<PAGE>
                                  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 SEPTEMBER 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 September 30, 2001, there were outstanding 22,050,000 shares of the
Registrant's Common Stock, $0.001 par value.

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



                                       1
<PAGE>

                                     PART I

                              FINANCIAL INFORMATION


Item I. Financial Statements


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

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                              PAGE (S)
                                                                              --------
<S>                                                                             <C>
INDEPENDENT ACCOUNTANTS' REPORT                                                     3

CONSOLIDATED FINANCIAL STATEMENTS

        Balance Sheets                                                              4

        Statements of Operations                                                    5

        Statements of Changes in Stockholders' Equity                               6

        Statements of Cash Flows                                                    7

        Notes to Financial Statements                                          8 - 15

SUPPLEMENTARY INFORMATION

        Schedule of General, Administrative and Development Expenses               16
</TABLE>



                                       2
<PAGE>

                         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
--------------------------------------------------------------------------------


                         INDEPENDENT ACCOUNTANTS' REPORT

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

We have reviewed the accompanying consolidated balance sheets of Creative
Technologies Holdings, Inc., and Subsidiaries (Development Stage Companies), as
of September 30, 2001, and the related consolidated statements of operations,
changes in stockholders' equity and cash flows for the nine 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.

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.

Our review was made for the purpose of expressing limited assurance that there
are no material modifications that should be made to the financial statements in
order for them to be in conformity with generally accepted accounting
principles. The information included in the accompanying schedule of general,
administrative and development expenses is presented only for supplementary
analysis review of the basic financial statements, and we are not aware of any
material modifications that should be made to it.

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

November 08, 2001
--------------------------------------------------------------------------------
          MEMBER - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS'
                               SEC PRACTICE GROUP
               CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS'
                               TAX PRACTICE GROUP



                                       3
<PAGE>

              CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                           CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                           SEPTEMBER 30,              DECEMBER 31,
                                                                                2001                      2000
                                                                            (UNAUDITED)                 (AUDITED)
                                                                           -------------              ------------
<S>                                                                         <C>                        <C>
                                     ASSETS

CURRENT ASSETS
      Cash                                                                  $    16,278                $    68,338
      Advances to employees                                                       4,058                     16,874
      Prepaid expenses                                                           12,988                     64,940
                                                                            -----------                -----------
          Total current assets                                                   33,324                    150,152
                                                                            -----------                -----------

INVESTMENTS
      Investment in other company (Note 3)                                      785,000                         --

PROPERTY AND EQUIPMENT, NET (Note 4)                                             83,575                    383,245

OTHER ASSETS
      Due from affiliates                                                            --                    132,115
      Deposits                                                                   25,976                     25,976
                                                                            -----------                -----------
          Total other assets                                                     25,976                    158,091
                                                                            -----------                -----------

TOTAL ASSETS                                                                $   927,875                $   691,488
                                                                            ===========                ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES (Note 5)
      Accounts payable                                                      $   555,400                $   437,197
      Payroll taxes payable                                                         515                     30,192
      Accrued liabilities                                                        73,960                     18,840
      Advances from officers                                                     24,750                     24,750
      Due to affiliates                                                          49,599                         --
      Loans payable (Note 6)                                                     49,900                     50,000
      Notes payable                                                                  --                    586,467
      Capital lease payable -current portion                                         --                      2,681
                                                                            -----------                -----------
          Total current liabilities                                             754,124                  1,150,127
                                                                            -----------                -----------

LONG-TERM LIABILITIES
      Capital lease payable                                                          --                      6,646
                                                                            -----------                -----------

TOTAL LIABILITIES                                                               754,124                  1,156,773
                                                                            -----------                -----------

MINORITY INTERESTS (Note 8)                                                          --                         --

STOCKHOLDERS' EQUITY (Note 9)
      Common stock, par value $0.001; 25,000,000 shares
         authorized; 22,050,000 shares issued and outstanding                    22,050                     12,600
      Paid-in capital                                                         3,302,292                    989,500
      Accumulated deficit                                                    (3,150,591)                (1,467,385)
                                                                            -----------                -----------
          Total stockholders' equity                                            173,751                   (465,285)
                                                                            -----------                -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $   927,875                $   691,488
                                                                            ===========                ===========
</TABLE>



          See accompanying notes and independent accountants' report.


