SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-QSB


            ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000


                         COMMISSION FILE NUMBER: 0-29417


                                 ICRYSTAL, INC.
                       ----------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


      DELAWARE                                  62-1581902
----------------------              -----------------------------------
(STATE OF ORGANIZATION)            (I.R.S. EMPLOYER IDENTIFICATION NO.)


                          3237 KING GEORGE HWY., STE. 101-B
                    SURREY, BRITISH COLUMBIA, V5P 1B7 CANADA
                 ----------------------------------------------
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                (604)542-5021
              --------------------------------------------------
              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE


CHECK  WHETHER THE ISSUER (1) FILED ALL REPORTS  REQUIRED TO BE FILED BY SECTION
13 OR 15(d) OF THE  EXCHANGE  ACT  DURING  THE PAST 12  MONTHS  AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES _X__  NO ____

THERE ARE  xx  SHARES OF COMMON STOCK  OUTSTANDING  AS OF OCTOBER  31,
2000.

<PAGE>




                          ICRYSTAL, INC. AND SUBSIDIARY
                                TABLE OF CONTENTS
                    SEPTEMBER 30, 2000 AND DECEMBER 31, 1999


                                                                            PAGE

PART I    FINANCIAL INFORMATION


          INDEPENDENT ACCOUNTANT'S REPORT.....................................1


  ITEM 1  FINANCIAL STATEMENTS

          Condensed Consolidated Balance Sheet................................2

          Condensed Consolidated Statement of Operations......................3

          Condensed Consolidated Statement of Cash Flows......................4

          Notes to Condensed Consolidated Financial Statements..............5-10


  ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS..............................11-16

SIGNATURES....................................................................17


PART II   OTHER INFORMATION

  ITEM 6  EXHIBITS ..........................................................E-1


<PAGE>


                         INDEPENDENT ACCOUNTANT'S REPORT



To the Board of Directors and Stockholders
iCrystal, Inc. and Subsidiary

We have  reviewed  the  accompanying  condensed  consolidated  balance  sheet of
iCrystal,  Inc. and Subsidiary (the "Company") as of September 30, 2000, and the
related condensed  consolidated  statements of operations and cash flows for the
three  and  nine  months  then  ended.   These  financial   statements  are  the
responsibility of iCrystal, Inc.'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 making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  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 the condensed  financial  statements referred to above for them to be
in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has incurred  losses since its inception and
has a net stockholders'  deficit. These conditions raise substantial doubt about
its ability to continue as a going concern.  Management's  plans regarding those
matters also are  described in Note 1. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards, the consolidated balance sheet of iCrystal, Inc. and Subsidiary as of
December  31, 1999,  and the  consolidated  related  statements  of  operations,
stockholders'  equity  and cash  flows for the year then  ended  (not  presented
herein);  and in our report dated March 31, 2000,  which included an explanatory
paragraph  describing   conditions  that  raised  substantial  doubt  about  the
Company's  ability to continue as a going  concern,  we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth
in the  accompanying  condensed  consolidated  balance  sheet as of December 31,
1999,  is  fairly  presented,  in all  material  respects,  in  relation  to the
consolidated balance sheet from which it has been derived.



/s/Moss Adams LLP

Bellingham, Washington
November 10, 2000

                                       1

<PAGE>

<TABLE>
<CAPTION>

                          ICRYSTAL, INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
                    SEPTEMBER 30, 2000 AND DECEMBER 31, 1999


                                     ASSETS


                                                                                   September 30,     December 31,
                                                                                       2000              1999
                                                                                   -------------     ------------
<S>                                                                                 <C>               <C>
CURRENT ASSETS
Cash                                                                                $    18,200       $    23,800
Accounts receivable - Master Licensee                                                   104,500            75,700
Prepaid expenses                                                                              -               900
                                                                                    -----------       -----------
        Total current assets                                                            122,700           100,400

PROPERTY AND EQUIPMENT, net                                                              49,600            17,900
                                                                                    -----------       -----------
TOTAL ASSETS                                                                        $   172,300       $   118,300
                                                                                    ===========       ===========


                      LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES
Accounts payable and accrued liabilities                                            $   150,300       $    72,100
Advances from related party                                                                   -            98,700
Current portion of deferred revenue - Master Licensee                                    13,400                 -
Convertible debt                                                                         78,200            78,200
                                                                                    -----------       -----------
        Total current liabilities                                                       241,900           249,000

LONG-TERM LIABILITIES

Deferred revenue - Master Licensee                                                      143,900            67,000
Advances from stockholders                                                                4,400            19,000
                                                                                    -----------       -----------
        Total liabilities                                                               390,200           335,000
                                                                                    -----------       -----------

STOCKHOLDERS' DEFICIT
Common stock, $0.01 par value, 30,000,000
  shares authorized; 15,682,800, and 14,682,800
  shares issued and outstanding                                                         156,900           146,900
Additional paid-in capital                                                            5,973,600         5,471,300
Deferred compensation                                                                   (19,800)          (59,300)
Accumulated deficit                                                                  (6,328,600)       (5,775,600)
                                                                                    -----------       -----------
        Total stockholders' deficit                                                    (217,900)         (216,700)
                                                                                    -----------       -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                         $   172,300       $   118,300
                                                                                    ===========       ===========

</TABLE>

See Accompanying notes to these consolidated financial statements.


