U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]     ANNUAL  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF 1934

                                  For  the  fiscal year ended December 31, 2000.

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
        ACT OF 1934

                                  For the transition period from_______to_______
                                  Commission file number _______________________


                  INNOVATIVE HOLDINGS AND TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)


           Colorado                                        74-2929034
---------------------------------              ---------------------------------
   (State of Incorporation)                    (IRS Employer Identification No.)



100 South Orange Ave., Ste. 300, Orlando, FL                 32801
--------------------------------------------   ---------------------------------
(Address of principal executive offices)                   (Zip Code)



Issuer's telephone number,(   407     )     481       -      8900
                           -----------  -------------   -------------


Securities to be registered under Section 12(b) of the Act:  None

         Title of each class                   Name of each exchange on which
         to be so registered                   each class is to be registered



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


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

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

         Title of each class                    Name of each exchange on which
         to be so registered                    each class is to be registered


Common Stock, par value $0.0001                            OTC BB
---------------------------------              ---------------------------------


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

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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     No
                                                                       ---   ---

<PAGE>

                                     PART I

Item 1.       Description of Business.

         (a)  Forward-looking  Statements.  Certain statements in this Form 10SB
Registration  Statement,  particularly under Items 1 and 2, constitute "forward-
looking statements" with the meaning of the Private Securities Litigation Reform
Act of 1995. These  forward-looking  statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results, performance
or  achievements  of the  Company  to be  materially  different  from any future
results,   performance   or   achievements,   expressed   or   implied   by  the
forward-looking statements.

         (b) Business Development. Innovative Holdings & Technologies, Inc. (the
"Company") was  incorporated  under the laws of the State of Colorado on January
7, 1987.  The  Company  has one  operating  subsidiary  named  Xtreme  Telemetry
Systems, Inc. (XTS), a Florida corporation.

         (c) Business of Issuer.  The company is in the  business of  acquiring,
creating  and   developing   high   technology   companies  with  promising  new
technologies  and  applications.  The  Company  does not intend to combine  with
private  companies  in  manners  which may  cause it to be deemed an  investment
company subject to the Investment Company Act of 1940.

         The  Company,  through its XTS  subsidiary,  has  developed  the Xtreme
Telemetry  System,  a high technology  data  acquisition and delivery system for
broadcast  television  and Internet  applications.  The XTS System  incorporates
sensor technologies to gather data from biological, mechanical and environmental
sources. This data then can be wirelessly transmitted from its source, by way of
XTS's  proprietary  software,  to broadcast  applications on TV or the Internet.
This  broadcast  information  can  then be  graphically  displayed  on TV or the
Internet.

         During 2000 there was contact  with sports and  broadcast  entities for
the  purpose  of  telemetry  data  acquisition  and  broadcast  delivery.  These
discussions  have not  resulted  in  contractual  agreements  and  there  are no
assurances that these efforts will be sucessful.

          The Company has developed propriety software for which a copyright has
been applied for.

                  The  Company   acquired   an  interest  in  USTech   Materials
Corporation.   USTech   Materials   Corporation   (USTM)   intends   to  develop
manufacturing  and marketing for Poly Ether Amid Resin,  also known as PEAR. The
PEAR resins were  originally  developed  by Ashland,  Inc.,  who entered  into a
license  agreement with  USTM/IHTL in July,  2000. The Company has endeavored to
seek out financing and personnel to assist  USTM's  infrastructure,  sales,  and
marketing  systems  and  strategic  relationships  in order to bring PEAR to the
marketplace.  This Company,  USTM, is still in its basic development stages, and
there are no guarantees that USTM will  successfully  raise sufficient  capital,
attract  management and other  personnel,  and be able to develop  manufacturing
facilities, materials sources, R&D capabilities, marketing channels and delivery
methods for PEAR resins.


<PAGE>

Employees

         The Company employed three full employees, and uses the services of six
consulting firms/individuals on an as-needed basis.

Item 2.       Description of Property.

         The Company owns no real  property.  It subleases  2,778 square feet of
office space from Metcalf Limited  Partnership.  The premises are located at 100
South Orange Ave., Suite 300, Orlando,  Florida.  The lease commenced on July 1,
1999 and ends on the last  effective day of the Lease,  October 1, 2002,  unless
terminated  sooner,  as set forth in the lease  agreement.  The monthly  rent is
currently $3,839.00.

Item 3.       Legal Proceedings.

         The  Company  is  not a  party  to  any  pending  or  threatened  legal
proceedings.

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

         No matter was submitted to a vote of the security holders,  through the
solicitation  of proxies or otherwise,  during the fourth  quarter of the fiscal
year covered by this report.

                                     PART II

Item 5.       Market for Common Equity and Related Stockholder Matters.

(a)      Market Information.

         The  Company's  common stock trades  Over-the-Counter  (OTC) on the OTC
Bulletin  Board under the symbol  IHTL.  Table 3 sets forth the high and low bid
information for each fiscal quarter within the last two years.  These quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.