                                       4
<PAGE>

              CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)



<TABLE>
<CAPTION>
                                             CUMULATIVE FROM              FOR THE
                                               12/6/96 (DATE        THREE MONTHS ENDED             NINE MONTHS ENDED
                                             OF INCEPTION) TO          SEPTEMBER 30,                 SEPTEMBER 30,
                                               SEPTEMBER 30,   ----------------------------    ----------------------------
                                                   2001            2001           2000            2001            2000
                                             ----------------  ------------    ------------    ------------    ------------
<S>                                            <C>             <C>             <C>             <C>             <C>
Revenue                                        $         --    $         --    $         --    $         --    $         --
                                               ------------    ------------    ------------    ------------    ------------
Operating expenses
      General, administrative and
              development expenses                2,987,302         192,911         670,665       1,484,246         736,477
      Depreciation and amortization (Note 4)         49,918             137             751          31,937             751
                                               ------------    ------------    ------------    ------------    ------------
          Total operating expenses                3,037,220         193,048         671,416       1,516,183         737,228
                                               ------------    ------------    ------------    ------------    ------------

Loss from operations                             (3,037,220)       (193,048)       (671,416)     (1,516,183)       (737,228)

Other income (expenses)
      Interest income                                 1,350              --             105             753             105
      Interest expense                              (10,170)         (9,225)                         (9,225)
      Loss on disposal of assets (Note 7)          (158,551)             --              --        (158,551)             --
                                               ------------    ------------    ------------    ------------    ------------
      Total other income (expenses)                (167,371)         (9,225)            105        (167,023)            105
                                               ------------    ------------    ------------    ------------    ------------

Net loss before minority shareholders            (3,204,591)       (202,273)       (671,311)     (1,683,206)       (737,123)

Net loss allocated to minority shareholders          54,000              --              --              --              --
                                               ------------    ------------    ------------    ------------    ------------

Net Loss for the period                        $ (3,150,591)   $   (202,273)   $   (671,311)   $ (1,683,206)   $   (737,123)
                                               ============    ============    ============    ============    ============

Net Loss per common share                                      $      (0.02)   $      (0.32)   $      (0.13)   $      (0.35)
                                                               ============    ============    ============    ============

Weighted average number of common shares                         13,202,563       2,100,000      13,202,563       2,100,000
                                                               ============    ============    ============    ============
</TABLE>


          See accompanying notes and independent accountants' report.


                                        5
<PAGE>

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



<TABLE>
<CAPTION>

                                                    COMMON STOCK               ADDITIONAL                              TOTAL
                                           -----------------------------        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                                                 --                --        (1,464,935)        (1,464,935)
                                           -----------       -----------       -----------       -----------        -----------
Balance, December 31, 2000                  12,600,000            12,600           989,500        (1,467,385)          (465,285)

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

Issuance of 7,850,000 shares in
    exchange for cancellation of
    $785,000 debt on
    September 30, 2001                       7,850,000             7,850           777,150                              785,000

Net loss for the nine months
    ended September 30, 2001                                                                      (1,683,206)        (1,683,206)
                                           -----------       -----------       -----------       -----------        -----------

Balance, September 30, 2001                 22,050,000       $    22,050       $ 3,302,292       $(3,150,591)       $   173,751
                                           ===========       ===========       ===========       ===========        ===========
</TABLE>


          See accompanying notes and independent accountants' report.


