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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


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

                           For the fiscal year ended:
                                December 31, 2002

                                 ICRYSTAL, INC.
                 ______________________________________________
                 (Name of Small Business Issuer in its Charter)

                             SEC File No. 000-29417

            DELAWARE                                     62-1581902
_______________________________             ____________________________________
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


                       3237 KING GEORGE HWY., SUITE 101-B
                           SURREY, BC V4P 1B7, CANADA
               ___________________________________________________
               (Address of principal executive offices) (Zip Code)


                    Issuer's telephone number: (604) 542-5021
                                               ______________

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

Securities registered under Section 12(g) of the Act:

                           Common Stock $.01 Par Value
                           ___________________________

                                 Title of Class

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period 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 [ ]

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  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. [X]

State issuer's revenues for the most recent fiscal year: $1,270,877.

On April 10, 2003, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $243,775, computed by
reference to the price at which the stock was sold on such date.

There were 19,732,785 shares of common stock $.01 par value outstanding as of
December 31, 2002.

                   Documents incorporated by reference: None.



Transitional Small Business Format (check one): Yes [ ]       No   [X]


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<PAGE>

ITEM 1   DESCRIPTION OF BUSINESS

                           FORWARD LOOKING STATEMENTS


This annual report contains forward-looking statements by the registrant based
on its current expectations about its business and its industry. You can
identify these forward-looking statements when you see words such as "EXPECT,"
"ANTICIPATE," "ESTIMATE" and other similar expressions. These forward-looking
statements involve risks and uncertainties and actual results could differ
materially from those anticipated in these forward-looking statements as a
result of such risk factors as discussed in Business Description, Risk Factors
and elsewhere in this Registration Statement. THE REGISTRANT undertakes no
obligation to publicly update any forward-looking statements for any reason,
even in the event new information becomes available or other events occur in the
future.

Unless otherwise indicated, all references to "DOLLARS", "$" or "US$" refer to
U.S. dollars and all references to "CDN$" refer to Canadian dollars.


                                   THE COMPANY


iCRYSTAL, INC. (together with its subsidiary, the "Company") is a Delaware
corporation, incorporated on OCTOBER 5, 1994, as Cable Group South, Inc.
Effective OCTOBER 19, 1998 the Company undertook an 8:1 reverse stock split and
changed its name to SoftNet Industries, Inc. To avoid a conflict with a
similarly named Company, the Company again changed its name to I crystal, Inc.
on JULY 29, 1999. The Company stockholders approved a change of the Company's
name to "iCRYSTAL, INC." at a Special Meeting JUNE 2000. The Company believes
this change in its name better reflects the Internet aspects of its software
development business.

From 1994 until late 1998, the Company had minimal operations and devoted its
efforts to corporate structuring, financial and business planning, recruitment
of directors and advisors, and raising additional financing. In 1998 the
business of the Company became focused on the development and licensing of
Internet based software for computer based card and table games for gaming and
casino applications. In December 1998 the Company entered into a licensing and
put option agreement (the "DIVERSIFIED LICENSE") with Diversified Cosmetics
International, Inc. ("DIVERSIFIED") to license that company's game and casino
software. Diversified subsequently exercised the put option (the "PUT OPTION")
granted in the Diversified License and required the Company to acquire
Diversified's casino software for Company Common Stock and a promissory note.
The Company's first revenues from the newly focused business operations were
realized in July 1999 and, therefore, the Company has presented development
stage financial statements for the periods through June 1999. Since its
founding, the Company has recorded significant losses. At December 31, 2002, the
Company has an accumulated deficit of $7,076,862 and has a shareholders deficit
of $673,322.


                                    BUSINESS

The Company is in the business of developing, acquiring, upgrading and
supporting Internet based games and casino and gaming software and developing
and maintaining WEBSITES for business to business enterprises that are engaged
in the Internet based casino and gaming business and associated electronic
commerce operations.


<PAGE>


While the current games are focused on table and casino style games, the Company
has the capacity and intends to produce games that work on a variety of game
platforms and span a wide range of genres including action, adventure, strategy
and simulation models to attract game enthusiasts, value buyers and foreign
casino players.

In addition, the Company, through its Master Licensee, offers access to WEBSITE
development and transaction support services, credit card processing support
services, cash transaction processing merchant banking, e-cash services and
software upgrading to its licensees. Licensees of the Company are provided
direct access to the merchant accounts for the processing of gaming transactions
on Company designed WEBSITES. Such merchant banking accounts and e-cash services
are conducted in the name of the Master Licensee. The processing costs are
deducted from gross revenues under the Master License and therefore are a cost
of business incurred by the Master Licensee.

In April 1999, the Company entered into its first licensing agreement (the
"MASTER LICENSE") for its gaming software with the Master Licensee (DCI), a
corporation organized in Dominica which also operated under the working name of
"DYNAMIC CASINO INVESTMENTS". The Master License is now held by Manihi. The
first WEBSITE, Video Poker Palace, began operations in mid-1999. Total revenues
received by the Company under the Master Licensees in 2000 were $900,640 from
both DCI and Manihi and $873,471 for the year ended December 31, 2001, from
Manihi. The Master Licensee (DCI) accounted for substantially all of the
Company's revenues in 1999 and approximately 75% of the Company's revenues in
2000.

Effective August, 1999 the Company purchased the proprietary rights to the bingo
software ("METROBINGO") that was being developed by Power Star Corp. ("POWER
STAR"). The Company was developing and improving the bingo software, but
recently delayed efforts to develop the bingo site to concentrate on the casino
software.

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

Under terms of the Master License with Manihi, the Company is obligated to
provide all new and existing casino gaming software, translation of themed
websites and casino gaming software, smart-download features and website
development, technical support and back-end accounting features. the Company, in
return, will receive thirty percent of the first $250,000 and fifteen percent of
any additional amounts of monthly net gaming revenue derived from the Company's
software and website packages. the Company will also receive fifty percent of
gross revenue derived from upfront set-up fees charged to sub-licensees and ten
percent of gross revenue derived from sales of software to sub-licensees. Manihi
is also required to spend a minimum of $10,000 monthly advertising for each
software package or casino.

The Company's expenses are based in part on the Company's product development
and marketing budgets. Many of the costs incurred by the Company to develop sell
and license its products are expensed as such costs are incurred, which often is
before a product is released or licensed. In addition, a significant portion of
the Company's expenses are fixed. As the Company increases its production and
licensing activities, current expenses will increase and, if revenues from
previously released products are below expectations, net income (loss) is likely
to be disproportionately affected.

                             PROPOSED SALE OF ASSETS

Although the Company's operations are set forth in detail above, the Company is
proposing to sell the assets principally involved the above-described business.
The proposed sale and related information is contained in the Company's
Preliminary Proxy materials filed with the SEC, but not yet approved for mailing
to shareholders. It is anticipated the Proxy Materials will be sent out shortly
after the filing of this Annual Report on Form 10-KSB.

THE TRANSACTION

The Board of Directors has entered into an Asset Purchase Agreement (the
"Agreement") with Wellington Holdings Ltd., a Belize company ("Wellington") to
sell the assets of the Company pertaining to its internet gaming software
development business and its related Master License Agreement with Manihi, Inc.
This business represents over 90% of the operations, revenues and expenses of
the Company. The Agreement is specifically subject to and conditional on
approval by the Company's shareholders.

As consideration for the sale of assets, Wellington has agreed to assume the
Company's liabilities in the amount of US$724,000.00 at closing. The Company
retains its cash and receivables as of the date of closing of the Agreement. A
copy of the entire Asset Purchase Agreement is included with this Proxy, as
Exhibit 1. Wellington had previously approached the Company with a similar offer
in the past, but the Company had rejected such offer at the time, feeling it
could increase its sales and revenues. Other than Wellington, the Company had
never received any indications of interest with respect to its business.
Wellington has established to the satisfaction of the Company, to a high degree
of certainty, that it has sufficient resources to acquire the assets and satisfy
the liabilities, as assumed by Wellington. The Company's conclusions in this
regard are based on due diligence performed by the Company on Wellington, which
is in the business of marketing and software consulting.

The rights of the Company's securities holders will not be affected by this
transaction.

On an accounting basis, this transaction is being treated as a sale of
substantially all of the assets by the Company, and there are no income tax
consequences to the Company.


ASSET PURCHASE AGREEMENT

The Agreement provides for the Company, at closing, to transfer all its rights,
titles and interests in its assets related to its internet gaming software
development business to Wellington, including the source codes. Concurrent with
this transfer, Wellington will assume liabilities of the Company in the total
sum of US$724,000.00.

The closing is subject to the following conditions:

         (a) All efforts will be made to insure that this transaction does not
generate significant taxable gains for any party.

         (b) Requisite approval by the respective party's board of directors.

         (c) The receipt of all other consents, approvals and authorizations as
may be required under applicable laws, rules and regulations.

         (d) The ability of the Company to deliver good, clear and clean title
to all Assets included in the Agreement.

The Company is not aware of any conditions which it believes are likely to be
waived by either party.

The Company will recirculate revised proxy materials and resolicit proxies if
there are any material changes in the terms of the asset sale, including those
that result from waivers.

REASONS FOR THE SALE

The value of the Company's software development business and the resulting
purchase price was determined based upon the approximate amount of the Company's
liabilities. Based on the reasons discussed below, the Company believed the
value of its software development business was very uncertain and questionable
and, therefore, giving due consideration to all the circumstances, the purchase
price was fair and reasonable. The Company did not obtain a fairness opinion as
to value and the sales price because it believed there was a possibility that
the fairness opinion could have resulted in a lower valuation and price, based
on the financially depressed status of the industry.

The Company believes it would be prudent to get out of the internet gaming
software development industry and this transaction is necessary and appropriate
at this time for the following reasons:

     1.  The Company has been struggling to maintain cash flow to continue
         operations at the current level, and this transaction will eliminate
         the financial loans and arrangements entered into by the Company in the
         past, when it was short of cash and obtained short-term loans at a high
         interest rate. It has been extremely difficult for the Company to
         service these loans and maintain the financial ability to continue
         successful operations.

     2.  The future business prospects in the internet gaming business, and
         especially in the gaming software development business engaged in by
         our Company, are very uncertain and risky. Many gaming software
         developers have ceased business operations and others have
         significantly reduced the cost at which they are willing to sell the
         software systems they develop, making it extremely difficult for the
         Company to successfully compete or sell software systems.

     3.  There are many countries around the world which have adopted or are
         considering adopting regulatory restrictions or prohibitions against
         internet gaming, which has, in turn, severely restricted or totally
         eliminated internet gaming operations in many countries. And it appears
         likely, in the opinion of the Company, that regulatory action in the
         United States will further refine and extend restrictions and/or
         prohibitions against internet gaming in the U.S.

     4.  The number of internet gaming operators around the world has decreased,
         and the revenues of those operators who continue to operate have
         reportedly been significantly reduced as a result of laws, rules and
         regulations restricting or eliminating the use of many types of credit
         cards as a method of payment for internet gaming activities. Thus,
         operators have had an extremely difficult time processing gaming
         transactions and/or collecting monies from internet gamers.

     5.  Cryptologic, a recognized leader in the internet gaming software
         development industry, has estimated that the market for gaming software
         is expected to shrink.

     6.  There is substantial competition from other internet gaming software
         developers, such as Cryptologic, and the Company lacks the financial
         and other resources to continue competing in the industry.

Based on these facts and circumstances, the Company believes this transaction is
in the best interest of the Company and its stockholders at this time.

