U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-KSB/ SECOND AMENDED





ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For
the fiscal year ended December 31, 2007








Commission
File No. 000-52472










CRC
CRYSTAL RESEARCH CORPORATION


(Exact
name of small business issuer as specified in its charter)









Nevada
            86-0728263(State or
      other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)







4952
East Encanto Street, Mesa, Arizona 85205


(Address
of Principal Executive Offices)





(480)
452-3301


(Issuer’s
telephone number)




(480)
832-6187


(Issuer’s
facsimile number)







(Former
name, address and fiscal year, if changed since last report)





1




Securities
registered pursuant to Section 12(b) of the Act: None







Securities
registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value







Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.





Yes  x     No  o







Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  o




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act):




Yes  oNo  x







Revenues
for year ended December 31, 2007:$ - 0 -







Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of March 26, 2008 was: $ - 0 -







Number of
shares of our common stock outstanding as of December 31, 2007 is: 12,327,449







The
Company’s Transfer Agent is Integrity Stock Transfer, 3027 E. Sunset Road, Suite
103, Las Vegas, Nevada 89120 Telephone (702) 317-7757.







State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of December 31, 2007: 12,327,449 shares of common stock.








2




CRC CRYSTAL
RESEARCH CORPORATION


TABLE OF CONTENTS








PAGEPART
    IITEM 1.
      DESCRIPTION OF BUSINESS
            4ITEM 2.
      DESCRIPTION OF PROPERTY
            10ITEM 3. LEGAL
      PROCEEDINGS
            10ITEM 4.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            10PART
    IIITEM 5. MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            11ITEM 6.
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            11ITEM 7.
      FINANCIAL STATEMENTS
            12ITEM 8.
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
            13ITEM 8A.
      CONTROLS AND PROCEDURES
            13ITEM 8B.
      CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
            14PART
    IIIITEM 9.
      DIRECTOR, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE
      WITH SECTION 16(A) OF THE EXCHANGE ACT
            14ITEM 10.
      EXECUTIVE COMPENSATION
            16ITEM 11.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT
            16ITEM 12.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
            17PART
    IVITEM 13.
      EXHIBITS AND REPORTS ON FORM 8-K
            18ITEM 14.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES
            19SIGNATURES
            19

















3






PART
I





ITEM
1.  DESCRIPTION OF
BUSINESS





GENERAL





CRC
Crystal Research Corporation (the "Company" or the "Registrant") was
incorporated in the State of Nevada on June 9, 2006. The Company is the
successor in interest to CRC Crystal Research Corporation (“Arizona CRC”), which
was incorporated in the State of Arizona on March 22, 1993.  On June
10, 2006, the board of directors of the Company and Arizona CRC approved their
merger for the purpose of reincorporating Arizona CRC in the State of
Nevada.  The reincorporation was completed by the filing of Articles
of Merger with the Secretary of State of Nevada on September 20, 2006 and with
the Secretary of State of Arizona on September 21, 2006.




The
Company was formed by Dr. Kiril Pandelisev to commercialize patents for new
technology and innovative crystal growing processes in the manufacture Crystals
and Crystal Products. The technology encompasses a new furnace design,
innovative crystal growing processes, and new, more sensitive Crystal Products.
Management believes that the new technology allows the Company to manufacture
Crystal Products faster, less expensively, and at a higher quality level than
that which current industry methods allow.






Planned
Operations




The
Company has a non-exclusive license to all technology owned by Single Crystal
Technologies, Inc. (“SCT”), which is owned by Dr. Kiril A.
Pandelisev.  Dr. Pandelisev is the Company’s sole officer and
director. The licensed technology includes patents, whether approved, pending or
in process of filing, other contractual agreements and technical measures
relating to the manufacture of Crystals, Crystal Products and ultra pure
materials.  The Company plans to raise capital to fund the development
of initial manufacturing capabilities to grow Crystal Products for sale in
various industrial markets. The Company has never produced any Crystal Products
or other products for commercial sale.






Properties
of Industrial Crystals




Crystals
are very pure concentrations of elements or compounds that have been melted and
then allowed to solidify in such a fashion that their atomic or molecular
structure forms a crystal lattice.  A distinguishing characteristic of
crystals is that they have a uniform, low energy state as compared to
non-crystal concentrations of the same elements or compounds.  When
certain impurities (or dopants) are intentionally added to a crystal, the
properties of the crystal are altered.  Dopants can be added while the
crystal is grown and/or during the processing of the crystal into a finished
product.  One significant alteration is that, with certain impurities,
the crystal can be made to react to electromagnetic waves, and the reaction can
be detected with detection devices.  In addition, impurities at
certain concentrations can alter the temperature at which the crystal will react
to electromagnetic wages.  By measuring the strength of the reaction
to electromagnetic waves, it is possible to measure features of an item or
process that is emitting the electromagnetic waves.




4




ITEM 1.  DESCRIPTION
OF BUSINESS - continued




Properties of Industrial
Crystals-
continued




The
effectiveness and quality of a crystal is dependent on the purity of the element
or compound used for the crystal, and the number of flaws in the crystal lattice
structure, which is determined by the crystal growth process. Optical
transmission, scintillation properties and heat tolerance also depend on the
uniformity of a crystal, as well as the amount and uniformity of distributions
of dopants within the crystal.  For instance, sodium iodide (NaI) in
its pure state can detect gamma rays only at very low temperatures. By adding a
small amount of Thallium metal to the crystal (about 0.01%), the crystal can
detect gamma rays or nuclear particles at much higher temperatures. Sodium
iodide detectors used in the medical imaging need only work at room temperature,
while sodium iodide detectors used in energy exploration operate can be made to
work in temperatures as high as 200oC by
altering the concentrations of Thallium metal added as a dopant.




A wide
variety of commercial and industrial applications have been developed to take
advantage of the properties of crystals.  For example:




Medial Imaging:  In
medical imaging applications (i.e., a CAT scan), sodium iodide crystals are
shaped into plates and placed around a patient that has been injected with
radioactive tracer material. The gamma rays emitted from the patient enter the
crystal plates and cause a scintillation event, or flash of light, when they
strike a Thallium atom which is used as the dopant.  A light sensor,
such as photo multiplier tube (PMT), detects the scintillation events, converts
each scintillation event into an electrical pulse and assigns coordinates to the
scintillation event. Special electronics amplify these signals and analyze
billions of events per second. The result of the analysis is the image of the
organ that is scanned. Since healthy tissue absorbs the injected radioactive
material differently than cancerous tissue, a radiologist can detect the
cancerous material as darker or brighter material (depending on the radioactive
material injected). SCT has developed technology that it believes can make the
crystals at lower cost and more sensitive, which will enable more accurate
diagnosis of the patient.




Petroleum
Exploration:  When drilling for oil or gas, it is important to
know the geological formations which are being penetrated. By adding a
scintillation crystal to the drilling assembly, a geologist on the surface can
be provided with that information. Oil well surveys are conducted by injecting
small traces of radioactive materials into wells under high steam pressure.
Gamma rays emitted from the walls of the well and detected by the crystal can be
analyzed and interpreted to show the composition of the geological formation in
which the crystal is located and whether it contains hydrocarbons. This
measurement is called oil well logging and is often referred to as "measured
while drilling." When the driller encounters a potential producing zone, a
geologist can use the crystal measurements to assess how much oil is present in
the zone and determine whether to stop drilling or continue drilling in search
for a more productive zone.  SCT’s patents provide technology for more
sensitive soil and hydrocarbon detection and can sustain rougher, hotter
environments without being damaged.




Homeland
Security:  In homeland security applications, crystal detection
devices are commonly used in airports, courthouses, government buildings,
nuclear plants and other sensitive areas to for scanning people, luggage and
shipping containers for weapons and “dirty bomb” materials.




5




ITEM 1.  DESCRIPTION
OF BUSINESS - continued
  Properties of Industrial
Crystals-
continued
  Bridgman-Stockbarger
Method of Crystal Production




The
predominant method of crystal production for industrial uses is the
Bridgman-Stockbarger Method, which was perfected in the 1930’s.  Under
the Bridgman Stockbarger Method, a crucible is filled with particulate raw
materials and melted at a high temperature.  The melted material is
then allowed to solidify by slowly lowering it into a cooling section, which
cools the bottom of the crucible.  The entire crystal is formed by
slowly cooling the entire crucible from the bottom to the
top.  Particularly with respect to non-metallic crystals, which are
characterized by poor heat conductivity, the Bridgman-Stockbarger Method suffers
from the following manufacturing problems:




·
            The
      yield for marketable crystals is low, and for large crystals can be as low
      as 1-3%;




·
            There
      are limitations on the maximum possible size of the
    crystals;




·
            The
      growth rate of the crystals is low, thus inhibiting volume production and
      increasing crystal production time;




·
            There
      is significant impurity variation within crystals. Often, less than 10% of
      the crystal produced is within the desired
  range;




·
            The
      capital investment for mass production is
large.




The
Bridgeman-Stockbarger Method is inefficient and costly, particularly for
non-metallic crystals that are based upon elements or compounds with low heat
conductivity.  The Bridgman-Stockbarger Method requires special
melting and annealing stations, expensive platinum crucibles, heavy material
handling equipment and considerable personnel. Conventional Bridgman-Stockbarger
furnaces can cost over one million dollars to build. Presently, crystals are
taken out of furnaces when they are over 900°F, exposing personnel to unhealthy
concentrations of iodine and thallium iodide vapors. The crystals produced are
subject to thermal induced stress damage, production yields of 70% or less, and
size limited to a maximum of 30 inches in diagonal dimension.






Technology
of Single Crystal Technologies, Inc.




The
Company has entered into a non-exclusive license of technology from Single
Crystal Technologies, Inc. (“SCT”), which is owned by Dr.
Pandelisev.  SCT holds patents obtained by Dr. Pandelisev pertaining
to a new method of growing crystals, purifying base compounds, introducing
dopants and incorporating finished crystals into industrial
applications.  Among the patents issued to Dr. Pandelisev and licensed
to the Company by SCT are:




Patent No.
            Title6,800,137
            Binary
      and ternary crystal purification and growth method
      and apparatus6,743,294
            Continuous
      crystal plate growth process and apparatus6,402,840
            Crystal
      growth employing embedded purification chamber6,352,588
            Material
      Purification6,334,899
            Continuous
      crystal plate growth apparatus6,153,011
            Continuous
      crystal plate growth process and apparatus6,071,339
            Continuous
      crystal plate growth process and apparatus5,993,540
            Continuous
      crystal plate growth process and apparatus5,753,918
            Superior
      performance subassembly for scintillation detection and detectors
      employing the subassembly5,614,721
            Modular
      gamma camera plate assembly with enhanced energy detection and
      resolution5,548,116
            Long
      life oil well logging assembly5,521,385
            Long
      life gamma camera plate assembly with improved reflector
      system







6




ITEM
1.  DESCRIPTION
OF BUSINESS - continued




Technology of Single
Crystal Technologies, Inc.-
continued




In
addition, the SCT and Dr. Pandelisev have the following pending patents that
relating the manufacture of Crystals and the development of Crystal
Products:




20020117625
            Fiber
      optic enhanced scintillation detector20020092465
            Binary
      and ternary crystal purification and growth method and
      apparatus20020083741
            Hot
      substrate deposition of fused silica20020083740
            Process
      and apparatus for production of silica grain having desired properties and
      their fiber optic and semiconductor application20020083739
            Hot
      substrate deposition fiber optic performs and perform components process
      and apparatus20020062784
            Material
      purification20020053317
            Material
      purification20020040675
            Continuous
      crystal plate growth process and
apparatus







The
Market




The uses
for Crystal Products are numerous. For example:




·
            the
      medical imaging industry uses NaI crystal plates to transform invisible
      gamma rays into visible light, which can be converted into an image of the
      object examined;




·
            bottlers
      use NaI crystal detectors to prevent overfilling of aluminum
      cans;




·
            automobile
      manufacturers use crystal detectors to control the paint spraying process
      to guarantee proper color mixing;




·
            steel
      manufacturers use NaI crystal detectors to adjust gigantic rollers to
      insure uniform thickness of rolled
steel;




·
            nuclear
      power plants use thousands of small NaI crystal detectors to measure
      radiation levels throughout the
plant;




·
            Engine
      manufacturers use scintillation technology to ensure proper engine wall
      thickness, alloy uniformity and crack free
  parts;




·
            Airports
      use crystals in personal and baggage scanners for detection of controlled
      substances, explosives and radioactive
material;




·
            Borders
      and ports use scintillation based detectors for detection of controlled
      substances, explosives and radioactive
material.








