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 SEPTEMBER 30, 2001


                         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 15,782,800 SHARES OF COMMON STOCK OUTSTANDING AS OF SEPTEMBER 30, 2001


<PAGE>





                                 ICRYSTAL, INC.


                                 AND SUBSIDIARY


                              FINANCIAL STATEMENTS


                       FOR THE NINE AND THREE MONTHS ENDED


                          SEPTEMBER 30, 2001 AND 2000,


                                      WITH


                                REVIEW REPORT OF


                          CERTIFIED PUBLIC ACCOUNTANTS





<PAGE>


                               TABLE OF CONTENTS


                                                                            PAGE


PART I     FINANCIAL INFORMATION

ITEM 1     FINANCIAL STATEMENTS

           Independent Accountants' Review Report.............................2

           Condensed Consolidated Balance Sheets..............................3

           Condensed Consolidated Statements of Operations....................4

           Condensed Consolidated Statements of Cash Flows....................5

           Notes to Financial Statements......................................6

ITEM 2     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS...............................14

SIGNATURES...................................................................18

PART II    OTHER INFORMATION

           None.


<PAGE>


                           MARK BAILEY & COMPANY, LTD.

                          Certified Public Accountants
                             Management Consultants


         OFFICE ADDRESS:                                      MAILING ADDRESS:
 1495 Ridgeview Drive, Ste. 200      Phone: 775/332.4200       P.O. Box 6060
     Reno, Nevada 89509-6634          Fax: 775/332.4210      Reno, Nevada 89513


                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT


November 9, 2001


Board of Directors
ICrystal, Inc., and Subsidiary


We have  reviewed the  accompanying  condensed  consolidated  balance  sheets of
ICrystal,  Inc.,  and  Subsidiary  as of  September  30,  2001,  and the related
condensed  consolidated  statements of operations  for the nine and three months
then ended,  and the  condensed  consolidated  statements  of cash flow for nine
months then ended, in accordance with Statements on Standards for Accounting and
Review   Services  issued  by  the  American   Institute  of  Certified   Public
Accountants.  All  information  included in these  financial  statements  is the
representation of the management of ICrystal, Inc., and Subsidiary.

A review consists  principally of inquiries of Company  personnel and analytical
procedures  applied to financial data. It is substantially less in scope than an
audit 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  accompanying  financial  statements  in order  for them to be in
conformity with generally accepted accounting principles.

The September 30, 2000  financial  statements of Icrystal,  Inc., and subsidiary
were reviewed by other accountants, whose report dates November 10, 2000, stated
that they were not aware of any  material  modifications  that should be made to
those  statements in order for them to be in conformity with generally  accepted
accounting principles.

As  discussed  in Note 1, certain  conditions  indicate  that the Company may be
unable to continue as a going concern. The accompanying  financial statements do
not include any adjustments to the financial  statements that might be necessary
should the Company be unable to continue as a going concern.




Mark Bailey & Co., Ltd.
Reno, Nevada


                                      -2-


<PAGE>

<TABLE>
<CAPTION>

                          ICRYSTAL, INC. AND SUBSIDIARY
                CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


                                                            September 30, 2001     September 30, 2000
                                                            ------------------     ------------------
<S>                                                            <C>                    <C>

                              ASSETS

CURRENT ASSETS
   Cash                                                        $     7,075            $    18,200
   Accounts receivable                                              85,253                104,500
   Prepaid expenses                                                  1,580                      -
                                                               -----------            -----------
      Total current assets                                          93,908                122,700
                                                               -----------            -----------

FIXED ASSETS (NET)                                                  34,769                 49,600
                                                               -----------            -----------
OTHER ASSETS
   Deposits                                                          7,788                      -
   Deferred tax asset (net of valuation allowance of
      $2,244,221 and $2,151,724)                                         -                      -
                                                               -----------            -----------
      Total other assets                                             7,788                      -
                                                               -----------            -----------
      Total assets                                             $   136,465            $   172,300
                                                               ===========            ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                            $   150,677            $    94,145
   Accrued expenses                                                100,000                 38,155
   Related party payable                                            45,569                 18,000
   Advance from stockholder                                          4,395                  4,400
   Current portion of debt - West Peak note                         19,297                      -
   Current portion of deferred revenue - master licensee            13,400                 13,400
                                                               -----------            -----------
      Total current liabilities                                    333,338                168,100
                                                               -----------            -----------

