Seaena Inc. – ‘SB-2’ on 2/11/05

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Registration of Securities by a Small-Business Issuer   —   Form SB-2
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SB-2        Registration of Securities by a Small-Business        76    435K 
                          Issuer -- sb2-crystalix                                
 2: EX-5        Exh 5-1 Legal Opinion                                  2     11K 
 3: EX-23       Exh 23-2 Consent of Auditors                           1      7K 

SB-2   —   Registration of Securities by a Small-Business Issuer — sb2-crystalix
Document Table of Contents

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As filed February 11, 2005                                File No. 333-______   
--------------------------------------------------------------------------------

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

 FORM SB-2
 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 CRYSTALIX GROUP INTERNATIONAL, INC.
(Name of small business issuer in its charter)

                                                        [Enlarge/Download Table]

                                                                                                 
           NEVADA                         5947                           65-0142472              
 (State or jurisdiction of     (Primary Standard Industrial  (I.R.S. Employer Identification No.)
incorporation or organization   Classification Code Number)                                      

 5275 SOUTH ARVILLE STREET, SUITE B-116, LAS VEGAS, NEVADA 89118
(702) 740-4616
 (Address and telephone number of principal executive offices)

 5275 SOUTH ARVILLE STREET, SUITE B-116, LAS VEGAS, NEVADA 89118
(Address of principal place of business or intended principal place of business)

 DOUGLAS E. LEE, PRESIDENT
 CRYSTALIX GROUP INTERNATIONAL, INC.
 5275 SOUTH ARVILLE STREET, SUITE B-116, LAS VEGAS, NEVADA 89118
(702) 740-4616
 (Name, address and telephone number of agent for service)

Copies of all communications to:
FAY M. MATSUKAGE, ESQ.
 DILL DILL CARR STONBRAKER & HUTCHINGS, P.C.
 455 SHERMAN STREET, SUITE 300
DENVER, COLORADO 80203
(303) 777-3737; (303) 777-3823 FAX

Approximate date of proposed sale to the public: As soon as practicable after   
the effective date of the Registration Statement.                               

If any of the securities registered on this form are being offered on a delayed 
or continuous basis pursuant to Rule 415 under the Securities Act, check the    
following box. [X]                                                              

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective       
registration statement for the same offering. [ ]                               

If this form is a post-effective amendment filed pursuant to Rule 462(c) under  
the Securities Act, check the following box and list the Securities Act         
registration statement number of the earlier effective registration statement   
for the same offering. [ ]                                                      

If this form is a post-effective amendment filed pursuant to Rule 462(d) under  
the Securities Act, check the following box and list the Securities Act         
registration statement number of the earlier effective registration statement   
for the same offering. [ ]                                                      

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]                                                          

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                         CALCULATION OF REGISTRATION FEE                                                            

--------------------------------------------------------------------------------------------------------------------
                                                    PROPOSED MAXIMUM        PROPOSED MAXIMUM                        
  TITLE OF EACH CLASS OF        AMOUNT TO BE       OFFERING PRICE PER      AGGREGATE OFFERING          AMOUNT OF    
SECURITIES TO BE REGISTERED    REGISTERED (1)<F1>       UNIT (2)<F2>            PRICE (2)<F2>      REGISTRATION FEE 
--------------------------------------------------------------------------------------------------------------------
                                                                                                                    
Common stock, $0.001 par         48,889,549              $0.09                $4,400,059.41             $517.89     
value per share                                                                                                     
--------------------------------------------------------------------------------------------------------------------
--------------                                                                                                      
<FN>                                                                                                                
(1)<F1>  Pursuant to Rule 416 of the Securities Act of 1933, as amended, this                                       
         registration statement also covers such additional number of shares of                                     
         common stock that may become issuable as a result of any stock splits,                                     
         stock dividends, or other similar transactions.                                                            

(2)<F2>  Estimated pursuant to Rule 457(c) solely for the purpose of calculating                                    
         the registration fee, based upon the average of the bid and asked                                          
         prices for such shares of common stock on February 8, 2005, as reported                                    
         by the OTC Bulletin Board.                                                                                 
</FN>                                                                                                               

The registrant hereby amends this registration statement on such date or dates  
as may be necessary to delay its effective date until the registrant shall file 
a further amendment which specifically states that this registration statement  
shall thereafter become effective in accordance with Section 8(a) of the        
Securities Act of 1933 or until the registration statement shall become         
effective on such date as the Commission, acting pursuant to said Section 8(a), 
may determine.                                                                  

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Subject to Completion, Dated February 11, 2005

 CRYSTALIX GROUP INTERNATIONAL, INC.
 UP TO 48,889,549 SHARES OF COMMON STOCK

       Unless the context otherwise requires, the terms "we", "our" and "us"
refers to Crystalix Group International, Inc.                                   

        This prospectus relates to the resale by selling stockholders of up to
48,889,549 shares of common stock. We will not receive any proceeds from sale of
any of the shares offered by the selling stockholders. We will pay the expenses 
of registering these shares.                                                    

       Our common stock is traded on the OTC Bulletin Board under the symbol
"CYXG.OB." On February 8, 2005, the closing bid price for our common stock was  
$0.09 per share.                                                                

 INVESTING IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. A
DETAILED EXPLANATION OF THESE RISKS IS INCLUDED IN THE SECTION ENTITLED "RISK   
FACTORS" OF THIS PROSPECTUS, BEGINNING ON PAGE 4.                               

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a     
criminal OFFENSE.                                                               

        The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these         
securities in any state where the offer or sale is not permitted.               

____________, 2005

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 TABLE OF CONTENTS
                                                                            PAGE

      PROSPECTUS SUMMARY.......................................................3
      RISK FACTORS.............................................................4
      SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........................7
      USE OF PROCEEDS..........................................................8
      MARKET FOR COMMON EQUITY.................................................8
      DIVIDEND POLICY..........................................................8
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION................9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING         
      AND FINANCIAL DISCLOSURE................................................15
      BUSINESS................................................................16
      MANAGEMENT..............................................................22
      EXECUTIVE COMPENSATION..................................................25
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........26
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................27
      DESCRIPTION OF SECURITIES...............................................29
      SELLING STOCKHOLDERS....................................................30
      PLAN OF DISTRIBUTION....................................................31
      LEGAL MATTERS...........................................................33
      EXPERTS.................................................................33
      ADDITIONAL INFORMATION..................................................33
      REPORTS TO STOCKHOLDERS.................................................33
      INDEX TO FINANCIAL STATEMENTS...........................................34

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PROSPECTUS SUMMARY

 This summary highlights information contained elsewhere in this
prospectus. You should carefully read this entire prospectus and the financial  
statements contained in this prospectus before purchasing our securities.       

CRYSTALIX GROUP INTERNATIONAL, INC.                                             

   We are a leading manufacturer, distributor, and marketer of laser
subsurface engraved optical quality glass products and laser subsurface         
engraving equipment. Our principal products are personalized three-dimensional  
engraved glass blocks that feature the facial image of one or more persons,     
custom three-dimensional images, and two-dimensional portraits, as well as the  
laser subsurface engraving equipment. As of December 31, 2004, we had 31 kiosks 
owned by our independent distributors, and four corporate-owned kiosks in retail
shopping malls, resorts, promenades, casinos, and theme parks where our products
are engraved and sold. Through our subsidiaries, Lazer-Tek Designs, Inc. and    
Lazer-Tek Designs, Ltd., we also sell to corporate accounts and other specialty 
groups, as well as an extensive gift line.                                      

        Our offices are located at 5275 South Arville Street, Suite B-116, Las
Vegas, Nevada 89118, and our telephone number is (702) 740-4616. Our website is 
located at WWW.CRYSTALIXUSA.COM. Information contained in our website is not    
part of this prospectus.                                                        

THE OFFERING                                                                    

Securities offered.............Up to 48,889,549 shares of common stock that may 
                  be acquired by selling stockholders.

Use of proceeds................We will not receive any of the proceeds from the 
                          selling stockholders of shares of our common
stock.            

Securities outstanding.........37,632,192 shares of common stock and 3,920,000  
                              shares of Class A preferred stock as of December
31, 2004.         

Plan of distribution...........The offering is made by the selling stockholders 
                               named in this prospectus, to the extent they sell
                              shares.  Sales may be made in the open market or
                             in private negotiated transactions, at fixed or
                             negotiated prices.  See "Plan of Distribution."

Risk factors...................An investment is subject to risk.  See "Risk     
Factors."         

SUMMARY SELECTED FINANCIAL INFORMATION                                          

      The balance sheet and income statement data shown below were derived
from our audited and unaudited consolidated financial statements. Our results of
operations for any interim period do not necessarily indicate our results of    
operations for the full year. You should read this summary financial data in    
conjunction with "Management's Discussion and Analysis of Financial Condition   
and Results of Operations," "Business," and our financial statements.           

BALANCE SHEET DATA:                                             
                                                  SEPTEMBER 30,     DECEMBER 31,
                                                  2004              2003

       Cash................................   $     1,980,511    $      58,881
        Working capital (deficit) ..........   $    (1,939,067)   $  (6,311,497)
       Intangible assets...................   $     2,124,777    $   2,621,598
       Total assets........................   $     7,062,794    $   6,242,294
       Total liabilities...................   $    10,844,523    $   9,624,922
        Stockholders' equity (deficit)......   $    (3,781,729)   $  (3,382,628)

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INCOME STATEMENT DATA:                                                                        

                                NINE MONTHS      NINE MONTHS                                  
                                   ENDED            ENDED         YEAR ENDED       YEAR ENDED 
                               SEPTEMBER 30,    SEPTEMBER 30,    DECEMBER 31,     DECEMBER 31,
                                   2004              2003            2003             2002    
                                                                                              
Revenue..................... $   3,382,721    $   4,864,600    $   6,364,505   $   4,664,855  
Net (loss) ................. $  (6,799,085)   $  (5,730,713)   $  (7,433,341)  $    (294,321) 
Basic and diluted (loss)                                                                      
per share                    $       (0.19)   $       (0.14)   $       (0.19)  $       (0.01) 

RISK FACTORS

 Before deciding to invest in us or to maintain or increase your
investment, you should carefully consider the risk factors described below,     
together with all other information in this prospectus and in our other filings 
with the SEC, before making an investment decision. If any of the following     
risks actually occurs, our business, financial conditions or operating results  
could be materially adversely affected. In such case, the trading price of our  
common stock could decline, and you may lose all or part of your investment.    

WE HAVE A SUBSTANTIAL STOCKHOLDERS' DEFICIT AT SEPTEMBER 30, 2004 AND HAVE      
INCURRED LOSSES SINCE INCEPTION.                                                

       To date, we have not had profitable operations. We expect to continue
to incur additional losses for the current year. We generated a net loss of     
$6,799,085 for the nine months ended September 30, 2004, and had a stockholders'
deficit of $3,781,729 as of September 30, 2004. In order to become profitable   
and sustain profitability, we will need to generate significant revenues to     
offset our cost of revenues and general and administrative expenses. We may     
never be able to achieve or sustain our revenue or profit goals.                

WE HAVE A WORKING CAPITAL DEFICIENCY AND LACK SUFFICIENT CASH.                  

At September 30, 2004, we had a working capital deficiency of 
$1,939,067. Accordingly, we are dependent upon external financing such as an    
offering of debt and/or equity securities or borrowing to continue operations.  

WE HAVE ONLY A LIMITED OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO EVALUATE  
YOUR INVESTMENT IN OUR STOCK.                                                   

     Your evaluation of our business will be difficult because we have a
limited operating history. Crystalix has been in business since November 2001.  
We face a number of risks encountered by early-stage companies, including our   
need to develop infrastructure to support growth and expansion; our need to     
obtain long-term sources of financing; our need to establish our marketing,     
sales and support organizations, as well as our distribution channels; our need 
to manage expanding operations; and our dependence on technology which could    
become incompatible or out of date. Our business strategy may not be successful,
and we may not successfully address these risks.                                

WE HAVE PLEDGED ALL OF OUR ASSETS TO OBTAIN OUTSIDE FINANCING.                  

         Because of our historical inability to generate sufficient revenues, we
rely upon external sources of financing to supplement our sales revenue. Since  
our inception in November 2001, we have financed our operations externally      
through the sale of our stock and by borrowing from various parties. We have    
pledged all of our assets to obtain these loans. We will need financing to      
expand our operations and attain the growth goals of our business plan. Sources 
of external financing may include short-term loans from affiliates of our       
company, bank borrowings, joint ventures, and future debt and equity offerings. 
We cannot assure you that financing will be available on acceptable terms, or at
all. Any additional financing may result in dilution to our shareholders,       
including those people who purchase our stock in this offering. Our failure to  
obtain external financing will have a material adverse effect on our results of 
operations and financial condition. If we cannot obtain external financing when 
needed, we may be forced to reduce the growth target of our business plan and/or
curtail operations.                                                             

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OUR CURRENT GROWTH STRATEGY IS DEPENDENT UPON OUR ABILITY TO OBTAIN AND SUPPORT 
INDEPENDENT DISTRIBUTORS AND TO SELL TO CORPORATE ACCOUNTS.                     

     Our growth is dependent upon our ability to obtain more independent
distributors throughout the United States and in selected locations around the  
world. To be successful, we need to be able to identify suitable partners,      
provide them with adequate training, and manage competently the infrastructure  
to support their efforts.                                                       

      Our growth is also dependent upon sales to corporate accounts. To be
successful in this effort, we must be able to compete with other products in the
image promotion industry.                                                       

WE ARE AFFECTED BY ECONOMIC CONDITIONS AND CONSUMER TRENDS.                     

       Our success will depend upon a number of factors relating to consumer
spending, including future economic conditions affecting disposable consumer    
income, such as employment, business conditions, interest rates, and taxation.  
If existing economic conditions deteriorate, consumer spending may decline,     
thereby adversely affecting our business and results of operations.             

   We must be able to anticipate and respond to changing merchandise
trends and consumer demands in a timely manner. If we should miscalculate       
consumers' purchasing habits and tastes, we will not be able to compete against 
other gift products.                                                            

WE FACE COMPETITION FROM EXISTING AND POTENTIAL COMPETITORS.                    

   We face substantial competition in the glass subsurface engraving
industry, as well as competition from others offering business opportunities.   
Due to our small size, it can be assumed that most if not all of our competitors
have significantly greater financial, technical, marketing and other competitive
resources. Many of our competitors and potential competitors have greater name  
recognition and more extensive customer bases that could be leveraged, for      
example, to position themselves as being more experienced, having better        
products, and being more knowledgeable than us. To compete, we may be forced to 
offer lower prices and narrow our marketing focus, resulting in reduced         
revenues, if any. Additionally, we need to continue to pursue enforcement of the
United States patent for the subsurface laser engraving process against the     
majority of our competition, which does not have license to use the patented    
process.                                                                        

OUR SUCCESS AND ABILITY TO COMPETE DEPENDS UPON OUR ABILITY TO SECURE AND       
PROTECT OUR PROPRIETARY TECHNOLOGY.                                             

Our success depends on our ability to protect our proprietary 
technology. In the event that a third party misappropriates or infringes on our 
intellectual property, our business would be seriously harmed. Third parties may
independently discover or invent competing technologies or reverse engineer our 
software. We expect that if we should successfully market franchises and        
licenses to use our software, competitors may attempt to duplicate our          
technology. Even if we were to obtain copyright protection on the software, we  
would still have to enforce our rights against those who might attempt to       
infringe on our intellectual property. Such enforcement efforts are likely to be
expensive and time-consuming.                                                   

THE LOSS OF OUR OFFICERS AND DIRECTORS OR OUR FAILURE TO ATTRACT AND RETAIN     
ADDITIONAL PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS.                       

Our success depends largely upon the efforts, abilities, and  
decision-making of our executive officers and directors. Although we believe    
that we maintain a core group sufficient for us to effectively conduct our      
operations, the loss of any of our key personnel could, to varying degrees, have
an adverse effect on our operations and system development. We do not currently 
maintain "key-man" life insurance on any of our executives or directors, and    
there is no contract in place assuring their services for any length of time.   
The loss of any one of them would have a material adverse affect on us. There   
can be no assurance that the services of any member of our management will      
remain available to us for any period of time, or that we will be able to enter 
into employment contracts with any of our management, or that any of our plans  
to reduce dependency upon key personnel will be successfully implemented.       

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        The knowledge and expertise of our officers and directors are critical
to our operations. There is no guarantee that we will be able to retain our     
current officers and directors, or be able to hire suitable replacements in the 
event that some or all of our current management leave our company. In the event
that we should lose key members of our staff, or if we are unable to find       
suitable replacements, we may not be able to maintain our business and might    
have to cease operations, in which case you might lose all of your investment.  

OUR COMMON STOCK HAS A LIMITED PUBLIC MARKET AND OUR SHARE PRICE MAY DECLINE    
AFTER THIS OFFERING.                                                            

         While our common stock trades on the OTC Bulletin Board, the market has
been limited and volatile at times. We cannot assure you that the public market 
for our common stock will continue to develop after this offering. If an active 
market for our common stock does not develop, the liquidity of your investment  
may be limited, and the price of our common stock may decline below what you    
paid for it.                                                                    

A LIMITED NUMBER OF STOCKHOLDERS WILL COLLECTIVELY CONTINUE TO OWN A MAJORITY OF
OUR COMMON STOCK AFTER THIS OFFERING AND MAY ACT, OR PREVENT CERTAIN TYPES OF   
CORPORATE ACTIONS, TO THE DETRIMENT OF OTHER STOCKHOLDERS.                      

      Immediately after this offering, our directors and officers will own
more than 41% of our outstanding common stock, assuming that none of the        
preferred stock is converted into common stock and that none of the warrants is 
exercised. Accordingly, these stockholders may, if they act together, exercise  
significant influence over all matters requiring stockholder approval, including
the election of a majority of the directors and the determination of significant
corporate actions after this offering. This concentration could also have the   
effect of delaying or preventing a change in control that could otherwise be    
beneficial to our stockholders.                                                 

POTENTIAL FUTURE SALES UNDER RULE 144 MAY DEPRESS THE MARKET PRICE FOR THE      
COMMON STOCK.                                                                   

   In general, under Rule 144, a person who has satisfied a one-year
holding period may sell within any three-month period a number of shares that   
does not exceed the greater of one percent of the then outstanding shares of    
common stock. Rule 144 also permits the sale of shares without any quantity     
limitation by a person who is not an affiliate of us and who has beneficially   
owned the shares for a minimum period of two years. Therefore, the possible sale
of our shares may, in the future, have a depressive effect on the price of our  
common stock in the over-the-counter market.                                    

OUR COMMON STOCK IS SUBJECT TO PENNY STOCK REGULATION THAT MAY AFFECT THE       
LIQUIDITY FOR OUR COMMON STOCK.                                                 

  Our common stock is subject to regulations of the Securities and
Exchange Commission relating to the market for penny stocks. These regulations  
generally require that a disclosure schedule explaining the penny stock market  
and the risks associated therewith be delivered to purchasers of penny stocks   
and impose various sales practice requirements on broker-dealers who sell penny 
stocks to persons other than established customers and accredited investors. The
regulations applicable to penny stocks may severely affect the market liquidity 
for our common stock and could limit your ability to sell your securities in the
secondary market.                                                               

OUR ISSUANCE OF THE CONVERTIBLE NOTES AND WARRANTS COULD SUBSTANTIALLY DILUTE   
THE INTERESTS OF SHAREHOLDERS.                                                  

     The $9,220,764 in convertible notes we issued in July and September
2004 are convertible by the holders into shares of our common stock at any time 
prior to their maturity in 2007 at a conversion price of the lesser of the      
average closing price of our common stock immediately prior to conversion or    
$0.08, subject to adjustments for stock splits, stock dividends, stock          
combinations, and other similar transactions. In addition, we issued to the     
holders of convertible notes in July and September 2004 seven-year warrants     
entitling the warrant holders to purchase an aggregate of 4,375,000 shares of   
our common stock at a maximum exercise price of $0.08 per share. Accordingly,   
our issuance of the convertible notes and warrants could substantially dilute   
the interests of our shareholders.                                              

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WE ARE OBLIGATED TO MAKE SIGNIFICANT PERIODIC PAYMENTS OF PRINCIPAL AND INTEREST
UNDER OUR NOTES.                                                                

 We have a material amount of indebtedness outstanding under the
convertible notes and other notes. Beginning January 1, 2005, we will have to   
make monthly principal payments of $318,447 and accrued interest. If we at any  
time default on our payment obligations the creditors will have all rights      
available under the instrument, including acceleration, termination, and        
enforcement of security interests. Such security interests cover all of our     
assets and those of our subsidiaries.                                           

FUTURE EQUITY TRANSACTIONS, INCLUDING EXERCISE OF OPTIONS OR WARRANTS, COULD    
RESULT IN DILUTION.                                                             

        From time to time, we sell restricted stock, warrants, and convertible
debt to investors in private placements. Because the stock is restricted, the   
stock is sold at a greater discount to market prices compared to a public stock 
offering, and the exercise price of the warrants sometimes is at or even lower  
than market prices. These transactions cause dilution to existing stockholders. 
Also, from time to time, options are issued to officers, directors, or          
employees, with exercise prices equal to market. Exercise of in-the-money       
options and warrants will result in dilution to existing stockholders. The      
amount of dilution will depend on the spread between the market and exercise    
price, and the number of shares involved.                                       

TRADING IN OUR COMMON STOCK ON THE OTC BULLETIN BOARD MAY BE LIMITED THEREBY    
MAKING IT MORE DIFFICULT FOR INVESTORS TO RESELL THEIR SHARES OF OUR COMMON     
STOCK.                                                                          

     Our common stock trades on the OTC Bulletin Board. The OTC Bulletin
Board is not an exchange and, because trading of securities on the OTC Bulletin 
Board is often more sporadic than the trading of securities listed on an        
exchange or NASDAQ, you may have difficulty reselling any of the shares that you
purchase from the selling shareholders.                                         

THE ISSUANCE OF SHARES UPON EXERCISE OF OUTSTANDING WARRANTS MAY CAUSE IMMEDIATE
AND SUBSTANTIAL DILUTION TO OUR EXISTING STOCKHOLDERS.                          

The issuance of shares upon exercise of warrants may result in
substantial dilution to the interests of other stockholders since the selling   
stockholders may sell the full amount issuable on exercise. In addition, such   
shares would increase the number of shares in the "public float" and could      
depress the market price for our common stock.                                  

 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

       This prospectus includes "forward-looking statements." All statements
other than statements of historical facts included or incorporated by reference 
in this report, including, without limitation, statements regarding our future  
financial position, business strategy, budgets, projected costs and plans and   
objectives of management for future operations, are forward-looking statements. 
In addition, forward-looking statements generally can be identified by the use  
of forward-looking terminology such as "may," "will," "expect," "intend,"       
"project," "estimate," "anticipate," "believe," or "continue" or the negative   
thereof or variations thereon or similar terminology. Although we believe that  
the expectations reflected in such forward-looking statements are reasonable, we
cannot give any assurance that such expectations will prove to have been        
correct. Important factors that could cause actual results to differ materially 
from our expectations ("Cautionary Statements") include, but are not limited to,
(1) risks pertaining to implementation of our proposed expansion of our         
distribution network; (2) competitive pressures in the giftware industry; (3)   
disputes or claims regarding the company's proprietary rights to its software   
and intellectual property; (4) acceptance of our products by corporate          
customers; (5) costs of desirable retail locations; (6) availability of suitable
optic glass and laser equipment components; (7) general economic and business   
conditions; (8) ability to successfully integrate acquired operations; and (9)  
other factors over which we have little or no control. All subsequent written   
and oral forward-looking statements attributable to us, or persons acting on our
behalf, are expressly qualified in their entirety by the cautionary statements. 
We assume no duty to update or revise our forward-looking statements based on   
changes in internal estimates or expectations or otherwise.                     

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 USE OF PROCEEDS

       We will not receive any of the proceeds from the selling stockholders
of shares of our common stock. However, we may receive the sale price of any    
common stock we sell to the selling stockholders upon exercise of the warrants. 
We expect to use the proceeds received from the exercise of warrants, if any,   
for general working capital purposes. The warrants contain a provision for      
cashless exercise. If that provision is utilized, we will not receive any       
proceeds.                                                                       

MARKET FOR COMMON EQUITY

    Our common stock has been trading on the over-the-counter bulletin
board ("OTCBB") since March 2000. The common stock traded under the symbol      
"ABIL" from March 2000 to December 9, 2002. Since December 9, 2002, it has      
traded under the symbol "CYXG." The following table sets forth the range of high
and low bid quotations for each fiscal quarter for the last two fiscal years.   
These quotations reflect inter-dealer prices without retail mark-up, mark-down, 
or commissions and may not necessarily represent actual transactions.           

FISCAL QUARTER ENDING                        HIGH BID          LOW BID  

March 31, 2002..........................     $   0.37         $   0.17  
June 30, 2002...........................     $   0.24         $   0.004 
September 30, 2002......................     $   0.06         $   0.02  
December 31, 2002.......................     $   1.50         $   0.02  

March 31, 2003..........................     $   0.97         $   0.55  
June 30, 2003...........................     $   0.91         $   0.21  
September 30, 2003......................     $   0.91         $   0.10  
December 31, 2003.......................     $   0.92         $   0.38  

March 31, 2004..........................     $   0.76         $   0.39  
June 30, 2004...........................     $   0.67         $   0.15  
September 30, 2004......................     $   0.28         $   0.07  
December 31, 2004.......................     $   0.24         $   0.09  

        On February 8, 2005, the closing bid price for the common stock on the
OTC Bulletin Board was $0.09.                                                   

        As of June 11, 2004 there were 501 record holders of our common stock.

 DIVIDEND POLICY

         We have not paid any dividends on any of our shares. We have no present
intention of paying dividends on any of our shares, as we anticipate that all   
available funds will be invested to finance the growth of our business.         

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 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW                                                                        

     Effective October 4, 2002, an arrangement was completed between the
company, then known as Americabilia.com, Inc. and Crystalix USA Group, Inc., a  
Nevada corporation, whereby the shareholders of Crystalix USA exchanged all of  
their common shares for 23,300,000 shares of Americabilia common stock. At the  
same time, we issued 7,000,000 shares of Americabilia Class A preferred stock to
acquire a technology license from Crystalix Technology, Inc.                    

   Immediately following the acquisition, the former shareholders of
Crystalix USA held approximately 77.6% of Americabilia's total issued and       
outstanding common shares. Crystalix USA was thereby deemed to be the acquiror  
and surviving company for accounting purposes. Accordingly, the transaction has 
been accounted for as a reverse acquisition using the purchase method whereby   
the assets and liabilities of Americabilia have been recorded at their fair     
market values and operating results have been included in the company's         
financial statements from the effective date of purchase. The net assets of     
Crystalix USA are included in the balance sheet at their historical book values 
and its results of operations have been presented for the comparative prior     
period.                                                                         

         On December 23, 2002, we acquired Lazer-Tek for 1,250,000 shares of our
common stock valued at $1,125,000 and an acquisition consulting fee obligation  
of $400,000. This acquisition has been accounted for using the purchase method. 
The purchase price was allocated to the assets purchased and liabilities assumed
based upon their estimated fair values as determined by management, upon        
reliance on an independent valuation report, on the date of acquisition, which  
approximated $2.7 million. The excess of fair value of the acquired net assets  
over the cost has been allocated as a pro rata reduction of all the acquired    
assets, excluding financial assets, assets to be disposed of by sale, deferred  
tax assets, pension or other post-retirement benefit plans, and any other       
current assets.                                                                 

GOING CONCERN                                                                   

       The accompanying consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United States
of America, which contemplate continuation of us as a going concern. We incurred
a net loss for the nine months ended September 30, 2004 of $6,799,085, used cash
for operating activities of $2,454,006 for the nine months ended September 30,  
2004 and at September 30, 2004 had an accumulated deficit of $14,542,069 and a  
working capital deficit of $1,939,067. These conditions raise substantial doubt 
as to our ability to continue as a going concern. These consolidated financial  
statements do not include any adjustments that might result from the outcome of 
this uncertainty. These consolidated financial statements do not include any    
adjustments relating to the recoverability and classification of recorded asset 
amounts, or amounts and classification of liabilities that might be necessary   
should the Company be unable to continue as a going concern.                    