Table 3.

Bid Information
--------------------------------------------------------------------------------

Fiscal Quarter Ended                        High                       Low
--------------------------------------------------------------------------------

December 31, 2000                           0.187                      0.0312
September 30, 2000                          0.348                      0.125
June 30, 2000                               0.348                      0.0625
March 31, 2000                              0.437                      0.265
December 31, 1999                           0.22                       0.12
September 30, 1999                          1.02                       0.16
June 30, 1999                               0.84                       0.375
March 31, 1999                              1.22                       0.325
December 31, 1998                           0.78                       0.27
--------------------------------------------------------------------------------

(b)      Holders.

         The Company has approximately  2,234 active  shareholders of its common
stock holding 26,374,884 common shares.

<PAGE>

(c)      Dividends.

         No dividends  have been  declared or paid to date and none are expected
to be paid in the forseeable  future.  There are no restrictions  imposed on the
Company which limit its ability to declare or pay dividends on its common stock.

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

The  following  discussion  and  analysis  should  be read in  conjunction  with
"Selected  Condensed  Consolidated  Financial Data" and the Company's  Condensed
Consolidated  Financial  Statements and Notes thereto included elsewhere in this
document.

Overview

Since its inception in 1987,  the Company's  purpose is to conduct  offerings of
its securities to raise capital to acquire businesses in various industries. For
the period from January 9, 1987  (inception)  to September 30, 1990, the Company
incurred a total net loss of $1,840,993. During this period, the Company devoted
substantially  all of  its  efforts  to  establish  and  organize  a  television
cablecast  facility.  However,  by the end of 1990 the operations of the Company
ceased.

From  December  1990  through  October  1997,  the  Company  did not operate any
businesses and was inactive.

In  November  1997,  the  Company  changed  its name to  Innovative  Holdings  &
Technologies,  Inc.  The Company  considers  its role to be an incubator of high
technology companies and began its search for suitable business acquisitions. In
the second  quarter of 1998,  the Company  signed an agreement to acquire BioCam
Company,  Inc.  (BioCam),  a developer of telemetry  technology in the amount of
$1,000,000.  This was paid for by issuance of  convertible  preferred  stock and
restricted  common stock.  The Company began supporting the operations of BioCam
financially and funded approximately  $350,000, in 1998. By the end of 1998, the
principals  of BioCam  rescinded  on their  agreement  with the  Company and the
relationship was terminated.

On January 8, 1999, the Company  incorporated  Xtreme  Telemetry  Systems,  Inc.
(Xtreme) and is its sole  stockholder.  Xtreme began the  development  of a real
time telemetric  monitoring  device, to be marketed  initially in the sports and
entertainment  industries.  The device will monitor performance and transmit the
data by broadcast or over the internet. In September,  1999, the Company secured
the services of specialists  in computer  software  development.  The alpha-beta
testing of the software  commenced  in the fourth  quarter,  1999.  The products
under development have not been completed.

Results of operations

The following table sets forth,  for the periods  indicated,  certain items from
the Company's Consolidated  Statements of Operations,  expressed as a percentage
of total expenses.

<PAGE>

Results of Operations, continued
                                         The nine months ended December 31,
                                         ----------------------------------
                                             2000             1999
                                            -----            -----
Revenues                                     0.0%             0.0%
                                            -----            -----

Expenses:
  General and Administrative                88.7%            70.2%
  Research and Development                   8.4%            28.9%
  Interest Expense                           2.9%              .9%
                                            -----            -----
         Total Expenses                      100%             100%
                                            -----            -----
Net Loss                                     100%             100%
                                            =====            =====

Revenues

The Company had no revenues for the years ended December 31, 2000 and 1999.

General and Administrative

General and  administrative  expenses  have  decreased  from $431,050 in 1999 to
$300,898 in 2000. The decrease in these expenses resulted from  consolidation of
operating activities and stream lining of expenditures.

Research and Development

Research and development  expenses decreased from $177,253 in 1999 to $28,455 in
2000. Research and development expenses are not recurring expenses.

Interest Expense

Interest  expense is due from  personal  loans made to the company.  The amounts
from 1999 to 2000 have not varied considerably.

Liquidity and Capital Resources

The Company requires capital principally for the financing of operations and the
development and marketing of its subsidiary's products. To date, the company has
financed its operations  primarily through the sale its of equity securities and
by obtaining  financing.  During the year ended  December 31, 1999,  the Company
generated $616,000 from the issuance of its stock.

The Company had  negative  working  capital as of December  31, 2000 of $441,340
compared to $241,885 as of December 31, 1999.

As stated in the  Company's  Consolidated  Financial  Statements,  the Company's
ability to continue as a going  concern is dependent  upon issuance of stock and
obtaining debt  financing.  There can be no assurance the  additional  financing
will be attained or that the operations will be profitable. Such inability would
have a material adverse effect on the Company's business,  operating results and
financial condition.