COMPANY'S CONTINUING BUSINESS

The Company will retain that portion of its assets related to its administration
of online services and back office management, as well as its computer hardware
unrelated to the software development business, and its website development
business. Its operations, and most significantly, its expenses, will be reduced
by 90%. The Company expects to aggressively market its services to existing
online gaming operators, through use of the internet and its industry contacts,
in an effort to become an outside vendor of services. The Company believes it
will be able to offer such services at rates cheaper than it costs the operators
to perform such services in-house.

The Company will use its remaining assets to continue its website development
business, as well as pursue related services, especially focusing on consulting
services to other companies in the gaming industry. The Board of Directors will
also investigate and consider various alternatives to expand the business,
especially the website development business, as and when opportunities arise.

In quantitative terms, the Company anticipates its continuing operations will be
reduced by approximately 90%, but its expenses will be correspondingly reduced
by 90%.


<PAGE>


                                    PRODUCTS

The Company's current and upcoming releases are based on a combination of games
derived from the Company's freely accessible traditional card and table games,
original game concepts created by the Company, and intellectual property or
other rights licensed from third parties. In releasing games and gaming items
based on licensed intellectual property rights, the company intends to
capitalize on the name recognition, marketing efforts and goodwill associated
with the underlying property.


                             COMPANY CASINO SOFTWARE

The Company produces proprietary Internet based casino style gaming software
with on-line transaction processing capabilities. The Company's casino software
packages are generally based on a specific gaming theme or a specific gaming
venue. For example, the Company's "VIDEO POKER PALACE" program offers thirty
(30) versions of video poker, including versions like "JACKS OR BETTER," "DEUCES
WILD," and "JOKER POKER." the Company has also developed its own versions of
poker such as "FLUSHORAMA," "KING OF THE HOUSE," and "STRAIGHT FLUSH BONUS."

The Company believes its future success will be driven by its variety of games,
its WEBSITE graphics and its relatively short development cycle, all of which
should attract and retain players. The Company's themed casino software packages
come with an accessory game package to provide a variety of experiences for the
players. For example, the Company's "BLACKJACK CASTLE" software offers eight
variations of blackjack. The Company's "SIZZLING SLOTS" software, currently
under development, will offer more than 20 different slot machines styles.

The Company's focus is to provide its licensees with a wide variety of gaming
themes, game versions and frequently updated graphics so that players will be
attracted to the WEBSITE initially and will want to return to experience the
updated software, to try new applications and to use e-commerce applications.
The four main casino themes The Company has developed are: video poker,
blackjack, slot machines and a casino featuring games preferred by the Asian
market, such as pai gow and baccarat. The Company believes that players will
search for, and keep returning to, casino WEBSITES using its software due to the
variety of games and gaming themes offered. The Company believes that players,
given a choice of gaming venues, will prefer to play in environments that
present a wide variety of games that are regularly updated but offered in a
familiar environment. While the Company anticipates that most players will seek
sites with rich and colorful graphic displays, some players who have more
limited time or technology access may prefer a less rich environment with faster
access speeds. The Company intends to provide game versions that meet both
expectations.

As with all commercial Internet software, security for commerce and information
exchange is a paramount requirement imposed by the licensees and the regulatory
environments to which Internet gaming is subject. To this end, the Company has
developed a security protocol, a communications protocol, and financial
transaction software which utilize specially developed, state-of-the-art
encryption technology, to ensure security, ease of use, and real time banking
for its licensees, and to limit access to players who are eligible, by age,
credit status and residence, to participate.


<PAGE>


                               PRODUCT DEVELOPMENT

                              INTERNAL DEVELOPMENT


The Company has one wholly-owned subsidiary, I crystal Software based in Surrey,
British Columbia, Canada, which researches, develops and tests each software
application licensed from third parties or being developed internally by the
Company. The Company has located its operations in the Vancouver region partly
because the area has a broad pool of technical personnel, programmers, web
designers and support services. In addition to developing and testing The
Company's Internet based casino software and games, I crystal Software designs
and develops each licensee's WEBSITE and the overall theme and visual design of
the licensee's software package. To this end, I crystal Software maintains a
team of software programmers, graphic designers and WEBSITE developers,
specialized in 3-D and conventional graphics programming.

I crystal Software has a webmaster department charged with researching Internet
developments and innovations related to the Internet based casino industry and
serves as the Company's security division and systems administrator, in charge
of securing both the Company and its software from unauthorized penetration.

To develop its products, the Company relies principally on its group of
programmers, web designers and graphic artists who work at I crystal Software as
employees or who work at the Company under service CONTRACTS. The Company also
acquires software through licenses with third parties and plans to acquire
rights to other complimentary products through strategic and distribution
arrangements with other interactive entertainment and leisure companies.

The Company has increased its spending on research and development over the past
fiscal year at $398,275, in the year ended DECEMBER 31, 2001, as compared to
$224,047 for the fiscal year ending DECEMBER 31, 2000.

The Company develops and produces it products using a model in which a core
group of creative, production and technical professionals on staff at the
Company, in cooperation with 's marketing group, have overall responsibility of
the development and production process and for the supervisor and coordination
of internal and external resources. This team provides the creative elements to
complete a project using, where appropriate, outside programmers, artists and
sound and special effects experts.

As resources allow, the Company plans to expand its internal review and quality
assurance process to include pre-development, development and production phases,
with specific milestones. This procedure is consistent with other industry
participants and is designed to enable The Company to manage and control
production timetables, to identify and address production and technical issues
at the earliest opportunity, and to coordinate revenues, quality control and
distribution phases.


                              EXTERNAL DEVELOPMENT

The Company has relied heavily on software products it acquired from independent
developers. Acquired titles generally are acquired and marketed under THE
COMPANY's name. If titles are acquired through licenses, such licenses will
generally provide the Company with distribution rights for a specific period of
time and for specified platforms and territories. In other instances titles may
be acquired outright by the Company from third parties. In consideration for its
services, a developer may receive a royalty based on revenues and may receive a
nonrefundable advance which may or may not be recouped by the Company.


                                 PRODUCT SUPPORT

The Company provides various forms of product support to both its internally and
externally developed titles. The Company's quality assurance personnel are
involved throughout the development and production processes for each title
published by the Company. All such products are subjected to extensive testing
before release in order to insure compatibility with the widest possible array
of hardware configurations and to minimize the number of bugs and other defects
found in the products. To support its products after release, the Company
provides 24-hour operator help lines. The customer support group tracks customer
inquiries and this data is used to help improve the development and production
process.


<PAGE>


                                    INDUSTRY

The Company is currently developing Internet based games with both gaming and
non-gaming attributes. The Company has delayed its efforts to develop a keno
game site due to the fact that the Company believes it will be too labor
intensive from an operational standpoint, and the Company intends to currently
use its efforts in other phases of its operations.


                                     GAMING

There are many other licensors of Internet based casino software and various
providers of alternative entertainment activities, all competing for the
public's entertainment dollar. The Company competes for the public's monthly
expenditures on entertainment with other Internet based gaming activities, cable
television, movie theaters, sporting events and other recreational activities.
As 's primary source of revenues will be a percentage of the net gaming revenues
generated by its licensees at their Internet casino WEBSITES, the Company's
revenues will be directly affected by the increase or decrease in participation
in such activities by the public. The company cannot estimate how such competing
activities may grow or to what extent such growth would decrease the Company's
revenues.

The Internet based gaming industry began in 1996 when the first on-line casinos
established operations, principally from operating bases in the Caribbean and
Central America. Technology constraints resulted in limited graphics, slow play
and a reliance on software which was difficult for the players to understand.
Companies such as Cryptologic and Microgaming were among the first to license
their software to the industry.

According to a 2000 Bear Stearns' report, there are approximately over 300
public and private companies that own, develop and operate more than 500
e-gaming Web properties worldwide and new sites are added each day. Recent
sources are predicting that on-line gaming revenues will be about $3 billion in
2002. Some in the industry are predicting an increase in player participation
from 3 million players in 1999 to 16 million players by the year 2002.


                                   COMPETITORS

Generally, the Company faces competition from a number of other companies that
license Internet based gaming software, many of which are well established and
have significantly greater resources than does the Company.

Currently, the Company believes its primary competitor is Starnet Communications
International Inc. ("STARNET"). Starnet and its SUBSIDIARIES have been licensing
Internet based casinos since 1997. Utilizing operating SUBSIDIARIES in Antigua,
Starnet also licenses adult entertainment WEBSITES, lotteries, parimutuals, and
a sportsbook. The Company also faces competition from Boss Media, which has been
licensing Internet based gaming WEBSITES since 1997 and is known for high
quality gaming software. Currently Boss Media licenses are reported to require
an upfront fee of $300,000, ongoing royalty payments of 35% of net gaming
revenue and a monthly charge of over $25,000 to service each licensee's hosting
and bandwidth requirements. In addition, Microgaming, a privately held company
based out of South Africa, has been licensing software since 1997. Microgaming
customizes most of its game packages for its licensees. Cryptologic has been
licensing


<PAGE>


Internet casinos through its wholly owned SUBSIDIARIES in Cyprus and Antigua,
since 1997. Cryptologic also handles credit card processing for all of its
licensees. Cryptologic recently settled a litigation matter in California in
which an on-line gambler refused to pay her casino debts, characterizing them as
illegal gambling CONTRACTS. Cryptologic settled the matter by paying the legal
fees and certain bank charges of the gambler. See also "REGULATORY
CONSIDERATIONS-NORTH AMERICA" for additional discussion.


                                    CUSTOMERS

The Company's revenues are dependent on the performance of the Master Licensee's
WEBSITE. However, the Company continues to pursue additional licensing
arrangements with other parties.


                            REGULATORY CONSIDERATIONS

Worldwide governmental regulation of Internet based gambling is varied and still
evolving. While it is currently legal in some countries, predominantly certain
countries in the Caribbean and Latin America, to set up regulated Internet based
gaming facilities, other countries, such as the United States, are considering
restrictions on Internet based gambling.


                                  NORTH AMERICA

Citizens of some or all jurisdictions in the United States may not be allowed to
participate in online casino wagering. The legality of gambling has heretofore
been considered a matter of state concern and each state has regulated its own
laws, rules and regulations regarding gaming and wagering. In the event Internet
gaming and wagering is ruled illegal in the various states, each state may
disallow Internet gaming and wagering. As a result, the Company's business would
be limited to only those states where gambling is legal, assuming such states
have proscribed Internet gambling. Furthermore, legislation may be introduced in
the U.S Congress seeking to prohibit all Internet gambling in the U.S. If the
legislation were enacted into law, the Company's business would be limited only
to locations outside the U.S. The inability to conduct any Internet gaming
operations in the U.S. may have a substantial negative impact on the potential
revenues that the Company is able to generate. However, since the Company will
be marketing and focusing the expansion of its operations in Europe and Asia,
the status of Internet gambling in the U.S. is being reduced as the company
diversifies its geographic area of concentration.

                                     CANADA

Currently, each province sets its own regulations for Internet based gambling.
However, there has been some public discussion by federal politicians about
possibly enacting federal regulations on Internet based gambling in Canada.
Currently, however, there are no proposed or pending bills in the Canadian
Parliament which would regulate Internet based gambling in Canada on a national
level.

Due to an uncertain regulatory environment, the Company's Master Licensee
currently intends to focus on markets outside of North America until such time
as U.S. and Canadian laws regarding Internet gaming are clarified. the Company
has designed its software to be capable of blocking wagers originating from
specified jurisdictions, such as the U.S. and Canada, thereby enabling its
licensees to ensure that gaming laws inside or outside the U.S. and Canada are
not violated. Although the Company's software is capable of screening out wagers
placed from any jurisdiction, the Company does not have control over the
operation of its licensees servers or over the WEBSITES utilizing its software
once such software is licensed to third parties, including the Master Licensee.
The Company believes that the Master Licensee is not currently screening wagers.


