at any time, and from time to
time, amend, terminate, or suspend one or more of the Plans in any manner it
deems appropriate, provided that such amendment, termination or suspension
cannot adversely affect rights or obligations with respect to shares or options
previously granted. The Board of Directors may not, without shareholder
approval: make any amendment which would materially modify the eligibility
requirements for the Plans; increase or decrease the total number of shares of
Common Stock which may be issued pursuant to the Plans except in the case of a
reclassification of L.A.M.'s capital stock or a consolidation or merger of
L.A.M.; reduce the minimum option price per share; extend the period for
granting options; or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.

The Plans are not qualified under Section 401(a) of the Internal
Revenue Code, nor are they subject to any provisions of the Employee Retirement
Income Security Act of 1974.

Summary. The following sets forth certain information as of July 10,
2002 concerning the stock options and stock bonuses granted by L.A.M. Each
option represents the right to purchase one share of L.A.M.'s common stock.

Total Shares Remaining
Shares Reserved for Shares Options/
Reserved Outstanding Issued As Shares
Name of Plan Under Plan Options Stock Bonus Under Plan
- ------------ ---------- -------------- ----------- ----------

Incentive Stock Option Plan 1,000,000 -- N/A 1,000,000
Non-Qualified Stock Option Plan 8,000,000 7,445,000 N/A 555,000
Stock Bonus Plan 2,000,000 N/A 1,495,000 505,000

Options Granted During Fiscal Year Ending December 31, 2001

The following tables set forth information concerning the options
granted, during the twelve months ended December 31, 2001, to L.A.M.'s officers
and directors, and the value of all unexercised options (regardless of when
granted) held by these persons as of December 31, 2001.

% of Total
Options
Granted
to Employees Exercise
Date Options Officers Price Per Expiration
Name of Grant Granted (#) & Directors Share (1) Date
- ---- -------- ----------- ------------ ---------- ------

Joseph Slechta 6/05/01 300,000 6.01% $0.58 6/05/06

Joseph Slechta 7/15/01 300,000 6.01% $0.58 6/05/06

Joseph Slechta 7/16/01 3,000,000 (2) 60.06% $0.58 6/30/11

Alan Drizen 7/15/01 300,000 (3) 6.01% $0.58 6/05/06

Peter Rothbart 7/15/01 300,000 6.01% $0.58 6/05/06

Gary M. Nath 7/15/01 300,000 6.01% $0.58 6/05/06

All options shown above were granted pursuant to L.A.M.'s Non-Qualified
Stock Option Plan. The shares issuable upon the exercise of 4,500,000 of the
options listed above have been registered for public sale by means of a
registration statement on Form S-8 which has been filed with the Securities and
Exchange Commission.

(1) The original exercise price for these options was $0.75 per share. On
September 5, 2001 L.A.M.'s board of directors changed the exercise price of
these options to $0.58 per share.

(2) The exercise of options to purchase 2,250,000 shares is subject to the
following conditions:

A. Option to purchase 1,000,000 shares will not be exercisable and will expire
on 12/31/02 unless between 1/01/02 and 1/01/03 L.A.M.:

1. receives a minimum of $2,000,000 in debt or equity financing; or
2. enters into a license, product development agreement or other agreement
which will provide revenues to L.A.M. of at least $2,000,000 over the term
of the license or agreement; or
3. has gross revenues of $5,000,000.

B. Options to purchase 1,250,000 shares will not be exercisable and will
expire on 12/31/03 unless between 1/01/03 and 1/01/04 L.A.M.:

In the event the performance criteria set forth in A or B above are not
met, then options will be exercisable on a pro rata basis based upon the
performance achieved versus the performance criteria specified. A majority of
L.A.M.'s disinterested directors will determine the number of options which are
exercisable.

Notwithstanding the foregoing all options which have not yet expired
will be immediately exercisable and fully vested in the event Slechta is
terminated without cause or upon a Change in Control. A Change in Control will
be deemed to have occurred if:

(i) any "person" (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act), other than L.A.M.,
any majority-owned subsidiary of the Company or any
compensation plan of L.A.M., becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of L.A.M. (whether by
merger, consolidation, reorganization or otherwise)
representing 40% or more of the combined voting power of
L.A.M.'s then outstanding securities;

(ii) prior to 01/04/04, the individuals who on the date of this
resolution constitute the Board of Directors of L.A.M. cease
for any reason to constitute at least a majority of such Board
of Directors, unless the election of each director who was not
a director on the date of this resolution has been approved in
advance by directors representing at least two-thirds of the
directors then in office who were also directors on the date
of this resolution;

(iii) any "person" (as such term is defined in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act), other than L.A.M., any
subsidiary of L.A.M. or any compensation, retirement,
pension or other employee benefit plan or trust of L.A.M.,
becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of any wholly-owned or majority
-owned subsidiary/subsidiaries of L.A.M. or any successor to

any wholly-owned or majority-owned subsidiary/subsidiaries
of L.A.M., (whether by merger, consolidation, reorganization
or otherwise) representing a majority of the combined voting
power of the then outstanding securities of any wholly owned
majority owned subsidiary/subsidiaries of L.A.M., as the
case may be;

(iv) L.A.M. merges or consolidates with or into another corporation
or other entity, or enters into a binding agreement to merge
or consolidate with or into another corporation or other
entity, other than a merger or consolidation which would
result in the voting securities of L.A.M. outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving corporation or entity) not less
than 60% of the combined voting power of the voting securities
of L.A.M. or such surviving corporation or entity outstanding
immediately after such merger or consolidation;

(v) L.A.M. shall sell, lease, exchange, transfer, convey or
otherwise dispose of all or substantially all of its assets,
or enter into a binding agreement for the sale, lease,
exchange, transfer, conveyance or other disposition of all or
substantially all of its assets, in one transaction or in a
series of related transactions;

(vi) L.A.M. shall liquidate or dissolve, or any plan or proposal
shall be adopted for the liquidation or dissolution of L.A.M.

Notwithstanding the foregoing all options which are not yet exercisable
will immediately expire on the date (i) Slechta voluntarily terminates his
employment with L.A.M. or (ii) the date L.A.M. notifies Slechta that he has been
Terminated for Cause. Terminated for Cause means:

(i)The determination by a vote of a majority of the disinterested
members of the Board of Directors, which determination shall
be based upon competent medical evidence, that Slechta will be
unable to perform his duties as an officer of L.A.M. by reason
of injury, illness, or other physical or mental disability
after absences for a period or periods aggregating in excess
of 45 working days in any 12-month period.

(ii) The determination by a majority of the disinterested members
of the Board of Directors that Slechta has been absent from
his employment for whatever cause, excluding allowable
vacations or sickness and disability, for a period of more
than 60 working days in any 12-month period.

(iii) The vote of a majority of the disinterested members of the
Board of Directors determining that Slechta has become so
intemperate in his use of alcohol or drugs as seriously to
interfere with the performance of his duties as an officer of
L.A.M.

(iv) A vote of a majority of the disinterested members of the Board
of Directors finding that (A) Slechta has violated any statute
or regulation, materially and adversely affecting L.A.M.
reputation, or earnings or welfare, (B) has been grossly
negligent or engaged in willful misconduct in the performance

of his duties as an officer of L.A.M., or (C) Slechta has
refused to follow the proper directions of the Board of
Directors.

Any financing, license agreement, product development agreement or
other agreement referred to in A or B above must be approved by L.A.M.'s Board
of Directors.

During October and November 2000, L.A.M. granted Mr. Slechta options to
purchase 225,000 shares of common stock at prices ranging between $3.50 to $4.00
per share. The options have since been cancelled by the mutual agreement of
L.A.M. and Mr. Slechta.

(3) Options were exercised in January 2002.

Option Exercises and Option Values

Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares December 31,2001 December 31, 2001
Acquired Value Exercisable/ Exercisable/
Name on Exercise (1) Realized (2) Unexercisable (3) Unexercisable (4)
- ---- --------------- ------------- ----------------- -----------------

Joseph Slechta -- -- 3,600,000/-- $36,000/--

Alan Drizen -- -- 300,000/-- $ 3,000/--

Peter Rothbart -- -- 300,000/-- $ 3,000/--

Gary M. Nath -- -- 300,000/-- $ 3,000/--

(1) The number of shares received upon exercise of any options.

(2) With respect to options exercised the dollar value of the difference
between the option exercise price and the market value of the option
shares purchased on the date of the exercise of the options.

(3) The total number of unexercised options held as of December 31, 2001,
separated between those options that were exercisable and those options
that were not exercisable.

(4) For all unexercised options held as of December 31, 2001, the excess of
the market value of the stock underlying those options as of December 31,
2001 over the option exercise price.

(5) In January 2002, Alan Drizen exercised options to purchase 300,000 shares
of common stock.

Other Options

Subsequent to December 31, 2001 certain persons, who were not
affiliated with L.A.M., assigned options to purchase shares of L.A.M.'s common
stock to the following officers and directors:

Shares Issuable
Upon Exercise Exercise Expiration
Name of Options Price Date
---- --------------- -------- ----------

Joseph T. Slechta 190,000 $0.58 1/18/03

Alan Drizen 1,550,000 $0.58 1/18/03

Peter Rothbart 190,000 $0.58 1/18/03

Gary M. Nath 190,000 $0.58 1/18/03

In January 2002 Alan Drizen exercised options to purchase 750,000
shares of common stock.

In February 2002 Joseph Slechta exercised options to purchase 90,000
shares of common stock.

In April 2002, Alan Drizen exercised options to purchase a further
750,000 shares of common stock.

In April and May 2002, Peter Rothbart exercised options to purchase a
total of 120,000 shares of common stock.

Subsequent to December 31, 2001 L.A.M. granted Non-Qualified Stock
Options to the person and upon the terms shown below.

Shares Issuable
Upon Exercise Exercise Expiration
Name of Options Price Date
---- ---------------- -------- ----------

Alan Drizen 2,000,000 $0.58 2/22/07

Stock Bonuses

The following officer of L.A.M. received shares of L.A.M.'s common stock as
stock bonuses:

Name Date Shares
---- ---- -------

Joseph Slechta 6/5/01 100,000

Certain Relationships and Transactions.

In September 1998, L.A.M. sold shares of its common stock to the persons,
in the amounts, and for the consideration set forth below:

Number
Name of Shares Consideration

Alan Drizen 1,076,308 (1) $10,763

Peter Rothbart 1,076,308 (2) $10,763

Gary M. Nath 742,784 $ 7,423

In September 1998, L.A.M. issued 6,000,000 shares of its common stock
in consideration for all of the issued and outstanding shares of LAM
Pharmaceuticals LLC, a Florida limited liability company. See "Business" for
further information concerning the acquisition of LAM Pharmaceuticals LLC. The
following officers, directors and other persons received shares of L.A.M.'s
common stock in connection with this transaction.

Name Shares Acquired

Alan Drizen 1,603,616 (1)
Peter Rothbart 1,603,616 (2)
Gary M. Nath 1,105,942
Lisa Krinsky 674,510 (3)
Arnold Hantman 376,019
All Other Sellers as a Group 636,297
----------
6,000,000

(1) Includes shares held by the Canyon Trust, a discretionary trust, of which
Mr. Drizen may be deemed the beneficial owner.
(2) Includes shares held by the Lexus Trust, of which Dr. Rothbart may be
deemed the beneficial owner.
(3) Includes shares held by the South Florida Bioavailability Clinic of which
Lisa Krinsky is the majority shareholder.

Subsequent to September 1998, Mr. Drizen, Dr. Rothbart and Mr. Nath sold a
portion of their shares in transactions which were exempt pursuant to Rule 144
of the Securities and Exchange Commission and gifted a portion of their shares
to relatives.

