UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-QSB


          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


                       FOR THE PERIOD ENDED JUNE 30, 2002


                         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 18,332,785 SHARES OF COMMON STOCK OUTSTANDING AS OF AUGUST 10, 2002.

<PAGE>



                          ICRYSTAL, INC. AND SUBSIDIARY

                         INDEPENDENT ACCOUNTANT'S REPORT

                                       AND

                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

       SIX MONTHS ENDED JUNE 30, 2002 AND YEAR ENDED DECEMBER 31, 2001


<PAGE>



                          ICRYSTAL, INC. AND SUBSIDIARY
                                TABLE OF CONTENTS
                      JUNE 30, 2002 AND DECEMBER 31, 2001





PART I     FINANCIAL INFORMATION

           ITEM 1     FINANCIAL STATEMENTS

           Condensed Consolidated Balance Sheets

           Condensed Consolidated Statement of Operations (Unaudited)

           Condensed Consolidated Statement of Cash Flows (Unaudited)

           Notes to Condensed Consolidated Financial Statements
           (Unaudited)

           ITEM 2     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

SIGNATURES

PART II    OTHER INFORMATION






<PAGE>

<TABLE>
<CAPTION>


                          ICRYSTAL, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS


                                                                JUNE 30, 2002     DECEMBER 31,
                                                                 (UNAUDITED)          2001
                                                                ______________    ____________
<S>                                                              <C>              <C>
                                     ASSETS

CURRENT ASSETS

   Cash                                                          $    17,369      $     1,387
   Accounts receivable (net of allowance account of $-0-)            117,362          107,996
   Advances to stockholders                                            1,361                -
   Prepaid expenses                                                   42,898                -
                                                                 ___________      ___________
      Total current assets                                           178,990          109,383
                                                                 ___________      ___________

FIXED ASSETS
   Equipment                                                          63,999           48,487
   Furniture and fixtures                                             18,909            5,459
   Leasehold improvements                                              6,342            4,764
   Accumulated depreciation and amortization                         (19,120)         (14,293)
                                                                 ___________      ___________
      Total fixed assets                                              70,130           44,417
                                                                 ___________      ___________

OTHER ASSETS
   Deposits                                                            6,249            6,249
   Loan origination fees (net of amortization of $51,417
     and $17,139)                                                          -           51,419
   Deferred tax asset (net of valuation allowance of
     $2,350,376 and $2,323,669)                                            -                -
                                                                 ___________      ___________
      Total other assets                                               6,249           57,668
                                                                 ___________      ___________
      Total assets                                               $   255,369      $   211,468
                                                                 ===========      ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES
   Accounts payable and accrued expenses                         $   128,904      $   213,843
   Related party payable                                              49,935           51,079
   Advances from stockholders                                              -            3,845
   Current portion of debt - West Peak note                            2,460            7,337
   Convertible debt and related interest                             512,400          443,896
   Customer deposit                                                   65,000                -
   Current portion of deferred revenue                                13,400           13,400
                                                                 ___________      ___________
      Total current liabilities                                      772,099          733,400
                                                                 ___________      ___________

DEFERRED REVENUE - MASTER LICENSEE                                    93,979          113,379
                                                                 ___________      ___________

      Total liabilities                                              866,078          846,779
                                                                 ___________      ___________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
   Common stock, $0.01 par value, 30,000,000
     shares authorized; 18,332,785 shares issued
     and outstanding at June 30, 2002 and December 31, 2001          183,328          167,828
   Additional paid-in capital                                      6,122,212        6,031,212
   Accumulated deficit                                            (6,916,249)      (6,834,351)
                                                                 ___________      ___________
      Total stockholders' deficit                                   (610,709)        (635,311)
                                                                 ___________      ___________

      Total liabilities and stockholders' equity                 $   255,369      $   211,468
                                                                 ===========      ===========