7




ITEM
1.  DESCRIPTION
OF BUSINESS - continued




The Market-
continued




Various
federal agencies, including the Homeland Security Agency, the Environmental
Protection Agency and the Nuclear Regulatory Commission, use crystal detectors
for qualitative and quantitative composition assessment of nuclear waste. They
are effective in providing for the safety of the nuclear waste depositories by
detecting possible leaks from the containers caused by chemical reactions and
the effects of nuclear particles bombardment. Crystal detectors are also used to
maintain inventory records of nuclear stockpiles and to impose sophisticated
security protection measures for these materials, especially those materials
used for military applications.




The
following table sets forth certain crystal types, their applications, and market
information:




Crystal
      Type/High Tech Product
            
            Application
            
            Market
      InformationSodium
      Iodide (NaI)
            
            Homeland
      Security; Borders, Ports, and inland applications.
            
            Major
      Customers: US Government, Lockheed Martin, General Electric,
      Others.
              Current
      Market Size: Approximately $362 Billion
              Current
      Producer: Saint Gobain, Foreign Corporation.Sodium
      Iodide (NaI)
            
            Oil
      Well Logging Detectors
            
            Major
      Customers: Schlumberger, Halliburton, Baker Hughes
              Current
      Market Size: Approximately $100 Million
              Current
      Producer: Saint Gobain, Foreign Corporation.Sodium
      Iodide (NaI)
            
            Medical
      Imaging
            
            Major
      Customers: GE, ADAC, Siemens, Toshiba
              Current
      Market Size: Over $400 Million
              Current
      Producer: Saint Gobain, Foreign Corporation.Cesium
      Iodide
            
            High
      Energy Physics
            
            Major
      Customers: U.S. Nat'l Research Facilities
              Current
      Market Size: Approximately $30-40 Million
              Current
      Producer: Saint Gobain, Foreign Corporation, and several Chinese
      Government owned entities.Calcium
      Fluoride (CaF2)
            
            Semiconductor
      Equipment manufacturing, Space Applications, Consumer optical
      products
            
            Major
      Customers: Nikon, Canon, ASML, Zeiss
              Current
      Market Size: Over $1 Billion(per Deutche Bank report)
              Current
      Producers: Canon, Nikon, Corning, Shott LithotechBarium
      Fluoride (BaF2);
      Strontium Fluoride (SrF2)
            
            Airborne
      Laser Defense Systems; Medical Imaging; Semiconductor Equipment
      Manufacturing
            
            Major
      Customers: Lockheed Martin, Northrop Grumman, Boeing, GE,
      Phillips.
              Current
      Market Size: Over $1 Billion
              Current
      Producers: Korth Kristale (Germany), Russian and Chinese Government
      Companies.Metal
      and Metal Alloys
            
            Jet
      Engine Turbine Blades, Space applications
            
            Major
      customers: Honeywell International, GE, Rolls Royce
              Current
      Market Size: Over $1 Billion
              Major
      producers: No major producers,Silicon/Silicon
      Alloy products
            
            Semiconductor
      Manufacturing, Chemical Industry, Space Applications
            
            Major
      customers: Intel, Freescale, TI, Sony, AMD, Others.
              Current
      Market Size: Over $5 Billion
              Major
      producers: Toshiba, Norton, Kyocera,High
      Purity Quartz & Quartz products
            
            Semiconductor
      manufacturing, Fiber Optic Industry; Food industry
            
            Major
      customers: Intel, Freescale, Sony, AMD, Others
              Current
      Market Size: Over $1 Billion
              Major
      producers Corning, Asahi, Shott Glass






8




ITEM
1.  DESCRIPTION
OF BUSINESS - continued
  The Market-
continued




Market
size estimates are based on published data that management could find or
management estimates, but is not based on a formal market
study.






Strategy




Manufacture
of proprietary Crystal Products is dependent on building a new furnace capable
of commercial production deploying the licensed technology. Management believes
its innovative, manufacturing process will significantly reduce production costs
of certain non-metallic crystals; reduce the capital expenditures needed to
finance a manufacturing facility; more than triple the rate of
crystal production; provide a product yield ranging from approximately 80 to 90%
and produce higher quality crystals and crystal products.




Initially,
the Company will focus on production of NaI Crystal Products for Homeland
Security applications and for energy exploration applications. Currently, the
market for NaI Crystal Products for oil well drilling and nuclear detection
applications is serviced solely by Saint Gobain and its subsidiary,
Harshaw-Bicron Corporation. Management believes that many NaI Crystal Products
customers will welcome a new supplier that can supply higher quality products,
without long and uncertain delivery times and constant price
increases.




With
respect to the Homeland Security market, the Company is in negotiations to be
the sodium iodide crystal supplier to a government contractor that has a
contract with the Homeland Security Agency to develop and certify nuclear
detection devices that would be purchased by other entities that need such
devices, such as cities, states, ports, mass transit authorities, and military
installations.  With the government contract, the Company has
developed a Nuclear/Radioactive Isotope Detection System that is based on
radiation detected by sodium iodide crystals. Software algorithms allow the
system to distinguish threat isotopes (e.g., cobalt-60, cesium-137, iridium-192,
and strontium-90) from isotopes naturally occurring in household items, such as
fish, bananas, and ceramic tile, or those used for medical purposes (e.g.,
potassium-40, thorium-232, and technetium-99m).




The
system also measures background radiation at predetermined intervals against a
standard low-level radiation source within the detector unit to constantly
benchmark naturally occurring radiation levels. This will eliminate the
possibility of false positive alarms. The sensor system has centralized
detection and monitoring capabilities for identifying both the type and amount
of radioactive isotopes.




The
Company and the contractor are designing the system to work seamlessly without
disrupting daily operations and workflow with nuisance false-positives. Alarms
occur only when a valid threat is detected through the presence of a threat
isotope or an unusually large presence of a non-threat isotope.  For
example, the system could be mounted under the spreader bars of the cranes that
unload cargo containers, so that the system will be able to silently monitor
each container as it is unloaded without any additional steps by port
workers.  The system would also be mounted in U-Frames, which could be
placed at entrances to ports, government and business complexes, airports, train
platforms, schools, toll booths, and special public events to silently monitor
vehicles and pedestrian traffic as the pass through the
U-Frame.  Finally, the Company and the contractor are developing a
portable model to use to verify positive readings generated by the stationary
models.




With
respect to the Energy Exploration market, the Company is working with
consultants to become a crystal supplier to the major oilfield services
companies, who are currently the suppliers of oil well logging detectors to the
oil and gas exploration industry.




After the
Company has entered the homeland security and energy exploration markets, the
Company intends to enter into the gamma camera market, the optical industry for
semiconductor process applications and air-borne laser defense applications, and
the development of high purity materials for support of the crystal growth
process and for the fabrication of chip processing chambers.




9




ITEM
1.  DESCRIPTION
OF BUSINESS - continued
  Strategy-
continued
  Environmental Laws




Neither
the materials supplied to manufacture the Crystal Products, the crystal
manufacturing process, nor refuse produced by the crystal manufacturing process
is subject to any federal or state environmental regulations. The refuse
discarded after production of Crystal Products is not classified as a "hazardous
substance" under either federal or state law and the airborne chemicals emitted
from the production process do not exceed federal or state ambient air quality
standards.




CRC
Crystal Research Corporation currently has one officer and one director. The
Company’s officer, Dr. Kiril Pandelisev, does not receive a salary.





As of
December 31, 2007 CRC Crystal Research Corporation had 12,327,449 shares of
$0.001 par value common stock issued and outstanding.





CRC
Crystal Research Corporation has administrative offices located at 4952 East
Encanto Street, Mesa, Arizona 85205.





CRC
Crystal Research Corporation fiscal year end is December 31.





EMPLOYEES





We have
no full time employees.  Dr. Kiril Pandelisev, our President, Chief
Executive Officer and Director,  ha ve agreed to allocate a
portion of his time to our activities without compensation.  On June
21, 2007 the following individuals were elected to the Board of Directors of the
Company as Directors: Charlie Searock, Don Jackson, and Shariar
Motakef.  The new Directors have also agreed to allocate a portion of
their time to the Company’s activities receiving shares of common stock as
compensation for their services.







ITEM
2. DESCRIPTION OF
PROPERTY





CRC
Crystal Research Corporation maintains its office at 4952 East Encanto Street,
Mesa, Arizona 85205. There are currently no proposed programs for the
renovation, improvement or development of the facilities currently in
use.





CRC
Crystal Research Corporation management does not currently have policies
regarding the acquisition or sale of real estate assets primarily for possible
capital gain or primarily for income. CRC Crystal Research Corporation does not
presently hold any investments or interests in real estate, investments in real
estate mortgages or securities of or interests in persons primarily engaged in
real estate activities.







ITEM
3. LEGAL
PROCEEDINGS





There is
no litigation pending or threatened by or against us.







ITEM
4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS





None.


10


PART
II





ITEM
5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS





On
December 31, 2007, there were 60 shareholders of record of our common
stock.  Our shares of common stock have never been traded on any
recognized stock exchange.





DIVIDENDS





We do not
intend to retain future earnings to support our growth.  Any payment
of cash dividends in the future will be dependent upon: the amount of funds
legally available therefore; our earnings; financial condition; capital
requirements; and other factors which our Board of Directors deems
relevant.







ITEM
6. MANGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS





OVERVIEW
 
 CRC
Crystal Research Corporation (the "Company" or the "Registrant") was
incorporated in the State of Nevada on June 9, 2006. The Company is the
successor in interest to CRC Crystal Research Corporation (“Arizona CRC”), which
was incorporated in the State of Arizona on March 22, 1993.  On June
10, 2006, the board of directors of the Company and Arizona CRC approved their
merger for the purpose of reincorporating Arizona CRC in the State of
Nevada.  The reincorporation was completed by the filing of Articles
of Merger with the Secretary of State of Nevada on September 20, 2006 and with
the Secretary of State of Arizona on September 21, 2006.
  The
Company was formed to commercialize patents for new technology and innovative
crystal growing processes in the manufacture Crystals and Crystal Products. The
technology encompasses a new furnace design, innovative crystal growing
processes, and new, more sensitive Crystal Products. Management believes that
the new technology allows the Company to manufacture Crystal Products faster,
less expensively, and at a higher quality level than that which current industry
methods allow.
  RESULTS
OF OPERATIONS
 
 Revenues
 
 We
have not yet generated any revenues. Our ability to generate any significant
revenues continues to be uncertain and is dependant on our ability to secure
financing.
 
 Year
Ended December 31, 2007 Compared to Year Ended December 31,
2006
 
 For
the twelve months ended December 31, 2007, the Company reported a net loss of
$63,206, or $0.01 per share compared with a net loss of $130,799, or $0.02 per
share for the twelve months ended December 31, 2006.
 
 General and Administrative:
 General and administrative expenses increased to $29,443 for the twelve
months ended December 31, 2007 compared to $18,146 for the same period in 2006.
 This increase was primarily due to an increase in expenses related to
secure financing for future operations.
 
 Professional Fees:
 Professional Fees expenses increased to $33,763 for the twelve months
ended December 31, 2007 compared to $13,722 for the same period in 2006.
 The increase is primarily related to an increase in the use of marketing
consultants during 2007.
 