                                       6
<PAGE>

              CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                           CUMULATIVE FROM
                                                           12/6/96 (DATE OF          NINE MONTHS ENDED
                                                            INCEPTION) TO              SEPTEMBER 30,
                                                             SEPTEMBER 30,     -----------------------------
                                                                2001              2001               2000
                                                             -----------       -----------       -----------
<S>                                                          <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net loss                                               $(3,150,591)      $(1,683,206)      $  (737,123)
      Adjustment to reconcile net loss to net cash used
       by operating activities
           Depreciation and amortization                          49,918            31,937               751
           Provision for bad debts                                85,409            85,409                --
           Minority interests in net loss of subsidiary          (54,000)               --                --
           (Gain) loss on disposal of property                   158,551           158,551                --
           Decrease (increase) in:
                 Advances to employees                            (4,058)           12,816           (13,169)
                 Prepaid expenses                                (25,976)           51,952            (8,575)
                 Other receivables                              (115,409)          (85,409)               --
                 Security deposits                               (12,988)               --           (32,300)
           Increase (decrease) in:
                 Accounts payable                                616,400           118,203           191,868
                 Accrued liabilities                              66,960            55,120            18,840
                 Due to affiliates                                49,599            49,599
                 Advances from officers                           24,750                --            95,250
                 Payroll taxes payable                               515           (29,677)           57,557
                                                             -----------       -----------       -----------
           NET CASH USED IN OPERATING ACTIVITIES              (2,310,920)       (1,234,705)         (426,901)
                                                             -----------       -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of property and equipment                        (247,049)          109,182           (53,166)
      Principal payments on notes                                 (5,833)               --                --
      Principal payments on capital lease                         (9,995)           (9,327)               --
                                                             -----------       -----------       -----------
           NET CASH USED IN INVESTING ACTIVITIES                (262,877)           99,855           (53,166)
                                                             -----------       -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from issuance of common stock                   2,039,342         1,537,242           553,650
      Increase in notes receivable                              (102,115)               --                --
      Increase in due to affiliates                              132,115           132,115                --
      Proceeds (payments) of notes payable                       470,833          (586,467)               --
      Proceeds (payments) of line of credit                       49,900              (100)               --
                                                             -----------       -----------       -----------
           NET CASH PROVIDED BY FINANCING ACTIVITIES           2,590,075         1,082,790           553,650
                                                             -----------       -----------       -----------

NET INCREASE (DECREASE) IN CASH                                   16,278           (52,060)           73,583

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

CASH, END OF PERIOD                                          $    16,278       $    16,278       $    73,583
                                                             ===========       ===========       ===========
</TABLE>


          See accompanying notes and independent accountants' report.



                                       7
<PAGE>

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



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 September 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 company has adopted the provisions of Accounting Research
                Bulletin No. 51 (ARB 51), "Consolidated Financial Statements,"
                as amended by Statement of Financial Accounting Standard No. 94
                (SFAS 94), "Consolidation of All Majority-Owned Subsidiaries"
                for its consolidation guidelines whereby a parent company that
                has controlling financial interest represented by direct or
                indirect ownership of more than 50% voting interest be
                consolidated, except those in which (a) control of the
                subsidiary is temporary or (b) significant doubt exists
                regarding the parent's ability to control the subsidiary.

                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.


                                       8
<PAGE>

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


        Method of Accounting

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

        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.



                                       9
<PAGE>

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


        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 September 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 - INVESTMENT IN OTHER COMPANY

        On September 29, 2001, Creative Technology Holdings, Inc. entered into a
        stock purchase agreement with Ridgeway Commercial Ventures, Limited
        (Ridgeway), a Belize Corporation. CTHI acquired 49% interest in LET THE
        FUN BEGIN A.V.V., a company incorporated under the laws of Aruba.

        Initial investment is $785,000 in exchange for a 6% interest bearing
        promissory note. On September 30, 2001, 7,850,000 common shares of CTHI
        were issued to Ridgeway for $0.10 a share in cancellation of the note
        payable for $785,000.

        Let the Fun Begin A.V.V. has three wholly owned subsidiaries:

                (a)     Let the Games Begin N.V., a Curacao-based offshore
                        entity formed on September 20, 2000.

                (b)     Let the Play Begin N.V., a Curacao-based offshore entity
                        formed on October 5, 1998.

                (c)     Cyber Entertainment, N.V., a Curacao-based onshore
                        entity formed on July 17, 2000.

