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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, 2000

                                 I CRYSTAL, 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. $900,600.

On April 12,  2001,  the  aggregate  market  value of the  voting  stock held by
non-affiliates  of  the  Registrant  was  approximately  $923,698,  computed  by
reference to the price at which the stock was sold on such date.

There were  15,682,800  shares of common stock $.01 par value  outstanding as of
April 12, 2001.

                      Documents incorporated by reference: None.



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


<PAGE>


                             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 will better reflect 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. As
of APRIL 3, 2000,  Diversified  held  16.8% of the Company's  Common  Stock and
officers and directors of the Company held 26.5% of Diversified's  common stock.
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, 2000, THE
COMPANY  has  an  accumulated  deficit  of  $6,254,200  and  has a  shareholders
deficiency of $216,800.


                                    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. The Company generally licenses the use of its software on a
non-exclusive  basis to licensees for the payment of an initial up-front fee and
a  percentage  of the  revenues  generated  by such  licensees  whether at their
WEBSITES or through sublicensees.  As of April 1999 the Company had one licensee
of its Internet  based casino  software and WEBSITE  products,  DCI,  Inc.  (the
"MASTER  LICENSEE").  Effective November 1, 2000, DCI assigned all of its rights
and  obligations to Manihi,  Inc., a Costa Rican  corporation,  which is now the
Master Licensee, under a new 25-year exclusive Master License Agreement.


                                        2


<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  License in 1999 from DCI were $90,900
and $900,600 for the year ended DECEMBER 31, 2000 from both DCI and 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.

The Company  entered into the Master License with the Master Licensee (then DCI)
on APRIL 8, 1999.

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 and concentrated its efforts
and resources on developing its "iBuyLotto" site.

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 is likely to be
disproportionately affected.

                                        3

<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.


                                GAME APPLICATIONS

The Company's first general audience  non-casino  style game is "iBuyLotto",  an
internet  lotto site currently in operation.  The  underlying  game software was
developed by the Company using the MetroBingo  software acquired from Power Star
in August 1999 for 1,450,000 shares of the Company's restricted Common Stock.

The Company has delayed  its plans to  complete  development  of the  MetroBingo
software.


                                        4


<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
two fiscal  years to $658,000 for the fiscal year ending  DECEMBER 31, 1999,  as
compared  to  $376,300,  in the  year  ended  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.


                                       5


<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.

As of January 2000, the current Internet based casino industry has grown to over
650 e-gaming  WEBSITES,  while expected revenues for "E-GAMING" sites in 1999 is
expected to be around $1.2 billion.,  expanding from its North American base, to
such markets as Europe,  China and Australia.  Expenditures  for gambling in the
U.S. for 1997 exceeded $100 billion. Some predicted annual revenues for 2000 for
the Internet based gaming in the U.S. alone at over $8 billion, while other more
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


                                        6


<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

The  United  States  Congress  may  soon be  considering  an  Internet  Gambling
Prohibition Act, formerly known as "THE KYL BILL," sponsored by Senator John Kyl
from Arizona.  If proposed and passed, the Kyl Bill would preempt state laws and
prohibit persons  involved in a gambling  business to use the Internet to place,
receive  or  otherwise  make a bet or  wager  or to  send,  receive,  or  invite
information  assisting in the placing of a bet or wager. An important element of
the Kyl Bill is that it does not place legal liability on the individual  player
and only  attempts  to  regulate  persons  engaged  in a gambling  business  who
knowingly use the Internet to accept wagers from U.S. residents.

While U.S. Federal law on Internet based casino style gaming remains  uncertain,
federal  courts  have  enforced  the Wire  Communications  Act (the "WIRE  ACT")
against on-line sports book operators. In February 2000, a U.S. Federal Court in
New York found the  president  and owner of World Sports  Exchange;  an internet
based sports book,  guilty of violating  the Wire Act for  accepting  wagers for
sporting events over interstate telephone lines.

Individual  U.S.  states have also begun to prohibit or regulate  Internet based
gambling.  Some states such as Missouri  and New York have  directly  prosecuted
operators of WEBSITE casinos accepting wagers from residents of their respective
states, obtaining verdicts resulting in jail time and fines for operators. Other
states,  such as Minnesota  are  obtaining  court  ordered  injunctions  against
WEBSITE  casinos to block them from accepting  wagers from state  residents.  In
other  states,  such as  California  state  authorities  have  begun to apply to
Internet  based  gambling laws  prohibiting  the use of telephone  lines for the
transmission  of gambling  information  and wager, as a basis for prosecution of
Internet  based  companies  transmitting  gambling  information.  Civil suits in
California  have also prevented  banks and credit card companies from collecting
amounts owed on credit  cards used to place  wagers,  thereby  resulting in some
credit card  companies  refusing to allow their cards to be used for the placing
of wagers in the future. Additionally, in states such as California and New York
where  the  legal  status  of  internet   based  gambling   remains   uncertain,
legislatures are considering passage of bills to specifically  prohibit internet
based gambling.


                                        7


<PAGE>


While the Company designs and licenses the casino WEBSITES,  and does not engage
in accepting or placing wagers,  the Master Licensee does accept wagers,  as may
future  licensees  of Company  software.  As a result,  the Master  Licensee and
future  licensees  may face  prosecution  in U.S.  states,  such as those listed
above,  if their  WEBSITES are used for gambling  purposes by residents of those
states.  Such  violations  could  result in legal  actions  against  the  Master
Licensee,  and  possibly  future  licensees,  resulting  in civil  and  criminal
actions,  convictions,  fines and injunctions against them. Although the Company
has only engaged in the design and  licensing  of such casino  WEBSITES to third
parties,  and does not operate such  WEBSITES,  there can be no  assurance  that
state  authorities would not pursue similar penalties against the Company in the
event a  licensee  of Company  designed  WEBSITES  has  accepted  wagers  from a
prohibited jurisdiction.

The  Company's  revenues  would also be adversely  affected by any legal actions
taken against the Master  Licensee if such legal actions  resulted in a decrease
in  the  amount  of net  gaming  revenues  generated  by  the  Master  Licensee.
Additionally,  the  Master  Licensee  and  future  licensee  may find  that some
revenues are denied to them by states, such as California, who refuse to enforce
payment by users of Company licensed casino WEBSITES.  Such an event would again
adversely  affect the Company as Company  revenues are directly  tied to the net
gaming revenues of its Master Licensee.

The gaming industry itself is examining  possible forms of  self-regulation  for
online operations. An industry association, the Interactive Service Association,
has drafted a  voluntary  code of conduct for online  gaming.  These  efforts at
self-regulation  by the on-line  gaming  industry  have been made more urgent by
federal law enforcement initiatives aimed at Internet gambling.

If the Kyl Bill  passes,  and the  individual  states  proceed  to  prohibit  or
restrict online gambling, the Company's Master Licensee and any future licensees
may no longer be able to pursue their business strategies in the U.S. market. As
the  Company's  primary  source of  revenues  is the  percentage  of net  gaming
revenues it receives from its Master Licensee,  the Company's overall operations
and income  would be  adversely  affected if it lost  access to a major  market.
Additionally,  although  the Company  does not operate the WEBSITES it licenses,
should  the Master  Licensee  or future  licensee's  of the  Company's  products
violate the laws of U.S.  jurisdictions,  the Master Licensee,  future licensees
and the Company may be prosecuted for such  violations.  While the Company plans
to coordinate with the Master Licensee and future licensees to share information
concerning  the  developments  which  impact  the  jurisdictions  in which  such
licensees  may  operate,  there  can  be no  assurance  that a  licensee  of the
Company's  software will not violate changing U.S. gambling  restrictions at the
state or federal level.


                                     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.


                                        8


<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.


                                 GLOBAL OUTLOOK

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.


                               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.


                                       9


<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 2001,  there were 14 persons  dedicating  full-time  services to the
Company  of whom four were  acting as  senior  programmers,  two were  acting as
system   administrators,   and  eight  were  involved  in  WEBSITE  development,
marketing,  graphic art  development and project  management.  Of those persons,
nine were full-time employees and five were under contractual  arrangements with
the Company.  Competition  for qualified  management and technical  employees is
intense in the Internet  software industry and the Company's success will 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:


                       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.


                        UNCERTAINTY OF ADDITIONAL CAPITAL

Although the Company currently has cash flows, it does not anticipate  achieving
positive cash flows from operations until the fourth quarter of 2001. 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.


                                       10


<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


                                       11


<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 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.


                                       12


<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.

Inaddition, 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
thatThe  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
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. Itis 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.


                                       13


<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 APRIL 12,  2001,  the Company  had  outstanding  15,682,800  shares of common
stock,  $.01 par value per share (the "COMMON STOCK") of which 5,180,300  shares
were  eligible  for  resale  without  restriction.  Of  the  15,682,800  shares,
1,000,000  shares of Common  Stock were  issued by the Company in July 2000 (the
"2000  SUBSCRIPTIONS"),  all of which are  restricted  securities  eligible  for
resale  within 1 year under Rule 144 and  Regulation  S. 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. 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) and 2.5 million
shares of Common  Stock held by  Diversified  which would be eligible for resale
but was being held for  distribution on liquidation of Diversified.  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 currently has 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.


                                       14


<PAGE>


             POSSIBLE UNAVAILABILITY OF PRIVATE PLACEMENT EXEMPTION

In March 1999, the Company sold, for an aggregate of $800,300 cash, net of issue
costs and  investor  relation  services  (recorded  at  $2,272,900),  a total of
1,914,000  shares  of its  Common  Stock  to less  than  thirty-five  investors,
including  individuals resident in Canada and the United States. The transaction
was undertaken as a direct transaction between the Company and the investors. To
the extent that U.S. securities laws were applicable,  the issuance was intended
to be in  reliance  on  Section  3(b) of the  Securities  Act and  Regulation  D
thereunder  specifically Rule 504 (as in effect on that date). Offerings made in
reliance on Rule 504 are limited to $1,000,000  and are subject to certain other
conditions  under  the rule.  In the  process  of  reviewing  its  prior  equity
offerings,  management  has become aware that it may have been  improper for the
Company to calculate  the amount of the issuance  solely on the basis of the net
cash proceeds from the sale. In the event that all proceeds were considered, the
amount of the proceeds would have been in excess of $1,000,000.  If the proceeds
were  calculated as such the  exemption  would not have been  available,  so the
Company may have  inadvertently  conducted an  unregistered  distribution of its
securities in violation of Section 5 of the  Securities  Act of 1933.  While the
period during which the investors  had a statutory  right of rescission  has now
passed,  other claims or enforcement  proceedings could still be timely asserted
against  the  Company.  If such claims  were  asserted  and the Company was held
liable, monetary damages and other remedies could be awarded or assessed against
the Company or its management.


                             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.


                                       15


<PAGE>


            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                          STATEMENT OF OPERATIONS DATA


RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED DECEMBER 31, 2000 AND
DECEMBER 31, 1999

Revenues - Revenues  were  $900,600  and  $90,900  for the  fiscal  years  ended
December 31, 2000 and 1999, respectively.  The increase of $809,700 reflects the
cessation of the Company's  development stage operations in the third quarter of
1999, when it began collecting revenues from its license agreements.

