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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A


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

                           For the fiscal year ended:
                                December 31, 2001

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

                             SEC File No. 000-29417

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


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

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

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

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

                           Common Stock $.01 Par Value
                          ---------------------------

                                 Title of Class

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

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

State issuer's revenues for the most recent fiscal year. $873,471.00

On April 15, 2002, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $ , computed by reference to
the price at which the stock was sold on such date.

There were 16,782,785 shares of common stock $.01 par value outstanding as of
December 31, 2001.

                      Documents incorporated by reference: None.



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


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<PAGE>

ITEM 1   DESCRIPTION OF BUSINESS

                           FORWARD LOOKING STATEMENTS


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

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


                                   THE COMPANY


iCRYSTAL, INC. (together with its subsidiary, the "Company") is a Delaware
corporation, incorporated on OCTOBER 5, 1994, as Cable Group South, Inc.
Effective OCTOBER 19, 1998 the Company undertook an 8:1 reverse stock split and
changed its name to SoftNet Industries, Inc. To avoid a conflict with a
similarly named Company, the Company again changed its name to I crystal, Inc.
on JULY 29, 1999. The Company stockholders approved a change of the Company's
name to "iCRYSTAL, INC." at a Special Meeting JUNE 2000. The Company believes
this change in its name 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.
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, 2001, the Company has an accumulated deficit of $6,834,351 and
has a shareholders deficiency of $635,311.


                                    BUSINESS

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


<PAGE>


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

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

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

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

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

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

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


<PAGE>

                                    PRODUCTS

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


                             COMPANY CASINO SOFTWARE

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

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

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

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

<PAGE>

                               PRODUCT DEVELOPMENT

                              INTERNAL DEVELOPMENT

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

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

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

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

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

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


                              EXTERNAL DEVELOPMENT

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


                                 PRODUCT SUPPORT

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



<PAGE>


                                    INDUSTRY

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


                                     GAMING

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

The Internet based gaming industry began in 1996 when the first on-line casinos
established operations, principally from operating bases in the Caribbean and
Central America. Technology constraints resulted in limited graphics, slow play
and a reliance on software which was difficult for the players to understand.
Companies such as Cryptologic and Microgaming were among the first to license
their software to the industry.
According to a 2000 Bear Stearns' report, there are approximately over 300
public and private companies that own, develop and operate more than 500
e-gaming Web properties worldwide and new sites are added each day.
Recent sources are predicting that on-line gaming revenues will be about $3
billion in 2002. Some in the industry are predicting an increase in player
participation from 3 million players in 1999 to 16 million players by the year
2002.


                                   COMPETITORS

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

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


<PAGE>


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


                                    CUSTOMERS

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


                            REGULATORY CONSIDERATIONS

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


                                  NORTH AMERICA

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

                                     CANADA

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

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


<PAGE>


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

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


                                    AUSTRALIA

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

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


                                 GLOBAL OUTLOOK

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

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

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


                               SALES AND MARKETING

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


                              INTELLECTUAL PROPERTY

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


<PAGE>


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

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


                                    EMPLOYEES

As of April 2002, there were 16 persons dedicating full-time services to the
Company of whom four were acting as senior programmers, two were acting as
system administrators, and ten were involved in WEBSITE development, marketing,
graphic art development and project management. Of those persons, eleven were
full-time employees and five were under contractual arrangements with the
Company. Recently, competition for qualified management and technical employees
 has been reduced
in the Internet software industry, however the Company's success will still
depend in large part upon its ability to continue to attract and retain
qualified employees. The Company believes that its relations with its employees
are excellent.


                                  RISK FACTORS

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


1.       COMPANY HAS NO HISTORY OF EARNINGS

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

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


2.       UNCERTAINTY OF ADDITIONAL CAPITAL

Although the Company currently has cash flows, it does not anticipate achieving
positive cash flows from operations until the second quarter of 2002. Therefore,
the Company's financial position for at least the next 6 months is contingent on
its ability to raise money through equity or debt financing to meet the
financial needs that are not funded from operations. The Company will seek to
raise additional capital either through the sale of equity or debt securities in
private or public financing or through strategic partnerships, in order fully to
finance, develop, market and upgrade its casino software programs and WEBSITES.

<PAGE>


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


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

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


                                   COMPETITION

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


                           TECHNOLOGICAL DEVELOPMENTS

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


                              GOVERNMENT REGULATION

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




<PAGE>


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

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


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

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

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


          PROTECTION OF THE COMPANY'S INTELLECTUAL PROPERTY IS LIMITED

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


<PAGE>


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

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


                DEPENDENCE ON KEY PERSONNEL AND PROGRAMMING STAFF

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

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


                    THE COMPANY'S STOCK PRICE MAY BE VOLATILE

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


                   THE COMPANY DOES NOT PLAN TO PAY DIVIDENDS

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


<PAGE>


           MANAGEMENT OF RAPID GROWTH AND LIMITED OPERATING EXPERIENCE

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


                         SHARES ELIGIBLE FOR FUTURE SALE

At DECEMBER 31, 2001, the Company had outstanding 16,782,785 shares of common
stock, $.01 par value per share (the "COMMON STOCK") of which 6,248,360 shares
were eligible for resale without restriction. In addition, there are 2 million
shares of Common Stock held by directors and officers which will be eligible for
resale pursuant to Rule 144 of the Securities Act (but subject to the relevant
volume limitations). Under those exemptions such shares will generally be
available for resale in the U.S. one year from the date of respective issuance.
This may adversely affect the market price of the Company's shares and could
affect the amount of trading in such shares.