        Cyber Entertainment, N.V. holds a gaming license from the territory of
        Curacao. At September 30, 2001, all the above entities have no
        operations. The adjustment on the investment account for the company's
        proportionate share of the income or loss for the period is zero. The
        carrying value of the investment account at September 30, 2001 is
        $785,000, the original cost of the investment.



                                       10
<PAGE>

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


NOTE 4 - PROPERTY AND EQUIPMENT, NET

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


<TABLE>
<CAPTION>
                                                  CTHI                 CTEGI               TOTAL
                                                --------             --------             --------
<S>                                             <C>                  <C>                  <C>
        Office Equipment                        $     --             $ 38,469             $ 38,469
        Software                                      --               50,387               50,387
        Furniture and fixtures                     2,731                   --                2,731
        Automobile                                    --                2,900                2,900
                                                --------             --------             --------
        Total property and equipment               2,731               91,756               94,487
        Accumulated depreciation                    (427)             (10,485)             (10,912)
                                                --------             --------             --------
        Property and equipment, net             $  2,304             $ 81,271             $ 83,575
                                                ========             ========             ========
</TABLE>

        Depreciation and amortization expense for the nine months ended
        September 30, 2001 amounted to $31,937.

NOTE 5 - CURRENT LIABILITIES

        Current liabilities consist of the following:


<TABLE>
<CAPTION>
                                            CTHI               CTIEGI               CTEGI              TOTAL
                                          --------            --------            --------            --------
<S>                                       <C>                 <C>                 <C>                 <C>
        Accounts payable                  $ 89,147            $     --            $466,253            $555,400
        Payroll taxes payable                   --                  --                 515                 515
        Accrued liabilities                     --                  --              73,960              73,960
        Advances from officers                 350                  --              24,400              24,750
        Due to affiliates                   11,099              38,500                  --              49,599
        Loan payable                            --                  --              49,900              49,900
                                          --------            --------            --------            --------
             Total                        $100,596            $ 38,500            $615,028            $754,124
                                          ========            ========            ========            ========
</TABLE>

NOTE 6 - LOAN PAYABLE

        CTEGI has a $49,900 promissory note payable on demand in the form of a
        line of credit with a financial



                                       11
<PAGE>

        institution. The line carries a variable rate of interest at the Wall
        Street Journal prime rate plus 1.00% per annum (10.5% at September 30,
        2001). Monthly payment requirements on the line consist of accrued
        interest only. As of September 30, 2001, the Company owed $49,900
        against the credit line and is personally guaranteed by an officer of
        CTEGI.






                                       12
<PAGE>

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


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 $133,060. Total loss on disposition of CTEGI's equipment and
        other assets total $158,551 at September 30, 2001.

NOTE 8 - MINORITY INTEREST

        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:

                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 September 30, 2001, the balance of the conditional promissory
                note receivable by CTEGI is $1,876,868. 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.

                At September 30, 2001, minority interests consist of the
                following:


<TABLE>
<S>                                                            <C>
                5,333,334 shares of common stock,
                   par value $0.01                              $ 53,334
                Paid-in capital                                      666
                Minority interests' share of deficit             (54,000)
                                                                --------
                Total Minority Interests                        $     --
                                                                ========
</TABLE>

                The majority interest was allocated the entire accumulated
                deficit attributed to the minority interest in excess of the
                balance of the capital stock pursuant to the Accounting Research
                Bulletin No. 51 (ARB 51), paragraph 15. If future earnings will
                materialize, the majority interest will be credited to the
                extent of such losses previously absorbed.


                                       13
<PAGE>

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


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 24,200,000 common shares are issued and
        outstanding at September 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.

        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.

        On September 29, 2001, CTHI entered into a stock purchase agreement with
        Ridgeway Commercial Ventures Ltd., a foreign corporation, whereby CTHI
        issued 7,850,000 of its $.001 par value common stock in exchange for
        cancellation of $785,000 indebtedness which the latter owed to
        Ridgeway.

