<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
                  JUNE 30, 2001.

                                                     OR

[ ]               TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934
                  FOR THE TRANSITION FROM _______ TO ________.

                         COMMISSION FILE NUMBER 0-29369

                      CREATIVE TECHNOLOGIES HOLDINGS, INC.
                      ------------------------------------
                 (Name of Small Business Issuer in its charter)


                Nevada                                88-0409146
   ---------------------------------               --------------
   (State or other jurisdiction of                 (I.R.S. Employer
    incorporation or organization)                 Identification No.)

1800 Avenue of the Stars, Suite 600
      Los Angeles, California                            90067
---------------------------------------                -------
(Address of principal executive offices)              (Zip code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

         As of June 30, 2001, there were outstanding 14,200,000 shares of the
         Registrant's Common Stock, $.001 par value.

Transitional Small Business Disclosure Format: Yes [ ] No [X]


<PAGE>   2
                                     PART I

                              FINANCIAL INFORMATION

Item 1.   Financial Statements


              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                        CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001


                                TABLE OF CONTENTS





<TABLE>
<CAPTION>
                                                                       PAGE(S)
<S>                                                                    <C>
ACCOUNTANTS' REVIEW REPORT                                               1

CONSOLIDATED FINANCIAL STATEMENTS

         BALANCE SHEET                                                   2

         STATEMENTS OF OPERATIONS                                        3

         STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                   4

         STATEMENTS OF CASH FLOWS                                        5

         NOTES TO FINANCIAL STATEMENTS                                   6 - 12
</TABLE>


<PAGE>   3

                         JOSEFINA C. DE LA CRUZ, C.P.A.
                           A Professional Corporation


Josefina C. De la Cruz, CPA                        2700 N Main Street, Suite 900
Rebecca Q. Masinsin, CPA                           Santa Ana, CA 92705
Timothy Vo, CPA                                    Tel. No.  (714) 558-8703
Marissa B. Zacarias, IT Manager                    Fax No.  (714) 558-7940
--------------------------------------------------------------------------------

                           ACCOUNTANT'S REVIEW REPORT

To the Board of Directors
Creative Technologies Holdings, Inc. and Subsidiaries
Los Angeles, California

We have reviewed the accompanying consolidated balance sheet of Creative
Technologies Holdings, Inc., and Subsidiaries (Development Stage Companies), as
of June 30, 2001 and the related consolidated statements of operations, changes
in stockholders' equity and cash flows for the six months then ended, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial statements is the representation of the
management of Creative Technologies Holdings, Inc. and Subsidiaries. The
financial statements of Creative Technologies Holdings, Inc. as of June 30, 2000
and the period December 31, 1996 (inception) to June 30, 2000 were audited by
other auditors whose report dated July 14, 2000, expressed an unqualified
opinion on those financial statements.

A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 13 to the financial
statements, the Company has no established source of revenue, suffered recurring
losses from operations and a net capital deficiency that raise substantial doubt
about its ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

Josefina C. de la Cruz, CPA
A Professional Corporation
Santa Ana, California

August 8, 2001

--------------------------------------------------------------------------------
           MEMBER - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
                               SEC PRACTICE GROUP
               CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
                               TAX PRACTICE GROUP


                                        1


<PAGE>   4
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                           CONSOLIDATED BALANCE SHEET
                                  (UNAUDITED)
                                  JUNE 30, 2001

<TABLE>
<S>                                                                  <C>
                                     ASSETS

CURRENT ASSETS
         Cash                                                        $    27,837
         Advances to employees                                            17,179
         Prepaid expenses                                                 12,988
         Due from affiliates (Note 4)                                     92,465
                                                                     -----------

         Total current assets                                            150,469
                                                                     -----------

PROPERTY AND EQUIPMENT, NET (Note 3)                                     172,933
                                                                     -----------

OTHER ASSETS
         Deposits                                                         25,976
                                                                     -----------

         Total other assets                                               25,976
                                                                     -----------

TOTAL ASSETS                                                         $   349,378
                                                                     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES (Note 5)
         Accounts payable                                            $   697,613
         Payroll taxes payable                                            10,741
         Loan payable (Note 6)                                            50,000
                                                                     -----------

         Total current liabilities                                       758,354

MINORITY INTERESTS (Note 8)                                             (720,378)
                                                                     -----------

STOCKHOLDERS' EQUITY (Note 9)
         Common stock,par value $0.001;  25,000,000 shares
            authorized; 14,200,000 shares issued and outstanding          14,200
         Paid-in capital                                               2,525,142
         Accumulated deficit                                          (2,227,940)
                                                                     -----------

         Total stockholders' equity                                      311,402
                                                                     -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $   349,378
                                                                     ===========
</TABLE>


             See accompanying notes and accountants' review report.


