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

                                   FORM 10-KSB

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

         For the fiscal year ended December 31, 1999

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

     For the transition period from _____________ to _______________

                          Commission File No. 001-15355

                         HOLTER TECHNOLOGIES HOLDING, AG
                 ----------------------------------------------
                 (Name of Small Business Issuer in its charter)

             Nevada                                  84-1393541
   -----------------------------                -------------------
  (State or other jurisdiction of                (I.R.S. Employer
   incorporation or organization)               Identification No.)

          23548 Calabasas Road, Suite 202, Calabasas, California 91302
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (818) 224-2145

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


          Title of each class     Name of each exchange on which registered

                 N/A                          N/A

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


                          Common Stock, par value $.001

                                (Title of Class)

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 [x]  No

<PAGE>

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  form,  and no  disclosure  will  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. [ ]

State issuer's revenues for its most recent fiscal year: $2,626,460

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified  date within the past 60 days.  (See  definition  of affiliate in Rule
12b-2 of the Exchange Act.) $68,550,143.76 as of November 30, 2000.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. [ ] Yes [ ] No

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 95,208,533 as of November 30, 2000.

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly described them
and  identify  the part of the Form 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities  Act"). The listed
documents should be clearly described for identification  purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).

Transitional Small Business Disclosure Format (Check one): Yes     ; No  X
                                                               ---      ---

                                       2

<PAGE>


                                     PART I

Item 1.           Description of Business

Business Development

         Holter Technologies Holding, AG (the "Company") was incorporated in the
State of Nevada on March 21, 1997 as Lyon  Mountain,  Inc. On February 10, 1998,
the Company changed its name to Falken Investment,  AG. On January 21, 1999, the
Company  changed  its name to Holter  Technologies  Holding,  AG. The Company is
engaged  primarily  in the  business  of  producing,  marketing  and selling air
filtration, water filtration and energy efficient products.

         In February 1999, the Company  acquired 100% of the outstanding  equity
interests of Holter Sachsen DENATEC GmbH ("Denatec"), a German limited liability
company,   and   80%  of  the   outstanding   equity   interests   of   Philaqua
Aufbereitungstechnik GmbH ("Philaqua"), a German limited liability company, from
the  stockholders  of Denatec  and  Philaqua,  including  Professor  Heinrich W.
Holter,  the Company's  President  and Chairman of the Board of  Directors.  The
purchase  price of Denatec and Philaqua was 44.1 million shares of the Company's
common stock, par value $.001 per share (the "Common Stock").  Denatec holds the
exclusive  rights to exploit  certain  worldwide  patents,  patents  pending and
similar  intellectual  property  rights  (collectively,  "Intellectual  Property
Rights") and other inventions of air filtration processes,  including denaturing
heat  exchangers  and  electrostatic   filters  having  a  denaturing  collector
electrode.  See Part I, Item 1,  "Description  of  Business  - Air  Filtration."
Philaqua holds the exclusive  rights to exploit certain  worldwide  Intellectual
Property Rights regarding  industrial  water treatment and purification  through
ultraviolet  light  filtration.  In  December  1998,  Philaqua  entered  into an
exclusive  distribution  agreement  with  Laboratory  of Impulse  Technique  ZAO
("LIT"), a Russian  corporation.  The joint venture was formed to facilitate the
manufacture of UV constructions and for market support of each of Philaqua's and
LIT's  products.  Pursuant  to the joint  venture,  Philaqua  agreed to purchase
ultraviolet-based  water treatment  products and other products as agreed by the
parties from time to time exclusively from LIT, and LIT agreed not to supply its
products to any other  distributors  in the world  except  those  located in the
former Soviet Union.

         In March 2000, the Company acquired 30% of the outstanding common stock
of Heinrich Holter GmbH ("Holter  GmbH"), a German  corporation,  from Professor
Holter in exchange for US$1.5 million. In December 2000, the Company acquired an
additional  20% of the  outstanding  common stock of Holter GmbH from  Professor
Holter in exchange for 15,000,000  shares of the Company's Common Stock.  Holter
GmbH engages primarily in the business of marketing, sales, production, research
and development of air, water and energy systems.

         In March 2000, the Company acquired 50% of the outstanding common stock
of  Holter  Systembau  GmbH  ("Holter  Systembau"),  a German  corporation,  for
US$125,000.  Holter Systembau engages primarily in the business of marketing and
sales of low-energy modular housing systems.

         In April 2000, the Company acquired 50% of the outstanding common stock
of LK- Luftqualitat AG ("LK-Luftqualitat"), a Swiss corporation, for US$650,000.
LK-Luftqualitat   engages  primarily  in  the  business  of  marketing,   sales,
production,  research and development of the Ionair(R)  filtration  system.  See
Part I, Item I, "Description of Business - Air Filtration."

                                       3
<PAGE>

         In April 2000, the Company acquired 20% of the outstanding common stock
of  Coolpoint   Ventilation  Equipment  Ltd.,  a  Hong  Kong  limited  liability
corporation,  now known as Coolpoint-Holter  Environmental  Technologies Limited
("Coolpoint"),  in exchange for 1,388,889  shares of the Company's Common Stock.
Coolpoint  engages  primarily  in the  business  of  marketing  and sales of air
filtration  systems in Asia. The Company was granted an option to purchase up to
20% of any Coolpoint  shares  offered to the public in the future.  In the event
that the price of the Company's  Common Stock has failed to reach at least $2.00
per share on or before December 31, 2000,  Coolpoint will receive an option from
the Company to  purchase  additional  shares of the  Company's  Common  Stock as
determined by the following formula:

 Net profit  distributed  to the Company by Coolpoint      Number of shares
 ----------------------------------------------------  =   of Common Stock
The  Company's  Common  Stock  price on                 available  to Coolpoint
 December 31, 2000                                         pursuant to option

There can be no  assurance  that the price of the  Company's  Common  Stock will
equal or exceed $2.00 prior to December 31, 2000 or that the Company will not be
required to issue the option to Coolpoint.

         In April 2000, the Company acquired 23% of the outstanding common stock
of Huta Zabrze SA ("Huta Zabrze"),  a Polish  corporation,  from Leszek Kulawik,
the Managing  Director of Huta Zabrze,  in exchange for 2,750,000  shares of the
Company's  Common Stock. In May 2000, the Company  acquired an additional  seven
percent of the outstanding  common stock of Huta Zabrze and $800,000 in exchange
for  2,000,000  shares  of the  Company's  Common  Stock.  Huta  Zabrze  engages
primarily  in the  production,  marketing  and  sales  of  steel  and  iron  and
construction, telecommunication and energy systems in the international market.

         In June 2000, the Company acquired 50% of the outstanding  common stock
of Intherm GmbH  ("Intherm"),  a German  corporation,  for  US$125,000.  Intherm
engages  primarily in the business of marketing and sales of energy systems such
as the  IntherMobil(R),  a refrigerated box used to provide  refrigeration where
needed which may be loaded onto different types of machinery.

         In December 2000, the Company  acquired 50% of the  outstanding  common
stock of Holter Italia s.r.l.  ("Holter Italia"),  an Italian corporation,  from
Professor  Holter in exchange  for  10,000,000  shares of the  Company's  Common
Stock. Holter Italia engages primarily in the business of marketing and sales of
air filtration systems.