</TABLE>


                  See Notes to the Interim Financial Statements


<PAGE>


<TABLE>
<CAPTION>


                          ICRYSTAL, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


                                                           SIX MONTHS ENDED                       THREE MONTHS ENDED
                                                   JUNE 30, 2002     JUNE 30, 2001         JUNE 30, 2002    JUNE 30, 2001
                                                   ______________     ______________       ______________    ______________
<S>                                                  <C>                <C>                  <C>               <C>

SOFTWARE ROYALTIES                                   $   626,046        $   283,203          $   351,048       $   182,500
                                                     ___________        ___________          ___________       ___________

OPERATING COSTS AND EXPENSES
  General and administrative                              96,384            172,505               46,594            78,974
  Research and development                               266,856            198,000              135,523            97,800
  Consulting                                             182,490            227,659              100,659           130,198
  Marketing expense                                        3,954             12,900                  665             6,800
  Depreciation and amortization expense                   4,826              3,639                 2,833             1,828
                                                     ___________        ___________          ___________       ___________
    Net income (loss) from operations                     71,536           (331,500)              64,774          (133,100)
                                                     ___________        ___________          ___________       ___________
  Interest expense                                       153,433             28,000               68,153            27,000
                                                     ___________        ___________          ___________       ___________
    Net income (loss) before income taxes                (81,897)          (359,500)              (3,379)         (160,100)
                                                     ___________        ___________          ___________       ___________
  Provision for income taxes                                   -                  -                    -                 -
                                                     ___________        ___________          ___________       ___________
    Net income (loss)                                $   (81,897)       $  (359,500)         $    (3,379)      $  (160,100)
                                                     ===========        ===========          ===========       ===========
    Earnings (loss) per share                        $     (0.00)       $     (0.02)         $     (0.00)      $     (0.01)
                                                     ===========        ===========          ===========       ===========
  Weighted average common shares
    outstanding  (basic and diluted)                  17,557,785         15,688,900           18,332,785        15,695,100
                                                     ===========        ===========          ===========       ===========

</TABLE>

                  See Notes to the Interim Financial Statements


<PAGE>


<TABLE>
<CAPTION>


                          ICRYSTAL, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


                                                                       SIX MONTHS ENDED
                                                             JUNE 30, 2002         JUNE 30, 2001
                                                             ______________         ______________
<S>                                                            <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                    $ (81,897)           $  (359,500)

     Adjustments to reconcile net loss to net
       cash used in operating activities:

       Amortization of deferred compensation costs                       -                 11,300
       Depreciation and amortization expense                         4,826                  3,639
       Amortization of loan origination fees                        51,419                      -
       Expenses paid by the issuance of stock                       28,602                 22,000
       Non cash interest expense for intrinsic value of
         conversion feature of debt                                      -                 22,700
       (Increase) decrease in accounts receivable                   (9,367)                39,961
       Increase in deferred tax asset                              (27,856)               (67,796)
       Increase in accounts payable and accrued expenses            15,062                139,200
       Decrease in related party payable                            (1,144)                     -
       Increase in interest payable                                 68,504                      -
       Increase in deferred tax valuation allowance                 27,856                 67,796
       Decrease in deferred revenue                                (19,400)               (10,100)
                                                               ___________            ___________
       Net cash provided by (used in) operating activities          56,605               (130,800)
                                                               ___________            ___________
CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of capital assets                                    (30,540)                (1,600)
                                                               ___________            ___________
       Net cash used in investing activities                       (30,540)                (1,600)
                                                               ___________            ___________

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of convertible debt                          -                159,400
     Principal payments on notes and advances                      (10,083)               (16,600)
                                                               ___________            ___________
       Net cash provided by (used in) financing activities         (10,083)               142,800
                                                               ___________            ___________

       Net increase in cash                                         15,982                 10,400

       Cash and cash equivalents at December 31, 2001, and 2000      1,387                  7,700
                                                               ___________            ___________

       Cash and cash equivalents at June 30, 2002, and 2001    $    17,369            $    18,100
                                                               ===========            ===========

SUPPLEMENTARY INFORMATION
During the six months ended June 30, 2002, and 2001, the Company paid $33,510
     and $1,400 in interest, respectively.

The Company paid no taxes during the three months ended June 30, 2002, or 2001.

