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

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

                                   FORM 10-KSB

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

For the fiscal year ended June 30, 2001         Commission File Number 000-28876

                      INTEGRATED HEALTH TECHNOLOGIES, INC.
            (Exact name of small business registrant in its charter)

                Delaware                                     22-2407475
     (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                      Identification No.)

   201 Route 22, Hillside, New Jersey                           07205
(Address of principal executive offices)                     (Zip code)

Registrant's telephone number: (973) 926-0816

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

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

                     Common Stock $.002 par value per share
                Class A Redeemable Common Stock Purchase Warrants
                              (Title of each class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  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   ___

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.

                           Yes   _X_        No   ___

Registrant's revenues for the fiscal year ended June 30, 2001 were $15,293,090.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant based on the trading price of the Registrant's Common Stock on August
31, 2001 was $ 357,600.

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

              Class                              Outstanding at August 31, 2001
    Common Stock $.002 par value                       6,228,720  Shares
Class A Redeemable Common Stock                        1,265,000  Warrants
        Purchase Warrants
Class C Redeemable Common Stock
        Purchase Warrants                                150,000  Warrants

                       DOCUMENTS INCORPORATED BY REFERENCE

The  information  required  by part III will be  incorporated  by  reference  to
certain  portions of a definitive  Proxy Statement which is expected to be filed
by the Registrant within 120 days after the close of its fiscal year.


<PAGE>


              INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES

                            FORM 10-KSB ANNUAL REPORT

                                      INDEX

Part I                                                                      Page
                                                                            ----
  Item 1.    Description of Business                                           1

  Item 2.    Description of Properties                                         3

  Item 3.    Legal Proceedings                                                 3

  Item 4.    Submission of Matters to a Vote of Security Holders               4

Part II

  Item 5.    Market for Registrant's Common Equity and Related Stockholder
             Matters                                                           5

  Item 6.    Management's Discussion and Analysis of Financial Condition
             And Results of Operations                                         6

  Item 7.    Financial Statements                                              8

  Item 8.    Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure                               8

Part III

  Item 9.    Directors, Executive Officers, Promoters and
             Control Persons; Compliance with Section 16(a) of the
             Exchange Act                                                      9

  Item 10.   Executive Compensation                                            9

  Item 11.   Security Ownership of Certain Beneficial
             Owners and Management                                             9

  Item 12.   Certain Relationships and Related Transactions                    9

  Item 13.   Exhibits and Reports on Form 8-K                                  9

Signatures

<PAGE>

PART I

Disclosure Regarding Forward-Looking Statements

All statements  other than  statements of historical  fact, in this Form 10-KSB,
including without limitation,  the statements under "Management's Discussion and
Analysis of Financial  Condition and Results of Operations" and  "Description of
Business"  are,  or may be  deemed  to be,  forward  looking  statements.  These
statements  represent the Company's  current  judgement and are subject to risks
and  uncertainties  that could cause actual results to differ  materially.  Such
risks  and  uncertainties  include,  without  limitation:  (i)  loss  of a major
customer, (ii) competition, and/or (iii) government regulation.

Item 1. Description of Business

Effective January 5, 2001 Chem International, Inc. amended its corporate charter
and changed its name to Integrated Health Technologies, Inc. [the "Company"].

The  Company,  a  Delaware  corporation,  is the  survivor  of a merger  of Chem
International,  Inc. a Delaware Corporation, with and into Frog Industries, Ltd.
a New York  corporation,  which was  effected  on  December  27,  1994 with Frog
Industries,  Ltd. renamed Chem  International Inc. after the merger. The Company
was  reincorporated  in Delaware  on  February  2, 1996.  The Company is engaged
primarily  in  manufacturing,  marketing  and  sales  of  vitamins,  nutritional
supplements  and  herbal  products,  including  vitamins  sold as single  entity
supplements,  in multi-vitamin combinations and in varying potency levels and in
different  packaging  sizes. The Company's  subsidiary,  Manhattan Drug Company,
Inc. ["Manhattan Drug"],  manufactures the vitamins and nutritional  supplements
for sale to  distributors,  multilevel  marketers  and  specialized  health-care
providers.  The Company also  manufactures  such products for sale under its own
private  brand,  "Vitamin  Factory",  through mail order.  On July 1, 2000,  the
Company began offering solid dosage product  development and technical  services
through its subsidiary,  Integrated  Health Ideas,  Inc. On August 31, 2000, the
Company  began  the  distribution  and  sale of  fine  chemicals  through  a new
subsidiary IHT Health Products, Inc.

Development and Supply Agreement

On April 9, 1998,  the Company  signed a development  and supply  agreement with
Herbalife  International of America, Inc. ["Herbalife"] whereby the Company will
develop,  manufacture  and supply  certain  nutritional  products  to  Herbalife
through December 31, 2001.

Manufacturing Agreement

On February 14, 1998,  the Company signed a  manufacturing  agreement with Pilon
International,  PLC., a company that supplies Zepter International, a world-wide
sales distributor of consumer products. The Company will manufacture and develop
dietary supplements through the year 2001.

Risk of Reduction of Significant Revenues from Major Customer

The Company derives a significant portion of its sales from one customer, Rexall
Sundown,  Inc.  ["Rexall"],  for which it manufactures  vitamins and nutritional
supplements.  Sales to Rexall  expressed as a percentage of the Company's  total
sales, were approximately 28% and 51%, respectively,  for the fiscal years ended
June 30, 2001 and 2000. The loss of this customer  would have a material  affect
on the Company's operations.

Dependence on Key Personnel

The Company is highly  dependent  on the  experience  of its  management  in the
continuing  development of its manufacturing and retail operations.  The loss of
the services of these certain individuals,  particularly E. Gerald Kay, Chairman
of the Board, and director of the Company,  would have a material adverse effect
on the Company's  business.  The Company has entered into employment  agreements
with each of its four executive  officers,  which expire on June 30, 2002.  Such
agreements  may be  terminated  by the  employees at any time upon 30 days prior
written notice without penalty,  subject to a one year non-compete  clause.  The
Company has obtained  key-man life  insurance in the amount of $1,000,000 on the
life of Mr. Kay, with the Company as the named beneficiary.


                                       1
<PAGE>

Raw Materials

The principal raw materials  used in the  manufacturing  process are natural and
synthetic  vitamins,  minerals,  herbs,  and  related  nutritional  supplements,
gelatin  capsules  and  coating  materials  and  the  necessary  components  for
packaging the finished  products.  The raw materials are available from numerous
sources within the United States. The gelatin capsules and coating materials and
packaging materials are similarly widely available.  Raw materials are generally
purchased by the Company  without  long-term  commitments,  on a purchase  order
basis.  The  Company's  principal  suppliers  are Tomen  American,  Inc.,  Roche
Vitamins, Inc., and Triarco Inc.

Employees

As of June 30, 2001, the Company had 96 full time employees, of whom 50 belonged
to a  local  unit  of the  Teamsters  Union  and  are  covered  by a  collective
bargaining agreement, which expires August 31, 2002.

Seasonality

The Company's results of operations are not  significantly  affected by seasonal
factors.

Trademarks

The Company owns the  registration  in the United  States  Patent and  Trademark
offices for "Oxitiva."  Oxitiva is the Company's  brand of chewable  antioxidant
formula.

Government Regulations

The manufacturing,  processing, formulation, packaging, labeling and advertising
of the  Company's  products  are  subject to  regulation  by a number of federal
agencies,  including the Food and Drug  Administration  [the "FDA"], the Federal
Trade  Commission [the "FTC"],  the United States Postal  Service,  the Consumer
Product Safety Commission and the Untied States  Department of Agriculture.  The
FDA is primarily  responsible for the regulation of the manufacturing,  labeling
and sale of the Company's products.  The Company's activities are also regulated
by various state and local  agencies in which the  Company's  products are sold.
The  operation of the  Company's  vitamin  manufacturing  facility is subject to
regulation by the FDA as a food manufacturing  facility. In addition, the United
States Postal  Service and the FTC regulate  advertising  claims with respect to
the Company's products sold by solicitation through the mail.

The Dietary Supplement Health and Education Act of 1994 [the "Dietary Supplement
Act"] was  enacted on October  25,1994.  The Dietary  Supplement  Act amends the
Federal  Food,  Drug and Cosmetic  Act by defining  dietary  supplements,  which
include vitamins, minerals,  nutritional supplements and herbs, and by providing
a regulatory  framework  to ensure safe,  quality  dietary  supplements  and the
dissemination of accurate  information about such products.  Dietary supplements
are regulated as foods under the Dietary Supplement Act and the FDA is generally
prohibited from regulating the active ingredients in dietary supplements as food
additives, or as drugs unless product claims trigger drug status.