        The issued and outstanding shares of 22,050,000 common shares at
        September 30, 2001 are as follows:

<TABLE>
<S>                                       <C>
        Regulation S shares                11,450,000
        Other Restricted Shares             9,950,000
        Free Trading Shares                   650,000
                                           ----------
                      Total                22,050,000
                                           ==========
</TABLE>


                                       14
<PAGE>

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

NOTE 10 - INCOME TAXES

        There is no provision for federal income taxes for the nine months ended
        September 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 September 30, 2001 is as
        follows:

<TABLE>
<S>                                                           <C>
        Net operating loss carry forward                       $(3,204,591)
                                                               ===========

        Current tax asset value of net operating
              loss carry forwards at statutory rate            $   480,690
        Valuation allowance                                       (480,690)
                                                               -----------
        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 nine months
        ended September 30, 2001. Cash payments for interest during the nine
        month period amounted to $9,225. The investment in other company for
        $785,000 was in exchange for an interest bearing promissory note that
        was cancelled by the issuance of 7,850,000 common shares of CTHI.

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 nine months ended September 30, 2001 amounted to
        $95,721.



                                       15
<PAGE>

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


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 all 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.



                                       16
<PAGE>


              CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
                          (DEVELOPMENT STAGE COMPANIES)
          SCHEDULE OF GENERAL, ADMINISTRATIVE AND DEVELOPMENT EXPENSES
                               SEPTEMBER 30, 2001
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                CUMULATIVE FROM
                                 12/06/96 (DATE               NINE MONTHS ENDED
                                OF INCEPTION) TO                 SEPTEMBER 30,
                                  SEPTEMBER 30,         --------------------------------
                                      2001                 2001                  2000
                                ----------------        ----------            ----------
<S>                               <C>                   <C>                   <C>
Salaries & wages                  $1,081,505            $  511,097            $  224,710
Professional fees                    771,206               412,356               232,593
Travel & promotions                  193,420                84,297                51,608
Rent                                 172,966                96,132                25,977
Recruiting                           128,989                27,116                68,600
Development expenses                 114,806                    --                94,932
Service contract fees                 97,000                97,000                    --
Taxes & licenses                      89,604                39,327                   395
Bad debts                             85,410                85,410                    --
Office supplies                       57,231                23,283                15,930
Telephone                             56,942                37,022                 5,145
Insurance                             48,549                15,506                 9,794
Office expenses                       43,818                26,422                 4,250
Computer expenses                     30,442                19,323                 1,211
Marketing expenses                     5,625                 5,625                    --
Postage & delivery                     5,418                 1,412                   833
Payroll administration                 3,605                 2,299                   400
Dues & subscription                      766                   619                    99
                                  ----------            ----------            ----------
                                  $2,987,302            $1,484,246            $  736,477
                                  ==========            ==========            ==========
</TABLE>


          See accompanying notes and independent accountants' report.


                                       17
<PAGE>

Item II. 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 products of Creative Technologies Holdings,
Inc. ("Company" or "Registrant") 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.

        (i) Revenues

        The nine months ended September 30, 2001 did not generate any revenues
for the Company. Its subsidiary, Creative Technology and Entertainment Group,
Inc., a development stage company engaged in developing online gaming and
interactive entertainment software, has no revenues or earnings from operations.
When the software product is completed and marketed, revenues are expected to
start.

        (ii) General, Administrative and Development Expenses

        The Company incurred general, administrative and development expenses in
the amount of $1,484,246 for the nine months ended September 30, 2001, compared
to $736,477 for the same period last year.

        Salaries and wages in the amount of $511,097 as well as professional
fees in the amount of $412,356 comprise approximately sixty percent of the
general, administrative and development expenses for the nine months ended
September 30, 2001. For the same period last year, salaries and wages in the
amount of $224,710 as well as professional fees in the amount of $232,593
comprise approximately sixty percent of general, administrative and development
expenses.

        A significant portion of general, administrative and development
expenses 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.

        (iii) Depreciation and Amortization

        Depreciation and amortization expense increased from $751 in the first
nine months of 2000 to $31,937 in the first nine months of 2001. The increase
was due to increased capital expenditures, particularly the acquisition of
office equipment and software.