        We plan to take the following steps that we believe will be sufficient
to provide us with the ability to continue in existence. We have recently       
re-negotiated the repayment term of certain debt and have issued a $2,000,000   
convertible promissory note to an unrelated third party. In July 2004, we       
changed our senior management by naming Mr. Kevin Ryan as Chief Executive       
Officer and Mr. Robert McDermott as Chief Financial Officer and believe that the
new management team will be able to achieve profitable operations, but there can
be no assurance that we will be able to raise sufficient capital and generate   
positive cash flows from operations sufficient to sustain operations. Our       
discussion in "Plan of Operation" below details additional sales strategies to  
sustain operations.                                                             

CRITICAL ACCOUNTING POLICIES AND ESTIMATES                                      

       Our discussion and analysis of our financial condition and results of
operations are based upon our condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted  
in the United States of America. The preparation of these consolidated financial
statements requires us to make estimates and judgments that affect the reported 
amounts of assets, liabilities, revenues and expenses, and related disclosures  
of contingent assets and liabilities. On an ongoing basis, we evaluate our      
estimates, including those related to impairment of long-lived assets, any      
potential losses from pending litigation and deferred tax asset or liability. We
base our estimates on historical experience and on various other assumptions    
that                                                                            

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we believe to be reasonable under the circumstances, the results of which form  
the basis for making judgments about the carrying value of assets and           
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions; however, 
we believe that our estimates, including those for the above-described items,   
are reasonable.                                                                 

         LEASE REVENUE. We previously entered into licensing agreements to lease
our laser equipment and our licensed laser inscription technology to individuals
and businesses that open retail establishments to sell laser inscribed glass    
products. The terms of these licensing agreements are typically for five years. 
The lease payments are generally paid in one or two installments upon signing   
the agreement and we recognize lease revenue ratably over the term of the       
contract.                                                                       

        MACHINE SALES. Laser equipment is no longer leased, but rather sold to
our independent distributors/retailers in three installment payments as follows:
40% upon order, 40% prior to delivery, and 20% upon completion of installation  
of equipment at the retail location. We retain ownership of the proprietary     
software and license use of the software to the distributor/retailer for a      
monthly fee, which is normally $500.                                            

     PRODUCT SALES. Revenue from the sale of laser inscribed products is
recognized when title to the products is transferred to the customer, which is  
point of sale at retail locations or customer acceptance for custom-designed    
products, and only when no further contingencies or material performance        
obligations are warranted. Revenue from the sale of glass cube products is      
recognized when title to the products is transferred to the                     
distributor/retailer, which is upon shipment, and only when no further          
contingencies or material performance obligations are warranted.                

  ROYALTY REVENUE. We recognize royalty revenue from licensing our
technology only when earned with no further contingences or material performance
obligations are warranted.                                                      

   DEFERRED REVENUE. Deferred revenue represents amounts received as
non-refundable payments upon the signing of the contract and delivery of the    
laser system unit, for which revenue will be recognized over the term of the    
license period. Deposits received from potential customers, who have not yet    
received the laser system units, are accounted as refundable customer deposits  
on the balance sheet.                                                           

 STOCK-BASED TRANSACTIONS. Shares of our common stock issued for
services, compensation or financing costs is valued at the market value of our  
common stock at the date of issuance.                                           

   INTANGIBLE ASSETS. Intangible assets consist of product and laser
licenses, capitalized software costs, website development costs, artwork and    
copyrights, trademarks, trade names, customer lists and relationships and were  
mostly acquired with the purchase of Laser-Tek. In accordance with SFAS No. 142,
"Goodwill and Other Intangible Assets," we evaluate intangible assets and other 
long-lived assets for impairment, at least on an annual basis and whenever      
events or changes in circumstances indicate that the carrying value may not be  
recoverable from its estimated future cash flows. Recoverability of intangible  
assets and other long-lived assets is measured by comparing their net book value
to the related projected undiscounted cash flows from these assets, considering 
a number of factors including past operating results, budgets, economic         
projections, market trends and product development cycles. If the net book value
of the asset exceeds the related undiscounted cash flows, the asset is          
considered impaired, and a second test is performed to measure the amount of    
impairment loss. Amortization is computed using the straight-line method over   
the estimated useful life of the assets.                                        

RESULTS OF OPERATIONS                                                           

      NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO SEPTEMBER 30, 2003.
Our revenue for the nine months ended September 30, 2004 decreased by $1,481,879
or 30.5% from $4,864,600 for the nine months ended September 30, 2003 to        
$3,382,721 for the nine months ended September 30, 2004. The decrease is        
principally due the disposition of our retail stores in Las Vegas, Nevada in    
April 2003, a reduction in the glass products we sell our licensees and a       
reduction in our lease revenue due to licensees canceling their contracts in    
late 2003 and early 2004.                                                       

  Our cost of revenue for the nine months ended September 30, 2004
decreased by $661,408 or 29.4% from $2,253,737 for the nine months ended        
September 30, 2003 to $1,592,329 for the nine months ended September 30,        

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2004. The decrease is principally due to the decrease in revenue. Our gross     
margin for the nine months ended September 30, 2004 was 53% compared to 54% for 
the nine months ended September 30, 2003.                                       

       Research and development for the nine months ended September 30, 2004
decreased by $216,554 or 100.0% from $216,554 for the nine months ended         
September 30, 2003 to $0 for the nine months ended September 30, 2004. The      
decrease is principally due to a decrease in product development due to lack of 
funds to finance such activities.                                               

      Payroll and related benefits for the nine months ended September 30,
2004 decreased by $422,463 or 23.1% from $1,829,790 for the nine months ended   
September 30, 2003 to $1,407,327 for the nine months ended September 30, 2004.  
The decrease is a result of a reduction in personnel due to corporate downsizing
in light of the reduction on revenue and a reduction in personnel in our retail 
sales staff as a result of the sale of our retail stores in Las Vegas in April  
2003.                                                                           

         General and administrative expenses for the nine months ended September
30, 2004 decreased by $1,620,041 or 32.1% from $5,047,470 for the nine months   
ended September 30, 2003 to $3,427,429 for the nine months ended September 30,  
2004. The decrease is principally due to a reduction in legal fees associated   
with litigation with certain of our former officers in 2003, consulting fees and
a reduction in general overhead due to corporate downsizing in light of the     
reduction in revenue. Included in general and administrative expenses for the   
nine months ended September 30, 2003 is $1,170,000, which is the valuation for  
2,340,000 shares of our common stock issued for consulting services rendered.   
Also, for the nine months ended September 30, 2004 we took a charge taken to    
earnings for the value of certain Series A preferred shares of $409,275 that    
were reallocated to certain members of the Company's senior management team.    

 Other expense, net for the nine months ended September 30, 2004
decreased by $525,672 from other expense of $501,200 for the nine months ended  
September 30, 2003 to other income of $24,472 for the nine months ended         
September 30, 2004. The significant decrease in other expense, net is the write 
off of our investment in Vitro Laser Gmbh of $500,000 in the second quarter of  
2003.                                                                           

         Interest expense for the nine months ended September 30, 2004 increased
by $3,032,631 or 406% from $746,562 for the nine months ended September 30, 2003
to $3,779,193 for the nine months ended September 30, 2004. The significant     
increase is due to the increase in debt, the amortization of debt issue costs of
$188,814 and a charge to interest expense of $2,747,001 for the issuance of     
common stock and the reallocation of certain Series A preferred shares to       
related party investors as additional consideration for funding the company.    
Included in interest expense for the nine months ended September 30, 2003 is    
$528,000, which is the valuation of 660,000 shares of our common stock issued as
consideration to the lender for extending the repayment terms of a loan to us of
$1,500,000.                                                                     

     YEAR ENDED DECEMBER 31, 2003 COMPARED TO DECEMBER 31, 2002. Our net
revenues are derived from product sales, lease revenue, and royalty revenue. We 
generate product sales through the sale of engraved glass products to customers 
in our retail kiosks, to corporate customers, and through the sale of glass     
blanks, display bases, and related products to our independent distributors. We 
receive lease revenues and royalty revenues from our independent distributors   
under the terms of master equipment leases and software licenses they have      
executed with us. Our revenue for the year ended December 31, 2003 increased by 
$1,699,650 or 36.4% from $4,664,855 for the year ended December 31, 2002 to     
$6,364,505 for the year ended December 31, 2003. The increase is principally due
to the increase in the number of our marketing affiliate locations that were in 
operation during the full year ended December 31, 2003 versus only part of the  
year in 2002.                                                                   

        The cost of revenue with regard to product consists of the cost of the
glass blanks, bases, and other items that we purchase from our suppliers. The   
lease cost of revenue consists primarily of the amortization of property, plant 
and equipment, including the direct personnel costs and direct product costs    
associated with the assembly of our leased equipment. Royalty cost of revenue   
consists of the royalty payments we make to Laser Design International. Our cost
of revenue for the year ended December 31, 2003 increased by $1,494,695 or 63.4%
from $2,358,012 for the year ended December 31, 2002 to $3,852,707 for the year 
ended December 31, 2003. The increase is principally due to the increase in     
revenue. Our gross margin for the year ended December 31, 2003 was 40% compared 
to 50% for the year ended December 31, 2002. The decrease in gross margin is    
principally a result                                                            

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of the sales of the four company-owned locations to a former officer of the     
company, which historically produced high gross margins.                        

         Research and development for the year ended December 31, 2003 decreased
by $19,617 or 4.7% from $416,684 for the year ended December 31, 2002 to        
$397,067 for the year ended December 31, 2003. The decrease is principally due  
to a decrease in product development due to lack of funds to finance such       
activities.                                                                     

   Payroll and related benefits for the year ended December 31, 2003
increased by $1,363,645 or 117.4% from $1,161,673 for the year ended December   
31, 2002 to $2,525,318 for the year ended December 31, 2003. The significant    
increase is due to the growth of our company, including the increase in payroll 
as a result of the acquisition of Laser-Tek, and the need to hire additional    
personnel. As we continue to expand our operations, we expect this expense to   
increase as our revenues increase.                                              

     General and administrative expenses for the year ended December 31,
2003 increased by $4,176,712 or 413.1% from $1,011,142 for the year ended       
December 31, 2002 to $5,187,854 for the year ended December 31, 2003. The       
increase in general and administrative expenses is principally due to the       
increase in overhead required to sustain our growing operations, increased      
professional fees as a result the outstanding litigation and consulting fees.   
Included in the amount for 2003 is $1,345,000, which is the valuation for       
2,590,000 shares of our common stock issued for consulting services rendered. We
expect general and administrative expenses to increase as we continue to        
increase both corporate sales and the expansion of retail locations, and proceed
with our plans for an offering of our stock and the listing of our common stock 
on Nasdaq or a stock exchange.                                                  

      Impairment expense for the year ended December 31, 2003 increased by
$399,113 from $nil for the year ended December 31, 2002 to $399,113 for the year
ended December 31, 2003. The increase in impairment expense is due to the write 
down of certain property and equipment of $243,893 and our customer list and    
relationships of $155,220. There were no such impairments for the year ended    
December 31, 2002.                                                              

         During the year ended December 31, 2003, we wrote off our investment in
Vitro Laser Gmbh of $500,000. We had originally paid Vitro an advance of        
$500,000 that was to be applied to the purchase price of that company. In       
accordance with the legal settlement on November 14, 2003, we allowed Vitro to  
retain the advance.                                                             

         Interest expense, net for the year ended December 31, 2003 increased by
$894,023 or 6,184.9% from $14,455 for the year ended December 31, 2002 to       
$908,478 for the year ended December 31, 2003. The increase is due to the       
increase in loans payable and shares of stock issued for financing costs. Of the
interest expense amount, $528,000 was included for the 660,000 shares of our    
common stock issued as consideration to the lender for extending the repayment  
terms of a loan to us of $1,500,000.                                            

LIQUIDITY AND CAPITAL RESOURCES                                                 

   AS OF SEPTEMBER 30, 2004. At September 30, 2004, we had a working
capital deficit of $1,939,067, as compared to $6,311,497 at December 31, 2003.  
We had cash and cash equivalents of $1,980,511 at September 30, 2004 as compared
to cash and cash equivalents of $58,881 at December 31, 2003. The decrease in   
the working capital deficit and the increase in cash and cash equivalents are   
principally due to the restructuring of related party debt and the issuance of a
$2,000,000 convertible promissory note to an unrelated third party. Our current 
cash on hand plus cash expected to be generated from operations will not be     
sufficient to sustain our current operations and service our outstanding debt   
for the next twelve months. We will need to issue debt or equity securities of  
at least $3,000,000 in order to service existing debt requirements and to       
sustain operations until such time that we can generate positive cash flow from 
our operations.                                                                 

During the nine months ended September 30, 2004, our financing
activities provided cash of $4,435,695, while our operating and investing       
activities used cash of $2,454,006 and $60,059, respectively. The cash used in  
operating activities was principally a result of the net loss we incurred. Our  
negative cash flow from operations was principally funded by borrowing          
additional amounts from a related party and the issuance of a $2,000,000        
convertible promissory note to an unrelated third party.                        

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         During the nine months ended September 30, 2004, we obtained $2,442,825
from advances from a related party and $2,000,000 from the issuance of a        
convertible promissory note to an unrelated third party.                        

    We recently restructured all of our related party debt as follows:

 o     On July 21, 2004, we issued a convertible promissory note to Mr. John
    Woodward, our former President, in the amount of $1,824,000, which
     represents principal due on a previously issued note payable in the
       amount of $1,343,722 plus accrued interest in the amount of $480,279.
 This note bears interest at 10% per annum and calls for monthly
         interest payments from August 1, 2004 to December 1, 2004. Beginning on
   January 1, 2005, this note requires monthly principal payments of
      $50,405 plus accrued interest with any unpaid principal and interest
         due on July 1, 2007. The monthly principal and interest payments can be
       paid with shares of our common stock at the option of the holder. The
    conversion price is the lesser of the average closing price of our
     common stock five business days immediately prior to the conversion
      notice or $0.08. We have agreed to register the shares issuable upon
        conversion of this note. We have determined that there is a beneficial
        feature associated with this convertible promissory note in the amount
        of $615,600. This amount will be amortized as financing costs over the
term of the note.                                             

  o     On July 21, 2004, we issued a convertible promissory note to Mr. Kevin
       Ryan, our Chief Executive Officer, in the amount of $5,396,764, which
        represents (a) principal due on two previously issued notes payable in
   the amounts of $852,680 and $1,010,000, (b) principal due under a
       revolving credit agreement in the amount of $1,766,500, (c) principal
      due under an additional note payable in the amount of $1,500,000 and
        (d) accrued interest on the above mention obligations in the amount of
   $267,584. This note bears interest at 10% per annum and calls for
       monthly principal payments from August 1, 2004 to December 1, 2004 of
    $45,000. On the last day of the month beginning on August 31, 2004
      through November 30, 2004, the accrued interest will be added to the
    principal amount. Beginning on January 1, 2005, this note requires
      monthly principal payments of $174,584 with any unpaid principal and
  interest due on July 1, 2007. The monthly principal and interest
       payments can be paid with shares of our common stock at the option of
       the holder. The conversion price is the lesser of the average closing
       price of our common stock five business days immediately prior to the
   conversion notice or $0.08. In addition, we granted to Mr. Ryan a
        warrant to purchase 1,875,000 shares of our common stock. The exercise
       price is lesser of the average closing price of our common stock five
        business days immediately prior to the notice of exercise or $0.08. We
     have agreed to register the shares issuable upon conversion of this
     note and exercise of the warrant. In accordance with EITF 00-27, we
  first determined the value of the note and the fair value of the
        detachable warrants issued in connection with this note. The estimated
value of the warrants of $200,625 was determined using the    
        Black-Scholes option pricing model and the following assumptions: term
       of 7 years, a risk free interest rate of 3.5%, a dividend yield of 0%
and volatility of 371%. The face amount of the note payable of
       $5,396,764 was proportionately allocated to the note and the warrants
       in the amounts of $5,203,330 and $193,434, respectively. The value of
   the note was then allocated between the note and the preferential
  conversion feature, which amounted to $3,188,488 and $2,014,842,
       respectively. The combined total discount is $2,208,276, and is being
amortized over the term of the note.                          

o     On July 21, 2004, we issued a promissory note to Ryan Capital       
    Management, Inc. (this company is controlled by Kevin Ryan) in the
    amount of $452,137, which represents principal due on a previously
        issued note payable in the amount of $400,000 plus accrued interest in
      the amount of $52,137. This note bears interest at 10% per annum and
        calls for monthly interest payments from August 1, 2004 to December 1,
2004. Beginning on January 1, 2005, this note requires monthly
     principal payments of $37,902 plus accrued interest with any unpaid
principal and interest due on December 1, 2005.               

 o     On August 1, 2004, we issued a promissory note to McCary & Rood (this
       company is controlled by Kevin Ryan) in the amount of $280,000, which
        represents past due consulting fees under a consulting agreement dated
        May 28, 2003. This note calls for monthly payments beginning August 1,
2004 of $30,000 with any unpaid principal due on May 1, 2005. 

  o     On August 1, 2004, we issued a promissory note to McCary & Rood in the
     amount of $214,037, which represents past due reimbursable expenses
under a consulting agreement dated May 28, 2003. This note    

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         calls for monthly payments beginning August 1, 2004 of $30,000 with any
unpaid principal due on March 1, 2005.                        

   On September 23, 2004, we issued a convertible promissory note to
CMKXTREME.COM in the amount of $2,000,000. This note bears interest at 10% per  
annum and calls for monthly principal payments of $55,556 plus accrued interest 
beginning November 1, 2004 with any unpaid principal and interest due on October
1, 2007. The monthly principal and interest payments can be paid with shares of 
our common stock at the option of the holder. The conversion price is the lesser
of the average closing price of our common stock five business days immediately 
prior to the conversion notice or $0.08. In addition, we granted to             
CMKXTREME.COM a warrant to purchase 2,500,000 shares of our common stock. The   
exercise price is lesser of the average closing price of our common stock five  
business days immediately prior to the notice of exercise or $0.08. We have     
agreed to register the shares issuable upon conversion of this note and exercise
of the warrant. In accordance with EITF 00-27, we first determined the value of 
the note and the fair value of the detachable warrants issued in connection with
this note. The estimated value of the warrants of $200,000 was determined using 
the Black-Scholes option pricing model and the following assumptions: term of 7 
years, a risk free interest rate of 3.5%, a dividend yield of 0% and volatility 
of 371%. The face amount of the convertible promissory note of $2,000,000 was   
proportionately allocated to the note and the warrants in the amounts of        
$1,818,182 and $181,818, respectively. The value of the note was then allocated 
between the note and the preferential conversion feature, which amounted to     
$1,636,364 and $181,818, respectively. The combined total discount is $363,636, 
and is being amortized over the term of the note.                               

         In addition, on July 21, 2004, we issued 3,019,000 shares of our common
stock to Kevin Ryan as additional consideration for the financing provided to   
us. Also, certain holders of our Series A preferred stock reallocated 2,647,900 
of their shares to certain investors and senior members of our management team. 
We will take a charge to financing costs and compensation expense of $2,747,011 
and $409,275, respectively, related to the issuance and reallocation of these   
common and preferred shares.                                                    

         AS OF DECEMBER 31, 2003. At December 31, 2003, we had a working capital
deficit of $6,311,497, as compared to a surplus of $511,575 at December 31,     
2002. We had cash and cash equivalents of $58,881 at December 31, 2003 as       
compared to cash and cash equivalents of $641,325 at December 31, 2002.         

   During the year ended December 31, 2003, our financing activities
provided cash of $2,275,376, while our operating and investing activities used  
cash of $1,166,873 and $1,690,947, respectively.                                

     During the year ended December 31, 2003, we used $1,390,947 for the
purchase of property and equipment, which consisted principally of equipment for
laser engraving systems and expansion of our network of kiosk locations. We also
used $300,000 for an advance to Vitro Laser.                                    

        During the year ended December 31, 2003, we obtained $748,000 from the
sale of common stock, which consisted of $488,000 collected from stock sold in  
2002 and $260,000 for the issuance of 1,120,000 additional shares in 2003. We   
also received proceeds from a note payable to related party of $1,010,000 and   
advances from a related party under a revolving line of credit of $823,675.     

      We have other current debt incurred in connection with the Lazer-Tek
acquisition in the principal amount of $1,252,680, consisting of $852,680 owed  
to Kevin Ryan, a former creditor of Lazer-Tek, which was due April 1, 2003, and 
$400,000 owed to Kevin Ryan in quarterly payments beginning April 1, 2003 for   
consulting fees. Neither of these payments has been made and we are currently in
default on these two obligations. Mr. Ryan obtained a Writ of Possession        
entitling him to all of our assets as of June 2, 2003. We agreed to dismiss our 
complaint against Mr. Ryan with prejudice. The Writ of Possession is to remain  
in effect, but the parties have agreed to postpone all deadlines and trial      
dates.                                                                          

PLAN OF OPERATION                                                               

        We believe that we have positioned Crystalix to become a leader in the
sub-surfaced glass etching industry, now that our reorganization is almost      
complete. Our management has developed a plan of operation for 2005. we have put
into place in our Las Vegas corporate headquarters officers and department heads
bringing various areas of expertise to design and implement our plan of         
operation.                                                                      

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   Our sales push begins in 2005 at the Promotional Product Industry
Convention, where our goal is to increase sales in the corporate and promotional
lines. The two-dimensional portrait line is growing rapidly as we have just     
closed on our first Christmas season producing two-dimensional portraits for a  
national portrait studio in over 900 of its stores. Entering 2005, we are in    
negotiations with other national portrait studios as the two-dimensional        
portrait demand continues to grow at a rapid pace.                              

      As a result of not marketing retail laser engraving equipment in the
United States in 2004, we have accumulated hundreds of inquiries for new        
independent distributorships and will aggressively resume negotiations in the   
first quarter of 2005 to sell the laser engraving equipment in the United       
States. We expect to start delivering units with the United States market by the
beginning of the second quarter of 2005. We have a sales office in Dublin,      
Ireland, that sold the new laser equipment within Europe during 2004 and intend 
to accelerate that pace this year. We believe that this sales effort should have
an immediate positive impact on revenues and cash flow as early as the end of   
the first quarter of 2005.                                                      

     The production facility based in Berlin, Germany, has finalized the
research and production of the new machine and we plan to begin mass production 
in January 2005. First quarter estimates are for the production of ten new      
machines, for which all should have a sales commitment by April 2005. The       
production should then increase to five machines per month for the second       
quarter, with anticipated demand for all 15 machines within the same quarter. We
have set the same sales targets for the last two quarters. We believe there is  
worldwide demand for the machines greater than current production capacity.     
Accordingly, we will continue to seek outside financing to increase production  
capacity while machine and glass sales continue to move us towards financial    
stability and growth within the current structure.                              

    We plan to initiate a second phase of our independent distributors
program. For a reduced fee, we will sell a satellite laser system to a satellite
partner, consisting of a three-dimensional scanner/camera and computer          
workstation. We will offer an optional sales booth and display counter. Instead 
of producing the glass products at the retail location, a satellite partner     
would scan a customer's facial image, e-mail the image and order information to 
us, and allow us to produce the actual glass product. The satellite partner     
would pay us a software licensing fee of 10% of gross sales and a facial image  
production fee. In addition, a satellite partner would have the option to       
purchase corporate awards, wedding, and giftware items at wholesale prices for  
resale to the public.                                                           

    We have secured direct glass suppliers in China, which should help
reduce glass and component costs. With the completion of the new laser engraving
machine, we expect our research and development expenses to decrease in 2005 and
our production efficiencies to increase and lead to a lower cost of             
manufacturing the machine. Negotiations are in progress with major component    
suppliers, which should result in quantity discounts on purchases. Accordingly, 
we expect cost of goods sold to decrease as a percentage of sales in both glass 
and machine segments.                                                           

 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

   On May 10, 2004, our directors approved the election of De Joya &
Company to audit the financial statements for the fiscal year ended December 31,
2004. Also on May 10, 2004, we dismissed the former accountants, Stonefield     
Josephson, Inc. The decision to change auditors was based upon financial        
considerations. Our board of directors recommended De Joya & Company. During the
two most recent fiscal years and the subsequent interim period, neither we nor  
anyone on our behalf consulted De Joya & Company regarding the application of   
accounting principles to a specific completed or contemplated transaction, or   
the type of audit opinion that might be rendered on our financial statements. We
did not receive, and De Joya & Company did not provide, any written or oral     
advice that was an important factor in reaching a decision as to an accounting, 
auditing or financial reporting issue prior to its engagement by us.            

     Stonefield Josephson, Inc. had audited our financial statements for
each of the last two fiscal years ended December 31, 2003. The report of        
Stonefield Josephson, Inc. did not contain an adverse opinion or disclaimer of  
opinion and was not modified as to uncertainty, audit scope, or accounting      
principles, except as follows:                                                  

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 The audit report of Stonefield Josephson, Inc. on our financial
statements as of and for the fiscal year ended December 31, 2003 contained a    
separate paragraph stating:                                                     

"The accompanying consolidated financial statements have been 
prepared assuming that the Company will continue as a going   
 concern. As discussed in Note 1, the Company has incurred a net
loss of $7,433,341, used cash for operations of $1,166,873 in 
the year ended December 31, 2003, is a party to various       
litigation, has a stockholders' deficit of $3,382,628 as of   
December 31, 2003 and has a working capital deficit of        
$6,311,497 as of December 31, 2003. These conditions raise    
substantial doubt about the Company's ability to continue as  
a going concern.  Management' plans in regard to 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."                        

    During the two most recent fiscal years and the subsequent interim
period through May 10, 2004, there were no disagreements with Stonefield        
Josephson, Inc. on any matter of accounting principles or practices, financial  
statement disclosure, or auditing scope or procedure which, if not resolved to  
the satisfaction of Stonefield Josephson, Inc., would have caused it to make    
reference to the subject matter of the disagreement in connection with its      
report.                                                                         

      There were no other "reportable events" as that term is described in
Item 304a(1)(v) of Regulation S-K occurring within our two most recent fiscal   
years and the subsequent interim period ending May 10, 2004.                    

BUSINESS

BUSINESS DEVELOPMENT                                                            

     We were originally incorporated in the state of Florida on August 22,
1989 under the name First Zurich Investments, Inc. On November 15, 1996, the    
name of the company was changed to Terra International Pharmaceuticals, Inc. On 
August 11, 1999, we acquired Veltre Enterprises, Inc. dba Unique Images. Unique 
Images designed and manufactured Hollywood and sports memorabilia for           
memorabilia galleries, as well as provided custom picture framing services. On  
September 7, 1999, we changed our name to americabilia.com, Inc. and on         
September 14, 1999, we conducted a recapitalization through the merger of       
americabilia.com Nevada with and into Worldwide Collectibles, Inc., a Nevada    
corporation and a wholly owned subsidiary we formed for the purpose of the      
merger. We issued a total of 6,115,000 shares of our common stock to the former 
stockholders of americabilia.com Nevada. In January 2001, we merged Unique      
Images into Worldwide Collectibles. As americabilia.com, Inc., we engaged in    
direct Internet merchandising of American-themed collectibles, gifts and        
memorabilia. On June 25, 2002, we announced our plans to cease business         
operations.                                                                     

        On October 4, 2002, we acquired all of the outstanding common stock of
Crystalix USA Group, Inc. in exchange for 23,300,000 shares of our common stock 
and an exclusive technology license from Crystalix Technology, Inc. in exchange 
for 7,000,000 shares of our Class A preferred stock. We changed our name to     
Crystalix Group International, Inc. on November 22, 2002 and changed our        
domicile to Nevada on November 26, 2002.                                        

       On December 23, 2002, we acquired all of the outstanding common stock
of Lazer-Tek Designs, Inc. and Lazer-Tek Designs, Ltd. (collectively            
"Lazer-Tek") in exchange for 1,250,000 shares of our common stock valued at     
$1,125,000 and an acquisition consulting fee obligation of $400,000. In         
addition, we loaned $1,000,000 to Lazer-Tek to repay existing debt, which is    
carried as an intercompany receivable from Lazer-Tek and eliminated in the      
financial statement consolidation. We also entered into a promissory note for   
$852,680. Lazer-Tek was acquired for several strategic marketing and operation  
reasons. With a wide base of corporate awards and gift clients to collegiate    
giftware and traditional advertising specialty groups, and with a collection of 
valuable engineered art pieces, Lazer-Tek was poised for market penetration with
the added collectibles provided by Crystalix USA. Additionally, our management  
realized that with our advanced software and laser technologies, we could       
improve both production time and quality at Lazer-Tek, thereby enhancing the    
overall operations of Lazer-Tek.                                                

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      On December 15, 2002, we executed an agreement to acquire 50% of the
ownership interest of Vitro Laser GmbH, a German corporation ("Vitro"), for     
consideration consisting of cash and the right to acquire shares of our common  
stock. Vitro manufactures laser-etching equipment used in the glassware         
industry. No formal agreements were consummated. We had advanced $500,000 to    
Vitro and have written this amount off during the fiscal year ended December 31,
2003 to other expense due to the uncertainty about successfully completing this 
acquisition. We sued Vitro and the subsequently settled the litigation.         

