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 MARCH 31, 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 15,682,800 SHARES OF COMMON STOCK OUTSTANDING AS OF APRIL 15, 2001.

<PAGE>



                          ICRYSTAL, INC. AND SUBSIDIARY

                         INDEPENDENT ACCOUNTANT'S REPORT

                                       AND

                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

       THREE MONTHS ENDED MARCH 31, 2001 AND YEAR ENDED DECEMBER 31, 2000


<PAGE>



                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                                               TABLE OF CONTENTS
                                            MARCH 31, 2001 AND DECEMBER 31, 2000
--------------------------------------------------------------------------------


                                                                            PAGE


PART I     FINANCIAL INFORMATION

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

ITEM 1     FINANCIAL STATEMENTS

           Condensed Consolidated Balance Sheets..............................2

           Condensed Consolidated Statement of Operations (Unaudited).........3

           Condensed Consolidated Statement of Cash Flows (Unaudited).........4

           Notes to Condensed Consolidated Financial Statements
           (Unaudited)........................................................5

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

SIGNATURES...................................................................13

PART II    OTHER INFORMATION

           None.

















<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 March 31, 2001, and the
related condensed consolidated statements of operations and cash flows for the
three months ended March 31, 2001 and 2000. 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, 2000, 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 25, 2001, 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,
2000, 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
May 17, 2001


                                                                               1


<PAGE>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                            CONDENSED CONSOLIDATED BALANCE SHEET
                                            MARCH 31, 2001 AND DECEMBER 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                March 31, 2001    December 31,
                                                                 (unaudited)          2000
                                                                --------------    ------------

<S>                                                              <C>              <C>


                                     ASSETS

CURRENT ASSETS

   Cash                                                          $     7,400      $     7,700
   Accounts receivable                                                32,600          110,300
                                                                 -----------      -----------
      Total current assets                                            40,000          118,000

PROPERTY AND EQUIPMENT, net                                           30,200           32,100
                                                                 -----------      -----------

TOTAL ASSETS                                                     $    70,200      $   150,100
                                                                 ===========      ===========


                      LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES
   Accounts payable and accrued liabilities                      $   227,900      $   170,300
   Deferred revenue                                                   26,800           30,000
   Notes payable                                                     104,600           41,600
                                                                 -----------      -----------
      Total current liabilities                                      359,300          241,900
                                                                 -----------      -----------
LONG-TERM LIABILITIES
   Advances from stockholder                                           4,400            4,400
   Deferred revenue                                                  117,100          120,600
                                                                 -----------      -----------
      Total liabilities                                              480,800          366,900
                                                                 -----------      -----------
STOCKHOLDERS' DEFICIT
   Common stock, $0.01 par value, 30,000,000
     shares authorized; 15,682,800 shares issued
     and outstanding at March 31, 2001 and December 31, 2000         156,900          156,900
   Additional paid-in capital                                      5,893,300        5,893,300
   Deferred compensation                                              (7,200)         (12,800)
   Accumulated deficit                                            (6,453,600)      (6,254,200)
                                                                 -----------      -----------
      Total stockholders' deficit                                   (410,600)        (216,800)
                                                                 -----------      -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                      $    70,200      $   150,100
                                                                 ===========      ===========

</TABLE>


SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.             2
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<PAGE>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
                                      THREE MONTHS ENDED MARCH 31, 2001 AND 2000
--------------------------------------------------------------------------------


                                           Three Months        Three Months
                                              Ended              Ended
                                          March 31, 2001     March 31, 2000
                                          --------------     --------------

REVENUE
   Software royalties                     $   100,700         $   105,500
                                          -----------         -----------
OPERATING EXPENSES
   General and administrative                 192,800             209,000
   Research and development                   100,200              61,600
   Sales and marketing                          6,100               7,500
                                          -----------         -----------
      Total operating expenses                299,100             278,100
                                          -----------         -----------
INCOME (LOSS) FROM OPERATIONS                (198,400)           (172,600)

OTHER EXPENSE
   Interest and finance costs                   1,000                 200
                                          -----------         -----------
NET LOSS BEFORE
PROVISION FOR INCOME TAXES                   (199,400)           (172,800)

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

NET LOSS                                  $  (199,400)        $  (172,800)
                                          ===========         ===========
EARNINGS (LOSS) PER SHARE
   Basic and diluted                      $     (0.01)        $     (0.01)
                                          ===========         ===========
   Weighted average common shares
     outstanding (basic and diluted)       15,682,800          14,693,700
                                          ===========         ===========


SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.             3
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<PAGE>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                      CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
                                      THREE MONTHS ENDED MARCH 31, 2001 AND 2000
--------------------------------------------------------------------------------


                           Increase (Decrease) in Cash


                                                Three Months        Three Months
                                                   Ended              Ended
                                               March 31, 2001     March 31, 2000
                                               --------------     --------------


CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                      $(199,400)         $(172,800)
Adjustments to reconcile net loss to
net cash used in operating activities
   Amortization of deferred compensation             5,600             18,700
   Depreciation                                      1,900              1,000
   Noncash general and administrative expenses
     incurred in exchange for stock                      -            112,500
Changes in operating assets and liabilities
   Accounts receivable                              77,700            (23,000)
   Prepaid expenses                                      -            (23,900)
   Accounts payable and accrued liabilities         57,600            (17,700)
   Deferred revenue                                 (6,700)            67,000
                                                 ---------          ---------
      Net cash from operating activities           (63,300)           (38,200)
                                                 ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                   -             (2,300)
                                                 ---------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from stock issuances                         -            100,000
   Repayment of note payable                       (14,600)                 -
   Proceeds from new debt                           77,600                  -
   Advances from (to) related parties, net               -              3,400
                                                 ---------          ---------
      Net cash from financing activities            63,000            103,400
                                                 ---------          ---------
NET CHANGE IN CASH                                    (300)            62,900

CASH, beginning of period                            7,700             23,800
                                                 ---------          ---------
CASH, end of period                              $   7,400          $  86,700
                                                 =========          =========

SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
   Interest paid                                 $     400          $       -
                                                 =========          =========


SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.             4
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<PAGE>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------


NOTE 1 - BASIS OF PRESENTATION

        The accompanying unaudited condensed consolidated financial statements
        have been prepared in accordance with generally accepted accounting
        principles for interim financial reporting and in accordance with the
        instructions for Form 10-QSB and Article 10 of Regulation S-X.
        Accordingly, they do not include all of the information and disclosures
        normally required by generally accepted accounting principles for
        complete financial statements or those normally reflected in the
        Company's Annual Report on Form 10-KSB. 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.

        The Company has incurred net losses since inception, and, at March 31,
        2001, it had a working capital deficiency of $319,300 and a
        stockholders' deficit of $410,600. During the quarter ended March 31,
        2001, the Company did not generate revenues sufficient to fund its
        operations. Revenues for the first quarter 2001 decreased due to its
        master licensee, Manihi, Inc., experiencing credit card processing
        restrictions during this time. The Company anticipates revenues will not
        return to previous levels until the third quarter of 2001. Accordingly,
        the Company's ability to fulfill its business strategy and to ultimately
        achieve profitable operations is dependent on its capacity to execute
        its business plan and, if necessary, obtain additional financing.

        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 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. Management believes these plans will
        allow the Company to generate sufficient cash to support its operations
        through December 31, 2001.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        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. 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.

        USE OF ESTIMATES
        The preparation of financial statements in conformity with generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the reported amounts of assets and liabilities
        at the date of the financial statements and the reported amounts of
        revenues and expenses during the reporting period. Actual results could
        differ from those estimates.


SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.             5
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<PAGE>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


        NET LOSS PER SHARE
        Net loss per share was computed using the weighted average number of
        common shares outstanding. Shares associated with stock options were not
        included because they are antidilutive.

        NEW ACCOUNTING STANDARDS
        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, was adopted by the Company in the first quarter of 2001 and
        management believes it did not have a material impact on the financial
        position and results of operations of the Company.


NOTE 3 - 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, which the
        Company agreed to register for resale at the request of West Peak.

        On December 23, 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. 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. The Company reduced the principle by $14,600
        during the quarters leaving a balance of $27,000 at March 31, 2001.

        During the three months ended March 31, 2001, the Company incurred
        working capital borrowings from an affiliated party of Manihi, Inc.
        (through common ownership) for $77,600. The note is due on demand and is
        unsecured.


NOTE 4 - CAPITAL STOCK AND STOCK-BASED COMPENSATION

        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 (or
        committed to be issued) and outstanding at March 31, 2001.

        STOCK BASED COMPENSATION
        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.


SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.             6
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<PAGE>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------


NOTE 4 - CAPITAL STOCK AND STOCK-BASED COMPENSATION (Continued)

        A summary of the status of the Plan at March 31, 2001 is as follows:

                                                                   Weighted-
                                                    Number          Average
                                                  of Options    Exercise Price
                                                  ----------    --------------

        Options outstanding at December 31, 2000

           Granted                                1,350,000         $ 0.20

           Exercised                                      -              -

           Forfeited                                      -              -
                                                  ---------         ------

        Options outstanding at March 31, 2001     1,350,000         $ 0.20
                                                  =========         ======

        Options exercisable at March 31, 2001     1,350,000         $ 0.20
                                                  =========         ======

        A summary of stock options outstanding at March 31, 2000 is as follows:

<TABLE>
<CAPTION>



                                    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>            <C>
         $ 0.20      1,350,000        0.33          $ 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 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 employee and
        non-employee director options at each balance sheet date. No additional
        compensation was recognized for the three months ended March 31, 2001 as
        a result of remeasuring the compensation cost of these options.

        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. No compensation
        expense was recognized during the quarter ended March 31, 2001.


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                                                   ICRYSTAL, INC. AND SUBSIDIARY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 4 - CAPITAL STOCK AND STOCK-BASED COMPENSATION (Continued)

        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 quarter ended March 31, 2001
        are as follows:

                                                        Three Months
                                                         Ended 2001
                                                        ------------

        Pro forma net loss                               $(204,200)

        Pro forma basic earnings (loss) per share            (0.01)

        Pro forma diluted earnings (loss) per share          (0.01)


NOTE 5 - 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. 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 March 31, 2001, it was in the process of winding
        down its affairs.

        SLAMKO VISSER, CHARTERED ACCOUNTANTS (SLAMKO VISSER)
        The Company is affiliated with the Canadian chartered accounting firm
        Slamko Visser through common ownership. During the three months ended
        March 31, 2001 and 2000, respectively, the Company incurred $18,300 and
        $14,000 of expense to Slamko Visser for consulting and accounting fees
        and related costs. The Company had $30,900 of accounts payable due to
        Slamko Visser at March 31, 2001.

        ADVANCES FROM STOCKHOLDERS
        The Company had advances from stockholders of $4,400 at March 31, 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.

        During 2000, the Company received $164,000 of upfront fees from DCI,
        Inc. for development of specified software packages. The fees are recog-
        nized when elements of the contract are delivered, which include deve-
        lopment, maintenance support and upgrades of the software packages.
        Manihi, Inc., discussed in  the next paragraph, is the successor to this
        agreement. The Company  recorded $6,700 of revenue during the three
        months ended March 31,  2001.


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                                                   ICRYSTAL, INC. AND SUBSIDIARY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 5 - RELATED PARTY TRANSACTIONS (Continued)

        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 November 1, 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, translation of
        themed websites and 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 first
        $250,000 and fifteen percent of any additional amounts of monthly net
        gaming revenue 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 sales of software to sub-licensees. Manihi is
        also required to spend a minimum of $10,000 monthly advertising for each
        software package or casino.

        The Company incurred consulting services of $51,000 with an affiliate of
        Manihi, Inc. (Note 3) during the three months ended March 31, 2001.


NOTE 6 - 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. The following tables
        and schedules summarize certain information about this segment.

<TABLE>
<CAPTION>


                                                       Internet Gaming
                                                     Software Development
                                           -----------------------------------------
                                           Three Months Ended     Three Months Ended
                                             March 31, 2001         March 31, 2000
                                              (unaudited)            (unaudited)
                                           ------------------     ------------------
        <S>                                    <C>                    <C>

        External revenues                      $ 100,700              $ 105,500
        Intersegment revenues                          -                      -
        Segment income (loss) before tax          (8,700)                33,200
        Segment assets                            60,400                170,400

        Total income (loss) before tax
           for reportable segments             $(  8,700)             $  33,200
        Corporate headquarters expense          (190,700)              (206,000)
                                               ---------              ---------
              Consolidated total               $(199,400)             $(172,800)
                                               =========              =========

</TABLE>


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                                                   ICRYSTAL, INC. AND SUBSIDIARY
                NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------


NOTE 6 - SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS (Continued)


        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.

                                                  Three Months Ended
                                           ---------------------------------
                                           March 31, 2001     March 31, 2000
                                           --------------     --------------

        Commonwealth of Domincia              $      -           $105,500

        Central America or Costa Rica          100,700                  -
                                              --------           --------
             Consolidated total               $100,700           $105,500
                                              ========           ========

        MAJOR CUSTOMERS

        The Company realized essentially all the $105,500 of revenue earned
        during three months ended March 31, 2000 from DCI, Inc., a related party
        (Note 5). During the three months ended March 31, 2001, the Company
        realized $94,000 of revenue under its new exclusive master license
        agreement with Manihi, Inc. (Note 5). Also see Note 3 for information
        regarding working capital made available to the Company from an
        affiliate of Manihi, Inc.


SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.            10
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<PAGE>


ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS FOR THE
        FISCAL QUARTER ENDED MARCH 31, 2001 AND MARCH 31, 2000

REVENUES - Revenues were $100,700 and $105,500 for the fiscal quarters ended
March 31, 2001 and 2000, respectively. The decline in revenue was due to Manihi,
Inc., the Company's Master Licensee, experiencing credit card processing
restrictions during this time. The average revenue for the first quarter of 2001
was $33,500 per month, which reflects the restricted credit card processing for
the period.

The startup of the Sub-licensee Partnership Program under the Master Licensee,
Manihi, Inc., new arrangements for the credit card processing, and the increase
in marketing activities of Manihi, Inc. should begin to show in increased
revenues to meet projected levels. However, the Company does not anticipate
revenues to exceed previous levels until the third quarter of 2001.

OPERATING EXPENSES - Operating expenses are primarily comprised of research and
development, professional expenses, and general and administrative costs.
Operating expenses were $299,100 and $278,100 for the fiscal quarters ended
March 31, 2001 and 2000, respectively. The increase of $21,000 was a result of
the Company continuing its business strategy to develop and license Internet
based gaming technology reflected in increased research and development costs
through higher labor costs during the first quarter of 2001 as compared to 2000.
Exclusive of this, operating expenses were comparable.

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 $100,200 and $61,600
respectively for the fiscal quarters ended March 31, 2001 and 2000. The $38,600
increase again reflects the Company's commitment to its business strategy of
developing and maintaining licensed Internet based gaming software.

General and Administrative - The Company's general and administrative costs
consist primarily of salaries and wages, professional fees, consulting fees,
travel, and office expenses. General and administrative costs were $192,800 and
$209,000 for the fiscal quarters ended March 31, 2001 and 2000, respectively.
The decrease of $16,200 reflects lower professional fees and the fact that the
Company has stabilized its operating costs for the quarter.

NET LOSS - The Company incurred a net loss of $199,400 and $172,800 for the
fiscal quarters ended March 31, 2001 and 2000, respectively. The 2001 loss was
the result of the increase in research and development expenses during this
quarter as well as the decrease in revenue due to the credit card restrictions
of Manihi, Inc., the Company's Master Licensee. This impact may continue to be
felt throughout the second and third quarters of 2001, and then improve with
increased revenues by the third quarter due to Manihi's resolution of credit
card processing and an increase in the marketing activities of Manihi.

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 consu-
        mers 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 the foreign
exchange rate between U.S. and Canadian currency could result in fluctuations in
the Company's annual and quarterly results.


                                                                              11


<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The working capital deficiency increased to $319,300 from $123,900 at March 31,
2001 and December 31, 2000, respectively. The increase of $195,400 is
attributable to the reduction in accounts receivable of $77,700 and to the
increase in accounts payable of $ 57,600 and note payable of $ 63,000. At March
31, 2001, and December 31, 2000, stockholders' deficit was $410,600 and
$216,800, respectively.

At December 31, 2000, $30,000 of current liabilities consisted of deferred
revenue, which have been reduced by $3,200 to $26,800 during the first quarter
ended March 31, 2001. The total change to deferred revenue, including current
and long term for the quarter ended March 31, 2001 was $6,700.

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.

During the quarter ended March 31, 2001 the company received financial support
by incurring working capital borrowings of $ 77,600 from an affiliated party of
Manihi, Inc. (through common ownership).

No capital expenditures were incurred during the quarter ended March 31, 2000.
The Company's budgeted capital expenditures for the fiscal year ending December
31, 2001 are approximately $50,000 for computer upgrading and office
renovations.

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. The company is proposing
to raise an additional $800,000 by way of a private placement. It is
management's goal to have the private placement in place by the end of the third
quarter, September 30, 2001.

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 revenues of approximately $33,500 and expenditures of $99,700 per month for
the first quarter ended March 31, 2001. The reduced revenues in the quarter
ended March 31, 2001, were directly attributable to the restriction of the
credit card processing for gaming sites. Management anticipates the new
arrangements in place by Manihi for the 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
profitability and 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.


                                                                              12


<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 May, 2001


                              ICRYSTAL, INC.


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

May 21, 2001


















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