                                       18
<PAGE>

        (iv) Net Loss per Share

        Net loss per share was at $0.13 for the nine months ended September 30,
2001, compared to a net loss per share of $0.35 for the same period last year.
The decrease was attributable mainly to additional issuance of shares.

        (v) Liquidity

        Since its formation, the Company has financed its operating activities
through funds from investors. Its investment in Let the Fun Begin A.V.V. was
financed through a note which was converted to equity stock.

        As of September 30, 2001, the Company had an accumulated deficit in the
amount of $3,150,591. Investors of the Company advanced funds to the Company for
its development operations and investment. As of September 30, 2001, investors
have advanced $2,322,242 which had been cancelled in exchange for issuance of
9,450,000 shares of common stock of the Company.

Item III. Qualitative and Quantitative Disclosures About Market Risk.

        The Company has neither considered nor conducted any research concerning
qualitative and quantitative market risk.

                                     PART II
                                OTHER INFORMATION

Item 1 - Legal Proceedings (None per Item 103 of Reg. S-B)

Item 2 - Changes in the Rights of the Company's Security Holders

        (a) Regulation S Issuance

        On September 28, 2001, 1,600,000 shares of common stock of the Company
were issued to Netsat Holdings Ltd. in exchange for cancellation of indebtedness
in the amount of $1,537,242. The unregistered sale of equity securities was made
pursuant to Regulation S promulgation under the Securities Act of 1933.

        On September 29, 2001, 7,850,000 shares of common stock of the Company
were issued to Ridgeway Commercial Ventures Ltd. in exchange for cancellation of
indebtedness in the amount of $785,000. The unregistered sale of equity
securities was made pursuant to Regulation S promulgation under the Securities
Act of 1933.

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


                                       19
<PAGE>


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

Item 5 - Other Information

        (a) Acquisition of Equity Interest in Let the Fun Begin, Inc. from
        Ridgeway Commercial Ventures Limited

        On September 29, 2001, the Company acquired forty nine percent (49%) of
the equity interest of Ridgeway Commercial Ventures Ltd. in Let the Fun Begin
A.V.V. in exchange for an interest-bearing Note in the amount of $785,000. The
said Note was converted to shares of common stock of the Company as of September
29, 2001 at $0.10 per share.

        Let the Fun Begin A.V.V., an Aruba-based offshore entity incorporated on
September 6, 2000, has three wholly-owned subsidiaries: (1) Let the Games Begin
N.V., a Curacao-based offshore entity formed on September 20, 2000; (2) Let the
Play Begin N.V., a Curacao-based offshore entity formed on October 5, 1998; and
(3) Cyber Entertainment N.V., a Curacao-based onshore entity formed on July 17,
2000.

        Cyber Entertainment N.V. holds a gaming license from the territory of
Curacao. The license was issued by government decree dated October 11, 2000
pursuant to Article 2 of the Netherlands Antilles Act on Offshore On-line Gaming
and Gambling.

        Cyber Entertainment N.V. was purchased by Let the Fun Begin A.V.V. from
Fiducia Escrow Services Ltd. for the purchase price of US$250,000.00. The
purchase was made pursuant of a Transfer of Shares dated July 27, 2000 wherein
Fiducia Escrow Services Ltd. sold and transferred to Let the Fun Begin A.V.V.
all of its rights and interests in and title to 6,000 fully paid shares in the
capital stock of Cyber Entertainment N.V.

        The Company's wholly-owned subsidiaries Let the Games Begin N.V., Let
the Play Begin N.V. and Cyber Entertainment N.V. currently have no operations.


Item 6 - Exhibits and Reports on Form 8-K

        (a) The Articles of Incorporation and by-laws of the Company appear in
Form 10SB12G filed February 7, 2000 and are incorporated herein by reference.

        (b) No reports on Form 8-K were filed during the quarter for which the
Report is filed.



                                       20
<PAGE>

                                    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: November 14, 2001               CREATIVE TECHNOLOGIES HOLDINGS INC.


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



                                       21