The Company  anticipates sales revenue for the first quarter of 2001 to decrease
to an  average  of  $40,000  per  month  due to  Manihi,  Inc.,  a  Costa  Rican
corporation ("Manihi"),  experiencing credit card processing restrictions during
this time. Manihi has a contract with us to resell internet gaming software. The
Company  anticipates  revenues will return to and exceed  previous levels by the
third quarter due to Manihi's resolution of credit card processing  restrictions
and an increase in marketing activities by Manihi.

Operating Expenses - Operating expenses are primarily  comprised of research and
development  and general  and  administrative  costs.  Operating  expenses  were
$1,371,400 and $5,629,200 for the fiscal years ended December 31, 2000 and 1999,
respectively. The decrease of $4,257,800 was a result of the Company's embarking
on its new  business  strategy  to develop  and license  Internet  based  gaming
technology  and its emergence  from  development  stage  operations in the third
quarter  of 1999.  During the 2000  year-end,  the  Company's  main focus of its
operations was the support of its licensees to increase its royalty base. Of the
total  expenses  incurred  during the fiscal  years ended  December 31, 2000 and
December 31, 1999,  $182,500 and $4,041,200  respectively were non-cash expenses
paid for through the issuance of stock.

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  and the  acquisition  of the rights to certain  Internet
based bingo software known as MetroBingo.  Research and  development  costs were
$376,300 and $658,000  respectively for the fiscal years ended December 31, 2000
and 1999,  respectively.  The $281,700  decrease  again  reflects the  Company's
emergence from its development stage in the third quarter of 1999 and proceeding
with its  business  strategy  to  develop  and  license  Internet  based  gaming
software.  The main  reason for this  decrease  is due to the 1999  purchase  of
MetroBingo  which was acquired in exchange for 1,450,000  shares of common stock
valued  at  $0.19  per  share,  for  a  total  cost  of  $275,500.  Because  the
technological  feasibility of the bingo software had not been established at the
date of acquisition,  the cost of the software rights was expensed.  The Company
has  suspended  its  development  of  MetroBingo  in  favor of  development  and
implementation of its "iBuyLotto" site.

General and  Administrative  - the Company's  general and  administrative  costs
consist  primarily of personnel costs,  professional and legal fees,  consulting
fees, travel,  and Internet  promotion.  General and  administrative  costs were
$950,800 and  $4,862,700  for the fiscal years ended December 31, 2000 and 1999,
respectively.  The decrease of $3,911,900  again  reflects the fact that in 1999
the Company expensed  non-recurring  business start up costs and undertaking its
new business strategy,  which included establishing an office in Surrey, British
Columbia,  Canada and retaining  fulltime  staff and  consultants.  Of the total
amount  expended  in 1999  for  general  and  administrative  costs,  $4,041,200
represents  one-time,  non-cash investor relations and expenses paid for through
the issuance of stock.


Net Loss - the Company  incurred a net loss of $478,600 and  $5,552,100  for the
fiscal years ended December 31, 2000 and 1999,  respectively.  The 1999 loss was
the result of the expenses incurred by the Company during its development stage,
which  ceased in the third  quarter of 1999,  when it began to realize  revenues
from licensing its Internet based casino software.


                                       16


<PAGE>


FLUCTUATIONS IN ANNUAL AND QUARTERLY RESULTS

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

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

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

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

     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.


LIQUIDITY AND CAPITAL RESOURCES

The Company's  working capital  deficiency and working capital ratio at December
31, 2000 were  $123,900 and 0.5 to 1.0,  respectively,  compared to $215,600 and
0.3 to 1.0 at December  31, 1999,  respectively.  At December 31, 2000 and 1999,
stockholders'  deficit was  $216,800  and  $216,700,  respectively.  The working
capital  deficiency and  stockholder  deficit are  attributable to the Company's
being in the  development  stage  throughout  1998 and the  first  half of 1999,
during which time it generated no revenues.  The decrease in the working capital
deficiency in 2000 is attributable to an increase in licensing revenue,  without
an equivalent  increase in costs along with the corporation  raising $200,000 by
way of a private  placement and expensing  $182,500  during the year through the
issuance of stock in  non-cash  transactions.  As  discussed  below,  $30,000 of
current  liabilities at December 31, 2000 consisted of deferred  revenue,  which
will not require an outlay of cash.

Effective  April 8, 1999, the Company  entered into a license with DCI, Inc. for
use of the Company's  technology.  Under the terms of the DCI, Inc. license, the
Company was  obligated to provide a minimum of six new  theme-oriented  software
packages and websites per year,  along with updates and technical  support,  and
development of specified  electronic payment and accounting  technology.  During
the first year of the DCI,  Inc.  license the Company  provided the six packages
required,  along with  special  upgrades to the graphics and the games in two of
the packages.  The Company was also  obligated to provide a monthly  advertising
rebate  equal to the lesser of 10% of monthly net gaming  revenue  derived  from
DCI,  Inc.'s  use of its  software  or the  amount  expended  by  DCI,  Inc.  on
advertising.  The Company,  in return,  was to receive 40% of monthly net gaming
revenue  derived from use of the  software by DCI,  Inc. and 50% of upfront fees
charged by DCI,  Inc. to any  sub-licensee.  In the event the  Company  produces
certain of its games on CD-ROM and enters  into a reseller  agreement  with DCI,
Inc., the Company was to receive 10% of gross revenue  derived from DCI,  Inc.'s
sales of the software.  DCI, Inc. was also  obligated to spend $10,000 per month
on advertising for each software  package and website licensed from the Company.
Under  terms of an  amendment  to DCI,  Inc.'s  license  dated May 1, 1999,  the
Company had the option to spend up to a specified  amount on  promotion  of DCI,
Inc.'s  website in exchange for an additional  10% share of net gaming  revenue,
not to exceed the total amount spent by the Company on promotion.

In the fourth  quarter of 2000,  the  Company  approved a request by DCI Inc. to
assign all of its rights and  obligations  under DCI,  Inc.'s two  non-exclusive
licensing  agreements to Manihi,  Inc. The effective  date of the assignment was
September 23, 2000.  Effective  November 1, 2000 Manihi and the Company  entered
into a new 25 year exclusive  license  agreement.  Under the terms of the Manihi


                                       17


<PAGE>


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.

In March 2000, the Company  launched a free gaming website where people can play
the  game  Keno  for  free  prizes.   This  site  is   structured   to  generate
banner-advertising  revenue  for the  Company.  Management  has  not  determined
whether the current traffic is indicative of future traffic or potential traffic
growth and whether  future  revenues to the  Company  from this or similar  free
sites will be significant.

The Company's budgeted capital  expenditures for the fiscal year ending December
31,  2001  are   approximately   $50,000  for  computer   upgrading  and  office
renovations.

During 1999, the Company raised $915,300 of net cash proceeds (including funding
of subscription  receivables) from exempt offerings or the private placements of
Common  Stock.  Another  $78,200  of  cash  was  raised  in  connection  with  a
convertible  loan agreement.  The loan  obligation has an outstanding  amount of
$41,600,  although the Company tendered the specified  Common Stock.  (See Legal
Proceedings).  Financing  was also provided in 1999 in the form of advances from
Diversified Cosmetics International Inc.  ("Diversified"),  a related party. The
$98,700 of  advances  outstanding  at  December  31,  1999  represented  various
expenses  paid by  Diversified  on the  Company's  behalf,  prior to the Company
establishing its own bank account. Though the advances bear no interest,  during
1999, the Company paid  Diversified  $6,700 of management  fees for handling its
cash receipts and  disbursements.  During 2000,  Diversified  agreed to assume a
Company receivable in exchange for its debt.

In  January  2000 the  Company  commenced  negotiations  to raise an  additional
$200,000 of equity financing, which was completed by the end of April 2000. This
financing  raised an  aggregate of $200,000 in cash in exchange for Common Stock
of the Company,  issued to 6 investors.  For the purposes of financial statement
reporting,  the  financing  was reported at $382,500 due to the trading value of
the  securities  at the  time  of  issuance.  Management  is  pursuing  numerous
potential financing sources to raise funds to cover its obligations for the next
year, including existing equity holders and new sources, but no commitments have
been received.  Management  believes that the Company's  success in raising this
additional financing will depend on the Company's ability to demonstrate that it
can fulfill its business strategy to license its games and websites and generate
significant  royalty  revenues.  Management also believes that stockholders will
continue to support the financing efforts of the Company as long as it continues
to demonstrate that it can fulfill that business strategy.

The Company began  realizing  revenues from its licensing  activities in June of
1999, and such revenues amounted to $90,900 through December 31, 1999.  Revenues
had  increased to $900,600 for the December 31, 2000 year end.  Revenues for the
month of December 2000 had reached $110,000 which exceeds the Company's  monthly
expenditures of an estimated $85,000 per month. The Company's liquidity over the
next 12 months is  contingent  on its  ability to raise  money  through  debt or
equity  financings  to meet its  short  term  needs.  However,  there  can be no
certainty  that the Company  will be able to meet its  financing  goals or raise
sufficient  financing to fund such future  business plans. In the event that the
Company is  unsuccessful  in its  efforts to raise the  capital  expected  to be
required  over the next  twelve  months,  the  Company  will need to modify  its
business strategy accordingly,  to adjust its operating requirements to meet its
available  liquidity and may need to consider  reductions  in  operations  until
capital  resources  or operating  cash flows are  sufficient  to meet  operating
needs.


IMPACT OF INFLATION

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


                                       18


<PAGE>


NEW ACCOUNTING STANDARDS

SFAS No. 133, Accounting for Derivative  Instruments and Hedging Activities,  as
amended by SFAS No.  137,  Accounting  for  Derivative  Instruments  and Hedging
Activities - Deferral of the effective  date of FASB Statement No. 133, and SFAS
No. 138,  accounting  for certain  derivative  instruments  and certain  hedging
activities, is effective for the Company in fiscal 2001. Among other provisions,
SFAS No. 133 requires that entities  recognize all  derivatives as either assets
or liabilities in the balance sheet and measure those  financial  instruments at
fair value.  Accounting for changes in fair value is dependent on the use of the
derivatives  and whether such use qualifies as hedging  activity.  Management is
currently  assessing the impact,  if any, these  standards may have on financial
position and results of operations.

In December 1999, the Securities and Exchange  Commission  (SEC") released Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  REVENUE  RECOGNITION  IN  FINANCIAL
STATEMENTS.  SAB 101  establishes  guidelines  in  applying  generally  accepted
accounting  principles  to the  recognition  of revenue in financial  statements
based on the following four criteria:

(1)  persuasive evidence of an arrangement exists,
(2)  delivery has occurred or services have been rendered,
(3)  the seller's price to the buyer is fixed or determinable, and
(4)  collectibility is reasonably assured.