OUR PRODUCTS                                                                    

   As a result of our acquisition of Crystalix USA, a Nevada company
incorporated on November 9, 2001, and subsequently Lazer-Tek, we are a leading  
manufacturer, distributor, and marketer of laser subsurface engraved optical    
quality glass products and laser subsurface engraving equipment. Our principal  
products are personalized three-dimensional engraved glass blocks that feature  
the facial image of one or more persons, custom three-dimensional images, and   
two-dimensional portraits, as well as the laser subsurface engraving equipment. 
As of December 31, 2004, we had 31 kiosks owned by our independent distributors,
and four corporate-owned kiosks in retail shopping malls, resorts, promenades,  
casinos, and theme parks where our products are engraved and sold. Through our  
subsidiaries, Lazer-Tek Designs, Inc. and Lazer-Tek Designs, Ltd., we also sell 
to corporate accounts and other specialty groups, as well as an extensive gift  
line.                                                                           

     Our engraving process involves the use of a high-resolution digital
camera, a laser image scanner, and two lasers that are configured together by a 
standard desktop personal computer, using our proprietary software and a Windows
operating system. The laser image scanner converts images from the digital      
camera, a customer's digital image, or a hard copy photograph into a            
three-dimensional or two-dimensional digitally formatted image that will be     
engraved into the center of the glass block by the laser. The scanner processes 
the image from several angles to create a three-dimensional or two-dimensional  
digital model of the image and plots the points where the laser will be directed
to engrave the image in the glass. The scanner and software generally complete  
the conversion process in 15 to 30 seconds. The glass block is then placed into 
the laser chamber for engraving. The engraving process generally takes a few    
minutes or less, depending on the number of images to be engraved, the degree of
detail in the images, and whether titles, names, or other materials are to be   
added with the images.                                                          

    The image can be engraved into glass blocks of different sizes and
shapes. The suggest retail price of the engraved glass ranges from $59 to $400, 
depending on the size of the glass block and number of images to be engraved,   
with a typical glass block retailing for $100 to $150. Engraved glass pieces for
corporate customers carry suggest retail prices from $19 to as much as several  
thousands of dollars. We also offer a variety of accessories and bases on which 
to display the engraved glass blocks.                                           

PRODUCT LINES                                                                   

  There are numerous applications for our engraving system. We are
currently focusing on the following product lines:                              

o    two-dimensional portraits;                           
o    corporate/award items;                               
o    giftware;                                            
o    three-dimensional facial images;                     
o    two-dimensional images;                              
o    licensed images and logos;                           
o    tabletop items; and                                  
o    gallery pieces.                                      

DISTRIBUTION                                                                    

We sell our products                                          
o    to corporate distributors;                           
o    to mass marketing organizations, such as QVC;        

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   o    through retail kiosks owned by us and by our independent
distributors;                                   
o    through college catalogs and bookstores;             
o    through photo distributors and retail outlets; and   
o    through art galleries.                               

PHOTO INDUSTRY. As of December 2004, we are producing our     
two-dimensional portrait products for a national portrait studio in over 900 of 
its stores. Entering 2005, we are in negotiations with other national portrait  
studios as the two-dimensional portrait demand continues to grow at a rapid     
pace. We are focused on building strategic relationships in this industry and   
will aggressively continue to seek market share. We believe our unique software 
platform allows companies to merge seamlessly photography and image data via the
Internet, thus providing photographers of any size the ability to offer our     
product with little or no additional overhead.                                  

        CORPORATE SALES. With the acquisition of Lazer-Tek and the presence of
Crystalix USA at the industry trade shows, corporate application of our laser   
engraved products for awards, gifts and presentation has been widely accepted.  
We believe our quality and visibility has secured us as one of the leading      
suppliers of subsurface imaged glass to the promotional products industry.      

INFINITY BUYING CLUBS. We have been aggressively pursuing mass
marketing organizations such as NASCAR, the National Basketball Association,    
Major League Baseball, and the Kentucky Derby, and have sold products to these  
organizations or teams within these organizations. With wholesale and retail    
ability available in these venues, we will explore large sales opportunities for
our entire market lines.                                                        

         RETAIL KIOSKS. The kiosks typically occupy no more than 120 square feet
and can be operated by only one or two employees. As of December 31, 2004, the  
following kiosks were in operation by our independent distributors:             

        ------------------------------------------------------------------------
DATE OPENED              LOCATION                               
        ------------------------------------------------------------------------
March 2002               DFS Galleria - Honolulu, Hawaii        
        ------------------------------------------------------------------------
May 2002                 Park Meadows Mall - Parker, Colorado   
        ------------------------------------------------------------------------
        May 2002                 First Street Station - Rehoboth Beach, Delaware
        ------------------------------------------------------------------------
 May 2002                 Mall of America - Bloomington, Minnesota
        ------------------------------------------------------------------------
    June 2002                Desert Passage, Aladdin - Las Vegas, Nevada
        ------------------------------------------------------------------------
August 2002              Tacoma Mall - Tacoma, Washington       
        ------------------------------------------------------------------------
    September 2002           Dubai International Airport - Dubai, United
Arab Emirates 
        ------------------------------------------------------------------------
 November 2002            Fisherman's Wharf - Monterey, California
        ------------------------------------------------------------------------
    November 2002            1145 Prospect Street - La Jolla, California
        ------------------------------------------------------------------------
        November 2002            3rd Street Promenade - Santa Monica, California
        ------------------------------------------------------------------------
November 2002            Disney Arribas - Orlando, Florida      
        ------------------------------------------------------------------------
  November 2002            622 Royal Street - New Orleans, Louisiana
        ------------------------------------------------------------------------
December 2002            Stratosphere Shops - Las Vegas, Nevada 
        ------------------------------------------------------------------------
        December 2002            Beach Towers - Atlantis Paradise Island Resort,
 Nassau, Bahamas
        ------------------------------------------------------------------------
   February 2003            Crystalix of Henderson - Henderson, Nevada
        ------------------------------------------------------------------------
    February 2003            Harrah's Carnival Court - Las Vegas, Nevada
        ------------------------------------------------------------------------
February 2003            Prudential Center Marketplace - Boston,
Massachusetts 
        ------------------------------------------------------------------------
April 2003               Chicago - Gurnee, Illinois             
        ------------------------------------------------------------------------
    April 2003               Burlington Mall - Burlington, Massachusetts
        ------------------------------------------------------------------------
April 2003               Harrahs - Laughlin, Nevada             
        ------------------------------------------------------------------------
April 2003               Village Shops - Gatlinburg, Tennessee  
        ------------------------------------------------------------------------
     November 2003            Bluewater - Greenhithe - Ken, United Kingdom
        ------------------------------------------------------------------------
        December 2003            Deira City Center - Dubai, United Arab Emirates
        ------------------------------------------------------------------------
December 2003            The Square - Tallaght - Dublin, Ireland
        ------------------------------------------------------------------------
December 2003            ABC Shopping Mall - Beirut, Lebanon    
        ------------------------------------------------------------------------
  December 2003            Monte Casino - Johannesburg, South Africa
        ------------------------------------------------------------------------
February 2004            OCBC Center  - Singapore, Singapore    
        ------------------------------------------------------------------------

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        ------------------------------------------------------------------------
DATE OPENED              LOCATION                               
        ------------------------------------------------------------------------
February 2004            Marafi Building - Kuwait               
        ------------------------------------------------------------------------
May 2004                 Pacific Fair - Broadbeach - Queensland,
Australia     
        ------------------------------------------------------------------------
June 2004                Mid Summer Arcade - Central Milton     
        ------------------------------------------------------------------------
        September 2004           The Grosvenor Shopping Center - Chester, United
Kingdom       
        ------------------------------------------------------------------------

We also had the following company-owned retail locations:     

        ------------------------------------------------------------------------
DATE OPENED              LOCATION                               
        ------------------------------------------------------------------------
 November 2003            Jervis Shopping Center - Dublin, Ireland
        ------------------------------------------------------------------------
September 2004           Sony Center - Berlin, Germany          
        ------------------------------------------------------------------------
December 2004            Blanchards Town - Dublin, Ireland      
        ------------------------------------------------------------------------
December 2004            Harvey Norman Store - Dublin Ireland   
        ------------------------------------------------------------------------

      INDEPENDENT DISTRIBUTORS. Through our software license, we grant our
independent distributors a non-exclusive right to operate our laser engraving   
system during the a specified term and any extensions thereof in an identified  
exclusive territory. We also make available to our independent distributors     
glass blanks, light bases, collection images, and related products from us or a 
pre-approved vendor to assure quality.                                          

     In 2004, we paid royalties for many of our independent distributors
that were not current with Norwood's licensing requirements. As a result of this
action, we are currently re-negotiating licensing agreements to bring all       
independent distributors into compliance. While this has had a negative effect  
on revenues in the short term, we believe this should be corrected by the end of
the first quarter of 2005. Our independent distributors can extend the terms of 
their agreements if they are in good standing under the new lease/licensing     
agreements and reach a royalty settlement. We did not allow any new independent 
distributors in the United States during the restructuring period of 2004.      

  COLLEGE CATALOGS AND BOOKSTORES. We manufacture certain licensed
articles under the line name of "Collegiate Crystal". The line consists of laser
reproductions of collegiate logos, mascots, buildings, and landmarks inside of  
high-quality glass cubes pursuant to orders from our collegiate distributor,    
Jardine Associates. We plan to expand this line by the end of the third quarter 
of 2005.                                                                        

INTERNATIONAL OPERATIONS. Crystalix USA formed a wholly owned 
subsidiary on October 24, 2002, Crystalix Imaging Limited, doing business as    
Crystalix Europe, to explore the marketability for corporate owned locations in 
the western European countries of Ireland, England and France. Through December 
2004, Crystalix Europe opened locations in Dublin, Ireland, with independent    
distributors. These locations are being well received and we plan to open other 
locations worldwide. In addition, our production facility in Berlin, Germany,   
has a kiosk at the Sony Center, which has also been very well received and      
generated numerous inquiries for kiosk sales that will be pursued in 2005.      

SUPPLIERS                                                                       

       The equipment components for our laser engraving system are available
from several suppliers. Currently, we use a Minolta high-resolution digital     
camera and laser image scanner, a laser that uses neodymium: yttrium aluminum   
garnet (Nd:YAG) as the material used for light emission, and a desktop personal 
computer. We have contracts with many of our equipment suppliers.               

    We have secured suppliers in China for our glass blocks, which are
lead-free and arsenic-free. We believe that there are only a limited number of  
suppliers of glass that can meet our needs. We have identified two potential    
suppliers in the United States, several potential European suppliers, and one   
other Chinese supplier. The glass that we use has the following characteristics:

  o    High transmittance and refraction of light throughout the visible and
near infrared spectra;                                        
o    Extremely low bubble and inclusion content;                        

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o    Requires no special handling and has stable chemical properties;   
  o    Capable of being precision-engraved using available laser technology;
and                                                           
o    Environmentally acceptable due to absence of lead and arsenic.     

INTELLECTUAL PROPERTY                                                           

      PATENTS; LICENSES; ROYALTY AGREEMENTS. Our laser engraving system is
derived in large part from patents held by others. Laser Design International,  
LLC ("LDI") had exclusive license rights to a family of patents which govern    
subsurface decorative laser marking in crystal, glass, and other clear          
materials. These patents were first filed in 1991 and have been issued in the US
and almost every part of the world. LDI recently purchased the patents in       
February 2003. In addition, LDI has another US patent, which improves on the    
original claims and more specifically applies them to the use of the process for
manufacture of decorative crystal and glass giftware. These patents cover both  
the process of manufacturing laser-etched crystal giftware, as well as the      
manufacturing machine and finished giftware products themselves.                

In 1995, LDI issued a license for these patent rights and the 
underlying technology to Janesville Group, Ltd. of Janesville, Wisconsin, which 
is now a part of Norwood Promotional Products, Inc., based in Austin, Texas.    
That license granted certain exclusive rights for manufacture of corporate      
giftware in North and South America. Norwood Promotional Products, Inc. markets 
20 product lines with over 6,000 products through promotional product           
distributors, and is believed to be the world's largest supplier of promotional 
products.                                                                       

        In February 1999, LDI and the Janesville Group, Ltd. granted Lazer-Tek
a non-exclusive license for the manufacture and sale of decorative products for 
the specialty advertising, premium, and retail markets in the US, Canada,       
Mexico, the United Kingdom, Central America, South America, and the Caribbean.  
Lazer-Tek pays a royalty of 17% of net sales for annual sales of up to $500,000 
and 20% of net sales for annual sales of $500,000 or more. This obligation      
continues until April 27, 2010.                                                 

In October 2001, LDI granted Crystalix USA a non-exclusive    
non-transferable license to use this technology for the manufacture and sale of 
decorative products in the giftware market segments, the wearable jewelry and   
gemstone material market segments, and the flat glass and architectural glass   
market segments. LDI also granted us a non-exclusive non-transferable license to
manufacture, use, sell and lease laser subsurface engraving machines to LDI     
subsurface engraving licensees. These licenses granted by LDI are subject to the
limitation that our activities cannot conflict with the exclusive rights granted
to the Janesville Group unless the Janesville Group expressly agrees in writing 
to allow the activity. We paid LDI $25,000 for the license and are obligated to 
pay LDI a royalty of 10% of the net sales for decorative products sold to all   
market segments except the flat glass and architectural glass market segments.  
For those sales, the royalty rate is 3% of net sales. The obligation to pay     
royalties continues until April 27, 2010 or termination of the license          
agreement. By letter dated January 1, 2002, LDI agreed that our royalty         
obligations shall be no higher than $3.00 per block, recognizing that our       
business included facial marking and three-dimensional imaging improvements that
are outside of the patents licensed to us.                                      

   In addition to the patents described above, we have the exclusive
worldwide rights to other proprietary technology. Rainer Eissing, our chief     
executive officer, has developed certain facial marking and three-dimensional   
imaging improvements that are outside of the engraving patents licensed by us.  
We obtained the rights to Mr. Eissing's technology by issuing Crystalix         
Technology 7,000,000 shares of our Class A preferred stock.                     

   We are currently negotiating with LDI to purchase its patents and
anticipate completion of the negotiations by February 2005.                     

 Lazer-Tek has an interest in US Patent No. 6,087,617 - computer
graphics system for generating an image reproducible inside optically           
transparent material.                                                           

   TRADEMARK AND TRADE NAME. In January 2003, we applied for federal
trademark registration of Crystalix and the diamond logo (serial number         
76/489692). As of the date of this prospectus, such registration has not been   
obtained. We hold Nevada trademarks on the Crystalix name.                      

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Lazer-Tek has the following federally registered trademarks:  

   o   For "LTD" -  No. 2,021,941 registered December 10, 1996
           o   For "Collegiate Crystal" - No. 2,504,803 registered November 6,
2001                                            
            o   For "Photocrystals" - No. 2,787,498 registered November 25, 2003

COMPETITION                                                                     

         We compete generally with many other manufacturers and retailers in the
giftware industry and specifically with those who offer personalized and        
engraved products. With regard to manufacturers of laser subsurface engraved    
optic glass items, we are aware of other competitors in the United States, but  
only a few that comply with the patents described above.                        

        There are several companies that offer laser subsurface engraved glass
products for sale to the public. However, many only offer decorative glass      
pieces that are already engraved, as opposed to offering custom-engraved        
products.                                                                       

        We believe that we are the leading "branded" manufacturer and retailer
of laser subsurface engraved optic glass in the US industry, due to the breadth 
of our product lines and methods of distribution.                               

We believe that we compete on the basis of                    

o   Image quality, definition and accuracy;             
o   Crystal quality;                                    
o   Crystal selection;                                  
o   Production/turnaround times;                        
o   Retail location and accessibility; and              
    o   Creativity with respect to the art image and glass shape

RESEARCH AND DEVELOPMENT                                                        

    During the fiscal years ended December 31, 2003 and 2002, we spent
$397,067 and $416,684, respectively, on research and development activities.    

GOVERNMENT REGULATION AND COMPLIANCE WITH ENVIRONMENTAL LAWS                    

We and our independent distributors are subject to the type of
government regulation typically associated with the operation of retail         
locations. These regulations pertain to the safe operation of the retail space, 
wages and working conditions for employees, and the proper collection of various
taxes. We do not believe that compliance with these regulations presents any    
unusual hardship or cost.                                                       

  Compliance with environmental laws generally does not affect our
business.                                                                       

EMPLOYEES                                                                       

         As of December 31, 2004, we employed a total of 31 persons, of which 25
were full-time. None of our employees is covered by a collective bargaining     
agreement.                                                                      

FACILITIES                                                                      

       Our principal offices are located at 5275 South Arville Street, Suite
B-116, Las Vegas, Nevada 89118. We lease approximately 12,000 square feet within
three centrally located buildings. We are currently in discussions to           
renegotiate lease agreements to expand operations and reduce costs.             

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LEGAL PROCEEDINGS                                                               

         On February 12, 2003, Vitro Laser Group USA, Inc. ("Vitro") and Kenneth
Morrison filed an original petition and application for injunctive relief in the
District Court of Dallas County, Texas, against Vitro Laser GmbH and us. The    
plaintiffs allege that Vitro and we wrongfully took two laser systems. The      
plaintiffs seek a temporary and permanent injunction enjoining, prohibiting, and
restraining Vitro and us from interfering with plaintiffs' rights in the laser  
systems and in their business facilities and operations. In addition, the       
plaintiffs seek from us exemplary damages for conversion of the equipment,      
statutory damages of $2,000 and attorneys' fees for theft of the laser systems, 
actual damages for unjust enrichment, and actual and exemplary damages for      
tortious interference with plaintiffs' contract with Vitro. With respect to     
Vitro, the plaintiffs seek exemplary damages for fraud, actual damages for      
negligent misrepresentation, actual damages and attorneys' fees for breach of   
contract, and actual damages for breach of fiduciary duty. Vitro asserts that it
was not properly served and that it is not amenable to suit or service in the   
United States since it is a German company. We have filed a special appearance  
in the lawsuit to contest the court's jurisdiction over it. The court found that
the court had jurisdiction over us and we have appealed that ruling. If we are  
unsuccessful in our jurisdictional challenge, we intend to assert that we took  
possession of the equipment at the request of Vitro, with Vitro asserting       
ownership over the equipment due to plaintiffs' failure to pay for the          
equipment. Management, together with Vitro, plans to vigorously defend this     
matter and since this matter is in its preliminary stages, no amounts have been 
accrued in the accompanying consolidated financial statements, as such amounts  
are not estimable.                                                              

MANAGEMENT

OFFICERS, DIRECTORS AND KEY EMPLOYEES                                           

Our executive officers, directors, and key employees are:     

NAME                       AGE    POSITION                    

        Kevin T. Ryan              54     Chief Executive Officer and Director

Doug Lee                   40     President                   

        Rainer Eissing             47     Chief Technical Officer and Director

        Robert McDermott           58     Executive Vice President, Treasurer,
                                          Chief Financial Officer and Director

     Oswaldus Van Dam           47     Director of Technical Operations,
                                      Assistant Secretary and Director

       Patty Hill                 46     Corporate Secretary, Vice President
                                    Finance and Administration and
                Controller

  John Lais                  49     Vice President Sales and Chief
                       Marketing Officer

Marc Janssens              49     Director                    

Tamer Muftizade            51     Director                    

John S. Woodward           52     Director                    

Our shareholders elect our directors annually and our board of
directors appoints our officers annually. Vacancies in our board are filled by  
the board itself. Set forth below are brief descriptions of the recent          
employment and business experience of our executive officers and directors.     

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KEVIN T. RYAN, CHIEF EXECUTIVE OFFICER AND DIRECTOR                             

    Mr. Ryan was the president of Lazer-Tek Designs from February 2002
until its acquisition by us in December 2002. He became our president and chief 
executive officer and a director in July 2004 and then resigned as president in 
January 2005. Since January 1998, he has served as president of Ryan Capital    
Management and Charan Industries, Inc., Westbury, New York. Charan Industries,  
Inc. is currently involved in construction and redevelopment, product line      
development for coin-operated games and the food and beverage industry, and     
special situations in hotel and marina operations. From 1992 to 1996, Mr. Ryan  
was the president of Bowling Corporation of America, a subsidiary of Charan.    
During that period, Charan's bowling, leisure, and gaming activities accounted  
for 80% of Charan's corporate sales and had 4,000 full and part-time employees. 
In 1996, Bowling Corporation of America was sold to AMF, Inc. Mr. Ryan also     
serves as president of McCary & Rood, an international trading company, since   
January 1999.                                                                   

DOUG LEE, PRESIDENT                                                             

        In January 2005, Mr. Lee was elected as president to succeed Mr. Ryan.
Immediately prior to his election, he was our executive vice president and      
director of operations. Mr. Lee joined us in December 2002, when we acquired    
Lazer-Tek Designs. Mr. Lee served as executive vice president for Lazer-Tek     
Designs from November 1999 to the acquisition date, where he managed operations 
and directed marketing and sales. He pioneered several product categories,      
including "Collegiate Crystal". In the 1990's, he founded TD Sports, which      
organized training camps sponsored by corporations in the Midwest. He is a      
frequent motivational speaker and has extensive experience in the media. Since  
1988, he has co-hosted a National Football League radio show, as well as served 
as color commentator for several professional and collegiate sporting events.   
Mr. Lee also served as an advisor during the National Basketball Association    
collective bargaining agreement in the mid 1990's. He has been the co-owner of  
Springboard Agency, a web and marketing company based in Dallas, Texas, since   
June 2004. Mr. Lee was involved in professional basketball from 1988 to 2000 as 
a player and consultant. He played in the National Basketball Association and   
several teams in Europe, as well as Israel and Japan. He has served on several  
boards including Fellowship of Christian Athletes of Nevada from 2001 to 2002,  
and is currently serving a second 4-year term on the advisory council for Purdue
University. Mr. Lee attended Texas A&M University and Purdue University where he
received a BS in RHI Business with "Big Ten" Academic Honors.                   

RAINER EISSING, CHIEF TECHNICAL OFFICER AND DIRECTOR                            

       Mr. Eissing has been our executive vice president and chief technical
officer since July 2004. He previously served as chairman of the board of       
directors and chief executive officer from October 2002 to July 2004. He has    
been a director since October 2002. He is the developer of the 3-D software and 
the laser unit used by Crystalix. Mr. Eissing founded Crystalix USA in 2001 and 
Crystalix GmbH Berlin in 1997 and has served as the chief executive officer of  
both companies since their inception. Mr. Eissing was a founder of EWS Rainer   
Eissing, a German laser development company that has provided consulting        
services to electronic manufacturers since 1994. Mr. Eissing is the holder of   
four patents, including two German patents involving our technology. Mr. Eissing
received a doctorate degree in electrical engineering from the TU Institute of  
Electro Technical Engineering in Berlin, Germany. Mr. Eissing has not served for
any directorships in any other reporting companies.                             

ROBERT MCDERMOTT, EXECUTIVE VICE PRESIDENT, TREASURER, CHIEF FINANCIAL OFFICER  
AND DIRECTOR                                                                    

       Mr. McDermott has been our executive vice president, treasurer, chief
financial officer, and a director since July 2004. He has been involved in all  
business ventures of Charan Industries, Inc. and Ryan Capital Management for    
over 25 years. Mr. McDermott is a certified public accountant and brings both   
domestic and international finance expertise to our company.                    

OSWALDUS ("EDGAR") VAN DAM, DIRECTOR OF TECHNICAL OPERATIONS, ASSISTANT         
SECRETARY, DIRECTOR OF TECHNICAL OPERATIONS AND DIRECTOR                        

  Mr. Van Dam has been a director since February 2003 and the vice
president and assistant secretary since July 2004. He served as the director of 
technical operations of Crystalix USA from July 2002 and now serves in that     
capacity for us. In 1989, Mr. Van Dam founded Van Dam European, an automobile   
dealership located in San                                                       

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Francisco, California. He served as its general manager until joining Crystalix 
USA in 2002. Mr. Van Dam has not served as a director for any other reporting   
companies.                                                                      

PATTY HILL, CORPORATE SECRETARY, VICE PRESIDENT FINANCE AND ADMINISTRATION AND  
CONTROLLER                                                                      

      Ms. Hill has been the controller of Lazer-Tek since October 2002 and
became our controller in December 2002. She became our corporate secretary and  
vice president finance and administration in July 2004. From November 2000 to   
April 2002, she was the controller for 1st National Processing, Inc., a credit  
card processing company in Las Vegas, Nevada, where she was responsible for     
development, implementation, and management of internal accounting for that     
company. Ms. Hill was the controller for Forefront, Inc., a multinational       
software corporation in Clearwater, Florida, from January 1997 to September     
2000. From July 1994 to November 1996, she was the assistant business manager   
for Citicaster, Inc./WTSP-TV in St. Petersburg, Florida. From May 1986 to May   
1994, she worked for companies in St. Paul, Minnesota, in management accounting.
Ms. Hill received a bachelor of science degree as an accounting major from the  
University of Minnesota School of Management.                                   

JOHN LAIS, VICE PRESIDENT SALES AND CHIEF MARKETING OFFICER                     

      Mr. Lais has been our vice president sales and chief marketing officer
since July 2004. He manages our sales, marketing, advertising, and licensing    
efforts for our domestic and worldwide efforts. From July 2002 to October 2003, 
Mr. Lais was executive vice president of business development, licensing and    
sponsorships for TicToc, a division of Omnicom Group Inc. in Dallas, Texas.     
During the period from August 2001 to July 2002, Mr. Lais did sales and         
management consulting independently in Dallas, Texas. He was senior vice        
president of business development for HALO Industries, Dallas, Texas, from      
February 2001 through August 2001. From June 1989 through January 2001, he was  
founded and president of Image Marketing, a sales promotion and marketing       
company located in Dallas, Texas. Mr. Lais received a bachelor of science degree
in kinesiology and physical education from Pepperdine University in 1979.       

MARC JANSSENS, DIRECTOR                                                         

        Mr. Janssens has been a director since October 2002. He also served as
our secretary and treasurer from October 2002 to March 2003 and our president   
from March 2003 to April 2003. Mr. Janssens has served as the secretary and     
treasurer of Crystalix USA since its inception in November 2001. From 1995 to   
2001, Mr. Janssens served as the director of marketing and sales for Spartacus  
Management Company, Inc., an advertising and promotional company in Chatsworth, 
California, that manufactured promotional logo recognition products. In 1990,   
Mr. Janssens founded Benchmarc Communications, Chatsworth, California, and      
served as its president to 1995. Benchmarc Communications provided organization 
services for US conventions and international incentive travel. From 1986 to    
1990, Mr. Janssens was a sales and marketing officer for United States          
Lines-International Container Transport. From 1982 to 1986, Mr. Janssens served 
as an account executive for McCann-Erickson Advertising Group in Brussels, Paris
and Amsterdam, where he was responsible for advertising accounts such as BMW,   
Benelux, Tupperware Europe, Van Heusen Fashions, Opel Automotive, and Proctor   
and Gamble. Mr. Janssens received a bachelor's degree in marketing and          
advertising sciences from the Stedelijk Instituut in Brussels, Belgium and      
graduated from Antwerp Atheneum, Belgium (a three-year course), having studied  
business English and business German. Mr. Janssens has not served as a director 
for any other reporting companies.                                              

TAMER MUFTIZADE, DIRECTOR                                                       

      Mr. Muftizade has been a director since July 2004. He is a fellow of
the Institute of Chartered Accountants in England and Wales, with more than 25  
years of audit and finance experience in industry and with large public         
accounting firms, with specific focus in the areas of manufacturing, banking and
investment, oil and gas, and construction. From September 1997 through October  
2002, he was a director of ASNA Holdings Ltd. in Istanbul, Turkey. In October   
2002, he became a director of Crystalix Imaging Limited, our subsidiary in      
Dublin, Ireland. Mr. Muftizade received a bachelor of arts degree from the      
School of Business Studies, London Guildhall University in 1974, became an      
associate member of the Institute of Chartered Accountants in England and Wales 
in 1977, a fellow in 1983, and has held the Institute's public practicing       
certificate since 1985.                                                         

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JOHN S. WOODWARD, DIRECTOR                                                      

   Mr. Woodward became a director in February 2003 and served as our
president from April 2003 to July 2004. Mr. Woodward is a semi-retired estate   
planning attorney, and has been licensed in California since 1980. He joined    
Crystalix USA in the spring of 2002 as a partner in one of the company-owned    
locations at the Forum Shops at Caesars Palace in Las Vegas, Nevada. Mr.        
Woodward received a degree in psychology from the University of Southern        
California and his law degree from Southwestern School of Law. He participates  
on boards of many foundations and charitable organizations and consults to a    
limited number of clients.                                                      

EXECUTIVE COMPENSATION

    The following table sets forth information the remuneration of our
chief executive officers and our four most highly compensated executive officers
who earned in excess of $100,000 per annum during any part of our last three    
fiscal years:                                                                   

                                                        [Enlarge/Download Table]
                           SUMMARY COMPENSATION TABLE                                                                    
-------------------------------------------------------------------------------------------------------------------------

                                                                             LONG TERM COMPENSATION                      
                                                                      ------------------------------------               
                                ANNUAL COMPENSATION                            AWARDS             PAYOUTS                
                   ------------------------------------------------------------------------------------                  
                                                           OTHER     RESTRICTED   SECURITIES                             
    NAME AND                                              ANNUAL        STOCK     UNDERLYING      LTIP      ALL OTHER    
    PRINCIPAL      FISCAL                                COMPENSA-     AWARD(S)     OPTIONS/      PAYOUTS   COMPENSA-    
    POSITION        YEAR    SALARY ($)       BONUS ($)    TION($)         ($)       SARS (#)        ($)      TION ($)    
-------------------------------------------------------------------------------------------------------------------------
                                                                                                                         
 Kevin T. Ryan      2004        -0-            -0-          -0-          -0-          -0-          -0-          -0-      
    (1)<F1>                                                                                                              
-------------------------------------------------------------------------------------------------------------------------
     John S.        2004        -0-            -0-          -0-          -0-          -0-          -0-          -0-      
    Woodward,       2003    170,000 (3)<F3>    -0-          -0-          -0-          -0-          -0-          -0-      
    President                                                                                                            
    (2)<F2>                                                                                                              
-------------------------------------------------------------------------------------------------------------------------
 Rainer Eissing,    2003      189,450          -0-          -0-          -0-          -0-          -0-        -0-(4)<F4> 
      Chief         2002      226,000          -0-          -0-          -0-        800,000        -0-        -0-(4)<F4> 
   Technol-                                                                                                              
  ogy Officer                                                                                                            
 (5)<F5> (6)<F6>                                                                                                         
-------------------------------------------------------------------------------------------------------------------------
Armin Van Damme,    2003      78,170           -0-          -0-          -0-          -0-          -0-        232,700    
  President         2002      218,584          -0-          -0-          -0-        800,000        -0-        -0-(4)<F4> 
 (6)<F6> (7)<F7>                                                                                                         
-------------------------------------------------------------------------------------------------------------------------
 Othmar Van Dam,    2003      95,637           -0-          -0-          -0-          -0-          -0-        205,482    
 Executive Vice     2002      199,885          -0-          -0-          -0-        800,000        -0-        -0-(4)<F4> 
   President                                                                                                             
 (6)<F6> (7)<F7>                                                                                                         
-------------------------------------------------------------------------------------------------------------------------
 Gary R. Moore,     2002        -0-            -0-          -0-          -0-          -0-          -0-          -0-      
   President                                                                                                             
   (8)<F8>                                                                                                               
-------------------------------------------------------------------------------------------------------------------------
---------------                                                                                                          
<FN>                                                                                                                     
(1)<F1>  Mr. Ryan became our president and chief executive officer in July 2004.                                         
(2)<F2>  Mr. Woodward was our president from April 2003 to July 2004.                                                    
(3)<F3>  We issued Mr. Woodward 340,000 shares of common stock valued at                                                 
         $170,000 for his services.                                                                                      
(4)<F4>  Does not include the value of a car furnished by us for use by Rainer                                           
         Eissing, Armin Van Damme, and Othmar Van Dam.                                                                   
(5)<F5>  Includes amounts paid to Mr. Eissing through his company. See "Certain                                          
         Relationships and Related Transactions."                                                                        
(6)<F6>  Such officers commenced their employment with us on October 4, 2002.                                            
         The compensation shown includes that paid by Crystalix USA Group in                                             
         2002.                                                                                                           
(7)<F7>  Such officers resigned in February 2003.                                                                        
(8)<F8>  Mr. Moore was the President from September 1999 to October 2002.                                                
</FN>                                                                                                                    

  Stock options granted to Armin Van Damme and Othmar Van Dam were
relinquished in 2003. Stock options granted to Rainer Eissing were cancelled in 
2004. There were no stock options granted in 2003 and no options are outstanding
at December 31, 2004.                                                           

COMPENSATION OF DIRECTORS                                                       

    Directors do not receive compensation but are reimbursed for their
expenses for each meeting of the board that they attend.                        