         In  February  2000,  the  Company  entered  into  a  Distribution   and
Cooperation   Agreement  with  INSTAL   Warszawa  S.A.   ("INSTAL"),   a  Polish
corporation.  INSTAL engages in the design, construction and installation of air
conditioning  systems in Poland and  provides  trained  service  support of such
systems.  The  agreement  permits  INSTAL and the Company to bid for and service
contracts in Poland using the Company's  air  filtration  technologies.  Each of
INSTAL  and  the  Company  agreed  not  to  enter  into  agreements  with  other
competitors  during the term of the agreement.  Unless earlier  terminated,  the
agreement  expires on December 31, 2003, and shall  automatically  renew for two
year terms unless  terminated  by either party at least six months in advance of
the termination date.

                                       4
<PAGE>

         The Company's  acquisition of and/or  association with these companies,
in whole or in part,  has  permitted  the  Company  to  increase  its  access to
intellectual  property in its areas of primary  focus,  such as air  filtration,
water filtration, and energy-related and energy conservation products.

         Through its affiliates and  subsidiaries,  the Company operates in four
areas:

1.       Marketing and sale of air filtration systems,  including denaturing air
         filters, Filtervlies, the Aer-O-Med(R)and Ionair(R)systems.

2.       Marketing  and  sale  of  water  filtration  systems,  including  water
         treatment and sewage sludge reduction treatments and UV/Ozon.

3.       Marketing and sale of energy-related and energy conservation  products,
         including coal-waste systems, Hocodems, Pyrotec, Clean Coal Technology,
         Thermo-Multiform and IntherMobil(R).

4.       Provision of design and engineering  services to third parties relating
         to the  development  of large  building or  industrial  projects in the
         areas of air filtration, water filtration and energy conservation.

Air Filtration

         With regard to air  filtration  products and services,  the Company and
many of its affiliates and  subsidiaries  engage in the design,  engineering and
provision of wet and dry dust  collection  systems for all types of  industries,
including,  but not limited to, power plants,  steelworks  and  foundries,  coke
processing   plants,   waste   incineration   plants   and   industrial   boiler
installations.  The Company  contracts  with third parties to provide design and
engineering  services of air cleansing  systems to major  projects,  either as a
contractor or subcontractor.  The Company will design the system and subcontract
the  production  of  the  air  cleansing   equipment  to  a  third  party  using
Intellectual  Property Rights licensed to or otherwise owned by the Company. The
Company  and a few of its  subsidiaries  and  affiliates  also engage in limited
production  of air cleansing  systems,  such as the  Filtervlies,  Ionair(R) and
Aer-O-Med(R) products.

         Holter  GmbH,  Denatec,  LK-Luftqualitat,  Holter  Italia,  INSTAL  and
Coolpoint engage in marketing and sales of the Company's air filtration services
and systems.  Holter GmbH, Coolpoint,  INSTAL and LK-Luftqualitat also engage in
limited production of the systems.

         The retail price and production of the Company's products is determined
on a contract-by-contract  basis with each customer. As of the date of this Form
10-KSB,  the  Company's  products  are not sold or  distributed  to the  general
public,  but rather to large  purchasers  such as  municipalities,  governmental
entities  and other  large  users  such as  shopping  malls,  hotels  and office
buildings  interested in improving  air quality.  Because the number and type of
the Company's  products are  determined  on a  contract-by-contract  basis,  the
Company does not have any current plans for distribution.

                                       5
<PAGE>

         The Company and certain of its  subsidiaries  and affiliates  engage in
limited  production of the  Filtervlies,  Ionair(R) and  Aer-O-Med(R)  products.
Other products  distributed by the Company and its  subsidiaries  and affiliates
are  subcontracted  to third  parties to produce  the  products.  The  Company's
monthly  production  capacity of its air filtration  products is affected by the
Company's existing  agreements and varies depending upon contract  requirements.
As of the date of this Form 10-KSB, the Company has met all material service and
production requirements.

Water Filtration

         With regard to water  filtration,  the  Company,  through  Philaqua and
others, including SHW Holter Wassertechnik GmbH, a German corporation founded by
Professor  Holter,  the  Company's  President  and  Chairman  of  the  Board  of
Directors,  designs and supplies,  and engages in limited production of, systems
and  components  for the  treatment  of water and  wastewater,  soils and sludge
through the use of ozone,  ultraviolet  light and  biological  applications.  In
Philaqua's technology, the ozone is generated in a gas-tight apparatus and mixed
with oxygen.  The mixture of oxygen and ozone is then transported via pipes into
the water to be  cleaned,  which is  contained  in  stainless  steel or concrete
vessels.  The  ozone-oxygen  mixture is absorbed in the water and removes and/or
destroys surfactants,  dyes, bacteria,  viruses and spores in the water. Any gas
discharge  from the chemical  reaction is destroyed by  catalysts.  The water is
then  disinfected by  UV-irradiation  prior to distribution  for drinking.  This
technology may be applied to reservoir,  river,  contaminated ground and cooling
water.

         Philaqua  also has  developed  its  technology  to reduce sewage sludge
produced by water treatment plants.  The Company believes its technology reduces
the  amount of sewage  sludge by more than 80%.  This  technology  uses ozone to
remove surfactants and dyes from sewage.

         Philaqua also provides services to biologists, chemists and mechanical,
processing,  electrical and site engineers engaged in large building projects to
assess water treatment processes.

         Production of Philaqua's water filtration  systems is performed by LIT.
Philaqua  and LIT  have  entered  into  an  exclusive  distributorship,  whereby
Philaqua  has agreed to acquire its products  exclusively  from LIT, and LIT has
agreed not to sell its products to any third party  except those  located in the
former Soviet Union. By its terms, the exclusive  distributorship agreement will
expire on December 31, 2001,  although the  agreement  may be extended by mutual
agreement of the parties.  Philaqua uses LIT's products to assemble and complete
Philaqua's  products.  Philaqua's  monthly  production  capacity  of  its  water
filtration  products is affected by its existing agreements and varies depending
upon contract requirements. As of the date of this Form 10-KSB, Philaqua has met
all material service and production requirements.

         The retail price and production of Philaqua's products is determined on
a  contract-by-contract  basis with each  customer.  As of the date of this Form
10-KSB,  Philaqua's  products are not sold or distributed to the general public,
but rather to large purchasers such as municipalities, governmental entities and
other large users such as shopping malls, hotels and office buildings interested
in  improving  water  quality.  Because  the  number  and type of the  Company's
products are determined on a  contract-by-contract  basis,  the Company does not
have any current plans for distribution.

                                       6

<PAGE>

Energy-Related and Energy Conservation Products

         With regard to energy  products,  the Company,  through its  affiliates
Huta  Zabrze,  Holter  Polska,  a Polish  corporation  owned and  controlled  by
Professor  Holter,  the  Company's  President  and  Chairman  of  the  Board  of
Directors, Holter Systembau and Intherm, and its subsidiary Holter GmbH, engages
in the  marketing  and  sale  and  limited  production  of  various  combustion,
conservation and environmental cleaning systems relating to energy products such
as coal.