SAB 101, as amended by SAB 101A,  is  effective  no later than the first  fiscal
quarter of fiscal years  beginning  after  December 15, 1999.  Accordingly,  the
Company adopted the new guidance in fiscal 2000. The adoption of SAB 101 did not
have a  material  effect  on the  Company's  financial  position  or  result  of
operations.


                            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
all of the Company's functions including its software  development,  production,
technical,   marketing,  and  administrative  operations.  It  also  houses  the
Company's  subsidiary I crystal  Software and all of its functions.  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  Cdn.  $2,300.50(approximately
U.S.$1,540).  The Company also leases 768 square feet of commercial space at 750
West Pender, Vancouver, British Columbia, Canada, commencing August 1, 2000, for
a term of one year. Monthly rental is Cdn. $2,350.23 (approximately U.S.$1,570).

The Company believes that existing facilities are adequate for its needs through
the middle of the year 2002. 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.


        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The  following  tables  set  forth  certain  information   regarding  beneficial
ownership of the Company's  Common Stock as of APRIL 12, 2001 by (i) each person
who owns  beneficially more than 5% of the Company's  outstanding  Common Stock,
(ii) each of the  Company's  directors  and  executive  officers,  and (iii) all
current directors and executive officers as a group. As of April 12, 2001, there
were 15,682,800 shares of Common Stock issued and outstanding.


                                       19


<PAGE>


                 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

                                o DOWNLOAD TABLE

NAME AND ADDRESS                AMOUNT AND NATURE OF
OF BENEFICIAL OWNER(1)          BENEFICIAL OWNERSHIP          PERCENT OF CLASS
----------------------          --------------------          ----------------

                             OFFICERS AND DIRECTORS:

Larry J. Hrabi(2)(7)            349,535                       2.2%

Gerald P. Slamko(3)(7)          1,037,327                     6.7%

Douglas J. Slamko(4)(7)         1,232,631                     7.9%

Derek Bodnarchuk(8)             100,000                        .6%

H. Rex Hollett(9)               200,000                       1.3%

                                5% STOCKHOLDERS:

AG Capital Management, Ltd.     1,000,000                     6.4%
P.O. Box 612
Times Square Providenciales
Turks 7, Caicos Islands, B.W.I

CEDE & Co. (5)                  5,012,815                     32%
P.O. Box 222 Bowling Green Station
New York, NY 10274

CTC, Inc.                       1,000,000                     6.4%
40 Hillsborough St
Roseau, Dominica,
West Indies

Diversified(6)                  2,500,000                     15.9%
1103 Toronto Dominion Tower
Edmonton Centre
Edmonton, Alberta
T5J 2Z1 CANADA

Digital Commerce Bank, Ltd.     1,000,000                     6.4%
1815 Hornby Street, Suite 404
Vancouver, B.C. V4Z 2E6

Power Star Corp.                1,450,000                     9.2%
33 Saint George Street
Commonwealth of Dominica


                                       20

<PAGE>


DIRECTORS AND OFFICERS AS A     2,919,493                     18.6%
GROUP (3 PERSONS): (7)


(1)Each of the  directors  and  officers  named can be reached at the  Company's
   executive offices located at 3237 King George Hwy., Suite 101-B, Surrey, B.C.
   V5P 1B7  Canada,  except  for  Gerald  Slamko  who can be  reached  at  #206,
   11062-156th Street, Edmonton,  Alberta Canada. The persons named in the table
   have sole voting and investment  power with respect to all shares shown to be
   beneficially  owned  by  them,  subject  to  community  property  laws  where
   applicable and the information contained in the footnotes to this table.

(2) Mr. Hrabi is a shareholder of Diversified and based on his percentage owner-
   ship in that  company  indirectly  owns  approximately  99,535  shares of the
   Common Stock.  Mr. Hrabi directly owns 100,000 shares of the Company's Common
   Stock.  Includes  150,000  options  granted in August 2000 to acquire  Common
   Stock immediately exercisable at $.20 per share expiring in August 2001.

(3) Mr. GERALD P. SLAMKO is a shareholder of Diversified and based on his per-
   centage  ownership  in that company  indirectly  owns  approximately  282,327
   shares of Common Stock. Mr. Slamko's common law wife, Ms. Diane Dutnall, owns
   approximately 5,000 shares Common Stock through a percentage  shareholding in
   Diversified.  Mr. Slamko directly owns 650,000 shares of the Company's Common
   Stock.  Includes  100,000  options  granted in August 2000 to acquire  Common
   Stock immediately exercisable at $.20 per share expiring August 2001.

(4)Mr. Douglas J. Slamko, a former officer and director of the Company, is a
   shareholder  of   Diversified.   Mr.  Slamko's  wife,   Linda  Slamko,   owns
   approximately 38,800 shares of Common Stock through a percentage shareholding
   in  Diversified.  Mr. Slamko  directly  owns 650,000  shares of the Company's
   Common  Stock.  Includes  300,000  options  granted in August 2000 to acquire
   Common Stock immediately exercisable at $.20 per share expiring August 2001.
   Mr. Douglas J. Slamko resigned from all positions with the Company in 2000.

(5)These  shares  represent  beneficial holdings held of record in brokerage
   accounts through Cede & Co.

(6)The  shares  of the  Company's  Common  Stock  owned  by Diversified  may be
   treated as  beneficially  held by Diversified  stockholders  prorata to their
   Diversified  holdings including Doug Slamko (243,831 shares of Common Stock),
   his wife Linda Slamko (38,800 shares of Common Stock), Gerald Slamko (282,327
   shares of Common Stock),  his common law wife, Diane Dutnall (5,000 shares of
   Common  Sock) and  LARRY  HRABI  (99,535  shares  of  Common  Stock)  and the
   remaining  stockholders  of  Diversified  (73.5%  held by  approximately  300
   persons) with such percentages  subject to any distributions that may be made
   to  creditors  in the  dissolution  approved  by  Diversified's  stockholders
   OCTOBER 7, 1999. As a result of that decision to dissolve,  Diversified plans
   to  distribute  its  shares  of  the  Company,  subject  to  payment  of  the
   outstanding obligations, to its shareholders.

(7)Includes  percentage  shareholdings in Diversified held by officers and
   directors of the Company.  The  percentage  ownership of Company Common Stock
   held by the stockholder  through  ownership in Diversified does not take into
   account the costs which will be associated with  dissolving  that company.  A
   certain  portion of Company Common Stock held by  Diversified  will likely be
   used to cover costs associated with its dissolution thereby reducing pro-rata
   the Common Stock ownership of Diversified shareholders.

(8)Includes  100,000  options  granted  in August  2000  to acquire Common Stock
   immediately exercisable at $.20 per share expiring August 2001.

(9)Includes  200,000  options  granted  in August  2000  to acquire Common Stock
immediately exercisable at $.20 per share expiring August 2001.

                               CHANGES IN CONTROL

There are no  arrangements  which  would  result in a change in  control  of the
Company.


                                       21


<PAGE>


ITEM 5. 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

                            o ENLARGE/DOWNLOAD TABLE


NAME                  AGE     POSITION

                             OFFICERS AND DIRECTORS:

Larry J. Hrabi        49     Director, Chairman and Chief Executive Officer of
                             the Company.
                             Director and Chief Executive Officer of I crystal
                             Software.

Gerald P. Slamko      44     Vice President, Treasurer and Chief Financial
                             Officer of the Company
                             Director, Treasurer and Chief Financial Officer of
                             I crystal Software

Derek Bodnarchuk      26     Director and President.

H. Rex Hollett        69     Director.

                            SENIOR TECHNOLOGY PERSONNEL:

Fabrice L'Heureux     29     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.

GERALD P. SLAMKO is the Company's Vice President,  Treasurer and Chief Financial
Officer and has served in that capacity  since DECEMBER 10, 1998. Mr. Slamko has
also  served as a Director,  Treasurer  and the Chief  Financial  Officer of the
Company's wholly owned subsidiary,  I crystal  Software,  since AUGUST 17, 1999.
Mr. Slamko has been a member of the Canadian Institute of Chartered  Accountants
of Alberta for the past 15 years. For more than 15 years Mr. Slamko has been the
president and a director of GERALD P. SLAMKO Professional Corporation, a partner
in the firm of Slamko  Visser,  chartered  accountants.  Slamko Visser  provides
accounting  services to the Company.  Mr.  Slamko has over 15 years of corporate
development  and  accounting  experience.  Since 1987 Mr. Slamko has also been a
director of  Diversified.  Mr.  Slamko is the brother of Douglas J. Slamko,  the
Company's President,  and Leonard Slamko who served as a director of the Company
until he entered into a consulting relationship with the Master Licensee.

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.


                                       22


<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.


                             EXECUTIVE COMPENSATION

The following  table shows,  for the three-year  period ended DECEMBER 31, 1999,
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.

<TABLE>
<CAPTION>


                           SUMMARY COMPENSATION TABLE

                           SUMMARY COMPENSATION TABLE

                                        o
                                    LONG-TERM
                                                   COMPENSATION

                           ANNUAL COMPENSATION AWARDS
                                                      PAYOUTS
                                                                          COMMON

                                                  NAME AND STOCK
                                                       UNDER
             PRINCIPAL OTHER ANNUAL OPTION/SAR'S PREFERRED LTIP ALL
                                                       OTHER
          POSITION YEAR SALARY BONUS COMPENSATION GRANTED STOCK PAYOUTS
                                                   COMPENSATION


<S>             <C>                 <C>      <C>           <C>        <C>        <C>    <C>   <C>

LARRY HRABI     Chief Executive     2000     $70,500(1)     $2,667         --     --     --
                Officer             1999     $6,000         $2,667         --     --     --     --
                                    1998          0            --          --     --     --     --

<FN>
(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 are immediately  exercisable at $.20 per
share and which expire in August 2001.
</FN>

</TABLE>


                                       23


<PAGE>


                      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 expire 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 FEBRUARY 3, 1999 the Company  entered  into a Service  CONTRACT  with Leonard
Slamko,  whereby he agreed to serve as a marketing  consultant to the Company to
develop,  maintain and monitor its marketing  strategies.  This Service CONTRACT
could be  terminated  at any time upon the provision of 14 days notice by either
party and was  terminated  by the  Company on DECEMBER 2, 1999 at which time Mr.
Slamko entered into a consulting  agreement with the Master Licensee.  Under the
Service CONTRACT Mr. Slamko was paid $5000 per month and was entitled to receive
100,000  shares of Common  Stock prior to  FEBRUARY 3, 2000,  unless the Service
CONTRACT had been previously terminated.  Although the Company was not obligated
to issue the shares of Common Stock to Mr.  Slamko upon the  termination  of the
Service  CONTRACT on DECEMBER 2, 1999,  all 100,000  shares of Common Stock were
issued to Mr.  Slamko in  recognition  for  marketing  services  rendered to THE
COMPANY during the 10 months he served under his service CONTRACT.

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.

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$70,500 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.


                                       24


<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

The Company had no stock option plan during the fiscal year ending  DECEMBER 31,
1999. 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.


                CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On DECEMBER 1, 1998,  the Company  entered  into the  Diversified  License  with
Diversified,  whereby the Company agreed to license, for a period of five years,
the Internet based casino software  developed by Diversified.  As  consideration
for the license of the casino  software,  the Company agreed to pay a royalty of
10% of the net revenues it obtained from the casino software to Diversified, and
Diversified was granted the Put Option to require the Company to purchase all of
the rights to the casino software from  Diversified for 2,500,000  shares of THE
COMPANY's  Common Stock.  Messrs.  Doug Slamko,  previous  officer and director,
Gerald  Slamko and LARRY HRABI,  current  officers and directors of the Company,
are also  shareholders of Diversified.  At the time the Diversified  License was
entered into the Company was managed by Mr. Robert Wallace,  who, in arms length
negotiations,  entered into the Diversified  License with  Diversified.  Messrs.
Hrabi,  Douglas  Slamko  and Gerald  Slamko  subsequently  became  shareholders,
officers and  directors  of the Company on when  Diversified  exercised  the Put
Option.  Thus, the  transaction  was negotiated on an arms length basis on terms
fair to the Company from the  perspective  of its  management at the time of the
transaction.

On  DECEMBER  10,  1998,  Diversified  exercised  the Put Option and the Company
acquired the casino software from Diversified for 2,500,000 shares of its Common
Stock, issued to Diversified, as well as additional consideration in the form of
a  promissory  note  for  Cdn$100,000  (approximately   U.S.$65,000)  issued  to
Diversified for continued development work performed on the casino software (the
"DIVERSIFIED TRANSACTION").  As a result of the Diversified Transaction, the 10%
royalty obligation was extinguished.  Prior to the Diversified Transaction,  THE
COMPANY  became  obligated  to issue  2,000,000  shares of Common  Stock to Doug
Slamko,  Gerald Slamko,  Leonard Slamko and Pat  VanBoximeer,  their sister,  as
payment for future services to be performed for the Company over the next twelve
months. Such shares were subsequently issued on DECEMBER 10, 1998. Additionally,
on December  16,  1998,  2,500,000  shares of Common  Stock were sold to certain
individuals who facilitated the transfer of the software from Diversified to THE
COMPANY.  Douglas J. Slamko,  the former  president  of the  Company,  is also a
director,  the Chief  Executive  Officer,  the President  and a  shareholder  of
Diversified and his wife is a shareholder of  Diversified.  GERALD P. SLAMKO the
Vice President,  Treasurer and Chief Financial  Officer of the Company is also a
Director,  Secretary,  Treasurer and a shareholder of Diversified and his common
law wife is a shareholder of Diversified. Leonard Slamko served as a director of
the Company  until he entered  into a  consulting  relationship  with the Master
Licensee, and he is also a shareholder of Diversified.

Subsequent to the transfer of technology  and prior to the date when the Company
established  its own bank  account  in late  1999,  all cash  transactions  were
deposited in and disbursed from Diversified's bank account. Diversified has also
paid  various  expenses  on the  Company's  behalf.  The  net  effect  of  these
circumstances has resulted in the Company owing Diversified  $98,700 at DECEMBER
31, 1999. The advances bear no interest since they are among related parties but
during the 1999 the Company  recorded a $6,700 of management fees to Diversified
for the services provided by Diversified.


                                       25


<PAGE>


On APRIL 8, 1999 the Company  entered into an Agreement with the Master Licensee
whereby the Company agreed to license to the Master  Licensee a minimum of 6 new
casino  software  packages and WEBSITES per year,  and to provide any updates to
such casino  software and WEBSITES for a term of 10 years at no extra cost.  The
Agreement  grants the Master  Licensee  the right to extend the  license  for an
additional five years. Under the Agreement,  the Company will be entitled to 40%
of the Net  Gaming  Revenue  derived  from  revenue  generated  by the casino or
WEBSITES  licensed to the Master Licensee.  Net Gaming Revenue is defined in the
Agreement  as gross  revenues  less  customer  payouts,  e-cash  charges,  fees,
holdbacks, and chargebacks,  and taxes or levies to which the Master Licensee is
subject.  Additionally,  the Company  will be  entitled to 50% of up-front  fees
charged by the Master Licensee to any sub-licensees,  and 10% of revenue derived
from sales of the  software.  Under the terms of an amendment  to the  Licensing
Agreement  the  Company  has the  option  to spend up to a  specified  amount on
promotion of the Master  Licensee's  WEBSITE in exchange for an  additional  10%
share of net  gaming  revenue,  not to  exceed  the  total  amount  spent by THE
COMPANY.  At the time the Master License was entered into the parties engaged in
an arms length  negotiation  of the terms of the Master  License and Mr. Leonard
Slamko  abstained  from voting on the matter as a director.  Leonard  Slamko,  a
director of the Company at the time the Agreement was entered into,  has entered
into a consulting arrangement with the Master Licensee.

Effective APRIL 14, 1999,  issued 1,000,000 shares of Common Stock pursuant to a
Letter of Intent with Digital Commerce Bank, Ltd. ("DIGITAL  COMMERCE") where in
exchange  for such  shares  Digital  Commerce  issued to the  Company a merchant
number for use in processing credit card transactions. A non-refundable up front
fee for receipt of the Digital Commerce  merchant number was paid by the Company
and  recorded  as an expense  of  $1,436,500.  Although  Digital  Commerce  is a
shareholder  of the Company and provides  merchant  banking  services to Company
licensees,  no  other  relationship  exists  between  the  Company  and  Digital
Commerce.

On OCTOBER 7, 1999, the Company agreed to issue 1,000,000 shares of Common Stock
valued at $180,000 to CTC Inc.,  in lieu of payment by the Company of a one-time
service fee for the  provision of  electronic  commerce and cash  services.  All
1,000,000 of these shares were subsequently issued on JANUARY 11, 2000. Although
CTC is a shareholder of the Company and provides  merchant  banking  services to
Company licensees, no other relationship exists between the Company and CTC.

On OCTOBER 15, 1999 the Company  entered into an additional  Agreement  with the
Master  Licensee  whereby the Company  agreed to license to the Master  Licensee
three new casino  software  packages  and  WEBSITES,  including  updates to such
casino  software and WEBSITES for a term of 10 years.  Under this  Agreement the
Master  Licensee  has the right to extend the  license  indefinitely.  Under the
Agreement, the Company is to be paid a fee of $100,000, payable in installments,
of which $67,000 has already been paid, with the remaining $33,000 is to be paid
upon  completion of the third casino software  package and WEBSITE.  The Company
will also be  entitled to 40% of the Net Gaming  Revenue  derived  from  revenue
generated by the casino or WEBSITES  licensed to the Master Licensee,  up to the
first $100,000  generated per month, and 30% of Net Gaming Revenue generated per
month over  $100,000.  The Master  Licensee  shall be  required  to spend 10% of
monthly Net Gaming  Revenue on  advertising,  all of which shall be subject to a
rebate by the Company. The Company had agreed to license one MetroBingo software
package  and  WEBSITES  to the Master  Licensee  for no charge and a second such
software  package and WEBSITE for a fee of $200,000,  provided that a deposit of
$10,000  was paid to the Company by  DECEMBER  31, 1999 and a second  deposit of
$40,000  was paid on JANUARY  31,  with the  balance  due on  completion  of the
software  package.  Neither  deposit was paid and the Metrobing site will not be
provided.  Leonard  Slamko,  a director of the Company at the time the Agreement
was entered  into,  has entered  into a consulting  arrangement  with the Master
Licensee.  Leonard Slamko is the brother of Douglas Slamko and Gerald Slamko. At
the time the Agreement was entered into,  the parties  engaged in an arms-length
negotiation of the terms of the Agreement and Mr. Leonard Slamko  abstained from
voting on the matter as a director.


                                       26


<PAGE>


On MAY 1, 1999,  the Company and the Master  Licensee  amended the APRIL 8, 1999
Agreement  to provide  that  Company  could  spend up to $70,000 to promote  its
Internet casino WEBSITE over a six month period beginning MAY 1, 1999. In return
the Company was eligible to retain up to an additional 10% of Net Gaming Revenue
until  such time as either the total of  $70,000  was spent on such  promotional
activities  or DECEMBER 31,  1999.  The term of this  amendment  has expired and
approximately  $70,000 was spent by the Company in furtherance of that amendment
during  its term.  Leonard  Slamko,  a director  of the  Company at the time the
Agreement was entered into, has entered into a consulting  arrangement  with the
Master  Licensee.  Leonard  Slamko is the  brother of Douglas  Slamko and Gerald
Slamko. At the time the amendment to the Agreement was entered into, the parties
engaged in an  arms-length  negotiation  of the terms of the  Agreement  and Mr.
Leonard Slamko abstained from voting on the matter as a director.

On AUGUST 28,  1999,  the  Company  entered  into an  Agreement  with Power Star
pursuant to which the Company  purchased the rights to certain software known as
MetroBingo  that was being  developed by Power Star in exchange for an aggregate
of 1,450,000 shares of Common Stock valued at $275,500.  Fabrice L'Heureux,  THE
COMPANY's  Project  Development  Coordinator and Creative  Director  through THE
COMPANY's  Service  CONTRACT  with  4250  Investments  Ltd.,  formerly  provided
services to Power Star in connection  with the creation and  development  of the
MetroBingo  software.  At the time the Agreement was entered,  Mr. l'Heureux was
not an employee of the Company and the transaction was the result of arms length
negotiations between the Company and PowerStar.

Through  September 30, 2000,  the Company had received  $164,000 of upfront fees
from DCI, Inc. 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 2000 and 1999,  the Company  incurred
$37,800 and $22,000,  respectively,  of expense to Slamko Visser for  consulting
and  accounting  fees and related  costs.  The Company had  accounts  payable of
$18,800 due to Slamko Visser at December 31, 2000.

The Company owed certain  stockholders  $19,000 for advances made to the Company
during 1999,  when it was in its development  stage.  In 2000, the  stockholders
agreed to settle  $14,600 of the  obligation  by accepting  the  assignment of a
receivable  from DCI, Inc. the Company had advances from  stockholders of $4,400
at December 31, 2000.

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.


                           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.


                                       27


<PAGE>


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.  Asof  APRIL 12,  2001,  there were
approximately  102  holders of record  and  approximately  15,682,800  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 1999 (SFNT)              $4.06             $1.38
           2nd Quarter 1999 (SFNT)              $2.00             $0.55
           3rd Quarter 1999 (SFNT)              $0.56             $0.33

           3rd Quarter 1999 (ICRS)              $0.40             $0.13
           4th Quarter 1999 (ICRS)              $0.26             $0.14
           1st Quarter 2000 (ICRS)              $0.90             $0.16
           2nd Quarter 2000 (ICRS)              $0.40             $0.30
           3rd Quarter 2000 (ICRS)              $0.35             $0.16
           4th Quarter 2000 (ICRS)              $0.35             $0.09



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


                               LEGAL PROCEEDINGS.

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


                 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

None.


                                       28


<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 three years without the registration of the securities under the
Securities Act in reliance on exemptions from such registrations requirements.