                                        2

<PAGE>   5
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                  CUMULATIVE FROM
                                                   12/6/96 (DATE        FOR THE THREE MONTHS               FOR THE SIX MONTHS
                                                  OF INCEPTION) TO             ENDED                               ENDED
                                                   JUNE 30, 2001              JUNE 30                             JUNE 30
                                                  ---------------- -----------------------------      -----------------------------
                                                                       2001             2000              2001             2000
                                                                   ------------      -----------      ------------      -----------
<S>                                               <C>              <C>               <C>              <C>               <C>
REVENUE                                           $        --      $         --      $        --      $         --      $        --
                                                  -----------      ------------      -----------      ------------      -----------

EXPENSES

       General  and Administrative Expenses         2,680,540           251,153           65,812         1,291,335           65,812
       Development Expenses                           114,796                --               --                --               --
       Depreciation and Amortization (Note 3)          49,781            10,911               --            31,800               --
                                                  -----------      ------------      -----------      ------------      -----------

       TOTAL EXPENSES                               2,845,117           262,064           65,812         1,323,135           65,812
                                                  -----------      ------------      -----------      ------------      -----------

NET OPERATING LOSS                                 (2,845,117)         (262,064)         (65,812)       (1,323,135)         (65,812)

OTHER INCOME (EXPENSE)

       Interest Income                                  1,350                --               --               753               --
       Loss on Disposal of Assets (Note 7)           (158,551)         (158,551)              --          (158,551)              --
                                                  -----------      ------------      -----------      ------------      -----------

       TOTAL OTHER INCOME AND EXPENSES               (157,201)         (158,551)              --          (157,798)              --
                                                  -----------      ------------      -----------      ------------      -----------

NET LOSS BEFORE MINORITY INTERESTS                 (3,002,318)         (420,615)         (65,812)       (1,480,933)         (65,812)

MINORITY INTERESTS' SHARE OF LOSS                     774,378            98,812               --           374,183               --
                                                  -----------      ------------      -----------      ------------      -----------

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS        $(2,227,940)     $   (321,803)     $   (65,812)     $ (1,106,750)     $   (65,812)
                                                  ===========      ============      ===========      ============      ===========

NET LOSS PER COMMON SHARE

       BASIC                                                             ($0.03)          ($0.03)           ($0.09)          ($0.03)
                                                                   ============      ===========      ============      ===========
       DILUTED                                                           ($0.03)          ($0.03)           ($0.09)          ($0.03)
                                                                   ============      ===========      ============      ===========

WEIGHTED AVERAGE SHARES OUTSTANDING

       BASIC                                                         12,600,000        2,100,000        12,600,000        2,100,000
                                                                   ============      ===========      ============      ===========
       DILUTED                                                       12,600,000        2,100,000        12,600,000        2,100,000
                                                                   ============      ===========      ============      ===========
</TABLE>



             See accompanying notes and accountants' review report.

                                        3


<PAGE>   6
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
               FROM DECEMBER 31, 1996 (INCEPTION) TO JUNE 30, 2001




<TABLE>
<CAPTION>
                                                                               ADDITIONAL                         TOTAL
                                                    COMMON STOCK                 PAID-IN       ACCUMULATED     STOCKHOLDERS'
                                               SHARES           AMOUNT           CAPITAL         DEFICIT          EQUITY
                                            -----------      -----------      -----------      -----------      -----------
<S>                                         <C>              <C>              <C>              <C>             <C>
Balance, December 31, 1996                       21,000      $     2,100      $        --      $    (2,100)     $        --

Net loss year ended December 31, 1997                                                                   --               --
                                            -----------      -----------      -----------      -----------      -----------