NON CURRENT LIABILITIES
   Deferred revenue - master licensee                              123,779                143,900
   Convertible debt and related interest                           185,095                 78,200
                                                               -----------            -----------
      Total non current liabilities                                308,874                222,100
                                                               -----------            -----------
      Total liabilities                                            642,212                390,200
                                                               -----------            -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common stock, $.01 par value, 30,000,000 shares
      authorized, 15,782,800 shares issued and
      outstanding at September 30, 2001, and
      15,682,800 issued and outstanding at September 30, 2000      157,828                156,828
   Additional paid-in capital                                    5,937,106              5,973,672
   Deferred compensation                                                 -                (19,800)
   Accumulated deficit                                          (6,600,681)            (6,328,600)
                                                               -----------            -----------
      Total stockholders' equity                                  (505,747)              (217,900)
                                                               -----------            -----------
      Total liabilities and stockholders' equity               $   136,465            $   172,300
                                                               ===========            ===========


                           See the Accompanying Notes


</TABLE>


                                      -3-


<PAGE>

<TABLE>
<CAPTION>

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


                                               Nine                   Nine                   Three                  Three
                                           Months Ended           Months Ended           Months Ended           Months Ended
                                        September 30, 2001     September 30, 2000     September 30, 2001     September 30, 2000
                                        ------------------     ------------------     ------------------     ------------------
<S>                                        <C>                    <C>                    <C>                     <C>

SOFTWARE ROYALTIES                         $   558,379            $   534,500            $   275,176            $    374,800
                                           -----------            -----------            -----------            ------------

OPERATING COSTS AND EXPENSES
   General and administrative                  791,119                663,990                208,739                 138,131
   Research and development                     60,186                261,100                 32,073                 100,800
   Marketing expense                             2,184                 31,310                  1,693                  12,100
   Stock based compensation                     12,800                117,800                 12,800                 117,800
   Depreciation expense                          8,751                  6,100                  5,112                   3,969
                                           -----------            -----------            -----------            ------------

      Net gain (loss) from operations         (316,661)              (545,800)                14,759                   2,000
                                           -----------            -----------            -----------            ------------

   Interest expense                             29,789                  7,200                  1,749                   7,200
                                           -----------            -----------            -----------            ------------

      Net gain (loss) before income taxes     (346,450)              (553,000)                13,010                  (5,200)
                                           -----------            -----------            -----------            ------------

   Provision for income taxes                        -                      -                      -                       -
                                           -----------            -----------            -----------            ------------

      Net gain (loss)                      $  (346,450)           $  (553,000)           $    13,010            $     (5,200)
                                           ===========            ===========            ===========            ============

      Earnings (loss) per share            $   (0.0220)           $   (0.0400)           $    0.0008            $          -
                                           ===========            ===========            ===========            ============
   Weighted average common shares
      outstanding  (basic and diluted)      15,782,800             15,319,700             15,782,800              15,682,800
                                           ===========            ===========            ===========            ============


                           See the Accompanying Notes

</TABLE>


                                      -4-


<PAGE>

<TABLE>
<CAPTION>

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


                                                                      Nine                   Nine
                                                                  Months Ended           Months Ended
                                                               September 30, 2001     September 30, 2000
                                                               ------------------     ------------------
<S>                                                                 <C>                    <C>

CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                        $ (346,450)           $ (553,000)

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

       Amortization of deferred compensation costs                      12,800                39,500
       Depreciation                                                      8,751                 6,100
       Common stock issued for expenses                                 22,000                     -
       Non cash interest expense for intrinsic value of
          conversion feature of debt                                    22,692                     -
       Stock based compensation - stock options                              -               117,800
       Stock based compensation - common stock                               -               194,500
       Decrease (increase) in accounts receivable                       25,051               (95,800)
       Decrease (increase) in prepaid expenses                          (1,580)                  900
       Increase in deferred tax asset                                 (117,121)                    -
       Increase  in related party payable                                1,714                     -
       Increase in interest payable                                      4,658                     -
       Increase in deferred tax valuation allowance                    117,121                     -
       Increase in accounts payable and accrued expenses               149,978                78,200
       Amortization of deferred revenue                                (13,400)               90,300