During 1999, 2000 and 2001 L.A.M. paid $63,210, $51,262 and $166,532
respectively to Nath & Associates for legal services. PLLC is a law firm in
which Mr. Nath, an officer and director of L.A.M., is a partner. As of May 31,
2002 L.A.M. owed Nath & Associates, PLLC $584,676 for legal services.

Prior to January 1, 1998, L.A.M. received advances from Mr. Drizen
($525,000), Dr. Rothbart ($170,000) and Mr. Nath ($475,000) that were used to
fund L.A.M.'s operations, research and development and clinical trials.
Subsequently additional advances were made, expenses disbursed and services
performed by these directors on behalf of L.A.M. At December 31, 2001, the total
of all such advances outstanding amounted to $848,037.

Between February 2, 2001 and April 26, 2001 Mr. Drizen, an officer and one
of three directors of L.A.M. at that time, borrowed $1,075,000 from L.A.M. The
amounts borrowed by Mr. Drizen were used to purchase 441,200 shares of L.A.M.'s
common stock between February 2, 2001 and May 10, 2001 in an effort to stabilize
L.A.M.'s stock price in the face of extensive short selling. Dr. Peter Rothbart,
also an officer and director of L.A.M., was advised by Mr. Drizen in late
February 2001 that Mr. Drizen was purchasing shares of L.A.M.'s common stock in
an effort to stabilize L.A.M.'s stock price. However, Dr. Rothbart did not know
until May 11, 2001 that Mr. Drizen was using corporate funds for this purpose.
Gary Nath, an officer and director of L.A.M., and Joseph Slechta, an officer of
L.A.M., were not aware of Mr. Drizen's activities in this regard until May 11,
2001. Dr. Rothbart, Mr. Slechta and Mr. Nath became aware of Mr. Drizen's
borrowings from L.A.M. in connection with Mr. Slechta's review of L.A.M.'s
financial statements for the quarter ended March 31, 2001.

Mr. Drizen agreed to pay the $1,075,000 borrowed from L.A.M., together with
interest at 6% per year, in accordance with the terms of a promissory note. The
note provided for a series of periodic payments with the unpaid amount of the
note, together with any accrued and unpaid interest, due on March 31, 2002. On
May 25, 2001 L.A.M.'s Directors approved these repayment terms, and at the same
time ratified Mr. Drizen's borrowings from L.A.M.

Although Mr. Drizen agreed to secure the repayment of this note,
L.A.M.'s Board of Directors, in view of the fact that proceeds from the sale of
Mr. Drizen's shares of L.A.M.'s common stock would be the primary source of
funds which would be used to repay the Note, did not require Mr. Drizen to
secure the repayment of the Note. Accordingly, the Note from Mr. Drizen was
unsecured.

In addition, as a result of Mr. Drizen's purchases and sales of
L.A.M.'s common stock between October 2000 and May 2001, L.A.M. is entitled to a
recoverable profit from Mr. Drizen, computed in accordance with 16(b) of the
Securities Exchange Act of 1934, in the amount of $408,078, as explained below.

Subsequent to December 31, 2001 Mr. Drizen and L.A.M. agreed that the
advance of $548,361 due him as of December 31, 2001 would be offset against the
remaining amount due pursuant to Mr. Drizen's promissory note. In addition, Dr.
Rothbart and Mr. Nath agreed with Mr. Drizen to apply a portion of their
receivables from L.A.M. against the amounts due by Mr. Drizen in an amount
sufficient to offset the remaining balance due on Mr. Drizen's promissory note.

Following these offset arrangements, as of March 27, 2002, L.A.M. owed Dr.
Rothbart and Mr. Nath $17,500 and $146,537 respectively, and Mr. Drizen's
promissory note was paid in full.

was designed to prevent the unfair use of information that may have been
obtained by insiders through their relationship to a corporation, Section 16(b)
nevertheless imposes strict liability which does not depend upon the actual use
or possession of inside information by an insider.

The formula most frequently used by a corporation to recover profits is
known as the "lowest price in/highest price out" method, by which profit is
computed by matching the highest sale price with the lowest purchase price
within six months, the next highest sale price with the next lowest purchase
price within six months, and so forth, until all shares have been included in
the computation. Although this profit computation allows for the maximum
recovery to the corporation, in the case of multiple sales and purchases within
a six month period, it often results in a higher profit than the profit actually
realized by the insider, and in some cases may result in a profit when the
insider actually incurred losses from the sales and purchases. Mr. Drizen, for
example, estimates that he incurred a loss of approximately $900,000 as a result
of his purchases and sales of L.A.M.'s common stock between October 2000 and May
2001.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information as of July 10, 2002
concerning the common stock owned by each officer and director of L.A.M., and
each other person known to L.A.M. to be the beneficial owner of more than five
percent (5%) of L.A.M.'s common stock.

Amount and Nature of
Beneficial Ownership Percentage
Name Number of Shares (1) Ownership

Joseph T. Slechta 20,000 0.08%
800 Sheppard Avenue West,
Commercial Unit 1
Toronto, Ontario
Canada M3H 6B4

Alan Drizen 1,303,616 5.2%
800 Sheppard Avenue West,
Commercial Unit 1
Toronto, Ontario
Canada M3H 6B4

Peter Rothbart 2,690,424 10.7%
274 St. Clements Avenue.
Toronto, Ontario
Canada M4R 1H5

Gary M. Nath 1,639,420 6.95%
6106 Goldtree Way,
Bethesda, Maryland 20817

(All Officers and Directors as 5,653,460 22.5%
a group, 4 persons)

(1) Excludes shares issuable upon the exercises of options held by the
following persons:

Shares Issuable
Upon Exercise Option Expiration
Name of Option Exercise Price Date of Option
---- ------------------- -------------- --------------

Joseph T. Slechta 300,000 $0.58 06/05/06
Joseph T. Slechta 300,000 $0.58 06/05/06
Joseph T. Slechta 3,000,000 $0.58 06/30/11
Joseph T. Slechta 100,000 $0.58 01/18/03
Alan Drizen 50,000 $0.58 01/18/03
Alan Drizen 2,000,000 $0.58 02/22/07
Peter Rothbart 300,000 $0.58 06/05/06
Peter Rothbart 70,000 $0.58 01/18/03
Gary M. Nath 300,000 $0.58 06/05/06
Gary M. Nath 190,000 $0.58 01/18/03

(2) Includes shares held by the Canyon Trust, a discretionary trust, of which
Mr. Drizen may be deemed the beneficial owner.
(3) Includes shares held by the Lexus Trust, of which Dr. Rothbart may be
deemed the beneficial owner.

EQUITY LINE OF CREDIT AGREEMENT

Overview

On January 24, 2001, L.A.M. entered into an equity line of credit
agreement with Hockbury Limited in order to establish a possible source of
funding for the development of L.A.M.'s technology. The equity line of credit
agreement establishes what is sometimes also referred to as an equity drawdown
facility.

During the 22 trading days following a drawdown request, L.A.M. will
calculate the amount of shares it will sell to Hockbury Limited and the purchase
price per share. The purchase price per share of common stock will based on the
daily volume weighted average price of L.A.M.'s common stock during each of the
22 trading days immediately following the drawdown date, less a discount of 10%.
L.A.M. will receive the purchase price less a placement fee payable to GKN
Securities equal to 7% of the aggregate purchase price. Hockbury Limited may

then resell all or a portion of these shares using this prospectus. GKN
Securities is the placement agent which introduced Hockbury Limited to L.A.M.
and is a registered broker-dealer.

L.A.M. may request a drawdown by faxing a drawdown notice to Hockbury
Limited, stating the amount of the drawdown and the lowest daily volume weighted
average price, if any, at which L.A.M. is willing to sell the shares. The
minimum volume weighted average price will be set by L.A.M.'s President in his
sole and absolute discretion.

As of July 10, 2002 L.A.M. had received net proceeds of $971,000 from the
sale of 1,053,177 shares of common stock pursuant to the terms of the equity
line of credit. L.A.M. has used the proceeds from the sale of these shares for
general and administrative expenses, research, clinical trials and sales and
marketing.

Calculation of Drawdown Amount, Purchase Price and Number of Shares Sold

The minimum amount L.A.M. can draw down at any one time is $100,000.
Without the written consent of Hockbury Limited the maximum amount L.A.M. can
draw down at any one time is the lesser of $1,000,000 or the amount equal to:

o 4.5% of the weighted average price of L.A.M.'s common stock for the sixty
calendar day period prior to the date of the drawdown request
o multiplied by the total trading volume of L.A.M.'s common stock for the
sixty calendar day period prior to the date of the drawdown request.

On the day following the delivery of the drawdown notice, a valuation
period of 22 trading days will start:

o On each trading day during the valuation period where the daily
volume weighted average price of L.A.M.'s common stock on the OTC
Bulletin Board exceeds the minimum price, if any, specified by
L.A.M. in the drawdown notice, the purchase price will equal 90%
of the volume weighted average price on that day.

o On each of the 22 trading days during the valuation period, the
number of shares to be sold to Hockbury Limited will be determined
by dividing 1/22 of the drawdown amount by the purchase price on
each trading day.

o If the volume weighted average price for L.A.M.'s common stock on
any trading day during the 22 trading day calculation period is
below the minimum price, then Hockbury Limited will not purchase
any shares on that day, and the drawdown amount will be reduced by
1/22.

If L.A.M. sets a minimum price which is too high and L.A.M.'s stock
price does not consistently meet that level during the 22 trading days after its
drawdown request, the amount L.A.M. can draw and the number of shares L.A.M.
will sell to Hockbury Limited will be reduced. On the other hand, if L.A.M. sets
a minimum price which is too low and its stock price falls significantly but
stays above the minimum price, L.A.M. will have to issue a greater number of
shares to Hockbury Limited based on the reduced market price.

Payment for Shares Issued

The shares purchased on the first 11 trading days will be issued and
paid for on the 13th trading day following the drawdown request. The shares
purchased on the 12th through the 22nd trading days will be issued and paid for
on the 24th trading day following the drawdown request. L.A.M. will receive the
purchase price less a placement agent fee payable to GKN Securities equal to 7%
of the aggregate purchase price for each sale.

Upon closing of the equity line of credit Agreement, L.A.M. paid $25,000 to
Hockbury Limited's legal counsel, Epstein Becker & Green P.C., to cover its
legal and administrative expenses.

Grant of Warrants

As consideration for extending the equity line of credit, L.A.M.
granted Hockbury Limited warrants to purchase 482,893 shares of common stock at
a price of $4.56 per share at any time prior to January 24, 2004. As partial
consideration for GKN Securities' services as placement agent in connection with
this offering, L.A.M. granted GKN Securities warrants to purchase 455,580 shares
of common stock at a price of $4.83 per share at any time prior to January 24,
2006. Warrants to purchase 209,500 shares were subsequently assigned to four
employees of GKN Securities. Neither Hockbury Limited, GKN Securities not the
four other warrant holders are obligated to exercise any warrants.

L.A.M. believes that the fair value of these warrants using customary
pricing models is approximately $1,100,000. The fair value of these warrants
were reflected in L.A.M.'s financial statements and recorded as an expense
during the quarter ended March 30, 2001.

Restrictions on Future Financings

The equity line of credit agreement limits L.A.M.'s ability to raise
capital by selling securities to third parties at a discount to the market price
of L.A.M.'s common stock during the term of the equity line of credit agreement.
L.A.M. may, however, sell securities at a discount in the following situations:

o under any presently existing or future employee benefit plan, which plan
has been or may be approved by L.A.M.'s stockholders;

o under any compensatory plan for a full-time employee or key consultant;

o in an underwritten registered public offering;

o in connection with a strategic partnership or other business transaction,
the principal purpose of which is not to raise money;

o in connection with a private placement of securities if the purchasers do
not have registration rights;

o a transaction to which Hockbury Limited gives its written approval.