<PAGE>

The  Company  currently  has no  specific  commitments  with  regard to  capital
expenditures with the exceptions of purchasing  computer  equipment and sensors.
The Company's future capital requirements will, depend on its ability to acquire
complementary business ventures, products or technologies.

The  Company  believes  that its  current  cash  balances  will not  provide the
liquidity necessary to satisfy the Company's working capital needs.

Inflation

Inflation  has not had a  significant  impact on the Company since its inception
nor is it expected to have a significant impact in the foreseeable future.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.133
(SFAS133) "Accounting for Derivative Instruments and Hedging Activities",  which
was amended by SFAS No. 137, issued in June 1999. SFAS 133 established standards
for  accounting  for  derivative   instruments,   including  certain  derivative
instruments  embedded in other contracts,  and hedging activities.  SFAS 133, as
amended,  is effective  for fiscal  years  beginning  after June 15,  2000.  The
Company  does not  believe  that the  adoption  of SFAS 133 will have a material
effect on the financial statements.

Recent Accounting Pronouncements, Continued

In March 2000, FASB Interpretation, No. 44, "Accounting for Certain Transactions
Involving Stock Compensation-An  Interpretation of APB Opinion No. 25," (FIN 44)
was  issued.  FIN 44  clarifies  the  application  of  APB  No.  25 for  certain
stock-based compensation issues. FIN 44 clarifies the definition of employee for
purposes of applying  APB No. 25, the criteria  for  determining  whether a plan
qualifies as a  non-compensatory  plan, the accounting  consequences  of various
modifications  to the terms of a  previously  fixed  option  or  award,  and the
accounting  for  an  exchange  of  share  compensation   awards  in  a  business
combination, among other matters. FIN 44 was effective July 1, 2000, but certain
conclusions in this  interpretation  cover  specific  events that occurred after
either December 15, 1998 or January 12, 2000. The  implementation  of FIN 44 did
not  have  a  significant  impact  on  our  financial  position  or  results  of
operations.

In September  2000, the FASB issued SFAS No. 140,  "Accounting for Transfers and
Servicing of Financial Assets and  Extinguishments  of Liabilities"  (SFAS 140).
SFAS 140  replaces  FASB  Statement  No.  125,  "Accounting  for  Transfers  and
Servicing of Financial  Assets and  Extinguishment  of Liabilities" and provides
accounting  and  reporting  standards  for  transfers and servicing of financial
assets and extinguishments of liabilities  occurring after March 31, 2001 and is
effective for recognition and reclassification of collateral and for disclosures
relating to  securitization  transactions and collateral for fiscal years ending
after  December 31, 2000. The Company does not believe that the adoption of SFAS
140 will have a material effect on the financial statements.

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting Bulletin (SAB) No.101, "Revenue Recognition in Financial Statements."
SAB  101  provides  the  SEC  Staff's  view's  in  applying  generally  accepted
accounting  principles to selected revenue issues.  The Company does not believe
that the  adoption  of SAB 101 will  have a  material  effect  on the  financial
statements.

<PAGE>

Item 7.       Financial Statements.

         The  required  financial  statements  are  included  in  this  document
starting at Page F-1.

Item 8.       Changes  In  and  Disagreements With Accountants on Accounting and
              Financial Disclosure.

         There  have  been no  changes  or  disagreements  with  accountants  on
accounting or financial  disclosure  during the Company's two most recent fiscal
years.

                                    PART III

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


The following table sets forth the officers and directors of the Company.

Name                             Position                                 Age
--------------                   -------------------                      ---
Helmuth Wyzisk                   President, Director                       44


(a)      Identify Directors and Executive Officers.

         The Company's  one director is Mr.  Helmuth  Wyzisk.  Mr. Wyzisk is the
President  and Chief  Executive  Officer.  Mr.  Wyzisk has served in his present
capacities  since  November  1997.  From  1995  through  1997 he  served  as the
President of Celesta  Corporation.  Celesta offered financial and other business
services  to its  customers.  Prior to 1995,  Mr.  Wyzisk was  President  of ELF
Investments,  a company providing contract  negotiation and acquisition services
to its customers.

(b)      Identify  Significant  Employees.  The  Company  has   no   significant
         employees, as that term is defined, other than its executive officer.

(c)      Family Relationships.  None.

