UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X] Annual Report to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year ended September 30, 2003.

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the transition period from _____________to______________

                          Commission File No. 000-27773

                           KRYSTAL DIGITAL CORPORATION
                           ---------------------------
             (Exact name of registrant as specified in its charter)

                  (formerly known as ESCAgenetics Corporation)

 Delaware                                              94-3012230
 --------                                              ----------
(State or other jurisdiction of Incorporation)         (I.R.S. Employer
                                                       Identification No.)

                         925 WEST LAMBERT ROAD, SUITE A
                                 BREA, CA 92821

                    (Address of principal executive offices)

Registrant's telephone number, including area code:   (714) 990-9300.
                                                      ---------------


Securities registered pursuant to Section 12(b) of the Act:

      Title of each Class            Name of each Exchange on which Registered
      -------------------            -----------------------------------------
         Not Applicable                               None

Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $0.001 Par Value
                         ------------------------------
                                (Title of Class)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (or for such shorter prior 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 in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the best of the  registrant's  knowledge,  in definitive proxy or
information statements  incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB. /X/

<PAGE>

         The issuer's net sales for the most recent fiscal year were $0.

         The aggregate  market value of the voting stock held by  non-affiliates
based upon the last sale price on January 29, 2004 was approximately $110,095.

         As of January 29, 2004 there were  22,948,438  shares of Common  Stock,
par value $0.001 per share, outstanding.

<PAGE>

PART I

ITEM 1.  BUSINESS

Formed in 1986,  Krystal  Digital  Corporation  ("the Company") was organized to
develop  and   commercialize   high-value,   plant  derived   products  for  the
agricultural and  pharmaceutical  markets.  The Company  actively  conducted its
business  between 1987 and the early part of 1995. In January 1995,  the Company
scaled back its business  activities and became largely a dormant  business.  In
January  1996,  the Company  filed a bankruptcy  petition for  protection  under
Chapter 11 of the U.S. Bankruptcy Code.

The   Company's   amended  plan  of   reorganization   (the   "Amended  Plan  of
Reorganization")  became effective on August 22, 1996. Under the Amended Plan of
Reorganization,  GFL Ultra Fund,  Ltd.  ("Ultra"),  the  Company's  largest debt
holder, received 25% of the cash available to unsecured creditors and 90% of the
Company's  common stock. The remaining cash was distributed  proportionately  to
the remaining  unsecured creditors and the remaining 10% of the Company's common
stock remained owned by its previous shareholders. The bankruptcy proceeding was
officially closed effective March 31, 1997. In July, 1998 Genesee Holdings, Inc.
("Holdings") acquired by merger all the assets of Ultra.

By the end of 1996, the Company sold or disposed of all of its assets other than
cash on hand and the stock of  PHYTOpharmaceuticals,  Inc. (an inactive majority
owned  subsidiary)  and SRE  ESCAgenetics  Corporation (an inactive wholly owned
subsidiary).

The Company has been dormant  during the fiscal year ended  September  30, 2003.
The Company has had no employees  since November 1996. The Company does not plan
to  continue  the   business   activities   that  it  conducted   prior  to  its
reorganization.

On November  5, 2003 the  Company  consummated  the  acquisition  of 100% of the
capital stock of Shecom Corporation ("Shecom").  At the time of the transaction,
there  were  1,000,000  shares  of  common  stock  of  the  Company  issued  and
outstanding and an additional  2,125,000 shares that it had agreed to issue upon
consummation  of the transaction  for investment  banking and related  financial
services.  Under  the terms of the  agreement  and plan of  reorganization,  the
Company issued to the former  stockholders  of Shecom  19,823,438  shares of its
common  stock and  warrants to purchase an  additional  2,051,619  such  shares,
constituting  87.5% of the total issued and  outstanding  equity  securities and
shares of common stock underlying options and warrants, respectively.

The transaction  was first reported in Schedule 14C sent to the  shareholders of
the  Company  and  filed  with  the  Securities  and  Exchange  Commission  (the
"Commission")  on October 8, 2003.  The Form 8-K  reporting  the  closing of the
acquisition of Shecom was filed with the Commission on November 20, 2003.  These
and  other  reports  filed  by  the  Company  are  available  to the  public  at
www.sec.gov.

<PAGE>

ITEM 2.  PROPERTIES

         None.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is not subject to any material legal proceedings.


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

         The  Company  did not  submit  any  matters  to a vote of its  security
holders during the fourth quarter of fiscal year 2003.














                                       2
<PAGE>

                                     PART II


ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK


         The Company's  Common Stock is quoted on the NASD's OTC Bulletin  Board
under the symbol  "KDGC." The market for the Company's  Common Stock is limited,
sporadic  and highly  volatile.  The  following  sets forth the high and low bid
prices per share of the Company's  Common Stock during its last two fiscal years
as reported by the OTC Bulletin Board. These prices reflect inter-dealer prices,
without retail  mark-ups,  mark-downs or  commissions,  and may not  necessarily
represent actual transactions.


                                  COMMON STOCK


FISCAL 2002
First Quarter                                        $2.1     $0.84
Second Quarter                                       1.26     0.84
Third Quarter                                        0.84     0.7
Fourth Quarter                                       0.7      0.7

FISCAL 2003
First Quarter                                        $0.84    $0.14
Second Quarter                                       0.84     0.15
Third Quarter                                        4.9      0.18
Fourth Quarter                                       2.00     1.01

FISCAL 2004
First Quarter                                        $2.00    $0.65
Second Quarter (through January 29, 2004)            1.10     0.65


         On January 29, 2004, there were  approximately 500 holders of record of
the Company's 22,948,438, outstanding shares of Common Stock.

         On  January  29,  2004,  the last  sale  price of the  Common  Stock as
reported on the OTC Bulletin Board was $0.65.


DIVIDEND POLICY

         The Company has never paid or declared  dividends on its common  stock.
The payment of cash dividends, if any, in the future is within the discretion of
the Board of Directors and will depend upon the Company's earnings,  its capital
requirements,  financial condition and other relevant factors. Management of the
Company intends,  for the foreseeable  future, to retain future earnings for use
in the Company's business.