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STOCK OPTION PLANS                                                              

         We do not have any stock option plans at this time, but plan to adopt a
plan for our employees in the near future.                                      

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table provides certain information as to our officers and
directors individually and as a group, and the holders of more than 5% of our   
common stock, as of December 31, 2004. Except as otherwise indicated, the       
persons named in the table have sole voting and investing power with respect to 
all shares of stock owned by them.                                              

                                                        [Enlarge/Download Table]
                         AMOUNT OF BENEFICIAL OWNERSHIP                                                               

                                                                                   TOTAL ASSUMING                     
    NAME AND ADDRESS OF                                     CLASS A PREFERRED      CONVERSION OF         PERCENT      
    BENEFICIAL OWNER (1)<F1>        COMMON STOCK                   STOCK          PREFERRED STOCK     OF CLASS (2)<F2>
                                                                                                                      

Kevin Ryan                        29,633,401(3)<F3>(4)<F4>     3,637,500 (3)<F3>   66,008,401 (3)<F3>     72.0%       
3950 E. Patrick Lane                                                                                                  
Suite 101                                                                                                             
Las Vegas, NV 89120                                                                                                   

Rainer Eissing                       5,825,000                    962,100            15,446,000           20.1%       

John S. Woodward                   4,283,175 (4)<F4>              800,000            12,283,175           15.3%       

CMKXTREME.COM                      7,040,743 (4)<F4>                 0               7,040,743            8.4%        
136 Arbor Way                                                                                                         
Henderson, NV  89074                                                                                                  

Marc Janssens                        2,796,000                    110,000            3,896,000            5.1%        

Oswaldus Van Dam                     1,631,000                    200,000            3,631,000            4.7%        

Robert McDermott                         0                        100,000            1,000,000            1.3%        

Tamer Muftizade                       428,572                     40,000              828,572             1.1%        

Doug Lee                              175,000                     12,500              300,000             0.4%        

Patty Hill                               0                        10,000              100,000             0.1%        

John Lais                                0                           0                   0                 --         

All officers and directors         33,520,148 (4)<F4>            3,800,000           71,520,148           75.4%       
as a group (10 persons)                                                                                               
<FN>                                                                                                                  
(1)<F1>  To our knowledge, except as set forth in the footnotes to this table                                         
         and subject to applicable community property laws, each person named in                                      
         the table has sole voting and investment power with respect to the                                           
         shares set forth opposite such person's name. Except as otherwise                                            
         indicated, the address of each person beneficially owning more than 5%                                       
         of our common stock is c/o Crystalix Group International, Inc., 5275                                         
         South Arville, Suite B-116, Las Vegas, Nevada 89118.                                                         

(2)<F2>  Percentages are based on 37,632,192 shares of common stock outstanding                                       
         and 3,920,000 shares of Class A preferred stock outstanding before the                                       
         offering, for a fully diluted total of 76,832,192 shares. If a person                                        
         listed on this table has the right to obtain additional shares of                                            
         common stock within sixty (60) days from December 31, 2004, the                                              
         additional shares are deemed to be outstanding for the purpose of                                            
         computing the                                                                                                

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         percentage of class owned by such person, but are not deemed to be                                           
         outstanding for the purpose of computing the percentage of any other                                         
         person.                                                                                                      

(3)<F3>  Includes shares owned by Rainer Eissing, John W. Woodward, Marc                                              
         Janssens, and Oswaldus Van Dam, since they have granted Ryan Capital                                         
         Management, Inc. an irrevocable proxy to vote their shares. Ryan                                             
         Capital Management, Inc. is owned and controlled by Kevin Ryan. The                                          
         proxy expires upon the later of (i) December 1, 2004, or (ii) 90 days                                        
         after repayment in full of all amounts owed by us to the bridge lender,                                      
         Kevin Ryan (or assignee), and John S. Woodward (or assignee). Also                                           
         includes 1,875,000 shares issuable upon exercise of a warrant.                                               

(4)<F4>  Includes shares issuable upon payment of principal and interest on                                           
         notes through March 1, 2005 and exercise of warrants, assuming that no                                       
         payments of interest have been made on the notes.                                                            

</FN>                                                                                                                 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Other than as disclosed below, none of our present directors, officers
or principal shareholders, nor any family member of the foregoing, nor, to the  
best of our information and belief, any of our former directors, senior officers
or principal shareholders, nor any family member of such former directors,      
officers or principal shareholders, has or had any material interest, direct or 
indirect, in any transaction, or in any proposed transaction which has          
materially affected or will materially affect us.                               

    RAINER EISSING. During the years ended December 31, 2003 and 2002,
purchases of equipment from Entwicklungen Werbetechnik Software, a company      
wholly-owned by Rainer Eissing, amounted to approximately $19,046 and           
$2,160,000, respectively. Included in accounts payable and accrued expenses at  
December 31, 2003 and 2002 are approximately $0 and $115,000 due to EWS,        
respectively. This related party vendor does not have any formal agreement.     
Management believes that these transactions are negotiated at arm's length.     
During the year ended December 31, 2003 and 2002, purchases of technology       
consulting services from EWS amounted to approximately $0 and $191,000,         
respectively. In 2003, Mr. Eissing was paid $189,450 through his company,       
Innovative Motions. We have included these amounts in the Summary Compensation  
Table in "Executive Compensation" above.                                        

     JOHN S. WOODWARD. On December 20, 2002, we borrowed $1,500,000 from
John S. Woodward. At the time of the loan, Mr. Woodward was not an officer or   
director of our company. He became a director in February 2003. The note accrued
interest at the annual rate of 7-1/8% but provided for an increase in order to  
maintain a 4% margin above Mr. Woodward's borrowing rate. Interest was payable  
on the first day of each month, beginning January 1, 2003. The note was         
originally due June 30, 2003 and secured by all of the assets and our ownership 
interest in Lazer-Tek Designs, Ltd. Mr. Woodward agreed to extend his note to   
January 20, 2004 in exchange for guaranteed interest. We issued a total of      
1,000,000 shares of our common stock to Mr. Woodward, 660,000 of which were for 
the extension of the repayment terms and 340,000 of which were for his services.

  On July 21, 2004, we issued a convertible promissory note to Mr.
Woodward in the amount of $1,824,000, which represents principal due on a       
previously issued note payable in the amount of $1,343,722 plus accrued interest
in the amount of $480,279. This note bears interest at 10% per annum and calls  
for monthly interest payments from August 1, 2004 to December 1, 2004. Beginning
on January 1, 2005, this note requires monthly principal payments of $50,405    
plus accrued interest with any unpaid principal and interest due on July 1,     
2007. The monthly principal and interest payments can be paid with shares of our
common stock at the option of the holder. The conversion price is the lesser of 
the average closing price of our common stock five business days immediately    
prior to the conversion notice or $0.08. We have agreed to register the shares  
issuable upon conversion of this note.                                          

         ARMIN VAN DAMME. In April 2003, we entered into an agreement with Armin
Van Damme, a former officer and director and founder of Crystalix USA Group, to 
transfer the four company-owned retail locations in Las Vegas for the surrender 
of all of his Class A preferred stock and common stock remaining after permitted
transfers of the common stock. As a result of this transaction, we have canceled
5,126,000 shares of common stock and 1,540,000 shares of Class A preferred stock
owned by Mr. Van Damme and removed the net book value of the assets related to  
the four company-owned retail location in the amount of $237,826. In addition,  
Mr. Van Damme resigned as an employee of the company and agreed to assume       
liability of the lease of his automobile, which had                             

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been leased by the company, and liability of the lease of office space at 5720  
South Arville, Suite 114, Las Vegas, Nevada. The transfer was effective as of   
April 28, 2003. No gain or loss was recognized from this related party          
transaction. Mr. Van Damme was to pay us a license fee of 5% of gross sales     
generated from the transferred locations and agreed to purchase all supplies and
equipment needed for the operation of the locations from us at its cost plus    
10%. The agreement provided for termination by us upon 30 days' prior written   
notice in the event of Mr. Van Damme's failure to make payments or submit       
reports on a timely basis.                                                      

         As a result of a settlement agreement with us, which was made effective
in November 2003, this agreement was declared null and void. Under the terms of 
the settlement, Mr. Van Damme is to keep the locations and the equipment at the 
locations. However, it is contemplated that he will replace the equipment and   
arrange for his own licensing of the proprietary technology within six months.  
While our equipment is in his possession, he is to pay a flat licensing and     
royalty fee of $500 per month per laser. Armin Van Damme is the brother of      
Oswaldus Van Dam, one of our current officers and directors.                    

        OTHMAR VAN DAM. In April 2003, we entered into an employment agreement
with Othmar Van Dam, a former officer and director and founder of Crystalix USA 
Group. He is the brother of Oswaldus Van Dam, one of our current officers and   
directors. Mr. Van Dam was to serve as our head of Marketing and Development of 
Affiliate Sales Locations for a three-year term beginning April 1, 2003 at a    
base salary of $120,000. In addition, Mr. Van Dam was to receive a performance  
bonus equal to 5% of the gross revenues generated by the Company through its    
affiliate locations. In consideration for the employment agreement, Mr. Van Dam 
surrendered all of his Class A preferred stock and agreed to reduce his         
ownership of common stock to 4.9%. Upon Mr. Van Dam's resignation, his          
employment was terminated in May 2003. As a result of a settlement agreement    
with us, which was made effective in November 2003, Othmar Van Dam relinquished 
all of his stock in the company.                                                

         KEVIN RYAN. In connection with the Lazer-Tek acquisition, we owed Kevin
Ryan, a former creditor of Lazer-Tek, the principal amount of $1,252,680,       
consisting of $852,680, which was due April 1, 2003, and $400,000 owed to Kevin 
Ryan in quarterly payments beginning April 1, 2003 for consulting fees. Neither 
of these obligations was paid. Mr. Ryan obtained a Writ of Possession entitling 
him to all of our assets as of June 2, 2003.                                    

         We entered into a consulting agreement with McCary & Rood dated May 28,
2003 under which Kevin Ryan provided advice to the President and CEO of the     
company pertaining to all matters including acquisitions, management, marketing,
financial controls and other financial matters; settlement of disputes with     
creditors and former officers and directors; relations with affiliates; and     
other matters as may be requested by us. As compensation for the satisfactory   
performance by Mr. Ryan under the agreement, we agreed to pay a fee of $20,000  
per month that Mr. Ryan performed as determined by us. This agreement was       
terminated effective July 31, 2004.                                             

      In addition to the two obligations described above, through December
31, 2003, Kevin Ryan had advanced a total of $823,675 to us under a revolving   
line of credit agreement dated December 1, 2003. Interest on the outstanding    
balance accrued at 10% per annum and was payable monthly. On December 1, 2003,  
we entered into a Secured Promissory Note with Kevin Ryan in the amount of      
$1,010,000. Interest accrued on the note at 10% per annum and was payable       
monthly. All principal and unpaid accrued interest under the Secured Promissory 
Note is due and payable no later than December 1, 2004.                         

       In December 2003, Rainer Eissing, Marc Janssens, and Oswaldus Van Dam
agreed to transfer a portion of their Class A preferred stock to Kevin Ryan,    
John S. Woodward, and other individuals in consideration of the continuing      
financial support and involvement of Messrs. Ryan and Woodward and these other  
individuals. The shares of Messrs. Eissing, Janssens, and Van Dam were          
reallocated as of July 21, 2004.                                                

   In addition, Rainer Eissing, John S. Woodward, Marc Janssens, and
Oswaldus Van Dam granted Ryan Capital Management, Inc. an irrevocable proxy to  
vote their shares. Ryan Capital Management, Inc. is owned and controlled by     
Kevin Ryan. The proxy expires upon the later of (i) December 1, 2004, or (ii) 90
days after repayment in full of all amounts owed by us to the bridge lender,    
Kevin Ryan (or assignee), and John S. Woodward (or assignee).                   

       On July 21, 2004, we issued a convertible promissory note to Mr. Ryan
in the amount of $5,396,764, which represents (a) principal due on two          
previously issued notes payable in the amounts of $852,680 and $1,010,000, (b)  

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principal due under a revolving credit agreement in the amount of $1,766,500,   
(c) principal due under an additional note payable in the amount of $1,500,000  
and (d) accrued interest on the above mention obligations in the amount of      
$267,584. This note bears interest at 10% per annum and calls for monthly       
principal payments from August 1, 2004 to December 1, 2004 of $45,000. On the   
last day of the month beginning on August 31, 2004 through November 30, 2004,   
the accrued interest will be added to the principal amount. Beginning on January
1, 2005, this note requires monthly principal payments of $174,584 with any     
unpaid principal and interest due on July 1, 2007. The monthly principal and    
interest payments can be paid with shares of our common stock at the option of  
the holder. The conversion price is the lesser of the average closing price of  
our common stock five business days immediately prior to the conversion notice  
or $0.08. In addition, we granted to Mr. Ryan a warrant to purchase 1,875,000   
shares of our common stock. The exercise price is lesser of the average closing 
price of our common stock five business days immediately prior to the notice of 
exercise or $0.08. We have agreed to register the shares issuable upon          
conversion of this note and exercise of the warrant.                            

On July 21, 2004, we issued a promissory note to Ryan Capital 
Management, Inc. (this company is controlled by Kevin Ryan) in the amount of    
$452,137, which represents principal due on a previously issued note payable in 
the amount of $400,000 plus accrued interest in the amount of $52,137. This note
bears interest at 10% per annum and calls for monthly interest payments from    
August 1, 2004 to December 1, 2004. Beginning on January 1, 2005, this note     
requires monthly principal payments of $37,902 plus accrued interest with any   
unpaid principal and interest due on December 1, 2005.                          

       On August 1, 2004, we issued a promissory note to McCary & Rood (this
company is controlled by Kevin Ryan) in the amount of $280,000, which represents
past due consulting fees under a consulting agreement dated May 28, 2003. This  
note calls for monthly payments beginning August 1, 2004 of $30,000 with any    
unpaid principal due on May 1, 2005.                                            

        On August 1, 2004, we issued a promissory note to McCary & Rood in the
amount of $214,037, which represents past due reimbursable expenses under a     
consulting agreement dated May 28, 2003. This note calls for monthly payments   
beginning August 1, 2004 of $30,000 with any unpaid principal due on March 1,   
2005.                                                                           

         FUTURE TRANSACTIONS. All future affiliated transactions will be made or
entered into on terms that are no less favorable to us than those that can be   
obtained from any unaffiliated third party. A majority of the independent,      
disinterested members of our board of directors will approve future affiliated  
transactions. We believe that of the transactions described above have been on  
terms as favorable to us as could have been obtained from unaffiliated third    
parties as a result of arm's length negotiations.                               

      CONFLICTS OF INTEREST. In accordance with the laws applicable to us,
our directors are required to act honestly and in good faith with a view to our 
best interests. In the event that a conflict of interest arises at a meeting of 
the board of directors, a director who has such a conflict will disclose the    
nature and extent of his interest to the meeting and abstain from voting for or 
against the approval of the matter in which he has a conflict.                  

 DESCRIPTION OF SECURITIES

GENERAL                                                                         

         We are authorized to issue of up to 300,000,000 shares of common stock,
$0.001 par value per share, 10,000,000 shares of Class A preferred stock, $0.001
par value per share, and 5,000,000 shares of Class B preferred stock, $0.001 par
value per share. The following summary does not purport to be complete. You may 
wish to refer to our Articles of Incorporation and Bylaws, copies of which are  
available for inspection.                                                       

COMMON STOCK                                                                    

       As of December 31, 2004, there were 37,632,192 shares of common stock
issued and outstanding. The board of directors may issue additional shares of   
common stock without the consent of the common stockholders.                    

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      VOTING RIGHTS. Each outstanding share of common stock is entitled to
one vote. The common stockholders do not have cumulative voting rights, which   
means that the holders of more than 50% of such outstanding shares voting for   
the election of directors can elect all of the directors to be elected, if they 
so choose.                                                                      

        NO PREEMPTIVE RIGHTS.  Holders of common stock are not entitled to any
preemptive rights.                                                              

      DIVIDENDS AND DISTRIBUTIONS. Holders of common stock are entitled to
receive such dividends as may be declared by the directors out of funds legally 
available for dividends and to share pro rata in any distributions to holders of
common stock upon liquidation or otherwise. However, we have never paid cash    
dividends on our common stock, and do not expect to pay such dividends in the   
foreseeable future.                                                             

PREFERRED STOCK                                                                 

     As of the date of this prospectus, only 7,000,000 shares of Class A
preferred stock have been issued, and 3,920,000 shares are presently            
outstanding.                                                                    

         The Class A shares are convertible into 10 common shares for each share
of preferred stock and each share of preferred stock is equivalent to the vote  
of 10 common shares.                                                            

    The rights and preferences of the Class B preferred stock is to be
established by the board of directors prior to the first issuance with authority
to do so being expressly vested in the board in our Articles of Incorporation.  

TRANSFER AGENT                                                                  

        Interwest Transfer Company, 1981 East 4800 South, Suite 100, Salt Lake
City, Utah 84117-5126, serves as the transfer agent and registrar for our common
stock.                                                                          

SELLING STOCKHOLDERS

      This prospectus relates to the resale of 48,889,549 shares of common
stock issuable upon conversion of or as interest on the $9,220,764 of           
convertible notes and upon exercise of warrants issued in July and September    
2004. We are registering the shares in order to permit the selling shareholders 
to offer the shares of common stock for resale from time to time. Except for the
ownership of the convertible notes and the warrants, the selling shareholders   
have not had any material relationship with us within the past three years.     

      The table below lists the selling shareholders and other information
regarding the beneficial ownership of the common stock by the selling           
shareholders. The second column lists the selling shareholders' beneficial      
ownership as of September 30, 2005. This amount includes shares issuable upon   
payment of principal and interest on notes through September 30, 2005 and       
exercise of warrants, assuming that no payments of interest have been made on   
the notes. The third column lists the shares of common stock being offered by   
this prospectus by the selling shareholders.                                    

        This prospectus generally covers the resale of at least that number of
shares of common stock equal to the sum of (1) the number of shares of common   
stock to cover principal and interest on the notes through September 30, 2005,  
and (2) the number of shares of common stock issuable upon exercise of the      
warrants. The fourth column assumes the sale of all of the shares offered by the
selling shareholders pursuant to this prospectus.                               

         Under the terms of the convertible notes, the selling shareholders only
convert that portion of the convertible notes equal to (1) the payment of       
principal, interest, and any other amounts payable when due, (2) any prepayment 
tendered by us, (3) the entire amount of the notes upon a sale of 51% or more of
our outstanding common stock, or (4) a portion not exceeding $1,000,000 if an   
event of default occurs. The number of shares in the second column does not     
reflect the $1,000,000 limitation. The selling shareholders may sell all, some  
or none of their shares in this offering. See "Plan of Distribution."           

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                                                        [Enlarge/Download Table]

                                                                                        OWNERSHIP AFTER OFFERING         
                                                   NUMBER OF                                                             
                                                    SHARES                    SHARES                                     
                                                 BENEFICIALLY              REGISTERED FOR      NUMBER OF                 
    NAME OF SELLING SHAREHOLDER                  OWNED (1)<F1>(2)<F2>        RESALE (2)<F2>     SHARES            PERCENT
                                                                                                                         
Kevin T. Ryan (3)<F3>                              79,920,025                28,705,025        51,215,000 (4)<F4>  66.7% 
John S. Woodward (3)<F3>                           17,020,256                 8,020,256         9,000,000          11.7% 
CMKXTREME.COM                                      12,164,268                12,164,268                 0           0%   
------------------                                                                                                       
<FN>                                                                                                                     
(1)<F1>  The number of shares of common stock considered beneficially owned by                                           
         each selling shareholder equals that number of shares of our common                                             
         stock shares issuable upon payment of principal and interest on notes                                           
         through September 30, 2005 and exercise of warrants, assuming that no                                           
         payments of interest have been made on the notes, plus shares of common                                         
         stock and preferred stock presently owned.                                                                      

(2)<F2>  The selling shareholders may sell up to 48,889,549 shares of our common                                         
         stock under this document. As described above, they may convert only                                            
         that portion of the convertible notes equal to (1) the payment of                                               
         principal, interest, and any other amounts payable when due, (2) any                                            
         prepayment tendered by us, (3) the entire amount of the notes upon a                                            
         sale of 51% or more of our outstanding common stock, or (4) a portion                                           
         not exceeding $1,000,000 if an event of default occurs.                                                         

(3)<F3>  Kevin Ryan and John Woodward are officers and/or directors of our                                               
         company.                                                                                                        

(4)<F4>  Includes shares owned by Rainer Eissing, John W. Woodward, Marc                                                 
         Janssens, and Oswaldus Van Dam, since they have granted Ryan Capital                                            
         Management, Inc. an irrevocable proxy to vote their shares. Ryan                                                
         Capital Management, Inc. is owned and controlled by Kevin Ryan. The                                             
         proxy expires upon the later of (i) December 1, 2004, or (ii) 90 days                                           
         after repayment in full of all amounts owed by us to the bridge lender,                                         
         Kevin Ryan (or assignee), and John S. Woodward (or assignee). Also                                              
         includes 1,875,000 shares issuable upon exercise of a warrant.                                                  
</FN>                                                                                                                    

PLAN OF DISTRIBUTION

        We are registering the shares of common stock issuable upon conversion
of the convertible notes and upon exercise of the warrants to permit the resale 
of the shares of common stock by the holders of the convertible notes and the   
warrants from time to time after the date of this prospectus. We will not       
receive any of the proceeds from the sale by the selling shareholders of the    
shares of common stock. We will bear all fees and expenses incident to our      
obligation to register the shares of common stock.                              

        The selling shareholders may sell all or a portion of the common stock
beneficially owned by them and offered hereby from time to time directly or     
through one or more underwriters, broker-dealers or agents. If the common stock 
is sold through underwriters or broker-dealers, the selling shareholders will be
responsible for underwriting discounts or commissions or agent's commissions.   
The common stock may be sold in one or more transactions at fixed prices, at    
prevailing market prices at the time of the sale, at varying prices determined  
at the time of sale, or at negotiated prices. These sales may be effected in    
transactions, which may involve crosses or block transactions,                  

         (1)   on any national securities exchange or quotation service on which
         the securities may be listed or quoted at the time of sale,
(2)   in the over-the-counter market,                         
       (3)   in transactions otherwise than on these exchanges or systems or
in the over-the-counter market,                   
       (4)   through the writing of options, whether such options are listed
on an options exchange or otherwise, or           
(5)   through the settlement of short sales.                  

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        If the selling shareholders effect such transactions by selling shares
of common stock to or through underwriters, broker-dealers or agents, such      
underwriters, brokers-dealers or agents may receive commissions in the form of  
discounts, concessions or commissions from the selling shareholders or          
commissions from purchasers of the shares of common stock for whom they may act 
as agent or to whom they may sell as principal (which discounts, concessions or 
commissions as to particular underwriters, brokers-dealers or agents may be in  
excess of those customary in the types of transactions involved). In connection 
with sales of the common stock or otherwise, the selling shareholders may enter 
into hedging transactions with broker-dealers, which may in turn engage in short
sales of the common stock in the course of hedging in positions they assume. The
selling shareholders may also sell shares of common stock short and deliver     
shares of common stock covered by this prospectus to close out short positions, 
provided that the short sale is made after the registration statement is        
declared effective and a copy of this prospectus is delivered in connection with
the short sale. The selling shareholders may also loan or pledge shares of      
common stock to broker-dealers that in turn may sell such shares.               

     The selling shareholders may pledge or grant a security interest in
some or all of the convertible notes, warrants, or shares of common stock owned 
by them and, if they default in the performance of their secured obligations,   
the pledgees or secured parties may offer and sell the shares of common stock   
from time to time pursuant to the prospectus. The selling shareholders also may 
transfer or donate the shares of common stock in other circumstances, in which  
case the transferees, donees or other successors in interest will be the selling
beneficial owners for purposes of the prospectus.                               

     The selling shareholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be "underwriters"   
within the meaning of the Securities Act, and any commissions paid, or any      
discounts or concessions allowed to any such broker-dealer may be deemed to be  
underwriting commissions or discounts under the Securities Act. At the time a   
particular offering of the shares of common stock is made, a prospectus         
supplement, if required, will be distributed which will set forth the aggregate 
amount of shares of common stock being offered and the terms of the offering,   
including the name or names of any broker-dealers or agents, any discounts,     
commissions and other terms constituting compensation from the selling          
shareholders and any discounts, commissions or concessions allowed or reallowed 
or paid to broker-dealers.                                                      

      Under the securities laws of some states, the shares of common stock
may be sold in such states only through registered or licensed brokers or       
dealers. In addition, in some states the shares of common stock may not be sold 
unless such shares have been registered or qualified for sale in such state or  
an exemption from registration or qualification is available and is complied    
with.                                                                           

         There can be no assurance that any selling shareholder will sell any or
all of the shares of common stock registered pursuant to the registration       
statement of which this prospectus forms a part.                                

     The selling shareholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and   
the rules and regulations thereunder, including, without limitation, Regulation 
M of the Exchange Act, which may limit the timing of purchases and sales of any 
of the shares of common stock by the selling shareholders and any other         
participating person. Regulation M may also restrict the ability of any person  
engaged in the distribution of the shares of common stock to engage in          
market-making activities with respect to the shares of common stock. All of the 
foregoing may affect the marketability of the shares of common stock and the    
ability of any person or entity to engage in market-making activities with      
respect to the shares of common stock.                                          

      We will pay all expenses of the registration of the shares of common
stock pursuant to the registration rights agreement estimated to be $25,000 in  
total, including, without limitation, Commission filing fees and expenses of    
compliance with state securities or "blue sky" laws; provided, however, that the
selling shareholders will pay all underwriting discounts and selling            
commissions, if any. In connection with sales made pursuant to this prospectus, 
we will indemnify the selling shareholders against liabilities, including some  
liabilities under the Securities Act, or the selling shareholders will be       
entitled to contribution, in accordance with the registration rights agreement. 
We will be indemnified by the selling shareholders against civil liabilities,   
including liabilities under the Securities Act that may arise from any written  
information furnished to us by the selling shareholders for use in this         
prospectus, or we will be entitled to contribution, in accordance with the      
registration rights agreement.                                                  

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     Once sold under the registration statement of which this prospectus
forms a part, the shares of common stock will be freely tradable in the hands of
persons other than our affiliates.                                              

 LEGAL MATTERS

     Dill  Dill Carr Stonbraker & Hutchings, P.C., Denver, Colorado, has
given an opinion on the validity of the securities.                             