(d)      Involvement  in  Certain  Legal  Proceedings.  None  of  the  Company's
         directors,  officers,  promoters or control persons, if any, during the
         past five years was, to the best of the Company's knowledge:

1.       A  general  partner  or  executive  officer  of a  business  that had a
         bankruptcy  petition  filed by or  against it either at the time of the
         bankruptcy or within the two years before the bankruptcy;

<PAGE>

2.       Convicted  in a  criminal  proceeding  or  been  subject  to a  pending
         criminal  proceeding  (excluding  traffic  violations  and other  minor
         offenses);
3.       Subject to any order,  judgement, or decree, not subsequently reversed,
         suspended  or  vacated,   of  any  court  of  competent   jurisdiction,
         permanently or temporarily enjoining,  barring, suspending or otherwise
         limiting his or her involvement in any type of business,  securities or
         banking activities; and
4.       Found by a court of competent  jurisdiction  (in a civil  action),  the
         Securities  and Exchange  Commission or the Commodity  Futures  Trading
         Commission  to  have   violated  a  federal  or  state   securities  or
         commodities law, and the judgement has not been reversed,  suspended or
         vacated.

Item 10.      Executive Compensation.

         The  Company has one  executive  officer.  Mr.  Wyzisk has been paid no
compensation during 1998 and 1999. Mr. Wyzisk was paid executive compensation in
the form of common  stock for the years 1994  through  1997 with the issuance of
6,000,000 common shares.  This compensation was valued at $300,000 or five cents
per share.  The company has granted stock options to its President to acquire up
to Ten Million  (10,000,000)  common shares for purchase price of $500,000.  The
option is exercisable commencing on June 1, 2000 and expires on March 9, 2003.

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

         Table 1 lists the persons who are known to the Company to be the owners
of more than five  percent of the  Company's  equity  shares as of December  31,
2000.

(a)      Beneficial Ownership of more than 5%.

         Table 1.

     (1)                 (2)                        (3)                  (4)
Title of Class     Name and Address          Amount and Nature        Percent of
                                                                         Class
--------------     ---------------------     -----------------        ----------
  *Common          Helmuth Wyzisk                 11,392,500             43.1%
   Common          Bodden & Company                1,666,666              6.3%


(b)      Security Ownership of Management.

         Table 2.

     (1)                 (2)                        (3)                  (4)
Title of Class     Name and Address          Amount and Nature        Percent of
                                                                         Class
--------------     ---------------------     -----------------        ----------
  *Common          Helmuth Wyzisk                 11,392,500             43.1%

(1)      Changes  in  Control.  Management  is  unaware  of any facts that would
         effect a change in the  control  of the  Company as of the date of this
         Form 10 SB filing.

(2)

<PAGE>

Item 12.      Certain Relationships and Related Transactions.

(a)      Transactions with Management and Others.

         Except  as  otherwise  set  forth  in  this  document,   no  member  of
management,  executive  officer,  director,  nominee  for a director or security
holder who is known to the  Company to own of record or  beneficially  more than
five percent of any class of the Company's voting securities,  nor any member of
the  immediate  family of any of the  foregoing  persons,  has had any direct or
indirect  material interest in any transaction to which the Company was or is to
be a party.

         The Company retains the services of a marketing company whose principal
owner is the controlling  shareholder of the Company.  During 1999,  payments of
$20,000 were made to this related company.

(b)      Certain Business Relationships.

         During 1997 and 1998 and prior to July 1, 1999 the Company's operations
were  based  at the  offices  of a  shareholder.  Payments  were  made  to  this
shareholder for rent,  administrative and miscellaneous  services.  During 1998,
50,000 shares were issued to and $53,800 was paid to this  shareholder.  For the
eight months ended  August 31, 1999,  payments in the  aggregate of $60,387 were
made to this shareholder.

         On March 10, 1998, the Company granted an option to purchase 10,000,000
shares of its common stock to the controlling  shareholder at a price of at $.05
per share. On March 10, 1998 the Company granted an option to purchase 2,000,000
shares of its common  stock to a  shareholder  at a price of $.05 per share.  On
March 10, 1998, the Company  granted an option to purchase  8,000,000  shares of
its common  stock to a  consultant  of the Company at a price of $.05 per share.
The options are  exercisable  commencing  on June 1, 2000 and expire on March 9,
2003.

(c)      Indebtedness of Management.

         No member of the  Company's  management  is or has been indebted to the
Company since the beginning of the Company's last fiscal year.

(d)      Transactions with Promoters.

         The  Company's  promoters  have not received,  directly or  indirectly,
anything of value from the Company, nor are they entitled to receive anything of
value from the Company.

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

         (a) Exhibits

         3.1*     Articles of Incorporation and amendment filed as an exhibit to
                  the  Company's  registration  statement on Form 10-SB filed on
                  December __, 1999 are  incorporated  in this annual  report by
                  reference.
         3.2*     By-Laws  filed as an  exhibit  to the  Company's  registration
                  statement  on Form  10-SB  filed  on  December  22,  1999  are
                  incorporated in this annual report by reference.
         27       Financial data schedule
         ---------------
         * Previously filed

         (b) There were no reports on Form 8-K filed by the  Company  during the
quarter ending December 31, 1999.

<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.

Dated: April 14, 2001


INNOVATIVE HOLDINGS & TECHNOLOGIES, INC.