Termination of the Equity Line of Credit Agreement

The Equity Line of Credit Agreement will terminate if:

o any event, which has not been corrected within 60 days, has taken place
which has any material adverse effect on the business or financial
condition of L.A.M. or which prohibits or interferes with the ability of
L.A.M. to perform any of its material obligations under the equity line of
credit agreement,
o L.A.M.'s common stock is de-listed from the OTC Bulletin Board unless the
de-listing is in connection with L.A.M.'s subsequent listing of its common
stock on the NASDAQ National market, the NASDAQ SmallCap Market, the
American Stock exchange or the New York Stock Exchange, or
o L.A.M. files for protection from its creditors under the Federal Bankruptcy
laws.

L.A.M. may terminate the equity line of credit if Hockbury Limited fails to
honor more than one drawdown notice.

Indemnification

Hockbury Limited, GKN Securities, and the four employees of GKN
Securities are entitled to customary indemnification from L.A.M. for any losses
or liabilities they suffer based upon material misstatements or omissions from
the registration statement and this prospectus, except as they relate to
information Hockbury Limited, GKN Securities, and the four employees of GKN
Securities supplied to L.A.M. for inclusion in the registration statement and
prospectus.

SELLING SHAREHOLDERS

This prospectus relates to sales of L.A.M.'s common stock by Hockbury
Limited, GKN Securitities and four other warrant holders. Hockbury Limited will
receive shares of L.A.M.'s common stock under an equity line of credit agreement
and up to 482,893 shares of common stock upon the exercise of warrants. GKN
Securities and the four other warrant holders will receive up to 455,580 shares
of L.A.M.'s common stock upon the exercise of warrants granted as a placement
fee. Hockbury Limited, GKN Securities and the four other warrant holders are
sometimes referred to in this prospectus as the selling shareholders.

L.A.M. will not receive any proceeds from the sale of the shares by the
selling shareholders. The selling shareholders may resell the shares they
acquire by means of this prospectus from time to time in the public market. The
costs of registering the shares offered by the selling shareholders are being
paid by L.A.M.. The selling shareholders will pay all other costs of the sale of
the shares offered by them.

The following table shows the shares which are being offered for sale
by the selling shareholders.

Shares
Shares Issuable Upon Shares to Be Share
Presently the Exercise Sold in this Ownership
Name Owned of Warrants Offering After Offering

Hockbury Limited (1) 482,893 482,893 --
GKN Securities Corp. -- 246,080 246,080 --
Brandon Ross -- 159,000 159,000 --
Jorge Tabuas -- 7,500 7,500 --
Lisa McInnes -- 35,500 35,500 --
Chris Toepke -- 7,500 7,500 --

(1) The number of shares owned by Hockbury Limited will vary from
time-to-time and will depend upon the number of shares purchased from
L.A.M. pursuant to the terms of the Equity Line Agreement. As of July 10,
2002 L.A.M. had received net proceeds of $971,000 from the sale of
1,053,177 shares of common stock under the equity line of credit.

Manner of Sale.

The shares of common stock owned, or which may be acquired, by the
selling shareholders may be offered and sold by means of this prospectus from
time to time as market conditions permit in the over-the-counter market, or
otherwise, at prices and terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. These shares may be
sold by one or more of the following methods, without limitation:

o a block trade in which a broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker/dealer.

In effecting sales, brokers or dealers engaged by the selling
shareholders may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from selling
shareholders in amounts to be negotiated.

The selling shareholders and any broker/dealers who act in connection
with the sale of the shares hereunder may be deemed to be "underwriters" within
the meaning of ss.2(11) of the Securities Acts of 1933, and any commissions
received by them and profit on any resale of the shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
L.A.M. has agreed to indemnify the selling shareholders and any securities
broker/dealers who may be deemed to be underwriters against certain liabilities,
including liabilities under the Securities Act as underwriters or otherwise.

L.A.M. has advised the selling shareholders that they and any
securities broker/dealers or others who may be deemed to be statutory
underwriters will be subject to the prospectus delivery requirements under the
Securities Act of 1933. L.A.M. has also advised each selling shareholder that in
the event of a "distribution" of the shares owned by the selling shareholder,
such selling shareholder, any "affiliated purchasers", and any broker/dealer or
other person who participates in such distribution may be subject to Rule 102
under the Securities Exchange Act of 1934 ("1934 Act") until their participation
in that distribution is completed. Rule 102 makes it unlawful for any person who
is participating in a distribution to bid for or purchase stock of the same
class as is the subject of the distribution. A "distribution" is defined in Rule
102 as an offering of securities "that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of special
selling efforts and selling methods". L.A.M. has also advised the selling
shareholders that Rule 101 under the 1934 Act prohibits any "stabilizing bid" or
"stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of the common stock in connection with this offering.

Grant of Registration Rights

L.A.M. granted registration rights to the selling shareholders to enable
them to sell the common stock they may acquire under the equity line of credit
agreement or upon the exercise of warrants. Notwithstanding these registration
rights, L.A.M. has no obligation:

o to assist or cooperate with the selling shareholders in the offering or
disposition of their shares;

o to obtain a commitment from an underwriter relative to the sale of any the
shares; or

o to include the shares within any underwritten offering.

The registration rights agreement with Hockbury Limited permits L.A.M.
to restrict the resale of the shares Hockbury Limited has purchased under the
equity line of credit agreement for a period of time sufficient to permit L.A.M.
to amend or supplement this prospectus to include material information. If
L.A.M. restricts the ability Hockbury Limited to resell shares at any time
during the 32 trading days following the delivery of a drawdown notice, and
L.A.M.'s stock price declines during the restriction period, then, in order to
compensate Hockbury Limited for its inability to sell shares during the
restriction period, L.A.M. will be required to pay Hockbury Limited an amount
determined by multiplying:

o the number of shares Hockbury Limited is committed to purchase during the
22 trading days following the delivery of the drawdown notice, and

o the difference between the highest daily weighted average price of L.A.M.'s
common stock during the restriction period and the weighted average price
of L.A.M.'s common stock on the day after the restriction period ends.

DESCRIPTION OF SECURITIES
Common Stock

L.A.M. is authorized to issue 50,000,000 shares of common stock. As of July
10, 2002 L.A.M. had 25,109,740 outstanding shares of common stock. Holders of
common stock are each entitled to cast one vote for each share held of record on

all matters presented to shareholders. Cumulative voting is not allowed; hence,
the holders of a majority of the outstanding common stock can elect all
directors.

Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefore and,
in the event of liquidation, to share pro rata in any distribution of L.A.M.'s
assets after payment of liabilities. The Board of Directors is not obligated to
declare a dividend and it is not anticipated that dividends will be paid until
L.A.M. is in profit.

Holders of common stock do not have preemptive rights to subscribe to
additional shares if issued by L.A.M. There are no conversion, redemption,
sinking fund or similar provisions regarding the common stock.

Preferred Stock

L.A.M. is authorized to issue up to 5,000,000 shares of preferred stock.
L.A.M.'s Articles of Incorporation provide that the Board of Directors has the
authority to divide the preferred stock into series and, within the limitations
provided by Delaware statute, to fix by resolution the voting power,
designations, preferences, and relative participation, special rights, and the
qualifications, limitations or restrictions of the shares of any series so
established. As the Board of Directors has authority to establish the terms of,
and to issue, the preferred stock without shareholder approval, the preferred
stock could be issued to defend against any attempted takeover of L.A.M..

Transfer Agent

Corporate Stock Transfer, Inc.
3200 Cherry Creek Drive South, Suite 430
Denver CO, 80209
Telephone Number (303)-282-4800
Facsimile Number (303) 282-5800

LEGAL PROCEEDINGS

L.A.M. is not involved in any pending or threatened legal proceeding.

EXPERTS

The financial statements included in this prospectus for the years
ended December 31, 2001 and 2000 have been so incorporated in reliance on the
report of Rotenberg & Company, LLP, independent accountants, given on authority
of said firm as experts in auditing and accounting.

With respect to the Independent Accountants Report on the unaudited
interim financial information of L.A.M. Pharmaceutical Corp. for the three
months ended March 31, 2002 and 2001 dated May 6, 2002 which is incorporated
herein by reference, Rotenberg & Company, LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports and incorporated by reference herein, they
did not audit and they did not express an opinion on that interim financial

information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Rotenberg & Company, LLP are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on the
unaudited interim financial information because those reports are not "reports"
on a "part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Act.

INDEMNIFICATION

L.A.M.'s Bylaws authorize indemnification of a director, officer,
employee or agent of L.A.M. against expenses incurred by him in connection with
any action, suit, or proceeding to which he is named a party by reason of his
having acted or served in such capacity, except for liabilities arising from his
own misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of L.A.M. who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably entitled
to indemnification. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, or persons
controlling L.A.M. pursuant to the foregoing provisions, L.A.M. has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

AVAILABLE INFORMATION

L.A.M. is subject to the informational requirements of the Securities
Exchange Act of l934 and in accordance therewith is required to file reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Copies of any such reports, proxy statements and
other information filed by L.A.M. can be inspected and copied at the public
reference facility maintained by the Securities and Exchange Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. and at the Securities and
Exchange Commission's Regional offices in New York (7 World Trade Center, Suite
1300, New York, New York 10048) and Chicago (Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511). Copies of such
material can be obtained from the Public Reference Section of the Securities and
Exchange Commission at its office in Washington, D.C. 20549 at prescribed rates.
Certain information concerning e-Video is also available at the Internet Web
Site maintained by the Securities and Exchange Commission at www.sec.gov. L.A.M.
has filed with the Securities and Exchange Commission a Registration Statement
on Form SB-2 (together with all amendments and exhibits) under the Securities
Act of 1933, as amended (the "Act"), with respect to the Securities offered by
this prospectus. This prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. For further information, reference is made to the Registration
Statement.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

-------------------------------------
FINANCIAL REPORTS
AT
DECEMBER 31, 2001
-------------------------------------

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

TABLE OF CONTENTS
- ------------------------------------------------------------------------------

Independent Auditors' Report F-2

Balance Sheets at December 31, 2001 and 2000 F-3

Statements of Changes in Stockholders' Deficit for the
Years Ended December 31,2001, 2000 and 1999 and for the
Period From the Date of Inception (February 1,1994)
Through December 31, 2001 F-4 to F-5

Statements of Operations for the Years Ended December 31,
2001, 2000 and 1999 and for the Period From the Date of
Inception (February 1, 1994) Through December 31, 2001 F-6

Statements of Cash Flows for the Years Ended December 31,
2001, 2000 and 1999 and for the Period From the Date of
Inception (February 1, 1994) Through December 31, 2001 F-7 to F-8

Notes to Financial Statements F-9 to F-21

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
and Shareholders
L.A.M. Pharmaceutical, Corp.
Lewiston, New York

We have audited the accompanying balance sheets of L.A.M. Pharmaceutical,
Corp. (A Development Stage Company) (A Delaware Corporation) as of December 31,
2001 and 2000, and the related statements of changes in stockholders' deficit,
operations and cash flows for each of the three years in the period ended
December 31, 2001 and for the period from the date of inception (February 1,
1994) through December 31, 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of L.A.M. Pharmaceutical, Corp. (A
Development Stage Company) (A Delaware Corporation) as of December 31, 2001 and
2000 and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2001 and for the period from the date of
inception (February 1, 1994) through December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.