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


    MINIMAL TRADING HISTORY OF COMMON STOCK - POSSIBLE STOCK PRICE VOLATILITY

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


PENNY STOCK REGULATION

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

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


<PAGE>

ITEM 3.  LEGAL PROCEEDINGS


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



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


RESULTS OF OPERATIONS  FOR THE FISCAL YEARS ENDED DECEMBER 31, 2001 AND DECEMBER
31, 2000

Revenues - Revenues were $873,500 and $900,600 for the fiscal years ended
December 31, 2001 and 2000, respectively. The decrease of $27,100 reflects the
result of the company's master licensee, Manihi, experiencing credit card
processing restrictions during the early part of 2001. By the end of 2001
revenues had returned to previous levels.

Operating Expenses - Operating expenses are primarily comprised of and general
and administrative costs, consulting expenses, professional services and
research and development expenditures. Operating expenses were $1,198,600 and
$1,371,400 for the fiscal years ended December 31, 2001 and 2000, respectively.
The decrease of $172,800 was mainly a result of a reduction in stock based
compensation and sales and marketing expenses. During 2001 all of the options
outstanding from its incentive stock option plan expired. During the 2001
year-end, the Company's main focus of its operations was the support of its
licensees to maintain and increase its royalty base. Of the total expenses
incurred during the fiscal years ended December 31, 2001 and December 31, 2000,
$92,000 and $182,500 respectively were non-cash expenses paid for through the
issuance of stock.

General and Administrative - The Company's general and administrative costs
consist primarily of office supplies, rent, telephone and travel expenses.
General and administrative costs were $175,000 and $116,900 for the fiscal years
ended December 31, 2001 and 2000, respectively. These are very comparable
between the two years.

Consulting expense - The Company's consulting expense consist primarily of third
party consultants on contract to the company. Consulting expense was $407,000
and $539,000 for the fiscal years ended December 31, 2001 and 2000,
respectively. This decrease of $132,000, results from the company's reduction in
the use of external consultants for its operation.

Professional services - The Company's professional services expense consist
primarily of auditing, legal and accounting services. Professional services
expense was $194,400 and $229,600 for the fiscal years ended December 31, 2001
and 2000, respectively. This decrease of $35,200, results from the company
preparing an SB10 in the 2000 fiscal year, the costs of which were reflected in
2000.


<PAGE>

Research and Development - The Company's research and development costs consist
primarily of personnel costs associated with the continued development of its
Internet based casino software. Research and development costs were $398,300 and
$376,300 respectively for the fiscal years ended December 31, 2001 and 2000,
respectively. The $22,000 increase reflects the company's commitment to ensure
its licensee's are using the most up to date software technology available.

Interest expenses - The company's interest expense consisted mainly of interest
on its convertible loans along with the fees associated with the set up of these
loans. Interest expense was $255,000 and $6,800 respectively for the fiscal
years ended December 31, 2001 and 2000, respectively. The $247,200 increase
reflects the company setting up and carrying the convertible loans for the 2001
year.

Net Loss - The Company incurred a net loss of $580,100 and $478,600 for the
fiscal years ended December 31, 2001 and 2000, respectively. The 2001 loss was
the result of the slightly lower software royalties combined with higher
research and development costs expenses and higher debt servicing costs
associated with its convertible loans.

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.

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital deficiency and working capital ratio at December
31, 2001 were $624,000 and 0.15 to 1.0, respectively, compared to $123,900 and
0.5 to 1.0 at December 31, 2000, respectively. At December 31, 2001 and 2000,
stockholders' deficit was $635,300 and $216,800, 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 increase in the working capital
deficiency in 2001 is attributable to an increase in debt servicing costs and
expenses to increase the size of its office and the number of research staff.

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. ("Manihi"). Manihi is a Costa Rican
corporation operating as a reseller of Internet gaming solutions. The effective
date of the assignment was September 23, 2000. Effective November 1, 2000 Manihi
and the Company entered into a new 25 year exclusive license agreement. Under
the terms of the Manihi agreement the Company is obligated to provide technical
support for all new and existing casino gaming software. In return the Company
is receiving thirty percent of the first $250,000 and fifteen percent of any
additional amounts of monthly net revenues derived from the Company's software
and website packages. The Company will also receive fifty percent of gross
revenue derived from upfront set-up fees charged to sub-licensees and ten
percent of gross revenue derived from the sales of software to sub-licensees.
Manihi is required to spend a minimum of $10,000 monthly advertising each
software package.

The Company's budgeted capital expenditures for the fiscal year ending December
31, 2002 are approximately $50,000 for computer upgrading and office
renovations.


<PAGE>


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.

During 2001 the Company received advances totalling $177,259 and converted
$22,700 of accounts payable for a total advance of $198,259 from Lexington
Systems Limited, an affiliate of Manihi, Inc., through common ownership. The
total interest paid to Lexington Systems Limited during the year ended December
31, 2001 was $151,953.