                                       2

<PAGE>

<TABLE>
<CAPTION>

                         ICRYSTAL, INC. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
             THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999



                                                 Three Months    Three Months     Nine Months      Nine Months
                                                    Ended           Ended            Ended            Ended
                                                September 30,    September 30,   September 30,    September 30,
                                                    2000             1999            2000             1999
                                                -------------    -------------   -------------    -------------

<S>                                             <C>              <C>             <C>              <C>
REVENUE
Software royalties                              $     374,800    $      21,100   $     534,500    $      21,100
                                                -------------    -------------   -------------    -------------

OPERATING EXPENSES
General and administrative                            142,100           94,300         670,100        4,352,600
Research and development                              100,800          380,000         261,100          586,000
Sales and marketing                                    12,100           46,200          31,300           82,900
Stock-based compensation -
   stock options                                      117,800                -         117,800                -
                                                -------------    -------------   -------------    -------------
        Total operating expenses                      372,800          520,500       1,080,300        5,021,500
                                                -------------    -------------   -------------    -------------

INCOME (LOSS) FROM OPERATIONS                           2,000         (499,400)       (545,800)      (5,000,400)

OTHER EXPENSE
Interest and finance costs                              7,200           12,800           7,200           13,200
                                                -------------    -------------   -------------    -------------

NET LOSS BEFORE
PROVISION FOR INCOME TAXES                             (5,200)        (512,200)       (553,000)      (5,013,600)

PROVISION FOR INCOME TAXES                                  -                -               -                -
                                                -------------    -------------   -------------    -------------

NET LOSS                                        $      (5,200)   $    (512,200)  $    (553,000)   $  (5,013,600)
                                                =============    =============   =============    =============

EARNINGS (LOSS) PER SHARE
Basic and diluted                               $           -    $       (0.05)        $ (0.04)   $       (0.51)
                                                =============    =============   =============    =============
Weighted average common shares
   outstanding (basic and diluted)                 15,682,800       11,356,600      15,319,700        9,871,400
                                                =============    =============   =============    =============

</TABLE>


See Accompanying notes to these consolidated financial statements.

                                       3


<PAGE>

<TABLE>
<CAPTION>

                         ICRYSTAL, INC. AND SUBSIDIARY
           CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999



                                                                                September 30,   September 30,
                                                                                    2000            1999
                                                                                -------------   -------------
<S>                                                                              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                                         $ (553,000)     $ (5,013,600)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED IN OPERATING ACTIVITIES
Amortization of deferred compensation                                                39,500            72,300
Depreciation                                                                          6,100             2,100
Stock-based compensation - stock options                                            117,800                 -
Stock-based compensation - common stock                                             194,500         4,022,300
CHANGES IN OPERATING ASSETS AND LIABILITIES
Accounts receivable                                                                 (95,800)          (21,900)
Prepaid expenses                                                                        900                 -
Accounts payable and accrued liabilities                                             78,200            28,000
Deferred revenue                                                                     90,300             7,000
                                                                                 ----------      ------------
Net cash from operating activities                                                 (121,500)         (903,800)
                                                                                 ----------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                                                 (37,800)          (16,800)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuances                                                       200,000           800,400
Repayment of advances from related party, net                                       (46,300)           (3,700)
Proceeds from issuance of convertible debt                                                -            78,900
Collection of stock subscriptions receivable                                              -            45,000
                                                                                 ----------      ------------
Net cash from financing activities                                                  153,700           920,600
                                                                                 ----------      ------------

NET CHANGE IN CASH                                                                   (5,600)                -

CASH, beginning of period                                                            23,800                 -
                                                                                 ----------      ------------
CASH, end of period                                                              $   18,200      $          -
                                                                                 ==========      ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                                                    $      300      $      1,200
                                                                                 ==========      ============
Income taxes paid                                                                $        -      $          -
                                                                                 ==========      ============
NON-CASH TRANSACTIONS
Stock issued for future services                                                 $        -      $     63,700
                                                                                 ==========      ============
Assignment of accounts receivable for settlement of advances
     from related party and stockholders                                         $   67,000      $          -
                                                                                 ==========      ============
Liabilities assumed by stockholder                                               $   12,000      $          -
                                                                                 ==========      ============

</TABLE>

See Accompanying notes to these consolidated financial statements.


                                       4

<PAGE>


                          ICRYSTAL, INC. AND SUBSIDIARY
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


NOTE 1 - ORGANIZATION AND CESSATION OF DEVELOPMENT STAGE OPERATIONS


        ORGANIZATION
        iCrystal,  Inc.  (the Company or iCrystal) was  incorporated  October 5,
        1994 in the state of  Delaware as Cable  Group  South,  Inc. In November
        1998, the Company changed its name to Softnet Industries,  Inc.; and, in
        June 1999, to avoid a conflict with another company with a similar name,
        the name was changed again to I crystal, Inc. In June 2000, the name was
        changed again to iCrystal,  Inc. The Board believes the most recent name
        change better reflects the Company's  business,  given the popular usage
        of the letter "i" to characterize Internet related businesses.

        In July 1998,  after giving affect to the reverse stock split  discussed
        below, the Company president  received 375,000 shares of common stock in
        exchange for services. Effective October 19, 1998, stockholders approved
        an eight to one reverse stock split,  reducing the number of outstanding
        shares from  6,130,000 to 766,300.  All  references in the  accompanying
        financial statements to number of shares and per share amounts have been
        restated to reflect the reduced number of shares outstanding.

        On December 1, 1998, the Company  entered into a memorandum of agreement
        with Diversified Cosmetics International,  Inc. (Diversified), a related
        party (Note 7), to license the rights to certain  internet-based  gaming
        software  that was in the  process of being  developed  by  Diversified.
        Under terms of the agreement,  Diversified had the option to require the
        Company to purchase the rights,  including all source code and technical
        specifications,  graphics,  domain names and trademarks, in exchange for
        2.5 million shares of common stock.  Diversified exercised its option on
        December 10, 1998.  Consideration  also  included a $65,000 note payable
        given for the additional amount of development undertaken by Diversified
        subsequent  to entering  into the  agreement.  The note was paid in full
        during 1999.

        Concurrent  with the  acquisition  of the software  rights,  the Company
        issued two million shares to certain owners of  Diversified.  The shares
        were  issued in  exchange  for stock  subscriptions  receivable  and for
        future  services to be provided in their capacity as corporate  officers
        of  iCrystal.   Another  2.5  million  shares  were  issued  to  certain
        individuals  in  exchange  for stock  subscriptions  receivable  and for
        services  provided in connection with  facilitating  the transfer of the
        software from Diversified to the Company.