<PAGE>


However, the Company will also work with its licensee, major credit card
providers, Internet service providers and Internet based self regulatory
organizations to confirm that players at Company designed Internet based casino
WEBSITES are of legal age, and reside in jurisdictions where Internet wagering
is legal.

While the Company will work with the Master Licensee and its future licensees to
stay abreast of legal developments in which such licensees operate, there can be
no assurance that licensee of Company software will not violate changing
Canadian gambling restrictions at the provincial or federal level. Should the
Master Licensee or future licensees of the Company's products violate the laws
of the various Canadian jurisdictions, the Master Licensee, future licensees and
the Company may be exposed to claims for such violations.


                                    AUSTRALIA

Australia has regulated, rather than prohibited, Internet based gaming. The
Australian Government has placed strict guidelines and taxation rates, as high
as 50%, on Internet based gaming operators. Recently, the country's Prime
Minister indicated his intention to seek a ban on Internet based gambling in
Australia despite strong opposition from that country's states and territories.

One of the first Australian based Internet gaming sites to be established was
Lassiters Online Casino ("LASSITERS"). Lassiters, which opened in April 1999
near Alice Springs in the Northern Territory, reported over 3,500 customers
producing over $2,000,000 in net gaming revenue by their third month of
operation. Since then, Australia has increasingly continued to attract major
private and public software licensors, adding significant net gaming revenues.


                                 GLOBAL OUTLOOK

In the UK a new bill has passed that permits the operation of interactive
gaming. Sweden is considering a proposal for amendments to the Lottery Act. The
growing trend in the EU countries towards interactive gaming will result in
increased demand for the Company's software and revenue. With the increase in
the number of game operators, the casino market is becoming increasingly
competitive. The Company recognizes the need for the development of new gaming
products and will continue to expend funding on development costs to ensure its
software remains competitive.

With the exception of the U.S., a significant number of governments appear to be
accepting Internet based gaming and are attempting to regulate and tax this
industry. Many countries in Europe now allow Internet based lotteries, and many
have blueprints for full Internet gaming regulations.

Caribbean countries such as Antigua, Dominica, and Aruba currently allow
regulated Internet based gaming. Antigua, for example, had licensed 48 gaming
operators as of JULY 1, 1999. Dominica and Aruba together have nearly as many.
The Caribbean will likely continue to be a major center for the Internet based
casino industry even if other countries put regulations or prohibitions in
place. the Company's Master Licensee (Manihi) currently operates its site out of
Costa Rica. After consulting with various experts, the management established
that many countries (U.K., Australia, Netherlands, Argentina, South Africa,
etc.) have realized the futility of trying to ban Internet gambling and have
developed or begun to develop legislation and tax for this industry, knowing
Internet usage and high speed access is continuing to grow, with the greatest
area of growth taking place outside of the U.S.


                               SALES AND MARKETING

The Company currently has one staff member devoted to marketing and licensing
sales. The Company also has three staff members who devote a portion of their
time to analyzing market information for the Company and its Master Licensee.


                              INTELLECTUAL PROPERTY

The Company uses the tradename "I CRYSTAL INC." under common law trademark
protection, but has no registered trademarks on such tradename or any other
tradenames or service marks utilized by it.


<PAGE>


The Company regards its software products as proprietary in that title to and
ownership of the software it develops resides exclusively with the Company. The
Company relies largely on its Master License Agreements with its Master Licensee
(Manihi), its own software protection schemes, confidentiality procedures and
employee agreements to maintain the trade secret aspects of its products. The
Company does not currently intend to apply for copyright or patent protection
for its software products. The Company believes that, due to the rapid pace of
innovation within the internet software industry, factors such as technological
and creative skill of personnel, knowledge and experience of management, name
recognition, maintenance and support of software products, the ability to
develop, enhance and market software products and services and the establishment
of strategic relationships in the industry are as important as patent, copyright
and other legal protections for its technology.

The Company believes that it has all necessary rights to market its products,
although there can be no assurance that third parties will not assert
infringement claims in the future.


                                    EMPLOYEES

As of April 2003, there were 15 persons dedicating full-time services to the
Company of whom four were acting as senior programmers, two were acting as
system administrators, and ten were involved in WEBSITE development, marketing,
graphic art development and project management. Of those persons, eleven were
full-time employees and five were under contractual arrangements with the
Company. Recently, competition for qualified management and technical employees
has been reduced in the Internet software industry, however the Company's
success will still depend in large part upon its ability to continue to attract
and retain qualified employees. The Company believes that its relations with its
employees are excellent.


                                  RISK FACTORS

The Company's business and investment in its securities is subject to a number
of risks which, in addition to ordinary business risks, include the following:


1.       COMPANY HAS NO HISTORY OF EARNINGS

The Company has only recently entered into its first Internet based casino
software licensing agreement and has a limited history of revenues or earnings
from such activities. The Company may not be successful in securing other
licenses for its casino software or in developing its general game related
software. There is no assurance that the Company will generate either revenues
or earnings from its existing licensee or from any other licensing arrangements
that it may enter into in the future.

The Company is at an early stage of entering the commercial marketplace. The
Company's future operating results are subject to a number of risks, including
its ability to implement its strategic plan, to attract qualified personnel and
to raise sufficient financing as required. Management's inability to effectively
guide the Company's growth (including implementing appropriate systems,
procedures and controls) could have an adverse effect on the Company's financial
condition and operating results.


2.       UNCERTAINTY OF ADDITIONAL CAPITAL

Although the Company currently has cash flows, it does not anticipate achieving
positive cash flows from operations until the second quarter of 2003. Therefore,
the Company's financial position for at least the next 6 months is contingent on
its ability to raise money through equity or debt financing to meet the
financial needs that are not funded from operations. The Company will seek to
raise additional capital either through the sale of equity or debt securities in
private or public financing or through strategic partnerships, in order fully to
finance, develop, market and upgrade its casino software programs and WEBSITES.


<PAGE>


The Company cannot offer assurances that funds will be raised when it requires
them or that the Company will be able to raise funds on suitable terms. Failure
to obtain such financing when needed could delay or prevent the Company's
planned software development and licensing projects, which could adversely
affect the Company's business, financial condition and results of operations. If
additional capital is raised through the sale of additional equity or
convertible securities, dilution to the Company's stockholders is likely to
occur.


THE COMPANY'S CASH FLOW COULD BE LOWER THAN  ANTICIPATED  DUE TO MASTER LICENSEE
EXPERIENCING CREDIT CARD PROCESSING RESTRICTIONS

The Company's Master Licensee, now Manihi, may have problems processing credit
card transactions and this could result in lower revenues to Manihi and, thus,
the Company.


                                   COMPETITION

The Company faces direct competition from a number of other companies, many of
which have greater resources. Many of the Company's competitors have well
established track records and customer bases in developing software generally or
in developing software games and gaming. As a relatively new company entering
into the market place, the Company has not yet established a reputation or
market presence in the industry and there is no assurance that it will. In
addition, since the Company's revenues are substantially all derived from its
Master Licensee, the Master License is specifically discussed and disclosed in
this annual report, thereby making that information available to current or
future competitors or entities dealing with the Company. This disclosure may
impact business negotiations between The Company and such entities in the
future.


                           TECHNOLOGICAL DEVELOPMENTS

Internet based industries in general, and the Internet based casino industry in
particular, are subject to rapid changes arising from new technological
developments and evolving industry standards. The Company's success will depend
heavily on its continuing ability to develop and introduce enhancements to its
existing casino software and new software or related products that meet changing
markets for on-line games and gaming. The Company will constantly be required to
commit significant resources to continued research and development in order to
remain competitive. However, the Company cannot be certain that it will develop
the software or technologies needed to ensure the Company's future success or
that its casino or general games software will not become obsolete due to the
introduction of alternative technologies. If the Company cannot continue to
innovate successfully, its business and operating results could be adversely
affected.


                              GOVERNMENT REGULATION

Every Internet business faces the risk of having to comply not only with the
laws of its home jurisdiction, but also with the laws of the countries where its
customers reside. With respect to Internet based casinos, many countries have
enacted or are considering enacting laws which may regulate or prohibit Internet
based gambling. The Company faces the risk that potential government regulations
in various jurisdictions could reduce the potential markets of its licensees or
the amount of revenues such licensees may generate in such markets or both. The
Company also faces the risk that its licensees may face extra-territorial
prosecution as a result of customers residing in regulated countries visiting a


<PAGE>


licensee's Internet casino site thereby generating increased uncertainty in the
Company's revenues obtained from licensing. If any such risks were to
materialize, the Company's financial condition and results of operations would
be adversely affected. While the Company does not engage in the operation of
casino WEBSITES, and serves only as a developer and licensor of casino WEBSITES,
there can be no assurance that, in the event of government regulation of
Internet based gambling, the Company would not be subjected to prosecutions by
government authorities in jurisdictions where Internet based gambling is
prohibited. However, the Company has not been made aware of any circumstances
which would lead it to believe that it would be prosecuted for the actions of
its licensees.

To date, while general Internet games have not been subject to special
government regulations, there is no assurance that this sector will not become
subject to regulatory oversight. See "REGULATORY CONSIDERATIONS" for a more
complete discussion.


  THE COMPANY DERIVES A SUBSTANTIAL AMOUNT OF ITS REVENUES FROM FOREIGN SOURCES

The Company is currently licensing and plans to license its software in
countries outside North America and to derive a portion of its games revenues
and most of its gaming related revenues from licensees in such jurisdictions.
The Company intends to expand these activities through licenses, direct and
indirect software sales, and localization activities. These activities will
require separate management focus and a full understanding of the international
marketplace, including skills not currently available at the Company. The
Company's international activities and its overall results will therefore be
subject to certain risks inherent in international trade, many of which are
beyond its control, such as changes in laws and policies affecting trade,
investment and taxes (including laws and policies relating to the repatriation
of funds and to withholding taxes), difficulties in attracting and retaining a
skilled local work force, differences in local fiscal discipline and the
instability of foreign economies and governments. There can be no assurance that
will be able to increase international revenues or that the foregoing local
factors will not have a material adverse effect on the Company's future revenues
and, consequently, on the Company's overall business, operating results and
financial conditions.

The Company's costs are generally paid in U.S. and Canadian currencies while its
revenues, generally paid in U.S. dollars, may at times be paid in non-U.S. or
Canadian currencies. Therefore, Company's revenues and operating results may be
affected by fluctuations in the exchange rates applicable to its licensees.
Currency exchange rates are determined by market factors beyond the Company's
control and may vary substantially during the course of a production period.
Further, The Company's ability to repatriate to Canada funds arising in
connection with foreign licensees may be adversely affected by currency and
exchange control regulations imposed by the country in which the Company's
casino software is exploited.


          PROTECTION OF THE COMPANY'S INTELLECTUAL PROPERTY IS LIMITED

The Company, other than through confidentiality agreements and restrictions it
places on its licensee's through its licensing agreements, does not retain or
protect its proprietary and intellectual property rights. Unauthorized parties
may copy and distribute the Company's casino software or certain portions or
applications of its software. In addition, other companies may independently
develop and produce software which is similar to, or imitates, the Company's
software. The Company has no registered copyrights or patents in either the U.S.
or Canada for its gaming software.


<PAGE>


The Company does not have and does not intend to apply for patents on its casino
or game software or its licensed WEBSITES. Management believes that the patent
application process in many countries in which the Company intends to sell or
license products would be time-consuming and expensive. In addition, patents
would have the effect of publicizing the source code or other proprietary
aspects of the Company's products. Finally, the Company intends continually to
improve and upgrade its casino and game software, and, as a consequence, any
patent protection may be out of date by the time the patent is granted.