Balance, December 31, 1997                       21,000            2,100               --           (2,100)              --

Net loss year ended
      December 31, 1998                                                                                 --               --
                                            -----------      -----------      -----------      -----------      -----------

Balance, December 31, 1998                       21,000            2,100               --           (2,100)              --

November 29, 1999
      Adjustment from No Par Value
      to $0.001 on 21,000 shares                                  (2,079)           2,079                                --

November 29, 1999
      Forward Stock Split 100:1               2,079,000            2,079           (2,079)                               --

Net loss year ended
      December 31, 1999                                                                               (350)            (350)
                                            -----------      -----------      -----------      -----------      -----------

Balance, December 31, 1999                    2,100,000            2,100               --           (2,450)            (350)

Issuance of 8,500,000 shares of
      common stock in exchange
      for 500,000 common shares of
      a Subsidiary on October 25, 2000        8,500,000            8,500          491,500               --          500,000

Issuance of 2,000,000 shares in
      exchange for cancellation of
      $500,000 debt on
      November 8, 2000                        2,000,000            2,000          498,000               --          500,000

Net loss for the year ended
      December 31, 2000                                               --               --       (1,118,740)      (1,118,740)
                                            -----------      -----------      -----------      -----------      -----------

Balance, December 31, 2000                   12,600,000           12,600          989,500       (1,121,190)        (119,090)

Issuance of 1,600,000 shares in
      exchange for cancellation of
       $1,537,242 debt on June 30, 2001       1,600,000            1,600        1,535,642               --        1,537,242

Net loss for the six months
      ended June 30, 2001                                                                       (1,106,750)      (1,106,750)
                                            -----------      -----------      -----------      -----------      -----------

Balance, June 30, 2001                       14,200,000      $    14,200      $ 2,525,142      $(2,227,940)     $   311,402
                                            ===========      ===========      ===========      ===========      ===========
</TABLE>


             See accompanying notes and accountants' review report.


                                        4


<PAGE>   7
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
     CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                                                               Cumulative from
                                                                              12/6/96 (Date of
                                                                               Inception) to
                                                                                June 30, 2001        2001             2000
                                                                              -----------------   ------------     ---------
<S>                                                                           <C>                 <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
               Net loss                                                          $(2,227,940)     $(1,106,750)     $ (65,812)
               Adjustment to reconcile net loss to net cash used
               by operating activities
                        Depreciation and amortization                                 49,781           31,800             --
                        Minority interests in net loss of subsidiary                (774,378)        (374,183)            --
                        (Gain) loss on disposal of property                           158,551          158,551             --
                        Decrease (increase) in:
                                 Advances to employees                               (17,179)            (305)            --
                                 Prepaid expenses                                    (77,928)              --             --
                                 Other receivables                                   (83,746)         (53,746)       (11,337)
                                 Security deposits                                    38,964           51,952             --
                        Increase (decrease) in:
                                 Accounts payable                                    684,652          186,455            202
                                 Accrued liabilities                                  66,960           55,120          6,711
                                 Advances from officers                               24,750               --             --
                                 Payroll taxes payable                                10,741          (19,451)         3,739
                                                                                 -----------      -----------      ---------
                                   NET CASH USED IN OPERATING ACTIVITIES          (2,146,772)      (1,070,557)       (66,497)
                                                                                 -----------      -----------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES
               Purchase of property and equipment                                   (374,071)         (17,840)            --
               Principal payments on notes                                            (5,833)              --             --
               Principal payments on capital lease                                    (1,361)            (693)            --
                                                                                 -----------      -----------      ---------
                                   NET CASH USED IN INVESTING ACTIVITIES            (381,265)         (18,533)            --
                                                                                 -----------      -----------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES
               Proceeds from issuance of common stock                              2,039,342        1,537,242        100,000
               Increase in notes receivable                                         (102,115)              --             --
               Increase in due to affiliates                                          30,147           30,147             --
               Proceeds of notes payable                                           1,057,300               --             --
               Proceeds from line of credit                                           50,000               --             --
               Payment of long term debt                                            (518,800)        (518,800)            --
                                                                                 -----------      -----------      ---------
                                   NET CASH PROVIDED BY FINANCING ACTIVITIES       2,555,874        1,048,589        100,000
                                                                                 -----------      -----------      ---------

                                     NET INCREASE (DECREASE) IN CASH                  27,837          (40,501)        33,503

                                       CASH AT BEGINNING OF PERIOD                        --           68,338             --
                                                                                 -----------      -----------      ---------

                                         CASH AT END OF PERIOD                   $    27,837      $    27,837      $  33,503
                                                                                 ===========      ===========      =========
</TABLE>



             See accompanying notes and accountants' review report.