                                       3
<PAGE>

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY PLANS

<TABLE>
<CAPTION>
                              Number of securities to be     Weighted-average exercise   Number of securities
                                issued upon exercise of      price of outstanding        remaining available for
                             outstanding options, warrants   options, warrants and       future issuance under
                                      and rights             rights                      equity compensation plans

<S>                                         <C>              <C>                          <C>
Equity compensation
plans approved by                           None             - - -                        None
security holders

Equity compensation
plans  not approved by                      None             - - -                        None
security holders

Total                                       None             - - -                        None
</TABLE>















                                       4
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                           FORWARD-LOOKING STATEMENTS

The  following  discussion  should  be read in  conjunction  with the  Company's
consolidated  financial  statements and related notes included elsewhere in this
Form 10-KSB.

This  filing  contains  forward-looking  statements.  The  words  "anticipated,"
"believe,"  "expect,  "plan," "intend," "seek,"  "estimate,"  "project," "will,"
"could," "may," and similar expressions are intended to identify forward-looking
statements. These statements include, among others, information regarding future
operations,  future  capital  expenditures,  and  future  net  cash  flow.  Such
statements reflect the Company's current views with respect to future events and
financial  performance and involve risks and uncertainties,  including,  without
limitation,  general  economic  and  business  conditions,  changes in  foreign,
political,   social,  and  economic  conditions,   regulatory   initiatives  and
compliance with governmental regulations,  the ability to achieve further market
penetration and additional  customers,  and various other matters, many of which
are  beyond  the  Company's  control.  Should  one or more  of  these  risks  or
uncertainties  occur, or should  underlying  assumptions  prove to be incorrect,
actual  results  may vary  materially  and  adversely  from  those  anticipated,
believed,   estimated,  or  otherwise  indicated.   Consequently,   all  of  the
forward-looking statements made in this filing are qualified by these cautionary
statements and there can be no assurance of the actual results or developments.

The Company had no revenues from operations since the  reorganization  date. The
Company  does not plan to continue the business  activities  that it  previously
conducted.  The Company has no employees and no fixed  assets.  The Company does
not  anticipate  hiring any employees or purchasing any assets other than as may
be required by its wholly owned subsidiary, Shecom Corporation.



                                       5
<PAGE>

CRITICAL ACCOUNTING POLICIES

The Company's significant accounting policies are outlined within Item 7 as Note
1 to the consolidated  financial  statements.  Some of those accounting policies
require the Company to make estimates and assumptions that affect the amounts it
reports.

RESULTS OF OPERATIONS

YEAR ENDED SEPTEMBER 30, 2003 COMPARED TO SEPTEMBER 30, 2002

REVENUES
The Company did not report any revenues from  continued  operations for the year
ended September 30, 2003.

OPERATING EXPENSES

   Accounting and Legal
      For the year ended  September 30, 2003,  the accounting and legal expenses
      increased to $36,000 from $17,000 for the year ended  September  30, 2002.
      This increase is  principally  attributable  to additional  legal expenses
      incurred in connection with the Merger (see Recent Events).

   Selling, General and Administrative
      Selling,  general and administrative expenses for the year ended September
      30, 2003 were  $43,000 as  compared  to $23,000 for the similar  period in
      2002.  The  increase in selling,  general and  administrative  expenses is
      principally  attributable to the issuance of 70,000 shares of common stock
      to the Principal Shareholder and two other directors for services, in lieu
      of compensation (see Note 2 to the Consolidated Financial Statements).

NET LOSS
Net loss for the year ended  September  30, 2003 amounted to $79,000 as compared
to a net loss of $40,000 for the year ended September 30, 2002. This increase in
net loss is attributable to the increase in operating expenses,  as discussed in
the preceding paragraphs.

LIQUIDITY AND CAPITAL RESOURCES

Operating Activities


                                       6
<PAGE>


At September 30, 3003, the Company had a working  capital  deficit of $3,000 and
an accumulated  deficit of $464,000.  For the year ended September 30, 2003, net
cash used in operating  activities  amounted to $87,000,  a $5,000 decrease from
the net cash used in operating activities for the comparable period in 2002.


Financing Activities

There were no financing  activities  during the fiscal year ended  September 30,
2003 other than the proceeds from the issuance of 170,675 shares of common stock
to two individuals (see Note 2 to the Consolidated  Financial  Statements).  The
financing  activities for the fiscal year ended  September 30, 2002 consisted of
advances  made  by its  former  majority  shareholder,  Genesee  Holdings,  Inc.
("Holdings")  on a term loan.  The loan,  which was converted  into a promissory
note (the  "Note")  on  December  1,  2002,  was  subsequently  sold to Kevin R.
Keating,  which in turn,  converted  the Note into equity during April 2003 (see
Note 2 to the Consolidated Financial Statements.)

See below for developments in this regard since September 30, 2003.

RECENT EVENTS

ACQUISITION OF SHECOM
On  August  22,  2003,  the  Company,   Shecom  Acquisition  Corp.,  a  Colorado
corporation  and wholly owned  subsidiary of the Company  ("Mergeco") and Shecom
Corporation,  a Colorado corporation  ("SHECOM"),  entered into an Agreement and
Plan of  Reorganization,  as amended on  September  24,  2003 (as  amended,  the
"MERGER AGREEMENT").

The Merger Agreement  provided for the acquisition by the Company of Shecom.  In
the  merger,  the former  stockholders  of Shecom and the holders of warrants to
purchase  common stock of Shecom  received that number of shares of common stock
of the Company plus warrants to purchase Company common stock as represented, in
the aggregate, 87.5% of the issued and outstanding shares of common stock of the
Company after giving effect to the merger.

Immediately  prior to the merger,  there were 21,257,737 shares of Shecom common
stock issued and  outstanding,  plus an  additional  2,200,000  shares of Shecom
common  stock  issuable  upon  exercise of certain  warrants to purchase  Shecom
common  stock,  for a total  of  23,457,000,  fully-diluted  outstanding  Shecom
shares.  At the time of the merger,  there were 1,000,000 shares of common stock
of the Company issued and  outstanding and an additional  2,125,000  shares that
the  Company  agreed to issue upon  consummation  of the  merger for  investment
banking and related financial services.

At the effective time of the merger,  to entitle the existing  holders of Shecom
common stock and Shecom warrants to own 87.5% of the fully-diluted shares of its
common  stock,  the  Company  issued  0.932558146  such  shares and  warrants to
purchase  0.932558146  such shares for each  outstanding  share of Shecom common
stock and each  outstanding  Shecom  warrant.  As a result,  the then holders of
Shecom equity  securities  received an aggregate of 19,823,438  shares of common
stock and warrants to purchase an additional  2,051,619  shares of common stock.
In addition, the Merger Agreement provided that, immediately after the effective
date of the  merger,  the board of  directors  of the  Company  will  consist of
persons designated by the stockholders of Shecom.