         Combustion Systems

         Holter GmbH's  product,  coal waste  systems  ("CWS"),  converts  waste
products'  inherent  chemical  energy into thermal energy in hot flue gas. Waste
products  such as those  normally  deposited in landfills  are instead used by a
power  station to create a separate  source of thermal  energy,  independent  of
electricity,  coal or other  powered  energy.  The thermal  energy is created by
converting the chemical energy of waste products into hot flue gas by means of a
plant satellite parallel to a power station steam generator.  The waste products
are heated and  converted  to hot flue gas.  The hot flue gas is conveyed to the
lower  furnace  section  of a  large  steam  generator  in  substitution  for an
equivalent  amount of coal.  The hot flue gas is then  heated  to  approximately
1,500 degrees Celsius.  Any dioxins and furans contained in the hot flue gas are
destroyed  during the heating  process,  and the remaining hot flue gases may be
cleaned with a conventional  flue-gas scrubber normally used in coal-fired power
stations.  The created energy is used to supply power for the power station. The
Company  believes that this CWS technology  results in a more efficient  heating
method  for the plant and a  reduction  in  landfill  waste and  carbon  dioxide
emissions of approximately 60%.

         The Company's  Pyrotec  product is a two stage  fluidized bed combustor
integrated into a steam boiler. It may be used to burn biomass materials such as
wood, hay, straw and paper,  treated wood products,  refuse-derived  fuel, coal,
industrial and municipal sludge  products.  The Company believes that the use of
the  Pyrotec  product  results  in  the  ability  to use a wide  load  range  of
combustible  materials,  low carbon monoxide emissions, a high burn out rate and
an efficient method of thermal energy.

         Conservation Systems

         The Company's  Thermo-Multiform  product is a building  product made of
expanded  polystyrene which may be used to construct  affordable,  well-insulted
and hygienic housing.  The Company believes that expanded polystyrene results in
a product that is resistant to fire,  fails to absorb water,  allows the passage
of  gases,  is more  dense  and  has a  higher  heat  insulation  capacity  than
conventional  building  materials such as brick or concrete.  Additionally,  the
expanded  polystyrene consists of 98% air, which the Company believes results in
excellent  heat  insulation  and a low  specific  weight.  The  Thermo-Multiform
product is produced in  component  pieces,  which may be pieced  together by the
home builder in the manner desired by the home owner similar to modular housing.
In order to construct a  structure,  the units are placed next to each other and
pressed together, and the hollow sections of the Thermo-Multiform  blocks may be
filled  with  cement.  Load-bearing  cores may be inserted  into  multiple-block
walls.

                                       7
<PAGE>

         The Company's  Okompakt  product is an air handling device which offers
low energy ventilation of homes and offices,  which the Company believes results
in an energy savings of up to 66% compared to open-window ventilation.

         Environmental Cleaning Systems Relating to Energy Products

         The Company's "clean coal  technology"  cleans mined coal of sulfur and
other  particulate  matter  from  the coal  itself,  yielding  what the  Company
believes  is a cleaner  burning  product  that  weighs  less so it costs less to
transport.  The raw mined  coal is  inserted  into a boiler  located at the mine
site. The boiler contains  technology  which pulverizes and heats the coal, thus
releasing the sulfur which may be extracted as a gas. Any withdrawn  particulate
matter,  such as ash,  fuel and  limestone,  is funneled to an encased  handling
system,  resulting in a virtually  dust-free  operation.  The  technology may be
applied  to  many  types  of  coal,   and  meets  all  current   European  Union
environmental and emissions requirements.

         The Company's  Hocodems product separates coal into two medium outlets,
which divide the coal into lower and higher density materials. The lower density
materials are  distributed  to the lower outlet by a vortex.  The higher density
materials are moved along a chamber by means of centrifugal force and ejected at
the upper end of the vessel by a discharge  facility.  The Company believes that
the  Hocodems  product  results in a simpler  and  smaller  plant  layout,  less
necessary   equipment,   lower   capital  and   operating   costs  and  improved
availability.

         Intherm's  product,  IntherMobil(R),  consists of a refrigerated box on
wheels which may be transferred from one type of transport to another  depending
upon  need.  IntherMobil(R)  may be loaded  onto any  vehicle by means of wheels
attached to the bottom of the box.  The  product is then  secured to the vehicle
and the materials may be  transported.  This enables a transporter  to make more
efficient  use of its  vehicles  and permits  repair of the  vehicle  and/or the
IntherMobil(R)   separately.   The  IntherMobil(R)   product  may  be  used  for
refrigeration or freezing.

         In addition to its limited production of energy products,  the Company,
Holter  GmbH,  Holter  Polska  and  Holter  Systembau  also  provide  design and
engineering  of energy  systems for third  parties.  As of the date of this Form
10-KSB, the Company has met all material service and production requirements.

         The retail price and  production  of the Company's  energy  products is
determined on a contract-by-contract basis with each customer. As of the date of
this Form 10-KSB,  the  Company's  products are not sold or  distributed  to the
general  public,   but  rather  to  large  purchasers  such  as  municipalities,
governmental  entities and other large users such as shopping malls,  hotels and
office  buildings  interested  in  improving  emissions  and  efficiency  of its
facilities. Because the number and type of the Company's products are determined
on a contract-by-contract basis, the Company does not have any current plans for
distribution.

                                       8
<PAGE>

Design and Engineering Services

         The Company and its subsidiaries and affiliates also provide design and
engineering  services  to third  parties  relating to the  development  of large
building or industrial projects in the areas of air filtration, water filtration
and energy  conservation.  The services  are provided on a  contract-by-contract
basis and are priced accordingly.

Markets

         The Company  believes  its  markets are  worldwide,  but  presently  is
focusing primarily upon markets in Eastern Europe,  Germany, Asia and the Middle
East. The Company's  research  indicates that there are over  80,000,000  square
meters of floor space in the Federal  Republic of Germany  alone,  and that such
space is growing by approximately  5,000,000 square meters each year. Based upon
the foregoing, the Company estimates a potential market of approximately 900,000
electrostatic  denaturing outlet filters by January 2002. The Company intends to
focus  its  marketing  efforts  to  consumers  the  Company  believes  would  be
particularly  attracted to the elimination of bacteria,  spores,  mold and other
airborne  allergens and particulate  removal,  such as hospitals,  other medical
facilities, schools, restaurants, hotels, apartment houses and office buildings.

         The Company intends to enter into  relationships  with third parties to
market its products.  As of the date of this Form 10-KSB,  Holter GmbH, Denatec,
LK-Luftqualitat,  Holter  Italia,  INSTAL and Coolpoint  engage in marketing and
sales of the Company's air  filtration  systems;  LIT and the Fushun Coal Mining
Bureau  ("Fushun")  have  entered into  agreements  to market  Philaqua's  water
filtration  products;  and Huta  Zabrze,  Holter  GmbH,  Holter  Polska,  Holter
Systembau, Intherm and Fushun engage in the marketing and sales of the Company's
energy-related  products.  The Company  intends to enter into further  marketing
relationships with third parties.

Competition

         Although  the Company  owns or has the rights by license to many of its
proprietary technologies,  the Company has many competitors in the general areas
of  air  filtration,  water  filtration  and  energy-related  products  and  the
provision of design and engineering services.  Many of the Company's competitors
are larger,  established  companies with greater  assets and financial  reserves
than the Company. The Company's future success will partly depend on its ability
to compete with these businesses.  Presently, there can be no assurance that the
Company will be able to compete with these businesses.