                                        5


<PAGE>   8
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001

NOTE 1 - ORGANIZATION HISTORY AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS

        The accompanying consolidated financial statements include the accounts
        of Creative Technologies Holdings Inc. (CTHI), formerly Morning Splendor
        Management, Inc. and its Subsidiaries, Creative Technology & Interactive
        Entertainment Group, Inc. (CTIEGI) and Creative Technology &
        Entertainment Group, Inc. (CTEGI) collectively referred to as "the
        Company". CTIEGI is 100% owned Subsidiary and CTEGI is 70% subsidiary of
        CTIEGI.

        Creative Technologies Holdings Inc. was incorporated as Morning Splendor
        Management, Inc. on December 6, 1996 under the laws of the State of
        Nevada to engage in any lawful activity, including but not limited to
        selected mergers and acquisitions. The Company has been in the
        developmental stage since inception. Other than the acquisition of
        CTIEGI, a subsidiary, the Company has no operating history and revenue.

        Creative Technology and Interactive Entertainment Group, Inc. (CTIEGI)
        was incorporated on June 26, 2000 under the laws of the State of Nevada.
        Other than the issuance of stock to its original shareholders, and
        acquisition of about 70% of CTEGI, a development stage company, it has
        no operations and revenues as of June 30, 2001.

        Creative Technology and Entertainment Group, Inc. (CTEGI) was
        incorporated under the laws of the State of Nevada on May 19, 2000 for
        the purpose of developing online gaming and interactive entertainment
        software. CTEGI is a development stage company and as such has no
        revenues or earnings from operations.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Consolidation Policy

                  The consolidated financial statements include the accounts of
                  the Company and all of its wholly owned and majority-owned
                  subsidiaries. All significant inter-company accounts and
                  transactions have been eliminated in consolidation.
                  Investments in unconsolidated affiliates are accounted for
                  using the equity method when the Company owns at least 20% but
                  no more than 50% of such affiliates. Under the equity method,
                  the Company records its proportionate shares of profits and
                  losses based on its percentage interest in earnings of
                  companies 50% or less.

         Method of Accounting

                  The Company prepares its financial statements on the accrual
                  method of accounting, recognizing income when earned and
                  expenses when incurred.



                                        6

<PAGE>   9
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001

         Estimates

                  The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions that affect the reported
                  amounts of assets and liabilities and disclosure of contingent
                  assets and liabilities at the date of the financial statements
                  and the reported amounts of revenues and expenses during the
                  reporting period. Actual results could differ from those
                  estimates.

         Cash and Cash Equivalents

                  The Company considers all highly liquid investments with
                  maturity of Six months or less to be cash equivalents for
                  purpose of reporting cash flows.

         Property, Plant and Equipment

                  Property, plant and equipment are stated at cost. Depreciation
                  is computed using the straight-line method over the estimated
                  useful lives of the related assets, less residual value where
                  appropriate as follows:


<TABLE>
<S>                                                  <C>
                    Software                         3 years
                    Office Equipment                 5 years
                    Furniture and Fixtures           7 years
                    Leasehold Improvements           5 years or remaining term of
                                                       lease, whichever is shorter
</TABLE>



         Income Taxes

                  Income taxes are provided for using the liability method of
                  accounting in accordance with Statement of Financial
                  Accounting Standards No. 109 (SFAS 109), "Accounting for
                  Income Taxes." A deferred tax asset or liability is recorded
                  for all temporary differences between financial and tax
                  reporting. Deferred tax expense (benefit) results from the net
                  change during the year of deferred tax assets and liabilities.