In November 2001 the Company refinanced the advance with an unrelated third
party for a total amount of $443,900 in principal, fees and accrued interest.
This note was due in May 2002, the Company has received an extension.

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 fulfil 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 fulfil 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
December 31, 2001 year end had remained at approximately the same level as 2000
being at $873,500. 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.


<PAGE>

ITEM 7   FINANCIAL STATEMENTS

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


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

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


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

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

                        DIRECTORS AND EXECUTIVE OFFICERS


NAME                  AGE     POSITION

                             OFFICERS AND DIRECTORS:

Larry J. Hrabi        50     Director, Chairman and Chief Executive Officer of
                             the Company.
                             Director and Chief Executive Officer of I Crystal
                             Software.

Derek Bodnarchuk      27     Director and President.

H. Rex Hollett        70     Director.

                            SENIOR TECHNOLOGY PERSONNEL:

Fabrice L'Heureux     30     Project Development Coordinator and Creative
                             Director.


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

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


<PAGE>


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

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

<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

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


                           SUMMARY COMPENSATION TABLE


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

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



                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

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


                            COMPENSATION OF DIRECTORS

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


                     CONTRACTUAL ARRANGEMENTS FOR EMPLOYMENT

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

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


<PAGE>


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


                        REPORT ON PRICING OF OPTIONS/SARS

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


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


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

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

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

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

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


<PAGE>


                           DESCRIPTION OF SECURITIES.

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

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

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


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

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


           QUARTER                     HIGH BID PRICE     LOW BID PRICE



           1st Quarter 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

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



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


<PAGE>


                    RECENT SALES OF UNREGISTERED SECURITIES.

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

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

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


                   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

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




<PAGE>
ITEM 13: INDEX TO EXHIBITS

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

                                     EXHIBIT

NUMBER      DESCRIPTION

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

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

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

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

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

4.1         2000 Incentive Plan of the Company.*

4.2         Form of Subscription Agreement for the 2000 Subscriptions.*

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

11.1        Statement re computation of per share earnings.*

21.1        Subsidiaries of registrant.*

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

<PAGE>


                                   SIGNATURES

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

Dated this 17th day of May, 2002


                              ICRYSTAL, INC.


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

May 17, 2002


<PAGE>



                                 ICRYSTAL, INC.,

                                 AND SUBSIDIARY

                              FINANCIAL STATEMENTS

                               FOR THE YEARS ENDED

                          DECEMBER 31, 2001, AND 2000,

                                      WITH

                                 AUDIT REPORT OF

                          CERTIFIED PUBLIC ACCOUNTANTS


<PAGE>


                                TABLE OF CONTENTS


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

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

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

Consolidated Statements of Stockholders' Deficit.............................F-6

Consolidated Statements of Cash Flows........................................F-7

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



                                      F-1

<PAGE>


                           MARK BAILEY & COMPANY, LTD.

                          Certified Public Accountants
                             Management Consultants


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


                          INDEPENDENT AUDITORS' REPORT

April 14, 2002
(Except for Note 11, as to which
the Date is May 15, 2002)

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

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

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the 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  provides a
reasonable basis for our opinion.

In our opinion,  the 2001 financial statements referred to above present fairly,
in all  material  respects,  the  financial  position of iCrystal,  Inc.,  as of
December 31, 2001,  and the results of its operation and cash flows for the year
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.  The Company has incurred losses since
inception and has a net stockholders deficit. These conditions raise substantial
doubt  about its  ability to continue  as a going  concern.  Management's  plans
regarding those matters are described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty




Mark Bailey & Co., Ltd.
Reno, Nevada


                                      F-2


<PAGE>

<TABLE>
<CAPTION>



                         ICRYSTAL, INC., AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                               December 31, 2001


                                      ASSETS

                                                                                            DECEMBER 31, 2001
                                                                                            _________________
<S>                                                                                                 <C>

CURRENT ASSETS
  Cash                                                                                          $     1,387
  Accounts receivable (net of allowance for doubtful accounts of $-0-)                              107,996
                                                                                                ___________
    Total current assets                                                                            109,383
                                                                                                ___________
FIXED ASSETS
  Equipment                                                                                          48,487
  Furniture and fixtures                                                                              5,459
  Leasehold improvements                                                                              4,764
  Accumulated depreciation and amortization                                                         (14,293)
                                                                                                ___________
    Total fixed assets                                                                               44,417
                                                                                                ___________
OTHER ASSETS
  Deposits                                                                                            6,249
  Loan origination fees (net of amortization of $17,139)                                             51,419
  Deferred tax asset (net of valuation allowance
    of $2,323,669)                                                                                        -
                                                                                                ___________
    Total other assets                                                                               57,668
                                                                                                ___________
    Total assets                                                                                $   211,468
                                                                                                ===========
                       LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                                                              $   113,843
  Accrued expenses                                                                                  100,000
  Related party payable                                                                              51,079
  Advance from stockholder                                                                            3,845
  Current portion of debt - West Peak note                                                            7,337
  Current portion of deferred revenue - master licensee                                              13,400
  Convertible debt and related interest                                                             443,896
                                                                                                ___________
    Total current liabilities                                                                       733,400
                                                                                                ___________
DEFERRED REVENUE - MASTER LICENSEE                                                                  113,379
                                                                                                ___________
  Total liabilities                                                                                 846,779
                                                                                                ___________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Common stock, $.01 par value, 30,000,000 shares
    authorized, 16,782,785 shares issued and outstanding                                            167,828
  Additional paid-in capital                                                                      6,031,212
  Accumulated deficit                                                                            (6,834,351)
                                                                                                ___________
    Total stockholders' equity                                                                     (635,311)
                                                                                                ___________
    Total liabilities and stockholders' equity                                                  $   211,468
                                                                                                ===========