The  Dietary   Supplement  Act  provides  for  specific   nutritional   labeling
requirements  for dietary  supplements  effective  January 1, 1997.  The Dietary
Supplement Act permits substantiated,  truthful and non-misleading statements of
nutritional  support  to be made in  labeling,  such  as  statements  describing
general well being from  consumption  of a dietary  ingredient  or the role of a
nutrient or dietary ingredient in affecting or maintaining structure or function
of the body. In addition,  the Dietary Supplement Act also authorizes the FDA to
promulgate  Current  Good  Manufacturing  Practices  ["cGMP"]  specific  to  the
manufacture of dietary  supplements,  to be modeled after food cGMP. The Company
currently  manufactures its dietary  supplement  products pursuant to food cGMP.
The Company  believes  that it is currently in  compliance  with all  applicable
government regulations.  The FDA will be proposing and promulgating  regulations
to implement  the Dietary  Supplement  Act. The Company  cannot  determine  what
effect such  regulations,  when  promulgated,  will have on its  business in the
future or what cost it will add to manufacturing  the product.  Such regulations
could, among other things,  require expanded or different labeling,  the recall,
reformulation or discontinuance  of certain products,  additional record keeping
and expanded  documentation of the properties of certain products and scientific
substantiation regarding ingredients, product claims and safety of efficacy.



                                       2
<PAGE>

Competition

The  business  of  manufacturing,   distributing  and  marketing   vitamins  and
nutritional supplements is highly competitive. Many of the Company's competitors
are  substantially  larger and have greater  financial  resources  with which to
manufacture and market their products.  In particular,  competition is fierce in
the retail  segment.  Many direct  marketers not only focus on selling their own
branded  products,  but  offer  national  brands  at  discounts  as  well.  Many
competitors have established brand names recognizable to consumers. In addition,
major  pharmaceutical   companies  offer  nationally   advertised   multivitamin
products. The Company also competes with certain of its customers who have their
own manufacturing capabilities.

Many of the Company's  competitors  in the retailing  segment have the financial
resources  to  advertise  freely to promote  sales and to produce  sophisticated
catalogs. In many cases, such competitors are able to offer price incentives for
retail  purchasers and offer  participation  in frequent buyers  programs.  Some
retail  competitors  also  manufacture  their own products whereby they have the
ability and financial incentive to sell their own product.

Product Liability Insurance

The Company  intends to compete by  stressing  the quality of its  manufacturing
product,  providing  prompt  service,  competitive  pricing of  products  in its
marketing segment and by focusing on niche products in the international  retail
markets.

The Company,  like other manufacturers,  wholesalers and distributors of vitamin
and  nutritional  supplement  products,  faces an  inherent  risk of exposure to
product liability claims if, among other things,  the use of its products result
in injury.  Accordingly,  the  Company  currently  maintains  product  liability
insurance  policies,  which  provides  a total of $10  million of  coverage  per
occurrence and $10 million of coverage in the aggregate.  Although the Company's
product  liability  insurance  policies do not  currently  provide  coverage for
claims  with  respect to products  containing  L-tryptophan  manufactured  after
September 1992, the Company  discontinued  manufacturing  such products in 1989.
Based upon indemnification  arrangements with its supplier of L-tryptophan,  the
Company's product liability insurance and the product liability insurance of its
suppliers, the Company believes that its product liability insurance is adequate
to cover  any  product  liability  claims.  There can be no  assurance  that the
Company's  current  level of product  liability  insurance  will  continue to be
available or, if available, will be adequate to cover potential liabilities.

Item 2. Description of Properties

On  January  10,  1997,  the  Company   entered  into  a  lease   agreement  for
approximately 84,000 square feet of factory,  warehouse and office facilities in
Hillside,  New Jersey. The facilities are leased from Vitamin Realty Associates,
L.L.C., a limited liability company, which is owned by the Company's Chairman of
the Board, and principal stockholder and certain family members and 10% owned by
the Company's  chief financial  officer.  The lease has a term of five years and
expires on January 10,  2002.  The lease  provides  for a base annual  rental of
$346,000  plus  increases  in real estate taxes and  building  expenses.  At its
option, the Company has the right to renew the lease for an additional five year
period.  The space is utilized for the retail mail order  business,  warehousing
and packaging  operations and also houses the Company's  corporate  offices.  On
April  28,  2000  the  lease  was  amended   reducing  the  square   footage  to
approximately 75,000 square feet and extending the lease to May 31, 2015.

The Company leased 40,000 square feet of  manufacturing  facilities in Hillside,
New  Jersey  from  Morristown  Holding  Company,  Inc.  (formerly  Gerob  Realty
Partnership), of which E. Gerald Kay, Chairman of the Board of the Company, is a
majority shareholder. The lease which expired on December 31,2000 provided for a
minimum  annual  rental of $60,000  plus  payment of all real estate  taxes.  On
August 30,  2000 the  Company  acquired  the  manufacturing  facility by issuing
1,05,420  shares of its common stock in exchange for the property.  The space is
utilized for Manhattan Drug's tablet manufacturing operations.

Item 3. Legal Proceedings

Numerous  unrelated  manufacturers,   distributors,   suppliers,  importers  and
retailers of  manufactured  L-tryptophan  are or were defendants in an estimated
2,000  lawsuits  brought in federal and state courts  seeking  compensation  and
punitive  damages  for  alleged  personal  injury  from  ingestion  of  products
containing  manufactured  L-tryptophan.  A number  of these  lawsuits  have been
settled or discontinued.  Additional suits may be filed. Prior to a request from
the FDA in November 1989 for a national,  industry-wide  recall,  Manhattan Drug
halted  sales  and  distribution  and  also  ordered  a recall  of  L-tryptophan
products. Subsequently, the FDA indicated that there is a strong epidemiological
between the ingestion of the  allegedly  contaminated  L-tryptophan  and a blood
disorder known as eosinophilia myalgia syndrome ["EMS"].



                                       3
<PAGE>

Investigators  at the United States Centers for Disease  Control  suspect that a
contaminant was introduced during the manufacture of the product in Japan. While
intensive  independent   investigations  are  continuing,   there  has  been  no
indication  that EMS was caused by any  formulation  or  manufacturing  fault of
Manhattan  Drug or any of the  other  firms  that  manufactured  tablets  and/or
capsules containing L-tryptophan.

Manhattan  Drug  and  certain  companies  in  the  vitamin  industry,  including
distributors,  wholesalers  and  retailers,  have entered into an agreement [the
"Indemnification Agreement"] with Showa Denko America, Inc. ["SDA"]. Under which
SDA, a U.S.  subsidiary  of a Japanese  corporation,  Showa Denko K.K.  ["SDK"],
which  appears  to have been the  supplier  of all of the  alleged  contaminated
L-tryptophan  products,  has assumed the defense of all claims against Manhattan
Drug arising out of the ingestion of L-tryptophan products and has agreed to pay
the legal fees and  expenses in that  defense,  and SDK has agreed to  guarantee
SDA's  obligation  therein.  SDA has posted a  revolving  irrevocable  letter of
credit, in the amount of $20,000,000,  to be used for the benefit of the Company
and other  indemnified  parties if SDA is unable or  unwilling  to  satisfy  any
claims or  judgements.  SDA has agreed to indemnify  Manhattan  Drug against any
judgements and to fund settlements arising out of those actions and claims if it
is determined  that a cause of the injuries  sustained by the  plaintiffs  was a
constituent in the bulk material sold by SDA to Manhattan Drug or its suppliers,
except  to the  extent  that  Manhattan  Drug is  found  to have any part of the
responsibility  for those  injuries  and except for certain  claims  relating to
punitive damages. There is no assurance that SDA will have the financial ability
to perform under the Indemnification Agreement.

Manhattan  Drug has product  liability  insurance,  which the  Company  believes
provides coverage for all of its L-tryptophan  products subject to these claims,
including  legal  defense  costs.  Due  to  the  multitude  of  defendants,  the
probability  that some or all of the total  liability  will be assessed  against
other  defendants  and the fact that discovery in these actions is not complete,
it is  impossible  to  predict  the  outcome  of these  actions or to assess the
ultimate  financial  exposure  of the  Company.  Based  upon the  aforementioned
indemnification arrangements,  the Company's product liability insurance and the
product liability insurance of its suppliers, the Company does not believe these
actions will have a material adverse effect on Manhattan Drug, and, accordingly,
no provision has been made in the Company's  Consolidated  Financial  Statements
for any loss that may be incurred by the Company as a result of these actions.

Item 4. Submission of Matters to a Vote of Security Holders

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter ended June 30, 2001.


                                       4
<PAGE>

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Effective  January 5, 2001 the Company  changed its name to  "Integrated  Health
Technologies,  Inc." and began  trading  using the  NASDAQ  symbol  IHTC for its
common stock and the symbol IHTCW for its redeemable warrants.

Set forth below are the high and low closing  prices of the Common Stock and the
Class A  Redeemable  Warrant as reported on the Nasdaq  National  Market for the
period July 1, 1999 through April 25, 2001 and on the Electronic  Bulletin Board
for the period April 25, 2001 through June 30, 2001:

                                               HIGH                    LOW

COMMON STOCK [CXIL/IHTC]

FISCAL YEAR ENDED JUNE 30, 2000
First Quarter                                $1.7500                 $0.5000
Second Quarter                               $1.4375                 $0.4375
Third Quarter                                $2.9375                 $0.5625
Fourth Quarter                               $1.7188                 $0.7813

FISCAL YEAR ENDED JUNE 30, 2001
First Quarter                                $2.4063                 $0.8750
Second Quarter                               $1.9375                 $0.4375
Third Quarter                                $1.0625                 $0.5000
Fourth Quarter                               $0.8125                 $0.2188

CLASS A REDEEMABLE WARRANTS [CXILW/IHTCW]

FISCAL YEAR ENDED JUNE 30, 2000
First Quarter                                $2.4062                 $0.8750
Second Quarter                               $1.9375                 $0.4375
Third Quarter                                $1.0625                 $0.5000
Fourth Quarter                               $0.8125                 $0.2100


FISCAL YEAR ENDED JUNE 30, 2001
First Quarter                                $0.6562                 $0.1875
Second Quarter                               $0.3438                 $0.0312
Third Quarter                                $0.1875                 $0.0625
Fourth Quarter                               $0.0938                 $0.0100


As of June 30, there were  approximately  580 holders of record of the Company's
Common Stock.