Rotenberg & Co., LLP
Rochester, New York
February 8, 2002
(Except for Note P, as to which the date is March 27, 2002)

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

BALANCE SHEETS
- -------------------------------------------------------------------------------

December 31, 2001 2000
- -------------------------------------------------------------------------------

ASSETS

Current Assets

Cash and Cash Equivalents (1) $ 11,284 $1,545,692

Cash Held by Broker - Debentures -- 357,250

Accounts Receivable 44,433 75,000

Inventory - Raw Materials 97,750 121,125

Prepaid Expenses 5,344 2,639
- -------------------------------------------------------------------------------
Total Current Assets 158,811 2,101,706

Property and Equipment - Net of Accumulated
Depreciation 121,185 19,601

Other Assets
Patents and Trademarks - Net of Accumulated
Amortization 489,322 336,196
- -------------------------------------------------------------------------------

Total Assets $769,318 $2,457,503
- -----------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

Accounts Payable and Accrued Expenses $ 601,999 $ 397,484

Convertible Debentures -- 1,598,250
- -------------------------------------------------------------------------------
Total Current Liabilities
601,999 1,995,734

Other Liabilities 848,037 1,256,115

Deferred Royalty Revenue 207,360 207,360
- -------------------------------------------------------------------------------

Total Liabilities 1,657,396 3,459,209
- -------------------------------------------------------------------------------

Stockholders' Deficit
Common Stock - $.0001 Par; 50,000,000 Authorized;
19,784,520 and 13,998,930 Issued and
Outstanding, respectively 1,978 1,400
Additional Paid-In Capital 17,964,009 8,812,199

Less: Loan Receivable-Officer (640,000) --

Deficit Accumulated During Development Stage (18,214,065) (9,815,305)
- ------------------------------------------------------------------------------

Total Stockholders' Deficit (888,078) (1,001,706)
- -------------------------------------------------------------------------------

Total Liabilities and Stockholders' Deficit $769,318 $2,457,503
- -------------------------------------------------------------------------------

(1) Between January 1, 2002 and March 27, 2002 the company has raised
additional cash of $967,900 from issuance of new shares. This has been used
in part for payment of accounts payable at December 31, 2001 and subsequent
operating expenses as described more fully in Note P to the financial
statements.

The accompanying notes are an integral part of this financial statement.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

- --------------------------------------------------------------------------------------------------------------------
Deficit
Loan Accumulated
Additional Receivable During Total
Number Common Paid-In from Development Stockholders'
of Shares Stock Capital Officer Stage Deficit
- ---------------------------------------------------------------------------------------------------------------------

Balance - February 1, 1994 -- $ -- $ -- $ -- $ -- $ --

Capital Contribution - Interest Expense -- -- 252,794 -- -- 252,794

Capital Contribution in Cash -- -- 162,200 -- -- 162,200

Distribution -- -- (68,660) -- -- (68,660)
Recapitalization as L.A.M.
Pharmaceutical, Corp. 6,000,000 600 (600) -- -- --

Issuance of Common Stock for Cash 4,332,500 433 378,352 -- -- 378,785
--
Net Loss -- -- -- (2,480,654) (2,480,654)
- -------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1998 10,332,500 1,033 1,515,492 -- (2,480,654) (964,129)

Capital Contribution - Interest Expense -- -- 107,681 -- -- 107,681

Issuance of Common Stock for Cash 60,000 6 59,994 -- -- 60,000
Stock Options and Awards Granted

- Compensation for Services Rendered -- -- 526,316 -- -- 526,316
Conversion Premium on Convertible
Debentures -- -- 1,252,000 -- -- 1,252,000

Net Loss -- -- -- -- (2,557,643) (2,557,643)
- -------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999 10,392,500 $ 1,039 $3,461,483 $ -- $(5,038,297) $(1,575,775)
- -------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.
continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Period from Date of Inception (February 1, 1994) Through December 31,
2001 - continued

- ----------------------------------------------------------------------------------------------------------------------------
Deficit
Loan Accumulated
Additional Receivable During Total
Number Common Paid-In from Development Stockholders'
of Shares Stock Capital Officer Stage Deficit
- ----------------------------------------------------------------------------------------------------------------------------
Balance - December 31, 1999 10,392,500 $ 1,039 $3,461,483 $ -- $(5,038,297) $(1,575,775)
Capital Contribution - Interest Expense -- -- 107,686 -- -- 107,686

Conversion Premium on Convertible Debentures -- -- 2,395,093 -- -- 2,395,093

Stock Options and Awards Granted
- Compensation for Services Rendered -- -- 447,640 -- -- 447,640

Debentures Converted to Common Stock 3,319,430 332 2,211,176 -- -- 2,211,508

Stock Options Exercised 287,000 29 189,121 -- -- 189,150

Net Loss -- -- -- -- (4,777,008) (4,777,008)
- -----------------------------------------------------------------------------------------------------------------------
Balance - December 31, 2000 13,998,930 1,400 8,812,199 -- (9,815,305) (1,001,706)

Capital Contribution - Interest Expense -- -- 113,200 -- -- 113,200

Common Shares Issued - Debenture Conversion
Premium 3,106,502 311 1,057,844 -- -- 1,058,155

Debentures Converted to Common Stock 853,167 85 1,611,114 -- -- 1,611,199

Stock Options Issued
- Compensation for Services Rendered -- -- 3,218,463 -- -- 3,218,463

Common Shares Issued
- Compensation for Services Rendered 1,213,900 121 1,047,086 -- -- 1,047,207

Stock Options Exercised 173,000 17 112,433 -- -- 112,450

Warrants Issued to Hockbury Limited and GKN
Securities -- -- 1,100,000 -- -- 1,100,000

Sale of Shares Under the Equity Line of
Credit Agreement 439,021 44 483,592 -- -- 483,636

Loan to Officer -- -- -- (1,075,000) -- (1,075,000)

Loan Repayments from Officer -- -- -- 435,000 -- 435,000

Short-Swing Profit on Insider Trading -- -- 408,078 -- -- 408,078

Net Loss -- -- -- -- (8,398,760) (8,398,760)
- -----------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2001 19,784,520 1,978 $17,964,009 $(640,000) $(18,214,065) $ (888,078)
========================================================================================================================

The accompanying notes are an integral part of this financial statement.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2001, 2000 and 1999 and for the Period From
Date of Inception (February 1, 1994) Through December 31, 2001
- -------------------------------------------------------------------------------

Date of
Inception
(February 1,
1994)
Through
December 31,
2001 2001 2000 1999
- ---------------------------------------------------------------------------------------
Revenues

Licensing Revenue $ 500,000 $300,000 $ -- $ --
- ----------------------------------------------------------------------------------------
Expenses
Interest Expense 897,842 232,819 292,180 120,625
General and Administrative 2,994,053 1,378,791 1,260,970 355,575
Marketing and Business Development 285,671 201,808 56,008 24,166
Research and Development 2,498,950 479,881 317,270 185,143
- ---------------------------------------------------------------------------------------
6,676,516 2,293,299 $1,926,428 685,509

Financial Accounting Expenses
Not Requiring the Use of Cash
During the Period:
Depreciation and Amortization 106,077 27,159 36,108 11,159
Share and Option Grants to Officers,
Directors Investors and Consultants 5,997,012 4,265,670 447,640 526,316
Conversion Premium on Convertible
Debentures 4,704,937 1,057,844 2,395,093 1,252,000
Warrants Issued on Equity Line of
Credit 1,100,000 1,100,000 -- --
- ----------------------------------------------------------------------------------------
Total Expenses 18,584,542 8,743,972 4,805,269 2,474,984
- -----------------------------------------------------------------------------------------
Loss Before Other Income and
(Expenses) (18,084,542) (8,443,972) (4,805,269)$(2,474,984)
- -----------------------------------------------------------------------------------------

Other Income and (Expenses)
Interest Income 77,837 45,212 28,261 2,601
Loss on Investment in Affiliate (207,360) -- -- (85,260)
- ----------------------------------------------------------------------------------------

Total Other Income and (Expenses) (129,523) 45,212 28,261 (82,659)
- -----------------------------------------------------------------------------------------

Net Loss for the Period $(18,214,065) $(8,398,760) $(4,777,008)(2,557,643)
- -----------------------------------------------------------------------------------------

Loss per Common Share - Basic and
Diluted $ (1.61) $ (0.53) $ (0.44) $ (0.25)
- -----------------------------------------------------------------------------------------

Weighted Average Number
of Common Shares Outstanding 15,817,111 10,893,116 10,392,500
- -----------------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

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

Net Loss $(18,214,065) $ (8,398,760) $(4,777,008) $(2,557,643)

Adjustments to Reconcile Net Loss for the
Period to Cash Flows from Operating
Activities:
Depreciation and Amortization 106,077 27,159 36,108 11,159
Capital Contributions:
Deemed Interest Expense on Loans from
Stockholders 581,361 113,200 107,686 107,681
Share and Option Grants - Officers,
Directors, Investors and Consultants 5,997,012 4,265,670 447,640 526,316
Warrants Issued - Equity Line of Credit 1,100,000 1,100,000 -- --
Conversion Premium on Convertible
Debentures 4,705,248 1,058,155 2,395,093 1,252,000
Interest on Converted Debentures 272,871 121,449 151,422 --
Loss on Investment in Affiliate 207,360 -- -- 85,260

Changes in Assets and Liabilities:
Accounts Receivable (44,433) 30,567 -- 39,349
Notes Receivable -- -- 50,000 --
Inventory - Raw Materials (97,750) 23,375 (121,125) --
Prepaid Expenses (5,344) (2,705) (2,639) 5,320
Accounts Payable and Accrued Expenses 601,999 204,515 151,135 182,683
- ---------------------------------------------------------------------------------------------------

Net Cash Flows from Operating Activities (4,789,664) (1,457,375) (1,561,688) (347,875)
- ---------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchases of Property and Equipment (155,225) (112,508) (37,631) (4,274)
Purchases of Patents and Trademarks, Net (527,336) (169,361) (116,932) (166,398)
- ---------------------------------------------------------------------------------------------------
Net Cash Flows from Investing Activities (682,561) (281,869) (154,563) (170,672)
- ---------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.

continued

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CASH FLOWS - continued
- -----------------------------------------------------------------------------

Date of
Inception
(February 1,
1994)
Through
December 31,
2001 2001 2000 1999
- -----------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Cash Capital Contributions 162,200 -- -- --
Distributions to Stockholders (68,660) -- -- --
Proceeds from Issuance of Common Stock 438,785 -- -- 60,000
Proceeds from (Repayment of) Convertible
Debentures 3,549,833 (108,500) 2,406,333 1,077,000
Proceeds from Exercise of Stock Options 301,600 112,450 189,150 --
Proceeds from Sale of Shares Under
the Equity Line of Credit Agreement 483,636 483,636 -- --
Note Payable -- -- -- (5,320)
Issuance of Loan Receivable - Officer, (640,000)
Net (640,000) -- --
Advances from Stockholders 1,256,115 -- -- --
- -----------------------------------------------------------------------------------------
Net Cash Flows from Financing Activities 5,483,509 (152,414) 2,595,483 1,131,680
- -----------------------------------------------------------------------------------------
Net Increase (Decrease)
in Cash and Cash Equivalents 11,284 (1,891,658) 879,232 613,133

Cash and Cash Equivalents - Beginning of
Period -- 1,902,942 1,023,710 410,577
- -----------------------------------------------------------------------------------------

Cash and Cash Equivalents - End of Period $ 11,284 $ 11,284 $1,902,942 $ 1,023,710
- -----------------------------------------------------------------------------------------
NON-CASH INVESTING AND FINANCING ACTIVITIES
- -----------------------------------------------------------------------------------------
Issuance of Common Stock in
Exchange for Property and Equipment $ 34,020 $ -- $ -- $ --
Short-Swing Profit on Insider Trading
- Offset Against Loan Payable to
Shareholder $ 408,078 $ 408,078 $ -- $ --
$3,549,833 $1,489,750 $2,060,083 $ --
Investment in Affiliate $ 207,360 $ -- $ -- $ --
Deferred Royalty Revenue $ (207,360) $ -- $ -- $ --
- -----------------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------

Note A - Summary of Transaction

L.A.M. Pharmaceutical, Corp. (the Company) was initially formed as
L.A.M. Pharmaceutical, LLC (the LLC) on February 4, 1997. From February
1, 1994 to February 4, 1997 the Company conducted its activities under
the name RDN. In September 1998, the members of L.A.M. Pharmaceuticals
LLC, a Florida Limited liability company, exchanged all of their
interests in the LLC for 6,000,000 shares of the Company's common stock.
The stock exchange between the Company and the members of the LLC is
considered a recapitalization or reverse acquisition. Under reverse
acquisition accounting, the LLC was considered the acquirer for
accounting and financial reporting purposes, and acquired the assets and
assumed the liabilities of the Company. The accompanying financial
statements include the historical accounts of the Company, the LLC and
RDN since February 1, 1994. All intercompany accounts and transactions
have been eliminated.