LINE OF CREDIT

As of September  30, 2003,  borrowings  outstanding  on Shecom's  maximum  $35.0
million line of credit with its principal senior lender were approximately $33.6
million,  as  compared  to $34.8  million on June 30,  2003.  The line of credit
contains  covenants that must be complied with on a continuous basis,  including
the  maintenance of certain  financial  ratios.  The ability to draw funds under
this credit facility is dependent upon sufficient  collateral  based on accounts
receivable  availability.  Shecom's  senior  lender has not  agreed to  increase
Shecom's line of credit.  As a result,  throughout  fiscal 2003, Shecom has been
cash  constrained  and  has  had  to  rely  on  borrowings  from  its  principal
shareholder to fund operations.  Shecom's  principal senior lender has agreed to
extend the  maturity  date of its line of credit to January 31,


                                       7
<PAGE>

2004,  but also  advised  that it did not intend to renew such line of credit on
the  present  terms,  if  at  all.  The  lender  and  Shecom  are  presently  in
negotiations on the terms of any extension that the lender may offer.

The Company is  attempting  to negotiate a new line of credit with certain other
potential lenders. Shecom recently received a non-binding  proposal from another
lender  regarding a new line of credit.  However,  the Company has not as of the
filing date of this report arranged for such an alternate facility.

There can be no  assurance  that  Shecom  will be able to timely  refinance  its
senior  credit  facility or convince its existing  lender to extend the maturity
date of the current credit facility on acceptable terms, if at all.

If no financing is raised  within the near  future,  there would be  substantial
doubt as to the Company's ability to continue as a going concern.



                                       8
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

The financial  statements of the Company are included in this report  commencing
on page F-1.

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

Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES.

Based on an evaluation  as of the date of the end of the period  covered by this
Form 10-KSB,  the Company's Chief Executive Office and Chief Financial  Officer,
conducted an evaluation of the  effectiveness of the design and operation of the
Company's  disclosure controls and procedures,  as required by Exchange Act Rule
13a-15.  Based on that  evaluation,  the Company's Chief  Executive  Officer and
Chief Financial  Officer  concluded that the Company's  disclosure  controls and
procedures were effective to ensure that information required to be disclosed by
the Company in the reports that the Company  files or submits under the Exchange
Act is recorded,  processed,  summarized  and  reported  within the time periods
specified by the Commission's rules and forms.

Changes in Internal Controls

There  were no  significant  changes in the  Company's  internal  controls  over
financial  reporting that occurred  during the quarter and year ended  September
30, 2003 that have materially  affected,  or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

Limitations on the Effectiveness of Controls

Management  of the Company  believes that a control  system,  no matter how well
designed and operated,  cannot provide absolute assurance that the objectives of
the control  system are met, and no evaluation of controls can provide  absolute
assurance  that all control  issues and  instances  of fraud,  if any,  within a
company have been detected.



                                       9
<PAGE>

                                    PART III

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

The following table sets forth the name, age and position of each person who was
serving as an  executive  officer or  director  of the Company as of January 29,
2004:

       NAME                       AGE      POSITION
       ----                       ---      --------
       Raju Shewa                 48       Chairman of the Board and Chief
                                           Executive Officer

       Phillip G. Trad            55       President and Director

       Fred Anavim                57       Chief Financial Officer and Director

       Vincent Franzone           48       Director

       John L. Titus              45       Director nominee


RAJU SHEWA.  Mr. Shewa is the Chairman of the Board and Chief Executive  Officer
of Shecom  Corporation.  Mr. Shewa founded Shecom in 1986 and has guided it from
its initial domestic and international sales of computer components and consumer
electronics through the import, development and manufacturing of computer memory
modules,  peripherals and personal  computers.  Mr. Shewa began his career after
obtaining  his  Bachelor of Commerce  Degree in 1975 by forming a Tokyo  trading
company under the name Shewa Brother's  Limited which  specialized in the import
and export of consumer  electronics to the Middle East, Asia, Africa, and Europe
with sales growing from $5.0 million to $40.0 million.  In 1980, Shewa Brother's
Limited  moved to  Frankfurt,  West Germany to expand its base of operation  and
increase  its market  share  internationally  under the name of Shewa  Brother's
GMBH.  Mr.  Shewa  is  presently  leading  the  development  of a  new  computer
technology and  peripherals in order to provide new and expanding  opportunities
for Shecom Corporation.

PHILLIP G. TRAD.  Mr. Trad is a Director  and became the  President of Shecom in
2001.  For 12 years prior thereto he served as a consultant to Shecom.  Mr. Trad
is an attorney who has provided legal  representation  and consulting on a state
and federal level to corporations,  insurance companies,  partnerships and joint
venture  investments to corporate and business  ventures since 1979. Since 1995,
Mr. Trad has been a director of PharmaPrint  Inc., a Delaware  corporation  that
specialized  in  the  development  and  advancement  of  herbal  and  bio-active
supplements and pharmaceutical development.  From 1998 to 2001, Mr. Trad was the
President of PharmaPrint Inc. having originally  started with the corporation as
its Senior Vice  President and General  Counsel in 1998.  Mr. Trad's  activities
included  domestic  and  international  contract  negotiations,  facilities  and
equipment procurement and financing,  investment counseling,  as well as, public
and private funding services.

FRED ANAVIM.  Mr. Anavim,  joined Shecom in 2001 as its Chief Financial  Officer
and Director. For approximately eleven years prior to joining Shecom, Mr. Anavim
provided  independent  financial  consulting services to various corporations in
the computer import,  manufacturing  and distribution  business  specializing in
internal controls,  operations management,  international credit and collection,
import,  export and customs clearing,  and installation of integrated accounting
systems.  From  1982  to  1988,  he  provided  services  as the  controller  and
accounting  consultant  to Project  Development  Company of Dallas,  Texas which
concentrated   in   multi-dimensional   real  estate   transactions,   corporate
development  and commercial  financing  services.  From 1980 to 1982, Mr. Anavim
served  as a  staff  accountant  and  auditor  for  Deloitte  &  Touche  and its
predecessor  firm. Mr. Anavim obtained an MA in Accounting from the Institute of
Accountancy in London in 1973, a MS in  International  Business  Management from
the University of Texas at Dallas,  and MBA in accounting and finance from North
Texas State University.