The Company has not declared or paid a dividend with respect to its Common Stock
nor does the Company anticipate paying dividends in the foreseeable future.


                                       5
<PAGE>

Item 6.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The  following  discussion  should be read in  conjunction  with the  historical
financial statements of the Company and notes thereto.

Results of Operations

Year ended June 30, 2001 Compared to the Year ended June 30, 2000

The  Company's  net loss for the year ended June 30,  2001 was  $(1,449,903)  as
compared to the net income of $3,143,695 for the year ended June 30, 2000.  This
decrease in net income of approximately  $4,600,000 is primarily the result of a
$300,000 decrease in operating income resulting from an increase in gross profit
of approximately $185,000 and an increase in selling and administrative expenses
of  approximately   $485,000,  a  decrease  in  other  income  of  approximately
$6,100,000  due to the  settlement  of a Class Action  Lawsuit and a decrease in
Federal and State income taxes of approximately $1,500,000.

Sales  for the  years  ended  June  30,  2001  and  2000  were  $15,293,090  and
$17,974,885,  respectively, a decrease of $2,681,795 or 15%. For the year ending
June 30, 2001 the Company had sales to one customer who accounted for 28% of net
sales in 2001 and 51% of net sales in 2000. The loss of this customer would have
an adverse affect on the Company's operations.

Retail and mail order sales for the year ended June 30, 2001 totaled $447,701 as
compared to $679,612  for the year ended June 30,  2000,  a decrease of 34%. The
Company  has been  experiencing  a decline  in retail  mail  order  sales due to
increased competition. The Company closed its retail store on March 2, 2001.

Sales under the Roche Vitamins,  Inc. distribution  agreement were $2,264,256 as
compared to $2,689,575 for the year ended June 30, 2000, a decrease of 16%.

On July 1, 2000 the Company began offering solid dosage product  development and
technical  services  through  its  subsidiary,  Integrated  Health  Ideas,  Inc.
Consulting revenues for the year ended June 30, 2001 totaled $458,757.

On August 31, 2000 the Company began the distribution and sale of fine chemicals
through a new  subsidiary,  IHT Health  Products,  Inc. Sales for the ten months
ended June 30, 2001 totaled $3,765,490.

Cost of Sales  decreased to $13,820,829  in 2001 as compared to $16,687,844  for
2000. Cost of sales decreased as a percentage of sales to 90% as compared to 93%
for  2000.  The  decrease  in  cost of  sales  is due to  greater  manufacturing
efficiencies.

Selling  and  administrative  expenses  for the year  ending  June 30, 2001 were
$3,758,957  versus  $3,276,435  for the same period a year ago.  The increase of
$482,522  was  primarily   attributable   to  a  decrease  in   advertising   of
approximately  $120,000,  an increase in freight out of approximately  $42,000 a
decrease in bad debt expenses of approximately  $130,000, a decrease in officers
salaries  of   approximately   $70,000,   an  increase  in  office  salaries  of
approximately $350,000 due to the commencement of the IHT Health Products,  Inc.
distribution business, a decrease in consulting fees of approximately  $175,000,
an  increase  in  insurance  expense of  approximately  $45,000,  an increase in
depreciation expense of approximately  $43,000, an increase in professional fees
of approximately  $70,000, an increase in public relations fees of approximately
$70,000  and an  increase in auto,  entertainment  and lodging of  approximately
$198,000.

Other income (expense) was $189,328 for the year ended June 30, 2001 as compared
to  $6,047,145  for the same period a year ago. This decrease in other income of
approximately  $6,000,000  is primarily  the result of the proceeds  received of
$6,143,849  from the  settlement  of a Class Action  Lawsuit  against three bulk
vitamin suppliers for the year ended June 30, 2000.



                                       6
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Results of Operations

Year ended June 30, 2000 Compared to the Year ended June 30, 1999

The  Company's  net income for the year ended June 30,  2000 was  $3,143,695  as
compared to the net loss of $(2,628,433)  for the year ended June 30, 1999. This
increase in net income of approximately  $5,800,000 is primarily the result of a
$670,000 increase in operating income resulting from a corresponding increase in
gross  profit  of  $670,000,  an  increase  in  other  income  of  approximately
$6,200,000  due to the  settlement of a Class Action  Lawsuit and an increase in
Federal and State income taxes of approximately $1,100,000.

Sales  for the  years  ended  June  30,  2000  and  1999  were  $17,974,885  and
$12,274,448, respectively, an increase of $5,700,437 or 46%. For the year ending
June 30, 2000 the Company had sales to one customer who accounted for 51% of net
sales in 2000 and 55% of net sales in 1999. The loss of this customer would have
an adverse affect on the Company's operations.

Retail and mail order sales for the year ended June 30, 2000 totaled $679,612 as
compared to  $713,962  for the year ended June 30,  1999,  a decrease of 5%. The
Company has been  experiencing  a decline in mail order  sales due to  increased
competition and a decrease in advertising expenses.

Sales under the Roche Vitamins,  Inc. distribution  agreement were $2,689,575 as
compared  to  $1,607,092  for the year  ended  June 30,  1999,  an  increase  of
$1,082,483 or 67%.

Cost of sales  increased to $16,687,844  in 2000 as compared to $11,655,173  for
1999. Cost of sales decreased as a percentage of sales to 93% as compared to 95%
for 1999.  The  decrease  in cost of sales is due to the  greater  manufacturing
efficiencies.

Selling  and  administrative  expenses  for the year  ending  June 30, 2000 were
$3,276,435  versus  $3,275,723  for the same period a year ago.  The increase of
$712 was primarily  attributable  to a decrease in advertising of  approximately
$50,000,  an increase in freight out of approximately  $46,000 a decrease in bad
debt  expenses of  approximately  $166,000,  a decrease in officers  salaries of
approximately  $80,000, an increase in office salaries of approximately $47,000,
a decrease in the writeoff of the balance of goodwill of approximately $276,000,
an  increase  in  consulting  fees of  approximately  $295,000,  an  increase in
professional fees of approximately  $63,000 and an increase in entertainment and
lodging of approximately $57,000.

Other  income  (expense)  was  $6,047,145  for the year ended  June 30,  2000 as
compared  to  $(136,159)  for the same period a year ago.  This  increase in net
income of  approximately  $6,200,000  is  primarily  the result of the  proceeds
received of $6,143,849  from the  settlement of a Class Action  Lawsuit  against
three bulk vitamin suppliers.

Liquidity and Capital Resources

At June 30, 2001 the  Company's  working  capital was  $3,687,816  a decrease of
$1,771,967 over working capital at June 30, 2000. Cash and cash equivalents were
$375,584 at June 30,  2001 a decrease  of  $1,447,425  from June 30,  2000.  The
Company  utilized  $1,517,415  and generated  $4,098,629  for operations for the
years ended June 30, 2001 and 2000,  respectively.  The primary  reasons for the
increase  in cash  utilized  for  operations  are a net  loss  of  approximately
$1,400,000,  an increase in accounts  receivable of approximately  $830,000,  an
increase in  inventory  of  approximately  $360,000,  an increase in  refundable
Federal Income Taxes of approximately  $410,000, an increase in accounts payable
of  approximately  $820,000 and an increase in accrued expenses of approximately
$422,000.  The Company  believes that the  anticipated  sales for next year will
meet cash needs for operations.

The Company utilized $24,066 and $167,460 in investing  activities for the years
ended June 30, 2001 and 2000,  respectively.  The Company  generated $94,056 and
utilized $2,407,190 from debt financing  activities for the years ended June 30,
2001 and 2000, respectively.



                                       7
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Liquidity and Capital Resources [Continued]

The  Company's  total  annual  commitments  at  June  30,  2001  for  long  term
non-cancelable  leases of $4,710,078  consists of  obligations  under  operating
leases  for  facilities  and  lease  agreements  for  the  rental  of  warehouse
equipment, office equipment and automobiles.

The Company has two revolving  lines of credit.  One of the lines provides for a
$1,000,000  revolving  line of credit  agreement,  which bears  interest at 3.0%
above the prime  interest rate and expires on November 5, 2001. At June 30, 2001
the balance due under the revolving line of credit was $636,966. The second line
of credit also  provides for a $1,000,000  revolving  line of credit  agreement,
which bears interest at 4% above the prime interest rate and expires on December
21, 2002. At June 30, 2001 the balance due under the second line was $1,566.