         Reporting on Costs of Start-Up Activities

                  Statement of Position 98-5 (SOP 98-5), "Reporting on the Costs
                  of Start-Up Activities" provides guidance on the financial
                  reporting of start-up and organization costs. It requires most
                  costs of start-up activities and organization costs to be
                  expended as incurred. With the adoption of SOP 98-5, there has
                  been little or no effect on the company's financial
                  statements.


                                        7

<PAGE>   10
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001

Research and Development Costs

                  In accordance with Statement of Financial Accounting Standards
                  No. 2 (SFAS 2), "Accounting for Research and Development
                  Costs," all research and development (R&D) costs are expensed
                  when they are incurred. Assets used in R&D activity, such as
                  machinery, equipment, facilities and patents that have
                  alternative future use either in R&D activities or otherwise
                  are capitalized.

         Loss Per Share

                  Net loss per share is provided in accordance with Statement of
                  Financial Accounting Standards No. 128 (SFAS 128), "Earnings
                  Per Share." Basic loss per share is computed by dividing
                  losses available to common stockholders by the weighted
                  average number of common shares outstanding during the period.
                  Diluted loss per share reflects per share amounts that would
                  have resulted if dilutive common stock equivalents had been
                  converted to common stock. As of June 30, 2001, the Company
                  had no dilutive common stock such as stock options.

         Year End

                  The Company has selected December 31 as its year-end.


NOTE 3 - PROPERTY AND EQUIPMENT, NET

         Property and equipment as of June 30, 2001 consist of the following:


<TABLE>
<CAPTION>
                                            CTHI         CTEGI           TOTAL
                                          -------      ---------      ---------
<S>                                       <C>          <C>            <C>
         Office equipment                 $    --      $ 148,965      $ 148,965
         Software                              --         50,387         50,387
         Furniture and fixtures             2,731             --          2,731
         Automobile                            --          2,900          2,900
                                          -------      ---------      ---------

         Total property and equipment       2,731        202,252        204,983
         Accumulated depreciation            (290)       (31,760)       (32,050)
                                          -------      ---------      ---------

         Property and equipment, net      $ 2,441      $ 170,492      $ 172,933
                                          =======      =========      =========
</TABLE>

         Depreciation and amortization expense for the six months ended June 30,
         2001 amounted to $31,800.



                                        8


<PAGE>   11

              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001


NOTE 4 - DUE FROM AFFILIATES

         Other receivables consist of total funds due from other affiliates in
         the amount of $92,465.

NOTE 5 - CURRENT LIABILITIES

         Current liabilities consist of the following:


<TABLE>
<CAPTION>
                                         CTHI       CTIEGI         CTEGI           TOTAL
                                      -------       ------       --------       ---------
<S>                                   <C>           <C>          <C>             <C>
         Accounts payable             $33,000         $--        $664,613        $697,613
         Payroll taxes payable             --          --          10,741          10,741
         Loan payable                      --          --          50,000          50,000
                                      -------        ----        --------        --------
              Total                   $33,000         $--        $725,354        $758,354
                                      =======        ====        ========        ========
</TABLE>



NOTE 6 - LOAN PAYABLE

         CTEGI has a $50,000 promissory note payable on demand in the form of a
         line of credit with a financial institution. The line carries a
         variable rate of interest at the Wall Street Journal prime rate plus
         1.00% per annum (10.5% at June 30, 2001). Monthly payment requirements
         on the line consist of accrued interest only. As of June 30, 2001, the
         Company owed $50,000 against the credit line and is personally
         guaranteed by an officer of CTEGI.


NOTE 7 - LOSS ON DISPOSITION OF PROPERTY AND EQUIPMENT

         CTEGI terminated its lease and abandoned the leased office premises in
         Falls Church, Virginia. As a result, it incurred a loss on the
         unamortized leasehold improvements in the amount of $25,491.
         Additionally, other losses on disposition of equipments and phone
         system amounted to $133,059. Total loss on disposition of CTEGI's
         equipment and other assets total $158,551 at June 30, 2001.