In addition, the Company may in the future be notified that it is infringing
upon certain patent and/or other intellectual property rights of others.
Although there are no such pending lawsuits against the Company or unresolved
notices that the Company is infringing upon intellectual property rights of
others, there can be no assurance that litigation or infringement claims will
not occur in the future. Such litigation or claims could result in substantial
costs and diversion of resources and could have a material adverse effect on the
Company's business, financial condition and results of operations. If it appears
necessary or desirable, the Company may seek licenses under patents or other
intellectual property that it is allegedly infringing. No assurance can be
given, however, that licenses could be obtained on commercially reasonable terms
or that the terms of any offered necessary licenses or other rights could have a
material adverse effect on the Company's business, financial condition and
results of operations.


                DEPENDENCE ON KEY PERSONNEL AND PROGRAMMING STAFF

The Company is highly dependent on key members of its management and its
programming staff . The loss of the services of any of them may adversely affect
's ability to achieve its business plan. Recruiting and retaining qualified
technical personnel to carry out research and development and technical support
will be critical to the Company's future success. Although management believes
that the Company will continue to be successful in attracting and retaining
skilled personnel, it can offer no assurance that the Company can accomplish
this objective on acceptable terms. The Company has not implemented key person
life insurance on any management employee.

Although the Company performs almost all of its software development in-house,
the Company hires the services of some individuals on a CONTRACT basis and pays
for the provisions of some services related to its business from third parties.
A disruption in the supply of such services could have an adverse impact on its
business and financial results of the Company, particularly at a time when the
Company is attempting to develop new game software, build brand identity and
customer loyalty. In addition, an increase in prices from its service providers
could also have an adverse impact on the Company's business and financial
results.


                    THE COMPANY'S STOCK PRICE MAY BE VOLATILE

In recent years and months, the U.S. stock market has experienced significant
price and volume fluctuations. These fluctuations, which are often unrelated to
the operating performances of specific companies, have had a substantial effect
on the market price of stocks, particularly stocks like the Company's. It is
also possible that the Company's operating results will not meet the
expectations of its public market analysts, which could have an adverse effect
on the trading price of its common shares. Accordingly, the market price for the
Company's Common Stock may fluctuate substantially.


                   THE COMPANY DOES NOT PLAN TO PAY DIVIDENDS

The Company has not yet realized positive net income and has not, since
incorporation, paid dividends. the Company expects to use any earnings to fund
it ongoing operations and to fund future casino software development.


<PAGE>


           MANAGEMENT OF RAPID GROWTH AND LIMITED OPERATING EXPERIENCE

The Company anticipates that the management of its growth will be a key
challenge. Failure effectively to meet this challenge could have a material
adverse effect on its operating results. Successful commercialization and
licensing of internet based casino software and WEBSITES will require management
of a number of operational activities in which the Company has little
experience. There is no assurance that, if the Company's business grows rapidly,
the Company will be able to manage such growth successfully.


                         SHARES ELIGIBLE FOR FUTURE SALE

At DECEMBER 31, 2002, the Company had outstanding 19,732,785 shares of common
stock, $.01 par value per share (the "COMMON STOCK") of which 18,546,785 shares
were eligible for resale without restriction. In addition, there are 2 million
shares of Common Stock held by directors and officers which will be eligible for
resale pursuant to Rule 144 of the Securities Act (but subject to the relevant
volume limitations). Under those exemptions such shares will generally be
available for resale in the U.S. one year from the date of respective issuance.
This may adversely affect the market price of the Company's shares and could
affect the amount of trading in such shares.

This may adversely affect the market price of its shares and could affect the
amount of trading of such shares.


    MINIMAL TRADING HISTORY OF COMMON STOCK - POSSIBLE STOCK PRICE VOLATILITY

The Company's Common Stock traded on the OTC Bulletin Board under the symbol
"ICRS" from August 1999 through March 2000, and under the symbol "ICRSE" from
March 2000 until APRIL 4, 2000. The Company's stock traded on the National
Quotation Bureau's "PINK SHEETS" from APRIL 5, 2000 until May 31, 2000, when
they re-commenced trading on the OTC Bulletin Board, where they currently trade
under the symbol "ICRS". The market price of the Company's Common Stock could
fluctuate substantially due to a variety of factors, including market perception
of its ability to achieve its planned growth, the quarterly operating results of
other Internet based gambling and casino software development companies, the
trading volume in its Common Stock, changes in general conditions in the
economy, the financial markets or other developments affecting the Company or
its competitors. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
prices of securities issued by many companies for reasons unrelated to their
operating performance.


PENNY STOCK REGULATION

Broker-dealer practices in connection with transactions in "PENNY STOCKS" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission (the "SEC" or the "COMMISSION"). Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on Nasdaq provided that current
price and volume information with respect to transactions in such securities is
provided by the exchange or trading system).

The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in connection with the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. the Company's securities are presently subject to the penny
stock rules, and, as a result, investors may find it more difficult to sell its
securities.

ITEM 2. DESCRIPTION OF PROPERTY.

The Company leases 2000 square feet of commercial space at 3237 King George
Highway, Suite 101-B, in Surrey, British Columbia, Canada. This facility houses
the Company's marketing, and administrative operations. The Company entered into
its lease on September 4, 1999, and the lease runs until January 31, 2003. The
Company's monthly rent payment is $2,300.50 CDN(approximately $1,540 USD).

In September 2001 the Company leased 1,857 square feet of commercial space at
400 Burrard Street, Suite 450, Vancouver, British Columbia, Canada, commencing
October 2001 for a term of 2 years. Monthly rental is $5,040 CDN (approximately
$3276 USD). This facility houses its software development, production, and
technical functions. It also houses the Company's subsidiary I crystal Software
and all of its functions.

The Company believes that existing facilities are adequate for its needs through
the middle of the year 2003. Should the Company require additional space at that
time, or prior thereto, the Company believes that such space can be secured on
commercially reasonable terms and without undue operational disruption.


<PAGE>

ITEM 3.  LEGAL PROCEEDINGS


The Company is currently not a party to any legal proceedings.



ITEM 6.  MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
         AND FINANCIAL CONDITION.


RESULTS OF OPERATIONS  FOR THE FISCAL YEARS ENDED DECEMBER 31, 2002 AND DECEMBER
31, 2001

Revenues - Revenues for the years ending December 31, 2002 and December 31, 2001
were $1,270,877 and $873,471 respectively. The increase of $397,406 reflects the
growth in gaming activities and royalties from previous marketing activities by
the company.

Operating Expenses - Operating expenses are primarily comprised of general
administrative costs, research and development, and consulting. Operating
expenses were $1,258,312 and $1,198,564 for the years ended December 31, 2002
and 2001, respectively. The increase of $59,748 was attributable to an increase
in the research and development and consulting expenses. Exclusive of research
and development, consulting and professional services, operating expenses in
total were comparable between periods.

General and Administrative - The Company's general and administrative costs
consist primarily of salaries and wages, travel, office, marketing and
depreciation and amortization expenses. General and administrative costs were
$250,570 and $393,323 for the years ended December 31, 2002 and 2001,
respectively. The $142,753 decrease was attributable to a decrease in
professional fees due to the filing of the 10SB in order to be a fully reporting
issuer and SB8 in order to release restrictions on certain shares.

Research and Development - The Company's research and development costs consist
primarily of costs associated with the continued development of its Internet
based casino software. Research and development costs were $564,837 and $398,275
for the years ended December 31, 2002 and 2001, respectively. The $166,562
increase again reflects the Company's commitment to its business strategy of
developing and maintaining licensed Internet based gaming software and expanding
the use of its software products.

Consulting - The Company's consulting costs consist primarily of costs
associated with the continued use of external consultants for certain functions.
Consulting costs were $442,905 and $406,966 respectively for the fiscal year
ended December 31, 2002 and 2001. The $35,939 increase reflects the Company's
increased reliance on external consultants as compared to the prior year.

NET LOSS - The Company incurred a net loss of $(242,511) and $(580,120) for the
year ended December 31, 2002 and 2001, respectively. The 2002 loss was mainly a
result of an increase in interest costs. Subsequent to year end, the Company
entered into an agreement for the sale of its assets related to gaming software
in exchange for the majority of its debts.

FLUCTUATIONS IN ANNUAL AND QUARTERLY RESULTS

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

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

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

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

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

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


<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The working capital deficiency was $639,878 and $180,121 for the years ended
December 31, 2002 and 2001, respectively. The increase of $459,757 is
attributable mainly to an increase in liabilities. At December 31, 2002, and
December 31, 2001, stockholders' deficit was $673,322 and $635,311,
respectively.

At December 31, 2001, $126,779 of liabilities consisted of deferred revenue,
which have been reduced by $59,779 to $67,000 during the fourth quarter ended
December 31, 2002.

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

During the year ended December 31, 2002 the company received financial support
by way of interest accrued from the convertible loans from affiliates of the
licensee in the amount of $255,076.

The Company's budgeted capital expenditures for the fiscal year ending December
31, 2002 were approximately $30,000 for computer upgrading. The company actually
expended $33,774 on capital expenditures during the year ended December 31,
2002.

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

IMPACT OF INFLATION

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

SUBSEQUENT EVENT

Management has modified its business strategy subsequent to year end. Due to
significantly increasing competition and potential processing problems in
February 2003, management entered into an arrangement to sell its gaming
software and related assets in exchange for the majority of the company's debts
including all of the convertible debt and related interest. The company is
keeping certain assets for use in its software consulting portion of the
business. Management believes that it can cover its expenses with this
consulting revenue in the future. By significantly reducing its debts the
interest costs should be reduced to a negligible amount. Management is looking
to potentially add to this base of business in the future through growth or
potential acquisition.

The Company's liquidity over the next 12 months is contingent on its ability to
market its consulting services to meet its short term needs. However, there can
be no certainty that the Company will be able to meet its financing goals or
raise sufficient financing to fund such future business plans. In the event that
the Company is unsuccessful in its efforts to generate revenues from its
consulting services or raise the capital expected to be required over the next
twelve months, the Company will need to modify its business strategy
accordingly, to adjust its operating requirements to meet its available
liquidity and may need to consider additional reductions in operations until
capital resources or operating cash flows are sufficient to meet operating
needs.

ITEM 7.  FINANCIAL STATEMENTS

The consolidated financial statements and related financial information required
to be filed are attached hereto. Reference is made to page F-1 of this Annual
Report for an index to the consolidated financial statements.


<PAGE>




                                 ICRYSTAL, INC.,

                                 AND SUBSIDIARY

                              FINANCIAL STATEMENTS

                               FOR THE YEARS ENDED

                          DECEMBER 31, 2002, AND 2001,

                                      WITH

                                 AUDIT REPORT OF

                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




<PAGE>




                                TABLE OF CONTENTS


Independent Auditors' Report.................................................F-2

Consolidated Balance Sheet...................................................F-3

Consolidated Statements of Operations........................................F-4

Consolidated Statements of Stockholders' Deficit.............................F-5

Consolidated Statements of Cash Flows........................................F-6

Notes to Financial Statements................................................F-8


                                      F-1


<PAGE>


                           MARK BAILEY & COMPANY, LTD.

                          Certified Public Accountants
                             Management Consultants


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


                          INDEPENDENT AUDITORS' REPORT


April 2, 2003

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

We have audited the balance sheet of iCrystal, Inc., (a Delaware corporation) as
of December 31, 2002, and the related statements of operations, changes in
stockholders' deficit, and cash flows for the years ended December 31, 2002, and
2001. 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 audit.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 financial statements referred to above present fairly, in
all material respects, the financial position of iCrystal, Inc., as of December
31, 2002, and the results of its operations and cash flows for the years ended
December 31, 2002, and 2001, 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. The Company has incurred losses since
inception and has a net stockholders' deficit. These conditions raise
substantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.