Note B - Nature of Operations and Summary of Significant Accounting
Policies

L.A.M. Pharmaceutical, Corp. was incorporated on July 24, 1998 under the
laws of the State of Delaware. The Company has the authority to issue
50,000,000 shares of common stock, $.0001 par value. The Company is engaged
in the research and development of Novel, Proprietary, Long Lasting
Injectable Drugs and Delivery Systems for Transdermal and Topical Drugs.

Development Stage

The Company has operated as a development stage enterprise since its
inception by devoting substantially all of its efforts to raising
capital, research and development, and product and market development.
Accordingly, the financial statements of the Company have been prepared
in accordance with the accounting and reporting principles prescribed by
Statement of Financial Accounting Standards (SFAS) No. 7, "Accounting
and Reporting by Development Stage Enterprises," issued by the Financial
Accounting Standards Board.

Revenue Recognition

Revenues are recognized when earned. On December 31, 1997 the Company
entered into an exclusive world-wide license agreement (the License
Agreement) with Ixora Bio-Medical Company Inc. (Ixora). Under the
License Agreement, Ixora has paid the Company $500,000 for the exclusive
rights of the Company's male and female sexual dysfunction product
technology. In addition, the Company received 37% of Ixora and will
receive a royalty equal to 9% of the net sales under the License
Agreement. Such payments will be recorded when received by the Company.
Ixora will also pay for all costs for the full development, registration
and protection of intellectual property, including but not limited to
patent costs, raw material costs, clinical development costs and
compensation of all Company personnel involved in the sexual dysfunction
product technology.

Method of Accounting

The corporation maintains its books and prepares its financial
statements on the accrual basis of accounting.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------

Note B -Nature of Operations and Summary of Significant Accounting
Policies - continued

Use of Estimates

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

Concentrations of Credit Risk

Financial instruments which potentially expose the Company to
significant concentrations of credit risk consist principally of bank
deposits. Cash is placed primarily in high quality short-term interest
bearing financial instruments.

Cash and Cash Equivalents

Cash and cash equivalents include time deposits, certificates of
deposit, and all highly liquid debt instruments with original maturities
of three months or less. The Company maintains cash and cash equivalents
at financial institutions that periodically may exceed federally insured
amounts.

Cash Held by Brokers - Debentures

Cash held by brokers - debentures consist of interest bearing term
deposit accounts having maturity dates of three months or less.

Inventory

Inventory is comprised of raw materials and is stated at the lower of
cost or market. Cost is determined by the first-in, first-out method and
market is based on the lower of replacement cost or net realizable
value.

Property, Equipment and Depreciation

Property and equipment are stated at cost, less accumulated depreciation
computed using the straight-line method over the estimated useful lives
as follows:

Furniture and Fixtures 5 - 7 Years
Computer Equipment 5 - 7 Years
Leasehold Improvements 5 Years

Maintenance and repairs are charged to expense. The cost of the assets
retired or otherwise disposed of and the related accumulated
depreciation are removed from the accounts.

Patents and Trademarks

Patents are carried at cost and are amortized using the straight-line
method over their estimated useful lives, not to exceed 17 years from
the date of issuance of the patent. Amortization expense for the years
ended December 31, 2001, 2000 and 1999 was $16,236, $32,055, and
$8,159, respectively. Accumulated amortization associated with patents
and trademarks at December 31, 2001 and 2000 amounted to $51,908 and
$40,125, respectively. - continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------

Note B - Nature of Operations and Summary of Significant Accounting
Policies - continued

Impairment of Assets

In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to Be Disposed Of," the Company assesses all long-lived assets
for impairment at least annually or whenever events or circumstances
indicate that the carrying amount may not be recoverable.

Research and Development Costs

Research and development expenditures are expensed as incurred.

Net Income (Loss) Per Common Share

Net income (loss) per common share is computed in accordance with SFAS
No. 128, "Earnings Per Share". Basic earnings per common share is
calculated by dividing income available to common shareholders by the
weighted-average number of common shares outstanding for each period.
Diluted earnings per common share is calculated by adjusting the
weighted-average shares outstanding assuming conversion of all
potentially dilutive stock options, warrants and convertible
securities. Diluted earnings per share is the same as basic earnings
per share for all of the periods presented since the effect of the
conversion of the debentures and the stock options and awards granted
would have an anti-dilutive effect on earnings per share.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," using the asset and liability approach,
which requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences between
the carrying amounts and the tax basis of such assets and liabilities.
This method utilizes enacted statutory tax rates in effect for the year
in which the temporary differences are expected to reverse and gives
immediate effect to changes in income tax rates upon enactment. Deferred
tax assets are recognized, net of any valuation allowance, for temporary
differences and net operating loss and tax credit carryforwards.
Deferred income tax expense represents the change in net deferred assets
and liability balances. The Company had no material deferred tax assets
or liabilities for the periods presented. Deferred tax assets arising
from the net operating losses incurred during the development stage have
been fully reserved against due to the uncertainty as to when or whether
the tax benefit will be realized.

Share and Option Grants

As described in Note K, the Company has elected to follow the accounting
provisions of Accounting Principles Board Opinion (APBO) No. 25
"Accounting for Stock Issued to Employees", for stock-based compensation
and awards made to employees - the intrinsic value method. Pro forma
disclosures required under SFAS No. 123, "Accounting for Stock-Based
Compensation" has not been furnished due to the short history of the
Company. Stock options granted to investors and consultants are subject
to the provisions of SFAS No. 123 and are recorded at the fair value of
the option at the date of grant.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------

Note B - Nature of Operations and Summary of Significant Accounting
Policies - continued

Financial Instruments

The Company's financial instruments consist of cash, accounts receivable
and accounts payable. 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. The fair value of
these financial instruments approximates their carrying value, unless
otherwise noted.

The fair value of due to stockholders and loan receivable - officer
could not be obtained without incurring excessive costs as they have no
readily determinable market place.

Reclassifications

Certain amounts in the prior period financial statements have been
reclassified to conform with the current year presentation.

Note C - Investment in Affiliate

Investment in Affiliate consists of a 37% interest in Ixora Biomedical
Company, Inc. The investment consists of the following at December 31:

Original Investment, January 1, 1998 $ 207,360
Investor's Share of Loss for the Year ending
December 31, 1998 (122,100)
----------------------------------------------------------------------

Carrying value of Investment, December 31, 1998 $ 85,260
Investor's Share of Loss for the Year ending
December 31, 1999 (85,260)
----------------------------------------------------------------------

Carrying value of Investment December 31, 1999,
2000 and 2001 $ --
-----------------------------------------------------------------------

Note D - Licensing Agreement

The Company has an exclusive license agreement (the License Agreement)
with Ixora Bio-Medical Company, Inc. (Ixora). Under the License
Agreement, Ixora has paid the Company $500,000 for the exclusive rights
of the Company's male and female sexual dysfunction product technology.
Ixora has also agreed to pay all costs for the development, registration
and protection of intellectual property, including but not limited to
patent costs, raw material costs, clinical development costs and
compensation of all Company personnel involved in the sexual dysfunction
product technology.

(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Note E - Property and Equipment

Property and equipment are recorded at cost and consisted of the following:

---------------------------------------------------------------------
December 31, 2001 2000
---------------------------------------------------------------------

Furniture and Fixtures $ 122,101 $ 37,281
Computer Equipment 22,095 9,351
Leasehold Improvements 30,692 11,296
----------------------------------------------------------------------
$ 174,888 $ 57,928
Less: Accumulated Depreciation (53,703) 38,327
-----------------------------------------------------------------------

Net Property and Equipment $ 121,185 $ 19,601
-----------------------------------------------------------------------

Depreciation expense for the years ended December 31, 2001, 2000, and
1999 was $10,923, $4,053, and $3,000, respectively.

Note F - Due to Stockholders

The Company has a liability for cash advances and salaries and other
expenses incurred in earlier years due to three of its stockholders
totaling $848,037 and $1,256,115 at December 31, 2001 and 2000,
respectively. The Company has agreements with these stockholders, which
provides for payment of this obligation without interest, not to exceed
25% of the profits realized by the Company in any year. The Company has
imputed interest at 8.5% and charged operations for each of the periods
presented with an offsetting credit to additional paid-in capital.

Note G - Deferred Royalty Revenue

Deferred Royalty Revenue represents amounts due to the Company from
Ixora Biomedical pursuant to the worldwide license agreement. The
$207,360 of Deferred Royalty Revenue approximated the value of the
Company's original investment in the affiliate. The balance will be
amortized to income upon commencement of Ixora's sale of the Company's
products.

Note H - Loan Receivable - Director

Between February and April 2001, Alan Drizen, the Company's President,
borrowed $1,075,000 from the Company. The amounts borrowed were used by
Mr. Drizen to purchase shares of the Company's common stock in an effort
to stabilize the share price in the face of extensive short selling of
the shares. Mr. Drizen has agreed to repay this amount to the Company,
together with interest at 6% per year, in accordance with the terms of a
promissory note. The note provides for a series of periodic payments
with the unpaid amount of the note, together with any accrued and unpaid
interest, due on March 31, 2002.

Although Mr. Drizen agreed to secure the repayment of this note, the
Company's Board of Directors, in view of the fact that proceeds from the
sale of Mr. Drizen's shares of the Company's common stock would be the
primary source of funds which would be used to repay the note, did not
require Mr. Drizen to secure the repayment of the note. Accordingly, the
note from Mr. Drizen is unsecured. As of December 31, 2001, all payments
required under the terms of Mr. Drizen's promissory note have been paid
and the outstanding principal balance of the note was $640,000.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Note H -Loan Receivable - Director - continued

As a result of Mr. Drizen's purchases and sales of the Company's common
stock between October 2000 and May 2001, the Company is entitled to a
recoverable profit of $408,078 from Mr. Drizen, computed in accordance
with 16(b) of the Securities Exchange Act of 1934. During 2001, this
amount was applied to reduce the amount that the Company owed to Mr.
Drizen with the offset being to additional paid-in capital.

Section 16(b) of the Exchange Act allows a corporation to recover any
profits realized by officers, directors, and principal shareholders of a
corporation from the purchase and sale (or sale and purchase) of equity
securities of the corporation within a six-month period. Although
Section 16(b) was designed to prevent the unfair use of information that
may have been obtained by insiders through their relationship to a
corporation, Section 16(b) nevertheless imposes strict liability which
does not depend upon the actual use or possession of inside information
by an insider.

The formula most frequently used by a corporation to recover profits is
known as the "lowest price in/highest price out" method, by which profit
is computed by matching the highest sale price with the lowest purchase
price within six months, the next highest sale price with the next
lowest purchase price within six months, and so forth, until all shares
have been included in the computation. Although this profit computation
allows for the maximum recovery to the corporation, in the case of
multiple sales and purchases within a six month period, it often results
in a higher profit than the profit actually realized by the insider, and
in some cases may result in a profit when the insider actually incurred
losses from the sales and purchases.