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

       Net cash used in operating activities                          (113,786)             (121,500)
                                                                    ----------            ----------

CASH FLOWS FROM INVESTING ACTIVITIES
    Deposit paid                                                        (7,788)                    -
    Purchase of fixed assets                                           (11,518)              (37,800)
                                                                    ----------            ----------

       Net cash used in investing activities                           (19,306)              (37,800)
                                                                    ----------            ----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from issuance of convertible debt                         157,737                     -
    Proceeds from issuance of common stock                                   -               200,000
    Principal payment on notes                                         (25,306)              (46,300)
                                                                    ----------            ----------

       Net cash provided by financing activities                       132,431               153,700
                                                                    ----------            ----------


       Net decrease in cash                                               (661)               (5,600)

       Cash and cash equivalents at
          December 31, 2000, and 1999                                    7,736                23,800
                                                                    ----------            ----------

       Cash and cash equivalents at
          September 30, 2001, and 2000                              $    7,075            $   18,200
                                                                    ==========            ==========

SUPPLEMENTARY INFORMATION AND NON CASH TRANSACTIONS

During the nine months ended September 30, 2001 and 2000, interest paid was $1,425 and $ 300, respectively.
The Company paid no taxes during the nine months ended September 30, 2001 or 2000.

In June 2001 the Company issued 100,000 shares of its common stock for services valued at $22,000.Also in
June 2001, the Company converted $21,700 of accounts payable to a convertible note payable.

In 2000 the company assigned $67,000 in accounts receivable for the settlement of an advance from a related
party and stockholders


                           See the Accompanying Notes

</TABLE>


                                      -5-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         BASIS OF PRESENTATION

         The accompanying  unaudited interim  financial  statements of ICrystal,
         Inc. and  Subsidiary  (the  "Company")  have been prepared  pursuant to
         Securities  and  Exchange  Commission  rules and  regulations.  Certain
         information  and footnote  disclosures  normally  included in financial
         statements  prepared in accordance with generally  accepted  accounting
         principles  have been  condensed or omitted  pursuant to such rules and
         regulations.  These financial  statements should be read in conjunction
         with the audited financial statements and notes thereto included in the
         Company's annual report on Form 10-K for the fiscal year ended December
         31, 2000. The  preparation  of financial  statements for the nine-month
         period  ended  September  30, 2001,  has been  completed by the Company
         without  audit by the  Company's  independent  auditors.  The financial
         information  included herein  reflects all  adjustments  (consisting of
         normal recurring  adjustments)  that are, in the opinion of management,
         necessary  for a fair  presentation  of results  for  interim  periods.
         Results  of  interim  periods  are not  necessarily  indicative  of the
         results to be expected for a full year.

         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 the Company's cash requirements,  it will need to
         obtain additional financing in the form of private placements of equity
         securities. Success in raising additional financing is dependent on the
         Company's  ability  to  demonstrate  that it can  fulfil  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.
         Management believes that these plans will allow the Company to generate
         sufficient cash to support its operations.

         The  preparation  of  the  financial   statements  in  conformity  with
         generally accepted  accounting  standards  requires  management to make
         estimates and assumptions that affect


                                      -6-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         BASIS OF PRESENTATION (CONTINUED)

         certain reported amounts and disclosures.  Accordingly,  actual results
         could differ from those estimates

         CASH AND CASH EQUIVALENTS

         For purposes of the statement of cash flows, the Company  considers all
         highly  liquid  debt  instruments  purchased  with a maturity  of three
         months or less to be cash  equivalents.  As of September 30, 2001,  and
         2000, the Company held no cash equivalents.

         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' revenues are earned.  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.