During the quarter ended June 30, 2002, the Company issued 1,000,000 shares of
     its common stock to settle $35,000 of accrued expenses and exchanged the
     balance of the accrued expenses ($65,000) for a customer deposit for a new
     licensee.  The Company also issued 550,000 shares of its common stock for a
     fifteen month consulting agreement with a fair market value of $71,500.

</TABLE>

                  See Notes to the Interim Financial Statements


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                 June 30, 2002


                         ICRYSTAL, INC., AND SUBSIDIARY
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                  June 30, 2002

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         BASIS OF PRESENTATION
         The accompanying  unaudited interim  financial  statements of ICrystal,
         Inc.  (the  "Company")  have been prepared by the Company in accordance
         with accounting  principles  generally accepted in the United States of
         America,  pursuant to the Securities and Exchange  Commission rules and
         regulations.  In management's  opinion all adjustments  necessary for a
         fair  presentation  of  the  results  for  interim  periods  have  been
         reflected  in  the  interim  financial   statements.   The  results  of
         operations for any interim period are not necessarily indicative of the
         results for a full year. All  adjustments  to the financial  statements
         are of a normal recurring nature.

         Certain  information  and  footnote  disclosures  normally  included in
         financial  statements  prepared in accordance  with generally  accepted
         accounting  principles have been condensed or omitted. Such disclosures
         are those that would substantially  duplicate  information contained in
         the most recent audited  financial  statements of the Company,  such as
         significant accounting policies and stock options.  Management presumes
         that users of the  interim  statements  have read or have access to the
         audited  financial   statements  and  notes  thereto  included  in  the
         Company's most recent annual report on Form 10KSB.

         These financial statements have been prepared assuming that the Company
         will continue as a going concern.  The Company has sustained  recurring
         losses over the past years.  In the event that  future  operating  cash
         flows do not meet all of the Company's cash requirements,  it will need
         to obtain  additional  financing in the form of private  placements  of
         debt or equity securities.  Success in raising 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.  Should  the  Company  need  additional
         financing through debt or equity placements, there is no assurance that
         such financing will be available, if at all, at terms acceptable to the
         Company.

<PAGE>

                         ICRYSTAL, INC., AND SUBSIDIARY
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                  June 30, 2002

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         BASIS OF PRESENTATION (CONTINUED)
         Management believes that these plans will allow the Company to generate
         sufficient cash to support its operations.

         NEW PRONOUNCEMENTS
         In May 2002 the Financial  Accounting  Standards  Board (`FASB') issued
         Statement of Financial Accounting Standards (`SFAS') 145 "Rescission of
         FASB Statements No. 4, 44, and 64,  Amendment of FASB Statement No. 13,
         and Technical  Corrections".  This pronouncement requires that gains or
         losses  arising from early  extinguishments  of debt that are part of a
         company's recurring operations (i.e., a risk management strategy) would
         not be reported as  extraordinary  items.  The statement  also provides
         that  modifications  to a capital lease that make it an operating lease
         be accounted for as a  sale-leaseback.  Management feels that the early
         adoption of SFAS No. 145 has not had a material effect on the financial
         results.

         STATEMENT RECLASSIFICATION
         The statements of operations for the periods ended June 30, 2001,  have
         been  reclassified to conform to the June 30, 2002,  presentation.  The
         operating and administrative expenses have been shown in more detail.

2.       NOTES PAYABLE
         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,  Inc.,  which
         the Company  agreed to register for resale at the request of West Peak.
         In December 1999 the Company issued 200,000 common shares to West Peak,
         which did not accept the shares tendered based on its position that the
         shares were to be  registered  upon  delivery.  In February  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

<PAGE>

                         ICRYSTAL, INC., AND SUBSIDIARY
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                  June 30, 2002

2.       NOTES PAYABLE (CONTINUED)
         breach of the loan  agreement.  In September 2000 the Court ordered the
         company  to pay West Peak the  balance  of the note plus  interest  and
         other costs. As of June 30, 2002, the balance of the note was $2,460.