New Accounting Pronouncement

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities".  Statement No. 133 establishes  accounting
and reporting  standards for derivative  instruments and for hedging activities.
It  requires  that an entity  recognize  all  derivatives  as  either  assets or
liabilities  and measure them at fair value.  Under certain  circumstances,  the
gains or losses from  derivatives may be offset against those from the items the
derivatives  hedge  against.  The Company has adopted SFAS No. 133 in the fiscal
year ending June 30,  2001.  SFAS No. 133 did not have a material  impact on the
financial statements.

In July 2001, FAS No. 141, "Business  Combinations"  ("FAS 141") and FAS No. 142
"Goodwill and Other Intangible Assets" ("FAS 142") were issued. FAS 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  after  June  30,  2001.  FAS 141 also  specifies  the  criteria  that
intangible  assets acquired in a purchase method business  combination must meet
to be  recognized  and  reported  apart from  goodwill.  FAS 142  requires  that
goodwill  and  intangible  assets  with  indefinite  useful  lives no  longer be
amortized,  but  instead  be  tested  for  impairment,  at  least  annually,  in
accordance  with the  provisions  of FAS 142.  FAS 142 will  also  require  that
intangible  assets with definite useful lives be amortized over their respective
estimated useful lives to their estimated  residual values,  and be reviewed for
impairment in accordance  with FAS No. 121,  "Accounting  for the  Impairment of
Long-lived  Assets and  Long-lived  Assets to be Disposed of". The provisions of
FAS 141 are effective  immediately,  except with regard to business combinations
prior to July 1, 2001. FAS 142 will be effective as of January 1, 2002. Goodwill
and other intangible assets acquired in business  combinations  completed before
July 1, 2001,  will  continue to be amortized  prior to the adoption of FAS 142.
The Company is currently  evaluating the effect that the adoption of FAS 141 and
FAS 142 will have on its results of operations and its financial position.

Impact of Inflation

The Company  does not believe  that  inflation  has  significantly  affected its
results of operations.

Item 7. Financial Statements

For a list of financial  statements  filed as part of this report,  see index to
financial statement at F-1.

Item  8.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

NONE



                                       8
<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Stockholders to be filed with the Securities and Exchange  Commission within 120
days after the close of the fiscal year ended June 30, 2001.

Item 10. Executive Compensation

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Stockholders to be filed with the Securities and Exchange  Commission within 120
days after the close of the fiscal year ended June 30, 2001.

Item 11. Security Ownership of Certain Beneficial Owners and Management

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Stockholders to be filed with the Securities and Exchange  Commission within 120
days after the close of the fiscal year ended June 30, 2001.

Item 12. Certain Relationships and Related Transactions

Incorporated by reference to the Company's Proxy Statement for Annual Meeting of
Stockholders to be filed with the Securities and Exchange  Commission within 120
days after the close of the fiscal year ended June 30, 2001.

Item 13. Exhibits and Reports on Form 8-K

(a)  The following documents are filed as part of this report:

     (1) A list of the financial  statements filed as part of this report is set
     forth in the index to financial  statements at Page F-1 and is incorporated
     herein by reference.

     (2) Exhibits

       Number                         Description
       ------                         -----------

       3.1      Restated Certificate of Incorporation of Registrant (1)

       3.2      By-Laws of Registrant (1)

       4.1      Form of  Amended  Warrant  Agreement  among the  Registrant  and
                Continental Stock Transfer & Trust Company, as Warrant Agent (1)

       4.2      Specimen Common Stock Certificate of Registrant (2)

       4.3      Specimen Class A Warrant Certificate of Registrant (2)

       10.1     Employment  Agreement,  effective  January 1, 1996,  between the
                Registrant and Ronald G. Smalley (1)

       10.2     Employment  Agreement,  effective  July  1,  1996,  between  the
                Registrant and E. Gerald Kay (1)

       10.3     Employment  Agreement,  effective  July  1,  1996,  between  the
                Registrant and Eric Friedman (1)

       10.4     Employment  Agreement,  effective  July  1,  1996,  between  the
                Registrant and Riva L. Kay (1)

       10.5     Employment  Agreement,  effective  July  1,  1996,  between  the
                Registrant and Christina M. Kay (1)

       10.6     Lease Agreement,  dated January 1, 1996,  between the Registrant
                and Gerob Realty Partnership (1)

       10.7     Stock Option Plan (2)

       10.8     Amended  Employment  Agreement,  effective  September  20, 1996,
                between the Registrant and E. Gerald Kay (3)

       10.9     Lease Agreement, dated August 3,1994, between the Registrant and
                Hillside 22 Realty Associates, L.L.C. (2)

       10.10    Exclusive   License   Agreement   between  the   Registrant  and
                International  Nutrition  Research Center,  Inc. and amendments,
                dated April 29, 1997 and November 27, 1996 (4)



                                       9
<PAGE>

       10.11    Lease  Agreement  between  the  Registrant  and  Vitamin  Realty
                Associates, dated January 10, 1997 (4)

       10.12    Manufacturing  Agreement  between Chem  International,  Inc. and
                Herbalife International of America, Inc. dated April 9, 1998 (5)

       10.13    Manufacturing  Agreement  between Chem  International,  Inc. and
                Pilon International, PLC. dated February 14, 1998 (5)

       10.14    Stock  Sale  Agreement  between  the  Company  and Gerob  Realty
                Partnership (5)

       10.15    Promissory  note  between  the  Company  and E. Gerald Kay dated
                March 12, 1998 (5)

       10.16    Class C Warrant to  purchase  common  stock dated March 12, 1998
                (5)

       10.17    Consulting  Agreement with Buttonwood Advisory Group dated March
                20, 1998 (5)

       10.18    Employment  Agreement,  effective  July  1,  1999,  between  the
                Registrant and Eric Friedman (6)

       10.18    Employment  Agreement,  effective  July  1,  1999,  between  the
                Registrant and Riva Sheppard (6)

       10.18    Employment  Agreement,  effective  July  1,  1999,  between  the
                Registrant and Christina Kay (6)

       10.18    Employment  Agreement,  effective February 16, 1999, between the
                Registrant and Abdulhameed Mirza (6)

       16.1     Letter on changes in certifying accountants (6)

       21       Subsidiaries of the Registrant

       27       Financial Data Schedule

       -----------------------
       (1)      Incorporated  herein by reference to the  corresponding  exhibit
                number to the Registrants  Registration  Statement of Form SB-2,
                Registration No. 333-5240-NY.

       (2)      Incorporated  herein by reference to the  corresponding  exhibit
                number to the Registrants Registration Statement Amendment No. 1
                on Form SB-2, Registration No. 333-5240-NY.

       (3)      Incorporated  herein by reference to the  corresponding  exhibit
                number to the Registrants Registration Statement Amendment No. 2
                on Form SB-2, Registration No. 333-5240-NY.

       (4)      Incorporated  herein by reference to the  corresponding  exhibit
                number to the  Registrants  Annual Report on Form 10-KSB for the
                fiscal year ended June 30, 1997,  filed on  September  29, 1997,
                Commission File No. 000-28876.

       (5)      Incorporated  herein by reference to the  corresponding  exhibit
                number to the  Registrants  Annual Report on Form 10-KSB for the
                fiscal year ended June 30, 1998,  filed on  September  23, 1998,
                Commission File No. 000-28876.

       (6)      Incorporated  herein by reference to the  corresponding  exhibit
                number to the  Registrants  Annual Report of From 10-KSB for the
                fiscal year ended June 30, 1999,  filed on  September  30, 1999,
                Commission File No. 000-28876.

(b)  No reports on Form 8-K were filed by the Registrant during the last quarter
     of the period covered by this report.


                                       10
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX





Item 7:  Consolidated Financial Statements


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

   Consolidated Balance Sheet as of June 30, 2001..................  F-3....F-4

   Consolidated Statements of Operations for the years
   ended June 30, 2001 and 2000....................................  F-5

   Consolidated Statements of Stockholders' Equity for the years
   ended June 30, 2001 and 2000....................................  F-6

   Consolidated Statements of Cash Flows for the years ended
   June 30, 2001 and 2000..........................................  F-7....F-8

   Notes to Consolidated Financial Statements......................  F-9....F-18



                                    . . . . .



                                      F-1
<PAGE>


INDEPENDENT AUDITOR'S REPORT


To the Stockholders and Board of Directors of
   Integrated Health Technologies, Inc.


     We have audited the accompanying  consolidated  balance sheet of Integrated
Health Technologies,  Inc. and Subsidiaries (formerly Chem International,  Inc.)
as of June 30, 2001,  and the related  consolidated  statements  of  operations,
stockholders' equity, and cash flows for the years ended June 30, 2001 and 2000.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Integrated Health  Technologies,  Inc. and its subsidiaries as of June 30, 2001,
and the  consolidated  results of their  operations and their cash flows for the
years  ended June 30, 2001 and 2000 in  conformity  with  accounting  principles
generally accepted in the United States.


                                      /s/ Amper, Politziner & Mattia, P.A.