         Air Filtration Products: The Company is not aware of any competitors in
the removal and  denaturization  of bacteria,  spores,  mold and other  airborne
allergens.  However,  the Company  believes  that the  following,  among others,
compete with the Company by producing a product which removes particulate matter
from the air:  Minnesota  Mining and  Manufacturing  Company,  General  Electric
Company, Siemans AG, Camfil GmbH, Delbag Luftfilter GmbH and Gebruder Trox GmbH

                                       9
<PAGE>

         Water Filtration Products: The Company believes that Passavant-Roediger
Umwelttechnik GmbH, Wedeco AG, Philipp  Muller-Hager & Elsasser GmbH,  Degremont
S.A. and SHW Holter  Wassertechnik GmbH, among others,  compete with the Company
in water filtration.  Nevertheless,  the Company is not aware of any competition
in the area of its protected sewage sludge reduction technology.

         Energy-Related  Products:  The Company  believes that Asea Brown Boveri
AG, Babcock BSH AG, Lurgi AG and L.&C.  Steinmuller GmbH, among others,  compete
with the Company in the provision of  energy-related  products  similar to those
offered by the Company. Nevertheless, the Company is not aware of any competitor
in the area of coal waste  co-combustion  technology  whose system has up to 50%
lower investment cost and up to 300% higher energy  efficiency than conventional
waste incineration plants.

Principal Suppliers

         LIT is the sole  contractual  supplier of components  to Philaqua.  The
Company,  its  affiliates  and  subsidiaries  do not rely  substantially  on any
supplier.

Dependence Upon Customers

         For the year ended December 31, 1999,  the Company  obtained 91% of its
total  revenues,  from Holter GmbH, a subsidiary  of the Company.  See Part III,
Item 12, "Certain  Relationships and Related  Transactions."  Additionally,  the
Company, through its affiliates, has significant material contracts with each of
the Government of the City of Moscow, Russian Federation,  and Lurgi Lent Jes AG
and Lurgi Energie Und  Entsorgung  GmbH with regard to a project in the Ukraine.
The size of either of these  agreements  may  result in the  Company  deriving a
significant  portion of its revenues  from that source in any given time period.
There can be no assurance that the Company will not be  significantly  dependent
upon revenues  derived from any one customer at any given time since the Company
fulfills executed  contracts for completion of projects.  The Company may remain
dependent  in the  immediate  future  upon a limited  number of  customers  (the
identity  of which may be  subject  to change  from year to year) for a material
percentage of its annual operating revenue.

                                       10
<PAGE>

Governmental Regulation

         The Company is subject to ordinary business regulation of employers and
businesses in the Federal Republic of Germany,  ordinary business  regulation of
businesses in the State of Nevada, and environmental regulations in each country
in which the  Company's  products are sold,  including  Russia,  China,  Poland,
Switzerland, Italy and Germany. The Company does not anticipate being subject to
significant  regulation  as a result of its  business  plans other than  typical
safety   certifications   for  its  products  and  manufacturing   capabilities,
electrical  appliances and devices.  To the best knowledge of the Company, as of
the date of this Form 10-KSB,  the Company is in compliance  with all applicable
material  environmental  laws.  The costs and  effects  of such  compliance  are
incorporated  into the costs of the Company's  products charged to each customer
depending upon the country in which the customer  wishes the Company's  products
to be operational and installed and cannot be quantified.  To the best knowledge
of the Company, as of the date of this Form 10-KSB, the Company has obtained all
applicable governmental approvals for its principal products and services.

Patents, Trademarks and Licensing Agreements

         Professor Heinrich W. Holter,  the Company's  President and Chairman of
the Board of Directors,  owns  approximately  3,500  international  Intellectual
Property  Rights  in the  areas  of air  filtration,  water  filtration,  energy
production and other technologies.  Professor Holter has licensed  approximately
975 of these  Intellectual  Property Rights to the Company and its subsidiaries,
including  Denatec and Philaqua,  and affiliates by royalty-free,  nonexclusive,
perpetual licenses.  By terms of the licenses,  the Company may sublicense these
Intellectual Property Rights to third parties at its option.

         The  Company has no other  Intellectual  Property  Rights or  licensing
agreements except for standard software license agreements.

Research and Development

         The Company engages in research and development  substantially  through
its affiliates and  subsidiaries.  Air and water  filtration and energy research
and  development  is  performed  by Holter  GmbH.  Air  filtration  research and
development is performed by Denatec, LK-Luftqualitat,  and contracted out by the
Company to  unaffiliated  universities  and centers of higher  education such as
ILK,  Uni  Munchen,  TU  Dresden,  Uni  Essen  and  Institut  Bodensee,   German
universities and academic centers.  Water filtration research and development is
performed by Philaqua.  The owner of any results of the research and development
is  the  person  or  entity  which  pays  for  the  research  and   development.
Accordingly,  in the event that Professor  Holter,  the Company's  President and
Chairman of the Board of Directors,  pays for the research and  development,  he
will own the results of the research and development.

         The  Company  estimates  that an average of DM30  million  was spent on
research  and  development  on its behalf by  Professor  Holter or by  companies
affiliated  or owned,  in whole or in part,  by him.  The costs of research  and
development are not borne directly by customers.

Employees

         Presently,  the Company has five employees,  all of whom are full-time,
in the  Gladbeck,  Germany  office.  The Company has three  executive  officers:
Professor  Holter,  the  Company's  President  and  Chairman  of  the  Board  of
Directors,  Dirk  Brinkmann,  the  Company's  Executive  Vice  President  and  a
director,  and Daniel Lezak, the Company's  Secretary/Treasurer  and a director.
See Part III,  Item 9,  "Directors,  Executive  Officers,  Promoters and Control
Persons;  Compliance  with  Section  16(a) of the  Exchange  Act."  The  Company
utilizes the personnel of its  subsidiaries and affiliates as it deems necessary
from time to time.  The  Company's  subsidiaries  have the  following  number of
full-time  employees:  Holter Italia (130),  Holter GmbH (105),  Philaqua  (12),
Holter Systembau (12),  LK-Luftqualitat  (10),  Denatec (8) and Intherm (5). The
Company's affiliates have the following number of full-time employees: Coolpoint
(800) and Huta Zabrze (450).

                                       11
<PAGE>

Item 2.           Description of Property

         The Company's  principal  place of business and  corporate  offices are
located at 23548 Calabasas Road,  Suite 202,  Calabasas,  California  91302. The
Calabasas  facilities  consist of approximately  600 square feet of office space
and are leased on a month to month basis from Gateway Industries, Ltd., of which
Daniel  Lezak,  the  Company's   Secretary/Treasurer  and  a  director,  is  the
President.  The monthly  rental for the Calabasas  property is $1,050 per month.
The purposes of this office are to maintain corporate records and provide office
space for corporate maintenance.