 EXPERTS

         We have included the financial statements of the company as of December
31, 2003, and for the years ended December 31, 2003 and 2002, in reliance upon  
the report of Stonefield Josephson, Inc., independent certified public          
accountants, whose report has been included in this prospectus given upon the   
authority of that firm as experts in accounting and auditing.                   

ADDITIONAL INFORMATION

  We have been subject to the reporting requirements under federal
securities laws since May 2000. We have filed with the SEC a registration       
statement on Form SB-2 and amendments to the registration statement with respect
to the securities offered through this prospectus. This prospectus does not     
contain all of the information set forth in the registration statement and the  
exhibits and schedules that are part of the registration statement. For further 
information about the securities and us, you should review the registration     
statement and the exhibits and schedules. Statements made in this prospectus    
regarding the contents of any contract or document filed as an exhibit to the   
registration statement are not necessarily complete. You should review the copy 
of such contract or document so filed.                                          

         You can inspect the registration statement, as well as the exhibits and
the schedules, filed with the SEC without charge, at the SEC's office at        
Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C. 20549. You can also     
obtain copies of these materials from the SEC's Public Reference Section at 450 
Fifth Street, NW, Washington, D.C. 20549, at prescribed rates. The SEC maintains
a web site on the Internet that contains reports, proxy and information         
statements, and other information regarding issuers that file electronically    
with the SEC at http://www.sec.gov.                                             

 REPORTS TO STOCKHOLDERS

        We are subject to the reporting requirements of the federal securities
laws, and are required to file periodic reports, proxy statements, and other    
information with the SEC. We will furnish our shareholders with annual reports  
containing audited financial statements certified by independent public         
accountants following the end of each fiscal year, proxy statements, and        
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year following the end of such fiscal quarter.          

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 INDEX TO FINANCIAL STATEMENTS

Unaudited Interim Consolidated Financial Statements - Nine Months Ended         
September 30, 2004 and 2003                                                     

Consolidated Balance Sheet                                            
        September 30, 2004 (Unaudited).....................................F-1

Consolidated Statements of Operations (Unaudited)                     
        Nine Months Ended September 30, 2004 and 2003......................F-2

Consolidated Statements of Cash Flows (Unaudited)                     
        Nine Months Ended September 30, 2004 and 2003......................F-3

    Notes to Consolidated Financial Statements (Unaudited).................F-4

Financial Statements - December 31, 2003                                        

     Report of Independent Registered Public Accounting Firm ...............FF-1

Consolidated Balance Sheet                                            
         December 31, 2003..................................................FF-2

Consolidated Statements of Operations                                 
         Years Ended December 31, 2003 and 2002.............................FF-3

     Consolidated Statements of Comprehensive Loss..........................FF-4

Consolidated Statement of Stockholders' Deficit                       
         Years ended December 31, 2003 and 2002.............................FF-5

Consolidated Statements of Cash Flows                                 
         Years Ended December 31, 2003 and 2002.............................FF-6

     Notes to Consolidated Financial Statements.............................FF-7

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

                                                               SEPTEMBER
                                                              30, 2004
                                                               -----------
                                                               (unaudited)
ASSETS

CURRENT ASSETS                                                                  
Cash and cash equivalents                                     $  1,980,511
Accounts receivable, net of allowance of $312,000                  320,032
Inventory                                                          679,485
Other current assets                                                96,306
                                                               -----------
TOTAL CURRENT ASSETS                                                3,076,334   
                                                               -----------

PROPERTY AND EQUIPMENT, net (including equipment                                
acquired from related party of $2,300,000 in 2002)               1,855,315

INTANGIBLE ASSETS                                                               
Licenses and related costs, net of accumulated                            
  amortization of $431,965                                       1,457,936
Capitalized software costs, net of accumulated                            
  amortization of $183,230                                         143,260
Website development costs, net of accumulated                             
  amortization of $83,425                                           66,908
Customer lists and relationships, net of accumulated                      
  amortization of $39,375                                           73,125
Artwork library, net of accumulated amortization of                       
  $522,664                                                         373,331
Tradename and trademark, net of accumulated                               
  amortization of $5,502                                            10,217
                                                               -----------
                                                                 2,124,777
                                                               -----------

OTHER ASSETS                                                            6,368   

                                                               -----------
TOTAL ASSETS                                                     $  7,062,794   
                                                               ===========

 LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES                                                             
Accounts payable and accrued expenses                         $  1,150,338
Customer deposits                                                   23,666
Notes payable (including $2,089,593 to related parties),                  
  net of discounts of $905,463                                   2,700,709
Current portion of deferred revenue                              1,140,688

                                                               -----------
TOTAL CURRENT LIABILITIES                                           5,015,401   
                                                               -----------

NOTES PAYABLE, net of current portion (including $3,078,647 to                  
related parties),                                                               
net of discounts of $2,093,235                                   4,467,531
DEFERRED REVENUE, less current portion                              1,361,591   

                                                               -----------
TOTAL LIABILITIES                                                  10,844,523   
                                                               -----------

COMMITMENTS AND CONTINGENCIES                                             -     

STOCKHOLDERS' DEFICIT                                                           
Preferred stock - Class A, $0.001 par value;                              
10,000,000 shares authorized; 3,920,000 Class A                       
  shares issued and outstanding                                      3,920
Common stock; $0.001 par value; 300,000,000 shares                        
  authorized; 37,632,192 shares issued and outstanding              37,632
Additional paid-in capital                                      10,758,413
 Other comprehensive loss - foreign currency translation            (39,625)
 Accumulated deficit                                            (14,542,069)

                                                               -----------
TOTAL STOCKHOLDERS' DEFICIT                                        (3,781,729)  
                                                               -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                      $  7,062,794   
                                                               ===========

The accompanying notes are an integral part of these consolidated 
financial statements. 

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                THREE MONTHS ENDED              NINE MONTHS ENDED      
                                           -----------------------------  -----------------------------
                                             SEPTEMBER      SEPTEMBER       SEPTEMBER       SEPTEMBER  
                                             30, 2004        30, 2003        30, 2004       30, 2003   
                                           -------------  --------------  --------------  -------------
                                            (unaudited)    (unaudited)     (unaudited)     (unaudited) 
                                                                                                       
REVENUE                                                                                                
    Product sales                          $    831,453   $     826,470   $   2,436,359   $  3,431,309 
    Lease revenue                               271,309         342,082         852,801      1,128,063 
    Royalty revenue                              41,234         141,589          93,561        305,228 
                                           -------------  --------------  --------------  -------------
TOTAL REVENUE                                 1,143,996       1,310,141       3,382,721      4,864,600 
                                           -------------  --------------  --------------  -------------

COST OF REVENUE                                                                                        
    Product sales                               482,780         304,497       1,223,162      1,650,473 
    Lease revenue                                49,301          78,584         315,010        458,383 
    Royalty revenue                              20,000          38,777          54,157        144,881 
                                           -------------  --------------  --------------  -------------
TOTAL COST OF REVENUE                           552,081         421,858       1,592,329      2,253,737 
                                           -------------  --------------  --------------  -------------

                                           -------------  --------------  --------------  -------------
GROSS PROFIT                                    591,915         888,283       1,790,392      2,610,863 
                                           -------------  --------------  --------------  -------------

OPERATING EXPENSES                                                                                     
    Research and development                        -           165,536             -          216,554 
    Payroll and related benefits                485,895         564,699       1,407,327      1,829,790 
    General and administrative                1,685,957         950,454       3,427,429      5,047,470 
    Impairment expense                              -               -                              -   
                                           -------------  --------------  --------------  -------------
TOTAL OPERATING EXPENSES                      2,171,852       1,680,689       4,834,756      7,093,814 
                                           -------------  --------------  --------------  -------------

LOSS FROM OPERATIONS                         (1,579,937)       (792,406)     (3,044,364)    (4,482,951)
                                           -------------  --------------  --------------  -------------

OTHER INCOME (EXPENSES):                                                                               
    Interest income                                 -               -               -              -   
    Other expense, net                              -               338          24,472       (501,200)
    Interest expense                         (3,384,461)       (100,959)     (3,779,193)      (746,562)
                                           -------------  --------------  --------------  -------------
TOTAL OTHER INCOME (EXPENSE)                 (3,384,461)       (100,621)     (3,754,721)    (1,247,762)
                                           -------------  --------------  --------------  -------------

LOSS BEFORE PROVISION FOR INCOME TAXES       (4,964,398)       (893,027)     (6,799,085)    (5,730,713)

PROVISION FOR INCOME TAXES                                                                             
    Current                                         -               -               -         (550,000)
    Deferred                                        -               -               -          550,000 
                                           -------------  --------------  --------------  -------------

NET LOSS                                   $ (4,964,398)  $    (893,027)  $  (6,799,085)  $ (5,730,713)
                                           =============  ==============  ==============  =============

NET LOSS PER SHARE - BASIC AND DILUTED     $      (0.14)  $       (0.02)  $       (0.19)  $      (0.14)
                                           =============  ==============  ==============  =============

WEIGHTED AVERAGE COMMON EQUIVALENT                                                                     
    SHARES OUSTANDING - BASIC AND DILUTED    36,377,442      38,989,192      34,873,451     39,943,478 
                                           =============  ==============  ==============  =============

The accompanying notes are an integral part of these consolidated 
financial statements. 

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                    NINE MONTHS ENDED       
                                                                --------------------------  
                                                                  SEPTEMBER      SEPTEMBER  
                                                                  30, 2004       30, 2003   
                                                                ------------   ------------ 
                                                                 (unaudited)    (unaudited) 
                                                                                            

CASH FLOW FROM OPERATING ACTIVITIES:                                                        
  Net loss                                                      $ (6,799,085)  $ (5,730,713)

  Adjustment to reconcile net loss to net cash                                              
    used in operating activities                                                            
     Depreciation and amortization                                   832,145        976,354 
     Provision for doubtful accounts                                     -          159,000 
     Common stock and reallocation of Series A preferred stock                              
       issued for financing costs                                  2,747,011        528,000 
     Common stock and reallocation of Series A preferred stock                              
       issued for services                                           462,775      1,170,000 
     Amortization of debt discounts                                  188,814            -   
     Foreign currency translation adjustment                           2,686        (15,959)
     (Gain) loss on disposal of fixed assets                          (1,973)       123,652 
     Write off of deferred offering costs                                -          212,797 
     Write off of advances to Vitro Laser, Gmbh                          -          500,000 
  Changes in operating assets and liabilities:                                              
  (Increase) decrease in:                                                                   
    Accounts receivable                                              184,021        218,479 
    Inventory                                                         72,528        419,338 
    Other current assets                                             (72,192)       143,595 
    Deposits                                                           3,905        (12,743)
  Increase (decrease) in:                                                                   
    Accounts payable and accrued expenses                            683,280        510,030 
    Customer deposits                                                (57,022)       (67,057)
    Deferred revenue                                                (700,899)       455,605 
                                                                -------------  -------------
Net cash used in operating activities                             (2,454,006)      (409,622)
                                                                -------------  -------------

CASH FLOW FROM INVESTING ACTIVITIES:                                                        
  Advances to acquire Vitro Laser, Gmbh                                  -         (300,000)
  Payment to repurchase laser                                        (39,006)           -   
  Payments to acquire property and equipment                         (21,053)    (1,309,944)
                                                                -------------  -------------
Net cash used in investing activities                                (60,059)    (1,609,944)
                                                                -------------  -------------

CASH FLOW FROM FINANCING ACTIVITIES:                                                        
  Net advances from related party                                  2,442,825        833,922 
  Proceeds from issuance of notes payable                          2,000,000            -   
  Payments on notes payable                                           (3,600)       (11,015)
  Payments on notes payable - related parties                         (3,530)           -   
  Payments for deferred offering costs                                   -         (136,797)
  Proceeds from sale on common stock, including stock                                       
   subscription receivable                                               -          748,000 
                                                                -------------  -------------
Net cash provided by financing activities                          4,435,695      1,434,110 
                                                                -------------  -------------

NET INCREASE (DECREASE) IN CASH AND                                                         
  CASH EQUIVALENTS                                                 1,921,630       (585,456)

CASH AND CASH EQUIVALENTS, Beginning of period                        58,881        641,325 
                                                                -------------  -------------

CASH AND CASH EQUIVALENTS, End of period                        $  1,980,511   $     55,869 
                                                                =============  =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                           
  Interest Paid                                                 $        -     $    136,045 
                                                                =============  =============
  Income taxes paid                                             $        -     $        -   
                                                                =============  =============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND                                           
  FINANCING ACTIVITIES                                                                      
  Purchase of property and equipment for note payable           $        -     $    237,826 
                                                                =============  =============

The accompanying notes are an integral part of these consolidated 
financial statements. 

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION                                                  

The unaudited  consolidated financial statements have been prepared by Crystalix
Group International, Inc. (the "Company"), pursuant to the rules and regulations
of the Securities and Exchange  Commission.  The  information  furnished  herein
reflects  all  adjustments   (consisting  of  normal   recurring   accruals  and
adjustments)  which are,  in the  opinion  of  management,  necessary  to fairly
present the operating results for the respective  periods.  Certain  information
and  footnote  disclosures  normally  present in annual  consolidated  financial
statements prepared in accordance with accounting  principles generally accepted
in the United  States of America  have been  omitted  pursuant to such rules and
regulations.   These  consolidated   financial  statements  should  be  read  in
conjunction with the audited consolidated financial statements and footnotes for
the year ended December 31, 2003 included in the Company's Annual Report on Form
10-KSB.  The  results  of the  nine  months  ended  September  30,  2004 are not
necessarily  indicative  of the results to be expected  for the full year ending
December 31, 2004.                                                              

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America,  which contemplate  continuation of the Company as a going concern. The
Company  incurred a net loss for the nine  months  ended  September  30, 2004 of
$6,799,085, used cash for operating activities of $2,454,006 for the nine months
ended September 30, 2004 and at September 30, 2004 had an accumulated deficit of
$14,542,069 and a working capital deficit of $1,939,067.  These conditions raise
substantial  doubt as to the Company's  ability to continue as a going  concern.
These  consolidated  financial  statements do not include any  adjustments  that
might result from the outcome of this uncertainty.  These consolidated financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of recorded  asset  amounts,  or amounts and  classification  of
liabilities  that might be necessary should the Company be unable to continue as
a going concern.                                                                

The  Company  plans  to  take  the  following  steps  that it  believes  will be
sufficient to provide the Company with the ability to continue in existence. The
Company has recently  re-negotiated  the repayment terms of certain debt and has
issued a convertible promissory note in the amount of $2,000,000 to an unrelated
third  party.  In July 2004,  the Company has changed its senior  management  by
naming Mr. Kevin Ryan as Chief  Executive  Officer and Mr.  Robert  McDermott as
Chief  Financial  Officer and believes that the new management team will be able
to achieve profitable operations, but there can be no assurance that the Company
will be able to raise sufficient  capital and generate  positive cash flows from
operations sufficient to sustain operations.                                    

STOCK OPTIONS                                                                   

The  Company  did not grant any new options  and no options  were  cancelled  or
exercised  during the nine months ended  September 30, 2004. As of September 30,
2003, only 3,000,000 options were outstanding,  which were granted in the fourth
quarter of 2002 and were fully vested  immediately.  Subsequent to September 30,
2003, all of the 3,000,000  outstanding options were relinquished as a result of
a settlement of a legal matter or canceled.                                     

The pro forma information regarding the effect on operations that is required by
SFAS 123 and SFAS 148 has not been presented since there is no pro forma expense
to be shown for the nine months ended September 30, 2004 and 2003.              

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)

NOTE 2 - LOSS PER SHARE                                                         

The Company  reports loss per share in accordance  with SFAS No. 128,  "Earnings
per  Share."  Basic loss per share is computed by  dividing  loss  available  to
common  shareholders by the weighted average number of common shares  available.
Diluted  loss per share is computed  similar to basic loss per share except that
the  denominator is increased to include the number of additional  common shares
that would have been  outstanding if the potential common shares had been issued
and if the additional  common shares were  dilutive.  Diluted loss per share has
not been  presented  since the effect of the  assumed  exercise  of options  and
warrants to purchase  common shares would have an  anti-dilutive  effect.  There
were 0 and 3,000,000 common equivalent shares  outstanding at September 30, 2004
and 2003, respectively.                                                         

NOTE 3 - INVENTORY                                                              

Inventory at September 30, 2004, consist of the following:                      

         Glass blocks, premade images and related products       $       351,717
         Electronic parts and accessories                                327,768
                                                                 ---------------
                                                                 $       679,485
                                                                 ===============

NOTE 4 - PROPERTY AND EQUIPMENT                                                 

Property and equipment at September 30, 2004, consist of the following:         

         Equipment under operating leases as lessor              $     1,850,003
         Computers and equipment                                         582,964
         Vehicles                                                          4,000
         Furniture and fixtures                                          173,444
         Leasehold improvements                                           32,188
                                                                 ---------------
                                                                       2,642,599
         Less accumulated depreciation and amortization                  787,284
                                                                 ---------------

                                                                 $     1,855,315
                                                                 ===============

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)

NOTE 6 - NOTES PAYABLE (INCLUDING RELATED PARTY NOTES)                          

Notes payable at September 30, 2004 consist of the following:                   

John Woodward. (a)                         $     1,824,000    
Kevin Ryan (b)                                   5,396,764    
Ryan Capital Management, Inc. (c)                  452,137    
McCary & Rood, Inc. (d)                            280,000    
McCary & Rood, Inc. (e)                            214,037    
CMKXTREME.COM (f)                                2,000,000    
                                        ----------------
                                            10,166,938
Less debt discounts                             (2,998,698)   
                                        ----------------
Net amount of notes payable                      7,168,240    
Less current portion                            (2,700,709)   
                                        ----------------
Long-term portion                          $     4,467,531    
                                        ================

    a.   On July 21, 2004, the Company issued a convertible  promissory  note to
         Mr. John Woodward,  the Company's  former  President,  in the amount of
         $1,824,000,  which represents principal due on a previously issued note
         payable in the amount of $1,343,722 plus accrued interest in the amount
         of  $480,279.  This note bears  interest at 10% per annum and calls for
         monthly  interest  payments  from  August 1, 2004 to  December 1, 2004.
         Beginning  on January 1, 2005,  this note  requires  monthly  principal
         payments of $50,405 plus accrued interest with any unpaid principal and
         interest  due on July 1,  2007.  The  monthly  principal  and  interest
         payments can be paid with shares of the  Company's  common stock at the
         option of the holder. The conversion price is the lesser of the average
         closing  price  of  the  Company's  common  stock  five  business  days
         immediately  prior to the conversion  notice or $0.08.  The Company has
         agreed to register the shares  issuable  upon  conversion of this note.
         The  Company  has  determined  that  there  is  a  beneficial   feature
         associated  with  this  convertible  promissory  note in the  amount of
         $615,600.  This amount will be amortized  as  financing  costs over the
term of the note.                                             

    b.   On July 21, 2004, the Company issued a convertible  promissory  note to
         Mr. Kevin Ryan, the Company's Chief Executive Officer, in the amount of
         $5,396,764,  which  represents  (a) principal  due on a two  previously
         issued  notes  payable in the amounts of $852,680 and  $1,010,000,  (b)
         principal  due under a  revolving  credit  agreement  in the  amount of
         $1,766,500,  (c) principal due under an additional  note payable in the
         amount of  $1,500,000  and (d) accrued  interest  on the above  mention
         obligations in the amount of $267,584.  This note bears interest at 10%
         per annum and calls for monthly principal  payments from August 1, 2004
         to December 1, 2004 of $45,000.  On the last day of the month beginning
         on August 31, 2004 through November 30, 2004, the accrued interest will
         be added to the principal  amount.  Beginning on January 1, 2005,  this
         note requires  monthly  principal  payments of $174,584 with any unpaid
         principal and interest due on July 1, 2007.  The monthly  principal and
         interest payments can be paid with shares of the Company's common stock
         at the option of the holder.  The conversion price is the lesser of the
         average closing price of the Company's  common stock five business days
         immediately prior to the conversion  notice or $0.08. In addition,  the
         Company granted to Mr. Ryan a warrant to purchase  1,875,000  shares of
         the Company's common stock. The exercise price is lesser of the average
         closing  price  of  the  Company's  common  stock  five  business  days
         immediately  prior to the notice of exercise or $0.08.  The Company has
         agreed to register the shares issuable upon conversion of this note and
         exercise of the warrant.  In  accordance  with EITF 00-27,  the Company
         first  determined  the  value of the  note  and the  fair  value of the
detachable  warrants                                          

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)

         issued  in  connection  with  this  note.  The  estimated  value of the
         warrants of $200,625  was  determined  using the  Black-Scholes  option
         pricing model and the following  assumptions:  term of 7 years,  a risk
         free  interest rate of 3.5%, a dividend  yield of 0% and  volatility of
         371%.   The  face  amount  of  the  note  payable  of  $5,396,764   was
         proportionately  allocated  to the note and the warrants in the amounts
         of  $5,203,330  and $193,434,  respectively.  The value of the note was
         then  allocated  between  the  note  and  the  preferential  conversion
         feature, which amounted to $3,188,488 and $2,014,842, respectively. The
         combined total discount is $2,208,276,  and is being amortized over the
term of the note.                                             

    c.   On July 21, 2004, the Company issued a promissory  note to Ryan Capital
         Management,  Inc.  (this  company is  controlled  by Kevin Ryan) in the
         amount of  $452,137,  which  represents  principal  due on a previously
         issued note payable in the amount of $400,000 plus accrued  interest in
         the amount of  $52,137.  This note bears  interest at 10% per annum and
         calls for monthly interest  payments from August 1, 2004 to December 1,
         2004.  Beginning  on  January  1,  2005,  this  note  requires  monthly
         principal  payments of $37,902  plus accrued  interest  with any unpaid
principal and interest due on December 1, 2005.               

    d.   On August 1, 2004,  the Company  issued a  promissory  note to McCary &
         Rood  (this  company  is  controlled  by Kevin  Ryan) in the  amount of
         $280,000,  which represents past due consulting fees under a consulting
         agreement  dated May 28,  2003.  This note calls for  monthly  payments
         beginning  August 1, 2004 of $30,000 with any unpaid  principal  due on
May 1, 2005.                                                  

    e.   On August 1, 2004,  the Company  issued a  promissory  note to McCary &
         Rood in the amount of $214,037,  which represents past due reimbursable
         expenses  under a consulting  agreement  dated May 28, 2003.  This note
         calls for monthly payments beginning August 1, 2004 of $30,000 with any
unpaid principal due on March 1, 2005.                        

    f.   On September 23, 2004, the Company issued a convertible promissory note
         to CMKXTREME.COM in the amount of $2,000,000.  This note bears interest
         at 10% per annum and calls for  monthly  principal  payments of $55,556
         plus  accrued  interest  beginning  November  1, 2004  with any  unpaid
         principal  and interest due on October 1, 2007.  The monthly  principal
         and interest  payments can be paid with shares of the Company's  common
         stock at the option of the holder.  The conversion  price is the lesser
         of the  average  closing  price  of the  Company's  common  stock  five
         business days immediately  prior to the conversion  notice or $0.08. In
         addition,  the Company  granted to  CMKXTREME.COM a warrant to purchase
         2,500,000  shares of the Company's  common stock. The exercise price is
         lesser of the average closing price of the Company's  common stock five
         business days immediately prior to the notice of exercise or $0.08. The
         Company has agreed to register the shares  issuable upon  conversion of
         this note and exercise of the warrant.  In accordance  with EITF 00-27,
         the Company first  determined  the value of the note and the fair value
         of the  detachable  warrants  issued in connection  with this note. The
         estimated  value of the warrants of $200,000 was  determined  using the
         Black-Scholes option pricing model and the following assumptions:  term
         of 7 years,  a risk free interest rate of 3.5%, a dividend  yield of 0%
         and volatility of 371%. The face amount of the  convertible  promissory
         note of $2,000,000  was  proportionately  allocated to the note and the
         warrants in the amounts of $1,818,182 and $181,818,  respectively.  The
         value  of the  note  was  then  allocated  between  the  note  and  the
         preferential  conversion  feature,  which  amounted to  $1,636,364  and
         $181,818, respectively. The combined total discount is $363,636, and is
being amortized over the term of the note.                    

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)

NOTE 7 - EQUITY                                                                 

During the nine months  ended  September  30, 2003,  the Company sold  1,120,000
shares of its  restricted  common stock for gross  proceeds of  $260,000.  Also,
during the nine months ended  September  30, 2003,  the Company  issued  660,000
shares of its common stock as  consideration  for the holder of the $1.5 million
loan payable extending the repayment terms that were valued at $528,000, and the
Company issued 2,340,000  shares of its common stock for services  rendered that
were valued at $1,170,000.                                                      

On July 21, 2004,  the Company issued  3,019,000  common shares of the Company's
common  stock  to  Kevin  Ryan as  additional  consideration  for the  financing
provided  to the  Company.  Also,  certain  holders  of the  Company's  Series A
preferred stock  reallocated  2,647,900 of their shares to certain investors and
senior  members of the Company's  management  team. The Company took a charge to
financing   costs  and   compensation   expense  of  $2,747,011   and  $409,275,
respectively,  related to the issuance of common shares and  reallocation of the
Series A preferred shares.                                                      

In addition,  in July 2004, the Company also issued a total of 500,000 shares of
common stock to two consultants valued at $53,500.                              

NOTE 8 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                              

In December 2003, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting  Bulletin ("SAB") No. 104, "Revenue  Recognition." SAB 104 supersedes
SAB 101,  "Revenue  Recognition  in  Financial  Statements."  SAB 104's  primary
purpose  is to  rescind  accounting  guidance  contained  in SAB 101  related to
multiple element revenue arrangements, superseded as a result of the issuance of
EITF 00-21,  "Accounting for Revenue  Arrangements with Multiple  Deliverables."
Additionally,  SAB 104  rescinds  the SEC's  Revenue  Recognition  in  Financial
Statements  Frequently  Asked  Questions and Answers ("the FAQ") issued with SAB
101 that had been  codified  in SEC  Topic  13,  Revenue  Recognition.  Selected
portions of the FAQ have been  incorporated  into SAB 104.  While the wording of
SAB  104 has  changed  to  reflect  the  issuance  of EITF  00-21,  the  revenue
recognition  principles of SAB 101 remain  largely  unchanged by the issuance of
SAB 104,  which was  effective  upon  issuance.  The adoption of SAB 104 did not
impact the consolidated financial statements.                                   

NOTE 9 - COMMITMENTS AND CONTINGENCIES                                          

The Company may be named as a defendant in legal actions arising from its normal
operations,  and from  time-to-time is presented with claims for damages arising
out of its actions.  The management of the Company  anticipates that any damages
or expenses it may incur in  connection  with these  actions,  individually  and
collectively,  will not have a material  adverse effect on the Company.  For the
three  months  ended  September  30,  2004,  there  has  been no  change  in the
litigation pending against the Company.                                         

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 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Stockholders of                                   
Crystalix Group International, Inc.                                             
Las Vegas, Nevada                                                               

We have audited the accompanying  consolidated  balance sheet of Crystalix Group
International,  Inc. and  Subsidiaries  as of December 31, 2003, and the related
consolidated statements of operations, comprehensive loss, stockholders' deficit
and  cash  flows  for  the  years  ended  December  31,  2003  and  2002.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.                                       

We conducted  our audits in  accordance  with  Standards  of the Public  Company
Accounting  Oversight Board generally  accepted in the United States of America.
Those standards require that we plan and perform the audits to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by management,  as well as evaluating  the overall  consolidated
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.                                               

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Crystalix Group  International,  Inc. and  Subsidiaries as of December 31, 2003,
and the  consolidated  results  of its  operations  and cash flows for the years
ended  December 31, 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 Note 1, the
Company  has  incurred a net loss of  $7,433,341,  used cash for  operations  of
$1,166,873  in  the  year  ended  December  31,  2003,  is a  party  to  various
litigation,  has a  stockholders'  deficit of $3,382,628 as of December 31, 2003
and has a working capital  deficit of $6,311,497 as of December 31, 2003.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to 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.                         