                                       10
<PAGE>

VINCENT FRANZONE.  For the past two years Mr. Franzone he has served as a Senior
Vice  President  and  Managing  Director  of  InvestPrivate,  LLC,  a  New  York
investment  banking  firm.  For four  years  prior to such  date,  he  served as
Syndicate  Manager of Prime Charter Equities LLC, a New York investment  banking
firm.

JOHN L. TITUS.  Since  February 1999, Mr. Titus has served as Vice President and
Chief Financial Officer of Metering  Technology  Corporation,  located in Scotts
Valley,  California,  where  he was  responsible  for all  financial,  treasury,
investor  relations,  inventory  control and other financial and  administrative
matters.  He was  instrumental in  facilitating  raising of both debt and equity
capital and the sale of the company to a public  corporation  in April 2003. For
two years prior  thereto,  Mr. Titus was a financial  consultant  with Murdock &
Associates,  Inc.  From  1990 to 1997,  Mr.  Titus  was  President  of a private
commercial  property  management  company,  and co-founded a private  publishing
company.  Mr.  Titus  holds a BA in  finance  from the  University  of Texas and
received an MBA in  business/finance  at the  University of Texas in 1983. It is
anticipated that Mr. Titus, currently a nominee to the board of directors,  will
become a director within the next 90 days.

No  family  relationships  exist  between  any of  the  Company's  directors  or
executive officers.

Except as set forth  herein,  no officer or director of the Company has,  during
the last five years: (i) been convicted in or is currently  subject to a pending
a criminal proceeding;  (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is  subject  to a  judgment,  decree  or  final  order  enjoining  future
violations of, or prohibiting or mandating  activities subject to any Federal or
state  securities  or banking laws  including,  without  limitation,  in any way
limiting  involvement  in any business  activity,  or finding any violation with
respect  to such law,  nor (iii) has any  bankruptcy  petition  been filed by or
against the business of which such person was an executive  officer or a general
partner,  whether  at the  time of the  bankruptcy  or for the two  years  prior
thereto.

COMPLIANCE WITH SECTION 16 (a)

Under the securities  laws of the United States,  the Company's  directors,  its
executive  officers,  and any persons  holding ten percent or more of the Common
Stock must report on their ownership of the Common Stock and any changes in that
ownership  to the  Commission.  Specific  due dates for these  reports have been
established.  During the year ended  September  30, 2003,  and based solely on a
review of electronic  filings made on the Commission's Edgar system, the Company
does not  believe  that all reports  required to be filed by Section  16(a) were
filed on a timely basis.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company does not presently have a standing audit, compensation or nominating
committee,  though it anticipates  forming an audit committee and a compensation
committee within the near future.

MEETINGS OF THE BOARD OF DIRECTORS

During  fiscal  2003,  the Company  held no meetings of the Board of  Directors,
taking all corporate action by written consent in lieu of a meeting.


                                       11
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

The Company has had no employees  since November 1996 and did not compensate its
officer or directors  during the fiscal year ended  September 30, 2003 or at any
time thereafter. Mr. Keating and Ms. Blackwell are compensated by their employer
for  services  rendered  to their  respective  employers.  No  portion  of their
compensation  is  specifically  attributable  to their  service as an officer or
director of the Company.  Mr. Keating and Ms. Blackwell  resigned on November 5,
2003,  upon  effectiveness  of the merger  whereby the Company  acquired  Shecom
Corporation.

DIRECTOR COMPENSATION

Directors are reimbursed for expenses  actually incurred in connection with each
meeting of the board or any committee thereof attended.  Effective  November 15,
2003, Mr. Franzone purchased 50,000 shares of Company common stock for $1.00 per
share,  and will be entitled to automatic annual grants of rights to purchase an
additional 50,000 shares of Company common stock for so long as he or she serves
as  a  director;   provided,  that  the  maximum  number  of  such  shares  such
non-employee  director shall be entitle to purchase shall be 250,000. All shares
of Company  common stock  purchased  shall be restricted  shares,  and all share
purchases  shall be at a price of at $1.00 per  share.  Directors  may  purchase
their shares either for cash, or at the directors option, by delivering their 6%
notes payable to the Company,  together with accrued interest thereon,  upon the
earlier  to occur of the sale of such  shares  or three  years  from the date of
purchase.

EXECUTIVE COMPENSATION

Raju  Shewa  currently  serves as the  Company's  Chief  Executive  Officer  and
Chairman  of  its  Board  of  Directors  pursuant  to a  three  year  employment
agreement,  dated as of  November  15,  2003.  The  Shewa  Employment  Agreement
provides for a minimum  annual base salary  payable to Mr. Shewa of $200,000,  a
minimum  increase each year equal to the percentage rise in the Los Angeles wage
index and certain incentive bonuses  consisting of 10% of the amount, if any, by
which the net income after taxes of the Company  shall exceed  $2,000,000 in any
fiscal year, up to a maximum  aggregate bonus not to exceed $100,000 in any such
year.

Phillip G. Trad currently serves as the Company's  President and a member of its
Board of Directors  pursuant to a three year employment  agreement,  dated as of
November 15, 2003. The Trad Employment  Agreement  provides for a minimum annual
base salary payable to Mr. Trad of $200,000,  a minimum increase each year equal
to the  percentage  rise in the Los  Angeles  wage index and  certain  incentive
bonuses  consisting of 10% of the amount, if any, by which the net income of the
Company shall exceed  $2,000,000  in any fiscal year, up to a maximum  aggregate
bonus not to exceed  $100,000 in any such year.  The Trad  employment  agreement
provides entitles Mr. Trad to purchase 166,666 shares of Company common stock on
November 15, 2003,  166,667  shares of Company common stock on November 15, 2004
and  166,667  shares of  Company  common  stock.  These  500,000  shares are all
restricted  securities and will be purchased for a price of $1.00 per share. Mr.
Trad may purchase his shares  either for cash, or at the  directors  option,  by
delivering their 6% notes payable to the Company, together with accrued interest
thereon,  upon the  earlier to occur of the sale of such  shares or three  years
from the date of purchase. No options have been exercised to date.