         FIXED ASSETS

         Depreciation   and   amortization   expense  is   provided   for  on  a
         straight-line  basis over the  estimated  useful  lives of the  assets.
         Leasehold  improvements and leased properties held under capital leases
         are amortized over the remaining lease terms.


                                      -7-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         EARNINGS PER SHARE

         Net  earnings  per share is provided in  accordance  with  Statement of
         Financial  Accounting  Standards  (FASB) No. 128  "EARNINGS PER SHARE".
         Basic earnings (loss) per share for each period is computed by dividing
         net loss by the  weighted  average  number of  shares  of common  stock
         outstanding  during the period.  Diluted  loss per share  reflects  per
         share  amounts  that would  have  resulted  if  dilutive  common  stock
         equivalents  had been  converted to common  stock.  As of September 30,
         2001,  and 2000, the Company had no dilutive  common stock  equivalents
         such as stock options.

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  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.  The  Company  made  principal  payments of
         approximately  $22,000 during the nine months ended September 30, 2001,
         leaving a balance of approximately $19,000, all of which is current.


                                      -8-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


3.       CONVERTIBLE DEBT

         During  the  first  nine  months of 2001,  the  Company  received  loan
         advances of $157,700 from Lexington  Systems  Limited  (Lexington),  an
         affiliate of Manihi,  Inc.  (the  Company's  master  licensee)  through
         common  ownership.  Additionally,  the Company converted $21,700 of the
         accounts  payable due to  Lexington  to a loan during  2001.  Under the
         terms of the loan, the advance is unsecured and bears interest annually
         at 7.14% compounded monthly. The loan is due on demand unless Lexington
         elects to convert the loan plus accrued interest into registered common
         shares of the  Company  at $0.08 per  share.  At  September  30,  2001,
         Lexington had not elected to convert the $180,400 plus accrued interest
         into the  Company's  common  stock.  Interest  expense of  $22,692  was
         recorded for the intrinsic value of the beneficial  conversion  feature
         embedded in the loan  agreement.  As of September 30, 2001, the balance
         of the  convertible  note and the accrued  interest  were  $180,437 and
         $4,658, respectively.

4.       PROVISION FOR INCOME TAXES

         The Company  recognizes  deferred tax  liabilities and benefits for the
         expected  future tax  consequences of events that have been included in
         the financial statements or tax returns.

         Deferred tax liabilities and benefits are recognized  using enacted tax
         rates in effect for the year in which the  differences  are expected to
         reverse.  The  following  is a  schedule  of  the  composition  of  the
         provision for income taxes for the nine months ended:

                                                      2001           2000
                                                      ----           ----

         Deferred noncurrent tax asset             $2,244,221     $ 2,151,724
         Valuation allowance                       (2,244,221)     (2,151,724)
                                                   ----------     -----------

              Total provision for income taxes     $      -0-     $       -0-
                                                   ----------     -----------


         The net change in the  valuation  account at September  30,  2001,  was
         $117,121.  The Company has available net operating  loss  carryforwards
         totaling  approximately  $6,660,650,  which expire starting in the year
         2009.


                                      -9-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


5.       CAPITAL STOCK

         The Company has a single class of $0.01 par value common stock.  Thirty
         million  shares are  authorized  and  15,782,800  shares are issued (or
         committed to be issued) and  outstanding at September 30, 2001.  During
         the first nine months of 2001,  the Company  issued  100,000 shares for
         marketing and consulting services valued at $22,000.

6.       STOCK OPTIONS

         In  July  2001  the  Company  extended  the  exercise  period  for  all
         outstanding stock options granted under the Company's stock option plan
         for an additional sixty days from the existing  expiration date of July
         31, 2001.  All the stock  options  expired in September  2001,  without
         being exercised (see Note 9).

7.       RELATED PARTY TRANSACTIONS

         The Company is affiliated with the following entities:

         DIVERSIFIED COSMETICS INTERNATIONAL, INC. (DIVERSIFIED)
         The Company is associated with  Diversified  through common  ownership.
         Diversified is an Alberta corporation that was previously listed on the
         Alberta Stock Exchange.  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  September  30,  2001,  it was in the process of
         winding down its affairs.  The Company had advances from Diversified of
         $4,395 at September 30, 2001.