 Impairment of Manufacturing
Equipment:  Impairment of Manufacturing Equipment expense decreased
to $0 for the twelve months ended December 31, 2006 compared to $98,931 for the
same period in 2006. This was due to an impairment of manufacturing equipment
during 2006.  See Note 2, “Summary of Significant Accounting
Practices” in the notes to audited financial statement.
  Depreciation and Amortization
Expense:  Depreciation and amortization expenses decreased to zero
for the twelve months ended December 31, 2007 compared to $2,141 for the
same period in 2006 because the Company assets were fully depreciated or
impaired at December 31, 2006.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 At
December 31, 2007, we had no capital resources.  During 2007 we relied
upon the issuance of common stock and additional capital contributions from
shareholders to fund administrative and manufacturing
expenses.  Moreover, we have never generated revenues, have an
accumulated a loss of $1,583,853
during its development stage, and currently lacks the capital to pursue its
business plan.  This raises substantial doubt about our ability to
continue as a going concern.
  11


ITEM
7.  FINANCIAL
STATEMENTS





Our
financial statements, together with the report of auditors, are as
follows:







CRC
CRYSTAL RESEARCH CORPORATION





FINANCIAL
STATEMENTS





AS
OF DECEMBER 31, 2007





CRC
Crystal Research Corporation


Financial
Statements Table of Contents








PageINDEPENDENT
      AUDITORS REPORT
            F-1BALANCE
      SHEET
            F-2STATEMENT OF
      OPERATIONS
            F-3STATEMENT OF
      CASH FLOWS
            F-4STATEMENT OF
      STOCKHOLDERS' DEFICIT
            F-5FOOTNOTES TO
      THE FINANCIAL STATEMENTS
            F-8












12


MOORE
& ASSOCIATES, CHARTERED
 ACCOUNTANTS AND
ADVISORS
 PCAOB REGISTERED
 
 
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
the Board of Directors
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 
 
 We
have audited the accompanying restated balance sheets of CRC Crystal Research
Corporation (A Development Stage Company) as of December 31, 2007 and 2006, and
the related restated statements of operations, stockholders’ equity and cash
flows through December 31, 2007, 2006 and Inception on March 22, 1993 through
December 31, 2007. These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audits.
 
 We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis
for our opinion.
 
 In our
opinion, the restated financial statements referred to above present fairly, in
all material respects, the financial position of CRC Crystal Research
Corporation (A Development Stage Company) as of December 31, 2007 and 2006 and
the results of its restated operations and its cash flows through December 31,
2007, 2006 and Inception on March 22, 1993 through December 31, 2007, in
conformity with accounting principles generally accepted in the United States of
America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note 3 to the
financial statements, the Company has never generated any revenues, has
accumulated a loss of $1,583,853 and currently lacks the capital to pursue its
business plan, which raises substantial doubt about its ability to continue as a
going concern.  Management’s plans concerning these matters are also
described in Note 3.  The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
 
 /s/
Moore & Associates, Chartered
 
 Moore
& Associates Chartered
 Las
Vegas, Nevada
 October
9, 2008
 
 
 2675 S. Jones Blvd. Suite
109, Las Vegas, NV 89146 (702) 253-7499 Fax (702)
253-7501






F-1




CRC
Crystal Research Corporation
 (A
Development Stage Company)


Restated
Balance Sheets




December
      31,
              
              
              December
      31,2007
              
              
              2006ASSETSCurrent
      AssetsCash
              
              $
              500
              
              
              $
              -Total
      Current Assets
              
              
              500
              
              
              
              -Total
      Assets
              
              $
              500
              
              
              $
              -LIABILITIES AND
      STOCKHOLDERS' EQUITY/(DEFICIT)Current
      LiabilitiesAccounts
      Payable
              
              $
              750
              
              
              $
              -Loans
      Payable - Related Parties
              
              
              21,556
              
              
              
              -Total
      Current Liabilities
              
              
              22,306
              
              
              
              -Stockholders'
      EquityPreferred
      Stock, authorized50,000,000
      shares, par value $0.001,no
      preferred stock is outstanding
              
              
              -
              
              
              
              -Common
      Stock, authorized450,000,000
      shares, par value $0.001,issued
      and outstanding on December 31,2007
      and December 31, 2006 is12,327,449
      and 10,659,449 sharesrespectively
              
              
              12,327
              
              
              
              10,659Paid
      in Capital
              
              
              1,549,720
              
              
              
              1,509,988Accumulated
      Deficit DuringDevelopment
      Stage
              
              
              (1,583,853
              )
              
              
              (1,520,647
              )Total
      Stockholders' Equity
              
              
              (21,806
              )
              
              
              -Total
      Liabilities and Stockholders' Equity
              
              $
              500
              
              
              $
              -The
      accompanying notes are an integral part of these
      statements





F-2




CRC
Crystal Research Corporation
 (A
Development Stage Company)
  Restated
Statements of Operation




March
      22, 1993(Inception)
      toYear
      Ended December 31,
              
              
              December
      31,2007
              
              
              2006
              
              
              2007Operating
      ExpensesGeneral
      and Administrative
              
              $
              29,443
              
              
              $
              18,146
              
              
              $
              1,042,688Impairment
      of Manufacturing Equipment
              
              
              -
              
              
              
              98,931
              
              
              
              198,931Loss
      on Sale of Asset
              
              
              -
              
              
              
              -
              
              
              
              7,491Research
      and Development
              
              
              -
              
              
              
              -
              
              
              
              331,459Professional
      Fees
              
              
              33,763
              
              
              
              13,722
              
              
              
              99,255Total
      Operating Expenses
              
              
              63,206
              
              
              
              130,799
              
              
              
              1,679,824(Loss)
      from Operations
              
              
              (63,206
              )
              
              
              (130,799
              )
              
              
              (1,679,824
              )Other
      Income (Expenses)Other
      Income
              
              
              
              
              
              
              
              
              
              
              6,654Gain
      on Write-Off of Debt
              
              
              
              
              
              
              
              
              
              
              230,000Interest
      Expense
              
              
              -
              
              
              
              -
              
              
              
              (140,683
              )Net
      Income/(Loss)
              
              $
              (63,206
              )
              
              $
              (130,799
              )
              
              $
              (1,583,853
              )Basic
      (Loss) per Share
              
              $
              (0.01
              )
              
              $
              (0.02
              )
              
              $
              (0.39
              )Diluted
      (Loss) per Share
              
              $
              (0.01
              )
              
              $
              (0.02
              )
              
              $
              (0.39
              )Basic
      and Diluted Weighted AverageNumber
      of Shares Outstanding
              
              
              11,385,991
              
              
              
              6,543,131
              
              
              
              4,050,417The
      accompanying notes are an integral part of these
      statements




F-3


CRC
Crystal Research Corporation
 (A
Development Stage Company)




Restated
Statements of Cash Flows




March
      22, 1993(Inception)
      toYear
      Ended December 31,
              
              
              December
      31,2007
              
              
              2006
              
              
              2007Operating
      Activities:Net
      Profit / (Loss)
              
              $
              (63,206
              )
              
              $
              (130,799
              )
              
              $
              (1,583,853
              )Adjustments
      to reconcile Net (Loss) to cash:Depreciation
              
              
              -
              
              
              
              2,141
              
              
              
              25,545Loss
      on Sale of Asset
              
              
              -
              
              
              
              -
              
              
              
              7,491Impairment
      of Manufacturing Equipment
              
              
              -
              
              
              
              98,930
              
              
              
              198,931Common
      Stock issued for Service
              
              
              41,400
              
              
              
              12,400
              
              
              
              225,000Contributed
      Services
              
              
              
              
              
              
              
              
              
              
              660,000Changes
      in Assets and LiabilitiesIncrease/(Decrease)
      in Accounts Payable
              
              
              750
              
              
              
              -
              
              
              
              750Increase/(Decrease)
      in Accrued Liabilities
              
              
              -
              
              
              
              -
              
              
              
              24,183Net
      Cash (Used) by Operating Activities
              
              
              (21,056
              )
              
              
              (17,328
              )
              
              
              (441,953
              )Investment
      Activities:Equipment
      Purchase
              
              
              -
              
              
              
              -
              
              
              
              (17,858
              )Manufacturing
      Equipment Purchase
              
              
              -
              
              
              
              -
              
              
              
              (214,109
              )Cash
      Used by Investment Activities
              
              
              -
              
              
              
              -
              
              
              
              (231,967
              )Financing
      Activities:Net
      Proceeds from loans - Related Parties
              
              
              21,556
              
              
              
              17,328
              
              
              
              215,548Proceeds
      from Series A Convertible Notes
              
              
              -
              
              
              
              -
              
              
              
              200,000Proceeds
      from sale of Common Stock
              
              
              -
              
              
              
              -
              
              
              
              258,872Cash
      Provided by Financing Activities
              
              
              21,556
              
              
              
              17,328
              
              
              
              674,420Net
      Increase/(Decrease) in Cash
              
              
              500
              
              
              
              -
              
              
              
              500Cash,
      Beginning of Period
              
              
              -
              
              
              
              -
              
              
              
              -Cash,
      End of Period
              
              $
              500
              
              
              $
              -
              
              
              $
              500Supplemental
      Information:Interest
      Paid
              
              $
              -
              
              
              $
              11,500
              
              
              $
              140,683Income
      Taxes Paid
              
              $
              -
              
              
              $
              -
              
              
              $
              -Non-Cash
      Activities:Loss
      on Sale and Impairment of Assets
              
              $
              -
              
              
              $
              98,930
              
              
              $
              206,422Contributed
      Capital
              
              $
              -
              
              
              $
              -
              
              
              $
              660,000Stock
      issued to Convert Notes
              
              $
              -
              
              
              $
              -
              
              
              $
              85,000Stock
      issued  to convert related-party debt
              
              $
              -
              
              
              $
              333,175
              
              
              $
              333,175Stock
      issued in lieu of cash for service
              
              $
              41,400
              
              
              $
              12,400
              
              
              $
              225,000The
      accompanying notes are an integral part of these
      statements





F-4




CRC
Crystal Research Corporation
 (A
Development Stage Company)
 
 Restated Statements of
Stockholders' Deficit
 From
22-Mar-1993 (Inception) to 31-December-2007
 
 DeficitAccumulatedPrice
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              During
      theIssue
              
              Per
              
              
              Common
      Stock
              
              
              Paid
      in
              
              
              Subscriptions
              
              
              Development
              
              
              TotalDate
              
              Share
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Receivable
              
              
              Stage
              
              
              EquityBalance
      at inception, March 22, 1993
              
              
              
              
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Common
      shares issued to founderfor cash and subscriptions
              22-Mar-93
              
              $
              0.01
              
              
              
              2,210,000
              
              
              
              2,210
              
              
              
              22,926
              
              
              
              (12,555
              )
              
              
              -
              
              
              
              12,581Payment
      of stock subscription
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              12,555
              
              
              
              
              
              
              
              12,555Net
      Loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (33,292
              )
              
              
              (33,292
              )Balance,
      December 31, 1994
              
              
              
              
              
              
              
              2,210,000
              
              
              
              2,210
              
              
              
              22,926
              
              
              
              -
              
              
              
              (33,292
              )
              
              
              (8,156
              )Common
      shares issued for services
              21-Sep-95
              
              $
              0.04
              
              
              
              44,000
              
              
              
              44
              
              
              
              1,956
              
              
              
              
              
              
              
              
              
              
              
              2,000Common
      shares issued for services
              30-Sep-95
              
              $
              0.25
              
              
              
              47,000
              
              
              
              47
              
              
              
              11,703
              
              
              
              
              
              
              
              
              
              
              
              11,750Common
      shares issued for cash
              21-Sep-95
              
              $
              0.22
              
              
              
              112,333
              
              
              
              112
              
              
              
              24,888
              
              
              
              
              
              
              
              
              
              
              
              25,000Common
      shares issued in
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -conversion
      of convertible notes
              30-Oct-95
              
              $
              0.25
              
              
              
              100,000
              
              
              
              100
              
              
              
              24,900
              
              
              
              
              
              
              
              
              
              
              
              25,000Common
      shares issued for services
              15-Nov-95
              
              $
              0.25
              
              
              
              31,600
              
              
              
              32
              
              
              
              7,868
              
              
              
              
              
              
              
              
              
              
              
              7,900Common
      shares issued in
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -conversion
      of convertible notes
              30-Dec-95
              
              $
              0.25
              
              
              
              40,000
              
              
              
              40
              
              
              
              9,960
              
              
              
              
              
              
              
              
              
              
              
              10,000Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (236,109
              )
              
              
              (236,109
              )Balance,
      December 31, 1995
              
              
              
              
              
              
              
              2,584,933
              
              
              
              2,585
              
              
              
              104,201
              
              
              
              -
              
              
              
              (269,401
              )
              
              
              (162,615
              )Common
      shares issued for cash
              18-Jan-96
              