</TABLE>


   The Accompanying Notes are an Integral Part of These Financial Statements


                                      F-3


<PAGE>

<TABLE>
<CAPTION>


                         ICRYSTAL, INC., AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For The Years Ended December 31, 2001, and 2000



                                                                                FOR THE YEAR ENDED
                                                                 DECEMBER 31, 2001             DECEMBER 31, 2000
                                                                 _________________             _________________
<S>                                                                  <C>                           <C>

SOFTWARE ROYALTIES                                                 $   873,471                   $   900,640
                                                                   ___________                   ___________

OPERATING COSTS AND EXPENSES
  General and administrative                                           174,968                       116,848
  Consulting expense                                                   406,966                       539,048
  Professional services                                                194,370                       229,571
  Research and development                                             398,275                       376,300
  Sales and marketing expense                                            4,002                        66,753
  Stock based compensation                                              12,800                        37,500
  Depreciation and amortization expense                                  7,183                         5,400
                                                                   ___________                   ___________
    Total operating cost and expenses                                1,198,564                     1,371,420
                                                                   ___________                   ___________
    Net loss from operations                                          (325,093)                     (470,780)
                                                                   ___________                   ___________

  Financing costs                                                            -                         1,000
  Interest expense                                                     255,027                         6,820
                                                                   ___________                   ___________
    Net loss before income taxes                                      (580,120)                     (478,600)
                                                                   ___________                   ___________
  Provision for income taxes                                                 -                             -
                                                                   ___________                   ___________
    Net loss                                                       $  (580,120)                  $  (478,600)
                                                                   ===========                   ===========
    Loss per share                                                 $     (0.04)                  $     (0.03)
                                                                   ===========                   ===========
Weighted average common shares
  outstanding  (basic and diluted)                                  15,982,785                    15,413,000
                                                                   ===========                   ===========

</TABLE>


   The Accompanying Notes are an Integral Part of These Financial Statements


                                      F-4


<PAGE>

<TABLE>
<CAPTION>


                         ICRYSTAL, INC., AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 For The Years Ended December 31, 2001, and 2000




                                                   COMMON STOCK           ADDITIONAL        DEFERRED     ACCUMULATED     TOTAL
                                               SHARES        AMOUNT    PAID-IN CAPITAL   COMPENSATION      DEFICIT       EQUITY
                                             __________    _________   _______________   ____________    ___________     ______
<S>                                          <C>           <C>           <C>              <C>           <C>            <C>

Balance at December 31, 1999                 14,682,785    $ 146,828     $ 5,471,414      $ (59,300)    $ (5,775,631)  $(216,689)
  Stock issued for cash and services            523,000        5,230         194,770                                     200,000
  Stock issued for services                     477,000        4,770         177,730                                     182,500
  Stock based compensation - stock options                                    37,500                                      37,500
  Amortization of deferred compensation                                                      46,500                       46,500
  Contributed capital                                                         12,000                                      12,000
  Net loss                                                                                                  (478,600)   (478,600)
                                             __________    _________     ___________      _________     ____________   _________
Balance at December 31, 2000                 15,682,785      156,828       5,893,414        (12,800)      (6,254,231)   (216,789)
  Stock issued for services in June 2001        100,000        1,000          21,000                                      22,000
  Stock issued to directors for services
    in November 2001                          1,000,000       10,000          60,000                                      70,000
  Benefit feature of the conversion of the
    convertible notes issued in 2001                                          56,798                                      56,798
  Amortization of deferred compensation                                                      12,800                       12,800
  Net loss                                                                                                  (580,120)   (580,120)
                                             __________    _________     ___________      _________     ____________   _________
Balance at December 31, 2001                 16,782,785    $ 167,828     $ 6,031,212      $       -     $ (6,834,351)  $(635,311)
                                             ==========    =========     ===========      =========     ============   =========

</TABLE>


   The Accompanying Notes are an Integral Part of These Financial Statements


                                      F-5


<PAGE>

<TABLE>
<CAPTION>


                         ICRYSTAL, INC., AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For The Years Ended December 31, 2001, and 2000

                                                                                 FOR THE YEARS ENDED
                                                                                    DECEMBER 31,
                                                                               2001              2000
                                                                             _________         _________
<S>                                                                          <C>               <C>

CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                                                   $(580,120)        $(478,600)
  Adjustments to reconcile net loss to net
  cash used in operating activities:
    Amortization of deferred compensation costs                                 12,800            46,500
    Depreciation and amortization expense                                        7,183             5,400
    Common stock issued for expenses                                            92,000           194,500
    Non cash interest expense for intrinsic value of
      conversion feature of debt                                                56,798                 -
    Stock based compensation - stock options                                         -            37,500
    Decrease (increase) in accounts receivable                                   2,308          (101,600)
    Decrease in prepaid expenses                                                     -               900
    Increase in deferred tax asset                                            (196,569)         (163,400)
    Increase  in related party payable                                           7,224                 -
    Increase in interest payable                                                25,126                 -
    Increase in deferred tax valuation allowance                               196,569           163,400
    Increase in accounts payable and accrued expenses                          113,179            98,200
    (Decrease) increase in deferred revenue                                    (23,800)           83,600
                                                                             _________         _________
      Net cash used in operating activities                                   (287,302)         (113,600)
                                                                             _________         _________
CASH FLOWS FROM INVESTING ACTIVITIES
    Deposits paid                                                               (6,249)                -
    Proceeds from sale of assets                                                     -            21,000
    Purchase of fixed assets                                                   (19,597)          (40,600)
                                                                             _________         _________
      Net cash used in investing activities                                    (25,846)          (19,600)
                                                                             _________         _________

</TABLE>


   The Accompanying Notes are an Integral Part of These Financial Statements


                                      F-6


<PAGE>

<TABLE>
<CAPTION>


                         ICRYSTAL, INC., AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For The Years Ended December 31, 2001, and 2000

                                                                                 FOR THE YEARS ENDED
                                                                                    DECEMBER 31,
                                                                               2001              2000
                                                                             _________         _________
<S>                                                                          <C>               <C>

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of convertible debt                                   542,910                 -
  Proceeds from issuance of common stock                                             -           200,000
  Payments on related party advances                                            (3,550)          (46,300)
  Principal payments on notes                                                 (232,525)          (36,600)
                                                                             _________         _________
    Net cash provided by financing activities                                  306,835           117,100
                                                                             _________         _________
    Net decrease in cash                                                        (6,313)          (16,100)
    Cash and cash equivalents at
      December 31, 2000, and 1999                                                7,700            23,800
                                                                             _________         _________
    Cash and cash equivalents at
      December 31, 2001, and 2000                                            $   1,387         $   7,700
                                                                             =========         =========

<FN>

SUPPLEMENTARY INFORMATION AND NON CASH TRANSACTIONS

During the years ended December 31, 2001 and 2000, interest paid was $153,726 and $6,700, respectively.

The Company paid no taxes during the years ended December 31, 2001, and 2000.

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

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

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

</FN>
</TABLE>


   The Accompanying Notes are an Integral Part of These Financial Statements


                                      F-7


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         iCrystal,  Inc. (the Company) 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.

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

         GOING CONCERN

         These financial statements have been prepared assuming that the Company
         will continue as a going  concern.  The Company has incurred net losses
         since  inception  and at December 31,  2001,  the Company had a working
         capital deficiency of $624,000 and a stockholder's deficit of $635,000.
         During 2001 the Company did not generate  revenues  sufficient  to fund
         its operation.

         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


                                      F-8


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         GOING CONCERN (CONTINUED)

         financing  will be  available,  if at all, at terms  acceptable  to the
         Company.

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

         BASIS OF PRESENTATION

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

         CASH AND CASH EQUIVALENTS

         For purposes of the statement of cash flows, the Company  considers all
         highly  liquid  debt  instruments  purchased  with a maturity  of three
         months or less to be cash  equivalents.  As of December 31,  2001,  and
         2000, the Company held no cash equivalents.

         ACCOUNTS RECEIVABLE

         The  Company  extends  credit  to  licensees  on  an  unsecured  basis.
         Management  established  allowances  for  doubtful  accounts  based  on
         evaluation  of  historical  and  current  payment  trends  as  well  as
         consideration of specific collection issues that may require additional
         specific  allowances.  As of December 31, 2001, all accounts receivable
         were considered collectible.

         PRINCIPLES OF CONSOLIDATION

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


                                      F-9


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         REVENUE RECOGNITION

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

         FIXED ASSETS

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

         LOAN ORIGINATION FEES

         Loan  origination fees are capitalized and amortized on a straight-line
         basis over the life of the loan.

         ADVERTISING COSTS

         Advertising  costs are  charged  to  operations  when  incurred.  Total
         advertising  costs charged to expense for the years ended  December 31,
         2001, and 2000, were $4,002 and $14,800, respectively.

         LOSS PER SHARE

         Net  loss  per  share is  provided  in  accordance  with  Statement  of
         Financial  Accounting  Standards  (SFAS) No. 128  "EARNINGS PER SHARE".
         Basic loss per share for each period is  computed by dividing  net loss
         by the weighted  average  number of shares of common stock  outstanding
         during the period.  Diluted loss per share  reflects per share  amounts
         that


                                      F-10


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         LOSS PER SHARE (CONTINUED)

         would have resulted if dilutive common stock  equivalents had been
         converted  to common  stock.  As of  December  31,  2001 and 2000,  the
         Company had no dilutive common stock equivalents such as stock options.