         In November  2001 the Company  refinanced  its advance  from  Lexington
         Systems with  convertible  notes. The Notes carry an interest rate of 4
         percent per month on the principal.  The principal and accrued interest
         are  convertible at $.04 per share.  The notes were due in May 2002 and
         the Company has received an extension on the notes for six months.  The
         balance  of the note and  accrued  interest  as of June 30,  2002,  was
         $512,400.

3.       CAPITAL STOCK
         During the quarter ended June 30, 2002,  the Company  issued  1,000,000
         shares of its common  stock to relieve an accrued  expense  with a fair
         market value of $35,000.  Also during the quarter  ended June 30, 2002,
         the Company  issued  550,000  shares of its common stock for a 15 month
         consulting agreement with a fair market value of $71,500.

4.       RELATED PARTIES
         The Company is affiliated with the Canadian  chartered  accounting firm
         Slamko Visser  through  common  ownership.  During the six months ended
         June 30, 2002, and 2001, the Company  incurred $ 12,392,  and $ 35,200,
         respectively, of expense to Slamko Visser for consulting and accounting
         fees and  related  costs.  As of June 30,  2002,  the payable to Slamko
         Visser was $49,935.

         During the period ended June 30, 2002, the Company  advanced  $1,361 to
         stockholders. The advances are due on demand and carry no interest.

5.       MAJOR CUSTOMER
         During  the six months  ended  June 30,  2002,  and 2001,  the  Company
         received essentially all of its revenue from its exclusive master
         license with Manihi, Inc. The Company

<PAGE>

                         ICRYSTAL, INC., AND SUBSIDIARY
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                  June 30, 2002

5.       MAJOR CUSTOMER (CONTINUED)
         received  $626,046  and $283,203 in the six months ended June 30, 2002,
         and 2001, respectively, from Manihi, Inc.




<PAGE>


ITEM 2.  MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS FOR THE
         FISCAL QUARTERS ENDED JUNE 30, 2002 AND JUNE 30, 2001

REVENUES - Revenues  were  $351,048 and $182,500 for the fiscal  quarters  ended
June 30, 2002 and 2001, respectively.

The increase of $168,548 due to Manihi  increasing its marketing  activities and
showing an increase in  revenues.  In the 2001  quarter  Manihi had  experienced
credit  card  processing  restrictions  which were  rectified  during the second
quarter of 2001.

The average revenue for the second quarter of 2002 was $117,016 per month, which
reflects the effect of the Partnership  Program for credit card processing,  and
the increase in marketing activities of Manihi. The Company anticipates revenues
will continue to grow based on the marketing plans in place at this time.

OPERATING EXPENSES - Operating  expenses are primarily  comprised of general and
administrative costs, research and development, consulting and interest expense.
Operating expenses were $286,274 and $315,600 for the fiscal quarters ended June
30, 2002 and 2001, respectively.  The decrease of $29,326 was mainly a result of
the Company  reducing its general and  administrative  costs and its  consulting
costs, combined with an increase in research and development expenses.

General and  Administrative  - The Company's  general and  administrative  costs
consist  primarily  of  salaries  and  wages,  travel,  office,   marketing  and
depreciation and amortization  expenses.  General and administrative  costs were
$50,092  and  $87,602  for the fiscal  quarters  ended  June 30,  2002 and 2001,
respectively.  The  decrease of $37,510  reflects  the fact that the Company has
stabilized its general and administrative costs for the quarter.

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 $135,523 and $97,800
respectively  for the fiscal  quarters ended June 30, 2002 and 2001. The $37,723
increase  again  reflects the Company's  commitment to its business  strategy of
developing and maintaining licensed Internet based gaming software.

Consulting  -  The  Company's   consulting  costs  consist  primarily  of  costs
associated with the continued use of external consultants for certain functions.
Consulting costs were $100,659 and $130,198 respectively for the fiscal quarters
ended June 30,  2002 and 2001.  The  $29,539  decrease  reflects  the  Company's
reduced reliance on external consultants as compared to the prior quarter.