Fred Anavim  serves as the Company's  Treasurer and currently  acts as its Chief
Financial  Officer  pursuant to a three year employment  agreement,  dated as of
November 15, 2003. The Anavim Employment Agreement provides for a minimum annual
base salary payable to Mr. Anavim of $92,000, a minimum increase each year equal
to the  percentage  rise in the Los  Angeles  wage index and  certain  incentive
bonuses  consisting of 5% of the amount,  if any, by which the net income of the
Company shall exceed  $2,000,000  in any fiscal year, up to a maximum  aggregate
bonus not to exceed  $50,000 in any such year. The Anavim  employment  agreement
provides  entitles Mr. Anavim to purchase  41,666 shares of Company common stock
on November 15, 2003, 41,667 shares of Company common stock on November 15, 2004
and  41,667  shares of  Company  common  stock.  These  125,000  shares  are all
restricted  securities and will be purchased for a price of $1.10 per share. Mr.
Anavim may purchase his shares either for cash, or at the directors  option,  by
delivering their 6% notes payable to the Company, together with accrued interest
thereon,  upon the  earlier to occur of the sale of such  shares or


                                       12
<PAGE>

three years from the date of purchase.  No options have been  exercised to date.
Mr.  Anavim's  agreement  provides that if the Company engages the services of a
Senior Vice-President of Finance and Administration and Chief Financial Officer,
Mr. Anavim would continue as Treasurer of the Company and its Shecom subsidiary.

INDEMNIFICATION

The Company's  Restated  Certificate  of  Incorporation  includes  provisions to
indemnify  its officers and  directors  against  damages for breach of fiduciary
duty as a director or officer involving any act or omission of any such director
or officer; provided, however, that the liability of such officers and directors
shall only be indemnified if he or she acted in good faith and in a manner he or
she  reasonably  believed to be in or not opposed to the best  interests  of the
corporation,  and,  with respect to any criminal  action or  proceeding,  had no
reasonable cause to believe his or her conduct was unlawful.

Under the  General  Corporation  Law of the State of  Delaware,  the Company may
indemnify its officers and directors for various expenses and damages  resulting
from  their  acting  in  those  capacities.   Insofar  as  indemnification   for
liabilities   arising  under  the  Securities  Act  of  1933,  as  amended  (the
"SECURITIES  ACT")  may be  permitted  to the  officers,  directors  or  persons
controlling the Company pursuant to those  provisions,  counsel has informed the
Company  that,  in the  opinion of the  Commission,  indemnification  is against
public policy as expressed in the Securities Act and is therefore unenforceable.



                                       13
<PAGE>

ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of January 29, 2004,  the Company's  authorized  capitalization  consisted of
100,000,000 shares of common stock, par value $.001 per share. As of January 29,
2004,  there were 22,948,438  shares of common stock  outstanding,  all of which
were fully paid, non-assessable and entitled to vote. Each share of common stock
entitles its holder to one vote on each matter submitted to the shareholder.

The following  table sets forth  ownership  information  as of January 29, 2004,
with respect to (i) each current  director or executive  officer of the Company,
(ii) each current  director  and  executive  officer,  (iii) all  directors  and
executive officers as a group and (iii) each person known to the Company to be a
beneficial  owner of more than 5% of its  outstanding  voting  securities.  Each
share of common  stock is  entitled to one vote.  Unless  otherwise  noted,  the
address  of  each  of  the  individuals  listed  below  is c/o  Krystal  Digital
Corporation, 925 West Lambert Road, Suite A, Brea, Ca 92821.

<TABLE>
<CAPTION>
NAME                                              NUMBER OF SHARES BENEFICIALLY OWNED (1)   PERCENTAGE OWNED
----                                              ---------------------------------------   ----------------

<S>                                                                             <C>                     <C>
Raju  Shewa,  Chairman  of the  Board and Chief
Executive Officer                                                               10,000,000               40.0%

Phillip G. Trad, President and Director (2)                                      2,000,000               8.0%

Fred Anavim, Treasurer and Director (2)                                          2,000,000               8.0%

Vincent J. Franzone, Director (2) (3)                                              525,000               2.5%

John L. Titus, Director nominee                                                          0              - - -

Michael Khorandi                                                                 5,000,000              20.0%

Kevin R. Keating                                                                   875,000               3.5%

All directors and executive officers as a group
(4 persons)                                                                     20,731,000              82.9%
</TABLE>

-----------------------
* Less than one percent.

(1) Beneficial  ownership is determined in accordance  with the Rule 13d-3(a) of
the Exchange Act, and generally includes voting or investment power with respect
to securities.  Pursuant to the rules and regulations of the Commission,  shares
of common  stock that an  individual  or group has a right to acquire  within 60
days  pursuant  to  the  exercise  of  options  or  warrants  are  deemed  to be
outstanding  for the  purposes of  computing  the  percentage  ownership of such
individual or group,  but are not deemed to be  outstanding  for the purposes of
computing  the  percentage  ownership  of any other  person  shown in the table.
Except as subject to community property laws, where applicable, the person named
above has sole  voting and  investment  power with  respect to all shares of the
Company's common stock shown as beneficially owned by him.

(2) Messrs.  Shewa, Trad, Anavim and Franzone are designees of Shecom and became
members  of the board of  directors  of the  Company  upon  consummation  of the
merger.  Immediately  following  the  merger,  Kevin R.  Keating  and  Margie L.
Blackwell,  the two former  directors of the Company as officers and  directors,
resigned from such positions.

(3) Upon completion of the merger,  an aggregate of 1,250,000  shares of Company
common  stock  were  issued in


                                       14
<PAGE>

equal amounts to each of Mr.  Franzone and his business  associate in connection
with their introduction of the Company to Shecom and its investment bankers.


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

At September 30, 2002 the Company owed  $240,000 to Holdings for loans  provided
to finance the Company's  business  activities.  The loans are convertible  into
equity at the rate of 130 shares per dollar at  Holding's  option.  Holdings has
waived its right to receive  interest on the loans  through  September 30, 2002.
Subsequent to September 30, 2002,  Holdings advanced an additional $5,000 to the
Company.

During the fiscal year ended  September 30, 2002,  the Company paid $2,700 to an
affiliate  of  Holdings  for  general  and  administrative  expenses  consisting
primarily of accounting and research services.