              $
              0.25
              
              
              
              40,000
              
              
              
              40
              
              
              
              9,960
              
              
              
              
              
              
              
              
              
              
              
              10,000Common
      shares issued for services
              06-Apr-96
              
              $
              0.25
              
              
              
              7,000
              
              
              
              7
              
              
              
              1,743
              
              
              
              
              
              
              
              
              
              
              
              1,750Common
      shares issued for services
              19-Aug-96
              
              $
              0.25
              
              
              
              4,000
              
              
              
              4
              
              
              
              996
              
              
              
              
              
              
              
              
              
              
              
              1,000Common
      shares issued for services
              17-Dec-06
              
              $
              0.25
              
              
              
              15,200
              
              
              
              15
              
              
              
              3,785
              
              
              
              
              
              
              
              
              
              
              
              3,800Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (192,969
              )
              
              
              (192,969
              )Balance,
      December 31, 1996
              
              
              
              
              
              
              
              2,651,133
              
              
              
              2,651
              
              
              
              120,685
              
              
              
              -
              
              
              
              (462,370
              )
              
              
              (339,034
              )Common
      shares issued for cash
              09-May-97
              
              $
              0.50
              
              
              
              50,000
              
              
              
              50
              
              
              
              24,950
              
              
              
              
              
              
              
              
              
              
              
              25,000Common
      shares issued for services
              09-May-97
              
              $
              0.50
              
              
              
              22,000
              
              
              
              22
              
              
              
              10,978
              
              
              
              
              
              
              
              
              
              
              
              11,000Common
      shares issued inconversion
      of convertible notes
              29-May-97
              
              $
              0.25
              
              
              
              80,000
              
              
              
              80
              
              
              
              19,920
              
              
              
              
              
              
              
              
              
              
              
              20,000Common
      shares issued for services
              14-Jul-97
              
              $
              0.50
              
              
              
              15,000
              
              
              
              15
              
              
              
              7,485
              
              
              
              
              
              
              
              
              
              
              
              7,500Common
      shares issued for cash
              14-Jul-97
              
              $
              0.50
              
              
              
              70,000
              
              
              
              70
              
              
              
              34,930
              
              
              
              
              
              
              
              
              
              
              
              35,000
   F-5
  Restated
Statements of Stockholders' Deficit - continued
  DeficitAccumulatedPrice
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              During
      theIssue
              
              Per
              
              
              Common
      Stock
              
              
              Paid
      in
              
              
              Subscriptions
              
              
              Development
              
              
              TotalDate
              
              Share
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Receivable
              
              
              Stage
              
              
              EquityCommon
      shares issued inconversion
      of convertible notes
              19-Aug-97
              
              $
              0.25
              
              
              
              120,000
              
              
              
              120
              
              
              
              29,880
              
              
              
              
              
              
              
              
              
              30,000Common
      shares issued for cash
              26-Aug-97
              
              $
              0.50
              
              
              
              113,472
              
              
              
              113
              
              
              
              56,623
              
              
              
              
              
              
              
              
              
              56,736Common
      shares issued for cash
              04-Dec-97
              
              $
              0.50
              
              
              
              30,000
              
              
              
              30
              
              
              
              14,970
              
              
              
              
              
              
              
              
              
              15,000Common
      shares issued for services
              04-Dec-97
              
              $
              0.50
              
              
              
              85,000
              
              
              
              85
              
              
              
              42,415
              
              
              
              
              
              
              
              
              
              42,500Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (175,534
              )
              
              
              (175,534
              )Balance,
      December 31, 1997
              
              
              
              
              
              
              
              3,236,605
              
              
              
              3,236
              
              
              
              362,836
              
              
              
              -
              
              
              
              (637,904
              )
              
              
              (271,832
              )Common
      shares issued for cash
              26-Feb-98
              
              $
              0.50
              
              
              
              20,000
              
              
              
              20
              
              
              
              9,980
              
              
              
              
              
              
              
              
              
              
              
              10,000Common
      shares issued for services
              26-Feb-98
              
              $
              0.50
              
              
              
              8,000
              
              
              
              8
              
              
              
              3,992
              
              
              
              
              
              
              
              
              
              
              
              4,000Common
      shares issued for cash
              11-May-98
              
              $
              0.50
              
              
              
              64,000
              
              
              
              64
              
              
              
              31,936
              
              
              
              
              
              
              
              
              
              
              
              32,000Common
      shares issued for cash
              30-Sep-98
              
              $
              0.50
              
              
              
              30,000
              
              
              
              30
              
              
              
              14,970
              
              
              
              
              
              
              
              
              
              
              
              15,000Common
      shares issued for services
              21-Dec-98
              
              $
              0.50
              
              
              
              3,000
              
              
              
              3
              
              
              
              1,497
              
              
              
              
              
              
              
              
              
              
              
              1,500Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (220,547
              )
              
              
              (220,547
              )Balance,
      December 31, 1998
              
              
              
              
              
              
              
              3,361,605
              
              
              
              3,361
              
              
              
              425,211
              
              
              
              -
              
              
              
              (858,451
              )
              
              
              (429,879
              )Common
      shares issued for cash
              14-Apr-98
              
              $
              0.50
              
              
              
              12,000
              
              
              
              12
              
              
              
              5,988
              
              
              
              
              
              
              
              
              
              
              
              6,000Common
      shares issued for cash
              15-Sep-98
              
              $
              0.50
              
              
              
              8,000
              
              
              
              8
              
              
              
              3,992
              
              
              
              
              
              
              
              
              
              
              
              4,000Common
      shares issued for services
              15-Sep-99
              
              $
              0.50
              
              
              
              8,000
              
              
              
              8
              
              
              
              3,992
              
              
              
              
              
              
              
              
              
              
              
              4,000Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (154,943
              )
              
              
              (154,943
              )Balance,
      December 31, 1999
              
              
              
              
              
              
              
              3,389,605
              
              
              
              3,389
              
              
              
              439,183
              
              
              
              -
              
              
              
              (1,013,394
              )
              
              
              (570,822
              )Common
      shares issued for services
              28-Mar-00
              
              $
              0.25
              
              
              
              290,000
              
              
              
              290
              
              
              
              72,210
              
              
              
              
              
              
              
              
              
              
              
              72,500Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (231,985
              )
              
              
              (231,985
              )Balance,
      December 31, 2000
              
              
              
              
              
              
              
              3,679,605
              
              
              
              3,679
              
              
              
              511,393
              
              
              
              -
              
              
              
              (1,245,379
              )
              
              
              (730,307
              )Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (80,558
              )
              
              
              (80,558
              )Balance,
      December 31, 2001
              
              
              
              
              
              
              
              3,679,605
              
              
              
              3,679
              
              
              
              511,393
              
              
              
              -
              
              
              
              (1,325,937
              )
              
              
              (810,865
              )Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (16,760
              )
              
              
              (16,760
              )Balance,
      December 31, 2002
              
              
              
              
              
              
              
              3,679,605
              
              
              
              3,679
              
              
              
              511,393
              
              
              
              -
              
              
              
              (1,342,697
              )
              
              
              (827,625
              )Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (18,063
              )
              
              
              (18,063
              )
  
 F-6
  Restated
Statements of Stockholders' Deficit -continued
  DeficitAccumulatedPrice
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              During
      theIssue
              
              Per
              
              
              Common
      Stock
              
              
              Paid
      in
              
              
              Subscriptions
              
              
              Development
              
              
              TotalDate
              
              Share
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Receivable
              
              
              Stage
              
              
              EquityBalance,
      December 31, 2003
              
              
              
              
              
              
              3,679,605
              
              
              
              3,679
              
              
              
              511,393
              
              
              
              -
              
              
              
              (1,360,760
              )
              
              
              (845,688
              )Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (142,763
              )
              
              
              (142,763
              )Balance,
      December 31, 2004
              
              
              
              
              
              
              3,679,605
              
              
              
              3,679
              
              
              
              511,393
              
              
              
              -
              
              
              
              (1,503,523
              )
              
              
              (988,451
              )Contributed
      capital for Service
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              660,000
              
              
              
              
              
              
              
              
              
              
              
              660,000Net
      Income / (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              113,674
              
              
              
              113,674Balance,
      December 31, 2005
              
              
              
              
              
              
              3,679,605
              
              
              
              3,679
              
              
              
              1,171,393
              
              
              
              -
              
              
              
              (1,389,849
              )
              
              
              (214,777
              )Common
      shares issued forexercise
      of warrants for debt
              10-Jun-06
              
              $
              0.12
              
              
              
              869,844
              
              
              
              870
              
              
              
              100,305
              
              
              
              
              
              
              
              
              
              
              
              101,175Common
      shares issued forconversion
      of related party debt
              10-Jun-06
              
              $
              0.04
              
              
              
              5,800,000
              
              
              
              5,800
              
              
              
              226,200
              
              
              
              
              
              
              
              
              
              
              
              232,000Common
      shares issued for services
              10-Jun-06
              
              $
              0.04
              
              
              
              300,000
              
              
              
              300
              
              
              
              11,700
              
              
              
              
              
              
              
              
              
              
              
              12,000Common
      shares issued for services
              30-Sep-06
              
              $
              0.04
              
              
              
              10,000
              
              
              
              10
              
              
              
              390
              
              
              
              
              
              
              
              
              
              
              
              400Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (130,798
              )
              
              
              (130,798
              )Balance,
      December 31, 2006
              
              
              
              
              
              
              
              10,659,449
              
              
              
              10,659
              
              
              
              1,509,988
              
              
              
              -
              
              
              
              (1,520,647
              )
              
              
              -Common
      shares issued for services
              15-Jun-07
              
              $
              0.01
              
              
              
              1,050,000
              
              
              
              1,050
              
              
              
              9,450
              
              
              
              
              
              
              
              
              
              
              
              10,500Common
      shares issued for services
              01-Oct-07
              
              $
              0.05
              
              
              
              618,000
              
              
              
              618
              
              
              
              30,282
              
              
              
              
              
              
              
              
              
              
              
              30,900Net
      Income / (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (63,206
              )
              
              
              (63,206
              )Balance,
      December 31, 2007
              
              
              
              
              
              
              
              12,327,449
              
              
              $
              12,327
              
              
              $
              1,549,720
              
              
              $
              -
              
              
              $
              (1,583,853
              )
              
              $
              (21,806
              )On
      June 9, 2006 the Company exercised articles of conversion from an Arizona
      Corporation to a Nevada Corporation and changed its capital
      stockfrom
      no par value stock to a $0.001 par value, this change has been
      retroactively applied to this schedule.On
      June 10, 2006 the Company exercised a 4:1 forward stock split that has
      been retroactively applied to this schedule and increases the number
      ofshares
      issued and thereby decreases the price per share.The
      accompanying notes are an integral part of these
      statements




F-7
 
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)


NOTE
1. GENERAL ORGANIZATION
AND BUSINESS





CRC
Crystal Research Corporation (“CRC Arizona”) was organized in the state of
Arizona on March 22, 1993.  CRC Arizona had difficulty obtaining
sufficient capital to maintain operations and ceased active operations in
1999.  In June, 2006, CRC Arizona’s board approved a plan to
reincorporate in the State of Nevada.  CRC Arizona completed the
reincorporation by filing of Articles of Merger with the States of Arizona and
Nevada on September 21, 2006, which effected the merger of the CRC Arizona with
and into CRC Crystal Research Corporation (“CRC Nevada”), a Nevada
corporation.  Prior to filing the Articles of Merger, CRC Nevada was a
wholly-owned subsidiary of CRC Arizona.   CRC Arizona and CRC
Nevada shall be referred to collectively as the “Company.”
 
 The
Company is a development stage company as defined by SFAS 7 and not a “Shell”
Company.  The Company is the licensee under a License Agreement dated
September 25, 2006, with Single Crystal Technologies, Inc. (“SCT”), under which
the Company holds a non-exclusive, worldwide license to use and employ certain
intellectual property rights owned by SCT to manufacture, use and sell
scintillation crystals, well logging assemblies, scintillation crystal plate
assemblies and gamma camera plate assemblies.  The Company intends to
use the rights granted under the License Agreement to develop product and
services for use in energy exploration and homeland security, among other
applications, and is actively seeking capital to fund the commencement of
operations.