Mark Bailey & Co., Ltd.
Reno, Nevada


                                      F-2


<PAGE>

<TABLE>
<CAPTION>

                         ICRYSTAL, INC., AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                               December 31, 2002



                                                                           December 31, 2002
                                                                           _________________
<S>                                                                          <C>
                                     ASSETS

CURRENT ASSETS
  Cash                                                                       $    13,352
  Accounts receivable (net of allowance for doubtful accounts of $-0-)            85,204
  Prepaid expenses                                                                14,300
                                                                             ___________
    Total current assets                                                         112,856
                                                                             ___________
FIXED ASSETS
  Equipment                                                                       67,935
  Furniture and fixtures                                                          18,207
  Leasehold improvements                                                           6,342
  Accumulated depreciation and amortization                                      (26,977)
                                                                             ___________
    Total fixed assets                                                            65,507
                                                                             ___________
OTHER ASSETS
  Deposits                                                                         6,249
  Deferred tax asset (net of valuation allowance of $2,435,232)                        -
                                                                             ___________
    Total other assets                                                             6,249
                                                                             ___________
    Total assets                                                             $   184,612
                                                                             ===========
                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable                                                           $   142,458
  Related party payable                                                           32,725
  Current portion of note payable                                                    984
  Current portion of deferred revenue - master licensee                           26,800
  Convertible debt and related interest                                          549,767
                                                                             ___________
    Total current liabilities                                                    752,734
                                                                             ___________
NON CURRENT LIABILITIES
  Deferred revenue - master licensee                                              40,200
  Customer deposits                                                               65,000
                                                                             ___________
    Total non current liabilities                                                105,200
                                                                             ___________
    Total liabilities                                                            857,934
                                                                             ___________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Common stock, $.01 par value, 30,000,000 shares
    authorized, 19,732,785 shares issued and outstanding                         197,328
  Additional paid-in capital                                                   6,206,212
  Accumulated deficit                                                         (7,076,862)
                                                                             ___________
    Total stockholders' deficit                                                 (673,322)
                                                                             ___________
    Total liabilities and stockholders' deficit                              $   184,612
                                                                             ===========


   The Accompanying Notes are an Integral Part of These Financial Statements

</TABLE>

                                      F-3


<PAGE>


<TABLE>
<CAPTION>

                         ICRYSTAL, INC., AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For The Years Ended December 31, 2002 and 2001


                                                     For the Years Ended
                                           ________________________________________
                                           December 31, 2002      December 31, 2001
                                           _________________      _________________
<S>                                            <C>                   <C>

SOFTWARE ROYALTIES                             $ 1,270,877           $   873,471
                                               ___________           ___________
OPERATING COSTS AND EXPENSES
  General and administrative                       155,919               174,968
  Consulting expense                               442,905               406,966
  Professional services                             71,870               194,370
  Research and development                         564,837               398,275
  Sales and marketing expense                       10,098                 4,002
  Stock based compensation                               -                12,800
  Depreciation and amortization expense             12,683                 7,183
                                               ___________           ___________
    Total operating cost and expenses            1,258,312             1,198,564
                                               ___________           ___________
    Net income (loss) from operations               12,565              (325,093)
                                               ___________           ___________
  Interest expense                                 255,076               255,027
                                               ___________           ___________
    Net loss before income taxes                  (242,511)             (580,120)
                                               ___________           ___________
  Provision for income taxes                             -                     -
                                               ___________           ___________
    Net loss                                   $  (242,511)          $  (580,120)
                                               ===========           ===========

    Loss per share                             $     (0.01)          $     (0.04)
                                               ===========           ===========
  Weighted average common shares
    outstanding  (basic and diluted)            19,345,285            15,982,785
                                               ===========           ===========


   The Accompanying Notes are an Integral Part of These Financial Statements

</TABLE>

                                      F-4


<PAGE>


<TABLE>
<CAPTION>

                         ICRYSTAL, INC., AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 For The Years Ended December 31, 2002, and 2001


                                                      Common Stock
                                                 ______________________     Additional        Deferred     Accumulated     Total
                                                   Shares       Amount    Paid-in Capital   Compensation     Deficit      Deficit
                                                 __________    ________   _______________   ____________   ___________    _______
<S>                                              <C>            <C>          <C>              <C>           <C>            <C>

Balance December 31, 2000                        15,682,785     156,828      5,893,414        (12,800)      (6,254,231)    (216,789)

  Stock issued for services in June 2001            100,000       1,000         21,000                                       22,000

  Stock issued to directors for services in
    in November 2001                              1,000,000      10,000         60,000                                       70,000

  Beneficial feature of the conversion of the
    convertible notes issued in 2001                                            56,798                                       56,798

  Amortization of deferred compensation                                                        12,800                        12,800

    Net loss                                                                                                  (580,120)    (580,120)
                                                 __________    ________     __________       ________      ___________    _________
Balance December 31, 2001                        16,782,785     167,828      6,031,212              -       (6,834,351)    (635,311)
                                                 __________    ________     __________       ________      ___________    _________
  Stock issued for services in January 2002       1,400,000      14,000         84,000                                       98,000

  Stock issued in January 2002 to relieve
    an accrued liability                          1,000,000      10,000         25,000                                       35,000

  Stock issued for services in June 2002            550,000       5,500         66,000                                       71,500

    Net loss                                                                                                  (242,511)    (242,511)
                                                 __________    ________     __________       ________      ___________    _________
Balance December 31, 2002                        19,732,785    $197,328     $6,206,212       $      -      $(7,076,862)   $(673,322)
                                                 ==========    ========     ==========       ========      ===========    =========


   The Accompanying Notes are an Integral Part of These Financial Statements

</TABLE>

                                      F-5


<PAGE>


<TABLE>
<CAPTION>

                         ICRYSTAL, INC., AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For The Years Ended December 31, 2002, and 2001


                                                                         For the Years Ended
                                                               ________________________________________
                                                               December 31, 2002      December 31, 2001
                                                               _________________      _________________
<S>                                                                <C>                    <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                         $(242,511)             $(580,120)

  Adjustments to reconcile net loss to net
  cash used in operating activities:
    Amortization of deferred compensation costs                            -                 12,800
    Depreciation and amortization expense                             12,683                  7,183
    Common stock issued for expenses                                 169,500                 92,000
    Non cash interest expense for intrinsic value of
      conversion feature of debt                                           -                 56,798
    Amortization of loan origination fees                             51,419                      -
    Decrease in accounts receivable                                   22,792                  2,308
    Increase in prepaid expenses                                     (14,300)                     -
    Increase (decrease) in related party payable                     (18,354)                 7,224
    Increase in interest payable                                     105,871                 25,126
    Increase in accounts payable and accrued expenses                 28,616                113,179
    Decrease deferred revenue                                        (59,779)               (23,800)
                                                                   _________              _________
      Net cash provided by (used in) operating activities             55,937               (287,302)
                                                                   _________              _________
CASH FLOWS FROM INVESTING ACTIVITIES
  Deposits paid                                                            -                 (6,249)
  Purchase of fixed assets                                           (33,774)               (19,597)
                                                                   _________              _________
    Net cash used in investing activities                            (33,774)               (25,846)
                                                                   _________              _________
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of convertible debt                               -                542,910
  Payments on related party advances                                  (3,845)                (3,550)
  Principal payments on notes                                         (6,353)              (232,525)
                                                                   _________              _________
    Net cash provided by (used in) financing activities              (10,198)               306,835
                                                                   _________              _________
    Net increase (decrease) in cash                                   11,965                 (6,313)

    Cash and cash equivalents at
      December 31, 2001, and 2000                                      1,387                  7,700
                                                                   _________              _________
    Cash and cash equivalents at
      December 31, 2002, and 2001                                  $  13,352              $   1,387
                                                                   =========              =========


   The Accompanying Notes are an Integral Part of These Financial Statements

</TABLE>

                                      F-6


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For The Years Ended December 31, 2002, and 2001


SUPPLEMENTARY INFORMATION AND NON CASH TRANSACTIONS

During the years ended December 31, 2002 and 2001, interest paid was $97,786 and
$153,726, respectively.

The Company paid no taxes during the years ended December 31, 2002, and 2001.

In January 2002 the Company issued 1,400,000 shares of its common stock for
services valued at $98,000. Also in January 2002 the Company issued 1,000,000
shares of its common stock, valued at $35,000, and set up a customer deposit
valued at $65,000, to relieve a payable with a value of $100,000

In June 2002 the Company issued 550,000 shares of its common stock for services
valued at $71,500.

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

In November 2001 the Company issued 1,000,000 shares of its common stock for
services valued at $70,000 to directors of the Company.


   The Accompanying Notes are an Integral Part of These Financial Statements


                                      F-7


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         iCrystal, Inc. (the Company) was incorporated on October 5, 1994, in
         the state of Delaware as Cable Group South, Inc. In November 1998 the
         Company changed its name to Softnet Industries, Inc., and in June 1999
         the name was changed to I Crystal. In June 2000 the name was changed
         again to iCrystal, Inc. The Company's offices are located in Surrey and
         Vancouver, British Columbia, where it engages in developing and
         licensing software related to the Internet gaming industry. Products
         include various theme oriented blackjack and poker games, slot
         machines, and bingo games. The Company does not conduct any gaming
         activities.

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

         GOING CONCERN
         These financial statements have been prepared assuming that the Company
         will continue as a going concern. The Company has incurred net losses
         since inception and at December 31, 2002, the Company had a working
         capital deficiency of $745,078 and a stockholders' deficit of $673,000.

          In the event that future operating cash flows do not meet all the
         Company's cash requirements, it will need to obtain additional
         financing in the form of private placements of equity securities.
         Success in raising additional financing is dependent on the Company's
         ability to demonstrate that it can fulfill its future business
         strategies. Should the Company need additional financing through debt
         or equity placements, there is no assurance that such financing will be
         available, if at all, or at terms acceptable to the Company.


                                      F-8


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         Management believes that the future cash flows from operations and its
         ability to raise additional debt or equity capital will allow the
         Company to generate sufficient cash to support its operations.

         BASIS OF PRESENTATION
         The preparation of the financial statements in conformity with
         generally accepted accounting standards in the United States of America
         requires management to make estimates and assumptions that affect
         certain reported amounts and disclosures. Accordingly, actual results
         could differ from those estimates

         CASH AND CASH EQUIVALENTS
         For purposes of the statement of cash flows, the Company considers all
         highly liquid debt instruments purchased with a maturity of three
         months or less to be cash equivalents. As of December 31, 2002, and
         2001, the Company held no cash equivalents.

         ACCOUNTS RECEIVABLE
         The Company extends credit to licensees on an unsecured basis.
         Management establishes allowances for doubtful accounts based on
         evaluation of historical and current payment trends as well as
         consideration of specific collection issues that may require additional
         specific allowances. As of December 31, 2002, all accounts receivable
         were considered collectible.

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


                                      F-9


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         REVENUE RECOGNITION
         The Company recognizes revenue when earned, in accordance with American
         Institute of Certified Public Accountants Statement of Position (SOP)
         97-2 "SOFTWARE REVENUE RECOGNITION" and SOP 98-9 "MODIFICATION OF SOP
         97-2 WITH RESPECT TO CERTAIN TRANSACTIONS," and the Securities and
         Exchange Commission's Staff Accounting Bulletin No. 101 "REVENUE
         RECOGNITION IN FINANCIAL STATEMENTS." Royalties based upon licensees'
         net gaming revenues are recognized as revenues when earned. Revenue
         from packaged product sales to and through distributors and resellers
         is recorded when related products are shipped. Revenue attributable to
         significant undelivered elements, including maintenance and technical
         support, is recognized over the contract period, ranging from 3 to 5
         years.