         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, 2001, and 2000, the Company  incurred $36,937 and $18,000
         respectively, of expense to Slamko


                                      -10-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


7.       RELATED PARTY TRANSACTIONS (CONTINUED)

         Visser for  consulting  and  accounting  fees and  related  costs.  The
         Company  had  $48,569  of  accounts  payable  due to  Slamko  Visser at
         September 30, 2001.

         DCI, INC. AND MANIHI, INC.

         In April and October 1999,  respectively,  the Company entered into two
         ten-year  nonexclusive master license agreements with DCI, Inc. for use
         of the Company's  technology.  Leonard Slamko, a consultant retained by
         DCI,  Inc., is a stockholder  of the Company and a relative of officers
         and  directors  of the  Company.  DCI,  Inc.  was  incorporated  in the
         Commonwealth   of   Dominica,   where  it  was   licensed   to  conduct
         international  wagering,  lotteries  and  games  of  chance  by  way of
         telecommunications.

         In the fourth  quarter of 2000 the  Company  approved a request by DCI,
         Inc.  to  assign  all  its  rights  and   obligations   under  the  two
         non-exclusive  licensing agreements to Manihi, Inc. ("Manihi").  Manihi
         is a Costa Rican corporation operating as a reseller of Internet gaming
         solutions. The effective date of the assignment was September 23, 2000.
         Effective  in November  2000 Manihi and the Company  entered into a new
         25-year exclusive master license agreement (the Agreement).

         Under terms of the Agreement  with Manihi,  the Company is obligated to
         provide all new and existing  casino  gaming  software,  smart-download
         features  and  website  development,  technical  support  and  back-end
         accounting  features.  The  Company,  in return,  will  receive  thirty
         percent of the second  $250,000 and fifteen  percent of any  additional
         amounts  of monthly  net  gaming  revenue  derived  from the  Company's
         software  and  website  packages.  In  conjunction  with the  exclusive
         contract with Manihi,  Inc., the Company  continues to record  deferred
         revenue  until the elements of  development,  maintenance,  support and
         upgrades of the software  packages are delivered.  The Company recorded
         $13,400 of revenue for the  elements  delivered  during the nine months
         ended September 30, 2001.


                                      -11-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


7.       RELATED PARTY TRANSACTIONS (CONTINUED)

         The Company  incurred  consulting  services of $76,000  with  Lexington
         Systems Limited,  an affiliate of Manihi,  Inc. (See Note 3) during the
         nine months ended September 30, 2001.

8.       SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS

         GEOGRAPHIC INFORMATION

         Following is a summary of revenues related to the respective  countries
         in which the Company  operates.  Revenues are  attributed  to countries
         based on location of customers.

<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED                            NINE MONTHS ENDED
                                       -----------------------------------------     ---------------------------------------
                                       SEPTEMBER 30, 2001   SEPTEMBER   30, 2000     SEPTEMBER 30, 2001   SEPTEMBER 30, 2000
                                       ------------------   --------------------     ------------------   ------------------
 <S>                                         <C>                  <C>                      <C>                  <C>

         Commonwealth
                 of Dominica                $     -0-            $ 534,500                $     -0-            $ 374,800
         Central America
                  or Costa Rica              275,1769                  -0-                  558,379                  -0-
                                            ---------            ---------                ---------            ---------

          Consolidated Total                $ 275,176            $ 534,500                $ 558,379            $ 374,800
                                            =========            =========                =========            =========

</TABLE>


         MAJOR CUSTOMERS

         During the nine months ended  September 30, 2001, the Company  realized
         $534,500 of revenue under its new exclusive  master  license  agreement
         with Manihi, Inc. (See Note 7)

9.       FAIR VALUE OF FINANCIAL INSTRUMENTS

         Financial  Accounting  Standards  Board  ("FASB")  Statement  No.  107,
         "Disclosure  About Fair Value of Financial  Instruments" is a part of a
         continuing  process by the FASB to  improve  information  on  financial
         statements.  The  following  methods and  assumptions  were used by the
         Company in estimating  its fair value  disclosures  for such  financial
         instruments as defined by the Statement.