NET LOSS - The Company incurred a net loss of $3,379 and $160,100 for the fiscal
quarters ended June 30, 2002 and 2001, respectively.  The 2002 loss was mainly a
result of an increase in research and  development  and interest  costs combined
with a  corresponding  decrease in  consulting  and  general and  administrative
expenses.  The company  expects  this trend to  continue  for the balance of the
year.

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
         gaming  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 gaming websites for recreation;

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

     4.  the ability of  licensees  to ensure  clearing of credit card and other
         e-commerce receipts are done on a timely basis.


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

<PAGE>

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

The working  capital  deficiency  was  $593,109  and  $624,017 at the end of the
second  quarter  at June 30,  2002 and  December  31,  2001,  respectively.  The
decrease of $30,908 is attributable mainly to a decrease in accounts payable. At
June 30, 2002,  and December  31, 2001,  stockholders'  deficit was $610,709 and
$635,311, respectively.

At December 31, 2001,  $126,779 of  liabilities  consisted of deferred  revenue,
which have been reduced by $19,400 to $107,379  during the second  quarter ended
June 30, 2002.

The Company has a 25 year exclusive license agreement with Manihi Inc. Under the
terms of the Manihi  agreement  the Company is  obligated  to provide  technical
support for all new and existing casino gaming  software.  In return the Company
is receiving  thirty  percent of the first  $250,000 and fifteen  percent of any
additional  amounts of monthly net revenues derived from the Company's  software
and website  packages.  The Company  will also  receive  fifty  percent of gross
revenue  derived  from  upfront  set-up fees  charged to  sub-licensees  and ten
percent of gross  revenue  derived from the sales of software to  sub-licensees.
Manihi is  required  to spend a minimum  of  $10,000  monthly  advertising  each
software package.

During the quarter ended June 30, 2002 the company received financial support by
way of  interest  accrued  from the  convertible  loans from  affiliates  of the
licensee in the amount of $68,153.

The Company's budgeted capital  expenditures for the fiscal year ending December
31, 2002 are  approximately  $30,000 for  computer  upgrading.  Of this  amount,
$21,592 was expended during the quarter ended June 30, 2002.

Management  continues to pursue numerous  potential  financing  sources to raise
funds to cover  its  obligations,  including  existing  equity  holders  and new
sources, but no commitments have been received to date.

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.

Revenues for the month of June 2002 had reached $114,000 which does not meet the
Company's monthly expenditures of an estimated $118,000 per month. The shortfall
is due mainly to the  interest  costs of financing  its  convertible  debt.  The
company is presently looking at ways to refinance this debt.

The Company's  liquidity over the next 12 months is contingent on its ability to
raise  money  through  debt or equity  financing  to meet its short term  needs.
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 available liquidity and may need to consider reductions
in operations until capital  resources or operating cash flows are sufficient to
meet operating needs.

IMPACT OF INFLATION

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

<PAGE>

MANAGEMENT  DISCUSSION  AND ANALYSIS OF RESULTS OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 2002 AND 2001

REVENUES - Revenues were $626,046 and $283,203 for the six months ended June 30,
2002 and June 30, 2001, respectively.

The increase of $342,843 due to Manihi  increasing its marketing  activities and
showing an increase in  revenues.  In the 2001  quarter  Manihi had  experienced
credit  card  processing  restrictions  which were  rectified  during the second
quarter of 2001.

The average revenue for the second quarter of 2002 was $104,341 per month, which
reflects the effect of the Partnership  Program for credit card processing,  and
the increase in marketing activities of Manihi. The Company anticipates revenues
will continue to grow based on the marketing plans in place at this time.

OPERATING EXPENSES - Operating  expenses are primarily  comprised of general and
administrative costs, research and development, consulting and interest expense.
Operating  expenses were $554,500 and $614,700 for the six months ended June 30,
2002 and 2001, respectively.  The decrease of $60,200 was mainly a result of the
Company reducing its general and administrative  costs and its consulting costs,
combined with an increase in research and development expenses.