Edison, New Jersey
August 21, 2001



                                      F-2
<PAGE>


INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2001


Assets:
Current Assets:
   Cash and Cash Equivalents                                          $  375,584
   Accounts Receivable-Net                                             2,214,274
   Note Receivable                                                        35,000
   Inventories                                                         3,598,845
   Prepaid Expenses and Other Current Assets                             172,444
   Deferred Income Taxes                                                 220,000
   Refundable Federal Income Taxes                                       625,000
                                                                      ----------


   Total Current Assets                                                7,241,147
                                                                      ----------


Property and Equipment-Net                                             2,350,312
                                                                      ----------

Other Assets:
   Deferred Tax Asset                                                     94,000
   Security Deposits and Other Assets                                    152,643
                                                                      ----------

   Total Other Assets                                                    246,643
                                                                      ----------

      Total Assets                                                    $9,838,102
                                                                      ==========



See accompanying notes to consolidated financial statements.




                                      F-3
<PAGE>

INTEGRATED HEALTH TECHNOLGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2001


Liabilities and Stockholders' Equity:
Current Liabilities:
   Accounts Payable                                                 $ 2,176,152
   Notes Payable                                                        721,142
   Accrued Expenses and Other Current Liabilities                       521,910
   Accrued Expenses-Related Party                                       122,400
   Capital Lease Obligation                                              11,727
                                                                    -----------

   Total Current Liabilities                                          3,553,331
                                                                    -----------

Non-Current Liabilities:
   Due to Stockholder                                                    68,746
   Capital Lease Obligation                                              24,295
                                                                    -----------
   Total Non-Current Liabilities                                         93,041
                                                                    -----------

Commitments and Contingencies [13]

Stockholders' Equity:
   Preferred Stock-Authorized 1,000,000 Shares,
   $.002 Par Value, No Shares Issued

   Common Stock-Authorized 25,000,000 Shares,
   $.002 Par Value, 6,228,720 Shares Issued and Outstanding              12,457
   Additional Paid-in Capital                                         6,113,582

   Retained Earnings                                                     94,522
                                                                    -----------
                                                                      6,220,561
   Less Treasury Stock at cost, 25,800 common shares                    (28,831)
                                                                    -----------

   Total Stockholders' Equity                                         6,191,730
                                                                    -----------

   Total Liabilities and Stockholders' Equity                       $ 9,838,102
                                                                    ===========



See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

INTEGRATED HEALTH TECHNOLGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS


                                                           Years ended
                                                            June 30,
                                                   ----------------------------
                                                       2001            2000
                                                   ------------    ------------
Sales                                              $ 15,293,090    $ 17,974,885

Cost of Sales                                        13,820,829      16,687,844
                                                   ------------    ------------

  Gross Profit                                        1,472,261       1,287,041

Selling and Administrative Expenses                   3,758,957       3,276,435
                                                   ------------    ------------

  Operating [Loss]                                   (2,286,696)     (1,989,394)
                                                   ------------    ------------

Other Income [Expense]:
  (Loss)/ Gain on Sale of Equipment                     (12,817)          6,344
  Interest Expense                                      (91,110)       (119,380)
  Interest Expense-Related Party                             --         (76,271)
  Partnership Income                                      8,765              --
  Consulting Fee Income                                  20,000              --
  Interest and Investment Income                         19,244          42,603
  Administrative Fee Income                             170,521              --
  Administrative Fee Income-Related Party                50,000          50,000
  Gain on Settlement of Lawsuit                          24,725       6,143,849
                                                   ------------    ------------
Other Income [Expense]-Net                              189,328       6,047,145
                                                   ------------    ------------

Income [Loss] Before Income Taxes                    (2,097,368)      4,057,751

Federal and State Income Tax Expense [Benefit]         (647,465)        914,056
                                                   ------------    ------------

  Net Income [Loss]                                $ (1,449,903)   $  3,143,695
                                                   ============    ============

Net Income [Loss] Per
Common Share:

Basic                                              $       (.24)   $        .61
                                                   ============    ============

Diluted                                            $       (.24)   $        .60
                                                   ============    ============

Average Common Shares Outstanding                     5,963,956       5,169,185

Dilutive Potential Common Shares:
Warrants and Options                                         --          86,738
                                                   ------------    ------------

Average Common Shares
Outstanding-assuming dilution                         5,963,956       5,225,923
                                                   ============    ============


See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>


INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE
YEARS ENDED JUNE 30, 2001 AND 2000

<TABLE>
<CAPTION>
                        Common Stock                          Additional                        Treasury Stock            Total
                  -------------------------     Preferred       Paid-in      Retained      -------------------------   Stockholders'
                     Shares      Par Value        Stock         Capital      Earnings        Shares         Cost          Equity
                  -----------   -----------   -------------   -----------   -----------    -----------   -----------    -----------
<S>                 <C>         <C>           <C>             <C>           <C>                 <C>      <C>            <C>
Balance-
July 1, 1999        5,178,300   $    10,357   $          --   $ 4,847,405   $(1,599,270)            --   $        --    $ 3,258,492
                  -----------   -----------   -------------   -----------   -----------    -----------   -----------    -----------

Purchase of
Treasury Stock             --            --              --            --            --         25,800       (28,831)       (28,831)

Net Income                 --            --              --            --     3,143,695             --            --      3,143,695
                  -----------   -----------   -------------   -----------   -----------    -----------   -----------    -----------

Balance-
June 30, 2000       5,178,300        10,357              --     4,847,405     1,544,425         25,800       (28,831)     6,373,356

Common Stock
Issued for
Purchase of Land
And Building        1,050,420         2,100              --     1,247,900            --             --            --      1,250,000

Issuance of
Stock Options              --            --              --        18,277            --             --            --         18,277

Net (Loss)                 --            --              --            --    (1,449,903)            --            --     (1,449,903)
                  -----------   -----------   -------------   -----------   -----------    -----------   -----------    -----------

Balance-
June 30, 2001       6,228,720   $    12,457   $          --   $ 6,113,582   $    94,522         25,800   $   (28,831)   $ 6,191,730
                  ===========   ===========   =============   ===========   ===========    ===========   ===========    ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   Years ended
                                                                    June 30,
                                                            --------------------------
                                                               2001            2000
                                                            -----------    -----------
<S>                                                         <C>            <C>
Operating Activities:
  Net Income [Loss]                                         $(1,449,903)   $ 3,143,695
                                                            -----------    -----------
  Adjustments  to Reconcile Net Income [Loss] to Net Cash
     Provided By [Used for] Operating Activities:
  Depreciation and Amortization                                 353,875        339,811
  Loss on Sale of Fixed Assets                                   12,817             --
  Amortization of Discount on Note Payable                           --         38,826
  Deferred Income Taxes                                         (34,000)       (36,000)
  Bad Debt Expense                                               40,428        170,387
  Consulting Expense-Stock Options                               18,277             --

Changes in Assets and Liabilities:
  [Increase] Decrease in:
  Accounts Receivable                                          (832,574)       410,705
  Inventories                                                  (362,167)       241,949
  Prepaid Expenses and Other Current Assets                     (62,304)       (15,352)
  Security Deposits and Other Assets                            (35,593)       (22,269)
  Refundable Federal Income Taxes                              (408,648)      (161,707)

Increase [Decrease] in:
  Accounts Payable                                              819,518        201,823
  Accrued Expenses and Other Liabilities                        422,859       (213,239)
                                                            -----------    -----------

  Total Adjustments                                             (67,512)       954,934
                                                            -----------    -----------

Net Cash-Operating Activities                                (1,517,415)     4,098,629
                                                            -----------    -----------

Investing Activities:
  Proceeds From Sale of Fixed Assets                              9,500             --
  Purchase of Property and Equipment                           (109,457)      (168,590)
  Loans to Stockholders                                          75,891          1,130
                                                            -----------    -----------

Net Cash-Investing Activities                                   (24,066)      (167,460)
                                                            -----------    -----------

Financing Activities:
  Note Receivable                                               (35,000)            --
  Proceeds from Notes Payable                                 2,564,471        927,504
  Repayment of Notes Payable                                 (2,435,415)    (3,305,863)
  Purchase of Treasury Stock                                         --        (28,831)
                                                            -----------    -----------
Net Cash-Financing Activities                                    94,056     (2,407,190)
                                                            -----------    -----------

Net Change in Cash and Cash Equivalents                      (1,447,425)     1,523,979

Cash and Cash Equivalents-Beginning of Year                   1,823,009        299,030
                                                            -----------    -----------

Cash and Cash Equivalents-End of Year                       $   375,584    $ 1,823,009
                                                            ===========    ===========
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     Years ended
                                                                       June 30,
                                                               -----------------------
                                                                  2001         2000
                                                               ----------   ----------
<S>                                                            <C>          <C>
Supplemental Disclosures of Cash Flow Information:
   Cash paid during the years for:
      Interest                                                 $   91,110   $  183,075
      Income Taxes                                                 15,374    1,205,160


Supplemental Schedule of Investing and Financing Activities:
Note payable issued in payment of accounts payable, trade              --   $1,500,000
Proceeds from lawsuit used in payment of note payable                  --    1,333,333
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-8
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[1] Business

Effective  January 5, 2001 the Company amended its corporate charter and changed
its name to "Integrated Health Technologies, Inc." (formerly Chem International,
Inc.) and began  trading  using the NASDAQ  symbol IHTC for its common stock and
the symbol IHTCW for its Class A redeemable warrants.