At DECEMBER  31, 1996 there were  3,000,000  shares of Common  Stock  issued and
outstanding  (without giving effect to the 8:1 reverse stock split undertaken in
Fall 1998).  On DECEMBER  30,  1997,  the Company  sold an  aggregate of 130,000
shares of the Company's Common Stock to less than thirty-five investors,  for an
aggregate  of $6,500 in cash.  To the  extent  that  U.S.  securities  laws were
applicable to the issuance, the issuance was made in reliance on Section 4(2) of
the Securities Act and under Rule 505 of Regulation D thereunder.

On JULY 6, 1998, the Company issued, for an aggregate of $15,000 in services, an
aggregate of 3,000,000  shares (or 375,000 shares after giving effect to the 8:1
reverse  stock split) of the Company's  Common Stock to the former  president of
the  Company  in a  private  transaction  between  him and the  Company  with an
ascribed  value of $3800 in exchange for services  rendered.  To the extent that
U.S.  securities laws were applicable to the issuance,  the issuance was made in
reliance on Section 4(2) of the  Securities Act and under Rule 505 of Regulation
D thereunder.  As a result of the above,  there were 6,130,000  shares of Common
Stock of the Company  issued and  outstanding  without  giving effect to the 8:1
reverse stock split and 766,250 shares after the reverse split. Unless otherwise
indicated, all share data set forth below gives effect to the reverse split.

On DECEMBER 10, 1998, the Company issued 2,500,000 shares of its Common Stock to
Diversified when  Diversified  exercised the option granted to it on DECEMBER 1,
1998. The transaction for  Diversified's  casino software was valued at $25,000.
The Company  also  delivered a  Cdn$100,000  (U.S.$65,000)  Note for  additional
development  undertaken  by  Diversified  after  the  transaction.  The note was
subsequently   paid.  Certain  officers  and  shareholders  of  Diversified  are
directors or executive  officers of the Company.  Diversified  is a  corporation
organized  under the laws of Alberta  with a number of  shareholders,  including
certain  officers and directors of the Company.  The  transaction was negotiated
between the Company and  Diversified.  To the extent that U.S.  securities  laws
were  applicable to the  issuance,  the issuance was made in reliance on Section
4(2) of the  Securities  Act and under Rule 506 of  Regulation D thereunder as a
private transaction  between the two entities,  not involving a public offering.
The 2,500,000  shares  continue to be held by Diversified and no distribution of
the shares has been made.

On DECEMBER 10, 1998,  the Company  issued  2,000,000  shares of Common Stock to
four  persons,  three of whom are  officers and  directors,  and one of whom was
their adult sister and all of whom are  residents in Canada.  The  consideration
consisted of a $20,000 cash  subscription  receivable and services in the amount
of $60,000 to be rendered to the Company by the officers and  directors and cash
paid by all parties.  The services were rendered throughout 1999 and the $20,000
was paid in March 1999. To the extent that U.S.  securities laws were applicable
to the  issuance,  the  issuance  was made in  reliance  on Section  4(2) of the
Securities  Act and  under  Rule 506 of  Regulation  D  thereunder  as a private
transaction  between the Company and 3 related  parties and one party with prior
knowledge and understanding of the Company.

On DECEMBER 16, 1998,  the Company  issued  2,500,000  shares of Common Stock to
persons  all of which are  residents  of  Canada  in  exchange  for  $25,000  in
subscription  receivables and for services rendered to the Company in the amount
of $75,000 by the individuals,  including  persons who provided  promotional and
investor  services.  To the extent that U.S.  securities laws were applicable to
the issuance,  the issuance was of exempt securities made in reliance on Section
3(b) of the  Securities  Act and under  Rule 504 (as in effect on that  date) of
Regulation D thereunder.

On MARCH 30, 1999,  the Company sold,  for an aggregate of $800,300 cash, net of
issue costs, and investor relation  services recorded at $2,272,800,  a total of
1,914,000  shares  of its  Common  Stock  to  less  than  thirty-five  investors
including  individuals resident in Canada and the United States. The transaction
was undertaken as a direct transaction between the Company and the investors. To
the extent  that U.S.  securities  laws were  applicable  to the  issuance,  the
issuance  was  intended to quality as exempt  securities  in reliance on Section
3(b) of the Securities Act and Regulation D thereunder  specifically  under Rule
504 (as in effect on that date).  The Company  reached the  conclusion  that the
exemption was available by calculating the net cash proceeds of the offering.


                                       29


<PAGE>


Effective  APRIL 14, 1999, the Company issued  1,000,000  shares of Common Stock
pursuant to a Letter of Intent with Digital  Commerce  whereby Digital  Commerce
would issue to the Company a merchant  number for use in processing  credit card
transactions.  A non-refundable up front fee for receipt of the Digital Commerce
merchant  number  was  paid  by  the  Company  and  recorded  as an  expense  of
$1,436,500.  To the extent  that U.S.  securities  laws were  applicable  to the
issuance,  the issuance  was made in reliance on Section 4(2) of the  Securities
Act and under  Rule 506 of  Regulation  D  thereunder  as a private  transaction
negotiated  between  the two  entities  and in  connection  with  their  overall
business transaction.

On AUGUST 16, 1999,  the Company  received a  convertible  loan in the amount of
$78,196  from West  Peak.  The  proceeds  of the loan  were paid to the  Company
through Diversified which acted as account manager for the Company. The loan was
repayable as of NOVEMBER 30, 1999,  and bore an interest  rate equal to the U.S.
prime rate plus 2%.  Although the Company  converted the principal  into 200,000
shares of Common Stock in December  1999,  in February 2000 West Peak filed suit
claiming breach of the terms of the loan and claimed as damages repayment of the
principal amount of approximately  $78,200 plus interest and costs. For purposes
of the registration statement the shares are treated as not outstanding at APRIL
3, 2000, without prejudice to the Company's  position in the litigation.  To the
extent the U.S.  securities  laws  applied to the loan and the  conversion,  the
transaction  with West Peak,  a Canadian  entity with  business  and  investment
experience, was undertaken as a private transaction between the Company and West
Peak in reliance  of Section  4(2) of the  Securities  Act and under rule 506 of
Regulation D thereunder.

On AUGUST 28,  1999,  the  Company  entered  into an  Agreement  with Power Star
pursuant to which the Company  purchased  all of the rights to certain  software
known as  MetroBingo  that was being  developed  by Power Star in  exchange  for
1,450,000  shares of Common  Stock with an aggregate  value of $275,500.  To the
extent that U.S.  securities laws were applicable to the issuance,  the issuance
was made in reliance on Section  4(2) of the  Securities  Act and under Rule 505
and 506 of Regulation D thereunder as a private  transaction  negotiated between
the two entities not involving a public offering.

On OCTOBER 5, 1999, the Company agreed to issue 1,000,000 shares of Common Stock
to AG Capital Management,  Ltd. ("AG CAPITAL") in exchange for cash and services
rendered in the aggregate amount of $200,000. All 1,000,000 of these shares were
subsequently issued on JANUARY 11, 2000. To the extent that U.S. securities laws
were  applicable to the  issuance,  the issuance was made in reliance on Section
4(2) of the  Securities  Act and under Rule 506 of  Regulation D thereunder as a
private  transaction  negotiated  between two  entities,  not involving a public
offering.

In December 1999,  the Company agreed to issue 1,000,000  shares of Common
Stock valued at $180,000 to CTC, in lieu of payment by of a one-time service fee
for the provision of  electronic  commerce and cash  services.  All 1,000,000 of
these shares were  subsequently  issued on JANUARY 11, 2000.  To the extent that
U.S.  securities laws were applicable to the issuance,  the issuance was made in
reliance on Section 4(2) of the  Securities Act and under Rule 506 of Regulation
D thereunder  as a private  transaction  negotiated  between two  entities,  not
involving a public offering.

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.


                                       30


<PAGE>


Additionally,  the Company has issued  Common  Stock in  exchange  for  services
rendered by the  following  companies and  individuals.  To the extent that U.S.
securities  laws were  applicable  to the  issuance,  the  issuance  was made in
reliance on Section  4(2) of the  Securities  Act and under Rule 701  thereunder
with respect to the individuals listed and Rule 506 with respect to the entities
based on their knowledge of the Company and its business and general  investment
experience:

<TABLE>
<CAPTION>

NAME                    DATE OF ISSUE     NUMBER OF SHARES     PRICE PER SHARE     AGGREGATE PRICE
<S>                        <C>  <C>            <C>                 <C>                 <C>

RSA Software               4-22-99             25,000              $1.35               $33,800

734633 Alberta Ltd.        6-28-99            127,500              $0.50               $63,800

Sean Comeau                7-01-99            100,000              $0.47               $47,000

Larry J. Hrabi            11-01-99            100,000              $0.16               $16,000

Douglas J. Slamko         12-02-99            100,000              $0.17               $17,000

Leonard Slamko            12-02-99            100,000              $0.17               $17,000

</TABLE>


                   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

                                       31


<PAGE>


                          ICRYSTAL, INC. AND SUBSIDIARY

                          INDEPENDENT AUDITOR'S REPORT
                                       AND
                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2000 AND 1999


<PAGE>

<TABLE>
<CAPTION>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                                               TABLE OF CONTENTS
--------------------------------------------------------------------------------
                                                      DECEMBER 31, 2000 AND 1999

                                                                           PAGE
<S>                                                                         <C>
INDEPENDENT AUDITOR'S REPORT.................................................1



CONSOLIDATED FINANCIAL STATEMENTS

     Balance Sheet...........................................................2

     Statement of Operations.................................................3

     Statement of Stockholders' Deficit......................................4

     Statement of Cash Flows.................................................5

     Notes to Consolidated Financial Statements............................6-16
</TABLE>




<PAGE>


                                                                  MOSS ADAMS LLP
--------------------------------------------------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS


                          INDEPENDENT AUDITOR'S REPORT



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

We have audited the accompanying  consolidated  balance sheet of iCrystal,  Inc.
(formerly named I Crystal, Softnet Industries, Inc. and Cable Group South, Inc.)
and Subsidiary as of December 31, 2000, and the related consolidated  statements
of operations,  stockholders'  deficit, and cash flows for each of the two years
in the period then ended.  These financial  statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit 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 consolidated financial position of iCrystal, Inc. and
Subsidiary  as of  December  31,  2000,  and the  results of their  consolidated
operations  and their cash  flows for each of the two years in the  period  then
ended in conformity with accounting  principles generally accepted in the United
States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has incurred  losses since its inception and
has a net stockholders'  deficit. These conditions raise substantial doubt about
its ability to continue as a going concern.  Management's  plans regarding those
matters also are  described in Note 1. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.