        CESSATION OF DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN
        For the period  October 5, 1994  through June 30,  1999,  the  Company's
        efforts were devoted to corporate  structuring,  financial  and business
        planning,   recruiting   directors  and  advisors,   raising  additional
        financing,  establishing  the  technological  feasibility  of the gaming
        software  acquired from  Diversified,  and  negotiating a master license
        agreement.   Accordingly,   through  June  30,  1999,  the  Company  was
        characterized  as  a  development   stage  company.   Development  stage
        operations  were  financed  primarily  through the issuance of shares of
        common stock for services and, in March 1999,  the issuance of 1,914,000
        shares of common stock for net proceeds of $800,300.  Prior to the March
        1999  issuance,  the  Company  had  no  material  amount  of  assets  or
        liabilities.

        In September 1999, the Company  established  offices in Surrey,  British
        Columbia,  where it engages in developing and licensing software related
        to the internet gaming industry. Products include various theme-oriented
        blackjack and poker games,  slot machines,  and bingo games. The Company
        does not conduct  any gaming  activities  itself but has entered  into a
        nonexclusive  master license agreement with DCI, Inc. (Master Licensee),
        a related party (Note 7), for use of the Company's gaming technology. In
        the third  quarter of 1999,  the Company began  realizing  revenues from
        this agreement and development stage operations ceased.

        On August 17, 1999, I crystal  Software  Inc. (I crystal  Software)  was
        incorporated  in  the  province  of  British  Columbia,   Canada.   Upon
        incorporation,  all  founding  shares  were  issued to the  officers  of
        iCrystal.  Effective  December 13, 1999,  the officers  contributed  all
        shares  to the  Company,  at  which  time I  crystal  Software  became a
        wholly-owned subsidiary of iCrystal. I crystal Software has subsequently
        carried  out  essentially  all of  the  Company's  software  development
        activity.


                                       5

<PAGE>


                         ICRYSTAL, INC. AND SUBSIDIARY
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


NOTE 1 - ORGANIZATION AND CESSATION OF DEVELOPMENT STAGE OPERATIONS (Continued)

        The Company has incurred net losses since  inception,  and, at September
        30,  2000,  it  had a  working  capital  deficiency  of  $119,200  and a
        stockholders'  deficit of  $217,900.  The Company has not yet  generated
        revenues sufficient to fund its operations.  Accordingly,  the Company's
        ability to accomplish  its business  strategy and to ultimately  achieve
        profitable  operations is dependent on its capacity to obtain additional
        financing and execute its business plan.

        Although  cash flows from  licensing  revenues  have been  increasing as
        games and websites  are  developed  and  licensed,  management  does not
        anticipate that cash revenues will be adequate to fund its cash expenses
        until the fourth  quarter of 2000.  The high level of non-cash  expenses
        incurred  during  1999 in  exchange  for  stock  is not  expected  to be
        repeated in 2000 and future periods.

        During the nine months  ended  September  30, 2000,  the Company  raised
        $200,000  in  private  placements  of common  stock.  During  the fourth
        quarter of 2000 or the first quarter of 2001, the Company plans to raise
        another $2 million in private equity financing. Proceeds will be used to
        fund  its  software  development  projects.   Success  in  raising  this
        additional   financing  is  dependent  on  the   Company's   ability  to
        demonstrate  that it can  fulfill its  business  strategy to license its
        games and websites and generate significant royalty revenues. Management
        believes these plans will allow the Company to generate  sufficient cash
        to support its operations through September 30, 2001.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


        INTERIM FINANCIAL INFORMATION
        The financial  information  included herein is unaudited;  however,  the
        information  reflects  all  adjustments  (consisting  solely  of  normal
        recurring adjustments) that are in the opinion of management,  necessary
        to a fair presentation of the financial position, results of operations,
        and cash flows for the interim periods.

        These  consolidated  financial  statements should be read in conjunction
        with the consolidated  financial  statements for the year ended December
        31,  1999 and notes  thereto  included  in Form  10SB as filed  with the
        Securities and Exchange Commission on May 30, 2000.

        PRINCIPLES OF CONSOLIDATION
        The consolidated  financial statements of iCrystal,  Inc. and Subsidiary
        include the accounts of its wholly-owned subsidiary, I crystal Software,
        Inc.  All material  intercompany  accounts  and  transactions  have been
        eliminated in consolidation.

        REVENUE RECOGNITION
        The Company  recognizes revenue when earned, in accordance with American
        Institute of Certified  Public  Accountants  Statement of Position (SOP)
        97-2, SOFTWARE REVENUE  RECOGNITION,  and SOP 98-9,  MODIFICATION OF SOP
        97-2  WITH  RESPECT  TO  CERTAIN  TRANSACTIONS.   Royalties  based  upon
        licensees' net gaming revenues are recognized as licensees' revenues are
        earned. In the event that licensees'  revenue  recognition  criteria are
        not met,  revenue is  recognized  when  received.  Revenue from packaged
        product sales to and through distributors and resellers is recorded when
        related  products  are  shipped.  Revenue  attributable  to  significant
        undelivered  elements,  including  maintenance and technical support, is
        recognized over the contract period as elements are delivered.


                                       6

<PAGE>


                         ICRYSTAL, INC. AND SUBSIDIARY
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


        NEW ACCOUNTING STANDARD
        In June 1998, the Financial  Accounting  Standards Board issued SFAS No.
        133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. Among
        other  provisions,  SFAS No. 133 requires  that  entities  recognize all
        derivatives  as either  assets or  liabilities  in the balance sheet and
        measure  those  financial  instruments  at fair  value.  Accounting  for
        changes in fair value is  dependent  on the use of the  derivatives  and
        whether such use qualifies as hedging  activity.  The new  standard,  as
        amended,   becomes  effective  for  the  Company  in  fiscal  2001,  and
        management  is currently  assessing  the impact,  if any, it may have on
        financial position and results of operations.