Note I -Income Taxes

The Company has approximately $8,300,000 of net operating loss
carryforwards for federal tax purposes as of December 31, 2001, which is
available to offset future taxable income and which expire in varying
amounts from 2013 to 2016. The Company has fully reserved for any future
tax benefits from the net operating loss carryforwards since it has not
generated any revenues to date.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------

Note J -Convertible Debentures

The Company issued convertible debentures during 1999 and 2000 having an
aggregate principal balance of $1,252,000 and $2,406,333, respectively.
These debentures were unsecured obligations of the Company that matured
over twelve months and bore interest at an annualized rate of 9.5%
payable at maturity. The debentures were convertible into common shares
of the Company at rates from $.50 to $3.00 per share (2 shares to .33
shares for each $1 of principal) at any time, at the option of the
holder. The common shares issued on conversion had a restriction as to
resale for a period of one year from the date that the original
debenture was issued. The Company could also redeem the debentures at
any time upon written notice and payment to the holder of all unpaid
principal and interest. The debentures were not subject to any sinking
fund requirements. Debentures in the amount of $2,060,083 were converted
during 2000 into 3,319,430 shares of the Company's common stock. On
August 9, 2001, the conversion terms for all debentures then outstanding
were revised. The number of shares to be issued upon conversion of the
notes, plus any accrued interest would be determined by dividing the
amount to be converted by $0.52. Note holders who agreed to convert on
these revised terms were also granted options to purchase shares of the
Company's common stock equal to 10% of the number of shares resulting
from conversion. The options are exercisable immediately at $0.58 per
share and expire in August 2002. During 2001, $1,489,750 of the
remaining debentures were converted to 853,167 shares with such
debenture holders receiving an additional 3,106,502 common shares and
options to purchase 424,493 shares of the Company's common stock. An
additional conversion premium of $1,057,844 was recognized in 2001
related to the revision of terms.

During 2001, debentures with a principal amount of $108,500 were repaid.

The conversion premium on the convertible debentures at the date of
issuance and the number of common share equivalents outstanding are as
follows:

Number of Excess of Fair
Value of
Common Share Conversion Common Stock Conversion
Equivalents Price Over Debentures Premium
-----------------------------------------------------------------------

Issued in 1999 2,504,000 $ 0.50 $ 5,749,400 $1,252,000
-----------------------------------------------------------------------

Issued in 2000 530,000 $ 0.50 $ 2,042,000 $ 265,000
42,667 3.00 95,260 95,260
1,149,048 1.75 2,915,023 2,034,833
-----------------------------------------------------------------------
1,721,715 $ 5,052,283 $2,395,093
------------------------------------------------------------------------
Converted in 2000 (3,014,000) $ 0.50
(290,430) 1.75
(15,000) 3.00
-----------------------------------------------
Shares Issued (3,319,430)
-----------------------------------------------
Outstanding at
December 31, 2000 906,285
===============================================
- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
Note J - Convertible Debentures - continued
---------------------------------------------------------------------

Number of
Common Share Conversion
Equivalents Price
-----------------------------------------------------------------------
Converted in 2001 (20,000) $ 0.50
(17,167) 3.00
(816,000) 1.75
----------------------------------------------------------------------
Shares Issued (853,167)
----------------------------------------------------------------------
Redeemed for Cash (10,500) $ 3.00
(42,618) 1.75
------------------------------------------------------------------------
(53,118)
------------------------------------------------------------------------
Outstanding at December 31, --
2001
----------------------------------------------------------------------

The excess fair value of the common stock into which the notes can
convert at the conversion date over the proceeds is recorded as
conversion premium and is limited to the amount of the proceeds of the
debentures. Accordingly, $2,395,093 and $1,252,000 was recorded in 2000
and 1999, respectively, as a charge to conversion premium and a credit
to additional paid-in capital in the accompanying financial statements.

Note K - Share and Option Grants

The Company has stock option plans under which employees, non-employee
directors, consultants and investors may be granted options to purchase
shares of the Company's common stock. Options vest immediately and have
varying expiration dates.

The Company has elected to follow APBO No. 25 and related
Interpretations in accounting for its stock-based compensation made to
its employees. APBO No. 25 requires no recognition of compensation
expense for most of the stock-based compensation arrangements provided
by the Company, namely, broad-based employee stock purchase plans and
option grants where the exercise price is equal to or less than the
market value at the date of grant. However, APBO No. 25 requires
recognition of compensation expense for variable award plans over the
vesting periods of such plans, based upon the then-current market
values of the underlying stock. In contrast, SFAS No. 123 requires
recognition of compensation expense for grants of stock, stock
options, and other equity instruments, over the vesting periods of
such grants, based on the estimated grant-date fair values of those
grants. Stock options and awards made to investors and consultants are
subject to the provisions of SFAS No. 123.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Note K - Share and Option Grants - continued

Employees

During 1999, the Company granted stock options for 100,000 shares of
common stock to employees as compensation for services rendered at
exercise prices that were below the fair value of the common stock at
the date of grant. In accordance with APBO 25, the Company recognized
compensation expense of $48,000 as a charge against operations during
1999 for the difference between the fair value and the exercise price of
the common stock at the date of grant.

Consultants

During 2001, 2000, and 1999, the Company granted stock options for
1,710,000, 936,000, and 358,333 shares, respectively, of common stock to
consultants as compensation for services rendered. In accordance with
SFAS 123, the Company recognized compensation expense during 2001, 2000,
and 1999 of $100,125, $277,330, and $272,057, respectively, for the fair
value of the options at the date of grant using a Black Scholes
option-pricing model.

Directors

During 2001 and 2000, the Company granted additional stock options for
4,275,000 and 225,000 shares, respectively, of common stock to directors
as compensation for services rendered. In accordance with SFAS No. 123,
the Company recognized compensation expense during 2001 and 2000 of
$2,199,375 and $94,950, respectively, for the fair value of the options
at the date of the grant using a Black Scholes option-pricing model.

Investors

During 2001, 2000 and 1999, the Company granted stock options for
5,005,000, 260,000 and 61,633 shares, respectively, of common stock to
investors. In accordance with SFAS No. 123, the Company recognized
compensation expense during 2001, 2000 and 1999 of $565,025, $75,360 and
$100,009, respectively, for the fair value of the options at the date of
grant using a Black Scholes option-pricing model.

The following assumptions were used:

December 31, 2001 2000 1999
----------------------------------------------------------------------
Weighted Average Fair Value of $ 0.26 $ 3.40 $ 2.23
Options
Weighted Average Exercise Price $ 0.78 $ 3.63 $ 1.53
Expected Market Volatility 7.0% 10.0% 10.0%
Risk Free Interest Rate 4.76% 4.72% 5.19%
Expected Life (Years) 5.0 2.5 1.8
Expected Dividend Yield 0% 0% 0%
-----------------------------------------------------------------------

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------

Note K - Share and Option Grants - continued

Stock option transactions for the three years ending December 31, 2001
are summarized as follows:

Weighted Average
Outstanding Exercise Price
------------------------------------------------------------------------
At December 31, 1998 740,500 $ 0.70
Granted 519,966 $ 1.36
------------------------------------------------------------------------

At December 31, 1999 1,260,466 $ 0.97
Granted 1,421,000 $ 3.63
Exercised (287,000) $ 0.66
------------------------------------------------------------------------

At December 31, 2000 2,394,466 $ 2.84
Granted 11,616,993 $ 0.73
Exercised (173,000) $ 0.65
Forfeited/Expired (992,966) $ 2.26
------------------------------------------------------------------------
At December 31, 2001 12,845,493 $ 0.80
------------------------------------------------------------------------

The following table summarizes information about fixed stock options
outstanding at December 31, 2001:

Weighted Weighted
Range of Shares Average Average
Exercise Prices Under Option Remaining Life Exercise Price
------------------------------------------------------------------------
$ 0.58 - $ 1.00 12,051,993 4.35 $ 0.62
$ 1.02 - $ 2.50 207,500 4.58 $ 2.45
$ 3.13 - $ 4.00 536,000 2.29 $ 3.71
$ 5.00 - $ 7.50 50,000 0.62 $ 6.25
------------------------------------------------------------------------

All of the above outstanding options are fully vested and exercisable.

During 2001, the Board of Directors authorized the repricing of options
to purchase shares of common stock at rates ranging from $0.58 to $0.90.
All repriced options maintained the same expiration terms. Approximately
1,930,000 options were repriced under this program, which accounted for
approximately 15% of options outstanding as of December 31, 2001. In
accordance with SFAS 123, the Company recognized compensation expense
during 2001 of $323,125 for the fair value of the options at the date
they were repriced using a Black Scholes option-pricing model.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------

Note K - Share and Option Grants - continued

During 2001, the Board of Directors authorized the extension of
expiration dates of options to purchase shares of common stock. The
extensions were for periods ranging from 12 months to 24 months.
Approximately 452,500 options were extended under this program, which
accounted for approximately 4% of options outstanding as of December 31,
2001. In accordance with SFAS 123, the Company recognized compensation
expense during 2001 of $30,813 for the fair value of the options at the
date their expiration date was extended using a Black Scholes
option-pricing model.

In 2001 and 1999, the Company granted awards of 1,213,900 and 25,000
shares, respectively, of common stock as compensation to outside
consultants. The Company has charged operations in 2001 and 1999 for the
fair value of the common stock awarded on the date of the grants in the
amount of $1,047,207 and $106,250, respectively.

Note L - Equity Line of Credit Agreement
On January 24, 2001, the Company entered into an equity line of credit
agreement with Hockbury Limited in order to establish a source of
finding for the development of the Company's technology. The equity line
of credit agreement establishes what is sometimes also referred to as an
equity drawdown facility.

Under the equity line of credit agreement, Hockbury Limited has agreed
to provide the Company with up to $20,000,000 of funding during the 20
month period following the date of an effective registration statement.
During this 20 month period, the Company may request a drawdown under
the equity line of credit by selling shares of its common stock to
Hockbury Limited, and Hockbury Limited will be obligated to purchase the
shares. The Company may request a drawdown once ever 27 trading days,
although the Company is under no obligation to request any drawdowns
under the equity line of credit. The Company has issued 439,021 shares
of common stock and received $483,636 in net proceeds as of December 31,
2001 under the equity line of credit agreement.

During the 22 trading days following a drawdown request, the Company
will calculate the amount of shares it will sell to Hockbury Limited and
the purchase price per share. The purchase price per share of common
stock is based on the daily volume weighted average price of the
Company's common stock during each of the 22 trading days immediately
following the drawdown date, less a discount of 10%. The Company will
receive the purchase price less a placement fee payable to GKN
Securities equal to 7% of the aggregate purchase price. Hockbury Limited
may then resell all or a portion of these shares. GKN Securities is the
placement agent which introduced Hockbury Limited to the Company and is
a registered broker-dealer.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------

Note L - Equity Line of Credit Agreement - continued

The minimum amount the Company can drawdown at any one time is $100,000.
The maximum amount the Company can drawdown at any one time is the
lesser of $1,000,000 or the amount equal to:

o 4.5% of the weighted average price of the Company's common stock for the 60
calendar days prior to the date of the drawdown request.
o Multiplied by the total trading volume of the Company's common stock for
the 60 calendar days prior to the date of the drawdown request.

Upon closing of the equity line of credit agreement, the Company paid to
Hockbury Limited's legal counsel, Epstein Beck & Green P.C., $25,000 to
cover its legal and administrative expenses.