On April  25,  2001 the  Company's  securities  were  delisted  from the  Nasdaq
SmallCap  Market because the Company failed to comply with the minimum bid price
requirements  for continued  listing as set forth in Marketplace  Rule 4310c(4).
The Company's  securities  continue to be traded on the OTC electronic  bulletin
board.

Integrated Health Technologies, Inc. [the "Company"] is engaged primarily in the
manufacturing,  marketing  and sales of vitamins,  nutritional  supplements  and
herbal  products.  Its customers  are located  primarily  throughout  the United
States.

[2] Liquidity

The Company  believes that with the supplemental  payment of approximately  $1.1
million  dollars  received  on August 1, 2001,  under the terms of a  settlement
Agreement which was originally  signed on January 20, 2000 with a major supplier
in connection with a multi-district  class action lawsuit, the available cash on
hand and the operating  plan for the fiscal year ended June 30, 2002 the Company
will have sufficient working capital to meet its needs for the current year.

[3] Summary of Significant Accounting Policies

Principles of Consolidation- The accompanying  consolidated financial statements
include  the  accounts of the  Company  and its  subsidiaries,  all of which are
wholly-owned.  Intercompany  transactions  and balances have been  eliminated in
consolidation.

Fair Value of Financial Instruments

Generally  accepted  accounting  principles require disclosing the fair value of
financial  instruments to the extent practicable for financial instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed herein is not necessarily  representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax consequences of realization or settlement.

In assessing the fair value of financial instruments, the Company uses a variety
of methods and  assumptions,  which are based on estimates of market  conditions
and risks existing at the time. For certain instruments, including cash and cash
equivalents,  accounts  receivable,  notes  receivable,  accounts  payable,  and
accrued  expenses,  it was estimated that the carrying amount  approximated fair
value because of the short maturities of these instruments. All debt is based on
current  rates at which the Company  could borrow  funds with similar  remaining
maturities and approximates fair value.

Cash and Cash  Equivalents-  Cash  equivalents  are comprised of certain  highly
liquid investments with a maturity of three months or less when purchased.

Inventories-Inventory is valued by the first-in,  first-out method, at the lower
of cost or market.

Depreciation- The Company follows the general policy of depreciating the cost of
property and equipment over the following estimated useful lives:

Building                                                             15 Years
Leasehold Improvements                                               15 Years
Machinery and Equipment                                               7 Years
Machinery and Equipment Under Capital Leases                          7 Years
Transportation Equipment                                              5 Years


                                      F-9
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2


[3] Summary of Significant Accounting Policies [Continued]

Machinery  and  equipment  are  depreciated  using  accelerated   methods  while
leasehold  improvements  are amortized on a  straight-line  basis.  Depreciation
expense was  $353,874  and  $339,811 for the years ended June 30, 2001 and 2000,
respectively.  Amortization  of equipment  under capital leases is included with
depreciation expense.

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.

Revenue  Recognition-  The  Company  recognizes  revenue  upon  shipment  of the
product. All returns and allowances are estimated and recorded currently.

Advertising-  Costs  incurred for producing and  communicating  advertising  are
expensed when  incurred.  Advertising  expense was $165,633 and $284,888 for the
years ended June 30, 2001 and 2000, respectively.

Stock-Based   Compensation-Statement   of  Financial  Accounting  Standards  123
"Accounting for Stock Based Compensation" ("SFAS 123") allows a Company to adopt
a fair value based method of accounting for its stock-based  compensation  plans
or continue to follow the  intrinsic  value method of  accounting  prescribed by
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued
to Employees".  The Company accounts for stock-based  compensation in accordance
with the  provisions  of  Accounting  Principles  Board  Opinion  "APB") No. 25,
"Accounting  for Stock Issued to  Employees"  and complies  with the  disclosure
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation". Under APB
No. 25,  compensation  cost for stock options is measured as the excess, if any,
of the quoted market price of the Company's  stock at the date of the grant over
the amount an employee must pay to acquire the stock.

[4] Investment in  Partnership-  The Company was a 49% partner in Natural Health
Science,  LLC (the  "Partnership").  The  Partnership  is engaged in the sale of
"Pycnogenol" (a raw material used in the production of nutritional supplements).
In April 2001 the Company  sold its  ownership  in the  Partnership  for its net
investment of $8,765 which  represented  the Company's  share of the profits for
the year ending  December 31, 2000. In addition to the partnership  income,  the
Company  also  receives  administrative  fee income  from the  Partnership.  The
Company received $185,099 in administrative fee income and $20,000 in consulting
fee income for the year ended June 30,  2001.  The  Company  currently  receives
$20,000 per month in  administrative  fee  income.  The  Company  purchased  raw
materials in the amount of $185,600 from the Partnership for the year ended June
30, 2001.

[5] Inventories

Raw materials                                                  $  1,607,296
Work-in-Process                                                   1,158,019
Finished Goods                                                      833,530
                                                               ------------
      Total                                                    $  3,598,845
                                                               ============

[6] Property and Equipment

Land and Building                                              $  1,250,000
Leasehold Improvements                                            1,157,960
Machinery and Equipment                                           2,657,679
Machinery and Equipment Under Capital Leases                        156,561
Transportation Equipment                                             32,152
                                                               ------------
Total                                                             5,254,352
Less: Accumulated Depreciation and Amortization                   2,904,040
                                                               ------------

      Total                                                    $  2,350,312
                                                               ============


                                      F-10
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3


[7] Notes Payable

   Bio Merieux Vitek, Inc. (a)                    $     16,223
   Medallion Business  Credit, LLC (b)                 636,966
   Summit Business Capital Corp. (c)                    66,387
   Merchant Financial Corporation (d)                    1,566
                                                  ------------
   Totals                                              721,142
   Less: Current Portion                               721,142
                                                  ------------

      Non-current Portion                         $         --
                                                  ============

(a) Five year 10%  equipment  note dated  April 1, 1997  providing  for  monthly
payments of $1,698 for  principal and interest.  The note is  collateralized  by
laboratory equipment.

(b) Under the terms of a  revolving  credit  note which  expires on  November 5,
2001,  the Company  may borrow up to  $1,000,000  at 3% above the  prime-lending
rate. The loan is collateralized by the inventory,  receivables and equipment of
Integrated  Health  Technologies,  Inc.,  and  its two  operating  subsidiaries,
Manhattan  Drug  Company,  Inc.  and  Vitamin  Factory,  Inc.  The note has been
guaranteed by the Company's principal stockholder. At June 30, 2001 the interest
rate was 10.5%.

(c) Non-Interest bearing Promissory Note dated August 30, 2000 providing for ten
consecutive monthly installments for the purchase of inventory.

(d) Under the terms of a  revolving  credit note which  expires on December  21,
2002,  the Company  may borrow up to  $1,000,000  at 4% above the prime  lending
rate. The loan is collateralized by the inventory,  receivables and equipment of
IHT Health Products, Inc. a subsidiary of Integrated Health Technology,  Inc. At
June 30, 2001 the interest rate was 11%.

The loan agreements with Medallion  Business Credit,  LLC and Merchant Financial
Corporation  contain certain financial  covenants relating to the maintenance of
specified liquidity,  the tangible net worth. The Company was in compliance with
all of its financial covenants.

The following are maturities of long-term debt for each of the next five years:

June 30,
2002                                                 $     721,142
2003                                                            --
2004                                                            --
2005                                                            --
2006                                                            --
                                                     -------------

Totals                                               $     721,142
                                                     =============

[8] Capital Lease

The Company acquired  warehouse and office equipment under the provisions of two
long-term leases.  The leases expire in March 2003 and July 2003,  respectively.
The equipment under the capital leases as of June 30, 2001 has a cost of $47,016
and accumulated depreciation of $10,218, with a net book value of $36,798.