         INCOME TAXES

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

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

         RESEARCH AND DEVELOPMENT COSTS

         Research and  development  costs are  expensed as incurred.  During the
         years ended December 31, 2001, and 2000, the Company expensed  $398,275
         and $376,300, respectively for research and development costs.

         SEGMENT INFORMATION

         The  company   reports   segments  in  accordance  with  SFAS  No.  131
         "DISCLOSURE  ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED  INFORMATION."
         SFAS No. 131 requires that


                                      F-11


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         SEGMENT INFORMATION (CONTINUED)

         reportable  segments be designated using a management  approach,  which
         relies on the  internal  organization  used by  management  for  making
         operational  decisions  and  assessing  performance.  SFAS No. 131 also
         requires certain disclosures about products and services,  geographical
         areas, and major customers.  Management assesses the performance of its
         operations as a single segment. (See Note 8)

         NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001 the  Financial  Accounting  Standards  Board (FASB) issued
         SFAS No. 141, "Business  Combinations" which requires that the purchase
         method of  accounting be used for all business  combinations  initiated
         after June 30, 2001,  establishes specific criteria for the recognition
         of  intangible  assets  separately  from  goodwill,  and requires  that
         unallocated   negative  goodwill  be  written  off  immediately  as  an
         extraordinary gain instead of being deferred and amortized. The Company
         will account for business  combinations in accordance with the guidance
         in SFAS No. 141.

         In June  2001 the  FASB  issued  SFAS  No.  142,  "Goodwill  and  Other
         Intangible Assets". This statement establishes accounting and reporting
         standards  for  goodwill and  intangibles  for years  commencing  after
         December 15, 2001.  Whether already  acquired or subsequently  acquired
         after  the   effective   date,   companies  are  required  to  identify
         intangibles  with finite lives and those with indefinite  lives.  Those
         intangibles  with finite lives are to be amortized  over the  estimated
         useful lives of the assets while those with indefinite lives are not to
         be amortized.  Each  intangible or goodwill asset should be analyzed at
         least annually for impairment  where the carrying value is in excess of
         the fair value of the intangibles.  The asset's carrying value is to be
         reduced  by a charge  to  income  if the fair  value is lower  than the
         carrying value. The Company has adopted SFAS No. 142 as of December 31,
         2001. Management does not feel that the standard will materially affect
         the Company.


                                      F-12


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

         In June  2001 the  FASB  issued  SFAS No.  143  "Accounting  for  Asset
         Retirement  Obligations." SFAS 143 requires that retirement obligations
         be recognized as they occur and display as liabilities.  This Statement
         applies  to  legal  obligations  associated  with the  retirement  of a
         tangible   long-lived   asset  that   result   from  the   acquisition,
         construction,  or development and the normal  operation of a long-lived
         asset.  Management  does not feel  that the  standard  will  materially
         affect the Company.

         In  August  2001 the FASB  issued  SFAS No.  144,  "Accounting  for the
         Impairment or Disposal of Long-Lived Assets." SFAS No. 144 modifies the
         rules for  accounting  for the  impairment  or disposal  of  long-lived
         assets. The new rules become effective for fiscal years beginning after
         December 15, 2001, with earlier application encouraged. Management does
         not feel that this standard will materially affect the Company.

         STATEMENT PRESENTATION

         The  December 31,  2000,  income  statement  has been  reclassified  to
         conform to the December 31, 2001, presentation.  The operating expenses
         have been shown in more detail.

2.       NOTES PAYABLE

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

         In December 1999 the Company issued 200,000 common shares to West Peak,
         which did not accept the shares tendered based on its position that the
         shares were to be  registered  upon  delivery.  In February  2000 after
         negotiations  to  resolve  the issue  failed,  West Peak


                                      F-13


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


2.       NOTES PAYABLE (CONTINUED)

         filed a claim  against  the  Company  in the  Supreme  Court of British
         Columbia,  Canada,  claiming breach of the loan agreement. In September
         2000 the Court  ordered the company to pay West Peak the balance of the
         note plus interest and other costs. The Company made principal payments
         of $35,227 and $36,600  during 2001 and 2000,  respectively,  leaving a
         balance of $7,337 at December 31, 2001.

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

         In November 2001 the Company  refinanced the convertible  advances with
         unrelated  third  parties in the amount of $418,770.  The note included
         commissions  and fees of $68,558,  carries an  interest  rate of 4% per
         month on the outstanding principal,  and is due May 15, 2002. The notes
         are  convertible to shares of the Company's  common stock at a value of
         $.04 per  share.  At the time of  issuance,  the  notes  did not have a
         beneficial conversion feature, as the conversion price was equal to the
         fair market  price of the stock.  In May 2002 the note was extended for
         six months with the same terms (See Note 11).