         FIXED ASSETS
         Depreciation and amortization expense is provided for on a declining
         balance basis over the estimated useful lives of the assets. Leasehold
         improvements are amortized over the remaining lease terms.

         VALUATION OF LONG-LIVED ASSETS
         The Company periodically reviews long-lived assets, including
         identifiable intangible assets, whenever events or changes in
         circumstances indicate that the carrying amount of an asset may be
         impaired and not recoverable. Adjustments are made if the sum of the
         expected future undiscounted cash flows is less than the carrying
         amounts.

         LOAN ORIGINATION FEES
         Loan origination fees were capitalized and amortized on a straight-line
         basis over the life of the loan.

         ADVERTISING COSTS
         Advertising costs are charged to operations when incurred. Total
         advertising costs charged to expense for the years ended December 31,
         2002, and 2001, were $10,098 and $4,002, respectively.


                                      F-10


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         LOSS PER SHARE
         Net loss per share is provided in accordance with Statement of
         Financial Accounting Standards (SFAS) No. 128 "EARNINGS PER SHARE".
         Basic loss per share for each period is computed by dividing net loss
         by the weighted average number of shares of common stock outstanding
         during the period. Diluted loss per share reflects per share amounts
         that would have resulted if dilutive common stock equivalents had been
         converted to common stock. As of December 31, 2002 and 2001, the
         Company had no dilutive common stock equivalents such as stock options.

         INCOME TAXES
         The Company accounts for income taxes using the liability method.
         Deferred taxes are provided for temporary differences between the basis
         of assets and liabilities for financial reporting and income tax
         purposes at enacted tax rates. Deferred tax amounts represent the
         future tax consequences of those differences, which will be either
         deductible or taxable when the assets and liabilities are recovered or
         settled. Valuation allowances are established when necessary to reduce
         deferred tax assets to the amounts expected to be realized.

         The Company is subject to tax reporting in multiple jurisdictions and
         considers the requirements of each jurisdiction when preparing its
         estimates of taxes currently due and deferred taxes. Each jurisdiction
         has its own oversight and enforcement bodies, and the Company is
         subject to audits in each taxing jurisdiction. The Company's provision
         for tax obligation represents estimates which are subject to changes
         and adjustments resulting from future events. (See Note 3)

         RESEARCH AND DEVELOPMENT COSTS
         Research and development costs are expensed as incurred. During the
         years ended December 31, 2002, and 2001, the Company expensed $564,837
         and $398,275, respectively for research and development costs.


                                      F-11


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         SEGMENT INFORMATION

         The company reports segments in accordance with SFAS No. 131 "
         DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION."
         SFAS No. 131 requires that reportable segments be designated using a
         management approach, which relies on the internal organization used by
         management for making operational decisions and assessing performance.
         SFAS No. 131 also requires certain disclosures about products and
         services, geographical areas, and major customers. Management assesses
         the performance of its operations as a single segment. (See Note 8)

         NEW ACCOUNTING PRONOUNCEMENTS
         In May 2002 the Financial Accounting Standards Board (`FASB') issued
         Statement of Financial Accounting Standards (`SFAS') 145 "RESCISSION OF
         FASB STATEMENTS NO. 4, 44, AND 64, AMENDMENT OF FASB STATEMENT NO. 13,
         AND TECHNICAL CORRECTIONS". This pronouncement requires that gains or
         losses arising from early extinguishments of debt that are part of a
         company's recurring operations (i.e., a risk management strategy) would
         not be reported as extraordinary items. The statement also provides
         that modifications to a capital lease that make it an operating lease
         be accounted for as a sale-leaseback. Management believes that SFAS No.
         145 will not materially affect the financial results of the Company.

         In August 2002 the FASB issued SFAS 146 "ACCOUNTING FOR COSTS
         ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES". This statement supercedes
         pronouncement 94-7 from the Emerging Issues Task Force (EITF) and
         establishes new standards of accounting and reporting for exit
         activities (including a restructuring). Under EITF 94-3, a liability
         was recognized as of the date of an entity's commitment to an exit
         plan. According to SFAS 146, a liability for exit or disposal costs is
         recorded as of the date that the obligation is incurred. This standard
         also requires that the liability be initially measured at fair value.
         The Company will account for exit or disposal activities in accordance
         with the guidance in SFAS 146. Management does not feel that this
         standard will affect the Company, as they will not incur exit or
         disposal costs.


                                      F-12


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         In October 2002 the FASB issued SFAS 147, "ACQUISITIONS OF CERTAIN
         FINANCIAL INSTITUTIONS". SFAS 147 addresses financial accounting and
         reporting for the acquisition of all or part of a financial
         institution. Since SFAS 147 is not relevant to the Company's business
         this statement will have no impact on the Company's financial position
         or results of operations.

         In December 2002 the FASB issued SFAS 148 "ACCOUNTING FOR STOCK BASED
         COMPENSATION". This SFAS amends SFAS 123 and provides new guidance
         regarding the transition when an entity changes from the intrinsic
         value method to the fair value method of accounting for employee stock
         based compensation cost. Additional information is now required to be
         disclosed regarding such cost in the financial statements of public
         companies. Since the Company has no employee stock based compensation
         plan at present, this SFAS will not affect the Company at this time.

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

         In December 1999 the Company issued 200,000 common shares to West Peak,
         which did not accept the shares tendered based on its position that the
         shares were to be registered upon delivery. In February 2000 after
         negotiations to resolve the issue failed, West Peak filed a claim
         against the Company in the Supreme Court of British Columbia, Canada,
         claiming breach of the loan agreement. In September 2000 the Court
         ordered the company to pay West Peak the balance of the note plus
         interest and other costs. The Company made principal payments of $6,353
         and $35,227 during 2002 and 2001, respectively, leaving a balance of
         $984 at December 31, 2002.


                                      F-13


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         In 2001 the Company received unsecured advances from Lexington Systems,
         a related party, totaling $175,559. The Company also converted $22,700
         of its accounts payable to the advance. The advances were convertible
         to shares of the Company's common stock at a value of $.08 per share.
         The advance was convertible at the discretion of Lexington Systems. The
         advances carried an interest rate of 7.14% per month on the principal
         and were due on demand. The conversion feature of the advances had a
         beneficial amount based on the intrinsic value of the conversion. The
         Company accrued $56,798 to additional paid in capital for the
         beneficial conversion feature of these advances. (See Note 8)

         In November 2001 the Company refinanced the convertible advances with
         third parties, related to Manihi, the master licensee, through common
         ownership, in the amount of $418,770. The note included commissions and
         fees of $68,558, carries an interest rate of 4% per month on the
         outstanding principal, and was due May 15, 2002. The notes are
         convertible to shares of the Company's common stock at a value of $.04
         per share. The notes and accrued interest are convertible at the
         discretion of the lenders At the time of issuance, the notes did not
         have a beneficial conversion feature, as the conversion price was equal
         to the fair market price of the stock. In May 2002 the note was
         extended for twelve months with the same terms. As of December 31, 2002
         the balance of the note and accrued interest was $549,767 and is due in
         2003. (See Note 8).

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

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


                                      F-14


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


                                                           2002     2001
                                                           ____     ____
         FEDERAL
         Current                                           $-0-     $-0-
         Deferred                                           -0-      -0-
                                                           ____     ____

             Total provision for federal income taxes       -0-      -0-
                                                           ____     ____
         CANADIAN
         Current                                            -0-      -0-
         Deferred                                           -0-      -0-
                                                           ____     ____

             Total provision for Canadian income taxes      -0-      -0-
                                                           ____     ____

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

         Deferred tax benefits and liabilities are calculated using enacted tax
         rates in Canada and the U.S. in effect for the year in which the
         differences are expected to reverse.

            The following is a schedule of the composition of the income tax
         benefit:

                                                       2002             2001
                                                       ____             ____

            Net operating loss carryforward        $ 2,435,232      $ 2,323,669
            Valuation                               (2,435,232)      (2,323,669)
                                                   ___________      ___________
              Total provision for income taxes     $       -0-      $       -0-
                                                   ===========      ===========

         Reconciliation of the statutory federal income tax rate to the
         Company's effective tax rate is as follows:

                                                           DECEMBER 31
                                                   ____________________________
                                                       2002             2001
                                                       ____             ____

            Net loss before taxes                  $  (242,511)     $  (580,120)
            U.S. statutory rate                          34.00%           34.00%
                                                   ___________      ___________
            Change in deferred tax                      82,453          196,569
            Change in deferred tax asset
              valuation account                        (82,453)        (196,569)
                                                   ___________      ___________
            Total tax expense                      $      0.00      $      0.00
                                                   ===========      ===========
            Effective tax rate                             0.0%             0.0%
                                                   ===========      ===========

         The net change in the valuation account was $82,453 and $196,569, in
         the years ended December 31, 2002, and 2001, respectively. The
         valuation allowance has been estimated in an amount equal to the


                                      F-15


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         projected future benefit of the loss carryforward because there is no
         assumption that the Company will generate sufficient income to utilize
         the tax benefit.

         The Company has incurred losses since its inception and has filed no
         income tax returns. The losses incurred to date may be limited due to
         the change in control of the Company and limitations on the
         deductibility of $4,628,200 for services in exchange for issuance of
         common stock. In the event that all returns are filed and accepted by
         the taxing authority, the Company will have unused net operating
         losses available for carryforwards of $7,076,831 that will start to
         expire in 2009 in the U.S.

         As a result of not filing all income tax returns, the Company may be
         subject to assessment of penalties. However, as of April 2, 2003, no
         assessments have been received and the likelihood of receiving such
         assessments or negotiating a settlement in the event assessments are
         received is difficult to estimate. Accordingly, the Company has not
         provided for any payments that may be made if such penalties are
         assessed.

         Under existing laws, undistributed earnings of foreign subsidiaries are
         not subject to U.S. tax until distributed as dividends. To the extent
         such earnings exist, they are considered indefinitely reinvested, and
         the Company provides no deferred income tax on such amounts.

4.       CAPITAL STOCK
         The Company has a single class of $0.01 par value common stock. Thirty
         million shares are authorized and 19,732,785 shares are issued (or
         committed to be issued) and outstanding at December 31, 2002.

         In 2002 the Company issued 1,950,00 shares of its common stock for
         services valued at $169,500.


                                      F-16


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         In 2002 the Company also issued 1,000,000 shares of its common stock to
         relieve a accrued liability valued at $35,000.

          In 2001 the Company issued 100,000 shares for marketing and consulting
         services valued at $22,000.

         In 2001 the Company issued 1,000,000 shares of its common stock to two
         officers and directors for consulting services valued at $70,000.

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

         There were no stock options outstanding during the year ended December
         31, 2002. A summary of the changes to status of the Plan in the year
         ended December 31, 2001, was as follows:
                                                                    Weighted
                                                                    Average
                                                      Number of     Exercise
                                                       Options       Price
                                                      _________     ________

         Options outstanding at December 31, 2000     1,350,000      $ .20
         Granted                                            -0-        -0-
         Exercised                                          -0-        -0-
         Forfeited                                   (1,350,000)       .20
                                                     __________      _____
         Options outstanding at December 31, 2001    $      -0-        -0-
                                                     ==========      =====


                                      F-17


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


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

         The Plan included a cashless exercise feature that allows holders to
         exercise their options without presenting cash or other consideration.
         When this feature is utilized, the Company withholds from shares that
         would otherwise be issued the number of shares having a fair market
         value equal to the option exercise price. Consequently, the number of
         shares issuable upon exercise varies with changes in the Company's
         stock price. Because the number of shares to be issued is not fixed,
         the Company remeasures the compensation cost of outstanding employee
         and non-employee directors' options at each balance sheet date. No
         additional compensation was recognized for 2002 or 2001 as a result of
         any remeasurement of the compensation cost of these options. There were
         no options outstanding as of December 31, 2002.