NOTE 2. SUMMARY OF
SIGNIFICANT ACCOUNTING PRACTICES





The
relevant accounting policies and procedures are listed below.
 
 Accounting
Basis
 
 The
statements were prepared following generally accepted accounting principles of
the United States of America consistently applied.
 
 Fiscal
Year
 
 The
Company operates on a December 31st fiscal
year end.
 
 Earnings/(Loss)
per Share
 
 The
basic earnings (loss) per share is calculated by dividing the Company’s net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted earnings (loss) per share is calculated by
dividing the Company’s net income (loss) available to common shareholders by the
diluted weighted average number of shares outstanding during the year. The
diluted weighted average number of shares outstanding is the basic weighted
number of shares adjusted for any potentially dilutive debt or equity common
stock equivalents.  As of
December 31, 2007 and 2006, the Company had 300,000 in common stock purchase
warrants outstanding as common stock equivalents.
  These
common stock warrants could potentially dilute basic Earnings Per Share (EPS) in
the future butbecause
the conversion price is in excess of the market pricewere not
included in the computation of diluted EPS because to do so would have been
anti-dilutive for the periods presented.


F-8
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)


NOTE 2. SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES - continued




Dividends
 
 The
Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
 
 Use
of Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
 
 Property
and Equipment
 
 Property
and equipment are carried at cost and depreciated on a straight-line bases over
their useful lives.  Office Equipment is depreciated over five
years.  Manufacturing equipment is depreciated over ten years and is
periodically reviewed for impairment.  A gain or loss on disposal is
included in the statement of operation net of cost and accumulated depreciation
for all disposed assets.  During 2004 the Company sold an asset and
recorded a loss on disposition of $7,491.
 
 The
net book value of manufacturing equipment at December 31, 2004 was
$203,212.  Because the Company had been inactive and the manufacturing
equipment had been in storage for several years, the Company decided to review
the equipment for impairment.  It was determined that not all
components were still useful.  Accordingly, the Company recorded an
impairment charge of $100,000 at December 31, 2005, which represented the book
value of the components which the Company determined were no longer
useful.  As of December 31, 2006, the Company reviewed the
manufacturing equipment again, and decided to fully impair the equipment, which
resulted in an impairment charge of $98,931 in the year ended December 31,
2006.
 
 Income
Taxes
 
 The
provision for income taxes is the total of the current taxes payable and the net
of the change in the deferred income taxes. Provision is made for the deferred
income taxes where differences exist between the period in which transactions
affect current taxable income and the period in which they enter into the
determination of net income in the financial statements.
 
 Research
and Development
 
 The
Company follows the policy of expensing research and development costs in the
period incurred. The Company incurred $0, $0 and $331,459 during the years ended
December 31, 2007 and 2006 and from inception through December 31, 2007,
respectively.





F-9
 
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)
  NOTE
3. GOING
CONCERN





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of its
assets and the liquidation of its liabilities in the normal course of
business.  However, the Company has never generated revenues, has
accumulated a loss of $1,583,853
during its development stage, and currently lacks the capital to pursue its
business plan.  This raises substantial doubt about the Company’s
ability to continue as a going concern.  The financial statements do
not include any adjustments that might result from this
uncertainty.





Management’s
Plan





Management
plans to seek funding from its shareholders and other qualified investors to
pursue its business plan.






NOTE
4. STOCKHOLDERS’
EQUITY




Common
Stock
 
 The
Company is authorized to issue 450,000,000 shares of common stock, par value
$0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per
share.  As of December 31, 2006, there were 10,659,449 shares of
common stock outstanding, and no shares of preferred stock
outstanding.   On June 10, 2006, the Company effected a four for
one stock split.  All share amounts herein are adjusted to give effect
to the stock split.
 
 On
December 3, 2007 the Company registered 4,000,000 common shares and 2,000,000
options to purchase common shares under an S-8 Non-Qualified Stock Compensation
Plan to assist in the acquisition of services and provide incentives for
employees as it executes its business plan of which zero shares have been issued
or committed as of December 31, 2007.  The Form S-8 was subsequently
withdrawn.
 
 The
Company did not issue any shares of common stock in 2005.
 
 The
Company issued 6,979,844 shares of common stock in 2006 in the following
transactions:
 
 ·
              On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
 
 ·
              On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
 
 ·
              On
      June 10, 2006, the Company issued 5,800,000 shares of common stock to the
      CEO in satisfaction of $232,000 of indebtedness from the Company to CEO,
      or $0.04 the trading price of the shares on the date of issuance of per
      share.




F-10
 
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)




NOTE
4. STOCKHOLDERS’
EQUITY - continued




·
              On
      June 10, 2006, the Company issued 300,000 shares of common stock to six
      unrelated parties for services rendered to the Company.  The
      shares were valued at the trading price of the shares on the date of
      issuance of $0.04 per share.
 
 ·
              On
      September 30, 2006, the Company issued 10,000 shares of common stock to an
      unrelated person for services rendered to the Company.  The
      shares were valued at $0.04 per
share.
 
 The
Company issued 1,668,000 shares of common stock during the period ended December
31, 2007 as follows:
 
 ·
              On
      June 15, 2007 the Company issued 1,050,000 common shares at the trading
      price of the shares on the date of issuance of $0.01 for professional
      consulting services of $10,500.
 
 ·
              On
      October 1, 2007 the Company issued 440,000 common shares to four board
      members for services in lieu of cash at the trading price of the shares on
      the date of issuance of $0.05 per share or $22,000 and 178,000 common
      shares at the trading price of the shares on the date of issuance of $0.05
      per share to convert accounts payable of
  $8,900.
 
 Warrants and
Options
 
 Information
relating to warrant activity follows:
 
 Warrants
      Outstanding at December 31, 2004
              
              
              1,169,844Less:  Warrants
      Exercised
              
              
              -Less:
      Warrants Expired
              
              
              -Total
      Warrants outstanding at December 31, 2005
              
              
              1,169,844Less:  Warrants
      Exercised
              
              
              869,844Less:
      Warrants Expired
              
              
              -Total
      Warrants outstanding at December 31, 2006
              
              
              300,000Less:  Warrants
      Exercised
              
              
              -Less:
      Warrants Expired
              
              
              -Total
      Warrants outstanding at December 31, 2007
              
              
              300,000


F-11
 
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)




NOTE
4. STOCKHOLDERS’
EQUITY - continued




On
December 31, 2007, the Company had warrants outstanding for the purchase of an
aggregate of 300,000 shares of its Common Stock, which are summarized in the
table below.
 
 Warrants
              
              
              Exercise
              
              ExpirationOutstanding
              
              
              Price
              
              Date140,000
              
              
              $
              0.50
              
              19-Oct-2008160,000
              
              
              $
              0.50
              
              8-Apr-2001Total
              
              
              300,000
 
 All
exercise prices and share amounts have been adjusted to account for a 4:1 stock
split effected on June 10, 2006.
 
 
 NOTE
5.            RELATED
PARTY PAYABLES
 
 Loans from Kiril A.
Pandelisev
 
 During
the fiscal year ended December 31, 2005, the Company received loans from the
Company’s sole officer and director, and its majority shareholder.  As
of December 31, 2005, the Company was indebted to the CEO in the amount of
$176,665.
 
 During
the fiscal year ended December 31, 2006, the Company received loans from the CEO
in the amount of $17,327.
 
 The
loans made by the CEO to the Company in 2005 and 2006 were used to fund general
and administrative expenses of the Company.  The loans were not
evidenced by a note, were unsecured, did not bear interest and were payable on
demand.
 
 On
June 10, 2006, the CEO utilized the amount due him by the Company to pay the
exercise price under warrants held by him (see below).
 
 Employment Agreement with
the CEO
 
 The
Company was a party to an Employment Agreement with its CEO dated March 31,
1997.  The Employment Agreement provided that the CEO was entitled to
base compensation of $120,000 per year, among other provisions.  The
Employment Agreement terminated by its terms on March 31, 2002.
 
 As of
December 31, 2005 the Company had accrued $799,182 in deferred salary under an
Employment Agreement with the CEO.
 
 As of
December 31, 2005, the CEO agreed to forgive any claim for $660,000 of the
accrual compensation, and as a result the Company recorded a contribution to
capital in that amount in fiscal 2005.  As a result of the
forgiveness, the balance owed to CEO at December 31, 2005 for accrued
compensation was $139,182 accrued salary.
  Satisfaction of Amounts Due
the CEO
 
 On
June 10, 2006, the CEO agreed to satisfy the amounts due him for accrued
compensation under his Employment Agreement and for loans he had made the
Company by exercising his options in the Company and converting the balance of
the indebtedness into additional shares of common stock.
 
 As of
June 10, 2006, the CEO held options to purchase 400,000 shares of common stock
at $0.25 per share, and options to purchase 469,844 shares of common stock at
$0.0025 per share.  The aggregate exercise price under both options
was $101,175.  The CEO applied $101,175 of the indebtedness due him by
the Company to the exercise price under the options, which resulted in him
acquiring 869,844 shares of common stock.
 
 After
exercising the options, the balance owed to the CEO was $232,000, which was
converted into 5,800,000 shares of common stock at $0.04 per
share.


F-12
 
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)




NOTE
5. RELATED
PARTY PAYABLES - continued




License Agreement with
Single Crystal Technologies, Inc.
 
 On
September 25, 2006, the Company entered into a License Agreement with Single
Crystal Technologies, Inc. (“SCT”), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.
 
 SCT is
owned by the Company’s CEO.  Under the License Agreement, the Company
is obligated to pay SCT a license fee of $50,000 when it raises at least
$500,000 in capital.  In addition, the Company will be obligated to
pay SCT royalties in varying percentages based on the revenues received from
products that incorporate the technology licensed to the Company under the
License Agreement.  In the event the Company fails to commence the
production of products incorporating the technology licensed under the License
Agreement within two years of the date of the Agreement, SCT may terminate the
License Agreement at its option.
 
 The
terms of the License agreement also obligates the Company to pay all the patent
filing and maintenance fees associated with all the patents held and new patents
developed by SCT, Inc.  The agreement also grants to the Company
exclusive rights to use any patents and patent improvements developed by either
SCT or the Company during the license period.
 
 During
the year ended December 31, 2007 the actual costs paid by a related party on
behalf of the Company is $18,000 for legal fees associated with patent
improvement and maintenance related to the license agreement.
 
 Current Loans from the
CEO
 
 During
the year ended December 31, 2007, Mr. Pandelisev has provided short term
operating capital to the company in the amount of $21,556.  These are
non-interest bearing demand loans.
 
 
 NOTE
6.            CONVERTIBLE
NOTES
 
 During
the years ended December 31, 1997, 1996 and 1995 the Company issued Series A
Convertible Unsecured Promissory Notes (the Notes) in the total aggregate
principal of $200,000.  The Notes bore interest at 10% payable
quarterly commencing December 31, 1995 through maturity on December 31,
1999.  Any notes that were not paid at maturity would continue to bear
interest at 10% per annum until paid.
 
 The
notes were convertible into shares of common stock at the rate of four (4)
shares of common stock for each one dollar principal amount of note (after
giving effect to a subsequent 4 for 1 stock split).   As of
December 31, 1999, notes in the aggregate principle amount of $85,000 had been
converted by the holders into 340,000 shares of common stock, leaving notes with
a principal balance of $115,000 outstanding.
 
 The
notes also provided the Company with the opportunity to redeem any unconverted
notes after the December 31, 1999 maturity date at the rate of 2,500 common
shares for every $5,000 in notes payable converted if certain interest and
profit sharing payments were made by the maturity date.  The Company
did not satisfy the conditions for redemption of the notes and therefore was not
eligible to redeem the notes at maturity on December 31, 1999.
 
 Because
the Company was unable to pay the remaining notes in full on their maturity
date, the Company’s board approved the issuance of two shares of common stock
for each one dollar principal amount of notes, or an aggregate of 230,000
shares, in March 2000 as a gesture of goodwill to the note
holders.  The Company recorded an expense of $57,500 resulting from
the issuance of these shares.
 
 As of
December 31, 2005, total principle and accrued interest on the notes was
$230,000.  Because no collection demands had been made by the holders
of the notes during the six years following the maturity date of the notes to
December 31, 2005, the Company was advised that any claim by a note-holder would
be barred by the statute of limitations under Arizona law. Accordingly the
Company wrote off its liability on the notes as of December 31, 2005, and
recorded a gain on
write-off debt of $230,000 at December 31,
2005.