/s/ MOSS ADAMS LLP
----------------------
Bellingham, Washington
March 25, 2001



                                                                               1
<PAGE>


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



                                     ASSETS

CURRENT ASSETS
  Cash                                                          $         7,700
  Accounts receivable                                                   110,300
                                                                        -------
     Total current assets                                               118,000
PROPERTY AND EQUIPMENT, net                                              32,100
                                                                         ------

TOTAL ASSETS                                                    $       150,100
                                                                      =========



                     LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
  Accounts payable                                              $       170,300
  Deferred revenue                                                       30,000
  Note payable                                                           41,600
                                                                         ------
     Total current liabilities                                          241,900

LONG-TERM LIABILITIES
  Advances from stockholders                                              4,400
  Deferred revenue                                                      120,600
                                                                        -------
     Total liabilities                                                  366,900
                                                                        =======

STOCKHOLDERS' DEFICIT
  Common stock, $0.01 par value, 30 million shares
     authorized; 15,682,800 shares outstanding                          156,900
  Additional paid-in capital                                          5,893,300
  Deferred compensation                                                 (12,800)
  Accumulated deficit                                                (6,254,200)
                                                                     ----------
     Total stockholders' deficit                                       (216,800)
                                                                       --------

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


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                                                               2

<PAGE>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                            CONSOLIDATED STATEMENT OF OPERATIONS
                                          YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------



                                                          2000           1999
                                                          ----           ----
REVENUE
Software royalties                                   $   900,600        $90,900
                                                     -----------        -------
OPERATING EXPENSES
General and administrative                               950,800      4,862,700
Research and development                                 376,300        658,000
Sales and marketing                                       44,300        108,500
                                                          ------        -------
Total operating expenses                               1,371,400      5,629,200
                                                       ---------      ---------
LOSS FROM OPERATIONS                                    (470,800)    (5,538,300)
                                                        --------     ----------
OTHER EXPENSE
Finance costs                                              1,000         12,000
Interest                                                   6,800          1,800
                                                           -----          -----
Total other expense                                        7,800         13,800
                                                           -----         ------
NET LOSS BEFORE PROVISION FOR INCOME TAXES              (478,600)    (5,552,100)
PROVISION FOR INCOME TAXES                                     -              -
                                                       ---------      ---------
NET LOSS                                             $  (478,600)   $(5,552,100)
                                                     ===========    ===========

EARNINGS (LOSS) PER SHARE
Basic and diluted                                        $ (0.03)       $ (0.52)
                                                         =======        =======






 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                                                               3

<PAGE>
<TABLE>
<CAPTION>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                          YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


                                                                      Common Stock              Additional          Stock
                                                                ---------------------------      Paid-in         Subscription
                                                                 Shares          Amount          Capital          Receivable
                                                                 ------          ------          -------          ----------
<S>                                                              <C>              <C>            <C>                   <C>
BALANCE, December 31, 1998                                        7,766,300        $ 77,700  $       180,800   $       (45,000)
Stock issued for cash, net of $156,600 issue costs                  848,000           8,500           861,800                 -
Stock issued for services and research and development            3,616,000          36,100         2,658,200                 -
Stock issued to employees and
consultants for services                                          2,452,500          24,600         1,770,500                 -
Collection of stock subscription receivable                               -               -                 -            45,000
Amortization of deferred compensation                                     -               -                 -                 -
Net loss                                                                  -               -                 -                 -
                                                                -----------     -----------       -----------          --------
BALANCE, December 31, 1999                                       14,682,800         146,900         5,471,300                 -
Stock issued for cash and services                                  523,000           5,200           194,800                 -
Stock issued for services                                           477,000           4,800           177,700                 -
Stock-based compensation - stock options                                  -               -            37,500                 -
Amortization of deferred compensation                                     -               -                 -                 -
Contributed capital                                                       -               -            12,000                 -
Net loss                                                                  -               -                 -                 -
                                                                -----------     -----------       -----------          --------
BALANCE, December 31, 2000                                       15,682,800       $ 156,900       $ 5,893,300  $              -
                  === ====                                      ===========     ===========       ===========    ===============


<CAPTION>
                                                                    Deferred         Accumulated
                                                                  Compensation         Deficit            Total
                                                                  ------------         -------            -----

<S>                                                                  <C>              <C>               <C>
BALANCE, December 31, 1998                                           $ (55,000)     $   (223,500)      $   (65,000)
Stock issued for cash, net of $156,600 issue costs                           -                 -           870,300
Stock issued for services and research and development                 (16,000)                -         2,678,300
Stock issued to employees and
consultants for services                                              (110,800)                -         1,684,300
Collection of stock subscription receivable                                  -                 -            45,000
Amortization of deferred compensation                                  122,500                 -           122,500
Net loss                                                                     -        (5,552,100)       (5,552,100)
                                                                --------------      ------------       -----------
BALANCE, December 31, 1999                                             (59,300)       (5,775,600)         (216,700)
Stock issued for cash and services                                           -                 -           200,000
Stock issued for services                                                    -                 -           182,500
Stock-based compensation - stock options                                     -                 -            37,500
Amortization of deferred compensation                                   46,500                 -            46,500
Contributed capital                                                          -                 -            12,000
Net loss                                                                     -          (478,600)         (478,600)
                                                                --------------      ------------       -----------
BALANCE, December 31, 2000                                           $ (12,800)     $ (6,254,200)      $  (216,800)
                                                                ==============      ============       ===========

</TABLE>






 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                                                               4
<PAGE>
<TABLE>
<CAPTION>


                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                           CONSOLIDATED STATEMENT OF CASH FLOWS
                                         YEARS ENDED DECEMBER 31, 2000 AND 1999

                           Increase (Decrease) in Cash

                                                                 2000              1999
                                                                 ----              ----
<S>                                                           <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                      $ (478,600)     $ (5,552,100)
Adjustments to reconcile net loss to
net cash used in operating activities
Amortization of deferred compensation                             46,500           122,500
Depreciation                                                       5,400             1,600
Stock-based compensation - stock options                          37,500                 -
Noncash research and development expenses
incurred in exchange for stock                                         -           309,300
Noncash general and administrative expenses
incurred in exchange for stock                                   194,500         4,041,200
Changes in operating assets and liabilities
Accounts receivable                                             (101,600)          (75,700)
Prepaid expenses                                                     900              (900)
Accounts payable                                                  98,200            72,100
Deferred revenue                                                  83,600            67,000
                                                                  ------            ------
Net cash from operating activities                              (113,600)       (1,015,000)
                                                                --------        ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                              (40,600)          (19,500)
Proceeds from sales of property and equipment                     21,000                 -
                                                                  ------           -------
Net cash flows from investing activities                         (19,600)          (19,500)
                                                                 -------           -------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuances                                    200,000           836,400
Advances from (to) related parties, net                          (46,300)           98,700
Proceeds from loan advance                                             -            78,200
Principal payments on note payable                               (36,600)                -
Collection of stock subscription receivables                           -            45,000
                                                                 -------         ---------
Net cash from financing activities                               117,100         1,058,300
                                                                 -------         ---------

NET CHANGE IN CASH                                               (16,100)           23,800
CASH, beginning of period                                         23,800                 -
                                                                  ------          --------

CASH, end of period                                              $ 7,700          $ 23,800
                                                                 =======          ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid                                                    $ 6,700           $ 1,600
                                                                 =======           =======
Income taxes paid                                                    $ -               $ -
                                                                 =======           =======
NONCASH TRANSACTIONS
Stock issued for future services                                     $ -         $ 126,800
                                                                 =======           =======
Assignment of accounts receivable for settlement of
advances from related party and stockholders                    $ 67,000               $ -
                                                                 =======           =======
</TABLE>




THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                                                               5
<PAGE>




                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 1 -  ORGANIZATION,  CESSATION OF  DEVELOPMENT  STAGE  OPERATIONS  AND GOING
CONCERN


        ORGANIZATION AND CHANGE IN NAME
        iCrystal,  Inc.  (the Company or iCrystal) was  incorporated  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.

        On August 17, 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.  Effective  December 13, 1999,  the officers  contributed  all
        shares  to the  Company,  at  which  time I  Crystal  Software  became a
        wholly-owned subsidiary of iCrystal. I Crystal Software has subsequently
        carried  out  essentially  all of  the  Company's  software  development
        activity.

        CESSATION OF DEVELOPMENT STAGE OPERATIONS
        For the period  October 5, 1994  through June 30,  1999,  the  Company's
        efforts were devoted to corporate  structuring,  financial  and business
        planning,   recruiting   directors  and  advisors,   raising  additional
        financing,  establishing  the  technological  feasibility  of the gaming
        software  acquired  from  Diversified  Cosmetics   International,   Inc.
        (Diversified), and negotiating a master license agreement.  Accordingly,
        through June 30, 1999,  the Company was  characterized  as a development
        stage company.  Development  stage  operations  were financed  primarily
        through the  issuance  of shares of common  stock for  services  and, in
        March 1999,  the  issuance of  1,914,000  shares of common stock for net
        proceeds of $800,300.  Prior to the March 1999 issuance, the Company had
        no material amount of assets or liabilities.

        In April 1999, the Company  entered into a  nonexclusive  master license
        agreement  with  DCI,  Inc.  (Note  8) for use of the  Company's  gaming
        technology.  In the third quarter of 1999,  the Company began  realizing
        revenues from this agreement and development stage operations ceased.

        GOING CONCERN

        The Company has incurred net losses  since  inception,  and, at December
        31,  2000,  it  had a  working  capital  deficiency  of  $123,900  and a
        stockholders'  deficit of  $216,800.  During  2000,  the Company did not
        generate  revenues  sufficient  to  fund  its  operations.  The  Company
        anticipates  revenues for the first  quarter 2001 to decrease due to its
        master  licensee,   Manihi  Inc.  (Note  8),  experiencing  credit  card
        processing  restrictions  during  this  time.  The  Company  anticipates
        revenues  will not return to previous  levels until the third quarter of
        2001.  Accordingly,  the  Company's  ability  to  fulfill  its  business
        strategy and to ultimately achieve profitable operations is dependent on
        its  capacity to execute its  business  plan and, if  necessary,  obtain
        additional financing.

        During the third and fourth  quarters of 2000,  the Company  experienced
        significant  revenue  growth and also achieved  positive cash flows from
        operations.  The Company will need to sustain or increase its  operating
        cash  flows  in  order  to  meet  its  investing   and  financing   cash
        requirements and to meet its obligations as they come due.

        In the  event  that  future  operating  cash  flows  do not meet all the
        Company's cash requirements, it will need to obtain additional financing
        in the form of  private  placements  of equity  securities.  Success  in
        raising  additional  financing is dependent on the Company's  ability to
        demonstrate  that it can  fulfill its  business  strategy to license its
        games and websites and generate significant royalty revenues. Should the
        Company need  additional  financing  through debt or equity  placements,
        there is no assurance that such financing will be available,  if at all,
        at terms acceptable to the Company. Management believes these plans will
        allow the Company to generate  sufficient cash to support its operations
        through December 31, 2001.


                                                                               6

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


        USE OF ESTIMATES
        The  preparation  of financial  statements in conformity  with generally
        accepted accounting principles requires management to make estimates and
        assumptions that affect the amounts reported in the financial statements
        and  accompanying   notes.   Actual  results  could  differ  from  those
        estimates.