                                      -12-


<PAGE>


                                                  ICRYSTAL, INC., AND SUBSIDIARY
                                                   NOTES TO FINANCIAL STATEMENTS
                                                    September 30, 2001, and 2000
________________________________________________________________________________


9.       FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

         The carrying  amounts  reported in the balance sheets for notes payable
         approximate  fair value at September 30, 2001.  The carrying  amount of
         the convertible note  approximates  fair value, as the interest rate is
         approximately  the same as the  Company  could  obtain from a lender at
         September 30, 2001.

10.      SUBSEQUENT EVENTS

         In September 2001 the Company  entered into a lease for office space in
         Vancouver,  British Columbia,  which will commence in October 2001. The
         lease is for two years,  and the expense for each of the next two years
         will be $18,960.


                                      -13-


<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, 2001
AND SEPTEMBER 30, 2000

QUARTERS ENDED SEPTEMBER 30, 2001 AND 2000

Revenues - Revenues for the quarters ending September 30, 2001 and September 30,
2000 were $275,176 and $374,800,  respectively. The decrease of $99,624 reflects
decreased  royalties from an decrease in gaming  activity  through the company's
Master  Licensee as compared to the prior year  quarter.  The level of royalties
was less than managements expectations due to Manihi, Inc., the Company's Master
Licensee,  experiencing  credit card  processing  restrictions  during the first
fiscal quarter which affected this quarter as well. The average  revenue for the
third  quarter of 2001 was  $91,700 per month,  which  reflects  the  restricted
credit card processing for the prior period.

The startup of the Partnership  Program for the credit card processing,  and the
increase in  marketing  activities  of Manihi  should begin to show in increased
revenues to meet  projected  levels.  However,  the Company does not  anticipate
revenues to exceed previous levels until the fourth quarter of 2001.


Operating Expenses - Operating expenses are primarily  comprised of research and
development  and general  and  administrative  costs.  Operating  expenses  were
$260,417  and  $372,800  for the  quarters  ended  September  30, 2001 and 2000,
respectively.  The decrease of $112,383 was largely  attributable to a reduction
of general and administrative expenses.

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 $32,073 and $100,800
for the quarters ended September 30, 2001 and 2000, respectively.
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
$213,851 and $142,100 for the quarters ended September 30, 2001 and
2000,  respectively.  The  increase  of $71,751  consists  mainly of the Company
having  incurred  legal  and  professional  costs in the third  quarter  of 2001
compared to the third  quarter of 2000 for the filing of the  Company's  10SB in
order to be a fully reporting issuer and SB8 in order to release restrictions on
certain shares.

Net Loss - The Company incurred a net income (loss) of $13,010 and $(5,200) for
the  quarters  ended  September  30,  2001 and 2000,  respectively.  The  $7,810
decrease in  operating  losses was the result of an increase  in  royalties  and
reduction of operating expenses.


                                      -14-


<PAGE>


NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

Revenues - Revenues for the nine months ending  September 30, 2001 and September
30,  2000 were  $558,379  and  $534,500  respectively.  The  increase of $23,879
reflects the growth in gaming  activities and royalties from previous  marketing
activities by the company.

Operating Expenses - Operating expenses are primarily  comprised of research and
development  and general  and  administrative  costs.  Operating  expenses  were
$875,040 and $1,080,300 for the nine months ended September 30, 2001 and 2000,
respectively.  The decrease of $205,260 was largely  attributable to a reduction
in professional  fees from the prior period due to the costs associated with the
filing of the 10SB.  Exclusive of professional fees, 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 $60,186
and  $261,100  for  the  nine  months  ended   September   30,  2001  and  2000,
respectively.  The  $200,914  decrease  reflects a  reduction  in  research  and
development   activities   required  as  the  company  moves  further  from  its
development and start up phase. The company is, however,  continuing to develop,
expand and maintain its 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
$799,870 and $670,100 for the nine months ended September 30, 2001 and
2000, respectively. The $129,770 increase was largely attributable to a increase
in  professional  fees  due to the  filing  of the  10SB in  order to be a fully
reporting issuer and SB8 in order to release restrictions on certain shares.