NOTE 3 - RESTATEMENT OF 1999 INTERIM FINANCIAL INFORMATION

        During the current period,  management  determined that the net loss and
        loss per  share for the  three  months  ended  September  30,  1999 were
        incorrectly  reported in the Company's  Form 10-SB filed on February 10,
        2000. The misstatement  was due to certain expenses  incurred during the
        first  six  months of the year  being  reported  in the  third  quarter.
        Results of  operations  and loss per share have been  restated to report
        these expenses in the proper period. As a result of the restatement, net
        loss decreased by $1,169,900,  from $(1,682,100) as previously  reported
        to  $(512,200).   Loss  per  share  decreased  $0.10,  from  $(0.15)  as
        previously reported to $(0.05).

        Certain  balances in the statements of operations and cash flows for the
        nine months ended  September 30, 1999 have been  reclassified to conform
        with the 2000 presentation.  The  reclassifications had no effect on net
        loss or loss per share for this period.


NOTE 4 - CONVERTIBLE DEBT

        In August  1999,  the Company  received a $78,200 loan advance from West
        Peak Ventures of Canada,  Inc. (West Peak). Under the terms of the loan,
        the  advance  is  unsecured  and  bears  interest  at 2% above the prime
        banking  lending  rate.  The loan was due in full on November  30, 1999,
        unless  converted  into 200,000  common  shares of  iCrystal,  which the
        Company agrees to register for resale at the request of West Peak.

        On December 23, 1999 the Company  issued  200,000  common shares to West
        Peak. West Peak did not accept the shares tendered based on its position
        that the shares were to be  registered  upon  delivery.  On February 15,
        2000, after negotiations to resolve the issue failed,  West Peak filed a
        claim  against  the Company in the  Supreme  Court of British  Columbia,
        Canada, claiming breach of the loan agreement. On September 7, 2000, the
        Court  ordered the Company to pay West Peak the balance of the note plus
        interest  and  other  costs for a total  obligation  of  $85,100.  As of
        November  10,  2000,  the Company  had not repaid the loan,  or paid the
        interest and other costs.


NOTE 5 - CAPITAL STOCK

        The Company has a single class of $0.01 par value common  stock.  Thirty
        million  shares  are  authorized  and  15,682,800  shares are issued and
        outstanding at September 30, 2000. During the first nine months of 2000,
        the Company  issued  1,000,000  shares for $200,000 of cash proceeds and
        consulting  services.  Certain  stockholders  also  assumed  $12,000  of
        liabilities  during  the  period,   which  was  recorded  as  a  capital
        contribution.


                                       7

<PAGE>


                         ICRYSTAL, INC. AND SUBSIDIARY
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


NOTE 6 - STOCK-BASED COMPENSATON

        On June 15, 2000,  stockholders  approved adoption of the 2000 Incentive
        Plan  (the  "Plan").  Under  the Plan the  Company  may make  awards  to
        employees,   non-employees,   directors,  consultants,  and  independent
        contractors of shares of common stock or derivative  securities  such as
        incentive and  nonqualified  stock  options  stock,  purchase  warrants,
        securities  convertible into common stock,  stock  appreciation  rights,
        phantom stock, or any other form of derivative,  without limitation. The
        term of the Plan is ten years, and three million shares are reserved for
        awards made under the Plan.  The Plan  stipulates no terms or conditions
        for the awards to be granted.

        A summary of the status of the Plan at September 30, 2000 is as follows:

<TABLE>
<CAPTION>
                                                                                  Weighted-
                                                                 Number            Average
                                                               of Options      Exercise Price
                                                               ----------      --------------
        <S>                                                     <C>            <C>
        Options outstanding at December 31, 1999
                Granted                                         1,350,000      $         0.20
                Exercised                                               -                   -
                Forfeited                                               -                   -
                                                               ----------      --------------
        Options outstanding at September 30, 2000               1,350,000      $         0.20
                                                               ==========      ==============
        Options exercisable at September 30, 2000               1,350,000      $         0.20
                                                               ==========      ==============

</TABLE>



        A summary of stock  options  outstanding  at  September  30,  2000 is as
follows:

<TABLE>
<CAPTION>


                            Options Outstanding                                 Options Exercisable
     ----------------------------------------------------------------        ---------------------------
                                         Weighted-
                                          Average          Weighted-                           Weighted-
      Range of                            Remaining          Average                             Average
      Exercise           Number          Contractual         Exercise           Number          Exercise
       Prices         Outstanding           Life              Price          Exercisable          Price
     ----------       -----------        -----------       ----------        -----------       ---------
      <S>               <C>               <C>              <C>                 <C>             <C>
      $    0.20         1,350,000         0.75 years       $     0.20          1,350,000       $    0.20

</TABLE>

        The Company applies the provision of APB Opinion No. 25,  ACCOUNTING FOR
        STOCK ISSUED TO EMPLOYEES,  and related  interpretations  to account for
        stock-based  awards  granted to  employees  and  non-employee  directors
        holding positions that are filled by stockholder election.  Accordingly,
        costs for employee and  non-employee  director stock options is measured
        as the excess, if any, of the value of the Company's common stock at the
        measurement  date over the amount the  employee  must pay to acquire the
        stock. No  compensation  expense was recognized at the date of grant for
        awards made to employees and non-employee directors under the Plan.