         The Company also  occupies  office space in  Dusseldorf  and  Gladbeck,
Germany as well as Italy, Poland, China, Switzerland, Russia and Czech Republic.
The  Dusseldorf  property  consists of  approximately  800 square  feet,  and is
provided by Holter GmbH, a subsidiary of the Company which Professor Holter, the
Company's President and Chairman of the Board of Directors, is the President, at
no cost to the Company.  The Gladbeck offices are located in a building operated
by Grundstucksgesellschaft HKP GbR, a partnership in which Professor Holter, the
Company's  President and Chairman of the Board of Directors,  is a partner.  The
offices consist of approximately  1,000 square feet of office space. The Company
does  not pay rent nor has an  executed  lease  for the  premises.  The  Italian
property is located in Fano,  Italy,  consists of approximately 600 square feet,
and is provided by Holter Italia,  a subsidiary of the Company,  at no charge to
the  Company.  The Polish  property  is located in Zabrze,  Poland,  consists of
approximately 1,000 square feet, and is provided by Huta Zabrze, an affiliate of
the Company, at no charge to the Company.  The Chinese properties are located in
Hong Kong and Fushun, China, consist of approximately 800 and 1,000 square feet,
and are provided by  Coolpoint,  an  affiliate  of the Company,  and Fushun Cool
Mining Bureau, a party with whom the Company has a joint venture  agreement,  at
no charge to the Company. The Swiss property is located in Lucerne, Switzerland,
consists of approximately 900 square feet, and is provided by LK-Luftqualitat, a
subsidiary of the Company, at no charge to the Company.  The Russian property is
located in Moscow,  Russia,  consists of approximately 1,200 square feet, and is
provided by the city of Moscow, a third party with whom the Company,  through an
affiliate of Professor Holter has a relationship, has an agreement, at no charge
to the  Company.  The Czech  property  is  located in  Prague,  Czech  Republic,
consists of approximately  1,100 square feet, and is provided by Holter GmbH, at
no charge to the Company.

Item 3.           Legal Proceedings

         There are presently no material pending legal  proceedings to which the
Company or any of its subsidiaries is a party or to which any of its property is
subject and, to the best of its knowledge,  no such actions  against the Company
or any of its subsidiaries are contemplated or threatened.

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

         During the fourth quarter of the Company's fiscal year, no matters were
submitted to a vote of security holders.

                                       12
<PAGE>

                                     PART II

Item 5.           Market for Common Equity and Related Stockholder Matters

         Prior to the  filing of this Form  10-KSB,  no shares of the  Company's
Common Stock have been  registered  with the Commission or any state  securities
agency of authority.

         The  Company's  Common  Stock is listed for trading on the Pink Sheets.
Pink  Sheets  LLC  is a  provider  of  pricing  and  financial  information  for
over-the-counter  ("OTC") securities  markets.  The Pink Sheets provide products
and services that increase the information available in the OTC markets so as to
make  them  more  efficient  for  all  participants.  The  Pink  Sheets  offer a
centralized  information  network  that  includes  services  designed to benefit
market makers, issuers, brokers and OTC investors.

         The  Company  trades on the Pink  Sheets  under the symbol  "HOTK." The
Company  traded on the  Over-the-Counter-Bulletin-Board  from  March  1998 until
November 1999.  Prior to March 1999, the Company's Common Stock traded under the
symbol  "FALK."  The  following  sets  forth the high and low bid prices for the
Common Stock to the best  knowledge  of the Company for the year ended  December
31, 1999 as of the dates set forth below.

Quarter Ending                      High Bid                 Low Bid
--------------                      --------                 -------
March 31, 1999                      0.4688                    0.3750
June 30, 1999                       3.25                      0.3750
October 31, 1999                    N/A                       0.47
December 31, 1999                   N/A                       0.50

         As of  December  27,  2000,  there  were 460  holders  of record of the
Company's  Common  Stock.  As of November 30,  2000,  the Company had issued and
outstanding 95,208,533 shares of Common Stock.

Dividend Policy

         The  Company  has  not   declared  or  paid  cash   dividends  or  made
distributions in the past on its Common Stock. The Company reserves the right to
declare a dividend when operations may merit.

Recent Sales of Unregistered Securities

         During  the period  covered by this Form  10-KSB,  the  Company  issued
shares of its Common Stock in private  placements to the following  investors in
the following amounts:

                                       13
<PAGE>


<TABLE>
<CAPTION>

                                                                                                                      Price
                                                                          # of shares         Aggregate                per
Date                 Name                                                   issued          Consideration             share
----                 ----                                                   ------          -------------             -----
Acquisition, Reorganization and Services (1)
--------------------------------------------
<S>         <C>                                                              <C>            <C>                     <C>
4/16/99      Prof. Heinrich W. Holter                                       36,000,000      Share Exchange
4/16/99      La Salle Investments, Ltd.                                      2,600,000      Share Exchange
4/16/99      Daniela Brinkmann                                               1,000,000      Share Exchange
4/16/99      Prof. Heinrich W. Holter                                        1,000,000      Share Exchange
4/16/99      Dr. Gerhardt Holter                                             1,000,000      Share Exchange
4/16/99      La Salle Investments, Ltd.                                      1,000,000      Share Exchange
4/19/99      Gateway Industries Ltd.                                         1,000,000      Share Exchange
4/19/99      Ralph Burstedde                                                   500,000      Share Exchange
8/9/99       Dennis Brovarone                                                   50,000         Services               $ .80

Regulation S Sales (2)

7/7/99       Walter Dreher                                                       6,028          $  5,274.50           $ .87
7/7/99       Gretel Fischer                                                      1,909          $  1,670.37           $ .87
7/7/99       Ute Fischer                                                         3,014          $  2,637.25           $ .87
7/7/99       Katharina Giel                                                      4,521          $  3,955.87           $ .87
7/7/99       Richard Kehrer                                                     11,152          $ 19,516.00           $1.75
7/7/99       Inge Pfeffer                                                        1,808          $  1,670.37           $ .87
7/7/99       Emil Teufel                                                         1,909          $  1,670.37           $ .87
7/7/99       Andreas Thomas                                                      1,909          $  1,670.37           $ .87
7/7/99       Erwin Ulrich                                                        6,028          $  5,274.50           $ .87
7/7/99       Nedzad Redzepagic                                                   1,507          $  1,318.62           $ .87
8/2/99       Uwe Arnot                                                           3,014          $  2,109.80           $ .70
8/2/99       Moritz von Bethmann                                                18,512          $ 12,958.40           $ .70
8/2/99       Elena Munzer                                                       22,898          $ 16,028.60           $ .70
8/4/99       Karl Burkhart                                                      30,000          $ 21,000.00           $ .70
8/4/99       Frank Braun                                                         7,072          $  4,950.40           $ .70
10/21/99     Hans Joachim Sieland                                              500,000          $200,000.00           $ .40
10/21/99     Rolf-Schmitt and Hans Joachim Sieland                             500,000          $200,000.00           $ .40
10/26/99     Antonio Sieland                                                   100,000           $40,000.00           $ .40
10/26/99     Hans Joachim Sieland                                              400,000          $160,000.00           $ .40
11/9/99      Rolf Schmitt                                                      500,000          $200,000.00           $ .40
11/26/99     Sigrid Molz                                                        32,565          $ 26,052.00           $ .80
11/29/99     Reinhard Hofmann                                                   11,718          $  9,374.40           $ .80
12/6/99      Hermann Casper                                                      6,410          $  5,128.00           $.80
12/6/99      Franz-Josef Meyer                                                  19,336          $ 15,468.80           $.80
12/6/99      Sylvia Rudell                                                      12,820          $ 10,256.00           $.80
12/6/99      Gerlinde Walter                                                     6,410          $  5,128.00           $.80
12/7/99      Hans-Jurgen Prei(beta)mann                                         32,552          $ 26,041.60           $.80
12/9/99      Alexander Aschauer                                                 15,037          $ 10,525.90           $.70
12/15/99     Andreas Prei(beta)mann                                             16,108          $ 12,886.40           $.80
12/15/99     Andreas Weber                                                      13,500          $  5,400.00           $.40
</TABLE>


                                       14
<PAGE>

(1)      With the  exception of the shares issued to Mr.  Brovarone,  the shares
         were  issued in relation to the  Company's  acquisition  of Denatec and
         Philaqua.  Shares issued to Mr.  Brovarone were issued as  compensation
         for legal services rendered to the Company.