/s/ Stonefield Josephson, Inc.                                                  

CERTIFIED PUBLIC ACCOUNTANTS                                                    

Santa Monica, California                                                        
February 27, 2004                                                               

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

                                                        [Enlarge/Download Table]


                                                                                    DECEMBER  
                                                                                    31, 2003  
                                                                                 -------------
                                                                                              
                                     ASSETS                                                   

CURRENT ASSETS                                                                                
   Cash and cash equivalents                                                     $     58,881 
   Accounts receivable, net of allowance of $260,000                                  504,053 
   Inventory                                                                          656,263 
   Other current assets                                                                24,114 
                                                                                 -------------
TOTAL CURRENT ASSETS                                                                1,243,311 
                                                                                 -------------

PROPERTY AND EQUIPMENT, net (including equipment                                              
   acquired from related party of $2,300,000 in 2002)                               2,367,112 

INTANGIBLE ASSETS                                                                             
   Licenses and related costs, net of accumulated amortization of $297,580          1,592,321 
   Capitalized software costs, net of accumulated amortization of $101,608            224,882 
   Website development costs, net of accumulated amortization of $45,843              104,490 
   Customer lists and relationships, net of accumulated amortization of $61,305        90,000 
   Artwork library, net of accumulated amortization of $298,665                       597,330 
   Tradename and trademark, net of accumulated amortization of $3,144                  12,575 
                                                                                 -------------
                                                                                    2,621,598 
                                                                                 -------------

OTHER ASSETS                                                                           10,273 
                                                                                 -------------

TOTAL ASSETS                                                                     $  6,242,294 
                                                                                 =============

                     LIABILITIES AND STOCKHOLDERS' DEFICIT                                    

CURRENT LIABILITIES                                                                           
   Accounts payable and accrued expenses                                         $  1,761,094 
   Customer deposits                                                                   80,688 
   Revolving line of credit - related party                                           823,675 
   Notes payable - related parties                                                  3,609,932 
   Current portion of notes payable                                                    20,448 
   Current portion of deferred revenue                                              1,258,971 
                                                                                 -------------
TOTAL CURRENT LIABILITIES                                                           7,554,808 
                                                                                 -------------

NOTES PAYABLE, less current portion                                                    68,651 

DEFERRED REVENUE, less current portion                                              2,001,463 

                                                                                 -------------
TOTAL LIABILITIES                                                                   9,624,922 
                                                                                 -------------
COMMITMENTS AND CONTINGENCIES (Note 13)                                                   -   
                                                                                 -------------
STOCKHOLDERS' DEFICIT                                                                         
   Preferred stock - Class A, $0.001 par value; 10,000,000 shares                             
      authorized; 3,920,000 Class A shares issued and outstanding                       3,920 
   Common stock; $0.001 par value; 300,000,000 shares                                         
      authorized; 34,113,192 shares issued and outstanding                             34,113 
   Additional paid-in capital                                                       4,364,634 
   Other comprehensive loss - foreign currency translation                            (42,311)
   Accumulated deficit                                                             (7,742,984)

                                                                                 -------------
TOTAL STOCKHOLDERS' DEFICIT                                                        (3,382,628)
                                                                                 -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                      $  6,242,294 
                                                                                 =============


The accompanying notes are an integral part of these
consolidated financial statements.

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        [Enlarge/Download Table]

                                                                          YEAR ENDED              
                                                              ------------------------------------
                                                                  DECEMBER           DECEMBER     
                                                                  31, 2003           31, 2002     
                                                              ----------------   -----------------
                                                                                                  
REVENUE                                                                                           
    Product sales                                             $     4,233,846    $      3,428,835 
    Lease revenue                                                   1,739,538             714,492 
    Royalty revenue                                                   391,121             521,528 
                                                              ----------------   -----------------
TOTAL REVENUE                                                       6,364,505           4,664,855 
                                                              ----------------   -----------------

COST OF REVENUE                                                                                   
    Product sales                                                   2,719,153           1,837,598 
    Lease revenue                                                     730,490             409,166 
    Royalty revenue                                                   403,064             111,248 
                                                              ----------------   -----------------
TOTAL COST OF REVENUE                                               3,852,707           2,358,012 
                                                              ----------------   -----------------

                                                              ----------------   -----------------
GROSS PROFIT                                                        2,511,798           2,306,843 
                                                              ----------------   -----------------

OPERATING EXPENSES                                                                                
    Research and development                                          397,067             416,684 
    Payroll and related benefits                                    2,525,318           1,161,673 
    General and administrative                                      5,187,854           1,011,142 
    Impairment expense                                                399,113                 -   
                                                              ----------------   -----------------
TOTAL OPERATING EXPENSES                                            8,509,352           2,589,499 
                                                              ----------------   -----------------

LOSS FROM OPERATIONS                                               (5,997,554)           (282,656)
                                                              ----------------   -----------------

OTHER INCOME (EXPENSES):                                                                          
    Interest income                                                       -                 2,790 
    Write off of advances to Vitro Laser GmbH (See Note 13)          (500,000)                -   
    Other expense, net                                                (27,309)                -   
    Interest expense                                                 (908,478)            (14,455)
                                                              ----------------   -----------------
TOTAL OTHER INCOME (EXPENSE)                                       (1,435,787)            (11,665)
                                                              ----------------   -----------------

LOSS BEFORE PROVISION FOR INCOME TAXES                             (7,433,341)           (294,321)

PROVISION FOR INCOME TAXES                                                                        
    Current                                                           550,000            (550,000)
    Deferred                                                         (550,000)            550,000 
                                                              ----------------   -----------------

NET LOSS                                                     $     (7,433,341)   $       (294,321)
                                                              ================   =================

NET LOSS PER SHARE - BASIC AND DILUTED                       $          (0.19)   $          (0.01)
                                                              ================   =================

WEIGHTED AVERAGE COMMON EQUIVALENT                                                                
    SHARES OUSTANDING - BASIC AND DILUTED                          39,340,124          26,255,422 
                                                              ================   =================


The accompanying notes are an integral part of these
consolidated financial statements.

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

                                              DECEMBER 31,
                                                2003              2002
                                                ----              ----

NET LOSS                                       $   (7,433,341)    $    (294,321)

FOREIGN CURRENCY TRANSLATION ADJUSTMENT               (41,416)             (895)
                                               ---------------    --------------

COMPREHENSIVE LOSS                             $   (7,474,757)    $    (295,216)
                                               ===============    ==============

The accompanying notes are an integral part of these
consolidated financial statements.

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                        [Enlarge/Download Table]

                                                       PREFERRED STOCK                                  ADDITIONAL       OTHER      
                                                           CLASS A                COMMON STOCK            PAID-IN    COMPREHENSIVE  
                                                     SHARES       AMOUNT        SHARES       AMOUNT       CAPITAL        LOSS       
                                                  ----------------------------------------------------------------------------------
                                                                                                                                    

BALANCE, DECEMBER 31, 2001                         7,000,000    $   7,000     23,300,000   $  23,300    $   (30,200)  $       -     

Shares issued for public shell merger transaction                              6,669,192       6,669         (1,669)                
Sale of shares through private placement offering                              8,776,000       8,776      1,579,224                 
Shares issued for acquisition of LazerTek Designs                              1,250,000       1,250      1,123,750                 
Foreign currency translation adjustment                                                                                     (895)   
Net loss                                                                                                                            

                                                  ------------------------   -------------------------  -------------------------   
BALANCE, DECEMBER 31, 2002                         7,000,000        7,000     39,995,192      39,995      2,671,105         (895)   

Sale of shares through private placement offering                              1,120,000       1,120        258,880                 
Shares issued for financing costs                                                660,000         660        527,340                 
Shares issued for services                                                     2,590,000       2,590      1,342,410                 
Exchange of shares with former officers for                                                                                         
   Company assets (at cost carryover basis)       (3,080,000)      (3,080)   (10,252,000)    (10,252)      (435,101)                
Foreign currency translation adjustment                                                                                  (41,416)   
Net loss                                                                                                                            

                                                  ------------------------   ------------------------   -------------------------   
BALANCE, DECEMBER 31, 2003                         3,920,000    $   3,920     34,113,192   $  34,113    $ 4,364,634   $  (42,311)   
                                                  ========================   ========================   =========================   



                                                    ACCUMULATED                                                                     
                                                      DEFICIT          TOTAL                                                        
                                                  -------------------------------                                                   
                                                                                                                                    

BALANCE, DECEMBER 31, 2001                          $   (15,322)   $     (15,222)                                                   

Shares issued for public shell merger transaction                          5,000                                                    
Sale of shares through private placement offering                      1,588,000                                                    
Shares issued for acquisition of LazerTek Designs                      1,125,000                                                    
Foreign currency translation adjustment                                     (895)                                                   
Net loss                                               (294,321)        (294,321)                                                   

                                                    -----------------------------                                                   
BALANCE, DECEMBER 31, 2002                             (309,643)       2,407,562                                                    

Sale of shares through private placement offering                        260,000                                                    
Shares issued for financing costs                                        528,000                                                    
Shares issued for services                                             1,345,000                                                    
Exchange of shares with former officers for                                                                                         
   Company assets (at cost carryover basis)                             (448,433)                                                   
Foreign currency translation adjustment                                  (41,416)                                                   
Net loss                                             (7,433,341)      (7,433,341)                                                   

                                                    -----------------------------                                                   
BALANCE, DECEMBER 31, 2003                          $(7,742,984)   $  (3,382,628)                                                   
                                                    =============================                                                   


The accompanying notes are an integral part of these
consolidated financial statements.

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                                              YEAR ENDED         
                                                                   ------------------------------
                                                                      DECEMBER        DECEMBER   
                                                                      31, 2003        31, 2002   
                                                                   --------------   -------------
                                                                                                 
CASH FLOW FROM OPERATING ACTIVITIES:                                                             
  Net loss                                                         $  (7,433,341)   $   (294,321)
  Adjustment to reconcile net loss to net cash                                                   
    provided by (used in) operating activities                                                   
       Depreciation and amortization                                   1,296,786         180,640 
       Provision for doubtful accounts                                   156,819         103,181 
       Common stock issued for financing costs                           528,000             -   
       Common stock issued for services                                1,345,000             -   
       Foreign currency translation adjustment                           (41,416)           (895)
       Loss on disposal of fixed assets                                  243,893             -   
       Write off of deferred offering costs                              212,797             -   
       Write off of advances to Vitro Laser, Gmbh                        500,000             -   
       Write down of customer lists                                      155,220             -   
  Changes in operating assets and liabilities:                                                   
  (Increase) decrease in:                                                                        
    Accounts receivable                                                  234,266        (803,584)
    Inventory                                                            508,696        (597,724)
    Other current assets                                                 166,622        (172,348)
    Deposits                                                             (10,273)          1,540 
  Increase (decrease) in:                                                                        
    Accounts payable and accrued expenses                                991,733        (633,170)
    Customer deposits                                                   (290,276)        335,989 
    Deferred revenue                                                     268,601       2,992,333 
                                                                   --------------   -------------
Net cash provided by (used in) operating activities                   (1,166,873)      1,111,641 
                                                                   --------------   -------------

CASH FLOW FROM INVESTING ACTIVITIES:                                                             
  Advances to acquire Vitro Laser, Gmbh                                 (300,000)       (200,000)
  Payments to acquire property and equipment                          (1,390,947)     (2,416,104)
  Net cash acquired from business combination                                -            18,418 
  Payments to acquire intangible assets                                      -          (339,845)
                                                                   --------------   -------------
Net cash used in investing activities                                 (1,690,947)     (2,937,531)
                                                                   --------------   -------------

CASH FLOW FROM FINANCING ACTIVITIES:                                                             
  Net advances under revolving line of credit - related party            823,675         (34,850)
  Payments on notes payable                                              (16,754)        (55,129)
  Proceeds from notes payable - related parties                        1,010,000       1,500,000 
  Payments on notes payable - related parties                           (152,748)            -   
  Payments for deferred offering costs                                  (136,797)        (76,000)
  Proceeds from sale on common stock, including stock                                            
    subscription receivable                                              748,000       1,105,100 
                                                                   --------------   -------------
Net cash provided by financing activities                              2,275,376       2,439,121 
                                                                   --------------   -------------
NET INCREASE (DECREASE) IN CASH AND                                                              
  CASH EQUIVALENTS                                                      (582,444)        613,231 

CASH AND CASH EQUIVALENTS, Beginning of year                             641,325          28,094 
                                                                   --------------   -------------

CASH AND CASH EQUIVALENTS, End of year                             $      58,881    $    641,325 
                                                                   ==============   =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                
  Interest Paid                                                    $       4,023    $      5,195 
                                                                   ==============   =============
  Income taxes paid                                                $         -      $        -   
                                                                   ==============   =============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND                                                
  FINANCING ACTIVITIES                                                                           
  Exchange of net assets to acquire common and Series A                                          
    preferred stock from former officer (see Notes 10, 12 and 13)  $     448,433    $        -   
                                                                   ==============   =============
  Purchase of property and equipment for note payable              $         -      $    222,757 
                                                                   ==============   =============


The accompanying notes are an integral part of these
consolidated financial statements.

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES                       

ORGANIZATION                                                  

         Crystalix Group International,  Inc. (formerly Americabilia.com,  Inc.)
         was  incorporated  under the laws of the State of Florida on August 22,
         1989 as a C-Corporation.  Pursuant to a Stock Purchase  Agreement dated
         October  4,  2002  between  Crystalix  USA  Group,  Inc.  ("CUSA")  and
         Americabilia.com,  Inc.  ("ABIL"),  and a Technology  License Agreement
         between  Crystalix  USA Group,  Inc.  and  Crystalix  Technology,  Inc.
         ("CTI"),  also dated October 4, 2002, the former  shareholders  of CUSA
         and CTI acquired 23,300,000 newly issued shares of common stock of ABIL
         and  7,000,000  shares of ABIL's  Class A preferred  stock with 10 to 1
         limited voting and conversion  rights only. At the date of consummation
         of  these  transactions,   these  shareholders  effectively  controlled
         approximately  77.6% of the issued and outstanding common stock of ABIL
         and  93.7%  of the  voting  control  and  ownership  of  ABIL  assuming
         conversion of the Class A preferred  shares.  Since the shareholders of
         CUSA obtained  control of ABIL,  according to FASB  Statement No. 141 -
         "BUSINESS  COMBINATIONS,"  this  acquisition  has  been  treated  as  a
         recapitalization  for  accounting  purposes,  in a  manner  similar  to
     reverse acquisition accounting. In accounting for this transaction:

            o     CUSA  is deemed to be the purchaser and surviving  company for
                  accounting purposes.  Accordingly, its net assets are included
                  in the  balance  sheet at their historical book values and the
                  results of operations  of  CUSA  have  been  presented for the
comparative prior period;                   

            o     Control  of the  net assets and  business of ABIL was acquired
                  effective October 4, 2002. This transaction has been accounted
                  for as a purchase of the  assets  and  liabilities  of ABIL by
                 CUSA.  The historical cost of the net assets acquired was $0.

         Effective  November  22,  2002,  the ABIL changed its name to Crystalix
         Group  International,  Inc.  On  November  26,  2002,  ABIL merged with
         Crystalix Group International,  Inc., a Nevada corporation, in a merger
solely for the purpose of redomicile.                         

BASIS OF PRESENTATION                                         

         The accompanying  consolidated  financial statements have been prepared
         in conformity  with  accounting  principles  generally  accepted in the
         United States of America, which contemplate continuation of the Company
         as a going concern.  The Company incurred a net loss for the year ended
         December 31, 2003 of $7,433,341,  used cash for operating activities of
         $1,166,873  for the year ended  December  31, 2003 and at December  31,
         2003,  had an accumulated  deficit of $7,742,984 and a working  capital
         deficit of  $6,311,497.  In addition,  the Company is in default on the
         payment  of  certain  note  payable  obligations.  The  Company is also
         involved in various  lawsuits and effective June 2, 2003, Kevin Ryan, a
         senior creditor,  has been granted a Writ of Possession allowing him to
         take  possession of the collateral  (all Company  assets)  securing his
         note (see Note 13). In addition,  Mr. Ryan has an irrevocable  proxy to
         vote the shares of certain controlling officers and stockholders, which
         allow  him  to  vote  approximately  70% of the  Company's  issued  and
         outstanding shares.  These conditions raise substantial doubt as to the
         Company's  ability to continue as a going concern.  These  consolidated
         financial  statements do not include any adjustments  that might result
         from the  outcome of this  uncertainty.  These  consolidated  financial
         statements   do  not   include   any   adjustments   relating   to  the
recoverability and                                            

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         classification of recorded asset amounts, or amounts and classification
         of liabilities  that might be necessary should the Company be unable to
continue as a going concern.                                  

         The Company plans to take the following  steps that it believes will be
         sufficient  to provide  the  Company  with the  ability to  continue in
         existence.  The Company is  negotiating  with  certain  loan holders to
         extend the  repayment  terms of certain  loans and the  Company is also
         seeking additional capital through the issuance of equity  instruments.
         The Company has changed its senior management and believes that the new
         management  team will be able to  achieve  profitable  operations,  but
         there  can be no  assurance  that  the  Company  will be able to  raise
         sufficient  capital and generate  positive  cash flows from  operations
sufficient to sustain operations.                             

PRINCIPLES OF CONSOLIDATION                                   

         The accompanying consolidated financial statements include the accounts
         of  Crystalix  Group  International,  Inc.  and its wholly  owned legal
         subsidiaries,  Crystalix USA Group,  Inc.,  Crystalix  Imaging  Limited
         (incorporated on October 24, 2002 in Ireland d.b.a.  Crystalix Europe),
         Lazer-Tek  Designs,  Inc. and Lazer-Tek  Designs Ltd  (collectively the
         "Company").  The accompanying  consolidated  financial  statements have
         been  prepared  in  accordance  with  accounting  principles  generally
         accepted in the United  States of America.  All material  inter-company
  accounts and transactions have been eliminated in consolidation.

LINES OF BUSINESS                                             

         The Company  assembles and leases its LaserMark II equipment,  together
         with its licensed laser  inscription  technology,  to  individuals  and
privately held businesses throughout the United States.       

         Lazer-Tek designs, manufactures and sells laser inscribed gift crystals
         to privately  held  businesses and corporate  customers  throughout the
United States.                                                

STOCK BASED COMPENSATION                                      

         SFAS No. 123,  "Accounting for Stock-Based  Compensation,"  establishes
         and encourages the use of the fair value based method of accounting for
         stock-based compensation  arrangements under which compensation cost is
         determined using the fair value of stock-based  compensation determined
         as of the date of grant and is recognized over the periods in which the
         related services are rendered.  The statement also permits companies to
         elect to continue using the current  intrinsic value accounting  method
         specified  in  Accounting  Principles  Board  ("APB")  Opinion  No. 25,
         "Accounting  for Stock Issued to Employees," to account for stock-based
         compensation.  The Company has elected to use the intrinsic value based
         method and has  disclosed  the pro forma effect of using the fair value
         based method to account for its stock-based  compensation.  The Company
         uses the fair value method for options granted to non-employees. If the
         Company had elected to recognize  compensation  expense  based upon the
         fair  value at the grant date for awards  under the Stock  Option  Plan
         consistent  with  the  methodology  prescribed  by SFAS  No.  123,  the
         Company's net loss and loss per share would be reduced to the pro forma
        amounts indicated below for the year ended December 31, 2003 and 2002:

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                     2003           2002
                                                    -------------   ------------
Net loss                                                      
           As reported                              $ (7,433,341)   $  (294,321)
          Compensation recognized under APB 25                -              -
           Compensation recognized under SFAS 123              -       (240,000)
                                                    -------------   ------------
                      Pro forma                     $ (7,433,341)   $  (534,321)
                                                    =============   ============

Basic and diluted loss per common share:                      
           As reported                              $      (0.19)   $     (0.01)
           Pro forma                                $      (0.19)   $     (0.02)

         The fair value for these  options  was  estimated  at the date of grant
         using  a   Black-Scholes   option  pricing  model  with  the  following
         weighted-average assumptions for 2002: risk-free interest rate of 5.5%;
         dividend yields of 0%; volatility  factors of the expected market price
         of the Company's  common stock of 340%; and a weighted average expected
life of the option of 4.7 years.                              

USE OF ESTIMATES                                              

         The preparation of consolidated financial statements in conformity with
         accounting  principles  generally  accepted  in the  United  States  of
         America  requires  management to make  estimates and  assumptions  that
         affect the reported  amounts of assets and  liabilities and disclosures
         of contingent  assets and  liabilities at the date of the  consolidated
         financial  statements and the reported  amounts of revenue and expenses
         during the reporting periods. As of December 31, 2003, the Company used
         estimates in determining  the  realization of its accounts  receivable,
         inventory,  its intangible  assets,  accrued  expenses and the value of
         common stock issued to consultants  for services.  Actual results could
differ from these estimates.                                  

FAIR VALUE OF FINANCIAL INSTRUMENTS                           

         For certain of the Company's  financial  instruments,  including  cash,
         accounts receivable,  inventory, other current assets, accounts payable
         and accrued  expenses,  and customer  deposits,  the  carrying  amounts
         approximate fair value due to their short maturities. The amounts shown
         for notes and loans payable also approximate fair value because current
         interest  rates and terms  offered to the Company for similar  debt are
substantially the same.                                       

CASH AND CASH EQUIVALENTS                                     

         For purposes of the statements of cash flows,  the Company defines cash
         equivalents  as all highly  liquid debt  instruments  purchased  with a
     maturity of three months or less, plus all certificates of deposit.

CONCENTRATION OF CREDIT RISK                                  

         Financial  instruments,   which  potentially  subject  the  Company  to
         concentrations   of  credit   risk,   consist  of  cash  and   accounts
         receivables.  The Company  places its cash with high quality  financial
         institutions and at times may exceed the FDIC $100,000 insurance limit.
         The Company  extends  credit based on an evaluation  of the  customer's
         financial condition,  generally without collateral.  Exposure to losses
on receivables is principally  dependent on each  customer's  

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         financial  condition.  The Company  monitors  its  exposure  for credit
      losses and maintains allowances for anticipated losses, as required.

INVENTORY                                                     

         Inventory,  consisting  primarily  of solid  blank glass  cubes,  laser
         inscribed gift crystals and related  accessories  and electronic  parts
         and accessories, are valued at the lower of cost (first-in,  first-out)
or market.                                                    

PROPERTY AND EQUIPMENT                                        

         Property  and   equipment   consisting  of   improvements,   machinery,
         equipment,  computers, furniture and fixtures are recorded at cost, and
         are  depreciated  using the  straight-line  method over their estimated
         useful lives.  Expenditures  for maintenance and repairs are charged to
         earnings  as  incurred;   additions,   renewals  and   betterments  are
         capitalized.  When  property  and  equipment  are retired or  otherwise
         disposed of, the related cost and accumulated  depreciation are removed
         from  the  respective  accounts,  and any gain or loss is  included  in
    operations. A summary of the estimated useful lives is as follows:

         DESCRIPTION                         USEFUL LIFE

 Machinery and equipment                     5-7 years
 Vehicles                                      5 years
 Furniture and fixtures                        5 years
 Computers and software                      3-5 years

IMPAIRMENT OF LONG-LIVED ASSETS                               

         In  October  2001,  the FASB  issued  SFAS  No.  144,  "Accounting  for
         Impairment of Disposal of Long-Lived Assets", which supersedes SFAS No.
         121,  "Accounting  for the  Impairment  of  Long-Lived  Assets  and for
         Long-Lived  Assets to Be Disposed Of", and the accounting and reporting
         provision   of  APB   Opinion   No.   30,"Reporting   the   Results  of
         Operations-Reporting  the  Effects  of  Disposal  of  a  Segment  of  a
         Business, and Extraordinary,  Unusual and Infrequently Occurring Events
         and  Transactions",  for the disposal of a segment of a business.  This
         statement also amends ARB No. 51, "Consolidated  Financial Statements",
         to eliminate the exception to consolidation  for a subsidiary for which
         control is likely to be impaired. SFAS No. 144 requires that long-lived
         assets  to be  disposed  of by sale,  including  those of  discontinued
         operations,  be measured at the lower of carrying  amount or fair value
         less cost to sell,  whether  reported in  continuing  operations  or in
         discontinued  operations.  SFAS  No.  144  broadens  the  reporting  of
         discontinued  operations  to include all  components  of an entity with
         operations  that can be  distinguished  from the rest of the entity and
         that will be eliminated from the ongoing  operations of the entity in a
         disposal  transaction.  SFAS No. 144 also establishes a "primary-asset"
         approach to determine  the cash flow  estimation  period for a group of
         assets and  liabilities  that  represents  the unit of accounting for a
         long-lived  asset to be held and used.  This statement is effective for
         fiscal years beginning after December 15, 2001. The Company's  adoption
         did not have a material impact to the Company's  financial  position or
results of operations.                                        

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

INTANGIBLE ASSETS                                             

         Intangible  assets consist of product and laser  licenses,  capitalized
         software  costs,  website  development  costs,  artwork and copyrights,
         trademarks,  trade names,  customer  lists and  relationships  and were
         mostly acquired with the purchase of Laser-Tek. In accordance with SFAS
         No. 142, "Goodwill and Other Intangible  Assets," the Company evaluates
         intangible assets and other long-lived assets for impairment,  at least
         on an annual  basis and  whenever  events or changes  in  circumstances
         indicate  that  the  carrying  value  may not be  recoverable  from its
         estimated future cash flows.  Recoverability  of intangible  assets and
         other  long-lived  assets is measured by comparing their net book value
         to the related  projected  undiscounted  cash flows from these  assets,
         considering  a number of  factors  including  past  operating  results,
         budgets,  economic  projections,  market trends and product development
         cycles.  If the  net  book  value  of the  asset  exceeds  the  related
         undiscounted cash flows, the asset is considered impaired, and a second
         test  is   performed  to  measure  the  amount  of   impairment   loss.
         Amortization  is  computed  using  the  straight-line  method  over the
estimated useful life of the assets (3-10 years) as follows:  

                                                     USEFUL LIFE
      Licenses and related costs                      10 years
      Artwork library                                  3 years
      Customer lists and relationships                 5 years
      Capitalized software                             3 years
      Website development costs                        3 years
      Trade name and trademark                         5 years

         For the year  ended  December  31,  2003,  the  Company  recognized  an
         impairment   loss  on  customer   lists  by  $155,220  (See  Note  14).
         Amortization  expense  amounted  to  $689,745  and $7,300 for the years
         ended December 31, 2003 and 2002,  respectively.  Amortization  expense
         for the years ended  December 31, 2004,  2005,  2006,  2007 and 2008 is
         estimated to be $686,663,  $651,097,  $197,215,  $185,724 and $182,580,
respectively.                                                 

WEBSITE DEVELOPMENT COSTS                                     

         The Company  accounts for the costs of computer  software  developed or
         obtained  for  internal  use in  accordance  with EITF 00-2 -  "WEBSITE
         COSTS" and  Statement of Position  98-1,  "ACCOUNTING  FOR THE COSTS OF
         COMPUTER SOFTWARE  DEVELOPED OR OBTAINED FOR INTERNAL USE." The Company
         capitalizes   costs  of   materials,   consultants,   and  payroll  and
         payroll-related costs for employees incurred in developing internal-use
         computer  software.  Amortization  is computed using the  straight-line
         method over the  estimated  useful  life of the asset (3 years).  Costs
         incurred during the preliminary project and post-implementation  stages
are charged to research and development expense.              

CAPITALIZED SOFTWARE COSTS                                    

         The Company  capitalizes  costs incurred for the production of computer
         software that generates the  functionality  within its laser  equipment
         units.  Capitalized costs include direct labor and related overhead for
         software  produced by the  Company  and the cost of software  purchased
         from third  parties.  All costs in the  software  development  process,
         which are  classified  as research  and  development,  are  expensed as
         incurred until technological feasibility has been established ("beta").
         Once  technological  feasibility has been  established,  such costs are
         capitalized  until the  software  has  completed  beta  testing  and is
available for mass-marketing.  Amortization, a cost of        

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         revenue,  will be provided  on a  product-by-product  basis,  using the
         straight-line  method, not to exceed three years,  commencing the month
         after the date of product release.  Quarterly,  the Company reviews and
         expenses  the  unamortized  cost of any  feature  identified  as  being
         impaired.   The  Company  also  reviews  recoverability  of  the  total
         unamortized  cost of all features and software  products in relation to
         estimated  service and  relevant  cash flows from  revenues  and,  when
         necessary,  makes an appropriate  adjustment to net  realizable  value.
         Amortization  is  computed  using  the  straight-line  method  over the
estimated useful life of the asset (3 years).                 

REVENUE RECOGNITION                                           

LEASE REVENUE                                                 
         The  Company  enters  into  licensing  agreements  to lease  its  laser
         equipment  and  its  licensed   laser   inscription   technology   with
         individuals and businesses who open retail establishments to sell laser
         inscribed crystal blocks.  The terms of these licensing  agreements are
         typically  for five years.  The lease  payments  are paid in one or two
         installments,  generally  upfront,  and the  Company  recognizes  lease
revenue ratably over the term of the contract.                

PRODUCT SALES                                                 
         Revenue from the sale of laser  inscribed  products are recognized when
         title  to  the  products  are  transferred  to the  customer  (customer
         acceptance  for  custom  designed  crystals)  and only when no  further
         contingencies or material  performance  obligations are warranted,  and
         thereby have earned the right to receive and retain reasonably  assured
payments for products sold and delivered.                     

         Revenue from the sale of glass cube products is  recognized  when title
         to the products are transferred to the customer-lessee  (upon shipment)
         and  only  when  no  further   contingencies  or  material  performance
         obligations are warranted, and thereby have earned the right to receive
         and retain reasonably assured payments for products sold and delivered.

ROYALTY REVENUE                                               
         The  Company  also  recognizes   royalty  revenue  from  licensing  its
         technology,  only when earned with no further contingencies or material
         performance  obligations  are  warranted,  and thereby  have earned the
         right to receive and retain reasonably  assured payments.  During 2003,
         the Company changed its estimation of computing and recognizing royalty
revenues to only upon collection.                             