        The  Company  applies the  provision  of SFAS No.  123,  ACCOUNTING  FOR
        STOCK-BASED  COMPENSATION,  and related  interpretations  to account for
        stock-based  awards granted to  non-employees,  other than  non-employee
        directors.  SFAS No. 123 requires that the costs for non-employee  stock
        options be measured  based on the fair value of the  options  granted at
        the date the services were performed. The Company uses the Black-Scholes
        option-pricing  model  to  compute  estimated  fair  value.  Stock-based
        compensation  expense recognized on the date of grant for options issued
        to  non-employees  during the three and nine months ended  September 30,
        2000 totaled $38,500, based on the following assumptions:


                                       8

<PAGE>


                         ICRYSTAL, INC. AND SUBSIDIARY
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


NOTE 6 - STOCK-BASED COMPENSATON (Continued)


        Risk-free interest rate                              6.0%
        Dividend yield rate                                  0.0%
        Price volatility                                   100.0%
        Weighted average expected life of options       .75 years

        The Plan  includes a cashless  exercise  feature that allows  holders to
        exercise their options without  presenting cash or other  consideration.
        When this feature is utilized,  the Company  withholds  from shares that
        would  otherwise  be issued  the number of shares  having a fair  market
        value equal to the option  exercise price.  Consequently,  the number of
        shares issuable upon exercise varies with changes in the Company's stock
        price.  Because  the  number of shares  to be issued is not  fixed,  the
        Company re-measures the compensation cost of outstanding options at each
        balance sheet date. As a result of the re-measurement,  during the three
        months ended  September 30, 2000,  the Company  recognized an additional
        $52,500 of  compensation  expense for options  granted to employees  and
        non-employee directors,  and another $26,800 of compensation expense for
        options granted to non-employees, other than non-employee directors.

        SFAS No. 123 requires disclosure of the pro forma effect of applying the
        fair value method of accounting  for stock options  granted to employees
        and non-employee  directors.  For disclosure purposes,  the Company uses
        the Black-Scholes  option-pricing model to compute estimated fair value,
        based  on the  assumptions  presented  above.  Pro  forma  net  loss and
        earnings  (loss) per share  amounts for the three and nine months  ended
        September  30,  2000 are as  follows.  There  are no  similar  pro forma
        results to report for the 1999 comparative periods.

<TABLE>
<CAPTION>

                                                                           2000
                                                            ---------------------------------
                                                                Three               Nine
                                                                Months             Months
                                                            --------------     --------------
        <S>                                                  <C>                  <C>
        Pro forma net loss                                   $    (33,200)        $ (581,000)
        Pro forma basic earnings (loss) per share            $       0.00            $ (0.04)
        Pro forma diluted earnings (loss) per share          $       0.00            $ (0.04)

</TABLE>


NOTE 7 - RELATED PARTY TRANSACTIONS

        The Company is affiliated with the following entities:

                  DIVERSIFIED COSMETICS INTERNATIONAL, INC. (DIVERSIFIED)
        The Company is affiliated  with  Diversified  through common  ownership.
        Diversified is an Alberta  corporation that was previously listed on the
        Alberta Stock  Exchange.  As described in Note 1, in December  1998, the
        Company acquired certain software rights from Diversified. Subsequent to
        the transfer of the  technology to the Company,  Diversified  has had no
        significant business operations; and, as of November 10, 2000, it was in
        the process of winding down its affairs.

        Prior  to the  Company  establishing  its own  bank  account,  all  cash
        transactions  were  deposited in and disbursed from  Diversified's  bank
        account.  Diversified  has also paid various  expenses on the  Company's
        behalf.  As a result of these  circumstances,  as of June 30, 2000,  the
        Company  owed  Diversified  $102,100.  During  the  three  months  ended
        September  30, 2000,  the Company  repaid  $49,700 of this  amount,  and
        Diversified  agreed  to  settle  the  remaining  $52,400  obligation  by
        accepting  the  assignment  of a receivable  from the  Company's  Master
        Licensee.

                                       9

<PAGE>

                          ICRYSTAL, INC. AND SUBSIDIARY
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                  NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999


NOTE 7 - RELATED PARTY TRANSACTIONS (Continued)

        DCI, INC. (THE MASTER LICENSEE)
        Effective   April  8,  1999,   the  Company   entered  into  a  ten-year
        nonexclusive  master license  agreement with the Master Licensee for use
        of the Company's  technology.  Essentially all of the Company's  revenue
        has been realized under this  agreement.  Leonard  Slamko,  a consultant
        retained by the Master  Licensee,  is a stockholder of the Company and a
        relative of officers and directors of the Company.  The Master  Licensee
        is incorporated in the Commonwealth of Dominica, where it is licensed to
        conduct international wagering,  lotteries and games of chance by way of
        telecommunications.

        Through September 30, 2000, the Company has received $164,000 of upfront
        fees from the Master  Licensee for  development  of  specified  software
        packages.  Recognition  of the fees received is deferred until such time
        as the software packages have been fully developed.  Once development is
        complete,  the fees are recognized  over a five-year term, the estimated
        period over which the Company  expects to provide  ongoing  maintenance,
        support and upgrades.

        SLAMKO VISSER, CHARTERED ACCOUNTANTS (SLAMKO VISSER)
        The Company is affiliated  with the Canadian  chartered  accounting firm
        Slamko Visser  through  common  ownership.  During the nine months ended
        September 30, 2000 and 1999, respectively,  the Company incurred $31,200
        and $11,100 of expense to Slamko Visser for  consulting  and  accounting
        fees and related costs.

        ADVANCES FROM STOCKHOLDERS
        As of June 30, 2000, the Company owed certain  stockholders  $19,000 for
        advances made to the Company during 1999, when it was in its development
        stage.   During  the  three  months  ended   September  30,  2000,   the
        stockholders agreed to settle $14,600 of the obligation by accepting the
        assignment of a receivable from the Company's Master Licensee.


NOTE 8 - SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS


        SEGMENT INFORMATION
        The  Company's  primary   operations  consist  of  the  development  and
        licensing of internet-based  gaming technology.  Management assesses the
        performance  of its  operations  as a single  segment.  Through June 30,
        1999, the Company's  efforts were focused primarily on development stage
        operations,  and no material  activities  occurred  within this  segment
        prior to that date. The following tables and schedules summarize certain
        information about this segment.