Kevin R.  Keating,  the former  President  and  controlling  stockholder  of the
Company  (owning  93.1% of its  outstanding  Common  Stock)  prior to the merger
whereby the Company acquired Shecom, is the father of the principal  stockholder
of Keating Investments,  LLC, the investment banking firm that rendered services
to the Company in connection with the merger.  Keating  Investments LLC received
an aggregate of 175,000 shares of Company common stock as  compensation  for its
services in connection  the  negotiation  and  consummation  of the merger.  Mr.
Keating  is  not  affiliated   with  and  has  no  equity  interest  in  Keating
Investments,  LLC and disclaims any  beneficial  interest in the Company  common
stock to be issued to Keating Investments,  LLC. Similarly, Keating Investments,
LLC  disclaims  any  beneficial  interest in the shares of Company  common stock
currently owned by Kevin R. Keating.

Vincent J. Franzone, a member of the board of directors of the Company, received
125,000   shares  of  Company  common  stock  upon  closing  of  the  merger  as
compensation  in connection  with his  introduction of Shecom to the Company and
its investment bankers.

Under  a  proposed  strategic  alliance  and  distribution  arrangement,  it  is
contemplated that Messrs. Raju Shewa,  Phillip G. Trad and Fred Anavim, three of
the principal  stockholders and the senior executive officers of the Company and
Shecom,  will  own  approximately  25% of the  capital  stock  of  Azia  Digital
Corporation,  a Delaware corporation ("ADC"). ADC has been organized to purchase
a line of digital  televisions,  flat screen computer  monitors,  DVDs and other
home   entertainment   consumer   electronic   products  from  an   unaffiliated
manufacturer of such products located in mainland China. It is contemplated that
ADC will  finance the  purchase of such  products and resell them to Shecom at a
profit  of  between  10% and 20% of ADC's  cost  under a  proposed  distribution
agreement  with Shecom.  An affiliate of the Chinese  manufacturer  will own the
remaining 75% equity interest in ADC. Shecom believes that this arrangement will
enable  it to  establish,  without  significant  financing  costs,  a  strategic
alliance  with a  substantial  manufacturer  that  provides  private  label home
entertainment  consumer electronic products to major OEMs and distributors,  and
become the exclusive distributor of these products in North America.

In 2000 and 2001,  Shecom  borrowed an aggregate of  approximately  $4.9 million
from Raju  Shewa,  the  principal  stockholder,  Chairman of the Board and Chief
Executive  Officer of the  Company  and Shecom.  These  loans are  evidenced  by
various  Shecom notes payable to Mr. Shewa bearing  interest at rates between 6%
and 9% per annum.  The Shecom notes payable to Mr. Shewa mature between December
31, 2007 and 2010, and are  subordinated to all  indebtedness  owed by Shecom to
its principal senior secured lender.

Raju Shewa has  guaranteed  repayment  of an aggregate of $2.0 million of bridge
loans  made by  certain  unaffiliated  investors  to Shecom in early  2003,  and
secured  such  guaranty by a second  mortgage  and deed of trust on his personal
residence  and on the real estate  located in Yorba Linda,  California  that was
previously leased to Shecom, as its principal  executive offices,  warehouse and
assembly  facility.  In connection with the recent sale of the sale of the Yorba
Linda,  California  property,  the  approximately  $294,000 of net cash proceeds
received by the Shewa Family Trust in excess of the amount  required to retire a
first mortgage and deed of trust securing such property was placed in escrow for
the


                                       15
<PAGE>

benefit of the holders of $2.0 million of bridge notes. In October 2003, $75,000
of  such  proceeds  were  used  for  a  down  payment  in  connection  with  the
contemplated  purchase  by the Shewa  trust of a  replacement  property in Brea,
California  to be  leased  to  Shecom  upon  completion  of  construction.  Such
replacement facility is expected to be ready for occupancy by Shecom in or about
June 2004.

Upon  completion  of the new  facility  purchased  by the Shewa Family Trust for
approximately  $2.3  million,  it is  anticipated  that  Shecom  will lease such
facility  under a five year triple net lease (with Shecom  paying all  operating
expenses) at an annual rental of $180,000 per annum.


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

(a)  Exhibits

Exhibit 31. Rule 13a-14(a)/15d-14(a) Certification.

Exhibit  32.1  Certification  by the  Chief  Executive  Officer  and  its  Chief
Financial   Officer   Relating  to  a  Periodic  Report   Containing   Financial
Statements.*

(b) Reports on Form 8-K.

There were no reports filed on Form 8-K during the last quarter  covered by this
report.

* The  Exhibit  attached  to this Form  10-KSB  shall not be deemed  "filed" for
purposes of Section 18 of the  Securities  Exchange  Act of 1934 (the  "Exchange
Act") or otherwise  subject to  liability  under that  section,  nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended,  or the  Exchange  Act,  except as  expressly  set forth by specific
reference in such filing.



                                       16
<PAGE>

                                   SIGNATURES




         In accordance  with Section 13 or 15(d) of the Securities  Exchange Act
of 1934,  the Registrant has duly caused this Annual Report on Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.


                                    KRYSTAL DIGITAL CORPORATION


                                    By: /s/ RAJU SHEWA
                                        ----------------------------
                                        Raju Shewa
                                       CEO and Chairman of the Board





           In  accordance  with the  Exchange  Act,  this report has been signed
below by the following persons and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                            Title                                Date
---------                            -----                                ----

<S>                                  <C>                                  <C>
/s/ RAJU SHEWA                       CEO and chairman of the board        January 29, 2004
-----------------------
Raju Shewa


/s/ PHILLIP TRAD                     President and director               January 29, 2004
-----------------------
Phillip Trad


/s/ FRED ANAVIM                      Director                             January 29, 2004
-----------------------
Fred Anavim


/s/ VINCENT FRANZONE                 Director                             January 29, 2004
-----------------------
Vincent Franzone
</TABLE>


                                       17
<PAGE>


INDEPENDENT AUDITORS' REPORT


Krystal Digital Corporation
Brea, CA

We have audited the accompanying consolidated balance sheet of Krystal Digital
Corporation (formerly known as ESCAgenetics Corporation) and subsidiaries (the
Company) as of September 30, 2003, and the related consolidated statements of
operations, shareholders' equity (deficit), and cash flows for the years ended
September 30, 2003 and 2002. 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 provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company at September 30, 2003,
and the results of its operations and its cash flows for the years ended
September 30, 2003 and 2002 in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Notes 1 and 5
to the financial statements, the Company's recurring losses from operations and
shareholders' capital deficiency raise substantial doubt about its ability to
continue as a going concern. Management's plans concerning these matters are
also described in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