F-13
 
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)




NOTE
7.            PROVISION
FOR INCOME TAXES
 The
Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes.
 
 SFAS
No. 109 requires the reduction of deferred tax assets by a valuation allowance
if, based on the weight of available evidence, it is more likely than not that
some or all of the deferred tax assets will not be realized.  The
total deferred tax asset is $348,448
as of December 31, 2007 which is calculated by multiplying a 22% estimated tax
rate by the cumulative NOL of $1,583,853
the total valuation allowance is a comparable $348,448.
 
 The
provision for income taxes for the period ended December 31, 2007 and 2006 is
calculated by applying the statutory rate of 22% to the income/(loss) from
continuing operations and deducting appropriate taxes and allowances as
follows:
  Year Ended December
      31,
                
                2007
                
                
                2006Deferred Tax
      Asset
                
                $
                13,905
                
                
                $
                28,776Valuation
      Allowance
                
                
                (13,905
                )
                
                
                (28,776
                )Current
      Taxes Payable
                
                
                0.00
                
                
                
                0.00Income Tax
      Expense
                
                $
                0.00
                
                
                $
                0.00
  Below
is a chart showing the operating losses from continuing operations and the years
in which they will expire.
  Year
                
                Amount
                
                Expiration1995
                
                
                155,727
                
                20151996
                
                
                192,969
                
                20161997
                
                
                175,534
                
                20171998
                
                
                220,547
                
                20181999
                
                
                154,943
                
                20192000
                
                
                231,985
                
                20202001
                
                
                80,558
                
                20212002
                
                
                16,760
                
                20222003
                
                
                18,063
                
                20232004
                
                
                142,763
                
                20242006
                
                
                130,798
                
                20262007
                
                
                63,206
                
                2027Total
                
                $
                1,583,853
   NOTE
8.            USE OF
PATENTS LICENSE, COMMITMENTS AND CONTINGENCIES
 
 On
September 25, 2006, the Company entered into a License Agreement with Single
Crystal Technologies, Inc. (“SCT”), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights (Patents) owned by SCT to manufacture, use and sell scintillation
crystals, well logging assemblies, scintillation crystal plate assemblies and
gamma camera plate assemblies.
 
 SCT is
owned by Kiril A. Pandelisev, the Company’s sole officer and
director.  Under the License Agreement, the Company is not obligated
to pay SCT the license fee of $50,000 until it raises at least $500,000 in
capital.  However, the Company is obligated to pay certain patent
filing and maintenance fees as described below as part of cost of the
license.  The Company has not recorded a liability to SCT for the
$50,000 because it is uncertain at this time that the Company will be able to
raise sufficient capital to trigger the obligation to make this
payment.
 
 The
terms of the License agreement also obligates the Company to pay all the patent
filing and maintenance fees associated with all the patents held and new patents
developed by SCT, Inc.  The agreement also grants to the Company
exclusive rights to use any patents and patent improvements developed by either
SCT or the Company during the license period.
 
 During
the year ended December 31, 2007 the actual costs paid by a related party on
behalf of the Company is $18,000 for legal fees associated with patent
improvement and maintenance fees related to the license
agreement.
 
 In
addition, the Company will be obligated to pay SCT royalties in varying
percentages based on the revenues received from products that incorporate the
technology licensed to the Company under the License Agreement.  In
the event the Company fails to commence the production of products incorporating
the technology licensed under the License Agreement within two years of the date
of the Agreement, SCT may terminate the License Agreement at its
option.


F-14
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)
  NOTE  9.THE EFFECT OF
RECENTLY ISSUED ACCOUNTING STANDARDS





Below
is a listing of the most recent Statement of Financial
Accounting Standards (SFAS) SFAS 155-157 and their effect on the
Company.
 
 Statement
No. 155 –Accounting
for Certain Hybrid Financial Instruments
  In
February 2006, the FASB issued SFAS No. 155,Accounting
for Certain Hybrid Financial Instruments, which amends SFAS No. 133,
Accounting for Derivatives
Instruments and Hedging Activities and SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities.  SFAS No. 155 amends SFAS No. 133 to narrow the
scope exception for interest-only and principal-only strips on debt instruments
to include only such strips representing rights to receive a specified portion
of the contractual interest or principle cash flows.  SFAS No. 155
also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a
passive derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument.
  Statement
No. 156 –Accounting
for Servicing of Financial Assets
  In
March 2006, the FASB issued SFAS No. 156,Accounting
for Servicing of Financial Assets, which provides an approach to simplify
efforts to obtain hedge-like (offset) accounting.  This Statement
amends FASB Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and
servicing liabilities. The Statement (1) requires an entity to recognize a
servicing asset or servicing liability each time it undertakes an obligation to
service a financial asset by entering into a servicing contract in certain
situations; (2) requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; (3)
permits an entity to choose either the amortization method or the fair value
method for subsequent measurement for each class of separately recognized
servicing assets or servicing liabilities; (4) permits at initial adoption a
one-time reclassification of available-for-sale securities to trading securities
by an entity with recognized servicing rights, provided the securities
reclassified offset the entity's exposure to changes in the fair value of the
servicing assets or liabilities; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the balance sheet and additional disclosures for all separately recognized
servicing assets and servicing liabilities. SFAS No. 156 is effective for all
separately recognized servicing assets and liabilities as of the beginning of an
entity's fiscal year that begins after September 15, 2006, with earlier adoption
permitted in certain circumstances. The Statement also describes the manner in
which it should be initially applied.
  Statement
No. 157 – Fair Value
Measurements
  In
September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements, to clarify how to measure fair value and to expand
disclosures about fair value measurements.  The expanded disclosures
include the extent to which companies measure assets and liabilities at fair
value, the information used to measure fair value, and the effect of fair value
on earnings and is applicable whenever other standards require (or permit)
assets and liabilities to be measured at fair value.  SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal
years.
  The
adoption of these new Statements is not expected to have a material effect on
the Company’s current financial position, results or operations, or cash
flows.
   NOTE  10.         SUBSEQUENT
EVENTS
 
 On
January 22, 2008 the company entered in to a consulting agreement with Mirador
Consulting Inc. (Mirador) for Investor Relations consulting.  The
Company issued 300,000 restricted common shares to Mirador upon execution of the
agreement.  Subsequently, the agreement was nullified and Mirador
provided notice that the certificate was returned.  Accordingly, the
company has affected an administrative hold on the stock until the certificate
is received.




F-15
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)
  NOTE
11.          RESTATED
FINANCIALS
  The
Company has restated its December 31, 2007 and 2006 and Inception to Date
financial statements as follows:
  Balance
Sheets
  Corrected
typographical error in commons shares reported as issued and outstanding on
December 31, 2007 from 12,327,805 shares to 12,327,449 shares consistent with
the Statement of Stockholders equity.  Summary of adjustments
follows:
  Originally
                
                
                
                
                
                Affect
      of2007
                
                Reported
                
                
                As
      Adjusted
                
                
                Change
                
                NotesCurrent
      AssetsCash
                
                $
                500
                
                
                $
                500
                
                
                $
                -Equipment
                
                
                -
                
                
                
                -
                
                
                
                -Total
      Assets
                
                $
                500
                
                
                $
                500
                
                
                $
                -Current
      LiabilitiesAccounts
      Payable
                
                $
                750
                
                
                $
                750
                
                
                $
                -Deferred
      Compensation
                
                
                -
                
                
                
                -
                
                
                
                -Loans
      Payable
                
                
                21,556
                
                
                
                21,556
                
                
                
                -Total
      Liabilities
                
                
                22,306
                
                
                
                22,306
                
                
                
                -Stockholders'
      EquityCommon
      Stock
                
                
                12,327
                
                
                
                12,327
                
                
                
                -Paid
      in Capital
                
                
                889,720
                
                
                
                1,549,720
                
                
                
                660,000
                
                (a)Accumulated
      Deficit
                
                
                (923,853
                )
                
                
                (1,583,853
                )
                
                
                (660,000
                )
                (a)Total
      Equity
                
                
                (21,806
                )
                
                
                (21,806
                )
                
                
                -Total
      Liabilities and Equity
                
                $
                500
                
                
                $
                500
                
                
                $
                -Notes:(a) This
      isa
      2005 adjustment that restates gains for forgiveness
      ofrelated
      party debts to contributed capital for services
      rendered.2006Current
      AssetsCash
                
                $
                -
                
                
                $
                -
                
                
                $
                -Equipment
                
                
                -
                
                
                
                -
                
                
                
                -Total
      Assets
                
                $
                -
                
                
                $
                -
                
                
                $
                -Current
      LiabilitiesAccounts
      Payable
                
                $
                -
                
                
                $
                -
                
                
                $
                -Total
      Liabilities
                
                
                -
                
                
                
                -
                
                
                
                -Stockholders'
      EquityCommon
      Stock
                
                
                10,659
                
                
                
                10,659
                
                
                
                -Paid
      in Capital
                
                
                849,988
                
                
                
                1,509,988
                
                
                
                660,000
                
                (a)Accumulated
      Deficit
                
                
                (860,647
                )
                
                
                (1,520,647
                )
                
                
                (660,000
                )
                (a)Total
      Equity
                
                
                -
                
                
                
                -
                
                
                
                -Total
      Liabilities and Equity
                
                $
                -
                
                
                $
                -
                
                
                $
                -Notes:(a) Thisisa
      2005 adjustment that restates gains for forgiveness
      ofrelated
      party debts to contributed capital for services
      rendered.
   F-16
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)
  NOTE
11.          RESTATED
FINANCIALS - continued
  2005Current
      AssetsCash
                
                $
                -
                
                
                $
                -
                
                
                $
                -Equipment
                
                
                101,071
                
                
                
                101,071
                
                
                
                -Total
      Assets
                
                $
                101,071
                
                
                $
                101,071
                
                
                $
                -Current
      LiabilitiesAccounts
      Payable
                
                $
                -
                
                
                $
                -
                
                
                $
                -Deferred
      Compensation
                
                
                139,182
                
                
                
                139,182
                
                
                
                -Loans
      Payable
                
                
                176,665
                
                
                
                176,665
                
                
                
                -Total
      Liabilities
                
                
                315,847
                
                
                
                315,847
                
                
                
                -Stockholders'
      EquityCommon
      Stock
                
                
                3,679
                
                
                
                3,679
                
                
                
                -Paid
      in Capital
                
                
                511,393
                
                
                
                1,171,393
                
                
                
                660,000
                
                (a)Accumulated
      Deficit
                
                
                (729,848
                )
                
                
                (1,389,848
                )
                
                
                (660,000
                )
                (a)Total
      Equity
                
                
                (214,776
                )
                
                
                (214,776
                )
                
                
                -Total
      Liabilities and Equity
                
                $
                101,071
                
                
                $
                101,071
                
                
                $
                -Notes:(a) This
      isa
      2005 adjustment that restates gains for forgiveness
      ofrelated
      party debts to contributed capital for services
      rendered.
  Statements
of Operations
  Originally
                
                
                
                
                
                Affect
      ofReported
                
                
                As
      Adjusted
                
                
                Change
                
                Notes2006Revenue
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      ExpensesGeneral
      and Administrative
                
                
                18,146
                
                
                
                18,146
                
                
                
                -Interest
      Expense
                
                
                -
                
                
                
                -
                
                
                
                -Impairment
                
                
                -
                
                
                
                98,931
                
                
                
                98,931
                
                (a)Research
      and Development
                
                
                -
                
                
                
                -
                
                
                
                -Professional
      Fees
                
                
                13,722
                
                
                
                13,722
                
                
                
                -Total
      Operating Expense
                
                
                31,868
                
                
                
                130,799
                
                
                
                98,931Operating
      (Loss)
                
                
                (31,868
                )
                
                
                (130,799
                )
                
                
                (98,931
                )Other
      Income (Expense)Other
      Income
                
                
                -
                
                
                
                -
                
                
                
                -Loss
      onSaleof
      Asset
                
                
                -
                
                
                
                -
                
                
                
                -Interest
      Expense
                
                
                -
                
                
                
                -
                
                
                