         The following  schedule shows future  principal  payments  required for
         contracts and notes payable as of December 31, 2001:

                                                             CONTRACTS &
                                                            NOTES PAYABLE
                                                            _____________

              West Peak note                                 $    7,337
              Convertible debt and related interest             443,896
                                                             __________

                                 Due in 2002                 $ 451,233
                                                             ==========


                                      F-14


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


3.       PROVISION FOR INCOME TAXES

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

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

         The  following is a schedule of the  composition  of the  provision for
         income taxes:

                                                             2001          2000
                                                            _____         _____
         FEDERAL
         Current                                            $ -0-         $ -0-
         Deferred                                             -0-           -0-
                                                            _____         _____

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

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

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

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

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

                                                     2001             2000
                                                  ___________      __________

         Net operating loss carryforward          $ 2,323,669      $2,127,100
         Valuation                                 (2,323,669)     (2,127,100)
                                                  ___________      __________
             Total provision for income taxes     $      -0-       $      -0-
                                                  ===========      ==========

         The net change in the valuation  account was $196,569 and $163,400,  in
         the  years  ended  December  31,  2001,  and  2000,  respectively.  The
         valuation  allowance  has  been  estimated  in an  amount  equal to the
         projected future benefit of the loss  carryforward  because there is no
         assumption that the Company will generate  sufficient income to utilize
         the tax benefit.


                                      F-15


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


3.       PROVISION FOR INCOME TAXES (CONTINUED)

         The Company has incurred  losses since its  inception  and has filed no
         income tax returns.  The losses  incurred to date may be limited due to
         the  change  in  control  of  the  Company  and   limitations   on  the
         deductibility  of  $4,458,700  for services in exchange for issuance of
         common stock. In the event that all returns are filed, the Company will
         have  unused  net  operating  losses  available  for  carryforwards  of
         $6,834,320 that will start to expire in 2009 in the U.S.

         As a result of not filing all income tax  returns,  the  Company may be
         subject to assessment of penalties.  However,  as of April 14, 2002, no
         assessments  have been received and the  likelihood  of receiving  such
         assessments  or negotiating a settlement in the event  assessments  are
         received is  difficult to  estimate.  Accordingly,  the Company has not
         provided  for any  payments  that  may be made  if such  penalties  are
         assessed.

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

4.       CAPITAL STOCK

         The Company has a single class of $0.01 par value common stock.  Thirty
         million  shares are  authorized  and  16,782,785  shares are issued (or
         committed to be issued) and outstanding at December 31, 2001.

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

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


                                     F-16


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


4.       CAPITAL STOCK (CONTINUED)

         In 2000 the Company issued 1,000,000 share of its common stock for cash
         proceeds and services totaling $382,500.  Also during the year, certain
         stockholders  assumed  $12,000 of the Company's  liabilities  which was
         recorded as contributed capital.

5.       STOCK BASED COMPENSATION

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

         A  summary  of the  status  of the Plan at  December  31,  2001,  is as
         follows:
                                                                    WEIGHTED
                                                                    AVERAGE
                                                     NUMBER OF      EXERCISE
                                                      OPTIONS       PRICE
                                                     __________     ________

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

         The Company applies the provisions of Accounting  Principles  Board No.
         25   "ACCOUNTING   FOR  STOCK   ISSUED  TO   EMPLOYEES,"   and  related
         interpretations  to account for stock-based awards granted to employees
         and  non-employee  directors  holding  positions  that  are  filled  by
         stockholder elections. Accordingly, costs for employee and non-employee
         director


                                      F-17


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


5.       STOCK BASED COMPENSATION (CONTINUED)

         stock  options are measured as the excess,  if any, of the value of the
         Company's  common  stock at the  measurement  date over the  amount the
         employee  must pay to acquire the stock.  No  compensation  expense was
         recognized  at the date of grant for the awards  made to  employee  and
         non-employee directors under the Plan.

         The Plan 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  remeasures the compensation  cost of outstanding  employee
         and  non-employee  directors'  options at each balance  sheet date.  No
         additional  compensation was recognized for 2000 or 2001 as a result of
         any remeasurement of the compensation cost of these options. There were
         no options outstanding as of December 31, 2001.

         The Company  applies the  provisions of SFAS No. 123,  "ACCOUNTING  FOR
         STOCK BASED  COMPENSATION," and related  interpretations to account for
         stock-based  awards granted to  non-employees,  other than non-employee
         directors.  SFAS No. 123 requires that the cost for non-employee stock
         options be measured  based on the fair value of the options  granted at
         the  date  the   services   were   performed.   The  Company  uses  the
         Black-Scholes  option-pricing  model to compute  estimated  fair value.
         There were no stock options  granted to  non-employees  during the year
         ended December 31, 2001. Stock based compensation  expenses  recognized
         on the date of grant for options  issued to  non-employees  during 2000
         totaled $37,500, based on the following assumptions:


                                      F-18


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


5.       STOCK BASED COMPENSATION (CONTINUED)

              Risk-free interest rate                             6.0%
              Dividend yield rate                                 0.0%
              Price volatility                                  100.0%
              Weighted average expected life of option            .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  the
         estimated fair value,  based on the assumptions  presented above. There
         were no stock options  issued in 2001.  Pro forma net loss and loss per
         share amounts for 2001 and 2000 are as follows:

                                                     2001           2000
                                                  __________     _________

              Pro forma Net Loss                  $(580,120)     $(533,200)
              Pro forma basic and diluted
              loss per share                      $   (0.04)     $   (0.03)


6.       OBLIGATIONS UNDER LEASE

         The Company  occupies  leased  premises which have renewal options with
         terms and conditions  similar to the original  lease.  The rent expense
         for the years ended  December  31,  2001,  and 2000,  were  $40,975 and
         $19,500, respectively.