<TABLE>
<CAPTION>

                                                      Internet Gaming
                                                    Software Development
                               -------------------------------------------------------------
                               Three Months    Three Months     Nine Months     Nine Months
                                  Ended           Ended           Ended           Ended
                               September 30,   September 30,   September 30,   September 30,
                                   2000            1999            2000            1999
                               -------------   -------------   -------------   -------------
<S>                              <C>            <C>              <C>            <C>
External revenues                $ 374,800      $   21,100       $ 534,500      $    21,100
Intersegment revenues                    -               -               -                -
Segment loss before tax            250,600        (408,800)       (223,500)        (655,400)
Segment assets                     153,200          33,700         153,200           33,700

Total income (loss) before tax   $ 250,600      $ (408,800)      $ 223,500      $  (655,300)
    for reportable segments
Corporate headquarters expense    (255,800)       (103,400)       (776,500)      (4,358,300)
                                 ---------      ----------       ---------      -----------
        Consolidated total       $  (5,200)     $ (512,200)      $(553,000)     $(5,013,600)
                                 =========      ==========       =========      ===========
</TABLE>


                                       10


<PAGE>

ITEM 2.   MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
          FINANCIAL CONDITION.

RESULTS OF OPERATIONS FOR THE  QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2000
AND SEPTEMBER 30, 1999

QUARTERS ENDED SEPTEMBER 30, 2000 AND 1999

Revenues - Revenues for the quarters ending September 30, 2000 and September 30,
1999 were $374,800 and $21,100,  respectively. The increase of $353,700 reflects
the cessation of the Company's development stage operations in the third quarter
of 1999,  when it began  collecting  revenues  from its license  agreement  (the
"Master License") with DCI, Inc. (the "Master Licensee") and continued marketing
strategies  for revenue  growth.  During the 2000 quarter the  Company's  Master
Licensee  had sites  which were in full  operation  which  resulted  in stronger
revenue than previous quarters.


Operating Expenses - Operating expenses are primarily  comprised of research and
development  and general  and  administrative  costs.  Operating  expenses  were
$372,800  and  $520,500  for the  quarters  ended  September  30, 2000 and 1999,
respectively. The decrease of $147,700 was largely attributable to the Company's
reduced research and development  expenditures  during the third quarter of 2000
as compared to 1999. The 1999 expense was particularly high due to the Company's
acquiring certain Internet-based software under development known as METROBINGO.
The  software  was  acquired in exchange  for  1,450,000  shares of common stock
valued at $0.19 per share for a total cost of $275,500.  In the 2000 quarter the
company  formalized its stock option plan and as a result  recorded  $117,800 of
stock-based  compensation  expense  related to stock options  awarded during the
quarter.  The amount  recorded in the 1999 quarter was $0 since the plan was not
in place during this quarter.  .Exclusive of these items,  operating expenses in
total were comparable between periods.

Research and Development - The Company's  research and development costs consist
primarily of costs  associated  with the continued  development  of its Internet
based casino software. Research and development costs were $100,800 and $380,000
for the quarters ended September 30, 2000 and 1999,  respectively.  The $279,200
decrease  reflects the Company's  acquiring the  METROBINGO  software  mentioned
above.  The company is  continuing  to  develop,  expand and  maintain  licensed
Internet based gaming software.

General and  Administrative  - The Company's  general and  administrative  costs
consist of salaries and wages,  consulting  fees,  professional  fees,  investor
relation services,  and office expenses.  General and administrative  costs were
$142,100  and  $94,300  for the  quarters  ended  September  30,  2000 and 1999,
respectively.  The increase of $47,800 consists mainly of the Company  expanding
its facilities and personnel in third quarter of 2000.  Other factors  affecting
the  difference   relates  to  the  Company  having   incurred  more  legal  and
professional costs in the third quarter of 2000 compared to the third quarter of
1999.  The  additional  costs  relate  primarily  to  the  Company's  regulatory
reporting requirements now that it is a fully reporting company.

Net Loss - The Company  incurred a net loss of $(5,200) and  $(512,200)  for the
quarters ended September 30, 2000 and 1999, respectively. The September 30, 1999
loss  was  the  result  of the  expenses  incurred  by the  Company  during  its
development  stage,  which ceased in the third quarter of 1999, when it began to


                                       11

<PAGE>


realize  revenues  from  licensing  its  Internet  based  casino  software.  The
September  30,  2000  loss  resulted  mainly  because  of the  $117,800  expense
associated with the stock-based  compensation on the stock options.  The options
were for past services and vested immediately,  requiring immediate  recognition
of the related expense.

During the third quarter of 2000 management determined that the net loss and the
net  loss  per  share  for the  three  months  ended  September  30,  1999  were
incorrectly  reported  in the  Company  10SB filed on  February  10,  2000.  The
misstatement was due to certain expenses incurred in the first six months of the
year being  reported in the third  quarter.  Results of operations  and loss per
share have been  restated to report these  expenses in the proper  period.  As a
result of the restatement, net loss decreased by $1,169,900 from $(1,682,100) as
previously reported to $(512,200).  Loss per share decreased $0.10, from $(0.15)
as previously reported to $(0.05).



NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

Revenues - Revenues for the nine months ending  September 30, 2000 and September
30, 1999 were  $534,500  and  $21,100,  respectively.  The  increase of $513,400
reflects the  cessation of the  Company's  development  stage  operations in the
third  quarter  of 1999,  when it began  collecting  revenues  from its  license
agreement  (the "Master  License")  with DCI, Inc. (the "Master  Licensee")  and
continued marketing strategies for revenue growth.