                -Impairment
      of ManufacturingEquipment
                
                
                (98,931
                )
                
                
                -
                
                
                
                98,931
                
                (a)Total
      Loss
                
                $
                (130,799
                )
                
                $
                (130,799
                )
                
                $
                -Notes:(a) This
      is presentation adjustment to report impairment as
      anoperating
      expense instead of an other expense.ITDRevenue
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      ExpensesGeneral
      and Administrative
                
                
                1,042,688
                
                
                
                1,042,688
                
                
                
                -Interest
      Expense
                
                
                140,683
                
                
                
                -
                
                
                
                (140,683
                )
                (a)Impairment
                
                
                -
                
                
                
                198,931
                
                
                
                198,931
                
                (b)Loss
      onSaleof
      Asset
                
                
                -
                
                
                
                7,491
                
                
                
                7,491
                
                (c)Research
      and Development
                
                
                331,459
                
                
                
                331,459
                
                
                
                -Professional
      Fees
                
                
                99,255
                
                
                
                99,255
                
                
                
                -Total
      Operating Expense
                
                
                1,614,085
                
                
                
                1,679,824
                
                
                
                65,739Operating
      (Loss)
                
                
                (1,614,085
                )
                
                
                (1,679,824
                )
                
                
                (65,739
                )
  F-17
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)
  NOTE
11.          RESTATED
FINANCIALS - continued
  Extraordinary
      ItemsGain
      on Write-Off of Debt
                
                
                230,000
                
                
                
                -
                
                
                
                (230,000
                )
                (d)Gain
      on Write-down ofDeferred
      Compensation
                
                
                660,000
                
                
                
                -
                
                
                
                (660,000
                )
                (e)Other
      Income (Expense)Other
      Income
                
                
                6,654
                
                
                
                6,654
                
                
                
                -Loss
      onSaleof
      Asset
                
                
                (7,491
                )
                
                
                -
                
                
                
                7,491
                
                (c)Gain
      on Write-Off of Debt
                
                
                
                
                
                
                230,000
                
                
                
                230,000
                
                (d)Interest
      Expense
                
                
                
                
                
                
                (140,683
                )
                
                
                (140,683
                )
                (a)Impairment
      of Manufacturing
                
                
                
                
                
                
                
                
                
                
                -Equipment
                
                
                (198,931
                )
                
                
                -
                
                
                
                198,931
                
                (b)Total
      Loss
                
                $
                (923,853
                )
                
                $
                (1,583,853
                )
                
                $
                (660,000
                )
                (e)Notes:(a) This
      is a presentation adjustment to correctly classify interest
      expenseas
      an other expense.(b) This
      is presentation adjustment to correctly classify impairment as
      anoperating
      expense instead of an other expense.(c) This
      is a presentation adjustment to correctly classify loss on
      saleof
      asset as an operation expense.(d) This
      a presentation adjustment to correctly classify Gain on
      Write-Offof
      debt as other expense not an extraordinary
item.(e) This
      adjustment removes the reported gain resulting from
      forgivenessof
      related party accrued compensation to contributed
      capital.
  Statements
of Stockholders’ (Deficit)
  CommonShares
                
                
                Par
                
                
                Paid
      In
                
                
                Accumulated
                
                
                TotalIssued
                
                
                Value
                
                
                Capital
                
                
                Deficit
                
                
                Equity2007Origionally
      Reported
                
                
                12,327,449
                
                
                $
                12,327
                
                
                $
                889,720
                
                
                $
                (923,853
                )
                
                $
                (21,806
                )As
      Restated
                
                
                12,327,449
                
                
                
                12,327
                
                
                
                1,549,720
                
                
                
                (1,583,853
                )
                
                
                (21,806
                )Affect
      of Change
                
                
                -
                
                
                $
                -
                
                
                $
                660,000
                
                
                $
                (660,000
                )
                
                $
                -(a)
                
                
                (a)2006Origionally
      Reported
                
                
                10,659,449
                
                
                $
                10,659
                
                
                $
                849,988
                
                
                $
                (860,647
                )
                
                $
                -As
      Restated
                
                
                10,659,449
                
                
                
                10,659
                
                
                
                1,509,988
                
                
                
                (1,520,647
                )
                
                
                -Affect
      of Change
                
                
                -
                
                
                $
                -
                
                
                $
                660,000
                
                
                $
                (660,000
                )
                
                $
                -(a)
                
                
                (a)ITDOrigionally
      Reported
                
                
                12,327,449
                
                
                $
                12,327
                
                
                $
                889,720
                
                
                $
                (923,853
                )
                
                $
                (21,806
                )As
      Restated
                
                
                12,327,449
                
                
                
                12,327
                
                
                
                1,549,720
                
                
                
                (1,583,853
                )
                
                
                (21,806
                )Affect
      of Change
                
                
                -
                
                
                $
                -
                
                
                $
                660,000
                
                
                $
                (660,000
                )
                
                $
                -(a)
                
                
                (a)Note:(a) This
      adjustment reclassifies the reported gain resulting from
      forgivenessof
      non-cash related party accrued compensation as contributed
      capital.
  F-18
 CRC
Crystal Research Corporation
 (A
Development Stage Company)
 NOTES
TO AUDITED FINANCIAL STATEMENTS
 (December
31, 2007 and 2006)
 (AS
RESTATED)
  NOTE
11.          RESTATED
FINANCIALS - continued
  Statements
of Cash Flows
  Originally
                
                
                
                
                
                Affect
      ofITD
      to 31-Dec-2007
                
                Reported
                
                
                As
      Adjusted
                
                
                Change
                
                NotesOperating
      ActivitiesNet
      Profit/(Loss)
                
                $
                (923,853
                )
                
                $
                (1,583,853
                )
                
                $
                (660,000
                )
                (a)Adjustments
      to reconcile to cashDepreciation
                
                
                25,545
                
                
                
                25,545
                
                
                
                -Loss
      onSaleof
      Asset
                
                
                7,491
                
                
                
                7,491
                
                
                
                -Impairment
                
                
                198,931
                
                
                
                198,931
                
                
                
                -Stock
      issued for Service
                
                
                225,000
                
                
                
                225,000
                
                
                
                -Gain
      on Write-off of Debt
                
                
                (230,000
                )
                
                
                -
                
                
                
                230,000
                
                (b)Gain
      on write-down of
                
                
                
                
                
                
                -
                
                
                
                -Accrued
      Liabilities
                
                
                (660,000
                )
                
                
                -
                
                
                
                660,000
                
                (b)Contributed
      Services
                
                
                
                
                
                
                660,000
                
                
                
                660,000
                
                (a)Changes
      in Assets and Liabilities
                
                
                
                
                
                
                
                
                
                
                -Increase
      in Accounts Payable
                
                
                750
                
                
                
                750
                
                
                
                -Increase
      in Accrued Liabilities
                
                
                914,183
                
                
                
                24,183
                
                
                
                (890,000
                )
                (b)Net
      Cash (Used) by Operating Activities
                
                
                (441,953
                )
                
                
                (441,953
                )
                
                
                -Investment
      Activities:Equipment
      Purchase
                
                
                (17,858
                )
                
                
                (17,858
                )
                
                
                -Manufacturing
      Equipment Purchase
                
                
                (214,109
                )
                
                
                (214,109
                )
                
                
                -Cash
      (Used) by Investment Activities
                
                
                (231,967
                )
                
                
                (231,967
                )
                
                
                -Financing
      Activities:Net
      Proceeds from loans-Related Parties
                
                
                215,548
                
                
                
                215,548
                
                
                
                -Proceeds
      from Convertible Notes
                
                
                200,000
                
                
                
                200,000
                
                
                
                -Proceeds
      from sale of Common Stock
                
                
                258,872
                
                
                
                258,872
                
                
                
                -Cash
      Provided by Financing Activities
                
                
                674,420
                
                
                
                674,420
                
                
                
                -Net
      Increase/(Decrease) in Cash
                
                
                500
                
                
                
                500
                
                
                
                -Cash,
      Beginning of Period
                
                
                -
                
                
                
                -
                
                
                
                -Cash,
      End of Period
                
                $
                500
                
                
                $
                500
                
                
                $
                -Notes:(a) This
      adjustment results from reversing the reported gain on the write-off of
      theaccumulated
      related party compensation thereby increasing net loss by
      $660,000accordingly,
      like other non-cash expenses this expenseisremoved
      toreconcile
      net loss to cash.(b) This
      adjustment reverses the incorrectly reported gains and
      accruedliabilities.
  Footnotes
to Audited Statements
  A Note
6 entitled “CONVERTIBLE NOTES” was added to disclose the conversion and
write-off of convertible notes.


F-19


ITEM
8.             CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
 
 Our
accountant is Moore & Associates, Chartered, Certified Public
Accountants.  We do not presently intend to change
accountants.  At no time have there been any disagreements with such
accountant regarding any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
 
  ITEM
8A.          CONTROLS AND
PROCEDURES
 
 Disclosure
Controls and Procedures
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under
the Securities Exchange Act of 1934 (Exchange Act) as a process designed by or
under the supervision of, our principal executive and principal financial
officers and effected by our Board of Directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and
procedures that:
 
 Pertain
to the maintenance of records that is in reasonable detail accurately and fairly
reflect the transactions and dispositions of our assets
 
 Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in  accordance with authorizations of our management
and directors: and
 
 Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 Management
assessed the effectiveness of the Company’s Internal Control over financial
reporting as of December 31, 2007. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in this Internal Control-Integrated
Framework.
 
 Base
on our assessment, we believe that, as of December 31, 2007 our internal control
over financial reporting was ineffective.
 
 The
determination of ineffective internal control over financial reporting is
primarily due to a lack of separation of duties and accounting
staff.  Our entire financial management is comprised of one
individual.  It is impossible to create a system of checks and
balances with oversight in this circumstance.  The lack of separation
of duties and accounting staff has resulted in several restatements of our
financial statements.  This is primarily due to the fact that we did
not dedicate the proper resources to researching some complex accounting issue
that arose during reporting period.  It is management’s intention to
bring additional people into the management team.  Once there are more
members of management, responsibilities can be divided and oversight roles
created.  This annual report does not include an attestation report of
the Company’s registered accounting firm regarding internal control over
financial reporting.  Management’s report was not subject to
attestation by the Company’s registered public accounting firm pursuant to
temporary rules of the SEC.
 
 Evaluation
of Internal Controls and Procedures.
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting.  The Company’s internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles.
 
 We
maintain disclosure controls and procedures (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that are designed to ensure that information
required to be disclosed in the reports we file or submit under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to our management, including our chief executive officer and
chief financial officer, as appropriate to allow timely decisions regarding
disclosure.  In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
 
 13
  ITEM
8A.          CONTROLS AND
PROCEDURES - continued
  Our
management, with the participation of our chief executive officer and chief
financial officer, has evaluated the effectiveness of our disclosure controls
and procedures as of December 31, 2007.  Based on their evaluation,
our chief executive officer and chief financial officer have concluded that, as
of December 31, 2007, our disclosure controls and procedures were not
effective.
 
 Our
conclusion was based on (1) our lack of systematic accounting and disclosure
procedures, (2) the lack of development of our IT systems, (3) the lack of
hiring and development of new personnel and (4) the number of adjustments
identified by our independent auditors during the course of their
review.  We attribute all of the identified weaknesses to the
formative stage of our organizational development.  We currently lack
the personnel resources to ensure that our disclosure controls and procedures
are adequate.  We intend to address the procedural and control issues
by adding more formalized accounting procedures and accounting
staff.
 
  ITEM
8B.          CHANGES IN INTERNAL
CONTROL OVER FINANCIAL REPORTING
 
 There
have not been any changes in the Company’s internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the year ended December 31, 2007 that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
 
 This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit us to provide only management’s
report in this Annual Report on Form 10-KSB/A.