/s/  Helmuth Wyzisk
-------------------
By:  Helmuth Wyzisk
Title: President


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



/s/  Helmuth Wyzisk                                           April 14, 2001
---------------------------
By:  Helmuth Wyzisk
Title: President, Director


<PAGE>
<TABLE>
<CAPTION>


            INNOVATIVE HOLDINGS AND TECHNOLOGIES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                              Year Ended December 31,
                                                              --------------------------
                                                                  2000           1999
                                                              -----------    -----------
<S>                                                           <C>            <C>
Current assets
  Cash                                                        $       440    $     2,011
  Prepaid expenses                                                 28,953          3,681
  Note receivable                                                    --           10,250
  Due from Affiliate                                               59,800
                                                              -----------    -----------
     Total current assets                                          89,193         15,942

Investments-US Tech Materials Corp., Inc.                             200           --

Property and equipment, net                                        18,567         23,121

Other assets                                                        3,473          4,263
                                                              -----------    -----------
     Total assets                                             $   111,433    $    43,326
                                                              ===========    ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
  Accounts payable and accrued
    expenses                                                  $    52,212    $    25,826
  Withholding taxes payable                                       171,816        163,250
  Notes payable                                                    25,000         25,000
  Due to affiliate                                                126,218         43,751
  Due to stockholders                                             155,287           --
                                                              -----------    -----------
     Total current liabilities                                    530,533        257,827
                                                              -----------    -----------




Stockholders' Deficit
  Common stock, $.0001 par value,
   450,000,000 shares authorized,
   26,374,884 and 23,124,884 issued
   and outstanding, respectively                                    2,638          2,313

  Additional paid-in capital                                    3,162,023      3,080,619
  Stock subscriptions receivable                                 (284,000)      (334,000)
  Deficit                                                      (3,299,761)    (2,963,433)
                                                              -----------    -----------
     Total stockholders' deficit                                 (419,100)      (214,501)
                                                              -----------    -----------
     Total liabilities and stockholders' deficit              $   111,433    $    43,326
                                                              ===========    ===========
</TABLE>




   The accompanying notes are an integral part of these financial statements.
             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<PAGE>


                                    Year Ended December 31,
                                 ----------------------------
                                      2000            1999
                                 ------------    ------------

Expenses
  General and administrative     $    300,898    $    431,050
  Research and development             28,455         177,253
  Interest expense                      9,729           5,744
                                 ------------    ------------
     Total expenses                   339,082         614,047
                                 ------------    ------------

Net loss from operations             (339,082)       (614,047)

Other Income
  Interest income                       2,754           1,315
                                 ------------    ------------
Net Loss                         $   (336,328)   $   (612,732)
                                 ============    ============

Net loss per share               $     (0.013)   $     (0.033)
                                 ============    ============


Weighted average common shares     25,172,830      18,679,052
                                 ============    ============











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


<PAGE>
<TABLE>
<CAPTION>


             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

                                       Shares of                     Additional      Stock                          Total
                                        Common                        Paid-In     Subscriptions    Accumulated      Equity
                                         Stock          Amount        Capital      Receivable       (Deficit)      (Deficit)
                                       ----------    -----------    -----------    -----------    --------------------------
<S>                                    <C>           <C>            <C>            <C>            <C>            <C>



Balance at December 31, 1998           21,254,884    $     2,126    $ 3,074,780    $      --      $(2,350,701)   $   726,205

    Cancellation of stock related
     to investment                     (4,200,000)          (420)      (999,580)          --             --       (1,000,000)

    Issuance of stock for services         50,000              5          9,995           --             --           10,000

    Issuance of stock in connection
     with January 8, 1999 offering        950,000             95        449,905           --             --          450,000

    Issuance of stock for repayment
      of notes payable                     70,000              7         46,019           --             --           46,026

    Issuance of stock under
      subscriptions agreements          5,000,000            500        499,500       (334,000)          --          166,000
   Net loss for the year                     --             --             --             --         (612,732)      (612,732)
                                      -----------    -----------    -----------    -----------    -----------    -----------
Balance at December 31, 1999           23,124,884          2,313      3,080,619       (334,000)    (2,963,433)      (214,501)
                                      -----------    -----------    -----------    -----------    -----------    -----------

  Cancellation of stock
    subscriptions                      (2,500,000)          (250)      (249,750)       250,000           --             --

  Issuance of stock for services          250,000             25         24,975           --             --           25,000



  Issuance of stock for repayment
    of notes payable                    1,500,000            150        106,579           --             --          106,729

  Issuance of stock under
    subscriptions agreements            4,000,000            400        199,600       (200,000)          --             --

  Net loss for the year                      --             --             --             --         (336,328)      (336,328)
                                      -----------    -----------    -----------    -----------    -----------    -----------
Balance at December 31, 2000           26,374,884    $     2,638    $ 3,162,023    $  (284,000)   $(3,299,761)   $  (419,100)
                                      ===========    ===========    ===========    ===========    ===========    ===========
</TABLE>