Net Loss - The Company incurred a net loss of $(346,450) and $(553,000) for
the nine months ended  September 30, 2001 and 2000,  respectively.  The $206,550
decrease  in loss was the  result of an  increase  in  revenue  combined  with a
reduction in operating expenses for the 2001 period as compared to 2000.


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.


                                      -15-


<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 $239,430 and $123,900 at the end of the third
quarter at September 30, 2001 and December 31, 2000, respectively.  The increase
in  working  capital  deficiency  of  $115,530  is  mainly  attributable  to the
reduction in Accounts  Receivable of $19,247, an increase in Accounts Payable of
$56,532 and an increase in Convertible Debt of $106,895.  At September 30, 2001,
and  December  31,  2000,  stockholders'  deficit  was  $505,747  and  $216,800,
respectively.

At December  31,  2000,  $30,000 of current  liabilities  consisted  of deferred
revenue,  which have been  reduced  by $16,600 to $13,400  during the first nine
months ended September 30, 2001. The total change to deferred revenue, including
current and long term for the nine months ended September 30, 2001 was $13,421.

In the fourth  quarter of 2000,  the  Company  approved a request by DCI Inc. to
assign all of its rights and  obligations  under DCI,  Inc.'s two  non-exclusive
licensing  agreements  to  Manihi,  Inc.  ("Manihi").  Manihi  is a Costa  Rican
corporation operating as a reseller of Internet gaming solutions.  The effective
date of the assignment was September 23, 2000. Effective November 1, 2000 Manihi
and the Company entered into a new 25 year exclusive  license  agreement.  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.

Capital  expenditures of $2,669 were incurred during the nine month period ended
September 30, 2001. The Company's  budgeted capital  expenditures for the fiscal
year ending December 31, 2001 are approximately  $50,000 for computer  upgrading
and office renovations.

During the first six months of 2001,  the  Company  received  loan  advances  of
$159,400 from Lexington  Systems  Limited  (Lexington),  an affiliate of Manihi,
Inc. (through common ownership).  Additionally, the Company converted $21,000 of
accounts  payable due to Lexington to a loan during 2001. Under the terms of the
loan, the advance is unsecured and bears interest at 7.14%  compounded  monthly.
The loan is due on  demand  unless  Lexington  elects to  convert  the loan plus
accrued interest into registered common shares of the company at $.08 per share.
At September  30, 2001  Lexington  had not elected to convert the $180,400  plus
accrued interest into the Company's  common stock.  During the second quarter of
2001  interest  expense of 22,700 was  recorded for the  intrinsic  value of the
beneficial conversion feature embedded in the loan agreement.

During the second  quarter of 2001 the company  issued  100,000 Common shares at
$.22 per share totalling $22,000 in exchange for investor relations.


                                      -16-


<PAGE>


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.  Subsequent to the June
30, 2001 period end the Company extended the expiration date of its stock option
plan from August 1, 2001 to September 30, 2001.  The plan had 1,350,000  options
granted at an excersise price of $.20 per share. These options expired September
30, 2001 without being exercised.

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 December 2000 had reached $110,000, which exceeded the
Company's monthly expenditures of approximately $85,000 per month. This compares
to monthly  revenues of  approximately  $91,700 and  expenditures of $86,800 per
month for the third quarter ended  September 30, 2001.  The reduced  revenues in
the  quarter  ended  September  30,  2001,  were  directly  attributable  to the
restriction of the credit card processing for gaming sites which occurred in the
first  quarter  of 2001.  New  arrangements  have  been put in place in place by
Manihi for credit card  approval and  processing,  and the  increased  marketing
activity will positively affect revenue for the remainder of 2001.

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.


PART II - Other Information

Item 1 - Exhibits

         No Exhibits.


                                      -17-


<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 15th day of November, 2001


                              ICRYSTAL, INC.


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

November 15, 2001










                                      -18-