         The Company applies the provisions of SFAS No. 123, "ACCOUNTING FOR
         STOCK BASED COMPENSATION," and related interpretations to account for
         stock-based awards granted to non-employees, other than non-employee
         directors. SFAS No. 123 requires that the cost for non-employee stock
         options be measured based on the fair value of the options granted at
         the date the services were performed. The Company uses the
         Black-Scholes option-pricing model to compute estimated fair value.
         There were no stock options granted to non-employees during the years
         ended December 31, 2002 or 2001.


                                      F-18


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


6.       OBLIGATIONS UNDER LEASE
         The Company occupies leased premises which have renewal options with
         terms and conditions similar to the original lease. The rent expense
         for the years ended December 31, 2002, and 2001, was $53,011 and
         $40,975, respectively.

7.       CONTINGENCIES
         Financial instruments which potentially subject the Company to
         concentrations of credit risk consist mainly of cash equivalents and
         trade receivables. The Company extends credit to its major customer,
         Manihi. In addition, the Company maintains amounts on deposit with
         financial institutions which at times, exceed federally insured limits.
         The Company has not experienced any significant losses in such
         accounts, nor does management believe it is exposed to any significant
         credit risk.

8.       RELATED PARTY TRANSACTIONS
         The Company is affiliated with the following entities:

         Slamko Visser, Chartered Accountants (Slamko Visser)
         The Company is affiliated with the Canadian chartered accounting firm
         Slamko Visser through common ownership. During 2002 and 2001, the
         Company incurred $21,000 and $16,279, respectively, of expense to
         Slamko Visser for consulting and accounting fees and related costs. The
         Company had $32,725 of accounts payable due to Slamko Visser at
         December 31, 2002.

         Manihi, Inc.
         Effective in November 2000 Manihi and the Company entered into a
         25-year exclusive master license agreement (the `Agreement'). Under
         terms of the Agreement with Manihi, the Company is obligated to provide
         all new and existing casino gaming software, smart-download features
         and website development, technical support and back-end accounting
         features. The Company, in return, will receive thirty percent of the
         first $250,000 and fifteen percent of any additional amounts of monthly
         net gaming revenue derived from the Company's software and website


                                      F-19


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


         packages. Also, the Company will also receive fifty percent of the
         gross revenue derived form the upfront set-up fees charged to
         sub-licensees and ten percent of gross revenue derived from sales of
         software to sub-licensees. Manihi is also required to spend a minimum
         of $10,000 monthly advertising for each software package or casino. The
         Company recorded $1,270,877 and $873,471 of revenue for the royalty
         collected and the elements delivered during the years ended December
         31, 2002 and 2001, respectively. As of December 31, 2002, the Company
         had $82,974 due from Manihi.

         During 2001 the Company received advances totaling $175,559 and
         converted $22,700 of accounts payable for a total advance of $198,259
         from Lexington Systems Limited, an affiliate of Manihi, Inc., through
         common ownership. In November 2001 the Company refinanced the advance
         with Wellington, Ltd., a company also related to Manihi through common
         ownership. The total interest accrued to Lexington Systems Limited and
         Wellington, Ltd., during the years ended December 31, 2002, and 2001,
         was $253,457 and $151,953, respectively. As of December 31, 2002 the
         Company owed a total of $549,767 for the note and related interest.

9.       SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS
         SEGMENT INFORMATION
         The Company's primary operations consist of the development and
         licensing of internet-based gaming technology. Management assesses the
         performance of its operation as a single segment.

         GEOGRAPHIC INFORMATION
         Following is a summary of revenues and long-lived assets related to the
         respective countries in which the Company operates. Revenues are
         attributed to countries based on location of customers.


                                      F-20


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


                                          For the Year Ended December 31, 2002
                                          ____________________________________
                                            Revenue       Long-lived Assets
                                            _______       _________________

         Canada                            $      -0-         $ 65,507
         Central America or Costa Rica      1,270,877              -0-
                                           __________         ________
             Consolidated Total            $1,270,877         $ 65,507
                                           ==========         ========


                                          For the Year Ended December 31, 2002
                                          ____________________________________
                                            Revenue       Long-lived Assets
                                            _______       _________________

         Canada                            $      -0-         $ 58,710
         Central America or Costa Rica        873,471              -0-
                                           __________         ________
             Consolidated Total            $  873,471         $ 58,710
                                           ==========         ========

         MAJOR CUSTOMERS
         During the years ended December 31, 2002, and 2001, the Company
         realized $1,270,877 and $873,471, of revenue, respectively, under its
         exclusive master license agreement with Manihi, Inc.

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

         The fair value of accounts receivable and payable, related party
         payable, and other current liabilities approximate their carrying
         amounts. The fair value of the advance from stockholder and the note
         payable approximates its carrying amount because of the short term
         nature of the financial instruments. The fair value of the convertible
         debt, approximate the carrying value December 31, 2002, as it reflects
         the current terms and conditions for similar debt available to the
         Company.


                                      F-21


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001


11.      SUBSEQUENT EVENT
         In February 2003 the Company entered into an agreement to sell all of
         its assets relating to the Internet gaming software to Wellington,
         Ltd., to relieve substantially all of the convertible debt and related
         interest payable and other account payable.












                                      F-22


<PAGE>


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

On October 19, 2001, Registrant dismissed Moss Adams LLP. and, on
October 10, 2001, Registrant retained Mark Bailey & Co. Ltd. as its auditor.
During the two previous fiscal years, the auditor expressed no adverse opinion,
nor was any audit qualified or modified. There were no disagreements of any kind
between iCrystal, Inc. and Moss Adams.


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Although the Company's BYLAWS provide for a Board of Directors consisting of not
less than two nor more than five directors, and the number is determined by a
properly approved resolution of the Board. The Board currently consists of three
(3) directors.

                        DIRECTORS AND EXECUTIVE OFFICERS


NAME                  AGE     POSITION

                             OFFICERS AND DIRECTORS:

Larry J. Hrabi        51     Director, Chairman and Chief Executive Officer of
                             the Company.
                             Director and Chief Executive Officer of I Crystal
                             Software.

Derek Bodnarchuk      28     Director and President.

H. Rex Hollett        71     Director.

                            SENIOR TECHNOLOGY PERSONNEL:

Fabrice L'Heureux     31     Project Development Coordinator and Creative
                             Director.


LARRY J. HRABI is the Chairman of the Company's Board of Directors and its Chief
Executive Officer. Mr. Hrabi has been a Director since DECEMBER 10, 1998 and the
Chief  Executive  Officer of the Company since  DECEMBER 10, 1998. Mr. Hrabi has
also  served as a Director  and the Chief  Executive  Officer  of the  Company's
wholly owned  subsidiary,  I Crystal  Software  since AUGUST 17, 1999.  Prior to
joining the Company Mr. Hrabi was the  President of Klein's Hair Care Centre,  a
private  manufacturing  company he has owned since 1975.  Mr.  Hrabi is also the
President and major shareholder of Cleanse-Rite Solutions.

DEREK BODNARCHUK has been a member of the Company's Board of Directors since ,
November 3, 1999, and has been President since July 2000. Mr. Bodnarchuk is the
president of 591879 BC Ltd., a drive-through coffee kiosk established in October
1999 which is operated as Celestial Blends Coffee. From August through January
of 1999 Mr. Bodnarchuk was the Manager of Delrios Restaurants. Prior to that he
was a martial arts instructor at the Academy of Martial Arts and Inner Power
from December 1997 through December 1998. From June 1995 to December 1997 he was
a waiter at Delrios Restaurant.


<PAGE>


HENRY REX HOLLETT has been a director of the Company since March 2000. For the
past 44 years Mr. Hollett has been the president and owner of B & H Tire, Ltd.
He also is presently on the council for the District of North Cowichan, British
Columbia, Canada, where he has held the title of Mayor for over 10 years.

FABRICE L'HEUREUX is not an executive officer but has been the Company's
Software Development Manager since JULY 1, 1999. Under a service CONTRACT the
Company entered into with 4250 Investments Ltd., Mr. L'Heureux is responsible
for development and design of the company's and licensees WEBSITES and the
Company's overall creative and graphic design of Company software. Mr. L'Heureux
graduated form Laval University in 1995 with a degree in Communications and
Graphic Design and a degree in "ALIAS WAVEFRONT 3-D SOFTWARE FOR THE MOTION
PICTURE INDUSTRY". He has designed numerous WEBSITES and was the Art Director
and Multi-media Producer for ITV.net, an Internet broadcaster based in
Vancouver, B.C. He is also a creator and designer of the MetroBingo software
acquired by the Company.

<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

The following table shows, for the three-year period ended DECEMBER 31, 2001,
the cash and other compensation paid to the Company's Chief Executive Officer.
No other executive officer had annual compensation in excess of $100,000 during
such period.


                           SUMMARY COMPENSATION TABLE

                                    2002   $60,000
LARRY HRABI     Chief Executive     2001   $70,500
                Officer             2000   $70,500 (1)    $2,667
                                    1999   $ 6,000        $2,667

(1) Mr. Hrabi's Service CONTRACT with the Company provided that he be granted
100,000 shares of Common Stock on or prior to NOVEMBER 1, 2000. The compensation
represented by the issuance of such stock is being recognized monthly by the
Company and Mr. Hrabi during the twelve month period commencing November 1999 at
a rate of $1,333. Additionally in August 2000, Mr. Hrabi was granted 150,000
options to acquire Common Stock, which were immediately exercisable at $.20 per
share and which expired in August 2001. In September, 2001 Mr. Hrabi was issued
500,000 Common Stock for a value of $35,000 for services rendered.



                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

On APRIL 4, 2000 the Company's Directors approved the 2000 Incentive Plan of the
Company subject to approval of the Company's Stockholders at the Special Meeting
of stockholders of the Company, which approval was granted by the Stockholders
in JUNE 2000. Prior to April 2000, had no employee stock option or other
incentive plans. To date, the Company has issued 1,350,000 options to acquire
the Common Stock to various officers, directors and employees of the Company
exercisable at $.20 per share, all of which vested immediately upon issuance and
which expired in August 2001.


                            COMPENSATION OF DIRECTORS

The directors of the Company are not compensated for their services although
such directors may from time to time be awarded options or other incentives
under the Company's 2000 Incentive Plan.


                     CONTRACTUAL ARRANGEMENTS FOR EMPLOYMENT

On JULY 1, 1999 the Company entered into a Service CONTRACT with 4250
Investments Ltd., a personal CONTRACT company whereby Mr. L'Heureux will act as
the Company's Software Development Manager to develop WEBSITES for its corporate
and licensee clients, to administer its software development project and to
oversee the overall creative, graphic direction and design efforts of THE
COMPANY. This Service CONTRACT may be terminated at any time upon the provision
of 14 days notice by either party. Under the Service CONTRACT 4250 Investments
Ltd. was paid $4000 per month, subject to performance reviews every three months
at which time the amount of compensation could be adjusted upward in the
discretion of the president. On NOVEMBER 1, 1999 monthly compensation was
increased to $5,000 per month. This contract is being paid on a month to month
basis at a rate of $5,000 per month.

On NOVEMBER 1, 1999 the Company entered into a Service CONTRACT with Mr. LARRY
HRABI whereby Mr. Hrabi will perform consulting work to develop and oversee
Company investor relations, and the Company's overall licensing, sales and
marketing efforts. This Service CONTRACT may be terminated at any time upon the
provision of 14 days notice by either party. Under the Service CONTRACT Mr.
Hrabi was paid US$60,000 on an annual basis, and was entitled to receive 100,000
shares of Common Stock prior to NOVEMBER 1, 2000, unless the Service CONTRACT
has been previously terminated by either party. All 100,000 shares of Common
Stock were issued to Mr. Hrabi on JANUARY 11, 2000. In addition, Mr. Hrabi was
issued 500,000 shares in September, 2001 as part of the compensation package.