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

<PAGE>

             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                Year Ended December 31,
                                                -----------------------
                                                  2000         1999
                                                ---------    ---------

Cash flows from operating activities:
Net loss                                        $(336,328)   $(612,732)
Adjustments to reconcile net
      loss to net cash used by
      operating activities:
      Stockholder services credited
       to capital                                    --         10,000
       Stock issued for services and expenses      31,729
       Depreciation                                 4,554        1,670
      (Increase) decrease in:
          Prepaid expenses                        (25,272)      (3,681)
          Notes receivable                         10,250      (10,250)
          Other assets                                790       (4,263)
      Increase (decrease) in:
          Accounts payable and accrued
            expenses                               26,386       13,704
          Withholding taxes payable                 8,566         --
                                                ---------    ---------
            Net cash used by operating
              activities                         (279,325)    (605,552)
                                                ---------    ---------


Cash flows from investing activities:
    Purchase of investment                           (200)        --
    Purchases of property and equipment              --        (24,791)
                                                ---------    ---------
            Net cash used by investing
              activities                             (200)     (24,791)
                                                ---------    ---------

Cash flows from financing activities:
   Proceeds from stockholders                     255,287         --
   Net proceeds to affiliate                       22,667       12,051
   Proceeds from issuance of stock                   --        616,000
                                                ---------    ---------
            Net cash provided by financing
              activities                          277,954      628,051
                                                ---------    ---------

Net Decrease  in cash                              (1,571)      (2,292)
Cash at beginning of year                           2,011        4,303
                                                ---------    ---------

Cash at end of year                             $     440    $   2,011
                                                =========    =========




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

<PAGE>

             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   Organization and Summary of Significant Accounting Policies

     Organization

     Innovative Holdings and Technologies, Inc. (the "Company") was incorporated
     in the State of  Colorado  in 1987 as Celesta  Corporation.  The  Company's
     purpose is to raise  capital by sales of its'  common  stock in  registered
     security offerings for the acquisition of businesses.
     The Company's office is located in Orlando, Florida.

     Subsidiary

     On January 8, 1999, the Company incorporated Xtreme Telemetry Systems, Inc.
     (Xtreme)  in  the  State  of  Florida  and  is its  only  shareholder.  The
     transaction  was  accounted for by the purchase  method of  accounting  for
     business combinations.

     The subsidiary is in the business of designing,  developing,  producing and
     selling  telemetric  sensor and  communication  products and services.  The
     subsidiary is in the development stage.

     Consolidation Policy

     The accompanying  consolidated financial statements include the accounts of
     the Company and its wholly owned subsidiary.  Intercompany transactions and
     balances have been eliminated in consolidation.

     Property and Equipment

     Property and equipment are recorded at cost.  Expenditures  for maintenance
     and repairs are charged to expense as incurred.  Depreciation is calculated
     on a straight-line  basis over estimated useful lives of the related assets
     as follows:

                                                              Years
                                                              -----
                           Furniture                            7
                           Computers                            5


     Loss Per Share

     Basic  loss per  share is  computed  using the  weighted-average  number of
common shares outstanding during the period.

<PAGE>

             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


1.   Organization and Summary of Significant Accounting Policies (Continued)

     Summary of Significant Accounting Policies (Continued)

     Income Taxes

     The Company  accounts for income taxes using the asset and liability method
     as required by Statements of Financial  Standards No. 109.  Deferred income
     taxes are recognized for operating losses, if available,  to offset federal
     income  taxes.  An allowance is provided if it is more likely than not that
     the Company will not realize the  benefits of a deferred  tax asset.  As of
     December 31, 2000 and 1999, a valuation allowance has been provided against
     the deferred tax asset. See Note 9.

     Accounting Estimates

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

2.  Concentration of Risks

     The Company  maintains its cash accounts in one commercial  bank located in
     Orlando,  Florida.  Accounts  in the bank  are  guaranteed  by the  Federal
     Deposit  Insurance  Corporation  (FDIC) up to  $100,000.  At various  times
     throughout  2000 and1999 the Company  maintained  cash balances in the bank
     that exceeded the FDIC limit.

3.  Property and Equipment
                                           December 31,
                                           ------------
                                      2000            1999
                                      -------         -------

Furniture                             $ 7,082         $ 7,082
Computers                              17,709          17,709
                                      -------         -------
                                       24,971          24,971
Less accumulated depreciation           6,404           1,850
                                      -------         -------
         Net property and equipment   $18,567         $23,121
                                      =======         =======
Depreciation Expense                  $ 4,554         $ 1,670
                                      =======         =======

4.  Investment - US Tech Material Corp., Inc.

     In 2000, the Company purchased 1% of the outstanding common stock of USTech
     Material  Corp.,  Inc (US Tech) in the amount of $200.  This  investment is
     valued at cost  because the  Company  does not have the ability to exercise
     significant influence over US Tech.