General and  Administrative  - The Company's  general and  administrative  costs
consist  primarily  of  salaries  and  wages,  travel,  office,   marketing  and
depreciation and amortization  expenses.  General and administrative  costs were
$105,164  and  $189,044  for the six  months  ended  June  30,  2002  and  2001,
respectively.  The  decrease of $83,880  reflects  the fact that the Company has
stabilized its general and administrative costs for the quarter.

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 $266,856 and $198,000
respectively  for the six  months  ended  June 30,  2002 and 2001.  The  $68,856
increase  again  reflects the Company's  commitment to its business  strategy of
developing and maintaining licensed Internet based gaming software and expanding
the use of its software products.

Consulting  -  The  Company's   consulting  costs  consist  primarily  of  costs
associated with the continued use of external consultants for certain functions.
Consulting  costs were  $182,490  and $227,659  respectively  for the six months
ended June 30,  2002 and 2001.  The  $45,169  decrease  reflects  the  Company's
reduced reliance on external consultants as compared to the prior quarter.

NET LOSS - The Company  incurred a net loss of $81,897 and  $359,500 for the six
months  ended June 30, 2002 and 2001,  respectively.  The 2002 loss was mainly a
result of an increase in research and  development  and interest  costs combined
with a  corresponding  decrease in  consulting  and  general and  administrative
expenses.  The company  expects  this trend to  continue  for the balance of the
year.

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
         gaming  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 gaming websites for recreation;

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

     4.  the ability of  licensees  to ensure  clearing of credit card and other
         e-commerce receipts are done on a timely basis.

<PAGE>

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

The working  capital  deficiency  was  $593,109  and  $624,017 at the end of the
second  quarter  at June 30,  2002 and  December  31,  2001,  respectively.  The
decrease of $30,908 is attributable mainly to a decrease in accounts payable. At
June 30, 2002,  and December  31, 2001,  stockholders'  deficit was $610,709 and
$635,311, respectively.

At December 31, 2001,  $126,779 of  liabilities  consisted of deferred  revenue,
which have been  reduced by $19,400 to $107,379  during the six month ended June
30, 2002.

The Company has a 25 year exclusive license agreement with Manihi Inc. Under the
terms of the Manihi  agreement  the Company is  obligated  to provide  technical
support for all new and existing casino gaming  software.  In return the Company
is receiving  thirty  percent of the first  $250,000 and fifteen  percent of any
additional  amounts of monthly net revenues derived from the Company's  software
and website  packages.  The Company  will also  receive  fifty  percent of gross
revenue  derived  from  upfront  set-up fees  charged to  sub-licensees  and ten
percent of gross  revenue  derived from the sales of software to  sub-licensees.
Manihi is  required  to spend a minimum  of  $10,000  monthly  advertising  each
software package.

During the six months ended June 30, 2002 the company received financial support
by way of interest  accrued from the  convertible  loans from  affiliates of the
licensee in the amount of $153,433.

The Company's budgeted capital  expenditures for the fiscal year ending December
31, 2002 are  approximately  $30,000 for  computer  upgrading.  Of this  amount,
$30,540 was expended during the six month ended June 30, 2002.

Management  continues to pursue numerous  potential  financing  sources to raise
funds to cover  its  obligations,  including  existing  equity  holders  and new
sources, but no commitments have been received to date.

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.

Revenues for the month of June 2002 had reached $114,000 which does not meet the
Company's monthly expenditures of an estimated $118,000 per month. The shortfall
is due mainly to the  interest  costs of financing  its  convertible  debt.  The
company is presently looking at ways to refinance this debt.

The Company's  liquidity over the next 12 months is contingent on its ability to
raise  money  through  debt or equity  financing  to meet its short term  needs.
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 available liquidity and may need to consider reductions
in operations until capital  resources or operating cash flows are sufficient to
meet operating needs.

IMPACT OF INFLATION

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

<PAGE>


PART II - Other Information

Item 1 - Exhibits

         99     Certification of Form 10-QSB Dated June 30, 2002


<PAGE>




                                   SIGNATURES

Pursuant 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 14th day of August, 2002


                              ICRYSTAL, INC.


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