         The following schedule shows future minimum lease payments required for
         operating leases that have  noncancelable  lease terms in excess of one
         year as of December 31, 2001(amounts are in Canadian Dollars):

                            Year Ending December 31,

                                    2002                             $ 82,011
                                    2003                               57,209
                                 After 2003                               -0-
                                                                     ________
                                              Total                  $139,220
                                                                     ========


                                      F-19


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


7.       CONTINGENCIES

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


8.       RELATED PARTY TRANSACTIONS

         The Company is affiliated with the following entities:

         Diversified Cosmetics International,  Inc. (Diversified) Diversified, a
         stockholder  of  the  Company,  is  an  Alberta  corporation  that  was
         previously  listed on the Alberta Stock Exchange.  In December 1998 the
         Company acquired certain software rights from  Diversified.  Subsequent
         to the transfer of the technology to the Company,  Diversified  has had
         no significant business operations.  In 2000 the Company repaid $49,700
         of the amount  owed,  and  Diversifed  agreed to settle  the  remaining
         $52,400  obligation  by accepting the  assignment of a receivable  from
         DCI, Inc.

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

         DCI, Inc. and Manihi, Inc.
         In April and October 1999,  respectively,  the Company entered into two
         ten- year nonexclusive master license agreements with DCI, Inc. for use
         of the Company's


                                      F-20


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


8.       RELATED PARTY TRANSACTIONS (CONTINUED)

         technology.  Leonard Slamko,  a consultant  retained by DCI, Inc., is a
         stockholder  of the Company and a relative of officers and directors of
         the Company. DCI, Inc. is incorporated in the Commonwealth of Dominica,
         where it is licensed to conduct international  wagering,  lotteries and
         games of chance by way of telecommunications.

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

         Under terms of the Agreement  with Manihi,  the Company is obligated to
         provide all new and existing  casino  gaming  software,  smart-download
         features  and  website  development,  technical  support  and  back-end
         accounting  features.  The  Company,  in return,  will  receive  thirty
         percent of the 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  recorded  $873,471  and
         $228,700 of revenue for the elements  delivered  during the years ended
         December 31, 2001 and 2000, respectively.  As of December 31, 2001, the
         Company had a $102,496 due from Manihi.

         During  2001  the  Company  received  advances  totaling  $177,559  and
         converted  $22,700 of accounts  payable for a total advance of $198,259
         from Lexington Systems Limited,  an affiliate of Manihi,  Inc., through
         common ownership.  In November 2001 the Company  refinanced the advance
         with an unrelated  third party.  The total  interest  paid to Lexington
         Systems Limited during the year ended December 31, 2001, was $151,953.


                                      F-21


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


8.       RELATED PARTY TRANSACTIONS (CONTINUED)

         Advances from shareholders

         The Company owed certain  stockholders $19,000 for advances made to the
         company  in 1999,  when it was in the  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  balance of the
         advance  as of  December  31,  2001,  and 2000 was  $3,845  and  $4,400
         respectively.

9.       SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS
         SEGMENT INFORMATION

         The  Company's  primary  operations  consist  of  the  development  and
         licensing of internet-based gaming technology.  Management assesses the
         performance of its operation as a single segment.

         GEOGRAPHIC INFORMATION

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

                                            FOR THE YEAR ENDED DECEMBER 31, 2001

                                            REVENUE            LONG-LIVED ASSETS
                                           _________           _________________

         Canada                            $     -0-               $ 58,710
         Commonwealth of Dominica                -0-                    -0-
         Central America or Costa Rica       873,471                    -0-
                                           _________               ________
             Consolidated Total            $ 873,471               $ 58,710
                                           =========               ========


                                      F-22


<PAGE>


                         ICRYSTAL, INC., AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


9.       SEGMENT AND GEOGRAPHIC INFORMATION AND MAJOR CUSTOMERS (CONTINUED)

         GRAPHIC INFORMATION (CONTINUED)


                                       FOR THE YEAR ENDED
                                       DECEMBER 31, 2000

                                            REVENUE
                                           _________

         Commonwealth of Dominica          $ 671,900
         Central America or Costa Rico       228,740
                                           _________
             Consolidated Total            $ 900,640
                                           =========

         MAJOR CUSTOMERS

         During the year ended December 31, 2001, and 2000, the Company realized
         $873,471  and  $228,740,  of  revenue  under its new  exclusive  master
         license agreement with Manihi, Inc.

10.      FAIR VALUE OF FINANCIAL INSTRUMENTS

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

         The fair  value of  accounts  receivable  and  payable,  related  party
         payable,  and other  current  liabilities  approximate  their  carrying
         amounts.  The fair value of the advance from  stockholder  and the note
         payable  approximates  its  carrying  amount  because of the short term
         nature of the financial instruments.  The fair value of the convertible
         debt,  approximate the carrying value December 31, 2001, as it reflects
         the current  terms and  conditions  for similar  debt  available to the
         Company.

11.      SUBSEQUENT EVENT

         In May  2002 the  convertible  note  which  was due May 15,  2002,  was
         extended for six months with the same terms.


                                      F-23