DEFERRED REVENUE                                              
         Deferred revenue represent amounts received as non-refundable  payments
         upon the  signing  of the  licensing  agreements  and  delivery  of the
         LaserMark II equipment,  for which,  revenue is  recognizable  over the
         term of the  agreement  (See Lease  Revenue).  Deposits  received  from
         potential customers/lessees, who have not yet received the LaserMark II
         equipment or products,  are  accounted  as  refundable  customer-lessee
deposits.                                                     

ADVERTISING AND MARKETING COSTS                               

         The Company  expenses  advertising  and  marketing  costs as  incurred.
         Advertising and marketing expense for the years ended December 31, 2003
and 2002 amounted to $125,507 and $36,810, respectively.      

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

INCOME TAXES                                                  

         The Company  accounts for income taxes in accordance with SFAS No. 109,
         "Accounting  for Income  Taxes."  Deferred  taxes are  provided  on the
         liability  method  whereby  deferred  tax  assets  are  recognized  for
         deductible  temporary  differences,  and deferred tax  liabilities  are
         recognized for taxable temporary differences. Temporary differences are
         the differences  between the reported amounts of assets and liabilities
         and their tax bases.  Deferred  tax assets are  reduced by a  valuation
         allowance  when, in the opinion of  management,  it is more likely than
         not  that  some  portion  or all of the  deferred  tax  assets  will be
         realized.  Deferred  tax assets and  liabilities  are  adjusted for the
    effects of changes in tax laws and rates on the date of enactment.

EARNINGS (LOSS) PER SHARE                                     

         The Company  reports  earnings (loss) per share in accordance with SFAS
         No. 128,  "Earnings  per  Share."  Basic  earnings  (loss) per share is
         computed by dividing income (loss) available to common  shareholders by
         the  weighted  average  number  of  common  shares  available.  Diluted
         earnings (loss) per share is computed  similar to basic earnings (loss)
         per share  except  that the  denominator  is  increased  to include the
         number of additional  common shares that would have been outstanding if
         the  potential  common  shares had been  issued  and if the  additional
         common shares were dilutive.  Diluted earnings (loss) per share has not
         been presented since the effect of the assumed  exercise of options and
         warrants to purchase common shares would have an anti-dilutive  effect.
         There were 0 and 3,000,000 common equivalent shares for the years ended
December 31, 2003 and 2002, respectively.                     

SEGMENT INFORMATION                                           

         The Company follows the provisions of SFAS No. 131,  "Disclosures about
         Segments of an Enterprise and Related  Information."  SFAS 131 requires
         public companies to report financial and descriptive  information about
         their  reportable  operating  segments.   The  Company  identifies  its
         operating  segments  based  on  how  management   internally  evaluates
         separate financial information (if available),  business activities and
         management  responsibility.  The  management  believes it operates in a
         single  business  segment.  During the year ended  December  31,  2003,
         Crystalix Europe had net sales of $327,050,  operating loss of $313,148
         and net loss of $316,564.  During the period since inception on October
         24,  2002 to  December  31,  2002,  Crystalix  Europe  had net sales of
$50,200, operating loss of $32,300 and net loss of $32,500.   

COMPREHENSIVE LOSS                                            

         SFAS No. 130, "Reporting Comprehensive Loss," establishes standards for
         the reporting and display of comprehensive income and its components in
         the  financial  statements.  For the year ended  December  31, 2003 and
         2002, the foreign currency translation  adjustment has been included in
         the consolidated  statement of stockholders' deficit showing the change
in comprehensive loss.                                        

RESEARCH AND DEVELOPMENT                                      

Research and development costs are expensed as incurred.      

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

RECLASSIFICATION                                              

         Certain  reclassifications  have  been  made to the  2002  balances  to
conform to the 2003 presentation.                             

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS                     

         During April 2003,  the FASB issued SFAS 149 - "Amendment  of Statement
         133 on Derivative  Instruments and Hedging  Activities",  effective for
         contracts  entered into or modified after September 30, 2003, except as
         stated below and for hedging  relationships  designated after September
         30, 2003. In addition,  except as stated below,  all provisions of this
         Statement were applied prospectively.  The provisions of this Statement
         that relate to Statement 133 Implementation  Issues that were effective
         for fiscal  quarters that began prior to June 15, 2003, were applied in
         accordance  with  their   respective   effective  dates.  In  addition,
         paragraphs 7(a) and 23(a),  which relate to forward  purchases or sales
         of when-issued  securities or other  securities  that do not yet exist,
         should be applied to both existing  contracts and new contracts entered
         into after September 30, 2003. The Company does not participate in such
         transactions and accordingly,  the adoption of FASB 149 did not have an
impact on the Company's consolidated financial statements.    

         During May 2003,  the FASB  issued SFAS 150 -  "Accounting  for Certain
         Financial  Instruments  with  Characteristics  of both  Liabilities and
         Equity",  effective for financial  instruments entered into or modified
         after May 31, 2003,  and otherwise is effective for public  entities at
         the  beginning of the first  interim  period  beginning  after June 15,
         2003. This Statement establishes standards for how an issuer classifies
         and measures certain financial instruments with characteristics of both
         liabilities  and  equity.   It  requires  that  an  issuer  classify  a
         freestanding  financial  instrument  that  is  within  its  scope  as a
         liability  (or  an  asset  in  some   circumstances).   Many  of  those
         instruments  were  previously   classified  as  equity.   Some  of  the
         provisions of this Statement are consistent with the current definition
         of liabilities in FASB Concepts  Statement No. 6, Elements of Financial
         Statements.  The  Company  has  adopted  FASB 150 which did not have an
impact on the Company's consolidated financial statements.    

         In January 2003, the FASB issued  Interpretation No. 46, "Consolidation
         of Variable Interest Entities."  Interpretation 46 changes the criteria
         by which  one  company  includes  another  entity  in its  consolidated
         financial  statements.  Previously,  the criteria were based on control
         through voting interest. Interpretation 46 requires a variable interest
         entity to be  consolidated by a company if that company is subject to a
         majority  of the  risk of loss  from  the  variable  interest  entity's
         activities  or entitled to receive a majority of the entity's  residual
         returns or both. A company that consolidates a variable interest entity
         is called the primary  beneficiary  of that entity.  The  consolidation
         requirements  of   Interpretation  46  apply  immediately  to  variable
         interest  entities  created after January 31, 2003.  The  consolidation
         requirements  apply to  other  entities  in the  first  fiscal  year or
         interim  period  beginning  after  December  15,  2003.  Certain of the
         disclosure  requirements apply in all financial statements issued after
         January 31, 2003,  regardless of when the variable  interest entity was
         established.  In December  2003,  the FASB  concluded to revise certain
         elements  of FIN 46,  which  will be  issued  shortly.  The  FASB  also
         modified  the  effective  date of FIN 46.  For all  entities  that were
         previously  considered  special  purpose  entities,  FIN 46  should  be
         applied in periods ending after December 15, 2003. Otherwise, FIN 46 is
         to be applied for registrants  who file under  Regulation SX in periods
         ending  after  March  15,  2004,  and for  registrants  who file  under
 Regulation  SB, in periods  ending after December 15, 2004. The

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         Company does not expect the  adoption to have a material  impact on the
     Company's consolidated financial position or results of operations.

         In January 2003, the FASB issued  Interpretation No. 46, "Consolidation
         of  Variable  Interest   Entities"  (an  interpretation  of  Accounting
         Research  Bulletin (ARB) No. 51,  Consolidated  Financial  Statements).
         Interpretation  46 addresses  consolidation by business  enterprises of
         entities to which the usual  condition  of  consolidation  described in
         ARB-51 does not apply. The Interpretation changes the criteria by which
         one  company  includes  another  entity in its  consolidated  financial
         statements.  The general  requirement  to  consolidate  under ARB-51 is
         based  on the  presumption  that an  enterprise's  financial  statement
         should  include  all of the  entities  in  which  it has a  controlling
         financial interest (i.e., majority voting interest).  Interpretation 46
         requires a variable  interest  entity to be  consolidated  by a company
         that does not have a majority voting  interest,  but  nevertheless,  is
         subject to a majority  of the risk of loss from the  variable  interest
         entity's  activities  or entitled to receive a majority of the entity's
         residual  returns  or both.  A company  that  consolidates  a  variable
   interest entity is called the primary beneficiary of that entity.

         In December 2003, the FASB concluded to revise certain  elements of FIN
         46,  primarily  to clarify the  required  accounting  for  interests in
         variable interest entities. FIN-46R replaces FIN-46, that was issued in
         January 2003.  FIN-46R exempts certain  entities from its  requirements
         and provides for special  effective  dates for entities that have fully
         or  partially  applied  FIN-46 as of  December  24,  2003.  In  certain
         situations, entities have the option of applying or continuing to apply
         FIN-46 for a short period of time before applying FIN-46R.  In general,
         for all  entities  that  were  previously  considered  special  purpose
         entities,  FIN 46 should be  applied  for  registrants  who file  under
         Regulation  SX  in  periods  ending  after  March  31,  2004,  and  for
         registrants  who file  under  Regulation  SB, in periods  ending  after
         December 15,  2004.  The Company does not expect the adoption to have a
         material  impact on the  Company's  financial  position  or  results of
operations.                                                   

         In December 2003,  the FASB issued a revised SFAS No. 132,  "Employers'
         Disclosures  about Pensions and Other  Postretirement  Benefits"  which
         replaces  the  previously  issued  Statement.   The  revised  Statement
         increases the existing  disclosures  for defined  benefit pension plans
         and other defined benefit  postretirement  plans.  However, it does not
         change the  measurement or recognition of those plans as required under
         SFAS No.  87,  "Employers'  Accounting  for  Pensions,"  SFAS  No.  88,
         "Employers'  Accounting for  Settlements  and  Curtailments  of Defined
         Benefit Pension Plans and for Termination  Benefits," and SFAS No. 106,
         "Employers'   Accounting   for   Postretirement   Benefits  Other  Than
         Pensions."  Specifically,  the revised Statement  requires companies to
         provide  additional  disclosures  about  pension plan  assets,  benefit
         obligations,  cash flows,  and benefit costs of defined benefit pension
         plans and other defined benefit  postretirement  plans. Also, companies
         are required to provide a breakdown of plan assets by category, such as
         debt, equity and real estate,  and to provide certain expected rates of
         return and target  allocation  percentages for these asset  categories.
         The Company has implemented this  pronouncement  and has concluded that
         the  adoption  has no  material  impact to the  consolidated  financial
statements.                                                   

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 2 - ACQUISITIONS                                                           

         On December 23, 2002, Crystalix Group International, Inc. acquired 100%
         of  the  outstanding  common  stock  of  Lazer-Tek  Designs,  Inc.  and
         Lazer-Tek Designs, Ltd., in exchange for 1,250,000 shares of its common
         stock valued at $1,125,000 (See Note 10) and an acquisition  consulting
         fee  obligation  of $400,000  (See Note 8), for an  aggregate  purchase
         price of $1,525,000. In addition,  Crystalix Group International,  Inc.
         loaned  $1,000,000 to Lazer-Tek to repay existing debt, all of which is
eliminated in consolidation.                                  

         This  acquisition  was  accounted  for  using  the  purchase  method of
         accounting under FASB 141 - "BUSINESS  COMBINATIONS,"  and accordingly,
         the  purchase   price  was  allocated  to  the  assets   purchased  and
         liabilities   assumed  based  upon  their   estimated  fair  values  as
         determined by  management,  upon reliance on an  independent  valuation
         report,  on the date of acquisition,  which  approximated a net of $3.2
         million.  The excess of fair value of acquired net assets over the cost
         of $1.7 million has been  allocated as a pro rata  reduction of all the
         acquired assets (excluding  financial assets,  assets to be disposed of
         by sale, deferred tax asset, pension or other  post-retirement  benefit
plans and any other current assets).                          

         The operating  results of the acquisition are included in the Company's
consolidated results of operations from December 23, 2002.    

NOTE 3 - INVENTORY                                                              

Inventory at December 31, 2003, consist of the following:     

            Glass blocks, pre-made images and related products     $     349,165
            Electronic parts and accessories                             307,098
                                                                   -------------
                                                                   $     656,263
                                                                   =============

NOTE 4 - PROPERTY AND EQUIPMENT                                                 

        Property and equipment at December 31, 2003, consist of the following:

            Equipment under operating leases as lessor             $   1,981,450
            Computers and equipment                                      640,716
            Vehicles                                                     132,820
            Furniture and fixtures                                       113,835
            Leasehold improvements                                        32,188
                                                                    ------------
                                                                       2,901,009
            Less accumulated depreciation and amortization               533,897
                                                                    ------------
                                                                    $  2,367,112
                                                                    ============

         Depreciation expense for the years ended December 31, 2003 and 2002 was
         $607,041 and $173,340, respectively. During the year ended December 31,
         2003,  the Company  recognized a loss on disposal of certain  assets of
$243,893 (see Note 14).                                       

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES                                  

         Accounts payable and accrued expenses at December 31, 2003,  consist of
the following:                                                

Accounts payable - trade (including $140,000 to a       
              related party)                                        $    567,085
            Royalties payable                                            327,516
            Accrued interest                                             331,761
            Accrued legal                                                369,653
            Other accrued expenses                                       165,079
                                                                    ------------
                                                                    $  1,761,094
                                                                    ============

NOTE 6 - DEFERRED REVENUE                                                       

         Deferred revenue represent amounts received as non-refundable  payments
         upon the  signing  of the  licensing  agreements  and  delivery  of the
         LaserMark  II  equipment,   for  which,   the  lease  revenue  will  be
recognizable over the term of the agreement.                  

         The  following  table  summarizes  the annual  estimated  revenue to be
recognized from deferred revenue, as of December 31, 2003:    

Year ending December 31,                          
          2004                                 $     1,258,971
          2005                                         797,804
          2006                                         686,723
          2007                                         463,440
          2008                                          53,496
                                                ----------------
                                                     3,260,434
       Less current portion                          (1,258,971)
                                                ----------------
      Long-term portion                        $     2,001,463
                                                ================

NOTE 7 - REVOLVING LINE OF CREDIT - RELATED PARTY                               

         On  December  1, 2003,  the Company  entered  into a 1-year,  revolving
         credit  agreement  with Mr. Kevin Ryan that provides for the Company to
         borrow,  from time to time,  up to  $1,000,000  (Note 1).  Interest  is
         accrued at 10% of the outstanding  balance and is payable  monthly.  At
         December  31,  2003,  the  Company  had  borrowed  $823,675  under this
revolving line of credit. (See also Note 15)                  

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 8 - NOTES PAYABLE - RELATED PARTIES                                        

         Notes  payable - related  parties at December 31, 2003  consists of the
following:                                                    

                                                        [Enlarge/Download Table]

                                                                                        
Note payable, related party, secured by all capital stock                               
  of Lazer-Tek, with unpaid principal due by January 20,                                
  2004, interest due monthly at 13.5% per annum. The                                    
  amount was not paid and is currently  in default.                     $     1,347,252 

Notes payable, former creditor of Lazer-Tek, secured by                                 
  assets of Crystalix, unpaid principal and interest was due by                         
  April 1, 2003 with interest at 10% per annum (default interest                        
  rate of 18% per annum).  This amount was not paid and                                 
  is currently in default (see Note 13)                                         852,680 

Note payable, related party, unsecured, payable in four quarterly                       
  payments starting on April 1, 2003 of $100,000 each with no interest.                 
  This note arose from the acquisition of Lazer-Tek.  This amount                       
  was not paid and is currently in default                                      400,000 

Note payable, related party, secured by the assets of the Company,                      
  interest accrues at 10% per annum; principal and accrued interest                     
  due on December 1, 2004                                                     1,010,000 
                                                                        ----------------

                                                                              3,609,932 
Less current portion                                                         (3,609,932)
                                                                        ----------------
Long-term portion                                                       $             - 
                                                                        ================

         Interest  expense,  under all  obligations,  amounted to  $908,478  and
       $14,236 for the years ended December 31, 2003 and 2002, respectively.

NOTE 9 - NOTE PAYABLE                                                           

         Notes payable bear interest at a rate of 11% per annum,  secured by two
         automobiles  and payable in aggregate  monthly  installments  of $2,050
(principal and interest) by September 2007.                   

         The following  table  summarizes the aggregate  maturities of the notes
payable as of December 31, 2003:                              

Year ending December 31,                          
          2004                                 $        20,448
          2005                                          22,650
          2006                                          25,091
          2007                                          20,910
                                                ----------------
                                                        89,099
       Less current portion                             (20,448)
                                                ----------------
      Long-term portion                        $        68,651
                                                ================

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 10 - STOCKHOLDERS' DEFICIT                                                 

STOCK ISSUED FOR ACQUISITION OF CRYSTALIX USA GROUP, INC.     

         Pursuant to a Stock  Purchase  Agreement  dated October 4, 2002 between
         Crystalix USA Group, Inc. and Americabilia.com,  Inc., and a Technology
         License  Agreement  between  Crystalix  USA Group,  Inc. and  Crystalix
         Technology,  Inc., also dated October 4, 2002, the former  shareholders
         of CUSA and CTI acquired 23,300,000 newly issued shares of common stock
         of ABIL and 7,000,000  shares of ABIL's Class A preferred stock with 10
         to 1 limited voting and conversion rights.  These preferred shares only
         have  voting  and  conversion  rights in the event of sale or change in
         control  of  the  Company.   At  the  date  of  consummation  of  these
         transactions,  these shareholders  effectively controlled approximately
         77.6% of the issued and  outstanding  common stock of ABIL and 93.7% of
         the voting  control and  ownership of ABIL  assuming  conversion of the
         Class A  preferred  shares.  Since the  shareholders  of CUSA  obtained
         control  of ABIL,  according  to FASB  Statement  No.  141 -  "BUSINESS
         COMBINATIONS,"  this acquisition has been treated as a recapitalization
         for accounting  purposes,  in a manner  similar to reverse  acquisition
         accounting.  As  such,  the  23,300,000  common  shares  and  7,000,000
         preferred shares have been presented on the  accompanying  Consolidated
         Statement of Stockholders' Equity as if the issuance had occurred as of
         the  beginning  of the earliest  period  presented.  In  addition,  the
         previously issued and outstanding  6,669,192 common shares of ABIL have
         been presented as an acquisition issuance as of the date of the reverse
acquisition.                                                  

COMMON STOCK ISSUED IN PRIVATE PLACEMENTS                     

         On October 9, 2002, the Board of Directors of the Company  approved and
         initiated  a  private   placement   offering  (the   "October   Private
         Placement") of 8,600,000 of the Company's  Rule 144  restricted  common
         stock  at an  average  offering  price of $0.17  per  share,  on a best
         efforts basis.  The Private  Placement was exempt from the registration
         provisions of the  Securities  and Exchange  Commission Act of 1933 and
         Rule 506 of Regulation D. The Company sold 8,600,000  common shares for
         net proceeds of $1,500,000, of which, $400,000 was collected in January
2003.                                                         

         On November  26, 2002,  the Board of Directors of the Company  approved
         and initiated another private placement offering (the "November Private
         Placement")  of the Company's  Rule 144  restricted  common stock at an
         average offering price of $0.50 per share, on a best efforts basis. The
         Private  Placement was exempt from the  registration  provisions of the
         Securities  and  Exchange  Commission  Act  of  1933  and  Rule  506 of
         Regulation D. As of December 31, 2002,  the Company sold 176,000 shares
         for proceeds of $88,000, all of which was collected in January 2003. In
         January 2003, the Company sold an additional  120,000 common shares for
         proceeds of $60,000.  Also in March 2003,  the Company  sold  1,000,000
         shares for proceeds of  $200,000.  The Company did not incur or pay any
offering costs.                                               

         COMMON STOCK ISSUED FOR  ACQUISITION  OF  LAZER-TEK  DESIGNS,  INC. AND
LAZER-TEK DESIGNS, LTD                                        

         On December  23,  2002,  the  Company  issued  1,250,000  shares of the
         Company's  common  stock to  acquire  Lazer-Tek,  valued  at a total of
         $1,125,000  using the Company's  trading price as of December 23, 2002.
         Pursuant to the agreement,  these shares had registration  rights until
         April 30,  2003.  The Company  has no  obligation  beyond a  reasonable
effort to have these shares registered.                       

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

COMMON STOCK ISSUED FOR SERVICES AND FINANCING COSTS          

         During the first quarter of 2003,  the Company issued 660,000 shares of
         its common stock,  as  consideration  to the holder of the $1.5 million
         loan payable for extending the repayment  terms. The shares were valued
         at their  fair  market  value of  $528,000  and  included  in  interest
         expense.  The Company also issued  2,340,000 shares of its common stock
         for  services  rendered  that  were  valued at a fair  market  value of
$1,170,000.                                                   

         During the fourth quarter of 2003, the Company issued 250,000 shares of
         its common stock to three consultants.  The shares were valued at their
         fair market value of $175,000 which was  determined  using the value of
        the Company's stock at the date the consulting agreements were signed.

   SHARES OF COMMON AND PREFERRED STOCK EXCHANGED FOR CERTAIN ASSETS

         During the second quarter of 2003, in accordance with an agreement with
         a former officer, the Company canceled 5,126,000 shares of common stock
         and  1,540,000  shares  of Class A  preferred  stock  owned by a former
         officer of the Company in exchange  for the  Company  transferring  the
         ownership to four retail store locations in Las Vegas, Nevada that were
         previously  owned by the  Company(See  Note 12) Since this  transaction
         occurred with a related party, the cost carryover basis of $237,826 was
used and no gain or loss was recognized from this transaction.

         During the fourth quarter of 2003, in accordance with an agreement with
         a former officer, the Company canceled 5,126,000 shares of common stock
         and  1,540,000  shares  of Class A  preferred  stock  owned by a former
         officer of the Company in exchange  for the  Company  transferring  the
         ownership of certain laser  equipment  located on cruise ships that was
         previously  owned by the Company (See Note 12). Since this  transaction
         occurred with a related party, the cost carryover basis of $210,607 was
used and no gain or loss was recognized from this transaction.

STOCK OPTION PLAN                                             

         The Company  does not have a formal stock  option  plan,  however,  the
         Board of  Directors  and the  management  may grant  options to acquire
         common  stock of the  Company  ("Options").  Options  may be  issued to
         directors, executives, key employees and consultants providing valuable
         services to the Company.  The Board of Directors and management  select
         recipients  to whom options are granted,  and  determine  the number of
         shares  to be  granted.  Options  granted  are  exercisable  at a price
         determined  by the Board of  Directors  and  management  at the time of
         grant,  but in no event  less  than fair  market  value.  During  2002,
         3,000,000  options  had been  granted  to  certain  key  employees  and
         management at an exercise price of $0.25 per share underlying the stock
         option  when the  trading  price as of the date of grant  was $0.16 per
share.                                                        

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

The following is table summarizes the options outstanding:    

                           WEIGHTED-
                                             STOCK           AVERAGE
                                            OPTION          EXERCISE
                                            PLAN             PRICE

      Balance, December 31, 2001                   -       $     -
          Granted                           3,000,000       $   0.25
                             -----------

       Balance, December 31, 2002           3,000,000       $   0.25
          Canceled                         (3,000,000)      $   0.25
                             -----------

      Balance, December 31, 2003                   -       $     -
                             ===========
      Exercisable, December 31, 2003               -       $     -
                             ===========

         In  connection  with the  exchange  of common and  preferred  stock for
         certain  assets of the Company and the  resignation  of certain  former
         officers of the Company (See Notes 10, 12 and 13), 1,600,000 options to
         purchase shares of the Company's  common stock for $0.25 per share were
         canceled.  Also,  in 2003,  the remaining  1,400,000  options were also
canceled.                                                     

NOTE 11 - INCOME TAXES                                                          

         Deferred  income  taxes  reflect  the  net  tax  effects  of  temporary
         differences  between the carrying amounts of assets and liabilities for
         financial  statement  purposes  and the  amounts  used for  income  tax
         purposes.   Significant   components  of  the  Company's  deferred  tax
liabilities and assets as of December 31, 2003 are as follows:

Deferred tax assets:                                    
              Net operating loss                               $     1,680,000
              Deferred revenue                                       1,100,000
              Stock issued for services and financing costs            577,000
              Advances to Crystalix Europe                             136,000
              Allowance for doubtful accounts                           68,000
                                                                ----------------
                                                                     3,561,000
Deferred tax liabilities:                               
               Step-up of basis of intangible assets                   (779,000)
               Depreciation of property and equipment                  (508,000)
               Other basis differences for assets acquired             (251,000)
                                                                ----------------
                                                                     (1,538,000)
                                                                ----------------
              Net deferred tax asset                                 2,023,000
               Less valuation allowance                              (2.023,000)
                                                                ----------------

                                                               $            --
                                                                ================

         At December  31,  2003,  the Company  had  federal net  operating  loss
         ("NOL") carryforwards of approximately $5,100,000.  Federal NOLs could,
if unused, begin to expire in 2018.                           

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

The valuation allowance increased by $1,272,000 during 2003.  

         The  reconciliation  of the  effective  income tax rate to the  federal
         statutory  rate for the years  ended  December  31, 2003 and 2002 is as
follows:                                                      

                                                        2003            2002
                                                        --------        --------
               Federal income tax rate                   (34.0%)         (34.0%)
            State tax, net of federal benefit           --              --
Loss for which no federal benefit was             
                  received                               34.0%           34.0%
                                                        --------        --------
              Effective income tax rate                   0.0%            0.0%
                                                        ========        ========

         Utilization of the net operating loss and tax credit  carryforwards  is
         subject  to  significant  limitations  imposed by the change in control
         under I.R.C. 382,  limiting its annual  utilization to the value of the
         Company at the date of change in  control  times the  federal  discount
rate.                                                         

NOTE 12 - RELATED PARTY TRANSACTIONS                                            

         During the year ended December 31, 2003 and 2002 purchases of equipment
         from a related  party  vendor  amounted  to  approximately  $8,300  and
         $2,160,000,  respectively.  Included  in  accounts  payable and accrued
         expenses at December 31,  2003,  is  approximately  $17,403 due to this
         related  party  vendor.  This related party vendor is wholly owned by a
         minority (non-controlling) shareholder of the Company and does not have
         any formal agreement.  Management  believes that these transactions are
negotiated at arms length.                                    

         During  the  year  ended  December  31,  2003  and  2002  purchases  of
         technology  consulting  services  from the same  related  party  vendor
amounted to approximately $189,450 and $191,000, respectively.

         On May 28, 2003, the Company  entered into a consulting  agreement with
         McCary & Rood, a company  controlled  by Mr. Kevin Ryan,  that provides
         for a monthly  consulting fee of $20,000.  The agreement expires on the
         earlier  of May 27,  2006 or on the date on which  Mr.  Ryan  accepts a
position as an officer of the Company.                        

         In April 2003,  the Company  entered into an  agreement  with Armin Van
         Damme,  a former  officer and  director  and founder of  Crystalix  USA
         Group, to transfer the four Company-owned retail locations in Las Vegas
         for the  surrender  of all of his Class A  preferred  stock and  common
         stock  remaining  after  permitted  transfers of the common stock. As a
         result of this transaction,  the Company has canceled  5,126,000 shares
         of common stock and 1,540,000  shares of Class A preferred  stock owned
         by Mr. Van Damme and removed  the net book value of the assets  related
         to the four  Company-owned  retail locations in the amount of $237,826.
         In addition,  Mr. Van Damme  resigned as an employee of the Company and
         agreed to assume  liability  of the lease of his  automobile  which had
         been leased by the Company,  and liability of the lease of office space
         at 5720 South Arville,  Suite 114, Las Vegas,  Nevada. The transfer was
         effective as of April 28,  2003.  No gain or loss was  recognized  from
         this related party transaction.  Mr. Van Damme was to pay the Company a
         license  fee  of 5% of  gross  sales  generated  from  the  transferred
         locations and agreed to purchase all supplies and equipment  needed for
         the operation of the  locations  from the Company at its cost plus 10%.
The  agreement  provided for  termination  by the Company     

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         upon 30 days'  prior  written  notice in the event of Mr.  Van  Damme's
failure to make payments or submit reports on a timely basis. 

         As a result of the  settlement  agreement  described  in Note 13,  this
         agreement  was  declared  null  and  void.   Under  the  terms  of  the
         settlement, Mr. Van Damme is to keep the locations and the equipment at
         the locations.  However,  it is  contemplated  that he will replace the
         equipment  and  arrange  for  his  own  licensing  of  the  proprietary
         technology within six months.  While the Company's  equipment is in his
         possession,  he is to pay a flat  licensing and royalty fee of $500 per
month per laser.                                              

         In April 2003,  the Company  entered into an  agreement  with Other Van
         Dam, a former  officer and director and founder of Crystalix USA Group,
         to transfer  ownership  of certain  laser  equipment  aboard the cruise
         ships owned by the  Starboard  Cruise line for the  surrender of all of
         his Class A preferred stock and common stock (See Note 13). As a result
         of this  transaction,  the Company canceled  5,126,000 shares of common
         stock and 1,540,000  shares of Class A preferred stock owned by Mr. Van
         Dam and used the net book value of the laser equipment in the amount of
$210,607 as the cost basis for the stock redemption.          

See Notes 7 & 8 for additional related party transactions.    