Operating Expenses - Operating expenses are primarily  comprised of research and
development  and general  and  administrative  costs.  Operating  expenses  were
$1,080,300 and $5,021,500 for the nine months ended September 30, 2000 and 1999,
respectively. The decrease of $3,941,200 was largely attributable to the Company
recognizing  $4,022,300  of  non-cash  services  received  during the first nine
months of 1999 in exchange  for  issuance of stock.  Similar  non-cash  services
received  in  exchange  for  stock  during  the first  nine  months of 2000 were
$194,500. As well, in 2000 the company formalized its stock option plan and as a
result recorded  $117,800 of stock-based  compensation  expense related to stock
options awarded during the quarter. The amount recorded in 1999 was $0 since the
plan was not in place  during this period.  Exclusive of these items,  operating
expenses in total were comparable between periods.

Research and Development - The Company's  research and development costs consist
primarily of costs  associated  with the continued  development  of its Internet
based casino software. Research and development costs were $261,100 and $586,000
for the nine  months  ended  September  30,  2000 and  1999,  respectively.  The
$324,900  decrease is largely  attributable  to the Company's  acquiring in 1999
certain  Internet-based  software under  development  known as  METROBINGO.  The
software was acquired in exchange for 1,450,000 shares of common stock valued at
$0.19 per share for a total  cost of  $275,550.  The  company is  continuing  to
develop, expand and maintain licensed Internet based gaming software.

General and  Administrative  - The Company's  general and  administrative  costs
consist of salaries and wages,  consulting  fees,  professional  fees,  investor
relation services,  and office expenses.  General and administrative  costs were
$670,100 and $4,352,600  for the nine months ended  September 30, 2000 and 1999,
respectively.  The  $4,352,600  reflects the Company  recognizing  $4,022,300 of
non-cash  investor  relation and consulting  services  received during the first
nine  months  of 1999 in  exchange  for  issuance  of stock.  Non-cash  services


                                       12

<PAGE>


received  in  exchange  for  stock  during  the first  nine  months of 2000 were
$194,500. . Other factors affecting the difference relates to the Company having
incurred  more  legal  and  professional  costs in the  second  quarter  of 2000
compared  to the second  quarter  of 1999 when it was not yet a fully  reporting
company.

Net Loss - The Company  incurred a net loss of $(553,000) and  $(5,013,600)  for
the nine months ended September 30, 2000 and 1999,  respectively.  The September
30, 1999 loss was the result of the expenses  incurred by the Company during its
development  stage,  which ceased in the third quarter of 1999, when it began to
realize  revenues  from  licensing  its  Internet  based  casino  software.  The
September 30, 2000 operating loss resulted because the research and development,
administrative  costs, sales and marketing costs,  stock-based  compensation for
stock options and interest and finance costs of $1,087,500 exceeded the $534,500
in licensing royalties and up-front fees recorded during that period.


FLUCTUATIONS IN ANNUAL AND QUARTERLY RESULTS

The Company's annual and quarterly operating results may fluctuate significantly
in the future as a result of numerous factors, including:

         1.       the amount and timing of expenditures required to develop the
                  Company's casino and bingo software and its licensing and
                  strategic relationships to enhance sales and marketing;

         2.       changes in the growth rate of Internet usage and the interest
                  of consumers in using Internet based casino and bingo websites
                  for recreation; and

         3.       the emergence of new services and technologies in the market
                  in which the Company now competes.

The  Company  also faces  foreign  currency  exchange  risk as a majority of its
revenue is  denominated in U.S.  currency and a majority of its operating  costs
are  incurred  in Canadian  currency.  Significant  fluctuations  in the foreign
exchange rate between U.S. and Canadian  currency will result in fluctuations in
the Company's annual and quarterly results.



LIQUIDITY AND CAPITAL RESOURCES

Effective  April 8, 1999,  the Company  entered into the Master License with the
Master  Licensee  for use of the  Company's  technology.  Under the terms of the
Master  License,  the  Company  is  obligated  to  provide a minimum  of six new
theme-oriented  software  packages and websites per year, along with updates and
technical  support,   and  development  of  specified   electronic  payment  and
accounting  technology.  During the first year of the Master License the Company
provided the six packages required,  however,  the Master Licensee has requested
special  upgrades  to the  graphics  and the games in two of the  packages.  The
special  modifications  were  completed  by June 30,  2000.  The Company is also
obligated to provide a monthly  advertising rebate equal to the lesser of 10% of
monthly  net  gaming  revenue  derived  from the  Master  Licensee's  use of its
software or the amount  expended  by the Master  Licensee  on  advertising.  The
Company, in return, is to receive 40% of monthly net gaming revenue derived from
use of the  software by the Master


                                       13

<PAGE>


Licensee  and  50% of  upfront  fees  charged  by  the  Master  Licensee  to any
sub-licensee.  In the event the Company  produces certain of its games on CD-ROM
and enters into a reseller agreement with the Master Licensee,  the Company will
receive 10% of gross  revenue  derived from the Master  Licensee's  sales of the
software.  The Master  Licensee is also  obligated to spend $10,000 per month on
advertising  for each  software  package and website  licensed from the Company.
Under terms of an amendment to the Master License dated May 1, 1999, the Company
had the  option to spend up to a  specified  amount on  promotion  of the Master
Licensee's  website  in  exchange  for an  additional  10%  share of net  gaming
revenue,  not to exceed the total amount spent by the Company on promotion.  The
term of the amendment, but not the underlying master License, has expired and no
amount was spent by the  Company in  furtherance  of that  amendment  during its
term.

The Company began  realizing  revenues from its licensing  activities in June of
1999, and such revenues amounted to $90,900 through December 31, 1999,  $374,800
for the  September  30, 2000  quarter  and  $534,500  for the nine months  ended
September  30, 2000.  The Company  anticipates  sales  revenue for the remaining
fiscal  period ending  December 31, 2000 to grow at $10,000 per month.  Although
cash outflows from licensing revenues have been increasing as games and websites
are developed and licensed,  management had anticipated that cash revenues would
equal cash expenses  sometime  during the third  quarter of 2000.  Excluding the
non-cash charge for stock-based  compensation  for stock options the company had
reached the level where the cash revenues had exceeded the cash expenses  during
this quarter.  However, due to the Company's software development plans over the
next year the Company's  liquidity  over the next 12 months is contingent on its
ability to raise money through debt or equity  financings to meet its short term
needs.