<PAGE>

             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.   Withholding Taxes Payable

     The  Company   compensates  various  individuals  for  consulting  services
     rendered by issuing common stock.  Back up withholding tax at a rate of 20%
     is being computed for these amounts.

6.   Notes Payable

     Notes payable as of December 31, 2000 and 1999 consisted of the following:

                                        December 31,2000      December 31,1999
                                        ----------------      ----------------

     Note Payable to an
      existing stockholder, interest
      accrues at 12%, matures
      September 26, 2001                     $25,000               $25,000


7.   Related Party Transactions

     During 2000, the Company advanced  $59,800 to an affiliate.  These advances
     are uncollaterized and there are no formal repayment terms.

     The Company is indebted to various  affiliate in the amount of $126,218 and
     $43,751 at  December  31, 2000 and 1999  respectively.  There are no formal
     repayment terms.

     The Company  retains the services of a marketing  company  whose  principal
     owner  is a  controlling  shareholder  of the  Company.  During  1999,  the
     payments of $20,000 were made to related company.

     During  1999,  the  Company  made  payments  to  a  shareholder  for  rent,
     administrative  and  consulting  services.  For the year ended December 31,
     1999, payments in the aggregate of $88,098 were made to this shareholder.

     The Company is indebted to various  shareholders  in the amount of $155,287
     at December 31, 2000. There are no formal repayment terms.

 8.  Lease

     The Company is subleasing  office space which commenced on July 1, 1999 and
     expires  October  1,  2002.  The  Company  has the right to  terminate  the
     sublease  with a 210 day  notice  to the  tenant  who is the  lessor of the
     premises.  Rent expense for the years ended  December 31, 2000 and 1999 was
     $45,274 and $22,085.

     Minimum required future rental payments under this lease as of December 31,
     2000, are:

                              2001                 $ 48,832
                              2002                   41,716
                                                 ----------
                                                   $ 90,548
                                                 ==========

<PAGE>
<TABLE>
<CAPTION>


                                   INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY

                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


9.  Income Taxes

       The total deferred tax assets are as follows:

                               Net Operating Loss Carryforwards        Applicable Tax Rate
                          -----------------------------------------   ----------------------
                                                                                            Valuation      Amount Per
                           Federal        State         Total          Federal      State   Allowance     Balance Sheet
                         -----------   -----------   ------------     ---------    ------- -----------    -------------
<S>                      <C>           <C>           <C>              <C>          <C>     <C>            <C>


Deferred tax assets at
 December 31, 1998       $   751,201   $   116,285   $   867,486                           $  (867,486)   $    --

Changes for the
 year ended
 December 31, 1999           194,647        30,131       224,778            34%       5.0%    (224,778)        --

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

Deferred tax assets at
 December 31, 1999           945,848       146,416     1,092,264                            (1,092,264)        --

Changes for the
 year ended
 December 31, 2000           107,069        16,574       123,643            34%       5.0%    (123,643)        --
                         -----------   -----------   -----------                           -----------    ---------

Deferred tax assets at
 December 31, 2000       $ 1,052,917   $   162,990   $ 1,215,907                           $(1,215,907)   $    --
                         ===========   ===========   ===========                           ===========    =========
</TABLE>



     At December 31, 2000, the Company has net operating loss  carryforwards  of
     $3,259,805. These losses will begin expiring in 2002.

     A valuation  allowance has been provided against the deferred tax assets at
     December  31, 2000 and 1999 since it is likely  that the  Company  will not
     realize the benefits of the deferred tax assets.

<PAGE>

             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


10.  Common Stock Transactions

     Common Stock transactions during 1999:

     In July 1999, the Company cancelled,  4,200,000 shares of common stock, due
     to termination of Biocam's contractual obligations.

     The Company issued 50,000 shares of its restricted  common stock in 1999 to
     individuals  as  compensation  in connection  with its  reorganization  and
     reactivation  of the  Company.  These  transactions  were valued at $10,000
     which was the fair market  value based upon either the open market  closing
     price  or a  board  of  directors  designation  as  of  the  date  of  each
     individual's involvement with the Company.

     The Company authorized shares of unregistered common stock as follows:

         700,000 shares issued at $.50 per share on January 8, 1999
         250,000 shares issued at $.40 per share on January 8, 1999

         The Company's  legal counsel  issued an opinion  stating that the above
         shares  are  exempt  from  registration   under  Section  3(b)  of  the
         Securities Act of 1993 and 504 of Regulation D.

     In 1999, the Company  issued 70,000 shares of its  restricted  common stock
     for repayment of a note payable plus accrued interest. This transaction was
     valued at  $46,026,  which was based on the note  payable  balance due plus
     accrued interest.