        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.

        CASH AND CASH EQUIVALENTS
        All highly liquid  investments,  with a maturity of three months or less
        at the time of purchase, are considered to be 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.  At December 31, 2000, all accounts receivable were
        considered to be fully collectible.

        PROPERTY AND EQUIPMENT
        Property   and   equipment   is  recorded   at  cost  less   accumulated
        depreciation.  Depreciation is computed using the  straight-line  method
        over five years for computer  equipment  and  furniture and fixtures and
        over the  three-year  remaining  term of the related lease for leasehold
        improvements.

        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
        amount.

        REVENUE RECOGNITION
        The Company  recognizes revenue when earned, in accordance with American
        Institute of Certified  Public  Accountants  Statement of Position (SOP)
        97-2, SOFTWARE REVENUE  RECOGNITION,  and SOP 98-9,  MODIFICATION OF SOP
        97-2  WITH  RESPECT  TO  CERTAIN  TRANSACTIONS.   Royalties  based  upon
        licensees' net gaming revenues are recognized as licensees' revenues are
        earned.  Revenue from packaged product sales to and through distributors
        and  resellers is recorded  when related  products are shipped.  Revenue
        attributable to significant undelivered elements,  including maintenance
        and  technical  support,  is  recognized  over the  contract  period  as
        elements are delivered.

        RESEARCH AND DEVELOPMENT COSTS
        Research and  development  costs are expensed as incurred.  Statement of
        Financial  Accounting  Standards (SFAS) No. 86, ACCOUNTING FOR THE COSTS
        OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED, does not
        materially affect the Company.


                                                                               7

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Effective  August 28, 1999, the Company  acquired from Power Star,  Inc.
        (Power Star) the software rights and related source codes, domain names,
        websites,  and trademarks for certain  internet-based  gaming technology
        under development known as METROBINGO.  In exchange,  the Company issued
        1,450,000  shares  of  common  stock to Power  Star.  At the time of the
        acquisition,  technological  feasibility  of the  software  had not been
        established, and the consideration given by the Company for the software
        rights  was  charged  to  research  and  development  expense.   Further
        development of this software is not currently being undertaken.

        INCOME TAXES
        The  Company  accounts  for income  taxes  using the  liability  method.
        Deferred income 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 audit in each taxing jurisdiction. Thus, the Company's provisions for
        tax  obligations  represent  estimates  which are subject to changes and
        adjustments resulting from future events.

        EARNINGS PER SHARE
        Basic  earnings  per share  amounts are  computed  based on the weighted
        average  number of shares  outstanding  during the period,  after giving
        retroactive  effect  to stock  splits.  Diluted  earnings  per share are
        computed by determining the number of additional  shares that are deemed
        outstanding due to share equivalents.

        SEGMENT INFORMATION
        The  Company   reports   segments  in  accordance  with  SFAS  No.  131,
        DISCLOSURES  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, geographic areas, and major customers. Management assesses the
        performance of its operations as a single segment.

        ADVERTISING
        Advertising  costs are charged to operations when incurred.  During 2000
        and 1999, advertising expense totaled $14,800 and $84,000, respectively.

        NEW ACCOUNTING STANDARDS
        SFAS  No.  133,  ACCOUNTING  FOR  DERIVATIVE   INSTRUMENTS  AND  HEDGING
        ACTIVITIES,  as  amended  by SFAS No.  137,  ACCOUNTING  FOR  DERIVATIVE
        INSTRUMENTS  AND HEDGING  ACTIVITIES - DEFERRAL OF THE EFFECTIVE DATE OF
        FASB  STATEMENT  NO.  133,  and SFAS No.  138,  ACCOUNTING  FOR  CERTAIN
        DERIVATIVE INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES,  is effective for
        the  Company  in fiscal  2001.  Among  other  provisions,  SFAS No.  133
        requires that entities  recognize  all  derivatives  as either assets or
        liabilities in the balance sheet and measure those financial instruments
        at fair value.  Accounting for changes in fair value is dependent on the
        use of the  derivatives  and  whether  such  use  qualifies  as  hedging
        activity.  Management is currently  assessing the impact,  if any, these
        standards may have on financial position and results of operations.


                                                                               8

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        In  December  1999,  the  Securities  and  Exchange  Commission  ("SEC")
        released  Staff  Accounting  Bulletin  No.  101  ("SAB  101"),   REVENUE
        RECOGNITION IN FINANCIAL STATEMENTS.  SAB 101 establishes  guidelines in
        applying generally accepted accounting  principles to the recognition of
        revenue in financial  statements  based on the following  four criteria:
        (1)  persuasive  evidence of an  arrangement  exists,  (2)  delivery has
        occurred or services have been  rendered,  (3) the seller's price to the
        buyer is fixed or  determinable,  and (4)  collectibility  is reasonably
        assured. SAB 101, as amended by SAB 101A, is effective no later than the
        first fiscal quarter of fiscal years  beginning after December 15, 1999.
        Accordingly,  the Company  adopted the new guidance in fiscal 2000.  The
        adoption  of SAB 101 did not have a  material  effect  on the  Company's
        financial position or result of operations.


NOTE 3 - PROPERTY AND EQUIPMENT

        Property and equipment consists of the following at December 31, 2000:

        Computer equipment                                              $ 30,500
        Leasehold improvements                                             4,700
        Furniture and fixtures                                             3,900
                                                                        --------
                                                                          39,100
        Less accumulated depreciation                                    (7,000)
                                                                        --------
                                                                        $ 32,100
                                                                        ========

        Depreciation   expense  in  2000  and  1999  was   $5,400  and   $1,600,
        respectively.


NOTE 4 - NOTE PAYABLE

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

        On December 23, 1999 the Company  issued  200,000  common shares to West
        Peak,  which did not accept the shares  tendered  based on its  position
        that the shares were to be  registered  upon  delivery.  On February 15,
        2000, after negotiations to resolve the issue failed,  West Peak filed a
        claim  against  the Company in the  Supreme  Court of British  Columbia,
        Canada, claiming breach of the loan agreement. On September 7, 2000, the
        Court  ordered the Company to pay West Peak the balance of the note plus
        interest  and other  costs for a total of $85,100.  As of  December  31,
        2000,  the Company has paid $36,600 of the principal  amount of the note
        and $10,400 of interest and other costs.


NOTE 5 - INCOME TAXES

        The income (loss) before income taxes consists of the following:

                                                         2000         1999
                                                         ----         ----
        U.S. operations                                $ 473,200 $ (5,552,100)
        Canadian operations                               (5,400)           -
                                                       ---------  -----------
                                                       $ 467,800 $ (5,552,100)
                                                       ========= ============



                                                                               9

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 5 - INCOME TAXES (Continued)

        The provision for income taxes consists of the following:

                                                            2000         1999
                                                            ----         ----
        Current expense (benefit)
          U.S.                                         $       -  $         -
          Canadian                                             -            -
        Deferred expense (benefit)
          U.S.                                           160,900    1,887,700
          Canadian                                         2,500            -
        Change in valuation allowance                   (163,400)  (1,887,700)
                                                        --------   ----------
                                                       $       -  $         -
                                                        ========   ==========

        The total tax provision  differs from the amount computed using the U.S.
        federal statutory income tax rate as follows:

                                                            2000         1999
        Net loss before income taxes                    $ (475,200)$ (5,552,100)
        U.S. statutory rate                                34%         34%

        Income tax benefit at statutory rate            $ (162,700)$ (1,887,700)
        Excess income tax benefit in Canada                   (700)           -
        Change in valuation allowance                      163,400    1,887,700
                                                           -------    ---------
                                                        $        - $          -
                                                           =======    =========

        The effects of  temporary  differences  that give rise to  deferred  tax
        assets are as follows:

                                                                    2000
                                                                    ----
        Net operating loss carryforwards                         $ 2,127,100
        Valuation allowance                                       (2,127,100)
                                                                  ----------
                                                                 $      -
                                                                  ==========


        The Company  believes  uncertainty  exists  surrounding  realization  of
        deferred tax assets. Accordingly, it has recorded a $2,127,100 valuation
        allowance  to reduce  deferred  tax  assets to an amount  that will more
        likely than not be realized.

        The Company has incurred consolidated losses since its inception and has
        filed no income tax returns.  The losses incurred to date may be limited
        due to a  change  in  control  of the  Company  and  limitations  on the
        deductibility  of  $4,366,700  for  services  received in  exchange  for
        issuance of common stock.  In the event that all returns are filed,  the
        Company  will have  unused  U.S.  net  operating  losses  available  for
        carryforward estimated to be $6,248,800. The losses will begin to expire
        in 2009.

        As a result of not filing all income tax  returns,  the  Company  may be
        subject to assessment of  penalties.  However,  as of March 25, 2001, no
        assessments  had 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 taxes on such amounts.


                                                                              10

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 6 - EARNINGS PER SHARE

        The numerators and  denominators of basic and diluted earnings per share
        are as follows:

                                                         2000           1999
                                                         ----           ----
        Numerator - net loss                          $ (478,600)  $ (5,552,100)
                                                      ==========    ============
        Denominator - weighted average
          number of shares outstanding                15,413,000      10,754,100
                                                      ==========      ==========

        At December  31, 2000,  stock  options were not included in the weighted
        average shares outstanding because they are antidilutive.


NOTE 7 - CAPITAL STOCK AND STOCK-BASED COMPENSATION

        The Company has a single class of $0.01 par value common  stock.  Thirty
        million  shares  are  authorized  and  15,682,800  shares are issued and
        outstanding at December 31, 2000.

        During 1999,  the Company  issued (or committed to be issued) a total of
        6,916,500 shares, as follows:

           o  1,914,000 shares issued on March 30, 1999 for $800,300 of net cash
              proceeds and investor relation services.

           o  1.0 million  shares issued on April 14, 1999 for merchant  banking
              services.

           o  25,000  shares  issued on April 22, 1999 for computer  programming
              services.

           o  127,500  shares  issued  on June  28,  1999  for  future  computer
              programming services. Deferred compensation was recognized ratably
              over seven months.

           o  100,000  shares  issued  on  July  1,  1999  for  future  computer
              programming  services.  Deferred  compensation is being recognized
              ratably over 25 months.

           o  1,450,000  shares  issued on August 24,  1999 for  certain  gaming
              technology under development known as METROBINGO.

           o  100,000  shares  issued on  November  1, 1999 to an officer of the
              Company for future management services.  Deferred compensation was
              recognized ratably over 12 months.

           o  1.0 million  shares issued on December 1, 1999 for $70,000 of cash
              proceeds and consulting services.

           o  100,000  shares  issued on  December  2, 1999 to an officer of the
              Company.

           o  100,000  shares issued on December 2, 1999 to a former  officer of
              the Company.

           o  1.0 million shares issued on December 3, 1999 for merchant banking
              services.

        In December  1999,  the Company  issued an additional  200,000 shares of
        common  stock that are not  reflected  above.  The shares were issued in
        connection  with the terms of the loan  described in Note 4. Because the
        shares were not accepted as settlement for the  convertible  debt,  they
        have not been presented as issued and outstanding.