NOTE 13 - COMMITMENTS AND CONTINGENCIES                                         

CONTRACTS                                                     

         Acquisition  Target - On  December  15,  2002,  the  Company  signed an
         agreement to acquire 50% of the ownership  interest of Vitro Laser GmbH
         ("Vitro"), a German Corporation,  for consideration  consisting of cash
         and the right to acquire  shares of the  Company's  common  stock.  The
         Company  advanced  $500,000  to Vitro  through  March  31,  2003 and in
         accordance  with a legal  settlement on November 14, 2003,  the Company
         allowed Vitro to retain the advance.  After new  management  terminated
         the process of acquiring  Vitro in June 2003, the $500,000  advance was
expensed during the same period. (See Note 14)                

         Royalty Agreement - Effective October 1, 2003, the Company entered into
         an amended and  restated  patent  license  agreement  with Laser Design
         International,  LLC  ("LDI")  and Norwood  Promotional  Products,  Inc.
         ("Norwood"),  which  superseded  the  February  1999 and  October  2001
         agreements.  The  Company  now has a  non-exclusive,  non-transferable,
         royalty-bearing  sub-license from LDI to make, use, offer for sale, and
         sell decorative  products using the technology other than in the United
         States.  Norwood granted the Company a non-exclusive,  non-transferable
         (other than reseller  licenses to permitted  resellers),  revocable and
         royalty-bearing  sub-license for the United States in the retail market
         segment.    Norwood   also   granted    Lazer-Tek   a    non-exclusive,
         non-transferable (other than reseller licenses to permitted resellers),
         revocable and royalty-bearing  sub-license for the United States in the
         corporate market segment.  Norwood is to approve all applications for a
         permitted  reseller  license.  The  Company is  required to pay LDI and
         Norwood  royalty  payments  based  on a  percentage  of net  sales on a
         quarterly basis. The royalty  agreement expires on the earlier of April
         27, 2010, a material  breach of  contract,  or mutual  recession of all
parties.                                                      

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

LEASES                                                        

         The following is a schedule by years of future minimum rental  payments
         required under operating leases that have non-cancelable lease terms in
excess of one year as of December 31, 2003:                   

Year ending December 31,                            
          2004                         $          10,259
          2005                                    10,259
          2006                                    10,259
                                       -----------------
                                       $          30,777
                                       =================

         Rent expense  amounted to $545,597 and  $1,005,000  for the years ended
December 31, 2003 and 2002                                    

LITIGATION                                                    

         The Company may be named as a defendant in legal  actions  arising from
         its normal  operations,  and from time-to-time is presented with claims
         for damages  arising out of its actions.  The management of the Company
         anticipates  that any damages or  expenses  it may incur in  connection
         with these  actions,  individually  and  collectively,  will not have a
         material  adverse  effect on the Company.  As of December 31, 2003, the
         Company was not a named party to any pending legal  proceedings,  other
         than routine  litigation deemed incidental to our business,  except for
the following:                                                

         CONCORD  INDUSTRIES  INC. -- In January 2003,  Concord  Industries Inc.
         ("Concord") filed an action for declaratory relief in the federal court
         for the State of Connecticut against Laser Design International and us,
         LLC ("LDI"). Concord seeks a judgment invalidating the patent issued to
         LDI and/or  declaring  that Concord is not  infringing on LDI's patent.
         LDI is the holder,  in part, of laser technology  patent rights related
         to laser  engraving.  We have licensed the use of this  technology from
         LDI. In November  2003,  Concord and we reached a settlement  agreement
         whereby Concord has agreed to dismiss us from the suit. LDI and Concord
         are still in litigation.  We anticipate  that LDI will be successful in
         its defense of its patent  rights.  The patents that are the subject of
         the suit pertain to  subsurface  decorative  laser  marking in crystal,
         glass, and other clear  materials,  which is the technology used in our
business.                                                     

         VITRO LASER GROUP USA -- On February 12,  2003,  Vitro Laser Group USA,
         Inc.  ("Vitro")  and Kenneth  Morrison  filed an original  petition and
         application  for  injunctive  relief  in the  District  Court of Dallas
         County,  Texas,  against  Vitro Laser GmbH  ("Vitro  GmbH") and us. The
         plaintiffs  allege  that  Vitro GmbH and we  wrongfully  took two laser
         systems  and,  thus,  sought  a  temporary  and  permanent   injunction
         enjoining,   prohibiting,  and  restraining  Vitro  GmbH  and  us  from
         interfering with  plaintiffs'  rights in the laser systems and in their
         business facilities and operations.  The parties subsequently  resolved
         the  issue  of  the  injunctive   relief,   pending  a  final  judicial
         determination,  by written agreements dated February 27, 2003 and March
5, 2003, I.E., by Rule 11 agreements.                         

         In addition,  the plaintiffs seek from us: actual and exemplary damages
         for conversion of the equipment;  actual damages,  statutory damages of
         $2,000,  and  attorneys'  fees for theft of the laser  systems;  actual
         damages for unjust  enrichment;  and actual and  exemplary  damages for
         tortious  interference with plaintiffs'  contract with Vitro GmbH. With
respect to Vitro  GmbH,  the                                  

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         plaintiffs seek: actual and exemplary damages for fraud; actual damages
         for negligent misrepresentation; actual damages and attorneys' fees for
      breach of contract; and actual damages for breach of fiduciary duty.

         At the  commencement  of the suit,  Vitro GmbH  alleged that it was not
         properly  served and that it was not amenable to suit or service in the
         United  States  since  it is a  German  company.  However,  Vitro  GmbH
         subsequently  consented to the court's jurisdiction and filed an answer
         and  cross-claims  against  the  plaintiffs.  We filed an answer  and a
         special   appearance   asserting   that  we  are  not  subject  to  the
         jurisdiction of the Texas court; however, the trial court found that we
         waived our  special  appearance  in the  lawsuit to contest the court's
         jurisdiction  over it, by  entering  into the Rule 11  agreements  with
         plaintiffs.  However,  the appellate court reversed the trial court and
         remanded  the case to the  lower  court  to  determine  whether  it has
personal  jurisdiction over us.                               

         The  plaintiffs  have  indicated  that they may  appeal  the  appellate
         court's ruling to the Texas Supreme Court.  If we are  unsuccessful  in
         our  jurisdictional  challenge,  we  intend  to  assert  that  we  took
         possession  of the  equipment at the request of Vitro GmbH,  with Vitro
         GmbH asserting  ownership over the equipment due to plaintiffs' failure
         to pay  for  the  equipment  and  that  we did  not  interfere  between
         plaintiffs and Vitro GmbH.  Management plans to vigorously  defend this
         matter and since this matter is in its preliminary  stages,  no amounts
         have  been   accrued  in  the   accompanying   consolidated   financial
statements, as such amounts are not estimable.                

         BERLINER ZISSER WALTER & MCDONALD,  P.C. -- On March 4, 2003,  Berliner
         Zisser  Walter & McDonald,  P.C.,  filed a complaint  against us in the
         District  Court  for the City  and  County  of  Denver,  Colorado.  The
         complaint  asserts  that the  plaintiff  law firm is owed  $141,701 for
         legal services.  We have asserted  various  defenses to the claim.  The
         case was tried to the court in March 2004. On March 19, 2004,  judgment
         was entered  against us in the amount of  $108,972,  plus  interest and
         costs.  This  judgment  has been  recorded  in accrued  expenses in the
accompanying consolidated balance sheet.                      

         KEVIN RYAN, ET AL. -- On March 31, 2003,  we filed a complaint  against
         Kevin Ryan, Lena Walther,  Douglas Lee,  Lazer-Tek  Designs,  Inc., and
         Lazer-Tek Designs, Ltd. in the District Court for Clark County, Nevada.
         The complaint alleged misrepresentations and breach of the Common Stock
         Purchase  Agreement  that we entered  into to  purchase  Lazer-Tek.  We
         requested a reduction  of the  purchase  price and of the amount due to
         Kevin  Ryan,  as well as  general  and  special  damages  in  excess of
         $10,000,  punitive  damages,  attorneys'  fees, and costs. On April 23,
         2003,   Kevin  Ryan  and  Douglas  Lee  filed  an  answer  denying  the
         allegations of the complaint.  In addition,  Kevin Ryan  counterclaimed
         for payment of the promissory note in the principal amount of $852,680,
         issuance of 568,750  shares of our common stock,  and an order for writ
         of possession of the collateral securing his note. On May 12, 2003, the
         court issued a Writ of Possession  to Kevin Ryan,  allowing him to take
         possession  of the  collateral  securing his note on June 2, 2003.  The
         collateral consists of all our assets. The default interest rate is 18%
         per annum. We have agreed to dismiss our complaint with prejudice.  The
         Writ of Possession is to remain in effect,  but the parties have agreed
to postpone all deadlines and trial dates.                    

         ARMIN VAN  DAMME,  ET AL.-- On June 30,  2003,  John S.  Woodward,  our
         president  and we, filed a complaint  against Armin Van Damme (a former
         officer and director of the Company),  Othmar Van Dam (a former officer
         and director of the Company), Jim Carrasco,  Carlos Ravelo, Brian Shedd
         (a former employee),  3DLI, Inc., and Vitro Laser, Inc. in the District
         Court  for  Clark  County,   Nevada.  The  complaint  alleged  tortious
         interference  with contractual  relations,  tortious  interference with
         prospective economic advantage,  conversion, and conspiracy on the part
of all                                                        

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CRYSTALIX GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

         of the named defendants.  In addition,  the complaint alleged breach of
         fiduciary duty by Armin Van Damme and Othmar Van Dam as to the Company.
         Mr. Woodward and we requested damages in excess of $10,000,  attorneys'
         fees and costs,  as well as  injunctive  relief.  On July 24, 2003,  we
         obtained  an order for a  preliminary  injunction,  which (1)  enjoined
         Brian Shedd from activities that would compete against us; (2) enjoined
         Othmar  Van  Dam  from  soliciting  our  existing   affiliates   and/or
         customers;   (3)  enjoined  Armin  Van  Damme  from   transferring   or
         encumbering his residence;  (4) mandated Armin Van Damme and Othmar Van
         Dam to remove us from being  financially  obligated on the lease of the
         vehicles  they are using;  (5) mandated  Armin Van Damme and Othmar Van
         Dam to provide  proof of current  registration  and  insurance  on such
         vehicles;  (6)  mandated  Armin Van Damme to provide us with  access to
         conduct an audit and inventory at four retail  locations  that had been
         purchased by Mr. Van Damme;  (7) mandated Armin Van Damme to return all
         our  corporate,  software  and  art  files  to  us;  (8)  enjoined  the
         defendants from  communicating  on our  letterhead;  (9) mandated us to
         remove  Armin  Van  Damme and  Othmar  Van Dam from our Web site;  (10)
         mandated  Armin  Van Damme and  3DLI,  Inc.  to issue  checks to us for
         amounts  diverted from the Company;  (11) enjoined the defendants  from
         encumbering,  tampering, hindering,  converting, or transferring any of
         our assets;  and (12) enjoined all parties from  disparaging  any other
         party in the action.  The defendants filed an answer and  counterclaim,
         suing us and all of our  officers  in  their  individual  capacity.  In
         October 2003, the parties  entered into a settlement  agreement,  which
provides, among other things, for the following:              

o    the dismissal of this suit with prejudice;       
             o    Armin  Van  Damme  keeping  the  four  retail locations in the
Mandalay Bay Group hotels (See Note 12);    
             o    Othmar Van Dam being able to pursue conducting business on the
Starboard Cruise Line;                      
             o    the relinquishment  by  Armin Van Damme  and Othmar Van Dam of
all ownership interest in the Company;      
             o    the Company retaining an  infrared laser  machine delivered by
Vitro; and                                  
     o    Vitro retaining the $500,000 payment from the Company.

      The settlement agreement was made effective as of November 14, 2003.

NOTE 14 - IMPAIRMENT  EXPENSE                                                   

         For the year ended December 31, 2003,  impairment  expense consisted of
the following:                                                

            Impairment of property and equipment (See Note 4)     $      243,893
            Impairment of value of customer lists (See Note 1)           155,220
                                                                  --------------
                                                                  $      399,113
                                                                  ==============

NOTE 15 - SUBSEQUENT EVENTS                                                     

         Subsequent  to  December  31,  2003,  the Company  received  additional
       advances under its revolving line of credit of $551,500. (See Note 7)

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 PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS                              

       Under the Nevada Revised Statutes, the registrant has broad powers to
indemnify its directors and officers against liabilities they may incur in such 
capacities, including liabilities under the Securities Act of 1933, as amended  
(the "Securities Act"). The registrant's Bylaws (Exhibit 3.2 hereto) also       
provide for mandatory indemnification of its directors and executive officers,  
and permissive indemnification of its employees and agents, to the fullest      
extent permissible under Nevada law.                                            

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION                            

  The expenses to be paid by the registrant in connection with the
securities being registered are as follows:                                     

     Securities and Exchange Commission filing fee........$       517.89
     Accounting fees and expenses.........................      5,000.00
     Blue sky fees and expenses...........................      1,000.00
     Legal fees and expenses..............................     15,000.00
     Transfer agent fees and expenses.....................      1,000.00
     Printing expenses....................................      2,000.00
     Miscellaneous expenses...............................        482.11

     Total................................................$    25,000.00

  All amounts are estimates except the SEC filing fee. The Selling
Stockholders will be bearing the cost of its own brokerage fees and commissions 
and its own legal and accounting fees.                                          

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.                               

     Within the past three years, the registrant has issued and sold the
unregistered securities set forth in the tables below.                          

COMMON STOCK:                                                                   

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------------------------------------
                       PERSONS OR CLASS OF                                                                         
       DATE                  PERSONS                           SECURITIES                        CONSIDERATION     
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
10/04/02            5 shareholders of          23,300,000 shares of common stock           shares of Crystalix USA 
                    Crystalix USA Group, Inc.                                                                      
-------------------------------------------------------------------------------------------------------------------
10/04/02            5 shareholders of          7,000,000 shares of Class A preferred       Technology license      
                    Crystalix USA Group, Inc.  stock                                                               
-------------------------------------------------------------------------------------------------------------------
12/23/02            3 shareholders of          1,250,000 shares of common stock            Shares of Lazer-Tek     
                    Lazer-Tek Designs                                                      Designs                 
-------------------------------------------------------------------------------------------------------------------
03/31/03            John E. Dhonau             2,000,000 shares of common stock            Services                
-------------------------------------------------------------------------------------------------------------------
04/08/03            John Woodward              1,000,000 shares of common stock            Loan extension and      
                                                                                           services                
-------------------------------------------------------------------------------------------------------------------
10/02 - 3/03        25 investors               9,896,000 shares of common stock            $1,848,000              
-------------------------------------------------------------------------------------------------------------------

                                      II-1                                                                         

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                       PERSONS OR CLASS OF                                                                         
       DATE                  PERSONS                           SECURITIES                        CONSIDERATION     
-------------------------------------------------------------------------------------------------------------------
                                                                                                                   
08/20/03            Basic Investors Inc.       100,000 shares of common stock              Services                
-------------------------------------------------------------------------------------------------------------------
09/01/03            Christina Hanneman         50,000 shares of common stock               Services                
-------------------------------------------------------------------------------------------------------------------
10/15/03            Princeton Research, Inc.   100,000 shares of common stock              Services                
-------------------------------------------------------------------------------------------------------------------
07/21/04            Kevin Ryan                 3,019,000 shares of common stock and        Debt restructure        
                                               seven-year warrant to purchase 1,875,000                            
                                               shares of common stock at $0.08 per share                           
                                               maximum price                                                       
-------------------------------------------------------------------------------------------------------------------
07/21/04            Jerzy Speckman and         500,000 shares of common stock              Services                
                    Mathias Nowicki                                                                                
-------------------------------------------------------------------------------------------------------------------
09/23/04            CMKXTREME.COM              Seven-year warrant to purchase 2,500,000    $2,000,000 loan         
                                               shares of common stock at $0.08 per share                           
                                               maximum price                                                       
-------------------------------------------------------------------------------------------------------------------

         The registrant relied upon the exemption from registration contained in
Section 4(2) as to all of the transactions, as the purchasers were deemed to be 
sophisticated with respect to the investment in the securities due to their     
financial condition and involvement in the registrant's business. Restrictive   
legends were placed on the stock certificates evidencing the securities issued  
in all of the above transactions. No underwriters were used.                    

ITEM 27. EXHIBITS                                                               

--------------------------------------------------------------------------------
REGULATION                                                                      
S-B NUMBER                              EXHIBIT                                 
--------------------------------------------------------------------------------
2.1        Stock Purchase Agreement, dated October 4, 2002, between       
    Americabilia.com, Inc. and Crystalix USA Group, Inc. (1)
--------------------------------------------------------------------------------
2.2        Plan and Agreement of Merger dated November 12, 2002 between   
           Crystalix Group International, Inc., a Florida corporation, and
         Crystalix Group International, Inc., a Nevada corporation (2)
--------------------------------------------------------------------------------
2.3        Common Stock Purchase Agreement, dated December 23, 2002, among
         Crystalix Group International, Inc., Lazer-Tek Designs, Inc.,
Lazer-Tek Designs, Ltd. and Lena Walther (3)        
--------------------------------------------------------------------------------
 3.1        Articles of Incorporation of Crystalix Group International, Inc.
(4)                                                 
--------------------------------------------------------------------------------
3.2        Bylaws of Americabilia.com, Inc. (5)                           
--------------------------------------------------------------------------------
5.1        Opinion of Dill Dill Carr Stonbraker & Hutchings, P.C.         
--------------------------------------------------------------------------------
 10.1        Form of Master Equipment Lease and Software License Agreement (4)
--------------------------------------------------------------------------------
10.2        Patent Sub-License Agreement, dated January 1, 2002, between    
       Laser Design International, LLC and Crystalix USA Group (4)
--------------------------------------------------------------------------------
10.3        Patent Sub-License Agreement, dated February 17, 1999, between  
    Janesville Group Limited and Lazer-Tek Designs, Ltd. (4)
--------------------------------------------------------------------------------

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REGULATION                                                                      
S-B NUMBER                              EXHIBIT                                 
--------------------------------------------------------------------------------
10.4        Sub-Lease Agreement, dated December 13, 2001, among Arville &   
         Russell, LLC, Western Window & Door Company and Crystalix USA
Group, and amendment thereto (4)                    
--------------------------------------------------------------------------------
 10.5        Lease Agreement, dated April 5, 2001 between South Tech Hacienda,
LLC and Lazer-Tek Designs, Ltd. (4)                 
--------------------------------------------------------------------------------
10.6        Promissory note to Kevin T. Ryan dated December 20, 2002 (4)    
--------------------------------------------------------------------------------
10.7        Promissory note to Kevin Ryan dated December 23, 2002 (4)       
--------------------------------------------------------------------------------
10.8        Bridge Loan Agreement dated October 21, 2003 (6)                
--------------------------------------------------------------------------------
  10.9        Revolving Credit Agreement dated as of December 1, 2003 with Kevin
Ryan (7)                                            
--------------------------------------------------------------------------------
10.10       Secured Promissory Note dated December 1, 2003 to Kevin Ryan (7)
--------------------------------------------------------------------------------
10.11       Consulting Agreement made as of May 28, 2003 with McCary & Rood 
(7)                                                 
--------------------------------------------------------------------------------
  10.12       Irrevocable Proxy Coupled with an Interest granted to Ryan Capital
Management, Inc. dated November 26, 2003 (7)        
--------------------------------------------------------------------------------
10.13       Settlement Agreement and Release between Crystalix Group        
            International, Inc. and John S. Woodward dated July 21, 2004 (8)
--------------------------------------------------------------------------------
10.14       Amended and Restated Convertible Promissory Note to John S.     
Woodward dated July 21, 2004 (8)                    
--------------------------------------------------------------------------------
10.15       Settlement Agreement and Release among Crystalix Group          
           International, Inc. Kevin T Ryan, Ryan Capital Management, Inc.
and McCary & Rood dated July 21, 2004.  (8)         
--------------------------------------------------------------------------------
 10.16       Amended and Restated Convertible Promissory Note to Kevin T. Ryan
dated July 21, 2004 (8)                             
--------------------------------------------------------------------------------
10.17       Promissory Note to Ryan Capital Management, Inc. dated July 21, 
2004 (8)                                            
--------------------------------------------------------------------------------
  10.18       Promissory Note for $280,000 to McCary & Rood dated August 1, 2004
(8)                                                 
--------------------------------------------------------------------------------
  10.19       Promissory Note for $214,037 to McCary & Rood dated August 1, 2004
(8)                                                 
--------------------------------------------------------------------------------
  10.20       Warrant to Purchase Common Stock of Crystalix Group International,
Inc. issued to Kevin T. Ryan (8)                    
--------------------------------------------------------------------------------
10.21       Registration Rights Agreement (8)                               
--------------------------------------------------------------------------------
10.22       Convertible Promissory Note to CMKXTREME.COM dated September 23,
2004 (9)                                            
--------------------------------------------------------------------------------
10.23       Warrant to Purchase Common Stock issued to CMKXTREME.COM (9)    
--------------------------------------------------------------------------------
16.1        Letter from Deloitte & Touche LLP (10)                          
--------------------------------------------------------------------------------
16.2        Letter from Stonefield Josephson, Inc. (11)                     
--------------------------------------------------------------------------------
21.1        Subsidiaries of Crystalix Group International, Inc. (4)         
--------------------------------------------------------------------------------
 23.1        Consent of Dill Dill Carr Stonbraker & Hutchings, P.C.  Reference
is made to Exhibit 5.1                              
--------------------------------------------------------------------------------

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REGULATION                                                                      
S-B NUMBER                              EXHIBIT                                 
--------------------------------------------------------------------------------
23.2        Consent of Stonefield Josephson, Inc.                           
--------------------------------------------------------------------------------
------------------                                                              
(1)   Incorporated by reference to the exhibits to the registrant's current     
report on Form 8-K, filed October 9, 2002.                          
(2)   Incorporated by reference to the exhibits to the registrant's current     
report on Form 8-K, filed December 4, 2002.                         
(3)   Incorporated by reference to the exhibits to the registrant's current     
report on Form 8-K, filed December 30, 2002.                        
(4)   Incorporated by reference to the exhibits to the registrant's annual      
  report on Form 10-KSB for the fiscal year ended December 31,     2002.
(5)   Incorporated by reference to the exhibits to the registrant's registration
statement on Form 10-SB, filed March 3, 2000.                       
(6)   Incorporated by reference to the exhibits to the registrant's quarterly   
report on Form 10-QSB for the quarter ended September 30, 2003.     
(7)   Incorporated by reference to the exhibits to the registrant's annual      
report on Form 10-KSB for the year ended December 31, 2003.         
(8)   Incorporated by reference to the exhibits to the registrant's quarterly   
report on Form 10-QSB/A for the quarter ended June 30, 2004.        
(9)   Incorporated by reference to the exhibits to the registrant's current     
report on Form 8-K, filed September 29, 2004.                       
(10)  Incorporated by reference to the exhibits to the registrant's current     
report on Form 8-K, filed September 13, 2002.                       
(11)  Incorporated by reference to the exhibits to the registrant's amended     
current report on Form 8-K, filed July 13, 2004.                    

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ITEM 28.   UNDERTAKINGS                                                         

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers and 
controlling persons of the issuer pursuant to the foregoing provisions, or      
otherwise, the issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed  
in the Act and is, therefore, unenforceable.                                    

        In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a     
director, officer or controlling person of the issuer in the successful defense 
of any action, suit or proceeding) is asserted by such director, officer or     
controlling person in connection with the securities being registered, the      
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the        
question whether such indemnification by it is against public policy as         
expressed in the Act and will be governed by the final adjudication of such     
issue.                                                                          

The Registrant hereby undertakes to:                          

         (1)   File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:       

             (i)    Include any prospectus required by section
10(a)(3) of the Securities Act;                                                 

                (ii)   Reflect in the prospectus any facts or events
which, individually or together, represent a                                    
fundamental change in the information in the registration statement.            
Notwithstanding the foregoing, any increase or decrease in volume of securities 
offered (if the total dollar value of securities offered would not exceed that  
which was registered) and any deviation from the low or high end of the         
estimated maximum offering range may be reflected in the form of prospectus     
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the     
changes in volume and price represent no more than a 20% change in the maximum  
aggregate offering price set forth in the "Calculation of Registration Fee"     
table in the effective registration statement.                                  

             (iii)  Include any additional or changed material
information on the plan of distribution.                                        

             (2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities 
offered, and the offering of the securities at that time to be the initial bona 
fide offering.                                                                  

               (3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.            

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SIGNATURES

        In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration     
statement to be signed on its behalf by the undersigned, in the City of Las     
Vegas, State of Nevada on February 11, 2005.                                    

                         CRYSTALIX GROUP INTERNATIONAL, INC.

           By: /s/ KEVIN T. RYAN
                                      ------------------------------------------
                                  Kevin T. Ryan, Chief Executive Officer

         In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:                                                            

                                                        [Enlarge/Download Table]

SIGNATURE                             TITLE                                          DATE             
                                                                                                      

/s/ KEVIN T. RYAN                     Chief Executive Officer and Director                            
------------------------------------  (Principal Executive Officer)                  February 11, 2005
Kevin T. Ryan                                                                                         

                                      Executive Vice President, Treasurer, Chief                      
/s/ ROBERT McDERMOTT                  Financial Officer, and Director (Principal                      
------------------------------------  Financial Officer)                             February 11, 2005
Robert McDermott                                                                                      

                                      Corporate Secretary, Vice President Finance                     
/s/ PATTY HILL                        and Administration and Controller (Principal                    
------------------------------------  Accounting Officer)                            February 11, 2005
Patty Hill                                                                                            

                                      Executive Vice President, Chief Technical                       
------------------------------------  Officer and Director                                            
Rainer Eissing                                                                                        

                                      Vice President, Assistant Secretary, Director                   
/s/ OSWALDUS VAN DAM                  of Technical Operations and Director           February 11, 2005
------------------------------------                                                                  
Oswaldus Van Dam                                                                                      

------------------------------------  Director                                                        
Marc Janssens                                                                                         

/s/ TAMER MUFTIZADE                                                                                   
------------------------------------  Director                                       February 11, 2005
Tamer Muftizade                                                                                       

/s/ JOHN S. WOODWARD                  Director                                       February 11, 2005
------------------------------------                                                                  
John S. Woodward                                                                                      


II-6

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SB-2’ Filing		Date		First		Last			Other Filings
		4/27/10		22		67
		12/31/08		55
		12/31/07		55					10-K,  10-K/A,  8-K
		10/1/07		16		43
		7/1/07		15		42
		12/31/06		55					10KSB,  NT 10-K
		5/27/06		66
		12/31/05		55					10KSB,  10KSB/A,  5
		12/1/05		15		43			8-K
		9/30/05		32		33			10QSB
		5/1/05		15		43
		3/1/05		16		43
Filed on:		2/11/05		1		76
		2/8/05		2		10
		1/1/05		9		43
		12/31/04		5		68			10KSB,  NT 10-K
		12/15/04		58		59
		12/1/04		15		43
		11/30/04		15		42
		11/1/04		16		43
		9/30/04		6		44			10-Q
		9/29/04		74					8-K
		9/23/04		16		73			10QSB/A,  3,  4,  8-K
		8/31/04		15		42
		8/1/04		15		73
		7/31/04		30
		7/21/04		15		73			4,  4/A
		7/13/04		74					8-K/A
		6/30/04		10		74			10QSB,  10QSB/A
		6/11/04		10
		5/10/04		17		18			8-K,  8-K/A
		3/31/04		10		59			10QSB
		3/19/04		69
		3/15/04		58
		2/27/04		45
		1/20/04		29		62
		12/31/03		10		74			10KSB,  5,  5/A,  NT 10-K
		12/24/03		59
		12/15/03		58
		12/1/03		30		73
		11/26/03		73					10QSB
		11/25/03		23
		11/14/03		14		70
		10/21/03		73
		10/1/03		67
		9/30/03		10		74			10QSB,  NT 10-Q
		7/24/03		70
		6/30/03		10		69			10QSB,  NT 10-Q
		6/15/03		58
		6/2/03		16		69
		5/31/03		58
		5/28/03		15		73
		5/12/03		69
		4/30/03		63
		4/28/03		30		66
		4/23/03		69
		4/1/03		16		62
		3/31/03		10		69			10QSB,  NT 10-K,  NT 10-Q
		3/5/03		68
		3/4/03		69
		2/27/03		68
		2/12/03		24		68
		1/31/03		58
		1/1/03		29
		12/31/02		10		74			10KSB,  NT 10-K
		12/30/02		74					8-K/A,  NT 10-K
		12/23/02		11		73			8-K,  8-K/A
		12/20/02		29		73
		12/15/02		19		67			8-K
		12/9/02		10
		12/4/02		74					8-K,  DEF 14C,  PRE 14C
		11/26/02		18		63
		11/22/02		18		51
		11/12/02		72
		10/24/02		21		57
		10/9/02		63		74			8-K
		10/4/02		11		72			3,  8-K,  8-K/A
		9/30/02		10					10-Q,  NT 10-K
		9/13/02		74					10-Q,  8-K
		6/30/02		10					10-Q
		6/25/02		18					8-K
		3/31/02		10					10-Q
		1/1/02		22		72
		12/31/01		49		65			10-K405
		12/15/01		54
		12/13/01		73
		11/9/01		19
		11/6/01		23
		4/5/01		73
		3/3/00		74					10-12G
		9/14/99		18
		9/7/99		18
		8/11/99		18
		2/17/99		72
		12/10/96		23
		11/15/96		18
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