     The Company issued  5,000,000  shares of  unregistered  common stock in the
     amount of $.10 per share for a total of $500,000.  These shares were issued
     under stock  subscriptions  agreements date November 9, 1999, in accordance
     with the terms and  conditions  of the Offering  Document  dated January 8,
     1999. The total collected to date is $166,000.

     Common stock transactions during 2000:

     The Company cancelled  2,500,000 shares of its restrictive common stock for
     nonpayment of stock subscriptions.

     The Company issued 250,000 shares of its restricted common stock in payment
     for future services in the amount of $25,000.

     The Company issued 1,500,000 shares of its restricted  common stock in lieu
     of  payment  of notes  payable  plus  accrued  interest  in the  amount  of
     $106,729.

     The Company  issued  4,000,000  shares of its  restricted  common  stock in
     connection with a stock option under a subscription agreement.

11.  Stock Options

     On March  10,1998,  the Company  entered into a stock  option  agreement in
     which the Company  grants the option to  shareholders  and  consultants  to
     purchase up to 21,000,000 shares of restricted common stock for an exercise
     price of $0.05 per share at any time through March 9, 2003.

<PAGE>

             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


11.      Stock Options (Continued)

The  following  is a summary of stock  option plan  activity  for the year ended
December 31, 2000 and 1999.

Number of options outstanding on January 1, 1999                     21,000,000

Number of options exercised by shareholder in 2000                   (4,000,000)
                                                                    -----------

Number of options outstanding on December 31, 2000                   17,000,000
                                                                    ===========
 Number of options exercisable at December 31, 2000                  17,000,000
                                                                    ===========
 Weighted average exercise price per share outstanding
 and exercisable                                                    $      0.05
                                                                    ===========
 Weighted average remaining contractual life of options
  outstanding and exercisable                                               2.2
                                                                    ===========

      No options were forfeited or expired in 2000 and 1999.

      SFAS No. 123,  "Accounting  for Stock-Based  Compensation"  (SFAS 123) was
      issued during 1995 and is effective for fiscal years ending after December
      15,  1996.  This  pronouncement   established   financial  accounting  and
      reporting  standards  for  stock-based  employee  compensation  plans.  It
      encourages,  but does not require,  companies  to  recognize  compensation
      expense for grants of stock,  stock option and other equity instruments to
      employees based on new fair accounting rules. Companies that choose not to
      adopt the new fair value  accounting  rules are  required to disclose  net
      income and earning  per share  under the new method on a pro forma  basis.
      The Company accounts for its options and warrants  according to APB No. 25
      and follows the disclosure provision of SFAS 123. Accordingly,  if options
      or warrants  are granted to  employees  or others for  services  and other
      consideration  with an exercise  price below the fair market  value on the
      date of the grant, the difference  between the exercise price and the fair
      market value is charged to operations. No options were granted in the year
      end 2000 and 1999.

12.  Going Concern

     As shown in the accompanying financial statements, the Company incurred net
     losses of $336,328 and  $612,732 for the years ended  December 31, 2000 and
     1999, respectively.  The Company's current liabilities exceeded its current
     assets  by  $441,340   and   $241,885  at  December   31,  2000  and  1999,
     respectively.  The ability of the Company to continue as a going concern is
     dependent on the development and marketing of products to be offered by its
     subsidiary.

<PAGE>

             INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13.  Cash Flow Information

     During 1999:

          The Company  cancelled  stock  related to purchase of an investment in
          the amount of $1,000,000.

          The  Company  issued  restricted  shares  of  its  common  stock  as a
          repayment  of notes  payable  plus  accrued  interest in the amount of
          $46,026.

          The Company issued stock under a subscription receivable in the amount
          of $334,000.

     During 2000:

          The  Company  issued  restricted  shares  of  its  common  stock  as a
          repayment of notes plus accrued interest in the amount of $ 106,729.

          The Company issued restricted common issued stock under a subscription
          receivable in the amount of $200000.

          The Company cancelled  2,500,000 shares of its restricted common stock
          in the amount of $250,000.

     See Note 10 for further information on the above noted transactions.

14.  Contingencies

     The Securities and Exchange  Commission has commenced an  investigation  of
     the  Company  pursuant to a Formal  Order.  This  investigation  focuses on
     whether the Company and others misrepresented  material facts or omitted to
     disclose  material  facts in press  releases  and  reports  filed  with the
     Commission,   concerning,   among  other  things,   the  Company's  assets,
     operations,  financial  condition  and  anticipated  revenue.  It cannot be
     predicted,  at  this  time,  whether  an  enforcement  proceeding  will  be
     recommended  by the  staff  to the  Commission,  what  the  nature  of such
     enforcement  proceeding  would be, the type of sanctions  sough or what the
     likelihood would be of reaching a settlement.

     Accordingly, no provision for any liability that may result upon resolution
     of this  investigation  has been  recorded  in the  accompanying  financial
     statement.