(2)      The private  placements  were  conducted  pursuant to Regulation S. The
         securities  were sold in an offshore  transaction  to non-U.S.  persons
         located  outside of the United  States at the time the Common Stock was
         purchased  and the  Company  did not  engage  in any  directed  selling
         efforts  in the  United  States.  No  offer  or sale was made to a U.S.
         person or for the  account  or  benefit  of a U.S.  person.  No general
         solicitation or advertising was made. The Common Stock sold pursuant to
         the private  placements was restricted.  Each purchaser was notified of
         the  restrictions  imposed on the Common  Stock and his or her transfer
         thereof.  Upon purchase of the Common Stock,  each purchaser  signed an
         investment  letter,   acknowledging  that  the  Common  Stock  was  not
         registered  pursuant to the  Securities  Act of 1933,  as amended  (the
         "Securities Act") and that resale of such Common Stock could only occur
         if  the  Common  Stock  was  subsequently  registered  pursuant  to the
         Securities  Act or an exemption from such  registration  was available.
         Each purchaser further acknowledged that he or she purchased the Common
         Stock for his or her own account  and not with a view to public  resale
         or distribution, and that he or she was capable of bearing the economic
         risks  of  investment  in the  Common  Stock.  Each  share  certificate
         representing  the  Common  Stock  contained  a  legend  reflecting  the
         restrictions  on transfer of the Common  Stock.  The proceeds  from the
         issuances were used for general corporate operating purposes.

         None of the  issuances of shares set forth above were  registered  with
the Commission under the Securities Act, because the transactions  were believed
to be exempt  from such  registration  pursuant  to the  exemptions  provided by
Regulation S.

Item 6.  Management's Discussion and Analysis or Plan of Operation

         The  following  information  should  be read in  conjunction  with  the
financial statements and notes thereto appearing elsewhere in this Form 10-KSB.

December 31, 1999 and December 31, 1998

Changes in Financial Condition

         In  1999,  the  Company   acquired  Denatec  and  Philaqua  by  issuing
43,600,000  shares of  restricted  Common  Stock of the  Company  for all of the
outstanding  common stock of Denatec and 80% of the outstanding  common stock of
Philaqua.  These acquisitions were accounted for as recapitalizations of Denatec
and Philaqua.  Accordingly, the consolidated financial statements of Denatec and
Philaqua are presented as the  historical  financial  statements of the Company.
The  acquisition  of  Denatec  and  Philaqua  has made a  substantial,  positive
contribution  to the financial  condition of the Company through  year-end.  The
balance of current  assets at December  31, 1999 was  $2,080,343,  compared to a
balance of $157,602 at December  31, 1998.  The balances of current  liabilities
were  $1,267,563 and $493,081 for the same periods  respectively.  The resulting
current ratio at December 31, 1999 was 1.6 :1. The current ratio at December 31,
1998 was 0.3 :1.

                                       15
<PAGE>

         The increase of current  assets at December 31, 1999 over  December 31,
1998 was due primarily to the increase of cash from $156,995 to  $1,369,990,  an
increase of  $1,212,995,  or 773%.  This  increase is due  primarily to the cash
generated from the sale of the Company's common stock for cash of $923,324.

         Current  assets at December 31, 1999 also increased due to the increase
of accounts receivable and notes receivable from $0 to $616,765,  an increase of
100%,  of  which  $604,175  was  to  related  parties.  Additionally,  inventory
increased  $92,610 or 100% from $0 at December 31, 1998,  to $92,610 at December
31,  1999.  The  balance at  December  31,  1999  included  primarily  materials
purchased for jobs in progress.

         The balance of current  liabilities at December 31, 1999 was $1,267,563
compared to $493,081 at December  31, 1998.  The increase of $774,482,  or 157%,
was due  primarily  to the  accrued  expenses  payable at  December  31, 1999 of
$619,775.  Current  liabilities at December 31, 1999 also increased by a related
party  payable of $59,125.  Accounts  payable  increased  $151,134 or 68%,  from
$220,727 at December 31, 1998 to $371,861 at December 31, 1999.  The increase is
primarily due to the expanded operations of the Company.

         The  Company  purchased  $50,636  of  equipment  during  the year ended
December  31,  1999.  Depreciation  expense  for the  current  year was  $34,290
compared to $12,976 for the prior year.

         At December 31, 1999,  the Company had no long-term  debt.  The Company
had sufficient cash flow from  operations to meet its current cash  obligations.
The Company  anticipates  continued positive cash flow from existing  operations
during the next twelve months,  and will continue to look for ways to invest its
cash  flow  in  acquisitions  of  companies  and  other  investments  that  will
contribute in a positive way to the Company's operating strategy.

Results of Operations

         Sales for the year ended December 31, 1999 were $2,626,460  compared to
$291,735  for the year ended  December  31,  1998,  resulting  in an increase of
$2,334,725 or 80%.  Cost of goods sold for the year ended  December 31, 1999 was
$487,078, or 19% of sales,  resulting in gross profit of $2,139,382,  or 81%, of
sales.

         Operating  expenses  include  primarily  salary and wage  expenses  and
general and administrative expenses. Salary and wage expenses for the year ended
December 31, 1999 were $895,925 compared to salary and wage expenses of $302,337
for the year ended December 31, 1998. General and  administrative  expenses were
$762,697, or 29%, of sales for the same period in 1998, resulting in an increase
of $487,880, or 178%. The increase was due to the expanded operations of Denatec
and Philaqua.

                                       16
<PAGE>

         Other  income  increased  from  $11,798 in 1998 to $56,063 for the year
ended  December  31, 1999,  an increase of $44,265,  or 375%.  This  increase is
offset  somewhat by the  increase in interest  expense  from $1,157 for the year
ended  December  31, 1998 to $49,064 for the year ended  December  31,  1999,  a
decrease of $47,097, or 4141%.

Inflation

         In the opinion of management,  inflation has not had a material  effect
on the operations of the Company.

Year 2000

         The  Year  2000  issue  results  from  an  industry-wide   practice  of
representing  years with only two digits instead of four.  Beginning in the Year
2000,  date code  fields  need to  accept  four  digit  entries  to  distinguish
twenty-first  century dates from  twentieth  century dates (2000 or 1900).  As a
result,  computer  systems and/or  software used by many companies  needed to be
upgraded to comply with such Year 2000 requirements.  Through June 30, 2000, the
Company has not experienced any  significant  problems  associated with the Year
2000 issue. As of June 30, 2000, the Company has not been made aware of, nor has
it experienced, date related problems with any third-party software. Although it
appears that the Year 2000 issue will not have a significant  adverse  effect on
the Company,  the Company  continues to monitor the Year 2000  compliance of its
internal  systems.  Undetected  errors  in  its  internal  systems  that  may be
discovered in the future could have a material  adverse  effect on its business,
operating results or financial condition.