NOTE 8 - MINORITY INTERESTS

         On August 21, 2000, a stock investment agreement with conditional
         promissory note was entered between CTEGI and CTIE. CTIE acquired about
         73.3% of CTEGI's total issued and outstanding shares consisting of
         fourteen million (14,000,000) shares for four million three hundred
         fifty four thousand dollars (US$4,354,000). Terms and conditions of the
         agreement are:



                                        9
<PAGE>   12

              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001

                  Initial payment was $400,000 and the balance of US$3,954,000
                  payable in (10) monthly consecutive installments on the 15th
                  day of each month beginning August 2000 and ending on May 2001
                  (the maturity date). The obligation is represented by a
                  non-interest bearing conditional promissory note.

                  The payments on the promissory note are subject to the
                  realization of the Company's expected financial projection in
                  the "Business Plan" and achievement of the "Development
                  Milestone Projection" for the development of Inner G software
                  system.

                  At June 30, 2001, the balance of the conditional promissory
                  note receivable by CTEGI is $1,961,500. Negotiations are in
                  process for the extension and revision of the stock purchase
                  agreement. Other than the minority interest below, all the
                  inter-company accounts have been eliminated.

         Minority interests consist of the following:


<TABLE>
<S>                                                  <C>
         5,333,334 shares of common stock,
            par value $.01                           $  53,334
         Paid-in capital                                   666
         Minority interests' share of deficit         (774,378)
                                                     ---------

         Total Minority Interests                    $(720,378)
                                                     =========
</TABLE>


NOTE 9 - STOCKHOLDERS' EQUITY

         The authorized common stock of CTHI consists of 25,000,000 shares with
         a par value of $0.001 of which 12,600,000 common shares are issued and
         outstanding at June 30, 2001.

         On December 6, 1996, CTHI issued 21,000 shares of its no par value
         common stock in consideration of $2,100 in cash.

         On November 29, 1999, the State of Nevada approved the restated
         Articles of Incorporation of CTHI that increased its capitalization
         from 25,000 shares to 25,000,000 shares of common stock. The no par
         value of its common stock was changed to $0.001 par value and the value
         of the common shares was adjusted by $2,079.00 decrease in common stock
         and increase of paid-in capital by the same amount. On November 29,
         1999, CTHI forward split its common stock 100:1; thus increasing the
         number of outstanding shares of common stock from 21,000 shares to
         2,100,000 shares.



                                       10

<PAGE>   13
              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001



         On August 31, 2000, CTIEGI issued 500,000 shares of its $0.001 par
         value common stock in consideration of $500,000 cash. These shares were
         exchanged for CTHI shares under a plan and agreement of reorganization
         with CTIEGI and Morgan & Lynch, Inc. (MLI) on October 25, 2000. Under
         the plan, the Company issued 8,500,000 shares of its common stock to
         MLI in exchange for MLI's ownership of 500,000 share of common stock of
         CTIEGI.

         On November 8, 2000, the Company entered into a stock purchase
         agreement with Netsat Holdings, Limited (NHL), a foreign corporation.
         Pursuant to the agreement, the Company issued 2,000,000 shares of its
         common stock in exchange for cancellation of $500,000 debt to NHL.

         On June 25, 2001, CTHI entered into a stock purchase agreement with
         NetSat Holdings, Ltd., whereby CTHI issued 1,600,000 shares of common
         stock at a price of $0.96 per share in cancellation of indebtedness
         owed to NetSat Holdings, Ltd., for a total aggregate amount of
         $1,537,242.

         The issued and outstanding shares of 14,200,000 common shares at June
         30, 2001 are as follows:


<TABLE>
<S>                                      <C>
         Regulation S shares             3,600,000
         Other Restricted Shares         9,950,000
         Free Trading Shares               650,000
                                        ----------
           Total                        14,200,000
                                        ==========
</TABLE>


NOTE 10 - INCOME TAXES

         There is no provision for federal income taxes for the six months ended
         June 30, 2001 due to the net loss sustained during the period. No state
         income tax provision was made because in Nevada, the state of the
         Company's domicile and operations, taxes on income are not imposed.

         The Company currently has no issues that create timing differences that
         would mandate deferred tax expense. Net operating losses would create
         possible tax assets in future years. Due to the uncertainty as to the
         utilization of net operating loss carry forwards, a valuation allowance
         has been made as to the utilization of net operating loss carry
         forward, to the extent of any tax benefit that net operating losses may
         generate.