Hein + Associates LLP

Orange, California
January 23, 2004




                                      F-1
<PAGE>


                  KRYSTAL DIGITAL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                               SEPTEMBER 30, 2003


                                     ASSETS

Current assets

   Cash                                                               $   6,000
                                                                      ---------

        Total assets                                                  $   6,000
                                                                      ---------


                 LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Liabilities:

   Accounts payable                                                   $   2,000
   Accrued expenses                                                       7,000
                                                                      ---------

      Total liabilities, all current                                      9,000
                                                                      ---------


Shareholders' equity (deficit):

   Preferred stock; $0.01 par value; 1,000,000 shares authorized;
      none issued or outstanding
   Common stock; $0.0001 par value; 100,000,000 shares authorized;
      1,000,000 shares issued and outstanding                             7,000
   Additional paid-in capital                                           454,000
   Accumulated deficit                                                 (464,000)
                                                                      ---------

      Total shareholders' equity (deficit)                               (3,000)
                                                                      ---------

        Total liabilities and shareholders' equity (deficit)          $   6,000
                                                                      ---------




                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       F-2
<PAGE>


                  KRYSTAL DIGITAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                       YEARS ENDED SEPTEMBER 30,
                                                       ------------------------
                                                          2003           2002
                                                       ---------      ---------

Revenues                                               $       0      $       0
                                                       ---------      ---------

Operating expenses:

   Accounting and legal                                   36,000         17,000
   General and administrative                             43,000         23,000
                                                       ---------      ---------

      Total expenses                                      79,000         40,000
                                                       ---------      ---------


Net loss
                                                       $ (79,000)     $ (40,000)
                                                       ---------      ---------

Net loss per share, basic and diluted
                                                       $   (0.12)     $   (0.08)
                                                       ---------      ---------

Weighted average common shares outstanding               683,824        524,304
                                                       ---------      ---------




                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       F-3
<PAGE>


                  KRYSTAL DIGITAL CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF
                          SHAREHOLDERS EQUITY (DEFICIT)

                     YEARS ENDED SEPTEMBER 30, 2003 AND 2002


<TABLE>
<CAPTION>
                                                                      ADDITIONAL
                                              COMMON       COMMON      PAID-IN    ACCUMULATED
                                              SHARES       STOCK       CAPITAL      DEFICIT        TOTAL
                                            ---------    ---------    ---------   -----------    ---------
<S>                                           <C>        <C>          <C>          <C>           <C>
BALANCE, OCTOBER 1, 2001                      524,304    $   7,000    $ 134,000    $(345,000)    $(204,000)
       Net loss                                     0         0.00         0.00      (40,000)      (40,000)
                                            ---------    ---------    ---------    ---------     ---------

BALANCE, SEPTEMBER 30, 2002                   524,304    $   7,000    $ 134,000    $(385,000)    $(244,000)
       Promissory note conversion             235,021         0.00      253,000           --       253,000
       Common shares issued to directors
       for services                            70,000         0.00       24,000           --        24,000
       Common shares issued to investors      170,675         0.00       43,000           --        43,000
       Net loss                                     0         0.00         0.00      (79,000)      (79,000)
                                            ---------    ---------    ---------    ---------     ---------
BALANCE, SEPTEMBER 30, 2003                 1,000,000    $   7,000    $ 454,000    $(464,000)    $  (3,000)
                                            =========    =========    =========    =========     =========
</TABLE>





                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       F-4
<PAGE>


                  KRYSTAL DIGITAL CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                     YEARS ENDED SEPTEMBER 30,
                                                     -------------------------
                                                         2003         2002
                                                      ---------     ---------
Cash flows from operating activities:

   Net loss                                           $ (79,000)    $ (40,000)
   Adjustments to reconcile net loss to net cash
      used in operations:
   Stock issued in lieu of compensation                  24,000          0.00
            Accounts payable                             (2,000)       (2,000)
            Accrued interest on note                     13,000          0.00
            Accrued expenses                              7,000          0.00
                                                      ---------     ---------

      Net cash used in operating activities             (37,000)      (42,000)
                                                      ---------     ---------

Cash flows from financing activities:

         Advances from Genesee Holdings, Inc.              0.00        31,000
         Proceeds from the issuance of stock             43,000          0.00
                                                      ---------     ---------

      Net cash provided by financing activities          43,000        31,000



Net increase (decrease) in cash                           6,000       (11,000)
                                                      ---------     ---------

Cash at beginning of year                                     0        11,000
                                                      ---------     ---------

Cash at end of year                                   $   6,000     $       0
                                                      ---------     ---------

 Schedule of non-cash financing activities:

Conversion of promissory note and accrued
   interest to common stock                             253,000          0.00
                                                      ---------     ---------



                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                       F-5
<PAGE>


                  KRYSTAL DIGITAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED SEPTEMBER 30 2003 AND 2002


1.   Summary of significant accounting policies

     PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

     The  consolidated  financial  statements  include  the  accounts of Krystal
     Digital Corporation,  formerly known as ESCAgenetics  Corporation ("Krystal
     Digital," or the "Company") and its majority and wholly owned subsidiaries,
     PHYTOpharmaceuticals,   Inc.  and  SRE  ESCAgenetics   Corporation,   after
     elimination of all significant intercompany accounts and transactions.  The
     Company's  subsidiaries did not have any significant  operating  activities
     during the periods presented.

     OPERATIONS

     Formed in 1986,  the Company  was  organized  to develop and  commercialize
     high-value,  plant-derived products for the agricultural and pharmaceutical
     markets.  In January 1995, the Company scaled back its business  activities
     and became largely a dormant business. In January 1996, the Company filed a
     bankruptcy  petition for protection under Chapter 11 of the U.S. Bankruptcy
     Code, and the Company's plan of  reorganization  became effective on August
     22, 1996. The bankruptcy  proceeding was officially  closed effective March
     31, 1997.

     Prior to April 2003,  Genesee  Holdings,  Inc.  ("Holdings")  owned  ninety
     percent of the outstanding common stock of the Company. Prior to that date,
     Holdings funded all operating expenses through a term loan. During the year
     ended September 30, 2002, the Company paid $2,700 on the loan. Holdings has
     waived its right to receive interest on the loan through December 31, 2002,
     when the loan was converted  into a promissory  note (Note 2). During April
     2003,  Holdings  sold its  interest to Kevin R. Keating  ("Keating"  or the
     "Principal  Stockholder"),  (Note 2). At September 30, 2003,  the Principal
     Stockholder  owned ninety three percent of the outstanding  common stock of
     the Company.