Forward Looking Statements

         This Form 10-KSB  contains  certain  forward  looking  statements.  The
Company wishes to advise readers that actual results may differ  materially from
such forward looking statements.  Forward looking statements involve substantial
risks and  uncertainties  that could cause actual  results to differ  materially
from those  expressed in or implied by the  statements,  and which may be beyond
the  Company's  control,  including,  but not  limited  to, the  following:  the
possible  success  of  the  Company's  varied  projects  and  subsidiaries,  the
volatility of the financial markets in which the Company invests, the ability of
the Company to fund its current and future  projects and its ability to meet its
cash and working  capital needs,  the industries in which the Company  operates,
and other risks  detailed in the  Company's  periodic  report  filings  with the
Securities and Exchange Commission (the "Commission").  Any statements contained
in this Form 10-KSB that are not statements of historical  fact may be deemed to
be forward looking statements. Without limiting the generality of the foregoing,
words  such  as  "may,"  "will,"  "expect,"   "anticipate,"  "intend,"  "could,"
"estimate,"  or  "continue,"  or the  negative  or other  variations  thereof or
comparable terminology are intended to identify forward looking statements.

                                       17

<PAGE>

Item 7.  Financial Statements

         The financial statements required by this Item are included herewith as
a separate section of this Report, commencing on Page F-1.

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

         None.

                                    PART III

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

Executive Officers and Directors

         The executive officers and directors of the Company are:

Name                               Age      Position
----                               ---      --------

Professor Heinrich W. Holter       70       President and Chairman of
                                            the Board of Directors
Dirk Brinkmann                     35       Executive Vice President, Director
Daniel Lezak                       66       Secretary/Treasurer, Director


         All directors hold office until the next annual meeting of stockholders
and until their successors have been duly elected and qualified.  Directors will
be elected at the annual meetings to serve for a term of one year, and until his
successor  shall have been  elected and  accepted  his  election to the board in
writing.

         Except  as  otherwise  provided  herein,  none of the  officers  and/or
directors of the Company are officers or directors of any other publicly  traded
corporation, nor have any of the directors, officers,  affiliates,  subsidiaries
or promoters of the Company filed any bankruptcy petition,  been convicted in or
been the  subject of any  pending  criminal  proceedings,  or the subject of any
order,  judgment,  or decree  involving  the  violation  of any state or federal
securities laws within the past five years.

         The business  experience of each of the persons listed above during the
past five years is as follows:

                                       18
<PAGE>


Professor Heinrich W. Holter, President and Chairman of the Board of Directors

         Professor Holter has served as the Company's  President and Chairman of
the  Board of  Directors  since  January  1999  and the  Managing  Director  and
principal  shareholder of Holter GmbH since 1995. He also serves as the Managing
Director of each of Denatec, Philaqua, Holter Systembau, LK-Luftqualitat, Holter
Italia and Holter Polska.

         Professor Holter holds over 3,500 international  Intellectual  Property
Rights  in the area of  environmental  protection  technology.  In 1985,  he was
appointed  Chairman of the German Diesel Board by the Society of  Inventors.  He
has been  awarded  the  order of merit  from the  Federal  Republic  of  Germany
(Bundesverdienstkreuz),  the Diesel gold medal for his scientific works, and the
German  Federal  Service Cross with ribbon.  Professor  Holter also received the
order of merit from the Moscow  Academy of  Sciences.  Professor  Holter was the
first  citizen of the  Federal  Republic  of  Germany  to receive  the "Order of
Friendship"  granted to him by the  President of the Russian  Federation,  Boris
Yeltsin,  for "personal  contribution to the development of the coal industry of
Russia and to the  strengthening of the friendly  relations  between Germany and
Russia."  Professor Holter received this honor for his work as the president and
a member of the East-West  Academy,  a foundation  which promotes  multinational
cooperation in the field of environmental protection, technology and medicine.

         Professor Holter holds an engineering degree  (Dipl.-Ing.,  Graduate in
Engineering)  from the  Mining  College in Essen,  Germany in 1953,  a Doctor of
Science  degree (Dr. sc.) from the technical  University of Mining in Ostrava in
1991, and a Doctor of Engineering  degree (Dr.-Ing.) from the Silesian Technical
College  in  Gliwice  in 1992.  Professor  Holter  has  served  as a  University
Professor at Kosice Technical University,  Germany since 1994, and was awarded a
prestigious  State  Professor  position by the State of  North-Rhine-Westphalia,
Germany.

Dirk Brinkmann, Executive Vice President and Director

         Since 1995 Mr.  Brinkmann has been  employed as a financial  advisor by
several  entities  owned and/or  controlled by Professor  Holter,  the Company's
President  and  Chairman of the Board of  Directors,  including  Holter GmbH and
Holter Polska. Mr. Brinkmann obtained an advanced degree in finance from College
Monchengladbach  in 1989.  Mr.  Brinkmann has served as the Company's  Executive
Vice President since October 2000 and as a director since January 1999.

Daniel Lezak, Secretary/Treasurer and Director

         Mr. Lezak holds a B.S. Degree in Accounting  from Roosevelt  University
in Chicago and is a Certified  Public  Accountant.  He has performed  consulting
services to  financially  distressed  public and private  companies  since 1965,
establishing  reorganization  plans  through  acquisition,  sale or  Chapter  11
bankruptcy  reorganization.  Mr. Lezak joined the Company in January 1999 as its
Secretary/Treasurer and a director.

         In addition to his position with the Company,  Mr. Lezak serves as Vice
President  and a director  of Turbo,  Inc.,  a publicly  held  company  that was
formerly  engaged in gold mining in California,  and President and a director of
Sierra-Rockies  Corporation,  a publicly  held  company  presently in Chapter 11
reorganization  in California.  Until August 2000, Mr. Lezak served as President
and a director of Organik  Technology,  Inc., a publicly  held company  recently
released from Chapter 11 proceedings.

                                       19
<PAGE>

         Mr. Lezak is also an officer and a director of Gateway Industries Ltd.,
a  privately-held  consulting and holding  company which is a shareholder of the
Company.  See Part I, Item 4, "Security  Ownership of Certain  Beneficial Owners
and Management."

Section 16(a) Beneficial Ownership Reporting Compliance

         Pursuant to Section 16(a) of the Exchange Act, the Company's directors,
executive  officers and any person holding 10.0% or more of its Common Stock are
required to report their  beneficial  ownership  and any changes  therein to the
Commission.  Specific due dates for these reports have been  established and the
Company is required to report  herein any failure to file such  reports by those
due dates. Based solely on review of the copies of such reports furnished to the
Company or written  representations  that no other  reports were  required,  the
Company  believes  that,  during its fiscal year ended  December 31,  1999,  its
executive officers,  directors and greater than 10.0% beneficial owners complied
with all applicable Section 16(a) filing  requirements with the exception of the
filing of Forms 3, which were not timely filed by any of the persons required to
file such Forms 3.

Item 10. Executive Compensation

         During the fiscal  years ended  December  31, 1998 and 1999 and for the
six month period ended June 30, 2000,  the Company did not pay  compensation  to
its officers or directors.  During such periods,  Professor  Heinrich W. Holter,
the  Company's  President  and  Chairman  of the  Board of  Directors,  and Dirk
Brinkmann,  the Company's  Executive  Vice  President  and a director,  received
compensation  from  Holter  GmbH and other  affiliates  or  subsidiaries  of the
Company.  Because  the  Company  did not pay  compensation  to its  officers  or
directors,  the  summary  compensation  table  has been  omitted  from this Form
10-KSB.