        During 2000, the Company issued  1,000,000 common shares for $200,000 of
        cash proceeds and $182,500 of consulting services. Also during the year,
        certain stockholders assumed $12,000 of the Company's  liabilities.  The
        assumption by the stockholder was recorded as a capital contribution.


                                                                              11

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 7 - CAPITAL STOCK AND STOCK-BASED COMPENSATION (Continued)


        STOCK BASED COMPENSATION

        On June 15, 2000,  stockholders  approved adoption of the 2000 Incentive
        Plan  (the  "Plan").  Under  the Plan the  Company  may make  awards  to
        employees,   non-employees,   directors,  consultants,  and  independent
        contractors of shares of common stock or derivative  securities  such as
        incentive and  nonqualified  stock  options  stock,  purchase  warrants,
        securities  convertible into common stock,  stock  appreciation  rights,
        phantom stock, or any other form of derivative,  without limitation. The
        term of the Plan is ten years, and three million shares are reserved for
        awards made under the Plan.  The Plan  stipulates no terms or conditions
        for the awards to be granted.

        A summary of the status of the Plan at December 31, 2000 is as follows:

                                                                     Weighted-
                                                        Number        Average
                                                      of Options  Exercise Price
                                                      ----------  --------------
        Options outstanding at December 31, 1999
                Granted                               1,350,000    $        0.20
                Exercised                                     -                -
                Forfeited                                     -                -
                                                      ----------   -------------
        Options outstanding at December 31, 2000      1,350,000    $        0.20
                                                      =========    =============
        Options exercisable at December 31, 2000      1,350,000    $        0.20
                                                      =========    =============

        A summary  of stock  options  outstanding  at  December  31,  2000 is as
        follows:
<TABLE>
<CAPTION>

                           Options Outstanding                                               Options Exercisable
    ----------------------------------------------------------------       -------------------------------------------------
                                         Weighted-
                                          Average          Weighted-                           Weighted-
     Range of                            Remaining          Average                             Average
     Exercise           Number          Contractual         Exercise           Number          Exercise
      Prices         Outstanding           Life              Price          Exercisable          Price
      ------         -----------           ----              -----          -----------          -----

<S>   <C>              <C>              <C>                 <C>              <C>                 <C>
      $ 0.20           1,350,000        0.50 years          $ 0.20           1,350,000           $ 0.20
</TABLE>



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

        The Plan  includes a cashless  exercise  feature that allows  holders to
        exercise their options without  presenting cash or other  consideration.
        When this feature is utilized,  the Company  withholds  from shares that
        would  otherwise  be issued  the number of shares  having a fair  market
        value equal to the option  exercise price.  Consequently,  the number of
        shares issuable upon exercise varies with changes in the Company's stock
        price.  Because  the  number of shares  to be issued is not  fixed,  the
        Company  re-measures the compensation  cost of outstanding  employee and
        non-employee   directors'   options  at  each  balance  sheet  date.  No
        additional   compensation  was  recognized  for  2000  as  a  result  of
        remeasuring the compensation cost of these options.


                                                                              12

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 7 - CAPITAL STOCK AND STOCK-BASED COMPENSATION (Continued)

        The  Company  applies the  provision  of SFAS No.  123,  ACCOUNTING  FOR
        STOCK-BASED  COMPENSATION,  and related  interpretations  to account for
        stock-based  awards granted to  non-employees,  other than  non-employee
        directors.  SFAS No. 123 requires that the costs for non-employee  stock
        options be measured  based on the fair value of the  options  granted at
        the date the services were performed. the Company uses the Black-Scholes
        option-pricing  model  to  compute  estimated  fair  value.  Stock-based
        compensation  expense recognized on the date of grant for options issued
        to  non-employees  during 2000 totaled  $37,500,  based on the following
        assumptions:

                    Risk-free interest rate                            6.0 %
                    Dividend yield rate                                0.0 %
                    Price volatility                                 100.0 %
                    Weighted average expected life of options      .75 years

        SFAS No. 123 requires disclosure of the pro forma effect of applying the
        fair value method of accounting  for stock options  granted to employees
        and non-employee  directors.  For disclosure purposes,  the Company uses
        the Black-Scholes  option-pricing model to compute estimated fair value,
        based  on the  assumptions  presented  above.  Pro  forma  net  loss and
        earnings (loss) per share amounts for 2000 are as follows.  There are no
        similar pro forma results to report for the 1999 comparative periods.

        Pro forma net loss                                        $ (533,200)

        Pro forma basic and diluted earnings (loss) per share        $ (0.03)


NOTE 8 - RELATED PARTY TRANSACTIONS

        The Company is affiliated with the following entities:

        DIVERSIFIED COSMETICS INTERNATIONAL, INC. (DIVERSIFIED)
        the Company is affiliated  with  Diversified  through common  ownership.
        Diversified is an Alberta  corporation that was previously listed on the
        Alberta Stock Exchange.  In December 1998, the Company  acquired certain
        software  rights from  Diversified.  Subsequent  to the  transfer of the
        rights  to the  Company,  Diversified  has had no  significant  business
        operations;  and,  as of  December  31,  2000,  it was in the process of
        winding down its affairs.

        Prior  to the  Company  establishing  its own  bank  account,  all  cash
        transactions  were  deposited in and disbursed from  Diversified's  bank
        account.  During the Company's development stage,  Diversified also paid
        various  expenses  on  the  Company's  behalf.  As  a  result  of  these
        circumstances,  the Company owed Diversified  $102,100 at June 30, 2000.
        During the third  quarter of 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.

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


                                                                              13

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 8 - RELATED PARTY TRANSACTIONS (Continued)

        Through September 30, 2000, the Company had received $164,000 of upfront
        fees from DCI,  Inc. 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.
        Effective  November 1, 2000,  Manihi and the Company  entered into a new
        25-year  exclusive  master license  agreement (the  "Agreement"),  under
        which all subsequent revenues have been earned.

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

        SLAMKO VISSER, CHARTERED ACCOUNTANTS (SLAMKO VISSER)
        The Company is affiliated  with the Canadian  chartered  accounting firm
        Slamko  Visser  through  common  ownership.  During  2000 and 1999,  the
        Company incurred $37,800 and $22,000, respectively, of expense to Slamko
        Visser for consulting and accounting fees and related costs. The Company
        had  accounts  payable of $18,800 due to Slamko  Visser at December  31,
        2000.

        ADVANCES FROM STOCKHOLDERS
        The Company owed certain  stockholders  $19,000 for advances made to the
        Company during 1999, when it was in its development  stage. In 2000, the
        stockholders agreed to settle $14,600 of the obligation by accepting the
        assignment of a receivable  from DCI, Inc. The Company had advances from
        stockholders of $4,400 at December 31, 2000.


NOTE 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  operations  as a single  segment.  Through June 30,
        1999, the Company's  efforts were focused primarily on development stage
        operations,  and no material  activities  occurred  within this  segment
        prior to that date. The following tables and schedules summarize certain
        information about this segment.


                                                                              14

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 9 - SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS (Continued)

                                                             Internet Gaming
                                                          Software Development
                                                          --------------------
                                                             2000         1999
                                                             ----         ----
External revenues                                        $ 900,600    $ 90,900
Interest expense                                             6,800       1,800
Depreciation and amortization                                5,400       1,600
Segment income (loss) before tax                           465,000    (688,800)
Income tax expense                                               -           -
Segment income (loss) before tax                           465,000    (688,800)
Segment assets                                             139,900     101,900
Expenditures for segment assets                             40,600      15,600

Total revenues for reportable segments                   $ 900,600    $ 90,900
Less intersegment revenues                                       -           -
                                                         ---------    --------
                                                         $ 900,600    $ 90,900
                                                         =========    ========

Total income (loss) before tax for reportable segments   $ 465,000  $ (688,800)
Corporate headquarters expense                            (943,600) (4,863,300)
                                                         ---------    --------
Consolidated total                                      $ (478,600)$ (5,552,100)
                                                        ========== ============

Total assets for reportable segments                     $ 139,900
Corporate headquarter's assets                              10,200
                                                            ------
Consolidated total                                       $ 150,100
                                                         =========



        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.

                                                      2000                1999
                                            -----------------------    ---------
                                                         Long-Lived
                                              Revenues     Assets      Revenues
                                              --------     ------      --------
        Canada                               $       -     $ 32,100    $      -
        Commonwealth of Dominica               671,900            -      90,900
        Central America or Costa Rica          228,700            -           -
                                               -------     ---------   --------
        Consolidated total                   $ 900,600     $ 32,100    $ 90,900
                                             =========     ========    ========

        MAJOR CUSTOMERS

        As described in Note 8, in April and October 1999,  the Company  entered
        into two non-exclusive  master license  agreements with the DCI, Inc., a
        related party, from which it has realized essentially all the $90,900 of
        revenue  earned  during  1999 and  $671,900  of revenue  earned in 2000.
        During 2000, the Company  realized another $228,700 of revenue under its
        new exclusive master license agreement with Manihi, Inc. (Note 8).


                                                                              15

<PAGE>

                                                   ICRYSTAL, INC. AND SUBSIDIARY
                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                      DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------


NOTE 10 - COMMITMENTS

        The Company  leases its operating  facilities  in Surrey and  Vancouver,
        British Columbia,  Canada. Minimum future annual obligations under terms
        of the leases are as follows:

          Years Ending
          December 31,                                       Amount
          ------------                                       ------
              2001                                          $ 16,100
              2002                                            10,400
              2003                                             6,100
                                                            --------
                                                            $ 32,600
                                                            ========

        During  2000  and  1999,   rent  expense  totaled  $19,500  and  $4,400,
        respectively.


NOTE 11 - CREDIT RISK

        Financial   instruments   that   potentially   subject  the  Company  to
        concentrations  of  credit  risk  consist  primarily  of cash  and  cash
        equivalents,  and accounts receivable.  The Company places its temporary
        cash investments with major Canadian  financial  institutions.  Balances
        may at times exceed federally  insured limits.  Essentially all accounts
        receivable were due from Manihi, Inc. at December 31, 2000 (Note 8).


NOTE 12 - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

        The fair values of cash,  accounts  receivable  and  payable,  and other
        current liabilities  approximate their carrying amounts.  The fair value
        of advances from  stockholders  approximates its carrying amount because
        of the short-term nature of the financial instrument.

                                                                              16


<PAGE>


                                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.*

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.*

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

<PAGE>



                                   SIGNATURES

In  accordance  with  Section 12 of the  Securities  Exchange  Act of 1934,  the
registrant caused this registration  statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

Date: APRIL 16, 2001               I CRYSTAL INC.


                                   By: /s/ LARRY HRABI
                                         ---------------------------
                                         LARRY HRABI
                                         Chief Executive Officer

                                   By: /s/ GERALD P. SLAMKO
                                         ---------------------------
                                         GERALD P. SLAMKO
                                         Vice President, Treasurer and
                                         Chief Financial Officer