Grant of Warrants
As consideration for extending the equity line of credit, the Company
granted Hockbury Limited warrants to purchase 482,893 shares of common
stock at a price of $4.56 per share at any time prior to January 24,
2004. As partial consideration for GKN Securities' services as placement
agent in connection with this offering, the Company granted GKN
Securities warrants to purchase 455,580 shares of common stock at a
price of $4.83 per share at any time prior to January 24, 2006. GKN
Securities subsequently assigned warrants to purchase 209,500 shares to
four employees of GKN Securities.

The fair value of these warrants using customary pricing models was
approximately $1,100,000 on January 24, 2001 and is reflected in the
Company's financial statements and recorded as an expense during 2001.

Note M - Common and Preferred Stock

Common Stock

The Company is authorized to issue 50,000,000 shares of common stock.
Holders of common stock are each entitled to cast one vote for each
share held of record on all matters presented to shareholders.
Cumulative voting is not allowed; hence, the holders of a majority of
the outstanding common stock can elect all directors.

Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available
therefore and, in the event of liquidation, to share pro rata in any
distribution of the Company's assets after payment of liabilities. The
Board of Directors is not obligated to declare a dividend and it is not
anticipated that dividends will be paid until the Company is profitable.

Holders of common stock do not have preemptive rights to subscribe to
additional shares if issued by the Company. There are no conversion,
redemption, sinking fund or similar provisions regarding the common
stock.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------

Note M - Common and Preferred Stock - continued

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of preferred
stock. The Company's Articles of Incorporation provide that the Board of
Directors has the authority to divide the preferred stock into series
and, within the limitations provided by Delaware statute, to fix by
resolution the voting power, designations, preferences, and relative
participation, special rights, and the qualifications, limitations or
restrictions of the shares of any series so established. As the Board of
Directors has authority to establish the terms of, and to issue, the
preferred stock without shareholder approval, the preferred stock could
be issued to defend against any attempted takeover of the Company.

Note N - Lease Arrangements

The Company leases office space and a research facility under operating
leases which expire at various dates through 2004. The leases require
the payment of property and business taxes, insurance and maintenance
costs in addition to rental payments.

Future minimum payments are as follows:

2002 2003 2004 2005 2006 Total
---- ---- ---- ---- ---- -----

$ 75,658 $ 76,636 $ 37,400 $ -- $ -- $ 189,694

Rent expense under operating leases was $66,965, $18,157 and $-0- for
the years ended December 31, 2001, 2000, and 1999, respectively.

Note O - Related Party Transactions

A director and shareholder of the Company is a partner in the law firm
that acts as counsel and patent attorneys to the Company. The Company
incurred legal fees and expenses to the law firm in the amount of
approximately $244,000, $180,000 and $214,000 in 2001, 2000 and 1999,
respectively.

Note P - Subsequent Events

Subsequent to December 31, 2001, the Company has raised additional
equity finance totaling $867,900 through the exercise by certain option
holders of their options. A total of 1,496,400 shares have been issued
in connection with these option exercises.

In addition, the Company has raised a further $92,000, net of related
commissions and costs, by a drawdown under the equity line of credit
facility with Hockbury Ltd. 143,185 new common shares were issued in
connection with this drawdown.

The cash raised was used for the Company's ongoing operating expenses,
for prepayment of costs in connection with the pending launch of the
company's wound healing product, and in reducing accounts payable. At
March 27, 2002, the Company had total cash balances of approximately
$246,000.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

-------------------------------------
FINANCIAL REPORTS
AT
March 31, 2002
-------------------------------------

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

Independent Accountants' Report on Interim Financial Information F-2

Balance Sheets at March 31, 2002 (Unaudited) and December 31, 2001 F-3

Statements of Changes in Stockholders' Equity (Deficit) for the
Three Months Ended March 31, 2002 and 2001 (Unaudited), for the
Period from Date of Inception (February 1, 1994) through
March 31, 2002 (Unaudited), and for the Year Ended March 31, 2001 F-4 to F-5

Statements of Operations for the Three Months Ended
March 31, 2002 and 2001 and for the Period from Date
of Inception (February 1, 1994) through March 31, 2002 (Unaudited) F-6

Statements of Cash Flows for the Three Months Ended
March 31, 2002 and 2001 and for the Period from Date
of Inception (February 1, 1994) through March 31, 2002 (Unaudited) F-7 to F-8

Notes to Financial Statements F-9 to F-11

INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and Stockholders
L.A.M. Pharmaceutical, Corp.
(A Development Stage Company)
(A Delaware Corporation)
Lewiston, New York

We have reviewed the accompanying balance sheet of L.A.M. Pharmaceutical,
Corp. as of March 31, 2002, and the related statements of changes in
stockholders' equity (deficit), operations, and cash flows for the three months
ended March 31, 2002 and 2001 and for the period from date of inception
(February 1, 1994) through March 31, 2002. These financial statements are the
responsibility of the Company's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.

Based on our review, we are not aware of any material modifications that
should be made to such financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the balance sheet of L.A.M.
Pharmaceutical, Corp. as of December 31, 2001 (presented herein), and the
related statements of changes in stockholders' equity (deficit) (presented
herein), operations, and cash flows (not presented herein) for the year then
ended and for the period from date of inception (February 1, 1994) through
December 31, 2001; and in our report dated February 8, 2002, except for Note P,
as to which the date is March 27, 2002, we expressed an unqualified opinion on
those financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 2001 and the related statement of
stockholders' equity (deficit) for the year then ended and for the period from
date of inception (February 1, 1994) through December 31, 2001 is fairly stated,
in all material respects. No auditing procedures have been performed subsequent
to the date of our report.

/s/ Rotenberg & Co., LLP

Rotenberg & Co., LLP
Rochester, New York
May 6, 2002

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

BALANCE SHEETS
- --------------------------------------------------------------------------------
(Unaudited)
March 31, December, 31
2002 2001
- --------------------------------------------------------------------------------

ASSETS

Current Assets
Cash and Cash Equivalents $ 268,250 $ 11,284
Other Receivable 175,000 44,433
Inventory - Raw Materials 93,500 97,750
Prepaid Expenses 196,537 5,344
- --------------------------------------------------------------------------------

Total Current Assets 733,287 158,811

Property and Equipment - Net of Accumulated
Depreciation 117,592 121,185

Other Assets
Patents and Trademarks - Net of Accumulated
Amortization 546,552 489,322
- --------------------------------------------------------------------------------

Total Assets $ 1,397,431 $ 769,318
- --------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
Accounts Payable and Accrued Expenses $ 610,790 $ 601,999

Other Liabilities
Due to Stockholders 164,037 848,037
Deferred Royalty Revenue 207,360 207,360
- --------------------------------------------------------------------------------

Total Liabilities 982,187 1,657,396
- --------------------------------------------------------------------------------

Stockholders' Equity (Deficit)
Common Stock - $.0001 Par; 50,000,000 Shares Authorized;
21,982,705 and 19,784,520 Shares
Issued and Outstanding, Respectively 2,198 1,978
Additional Paid-In Capital 20,206,409 17,964,009
Loan Receivable - Director/Officer -- (640,000)
Receivable on Option Exercise (104,000) --
Deficit Accumulated During Development Stage (19,689,363) (18,214,065)
- --------------------------------------------------------------------------------

Total Stockholders' Equity (Deficit) 415,244 (888,078)
- --------------------------------------------------------------------------------

Total Liabilities and Stockholders'
Equity (Deficit) $ 1,397,431 $ 769,318
- --------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.

See Accountants' Review Report

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
- --------------------------------------------------------------------------------

Deficit
Accumulated
Number Additional Loan During Total
of Common Paid-In Receivable- Development Stockholders'
Shares Stock Capital Director/Officer Stage Equity (Deficit)
- ----------------------------------------------------------------------------------------------------------------------------------

Balance - February 1, 1994 -- $ -- $ -- $ -- $ -- $ --

Capital Contribution - Services Rendered -- -- 757,386 -- -- 757,386
Capital Contribution - Laboratory Equipment -- -- 24,245 -- -- 24,245
Capital Contribution - Leasehold Improvements -- -- 9,775 -- -- 9,775
Capital Contribution - Interest Expense -- -- 468,161 -- -- 468,161
Capital Contribution in Cash -- -- 162,200 -- -- 162,200
Distribution -- -- (68,660) -- -- (68,660)
Recapitalization as L.A.M. Pharmaceutical,
Corp. 6,000,000 600 (600) -- -- --
Issuance of Common Stock for Cash 4,392,500 439 438,346 -- -- 438,785
Debentures Converted to Common Stock 3,319,430 332 2,211,176 -- -- 2,211,508
Conversion Premium on Convertible Debentures -- -- 3,647,093 -- -- 3,647,093
Stock Options and Awards Granted -
Compensation for Services Rendered -- -- 973,956 -- -- 973,956
Stock Options Exercised 287,000 29 189,121 -- -- 189,150
Net Loss for the Period -- -- -- -- (9,815,305) (9,815,305)
- ----------------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2000 13,998,930 1,400 8,812,199 -- (9,815,305) (1,001,706)

Capital Contribution - Interest Expense -- -- 26,920 -- -- 26,920
Debentures Converted to Common Stock 107,333 11 197,716 -- -- 197,727
Common Shares Issued -
Compensation for Services Rendered 10,000 1 9,999 -- -- 10,000
Stock Options Exercised 173,000 17 112,433 -- -- 112,450
Warrants Issued to Hockbury Limited and GKN
Securities -- -- 1,100,000 -- -- 1,100,000
Loan to Director/Officer -- -- -- (1,025,000) -- (1,025,000)
Net Loss for the Period (Unaudited) -- -- -- -- (1,667,723) (1,667,723)
- ----------------------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2001 (Unaudited) 14,289,263 $ 1,429 $ 10,259,267 $(1,025,000) $(11,483,028) $(2,247,332)
- ----------------------------------------------------------------------------------------------------------------------------------

- continued -

The accompanying notes are an integral part of this financial statement.

See Accountants' Review Report

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) -
continued

Balance - March 31, 2001 (Unaudited) 14,289,263 $ 1,429 $ 10,259,267 $(1,025,000) $(11,483,028) $(2,247,332)

Capital Contribution - Interest Expense -- -- 86,280 -- -- 86,280
Common Shares Issued - Debenture Conversion
Premium 3,106,502 311 1,057,844 -- -- 1,058,155
Debentures Converted to Common Stock 745,834 74 1,413,398 -- -- 1,413,472
Stock Options Granted -
Compensation for Services Rendered -- -- 3,218,463 -- -- 3,218,463
Common Shares Issued -
Compensation for Services Rendered 1,203,900 120 1,037,087 -- -- 1,037,207
Sale of Shares Under the Equity Line of
Credit Agreement 439,021 44 483,592 -- -- 483,636
Loan to Director/Officer -- -- -- (50,000) -- (50,000)
Loan Repayments from Director/Officer -- -- -- 435,000 -- 435,000
Short-Swing Profit on Insider Trading -- -- 408,078 -- -- 408,078
Net Loss for the Period -- -- -- -- (6,731,037) (6,731,037)
- ----------------------------------------------------------------------------------------------------------------------------------

Balance - December 31, 2001 19,784,520 1,978 17,964,009 (640,000) (18,214,065) (888,078)

Capital Contribution - Interest Expense -- -- 10,070 -- -- 10,070
Stock Options Granted -
Compensation for Services Rendered -- -- 948,600 -- -- 948,600
Stock Options Exercised 2,055,000 206 1,191,744 -- -- 1,191,950
Sale of Shares Under the Equity Line of
Credit Agreement 143,185 14 91,986 -- -- 92,000
Receivable on Option Exercise -- -- (104,000) -- -- (104,000)
Loan Repayments from Director/Officer -- -- -- 640,000 -- 640,000
Net Loss for the Period (Unaudited) -- -- -- -- (1,475,298) (1,475,298)
- ----------------------------------------------------------------------------------------------------------------------------------

Balance - March 31, 2002 (Unaudited) 21,982,705 $ 2,198 $ 20,102,409 $ -- $(19,689,363) $ 415,244
- ----------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.