In October 1999, the Company entered into a second  ten-year  agreement with the
Master  Licensee  related to licensing  three specific  theme-oriented  Internet
casino  websites.  Under  this  agreement,  once all  three  sites are ready for
operation,  the  Company  is to  receive a $100,000  upfront  fee.  It will then
receive 40% of the first $100,000 of monthly net gaming revenue derived from the
sites and 30% of monthly net gaming  revenue in excess of  $100,000.  In January
2000 , the Company received $67,000,  of the upfront fee. The balance of $33,000
is due once the third casino website is delivered.  The Company's  disclosure of
the terms of the Master License may impact the Company's  ongoing  relationships
with future licensees who now have full access to the information. Disclosure of
such terms may also  negatively  affect the Company's  ability to negotiate more
favorable  licenses with other licensees since they will be able to refer to the
terms of the Master License.

In March 2000, the Company  launched a free gaming website where people can play
the  game  Keno  for  free  prizes.   This  site  is   structured   to  generate
banner-advertising  revenue  for the  Company.  Given the recent  launch of this
site,  no revenues  have yet been  recorded and  management  has not  determined
whether the current traffic is indicative of future traffic or potential traffic
growth and whether  future  revenues to the  Company  from this or similar  free
sites will be significant.


                                       14

<PAGE>


In April 2000,  the Company  entered into a third  ten-year  agreement  with the
Master  Licensee  related to licensing  four  specific  theme-oriented  Internet
casino  websites.  Under this  agreement  the Company is to receive  $80,000 per
casino  staged  over 3  payments.  It will then  receive  20% of the monthly net
gaming  revenue  derived  from the sites.  In April 2000 and  August  2000,  the
Company received $22,000 and $7,900 respectively, as a deposit on this software.

As of September 30, 2000,  current  monthly cash flows from licensing  royalties
are approximately $120,000 per month. Currently,  average monthly operating cash
needs are approximately  $120,000.  Cash flows from licensing revenues have been
increasing as games and websites are  developed and licensed.  The high level of
non-cash  expenses  incurred  by the Company  during 1999 in exchange  for stock
issued is  expected  to be  reduced in 2000 and  future  periods as the  Company
matures.

The Company's budgeted capital  expenditures for the fiscal year ending December
31,  2000 are  approximately  $50,000.  The  company  has  spent  $37,800  as of
September 30, 2000.

During 1999, the Company raised $915,300 of net cash proceeds (including funding
of subscription  receivables) from exempt offerings or the private placements of
Common  Stock.  Another  $78,200  of  cash  was  raised  in  connection  with  a
convertible loan agreement.  The loan obligation remains  outstanding,  although
the Company  tendered  the  specified  Common  Stock.  (See Legal  Proceedings).
Financing was also provided in 1999 in the form of advances from Diversified,  a
related  party.  The  $98,700 in  advances  outstanding  at  December  31,  1999
represent various expenses paid by Diversified on the Company's behalf, prior to
the Company  establishing  its own bank  account.  Though the  advances  bear no
interest,  during 1999, the Company paid  Diversified  $6,700 of management fees
for handling  its cash  receipts and  disbursements.  At September  30, 2000 the
balance had been settled in full.

In  January  2000 the  Company  commenced  negotiations  to raise an  additional
$200,000 of equity financing, which was completed by the end of April 2000. This
financing  raised an  aggregate  of $200,000 in cash in exchange  for  1,000,000
shares of Common  Stock of the  Company,  issued to  approximately  6 investors.
During the next six months,  the Company  hopes to raise another $2.0 million in
equity  financing   principally  to  fund  its  software  development  projects.
Management  is  pursuing  numerous  potential  financing  sources  for the  $2.0
million,  including existing equity holders and new sources,  but no commitments
have been received.  Management  believes that the Company's  success in raising
this  additional  financing will depend on the Company's  ability to demonstrate
that it can fulfill its business  strategy to license its games and websites and
generate   significant   royalty   revenues.   Management   also  believes  that
stockholders  will continue to support the  financing  efforts of the Company as
long as it continues to demonstrate that it can fulfill that business  strategy.
Management  estimates  that  monthly  cash from  licensing  royalties  and other
revenues  is  presently  sufficient  to  cover  operating  expenses.  Management
believes  that cash from  operations,  coupled  with the $2.0  million of equity
financing  discussed above will allow the Company to generate sufficient cash to
support its  operations  for the next twelve  months.  However,  there can be no
certainty  that the Company  will be able to meet its  financing  goals or raise
sufficient  financing to fund such future  business plans. In the event that the
Company is  unsuccessful  in its  efforts to raise the  capital  expected  to be
required  over the next  twelve  months,  the  Company  will need to modify  its
business strategy accordingly,  to adjust its operating requirements to meet its


                                       15

<PAGE>


available liquidity and may need to consider reductions in software  development
projects until capital  resources or operating cash flows are sufficient to meet
the new development needs.


IMPACT OF INFLATION

The Company  believes that  inflation has not had a material  effect on its past
business.






                                       16

<PAGE>


                                   SIGNATURES

Purusant to the  requirements  of Section 13 of the  Securities  Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated this 21st day of November, 2000


                              ICRYSTAL, INC.


                              By:/s/LARRY J. HRABI
                                 -----------------
                                 Larry J. Hrabi, CEO

November 21, 2000





                                       17

<PAGE>

                                    EXHIBITS


Exhibit
Number          Description
-------         -----------------------

27              Financial Data Schedule







                                       E-1