<PAGE>


On DECEMBER 2, 1999 the Company entered into a Service CONTRACT with Douglas
Slamko, whereby Mr. Slamko agreed to serve as president of the Company to
organize, implement and oversee overall operations and to direct the Company's
marketing program. This Service CONTRACT may be terminated at any time upon the
provision of 14 days notice by either party. Under the Service CONTRACT, Mr.
Slamko is paid $5000 per month, and was entitled to receive 100,000 shares of
Common Stock on or prior to FEBRUARY 3, 2000, for services provided in 1999
unless the Service CONTRACT had been previously terminated by either party. All
100,000 shares of Common Stock were issued to Mr. Slamko on JANUARY 11, 2000.
Mr. Douglas Slamko resigned his positions with the Company in 2000.


                        REPORT ON PRICING OF OPTIONS/SARS

Of the 1,350,000 Common Stock options granted as of August 2000, all were
granted at an exercise price of $.20 per share, which was the fair market value
as of that date. All of these options expired in August of 2001. No new options
have been granted in fiscal 2001 under the 2000 Incentive Plan.


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


Prior to the date when the Company established its own bank account in late
1999, all cash transactions were deposited in and disbursed from an account
under Diversified Cosmetics International Inc. Diversified had originally sold
the software to the company in exchange for 2.5 million shares. Diversified had
also paid various expenses on the Company's behalf. The net effect of these
circumstances has resulted in the Company owing Diversified $3,845 at DECEMBER
31, 2001. The advances bear no interest since they are among related parties.
During 2001, Diversified distributed its 2.5 million shares of the company to
its stock holders as part of its winding up process.

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

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

The Company is affiliated with the Canadian chartered accounting firm Slamko
Visser through common ownership. During 2001 and 2000, the Company incurred
$16,279 and $37,800, respectively, of expense to Slamko Visser for consulting
and accounting fees and related costs. The Company had accounts payable of
$51,079 due to Slamko Visser at December 31, 2001.

During 2000, the Company owed Diversified $102,100. During the third quarter
2000, the Company repaid $49,700 of this amount, and Diversified agreed to
settle the remaining $52,400 obligation by accepting the assignment of a
receivable from DCI, Inc. At December 31, 2001 the Company owed Diversified
$3,845 for certain bills paid by Diversified.


<PAGE>


                           DESCRIPTION OF SECURITIES.

The Company's CERTIFICATE OF INCORPORATION authorizes a total share capital of
30,000,000 of which all such shares are designated as Common Stock, par value
$0.01 per share. There are no preemptive rights associated with these securities
and no cumulative voting is authorized by the BY-LAWS.

Each shareholder is entitled to one vote for each share of Common Stock owned of
record. The holders of shares of Common Stock do not possess cumulative voting
rights, which means that the holders of more than 50% of the outstanding shares
voting for the election of directors can elect all of the directors, and in such
event the holders of the remaining shares will be unable to elect any of THE
COMPANY's directors. Holders of outstanding shares of Common Stock are entitled
to receive dividends out of assets legally available at such times and in such
amounts as the Company's board of directors may determine. Upon liquidation,
dissolution, or winding up, the assets legally available for distribution to THE
COMPANY's shareholders will be distributed ratably among the holders of the
shares outstanding at the time. Holders of the Company's shares of Common Stock
have no preemptive, conversion, or subscription rights, and the Company's shares
of Common Stock are not subject to redemption. All the Company's outstanding
shares of Common Stock are fully paid and non-assessable.

There are no restrictions in the Company's CERTIFICATE OF INCORPORATION, as
amended to date or its current , which restrict or inhibit changes in the voting
control or ownership in the Company.


        MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND
                          RELATED STOCKHOLDER MATTERS.

The Company's shares of Common Stock formerly traded on the OTC Bulletin Board
Market under the trading symbol "ICRS." The Company's Common Stock initially
began trading on the OTC Bulletin Board on MAY 20, 1998 under the symbol "CGSI."
The Company changed its name to SoftNet Industries Inc. on NOVEMBER 18, 1998 and
the Company's trading symbol was subsequently changed to "SFNT" on NOVEMBER 24,
1998. On JULY 29, 1999 the Company's name was changed to I crystal Inc. due to a
conflicting name being used by another company and its trading symbol was
changed to "ICRS" on AUGUST 3, 1999 until March 1999 when the Company's symbol
changed to "ICRSE." On APRIL 5, 2000 the Company's stock began trading on the
National Quotation Bureau's pink sheets. As of APRIL 12, 2002, there were
16,782,785 shares of Common Stock outstanding. The high and low bid prices of
the Company's Common Stock for each quarter of its last two fiscal years as
quoted from the OTC Bulletin Board were:


           QUARTER                     HIGH BID PRICE     LOW BID PRICE



           1st Quarter 2002 (ICRS)         $0.12              $0.04
           2nd Quarter 2002 (ICRS)         $0.08              $0.05
           3rd Quarter 2002 (ICRS)         $0.06              $0.04
           4th Quarter 2002 (ICRS)         $0.06              $0.01

           1st Quarter 2001 (ICRS)         $0.10              $0.05
           2nd Quarter 2001 (ICRS)         $0.18              $0.10
           3rd Quarter 2001 (ICRS)         $0.09              $0.05
           4th Quarter 2001 (ICRS)         $0.14              $0.08



These quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission, and may not represent actual transactions.


<PAGE>


                    RECENT SALES OF UNREGISTERED SECURITIES.

The following sets forth certain information concerning the currently
outstanding securities of the Company which were sold or issued by the Company
during the last two years without the registration of the securities under the
Securities Act in reliance on exemptions from such registrations requirements.

In July 2000, the Company issued 1,000,000 shares of the 2000 Subscriptions to
approximately 6 non-U.S. resident investors for an aggregate of US$200,000 in
cash. The 2000 Subscriptions have "PIGGY-BACK" registration rights for a period
of one year in the event the Company proceeds to register shares of Common Stock
under the Securities Act of 1933. To the extent U.S. securities laws were
applicable to the issuance, the issuance was made in reliance of Rule 506 under
Regulation D and in any event under Section 4(2) as a private transaction, not
involving a public offering.

In September, 2001 the Company issued 1,000,000 shares to two officers and
directors for services valued at $70,000. In addition, during 2001 the Company
issued 100,000 shares for marketing and consulting services valued at $22,000.


                   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article Eight of the Company's provides that the directors of the Company shall
not be liable to the Company or the shareholders of the Company for a breach of
fiduciary duty unless such breach involves (1) the director's duty of loyalty to
the Company, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (3) liability for
unlawful payments of dividends or stock purchases or redemption's by the
Company, or (4) a




<PAGE>

ITEM 13.    EXHIBITS, LISTS AND REPORTS ON FORM 8-K.

a)       All required exhibits, including the Company's Articles of
         Incorporation, and Bylaws, are attached to the Company's Form 10-SB/A,
         filed May 30, 2000. All previously filed exhibits are incorporated
         herein by reference.

b)       No reports were filed on Form 8K during the period ended December 31,
         2002.

                                INDEX TO EXHIBITS

The following exhibits are filed pursuant to Rule 601 of Regulation S-B.

                                     EXHIBIT

NUMBER      DESCRIPTION

3.1         CERTIFICATE OF INCORPORATION of the Company filed on OCTOBER 5,
            1994.*

3.2         Certificate for Renewal and Revival of Charter of the Company filed
            on DECEMBER 3, 1997.*

3.3         Certificate   of  Amendment  of CERTIFICATE OF INCORPORATION of
            the Company filed NOVEMBER 18, 1998.*

3.4         Certificate  of  Amendment  to  the CERTIFICATE OF INCORPORATION of
            the Company filed on JULY 29, 1999.*

3.5         BYLAWS of the Company adopted OCTOBER 10, 1994.*

4.1         2000 Incentive Plan of the Company.*

4.2         Form of Subscription Agreement for the 2000 Subscriptions.*

8.1         Current Report Form 8-K dated October 29, 2001*

10.1        License and Option to Sell Agreement dated DECEMBER 1, 1998, by and
            between Diversified and the Company.*

10.2        Notice  of  Exercise  Put  Option dated  DECEMBER 10, 1998,  by and
            between Diversified and the Company.*

10.3        Company Promissory Note dated DECEMBER 10, 1998, issued to
            Diversified.*

10.4        Service CONTRACT dated FEBRUARY 3, 1999, by and between the Company
            and Leonard Slamko.*

10.5        Letter of Intent dated MARCH 3, 1999, by and between the Company and
            Digital Commerce.*

10.6        Agreement dated APRIL 8, 1999, by and between the Company  and the
            Master Licensee.*

10.7        Agreement  dated APRIL 22, 1999,  by and  between the Company and
            RSA Software, Inc.*

10.8        Addendum to Agreement dated MAY 1, 1999 by and  between the  Company
            and Master Licensee.*

10.9        Service CONTRACT dated JUNE 28, 1999, by and between the Company
            743633 Alberta Ltd. (DBA Computer Assistants).*

10.10       Service CONTRACT dated JULY 1, 1999, by and between the Company and
            4250 Investments Ltd.*

10.11       Service  CONTRACT dated JULY  1,  1999,  by and between the Company
            and Sean Comeau.*

10.12       Convertible Loan dated AUGUST 16, 1999, by and between the Company
            and West Peak Ventures of Canada, Inc.*

10.13       Agreement dated AUGUST 28,   1999,   by   and between   the  Company
            and Power Star Corp.*

10.14       Lease INDENTURE dated SEPTEMBER 4, 1999 by and between Mario's
            Pinocchio Ristorante, Ltd. and the Company.*

10.15       Agreement   dated  OCTOBER 15,  1999,  by and between the  Master
            Licensee and the Company.*

10.16       Service   CONTRACT   dated NOVEMBER  1, 1999,  by and between  THE
            COMPANY and LARRY HRABI.*

10.17       Service    CONTRACT   dated DECEMBER  2,  1999,  by and between  THE
            COMPANY and Douglas Slamko.*

10.18       Agreement, dated MARCH 13, 2000, by and between I Crystal Soft- ware
            and American Amusements Co.*

10.19       Agreement dated DECEMBER 3, 1999 by and between the Company and CTC,
            Inc.*

11.1        Statement re computation of per share earnings.*

21.1        Subsidiaries of registrant.*

99          Certification

            ____________________
            * PREVIOUSLY FILED and incorporated by reference to the registrant's
              Form-10SB/A, filed May 30, 2000.

<PAGE>


                                       12



<PAGE>

                                   SIGNATURES

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

Dated this 11th day of April, 2003


                              ICRYSTAL, INC.


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


<PAGE>


                                  CERTIFICATION


I, Larry Hrabi, certify that:

1.   I have reviewed this Annual Report on Form 10-KSB of i Crystal, Inc.;

2. Based on my knowledge, this Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this Annual Report, fairly represent in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this Annual Report;

4. As the registrant's sole certifying officer, I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

i) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the
period in which this Annual Report is being prepared;

ii) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this Annual
Report (the "Evaluation Date"); and

iii) Presented in this Annual Report my conclusions about the effectiveness of
the disclosure controls and procedures based on my evaluation as of the
Evaluation Date;

5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of the board of directors (or persons
performing the equivalent functions):

i) All significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

ii) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. I have indicated in this Annual Report whether or not there were significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of my most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.



April 11, 2003                                   /s/ LARRY HRABI
                                                ___________________
                                                     Larry Hrabi
                                                     Chairman and CFO