The future minimum lease payments under capital leases and the net present value
of the future minimum lease payments at June 30, 2001 are as follows:


                                      F-11
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4


[8]  Capital Leases (Continued)

Total Minimum Lease Payments                                  $        47,016
Amount Representing Interest                                          (10,994)
                                                              ---------------

Present Value of Net Minimum Lease Payments                            36,022
Current Portion                                                       (11,727)
                                                              ---------------

   Long-Term Capital Lease Obligation                         $        24,295
                                                              ===============


The following are maturities of long-term capital lease obligations:

June 30,
2002                                                           $     14,194
2003                                                                  5,973
2004                                                                  4,125
                                                               ------------

Totals                                                         $     24,295
                                                               ============

[9] Income Taxes

Deferred tax attributes  resulting from differences between financial accounting
amounts and tax bases of assets and liabilities at June 30, 2001 follow:

 Current assets and liabilities
  Allowance for doubtful account                              $     52,000
  Inventory overhead capitalization                                 45,000
  Other accruals                                                   123,000
                                                              ------------
Net current deferred tax asset (liability)                    $    220,000
                                                              ============


Long-Term assets and liabilities
  Depreciation                                                $     94,000
                                                              ============

The provision for income taxes consists of the following:

                                                             June 30,
                                                       2001              2000
                                                    ---------         ---------
Deferred tax (benefit)                              $ (34,000)        $ (36,000)
Current tax expense (benefit)                        (613,465)          950,056
                                                    ---------         ---------
                                                    $(647,465)        $ 914,056
                                                    =========         =========


The  statutory  income tax rate differs from the  effective tax rate used in the
financial  statements  as a  result  of the  permanent  differences,  change  in
statutory tax rate and current year net operating  losses. A  reconciliation  of
the  statutory  tax rate to the effective tax rate for the year ended June 30 is
as follows:


                                      F-12
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5


[9] Income Taxes (Continued)

                                                         2001          2000
                                                      ---------     ---------
     Computed (benefit) provision at the
     statutory tax                                          (34)%          34%
          State tax rate                                     --             6
      Reversal of prior year tax accruals                    --            (5)
      Change in valuation allowance                          --            (8)
      Change in estimated tax rate                           --            (2)
      Other                                                   3            --
                                                      ---------     ---------
     Effective income tax rate                              (31)%          25%
                                                      =========     =========

[10] Profit-Sharing Plan

The Company  maintains a  profit-sharing  plan,  which  qualifies  under Section
401(k) of the Internal Revenue Code, covering all nonunion employees meeting age
and service requirements.  Contributions are determined by matching a percentage
of employee  contributions.  The total expense for the years ended June 30, 2001
and 2000 was $59,631 and $53,214, respectively.

[11] Significant Risks and Uncertainties

[A]  Concentrations  of Credit  Risk-Cash-  The  Company  maintains  balances at
several financial institutions.  Accounts at each institution are insured by the
Federal  Deposit  Insurance  Corporation  up to $100,000.  At June 30, 2001, the
Company's uninsured cash balances totaled approximately $500,000.

[B]  Concentrations of Credit  Risk-Receivables-  The Company routinely assesses
the financial strength of its customers and, based upon factors  surrounding the
credit  risk  of its  customers,  establishes  an  allowance  for  uncollectible
accounts and, as a  consequence,  believes that its accounts  receivable  credit
risk exposure  beyond such  allowances is limited.  The Company does not require
collateral in relation to its trade accounts  receivable credit risk. The amount
of the allowance for uncollectible accounts at June 30, 2001 is $128,389.

[12] Major Customer

For the years ended June 30, 2001 and 2000,  approximately 28% or $4,300,000 and
51% or $9,200,000  of revenues were derived from one customer.  The loss of this
customer would have an adverse affect on the Company's operations.  In addition,
for the years ended June 30, 2001 and 2000,  an aggregate of  approximately  32%
and 24%,  respectively,  of revenues were derived from two other  customers;  no
other customers  accounted for more than 10% of consolidated sales for the years
ended June 30, 2001 and 2000. Accounts receivable from these customers comprised
approximately  31% and 44% of total  accounts  receivable  at June 30,  2001 and
2000, respectively.

[13] Commitments and Contingencies

[A] Leases

Related Party Leases- Certain  manufacturing  and office  facilities were leased
from Morristown Holding Company, Inc., (formerly Gerob Realty Partnership) whose
owners are stockholders of the Company. The lease, which expired on December 31,
2000 provided for a minimum  annual rental of $60,000,  plus payment of all real
estate taxes. Rent and real estate tax expense for the years ended June 30, 2001
and 2000 on this  lease was  approximately  $5,000 and  $105,000,  respectively.
Unpaid rent due to Morristown  Holding Company,  Inc. and Gerob at June 30, 2001
has been separately  disclosed as accrued expenses on the  consolidated  balance
sheet. The balance due was $122,400 as of June 30, 2001.

Other warehouse and office facilities are leased from Vitamin Realty Associates,
L.L.C.,  a  limited  liability  company,  which is 90%  owned  by the  Company's
chairman and principal  stockholder  and certain family members and 10% owned by
the Company's  Chief Financial  Officer.  The lease was effective on January 10,
1997 and provides for minimum



                                      F-13
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6


[13] Commitments and Contingencies [Continued]

annual rental of $346,000 through January 10, 2002 plus increases in real estate
taxes and building operating expenses. Rent expense has been straight-lined over
the life of the lease.  At its  option,  the  Company has the right to renew the
lease for an  additional  five  year  period.  On April  28,  2000 the lease was
amended  reducing the square  footage and  extending  the lease to May 31, 2015.
Rent  expense  for the  years  ended  June 30,  2001 and 2000 on this  lease was
approximately $455,000 and $456,000.

Other Lease Commitments- The Company leases warehouse  equipment for a five year
period providing for an annual rental of $23,114 and office equipment for a five
year period providing for an annual rental of $8,365.

The Company leases automobiles under non-cancelable  operating lease agreements,
which expire through 2004.

The minimum rental commitment for long-term non-cancelable leases is as follows:

                                                Related
Year Ending                 Lease             Party Lease
  June 30,                Commitment           Commitment              Total
  --------              -------------       ---------------      ---------------
    2002                $      99,716       $       323,559      $       423,275
    2003                       75,830               323,559              399,389
    2004                       41,202               323,559              364,761
    2005                       10,640               323,559              334,199
    2006                        6,790               323,559              330,349
    Thereafter                     --             2,858,105            2,858,105
                        -------------       ---------------      ---------------

    Total               $     234,178       $     4,475,900      $     4,710,078
                        =============       ===============      ===============

Total rent expense,  including real estate taxes and  maintenance  charges,  was
approximately  $523,000 and $556,000 for the years ended June 30, 2001 and 2000,
respectively.  Rent  expense is stated net of sublease  income of  approximately
$3,000 and $12,000 for the years ended June 30, 2001 and 2000, respectively.

[B] Employment  Agreements-  Effective  July 1, 1999,  the Company  entered into
three year employment  agreements with its four executive officers which provide
for aggregate annual salaries of $495,000 for the years ending June 30, 2001 and
2002, respectively. These agreements are subject to annual increases equal to at
least the increase in the consumer price index for the Northeastern area.

[C] Litigation- The Company is unable to predict its ultimate financial exposure
with  respect  to its prior sale of certain  products  which may have  contained
allegedly  contaminated  Tryptophan  which is the subject of  numerous  lawsuits
against  unrelated  manufacturers,   distributors,   suppliers,   importers  and
retailers of that product.  However,  management does not presently  believe the
outcome of these actions will have a material adverse effect on the Company.

[D] Consulting  Agreements- The Company entered into a consulting agreement with
a  financial  public  relations  firm to provide  financial  communications  and
investor  relations.  The agreement is for a 12-month  period and provides for a
yearly  retainer  of  $54,000.  In  addition  the  Company  has  issued  to  the
consultants options to purchase 75,000 shares of its common stock at an exercise
price of $1.10 and 75,000 shares at an exercise price of $1.75

[E]  Development  and Supply  Agreement- On April 9, 1998,  the Company signed a
development and supply agreement with Herbalife  International of America,  Inc.
["Herbalife"]  whereby the Company will develop,  manufacture and supply certain
nutritional products to Herbalife through December 31, 2001.

[F]  Manufacturing  Agreement-  On  February  14,  1998,  the  Company  signed a
manufacturing agreement with Pilon International,  PLC., a company that supplies
Zepter  International,   a  world-wide  direct  sales  distributor  of  consumer
products.  The Company will manufacture and develop dietary  supplements through
the year 2001.



                                      F-14
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7


[14] Related Party Transactions

During the year ended June 30,  1997,  the  Company  entered  into a  consulting
agreement with the brother of the Company's  Chairman of the Board on a month to
month basis for $1,100 per month. The total consulting expense recorded per this
verbal agreement for the years ended June 30, 2001 and 2000 was $13,200 for each
year.

[15] Equity Transaction

[A] Purchase of Manufacturing  Facility-On August 30, 2000 the Company issued to
Morristown  Holding  Company,  Inc.  1,050,420  shares  of its  common  stock in
exchange for the manufacturing and office facility it had been renting.

[B] Consultant Agreement/Stock Options-In connection with a consulting agreement
dated July 18, 2000 the Company has issued  75,000  options on its common  stock
exercisable at $1.10 per share and 75,000 options exercisable at $1.75 per share
[See Note 11G]. Should the Company choose not to renew the consulting  agreement
the consultants have agreed to give back 50,000 shares of the $1.75 options. The
options are exercisable for five years from the date the agreement was signed.

[C] Stock  Option Plan - The  Company  has  adopted a stock  option plan for the
granting of options to employees,  officers,  directors and  consultants  of the
Company to purchase up to 5,000,000 shares of common stock, at the discretion of
the Board of Directors.  Stock option grants are limited to a total of 2,500,000
shares for  "incentive  stock options" and 2,500,000  shares for  "non-statutory
options" and may not be priced less than the fair market value of the  Company's
common stock at the date of grant.  Options  granted are  generally for ten year
periods,  except that  options  granted to a 10%  stockholder  [as  defined] are
limited to five year terms.

On July 20, 2001 the Company  granted to its employees  200,000  incentive stock
options for a term of ten years at the exercise price of $1.00.

On December 19, 2000 the Company granted  497,333  incentive stock options for a
term of 10 years at an exercise  price equal to the market  price  ($.75) on the
date of grant and 120,480  incentive stock options at an exercise price equal to
110% of the market price ($.83).