See Accountants' Review Report

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Period from
Date of
Inception Three Months Ended
(February 1,
1994) March 31,
----------------------
through
March 31, 2002 2002 2001
- --------------------------------------------------------------------------------

Revenues
Licensing Revenues $ 500,000 $ -- $ --
- --------------------------------------------------------------------------------

Expenses
Research and Development 2,623,574 124,624 66,465
Marketing and Business Development 447,211 161,540 31,265
General and Administrative 3,209,808 215,755 402,334
- --------------------------------------------------------------------------------
6,280,593 501,919 500,064
Financial Accounting Expenses Not
Requiring the Use of Cash During
the Period:
Depreciation and Amortization 120,222 14,145 7,043
Interest Expense 908,476 10,634 61,149
Share and Option Grants to Officers,
Directors, Investors, and
Consultants 6,945,612 948,600 --
Conversion Premium on Convertible
Debentures 4,704,937 -- --
Warrants Issued on Equity Line of
Credit 1,100,000 -- 1,100,000
- --------------------------------------------------------------------------------

Total Expenses 20,059,840 1,475,298 1,668,256
- --------------------------------------------------------------------------------

Loss Before Other Income and (Expenses) (19,559,840) (1,475,298) (1,668,256)
- --------------------------------------------------------------------------------

Other Income and (Expenses)
Interest Income 77,837 -- 533
Loss on Investment in Affiliate (207,360) -- --
- --------------------------------------------------------------------------------

Total Other Income and (Expenses) (129,523) -- 533
- --------------------------------------------------------------------------------

Net Loss for the Period $(19,689,363) $(1,475,298) $(1,667,723)
- --------------------------------------------------------------------------------

Loss per Common Share - Basic and
Diluted $ (1.68) $ (0.07) $ (0.12)
- --------------------------------------------------------------------------------

Weighted Average Number
of Common Shares Outstanding 21,148,294 14,148,700
- --------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.

See Accountants' Review Report

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
Period from
Date of
Inception
(February 1, Three Months Ended
1994) March 31,
through -------------------
March 31, 2002 2002 2001
- --------------------------------------------------------------------------------

Cash Flows from Operating Activities

Net Loss for the Period $(19,689,363) $(1,475,298) $(1,667,723)

Adjustments to Reconcile Net Loss for
the Period to Net Cash Flows from
Operating Activities:

Depreciation and Amortization 120,222 14,145 7,043
Capital Contributions:
Deemed Interest Expense on
Loans from Stockholders 591,431 10,070 26,920
Share and Option Grants - Officers,
Directors, Investors, and
Consultants 6,945,612 948,600 10,000
Warrants Issued - Equity Line of
Credit 1,100,000 -- 1,100,000
Conversion Premium on Convertible
Debentures 4,705,248 -- --
Interest on Converted Debentures 272,871 -- --
Loss on Investment in Affiliate 207,360 -- --

Changes in Assets and Liabilities:

Inventory - Raw Materials (93,500) 4,250 --
Prepaid Expenses (196,537) (191,193) (3,821)
Accounts Payable and Accrued Expenses 610,790 8,791 54,962
- --------------------------------------------------------------------------------
Net Cash Flows from Operating Activities (5,425,866) (680,635) (472,619)
- --------------------------------------------------------------------------------

Cash Flows from Investing Activities:

Purchases of Property and Equipment (156,907) (1,682) (61,433)
Purchases of Patents and Trademarks -
Net (593,436) (66,100) (25,132)
- --------------------------------------------------------------------------------
Net Cash Flows from Investing Activities $ (750,343) $ (67,782) $ (86,565)
- --------------------------------------------------------------------------------

- continued -

The accompanying notes are an integral part of this financial statement.

See Accountants' Review Report

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

STATEMENTS OF CASH FLOWS (UNAUDITED) - continued
- --------------------------------------------------------------------------------
Period from
Date of
Inception Three Months Ended
(February 1,
1994) March 31,
----------------------
through
March 31, 2002 2002 2001
- --------------------------------------------------------------------------------

Cash Flows from Financing Activities
Cash Capital Contributions $ 162,200 $ -- $ --
Distributions to Stockholders (68,660) -- --
Proceeds from Issuance of Common Stock 438,785 -- --
Proceeds from Convertible Debentures 3,549,833 -- --
Proceeds from Exercise of Stock Options 1,214,550 912,950 112,450
Proceeds from Sale of Shares Under the
Equity Line of Credit Agreement 575,636 92,000 --
Loan Receivable - Director/Officer -- -- (1,025,000)
Advances from (Repayments to)
Stockholders 572,115 433 --
- --------------------------------------------------------------------------------

Net Cash Flows from Financing Activities 6,444,459 1,005,383 (912,550)
- --------------------------------------------------------------------------------

Net Increase (Decrease) in
Cash and Cash Equivalents 268,250 256,966 (1,471,734)

Cash and Cash Equivalents - Beginning
of Period -- 11,284 1,902,942
- --------------------------------------------------------------------------------

Cash and Cash Equivalents - End of
Period $ 268,250 $ 268,250 $ 431,208
- --------------------------------------------------------------------------------

Non-Cash Investing and Financing Activities
- --------------------------------------------------------------------------------

Acquisition of Property and Equipment
via Stockholder Contribution $ 34,020 $ -- $ --
Short-Swing Profit on Insider Trading -
Offset Against Due to Stockholders $ 408,078 $ -- $ --
Exercise of Stock Options $ 279,000 $ 279,000 $ --
Offsetting of Stockholders Receivable
and Payables $ 728,000 $ 728,000 $ --
Debentures Converted to Common Stock $ 3,549,833 $ -- $ 197,727
Investment in Affiliate $ 207,360 $ -- $ --
Deferred Royalty Revenue $ (207,360) $ -- $ --
- --------------------------------------------------------------------------------

The accompanying notes are an integral part of this financial statement.

See Accountants' Review Report

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Note A - Basis of Presentation
The condensed financial statements of L.A.M. Pharmaceutical, Corp. (the
"Company") included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in
conjunction with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. These condensed financial
statements should be read in conjunction with the annual audited
financial statements and the notes thereto included in the Company's
Form 10-KSB, and other reports filed with the SEC.

The accompanying unaudited interim financial statements reflect all
adjustments of a normal and recurring nature, which are, in the opinion
of management, necessary to present fairly the financial position,
results of operations and cash flows of the Company for the interim
periods presented. The results of operations for these periods are not
necessarily comparable to, or indicative of, results of any other
interim period or for the fiscal year as a whole. Factors that affect
the comparability of financial data from year to year and for comparable
interim periods include non-recurring expenses associated with market
launch of new products, the Company's registration with the SEC, costs
incurred to raise capital, acquisitions of patents and trademarks, and
stock options and awards.

Reclassifications
Certain amounts in the prior year financial statements have been
reclassified to conform with the current year presentation.

Note B - Receivable - Director/Officer
Between February and April 2001, Alan Drizen, the Company's President,
borrowed $1,075,000 from the Company. The amounts borrowed were used by
Mr. Drizen to purchase shares of the Company's common stock in an effort
to stabilize the share price in the face of extensive short selling of
the shares. Mr. Drizen agreed to pay this amount to the Company,
together with interest at 6% per year, in accordance with the terms of a
promissory note. The note provided for a series of periodic payments
with the unpaid amount of the note, together with any accrued and unpaid
interest, due on March 31, 2002.

As a result of Mr. Drizen's purchases and sales of the Company's common
stock between October 2000 and May 2001, the Company was entitled to a
recoverable profit of $408,078 from Mr. Drizen, computed in accordance
with Section 16(b) of the Securities Exchange Act of 1934. During 2001,
this amount was applied to reduce the amount that the Company owed to
Mr. Drizen with the offset being to additional paid-in capital.

During March 2002, Mr. Drizen and the Company agreed that the balance of
$548,361 owed by the Company to Mr. Drizen at December 31, 2001,
included in amounts due to stockholders, would be offset against the
remaining amount due pursuant to Mr. Drizen's promissory note. In
addition, two other Directors and stockholders agreed with Mr. Drizen to
apply a portion of their receivables from the Company, included in
amounts due to stockholders, against the amounts due by Mr. Drizen in an
amount sufficient to offset the remaining balance due on Mr. Drizen's
promissory note. Following these offset arrangements, Mr. Drizen's
promissory note was paid in full.

- continued -

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Note B - Receivable - Director/Officer - continued

In February 2002, Mr. Drizen exercised options to acquire a total of
1,050,000 shares for a total option amount of $435,000. At March 31,
2002, $279,000 of the option amount remained unpaid. During April 2002,
an additional $175,000 was paid by Mr. Drizen.

Note C - Equity Line of Credit Agreement
On January 24, 2001, the Company entered into an equity line of credit
agreement with Hockbury Limited in order to establish a source of
funding for the development of the Company's technology. The equity line
of credit agreement establishes what is sometimes also referred to as an
equity drawdown facility. The Company has issued 582,206 shares of
common stock and received $575,636 in net proceeds as of March 31, 2002
under the equity line of credit agreement.

Under the equity line of credit agreement, Hockbury Limited has agreed
to provide the Company with up to $20,000,000 of funding. During this
period, the Company may request a drawdown under the equity line of
credit by selling shares of its common stock to Hockbury Limited, and
Hockbury Limited will be obligated to purchase the shares. The Company
may request a drawdown once every 27 trading days, although the Company
is under no obligation to request any drawdowns.

The price at which shares may be sold to Hockbury under the equity line
of credit agreement is based on the daily volume weighted average price
of the company's common shares during the 22 trading days following a
drawdown request, less a discount of 10%. The Company receives the
purchase price less a placement agent fee payable to GKN Securities
equal to 7% of the aggregate purchase price. Hockbury Limited may then
resell all or a portion of these shares. GKN Securities is the placement
agent which introduced Hockbury Limited to the Company and is a
registered broker-dealer.

The minimum amount the Company can draw down at any one time is
$100,000, and the maximum is the lesser of $1,000,000 or the amount
equal to 4.5% of the weighted average price of the Company's common
stock multiplied by the total trading volume of the Company's common
stock for the sixty calendar days prior to the date of the drawdown
request.

L.A.M. PHARMACEUTICAL, CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Lewiston, New York

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

Note D - Subsequent Events
On April 15, 2002, the Company obtained Section 510(k) approval from
the U.S. Food and Drug Administration to market its proprietary L.A.M.
IPM Wound Gel(TM). L.A.M. will commence marketing this product on
June 3, 2002.

TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY .....................................
RISK FACTORS............................................
COMPARATIVE SHARE DATA ................................
MARKET FOR COMMON STOCK ................................
USE OF PROCEEDS.........................................
MANAGEMENT'S DISCUSSION AND ANALYSIS
AND PLAN OF OPERATION..............................
BUSINESS................................................
MANAGEMENT .............................................
PRINCIPAL SHAREHOLDERS..................................
EQUITY LINE OF CREDIT AGREEMENT.........................
SELLING STOCKHOLDERS....................................
DESCRIPTION OF SECURITIES...............................
LEGAL PROCEEDINGS.......................................
EXPERTS ................................................
INDEMNIFICATION ........................................
AVAILABLE INFORMATION...................................
FINANCIAL STATEMENTS....................................

No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by L.A.M. This prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, any of the securities offered in any
jurisdiction to any person to whom it is unlawful to make such an offer in such
jurisdiction. Neither the delivery of this prospectus nor any sale made in this
prospectus shall, under any circumstances, create any implication that the
information in this prospectus is correct as of any time subsequent to the date
of this prospectus or that there has been no change in the affairs of L.A.M.
since such date.