PART
III





ITEM
9. DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT





The
directors and officers as of December 31, 2007, are set forth
below.  The directors hold office for their respective term and until
their successors are duly elected and qualified.  Vacancies in the
existing Board are filled by a majority vote of the remaining
directors.  The officers serve at the will of our Board of
Directors








Name
            
            Age
            
            Positions and
      Offices HeldDr. Kiril
      Pandelisev
            
            
            57
            
            President/CEO/DirectorCharlie
      Searock
            
            
            71
            
            DirectorDon
      Jackson
            
            
            73
            
            DirectorShariar
      Motakef
            
            
            50
            
            Director




BUSINESS
EXPERIENCE





Set forth
below is the name of our director and officer, all positions and offices held,
the period during which he has served as such, and the business experience
during at least the last five years:





Dr. Kiril Pandelisev,
President, Chief Executive Officer, and Director:





Dr. Kiril
A. Pandelisev joined the Company at its inception in 1993.  From 1975
to 1984, Dr. Pandelisev was a member of the faculty of St. Cyril and Methodius
University, Skopje, Macedonia.  From 1979 to 1982, Dr. Pandelisev was
an Exchange Scientist at Arizona State University.  From 1985 to 1988,
Dr. Pandelisev was a Research Analyst at Arizona State
University.  From 1988 to 1990, Dr. Pandelisev was a Research
Physicist at Johnson Matthey Electronics.  In 1991, Dr. Pandelisev was
a Senior Scientist at Horiba Instruments, Inc.,  Since 1991, Dr.
Pandelisev has been employee by various private entities which he owns and
controls, including the Company.  Dr. Pandelisev received a B.Sc.
degree in Applied Physics from St. Cyril and Methodius University, Skopje,
Macedonia, in 1973. Dr. Pandelisev received an M.Sc. degree in Physics from
St. Cyril and Methodius University in 1976. Dr. Pandelisev received a Sc.D
degree in Physics from St. Cyril and Methodius University in 1984. Dr.
Pandelisev is an authority on crystal growth, and is the author or contributing
author of 17 papers on the subject published in various scientific
journals.





14


ITEM
9. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGEACT
- continued




Charlie Searock,
Director:





Lt. Gen.
Charles J. Searock Jr. retired from active duty military service in 1993 after
almost 37 years in the Air Force and two years in the Army National Guard. He
served most recently as the CEO/president of the International Tactical Training
Center in Denison, Texas and left that position on 31 Dec 06.  He was
recently reappointed by the Secretary of the Air Force to the Civil Air Patrol
Board of Governors.  From 1996 to 2001, he was CEO/president and a member
of the board of directors of Dynasil Corp., a publicly traded high-tech glass
manufacturing company. From October 2001 to August 2002, Lt. Gen. Searock was
President and member of the Board of Directors of the Air Victory Museum, a
non-profit educational museum.  From August 2002 to March 2005, Lt. Gen.
Searock served as a consultant to several start-up high tech companies.
 From February 2005 to July 2005, Lt. Gen. Searock was a consultant and
contract employee with e2ECTA, Inc., which provides energy conservation
consultation and products.  From July 2005 to February 2006, Lt. Gen.
Searock was a consultant to Aviation Management, Inc., which provides jet engine
management services primarily to small fleet jet aircraft owners.  From
February 2005 to December 2006, Lt. Gen. Searock was president of International
Tactical Training Center, which provides fighter jet contract services to the
federal government.  Since January 2006, Lt. Gen. Searock has been
retired.




Searock
is a 1976 Army War College graduate who commanded at the squadron, wing, center
and major command levels. He served as a KC-97 pilot, B-52 pilot/instructor
pilot/flight examiner and FB-111 pilot/instructor pilot. He was assigned to the
Pentagon as a member of the air staff, and he served as Assistant for Plans to
the Military Assistant to the President at the White House. He maintains his
currency as a commercial multi-engine instrument-rated pilot and is a Civil Air
Patrol pilot.  Searock is a member of the Board of Nominations of the
National Aviation Hall of Fame and is one of three members of the New Jersey
Governor’s Air and Space Medal Nominating Committee. He is also a member of the
Wings Club in New York City, the Air Force Association, Aircraft Owners and
Pilots Association and the Experimental Aircraft Association.




Dr. Don Jackson,
Director:




From 2002
to the present, Dr. Jackson has been the chairman and chief executive officer of
Findem, Inc.  Prior to joining Findem, Inc., Dr. Jackson held a variety of
officer and managerial positions in technology and engineering-related
companies, including Prodeo Technologies, Inc., Westech Systems, Inc./IPEC, The
Arena Group, Superwave Technologies, Inc., and Microelectronic Packaging, Inc.
 Dr. Jackson is on the Dean’s Advisory Board of Fulton School of
Engineering at Arizona State University and serves as an adjunct physics
professor at Embry Riddle Aeronautical University in Prescott, Arizona.
 Dr. Jackson has an AB degree in Physics from William Jewell College, an
M.S. degree in Physics from Iowa State University, and a Ph.D. in Electrical
Engineering from Arizona State University.




Dr. Shariar Motakef,
Director:





Dr.
Motakef is the founder and president of Cape Simulations, which specializes in
the development of advanced simulation tools and model-based control and testing
systems for manufacturing and materials processing industries. In addition, Cape
Simulations provides engineering consulting services.  Dr. Motakef received
a B.S., M.S. and Ph.D degrees from the Mechanical Engineering Department at
Massachusetts Institute of Technology.  Prior to founding Cape Simulations,
he was the Samual C. Collins Associate Professor of Mechanical Engineering at
MIT’s Heat Transfer Laboratory.  At MIT, Dr. Motakef’s research team was
involved with thermo-fluid design and analysis of electronic materials and
semiconductor processing equipment.   Dr. Motakef was on the editorial
board of the Journal of Materials Science and Manufacturing Science from 1992 to
1995, and is a member of the American Association of Crystal
Growth.




15


ITEM
9. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGEACT
- continued




CERTAIN
LEGAL PROCEEDINGS





No
director, nominee for director, or executive officer has appeared as a party in
any legal proceeding material to an evaluation of his ability or integrity
during the past five years.





COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT





To date,
we have not filed Form 5 for the year ended December 31, 2007.







ITEM
10. EXECUTIVE
COMPENSATION





None of
the Company's officers or directors has received any cash or other remuneration
within the last three years.  It is likely, however, that after the
Company successfully raises capital to fund its business plan, the Company will
begin paying compensation to its officers and directors, the amount of which
will be determined by the board of directors at the time.




No
retirement, pension, profit sharing, stock option or insurance programs or other
similar programs have been adopted by us for the benefit of our
employees.







ITEM
11. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





We have
issued a total of 8,519,844 shares of our common stock to the following persons
for services as of March 24, 2008:








Name
            
            Number of Total
      Shares
            
            
            % of
      ShareholdingsDr. Kiril
      Pandelisev
            
            
            8,189,844
            
            
            
            66%Charlie
      Searock
            
            
            110,000
            
            
            
            .09%Dr. Don
      Jackson
            
            
            110,000
            
            
            
            .09%Dr. Shariar
      Motakef
            
            
            110,000
            
            
            
            .09%




The
address for Dr. Pandelisev, Charlie Searock, Dr. Jackson, and Dr. Motakef is
4952 East Encanto Street, Mesa, Arizona 85205.







16


ITEM
12. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS





During
the fiscal year ended December 31, 2005, the Company received loans from the
Company’s sole officer and director, and its majority shareholder.  As
of December 31, 2005, the Company was indebted to the CEO in the amount of
$176,665.





During
the fiscal year ended December 31, 2006, the Company received loans from the CEO
in the amount of $17,327.





The loans
made by the CEO to the Company in 2005 and 2006 were used to fund general and
administrative expenses of the Company.  The loans were not evidenced
by a note, were unsecured, did not bear interest and were payable on
demand.





On June
10, 2006, the CEO utilized the amount due him by the Company to pay the exercise
price under warrants held by him.





The
Company was a party to an Employment Agreement with its CEO dated March 31,
1997.  The Employment Agreement provided that the CEO was entitled to
base compensation of $120,000 per year, among other provisions.  The
Employment Agreement terminated by its terms on March 31, 2002.





As of
December 31, 2005 the Company had accrued $799,182 in deferred salary under an
Employment Agreement with the CEO.





As of
December 31, 2005, the CEO agreed to forgive any claim for $660,000 of the
accrual compensation, and as a result the Company recorded an unusual gain in
that amount in fiscal 2005.  As a result of the forgiveness, the
balance owed to CEO at December 31, 2005 for accrued compensation was $139,182
accrued salary.





On June
10, 2006, the CEO agreed to satisfy the amounts due him for accrued compensation
under his Employment Agreement and for loans he had made the Company by
exercising his options in the Company and converting the balance of the
indebtedness into additional shares of common stock.





As of
June 10, 2006, the CEO held options to purchase 400,000 shares of common stock
at $0.25 per share, and options to purchase 469,844 shares of common stock at
$0.0025 per share.  The aggregate exercise price under both options
was $101,175.  The CEO applied $101,175 of the indebtedness due him by
the Company to the exercise price under the options, which resulted in him
acquiring 869,844 shares of common stock.





After
exercising the options, the balance owed to the CEO was $232,000, which was
converted into 5,800,000 shares of common stock at $0.04 per share.





On
September 25, 2006, the Company entered into a License Agreement with Single
Crystal Technologies, Inc. (“SCT”), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.




SCT is
owned by the Company's CEO.


17


ITEM
12. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS - continued




Under the
License Agreement, the Company is obligated to pay SCT a license fee of $50,000
when it raises at least $50,000 in capital. In addition, the Company will
be obligated to pay SCT royalties in varying percentages based on the revenues
received from products that incorporate the technology licensed to the Company
under the License Agreement. In the event the Company fails to commence the
production of products incorporating the technology licensed under the License
Agreement within two years of the date of the Agreement, SCT may terminate the
License Agreement at its option.





During
the year ended December 31, 2007, Mr. Pandelisev has provided short term
operating capital to the company in the amount of $21,556. This is
non-interest bearing demand loans.





On
January 22, 2008 the company entered in to a consulting agreement with Mirador
Consulting Inc. (Mirador) for Investor Relations consulting.  The
Company is obligated to pay $3,000 per month payable in arrears at the time
Mirador raises not less that $250,000, a 5% finders fee on any money raised by
them and 600,000 restricted shares of common stock, 300,000 shares to be issued
upon execution of the agreement and 300,000 common shares when the Company
receives $250,000 in investments brought by Mirador.





CRC
Crystal Research Corporation’s principal office space is provided at no
cost.  Please refer to the section titled “Description of Property”
herein.







PART
IV





ITEM
13. EXHIBITS AND REPORTS
ON FORM 8-K





(a)  The
following documents are filed as part of this report:





1.   Financial
statements; see index to financial statements and schedules in Item 7
herein.





2.   Financial
statement schedules; see index to financial statements and schedules in Item 7
herein.





3.   Exhibits:





The
following exhibits are filed with this Form 10-KSB and are identified by the
numbers indicated; see index to exhibits immediately following financial
statements and schedules of this report.





EXHIBIT
INDEX





3.1
            Articles
      of
Incorporation    (1)





3.2
            By-laws    (1)




14
            Code of Ethics
      (2)23
            Consent of Independent
  Auditor




31
              Certification pursuant to Section 302 of the
      Sarbanes-Oxley At of 2002
 
 32
              Certification pursuant to Title 18 Section
      1350





(1)
            Incorporated
      by reference to our Form 10SB (SEC File No.
  333-151309).




(2)
            Incorporated by
      reference to our Form 10KSB filed on March 28,
  2008.




Reports
on Form 8k:





23.  8k
filed June 28, 2007 (incorporated by reference)




18


ITEM
14. PRINCIPAL ACCOUNTANT
FEES AND SERVICES





Audit
Fees





For the
Company's fiscal year ended December 31, 2007, we were billed and paid
$3,500.  The audit fees were for professional services rendered for
the audit of our financial statements, respectively.





Tax
Fees





For the
Company's fiscal year ended December 31, 2007, we were billed and paid $500
for professional services rendered for tax compliance, tax advice, and tax
planning, as well as for legal services.





All Other
Fees





The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal year ended December 31, 2007.










SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, there unto duly authorized.




CRC
      CRYSTAL RESEARCH CORPORATIONDate:  October
      31, 2008
              By:
              /s/   
      Dr. Kiril
      PandelisevDr.
      Kiril PandelisevPresident,
      Chief Executive Officer,and
      Director





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.




Date:  October
      31, 2008
              By:
              /s/  
      Dr. Kiril
      PandelisevPresident,
      Chief Executive Officer,and
      Director







19