     The  Company  does not plan to continue  the  business  activities  that it
     conducted  prior  to its  reorganization.  It plans  to  pursue a  business
     combination  or  other  strategic  transaction.  A  candidate  for  such  a
     transaction was identified subsequent to year-end (Note 5). Ultimately, the
     continuation  of the  Company  as a going  concern  is  dependent  upon the
     establishment  of  profitable   operations.   These   circumstances   raise
     substantial  doubt  as to the  Company's  ability  to  continue  as a going
     concern.

     Because the  achievement  of these plans is dependent  upon future  events,
     there can be no assurance that future  profitable  operations will occur as
     planned.

     USE OF ESTIMATES

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

     NET LOSS PER SHARE

     Net loss per share is calculated on the basis of weighted average number of
     common shares  outstanding.  Common stock equivalents are excluded from the
     computation, as their effect is antidilutive.

2.   Shareholders' equity

     The Company has  authorized  100,000,000  shares of Common Stock with a par
     value of $.0001 per share and  1,000,000  shares of Preferred  Stock with a
     par value of $.01 per share. There were



                                       F-6
<PAGE>


     1,000,000  shares of Common Stock issued and  outstanding  at September 30,
     2003. No shares of preferred stock are outstanding.

     On  December 1, 2002,  the  Company  entered  into a  promissory  note with
     Holdings for the lesser of $300,000 or the  aggregate  principal  amount of
     all unreimbursed  advances made by Holdings to the Company,  with an annual
     interest rate of 5% and due on demand. The note was convertible into equity
     at a rate of 130 shares per dollar at Holdings' option.

     During April, 2003,  Holdings sold its interest in the Company to Keating ,
     along with the convertible note (the "Note") due from the Company, totaling
     $253,000 as of that date.  Keating  then  converted  the Note into  235,021
     shares (post split) of common stock,  in  accordance  with the terms of the
     note.  As a  result  of this  transaction,  the  Company  is  considered  a
     development stage enterprise effective April 1, 2003.

     During April 2003, the Company  declared a one for 140 reverse split of all
     outstanding  common stock. All periods presented have reflected the reverse
     stock split.

     During May 2003,  the Company  sold  170,675  shares of common stock to two
     individuals and received proceeds totaling $43,000.

     During June 2003,  the Company  issued the  Principal  Stockholder  and two
     other  directors  70,000  shares of common  stock for  services,  valued at
     approximately $24,000 (Note 4).

3.   Income taxes

     The  Company  has   accumulated   net  operating  loss   carryforwards   of
     approximately  $320,000 that are available to offset future taxable income,
     if any, through 2020.  Realization of the net operating loss  carryforwards
     is dependent upon future profitable operations. Accordingly, management has
     recorded a valuation  allowance to reduce  deferred  tax assets  associated
     with net operating loss carryforwards to zero at September 30, 2003.

4.   Related party transactions

     On June 3, 2003,  the Board of Directors  authorized the issuance of 70,000
     shares of common stock to the Principal Stockholder and two other directors
     of the  Company,  in  lieu of  compensation.  The  shares  were  valued  at
     approximately $24,000 on the date of issuance (Note 2).

     Keating is the father of the principal  stockholder of Keating Investments,
     LLC, the investment  banking firm that rendered  services to the Company in
     connection  with the merger (Note 5) of a newly  created  subsidiary of the
     Company with and into Shecom Corporation  ("Shecom").  Keating  Investments
     LLC received an aggregate of 175,000 shares of common stock as compensation
     for its services in connection with the negotiation and consummation of the
     merger.  Keating  is not  affiliated  with and has no  equity  interest  in
     Keating  investments,  LLC and  disclaims  any  beneficial  interest in the
     shares of common  stock  issued to  Keating  Investments,  LLC.  Similarly,
     Keating Investments, LLC disclaims any beneficial interest in the shares of
     common stock currently owned by Keating

5.   Subsequent events.

     On August 22,  2003,  the Company  entered  into an  agreement  and plan of
     reorganization,  as amended  on  September  24,  2003,  with  Shecom and on
     November 5, 2003,  completed the merger of Shecom  Acquisition  Corporation
     with  and into  Shecom,  thereby  acquiring  100% of the  capital  stock of
     Shecom. In connection with the merger, ESCAgenetics Corporation changed its
     corporate name to Krystal Digital Corporation. The merger will be accounted
     for as a reverse acquisition in which Shecom is the accounting acquiror and
     Krystal Digital is the legal acquiror. The management of Shecom will be the
     management of the Company.  Prior to the merger,  Keating,  the controlling
     stockholder of Krystal Digital,  owned approximately 93.1% of the shares of
     its common stock. In connection with the merger,  Krystal Digital issued to
     the then  shareholders  of Shecom and the  holders of  warrants to purchase
     additional  shares of Shecom common stock,  that number of shares of common
     stock of Krystal  Digital and  warrants to  purchase  additional  shares of
     Krystal Digital common stock as represented (assuming full exercise of such
     warrants)  87.5% of the issued and  outstanding  shares of common  stock of
     Krystal  Digital  on a  fully-diluted  basis,  after  giving  effect to the
     merger.

     Shecom's  line of credit  expires on December 31, 2003,  and the  principal
     senior  lender  has  advised  that it does not intend to renew such line of
     credit and has  requested  that  Shecom seek and obtain  alternative  asset
     based  financing.  Shecom is currently in discussions with several banks to
     take  over the  existing  line of  credit  and is  attempting  to obtain an
     alternative  credit line.  If Shecom is unable to timely  obtain  alternate
     senior  credit  facility,  it might not be able to continue its business as
     presently conducted, if at all.


                                       F-7
<PAGE>


INDEX TO EXHIBITS


EXHIBIT NO.                DESCRIPTION OF EXHIBITS

21.01                      Subsidiaries of Registrant. (1)

31.01 and 31.02            Rule 13a-14(a)/15d-14(a) Certifications

32.01 and 32.02            Certification  by the  Chief  Executive  Officer  and
                           Chief Financial Officer Relating to a Periodic Report
                           Containing Financial Statements



(1) Filed herewith.