The Company  also  granted  171,667  non-statutory  stock  options to  officers,
directors, and members of its Scientific Advisory Board at the exercise price of
$.75 and 179,520  non-statutory  stock options at $.83 No dividends are expected
to be paid during the life of the options.

Pro forma  information  regarding  net  income and  earnings  per share has been
determined  as if the Company had  accounted  for its  employee's  stock options
under the fair-value  method.  The fair value for these options was estimated at
the date of grant using a Black-Scholes  option pricing model with the following
weighted-average assumptions for June 30:

                                              2001                  2000
                                            ---------             ---------
Risk-free interest rate                          5.5%                  6.6%
Expected volatility                            137.3%                104.1%
Dividend yield                                   --                    --
Expected life                               8.0 years             7.6 years

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options,  which have no vesting  restrictions and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the Company's employee stock options


                                      F-15
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8


[15] Equity Transactions [Continued]

have characteristics  significantly  different from those of traded options, and
because changes in the subjective  input  assumptions can materially  affect the
fair-value  estimate,  in  management's  opinion,  the  existing  models  do not
necessarily  provide a reliable single measure of the fair value of its employee
stock options.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is  amortized  to  expense  over the  option's  life.  The  Company's  pro forma
information follows:

                                                 2001             2000
                                            --------------    -------------

Pro forma net income, (loss)                $   (1,965,129)   $   2,545,855
                                            ==============    =============

Pro forma net income, (loss) per share
   Basic                                    $         (.33)   $         .49
                                            ==============    =============
   Diluted                                  $         (.33)   $         .48
                                            ==============    =============

The Company recorded compensation expense for stock options issued in the amount
of $18,000 and $0 for the years ended June 30, 2001 and 2000.

A summary of the Company's stock option  activity,  and related  information for
the years ended June 30, follows:

                                              Weighted                 Weighted
                                              Average                   Average
                                              Exercise    Number of    Exercise
                                Options        Price     Exercisable     Price
                                -------        -----     -----------     -----
Outstanding
  June 30, 1999                  940,175    $     2.82      940,175   $     2.82
      Granted                  1,590,000          0.52
      Exercised                       --                                      --
      Terminated                 (15,000)         3.50
                              ----------

Outstanding                    2,515,175          1.36      925,175         2.82
  June 30, 2000
     Granted                   1,319,000          0.88
      Exercised                       --                                      --
      Terminated                 (20,000)         0.50
                              ----------

Outstanding
  June 30, 2001                3,814,175          1.20    2,495,175         1.36
                              ==========

Weighted-average fair
  value of  options granted
  during the year                                 2001                      2000
                                                  ----                      ----

       Where exercise price                       0.81                      0.50
       equals stock price

       Where exercise price                       1.03                      0.55
       exceeds stock price

       Where stock price                            --                        --
       exceeds exercise price


                                      F-16
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9


[15] Equity Transactions [Continued]

Following is a summary of the status of stock  options  outstanding  at June 30,
2001:

<TABLE>
<CAPTION>
                                  Outstanding Options                                  Exercisable Options
                      ---------------------------------------------------       -------------------------------
                                       Weighted
                                        Average               Weighted                             Weighted
   Exercise                            Remaining               Average                              Average
  Price Range         Number       Contractual Life        Exercise Price       Number           Exercise Price
-------------         ------       ----------------        --------------       ------           --------------
<S>                <C>                    <C>                   <C>            <C>                    <C>
 $ .50 -  .55      1,570,000              7.9                   0.52           1,570,000              0.52
 $ .75 -  .83        969,000              9.3                   0.77                   0                 0
 $1.00 - 1.10        275,000              6.7                   1.03                   0                 0
 $1.50 - 1.65        320,604              6.2                   1.53             320,604              1.53
 $1.75                75,000              4.0                   1.75                   0                 0
 $3.50 - 3.85        604,571              5.2                   3.52             604,571              3.52
 ------------     ----------            -----                 ------           ---------              ----
 $0.50 - 3.85      3,814,175              7.4                   1.20           2,495,175              1.36
</TABLE>

There were no warrants  exercised  for the fiscal  years ended June 30, 2001 and
2000.

[D]  Consultant   Agreement/Stock  Options-  In  connection  with  a  consulting
agreement  dated March 20, 1998, the Company has issued three options for 45,000
shares of common  stock [See Note 12E].  Each option is  exercisable  for 15,000
shares at exercise price of $1.125, $2.50 and $4.00, respectively. These options
are exercisable until five years following the date of this agreement.

[E] Related Party Promissory  Note- On March 12, 1998, the Company  negotiated a
three year  promissory  note for $750,000 with its Chairman and then  President.
The note was  repaid  in  January  2000.  As  consideration  for the  loan,  the
Corporation  issued a Class C Warrant to purchase 150,000 shares of common stock
at the aggregate  purchase price of $1.75 per share.  The warrant is exercisable
for a four year period  commencing  one year after the  issuance of the note and
expires on March 12, 2003.

[16] New Accounting Pronouncement

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities".  Statement No. 133 establishes  accounting
and reporting  standards for derivative  instruments and for hedging activities.
It  requires  that an entity  recognize  all  derivatives  as  either  assets or
liabilities  and measure them at fair value.  Under certain  circumstances,  the
gains or losses from  derivatives may be offset against those from the items the
derivatives  hedge  against.  The Company has adopted SFAS No. 133 in the fiscal
year ending June 30,  2001.  SFAS No. 133 did not have a material  impact on the
financial statements.

In July 2001, FAS No. 141,  "Business  Combinations"  (FAS 141") and FAS No. 142
"Goodwill and Other Intangible  Assets" (FAS 142") were issued. FAS 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  after  June  30,  2001.  FAS 141 also  specifies  the  criteria  that
intangible  assets acquired in a purchase method business  combination must meet
to be  recognized  and  reported  apart from  goodwill.  FAS 142  requires  that
goodwill  and  intangible  assets  with  indefinite  useful  lives no  longer be
amortized,  but  instead  be  tested  for  impairment,  at  least  annually,  in
accordance  with the  provisions  of FAS 142.  FAS 142 will  also  require  that
intangible  assets with definite useful lives be amortized over their respective
estimated useful lives to their estimated  residual values,  and be reviewed for
impairment in accordance  with FAS No. 121,  "Accounting  for the  Impairment of
Long-lived  Assets and  Long-lived  Assets to be Disposed of". The provisions of
FAS 141 are effective  immediately,  except with regard to business combinations
prior to July 1, 2001. FAS 142 will be effective as of January 1, 2002. Goodwill
and other intangible assets acquired in business  combinations  completed before
July 1, 2001,  will  continue to be amortized  prior to the adoption of FAS 142.
The Company is currently evaluating the effect that the adoption of FAS 142 will
have on its results of operations and its financial position.



                                      F-17
<PAGE>

INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9


[17] Subsequent Events

Litigation  Settlement - On August 1, 2001, the Company  received a supplemental
payment of  approximately  $1.1 million  dollars under the terms of a settlement
Agreement which was originally  signed on January 20, 2000 with a major supplier
in connection with a multi-district  consolidated class action brought on behalf
of direct purchasers of vitamin products.

Tender Offer- On March 5, 2001 the Company entered into an Agreement and plan of
Reorganization with NuCycle Therapy,  Inc.  ("NuCycle") whereby Chem Acquisition
Corp.,  (a  wholly-owned  subsidiary)  will acquire  NuCycle  Therapy,  Inc. and
NuCycle Therapy,  Inc. will become a wholly-owned  subsidiary of the Company. On
May 21, 2001 the  original  agreement  was amended and  restated to provide that
Chem  Acquisition  Corp.  will make a tender  offer  for all of the  outstanding
common stock of NuCycle Therapy,  Inc. and all outstanding  warrants.  The total
consideration  offered will be  $400,000.  The tender offer was accepted on July
11, 2001 and resulted in Chem Acquisition  Corp.  acquiring  2,298,309 shares of
NuCycle common stock which represented  approximately 72% of NuCycle.  On August
29, 2001  NuCycle  Therapy,  Inc.  held a special  meeting of  stockholders  and
approved the Amended and Restated Agreement and Plan of Reorganization.

The Company,  in September  2001,  then entered into a Licensing  Agreement with
NuCycle  whereby the Company  obtained  the  exclusive  license to  manufacture,
market and sell vitamin and mineral supplements using NuCycle's technology.

In September  2001 the Company then sold  NuCycle to certain  investors  for the
same $400,000 to recoup the Company's  investment.  Certain of the investors are
also  shareholders  and officers of the Company.  NuCycle  desired to pursue the
development of drugs and pharmaceuticals with its technology and the Company did
not want to fund such development.


                                      F-18
<PAGE>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) 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.


                           INTEGRATED HEALTH TECHNOLOGIES, INC. AND SUBSIDIARIES


Date: September 24, 2001           By: /s/ Seymour Flug
                                       -----------------------------------------
                                           Seymour Flug,
                                           President and Chief Executive Officer

Date: September 24, 2001           By: /s/ Eric Friedman
                                       -----------------------------------------
                                           Eric Friedman,
                                           Chief Financial Officer


                                      F-19