         The Company's total deferred tax assets as of June 30, 2001 is as
         follows:



                                       11


<PAGE>   14

              CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 2001



<TABLE>
<S>                                                       <C>
         Net operating loss carry forward                 $ 3,002,318
                                                          ===========

         Current tax asset value of net operating
             loss carry forwards at statutory rate        $   450,348
         Valuation allowance                                 (450,348)
                                                          -----------

         Net deferred tax (asset) liability               $        --
                                                          ===========

         Current Income Tax Expense                       $        --
                                                          ===========

         Deferred Income Tax Expense (Benefit)            $        --
                                                          ===========
</TABLE>


NOTE 11 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

         There were no cash payments made for income taxes for the six months
         ended June 30, 2001. Cash payments for interest during the year
         amounted to $8,346.00.


NOTE 12 - COMMITMENTS

         The Company leases its corporate headquarters under an operating lease
         expiring in December 2001. The agreement does not provide for an option
         to extend the terms of the lease.

         Rent expense for the six months ended June 30, 2001 amounted to
$100,893.


NOTE 13 - GOING CONCERN

         The Company's financial statements are prepared using generally
         accepted accounting principles applicable to a going concern, which
         contemplates the realization of assets and liquidation of liabilities
         in the normal course of business. However, the Company does not have an
         established source of revenues to cover its development and operating
         costs and to allow it to continue as a going concern. Current sources
         of funds for development costs of the Company are periodic funding of
         and advances from its investors. Funding from investors, however, have
         been set for a specified period and amount. The Company's only source
         of funds would be additional advances from its investors if it
         continues to have no source of revenues.

         On April 9, 2001, CTEGI, the subsidiary that operates in Falls Church,
         Virginia, has downsized its operations and terminated majority of its
         employees involved in its development operations. The funding of
         CTEGI's technology development has been temporarily deferred as a
         result of CTEGI's major changes in its business development plan.



                                       12
<PAGE>   15


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations


                  All statements, trend analysis and other information contained
in this Report relative to markets for the Company's products and trends in
revenues, gross margin and anticipated expense levels, as well as other
statements including words such as "believe," "anticipate," "expect,"
"estimate," "plan" and "intend" and other similar expressions, constitute
forward-looking statements. Those forward-looking statements are subject to
business and economic risks, and the Company's actual results of operations may
differ from those contained in the forward-looking statements. The following
discussion of the financial condition and results of operations of the Company
should also be read in conjunction with the Financial Statements and Notes
related thereto included elsewhere in this Report.


            (1)  Results of Operations

                  The six months ended June 30, 2001 did not generate any
revenues for the company. In addition, the Company incurred general,
administrative and development expenses in the amount of $1,291,335 for the six
months ended June 30, 2001. A significant portion of this amount supported
Creative Technology and Entertainment Group, Inc., a development stage company
engaged in developing online gaming and interactive entertainment software.
Creative Technology and Entertainment Group, Inc. has no revenues or earnings
from operations.

            Net loss per share was at $0.09 for the six months ended June 30,
2001.

            (2) Liquidity

                  As of June 30, 2001, the Company had negative working capital.
The Company plans to raise additional capital through sale of its equity
securities. The additional capital will be used to provide financing necessary
to position the Company as a provider of interactive games through the Internet.


Item 3.  Qualitative and Quantitative Disclosures About Market Risk.

                  The Company has neither considered or conducted any research
concerning qualitative and quantitative market risk.



                                       13

<PAGE>   16

                                     PART II

                                OTHER INFORMATION


Item 1 - Legal Proceedings                None

Item 2 - Changes in the Rights of the Company's
                  Security Holders        None

Item 3 - Defaults by the Company on its
                  Senior Securities       None

Item 4 - Submission of Matter to Vote of Security
                  Holders                 None

Item 5 - Other Information                None

Item 6 - Exhibits and Reports on Form 8-K

                  No reports on Form 8-K were filed during the quarter for which
the report is filed.


                                    SIGNATURE

                  Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

Dated: August 15, 2001              CREATIVE TECHNOLOGIES HOLDINGS, INC.


                                                     By:  /s/ CHRIS ALBORNOZ
                                                          ----------------------
                                                          Chris Albornoz
                                                          President



                                       14