         On October 25, 2000,  the Company  entered into  employment  agreements
with each of Professor Holter and Mr. Brinkmann.  Each employment agreement will
terminate  on December  31,  2005,  and each  automatically  extends for another
calendar year unless  terminated by either party by November 30 of each calendar
year. Pursuant to the terms of the employment agreements,  Professor Holter will
be paid  $20,000,  and Mr.  Brinkmann  will be paid  $10,000,  per  month.  Both
Professor  Holter  and Mr.  Brinkmann  will be  entitled  to an annual  bonus as
determined  by the  Board of  Directors  after  consideration  of each  person's
contributions to the Company and the performance of his duties.  Each employment
agreement provides that upon the termination of the employee's employment by the
Company other than for "cause" (as defined in the  employment  agreements) or by
the  employee for certain  actions of the Company,  such as effecting a material
adverse change in the employee's responsibilities, the employee will be entitled
to all compensation and benefits payable under the employment  agreement for the
remainder of the term. As of the date of this Form 10-KSB, no payments have been
made to Professor Holter or Mr. Brinkmann pursuant to the employment agreements.

                                       20
<PAGE>


Item 11. Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets  forth  information,  to  the  best  of the
Company's  knowledge,  as of November 30, 2000 with respect to each person known
by the Company to own beneficially more than 5% of the outstanding Common Stock,
each director and all directors and officers as a group.

 Name and Address                       Amount and Nature of          Percent
of Beneficial Owner                     Beneficial Ownership         of Class(1)
-------------------                     -------------------         -----------
Prof. Heinrich W. Holter                  63,083,333(2)               66.2%
President, Chairman of the Board
  of Directors
Beisenstr.39
45964 Gladbeck, Germany

Dirk Brinkmann                             1,055,555(3)                1.1%
Executive Vice President, Director
Beisenstr. 39
45964 Gladbeck, Germany

Daniel Lezak                               1,055,555(4)                1.1%
Secretary/Treasurer, Director
23548 Calabasas Road, Suite 202
Calabasas, California 91302

Herman Hogg                                4,270,348(5)                4.5%
Hans-Adolf-Buhler-Strasse 8
D-79361 Sasbach-Jechtingen
Germany


Leszek Kulawik                             4,750,000(6)                5.0%
Bytomska 1
41-800 Zabrze, Poland


All directors and officers                65,184,443                  68.5%
a group (3 persons)

(1)      Based upon 95,208,533 shares outstanding as of November 30, 2000.

(2)      Includes  1,000,000  shares held by his son, Dr.  Gerhardt  Holter,  in
         which Professor Holter disclaims beneficial ownership.

                                       21
<PAGE>

(3)      Includes 1,000,000 shares held by his wife, Daniela Brinkmann, in which
         Mr. Brinkmann disclaims beneficial ownership.

(4)      Includes 1,000,000 shares indirectly held by Gateway Industries,  Ltd.,
         of which Mr. Lezak is a beneficial owner.

(5)      Includes  20,348 shares held by his children,  Michael and Verena Hogg,
         in which Mr. Hogg disclaims beneficial ownership.

(6)      Includes  2,000,000 shares held by Huta Zabrze, of which Mr. Kulawik is
         Managing  Director  and  in  which  he  may  be  considered  to  have a
         beneficial interest.

         Unless  otherwise  indicated  in the  footnotes,  the  Company has been
advised that each person  above has sole voting power over the shares  indicated
above.

Item 12.           Certain Relationships and Related Transactions

         There have been no  transactions  between the Company and any  officer,
director,  nominee for election as director,  or any shareholder  owning greater
than five percent (5%) of the Company's  outstanding  shares,  nor any member of
the above referenced individuals' immediate family, except as set forth below.

         In February 1999, the Company  acquired 100% of the outstanding  equity
interests  of  Denatec,  a  German  limited  liability  company,  and 80% of the
outstanding  equity interests of Philaqua,  a German limited liability  company,
from the stockholders of Denatec and Philaqua,  including  Professor Heinrich W.
Holter,  the Company's  President  and Chairman of the Board of  Directors.  The
purchase  price of Denatec and Philaqua was 44.1 million shares of the Company's
Common Stock, valued at aggregate predecessor cost of US$263,935.  Denatec holds
the exclusive rights to exploit certain worldwide  Intellectual  Property Rights
and other  inventions of air filtration  processes,  including  denaturing  heat
exchangers and electrostatic  filters having a denaturing  collector  electrode.
See Part I, Item 1,  "Description of Business - Air Filtration."  Philaqua holds
the exclusive rights to exploit certain worldwide  Intellectual  Property Rights
and other  inventions  regarding  industrial  water  treatment and  purification
through  ultraviolet  light  filtration.  See Part I,  Item 1,  "Description  of
Business - Water Filtration."

         In March 2000, the Company acquired 30% of the outstanding common stock
of Holter  GmbH, a German  corporation,  from  Professor  Holter in exchange for
US$1.5 million.  In November 2000, the Company acquired an additional 20% of the
outstanding  common stock of Holter GmbH from  Professor  Holter in exchange for
15,000,000  shares of the Company's Common Stock.  Holter GmbH engages primarily
in the business of marketing,  sales,  production,  research and  development of
air, water and energy systems.

         In March 2000, the Company acquired 50% of the outstanding common stock
of Holter  Systembau,  a German  corporation,  for US$125,000.  Holter Systembau
engages  primarily in the business of marketing and sales of low-energy  modular
housing systems.

                                       22
<PAGE>

         In November 2000, the Company  acquired 50% of the  outstanding  common
stock of  Holter  Italia,  an  Italian  corporation,  from  Professor  Holter in
exchange for  10,000,000  shares of the Company's  Common  Stock.  Holter Italia
engages  primarily  in the  business of  marketing  and sales of air  filtration
systems.

         For the year ended  December 31, 1999,  the Company  derived 91% of its
total  revenues  from Holter GmbH, a subsidiary  of the Company,  and  purchased
US$123,017 of equipment and other products from Holter GmbH.

         In March 1997, the Company was formed in part by Mr. Georgios Stolte, a
German resident.  The Company  considers Mr. Stolte to be an initial promoter of
the  Company.

         During 1999, the Company made unsecured loans in the amount of $520,841
to Holter GmbH, a company owned and controlled at the time by Professor  Holter.
During 1999,  Holter GmbH made  unsecured  loans in the amount of $36,931 to the
Company. Each of the loans has an interest rate of 6.5% per annum and is due and
payable upon demand.

         On December 30, 1998,  Professor  Holter  executed a loan agreement for
$39,743 in favor of Denatec.  The loan  accrues  interest at 6% per annum and is
due and payable on demand with six months  prior  notice.  On December 30, 1998,
Denatec  executed a loan  agreement  for  $18,560 in favor of Holter GmbH in the
amount of $7,552.

Item 13. Exhibits and Reports on Form 8-K

         Except as otherwise  indicated,  the following  exhibits are filed with
this Report by reference to the Company's Registration Statement, filed with the
Commission:

Exhibit No.                     Exhibit Name

3.1      Articles of Incorporation and Amendments*
3.2      Bylaws*
10.1     Acquisition Agreement of Denatec*


*Filed previously

                                       23
<PAGE>




                                   SIGNATURES
                                   ----------

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  Report to be signed on its behalf by the  undersigned,
thereunto duly organized.

                                              HOLTER TECHNOLOGIES HOLDING, AG
                                              (Registrant)

Date: December 29, 2000              By:  /s/ Prof. Dr. Dr. Heinrich W. Holter
                                          ------------------------------------
                                              Prof. Dr. Dr. Heinrich W. Holter
                                              President and Chairman
                                              of the Board ofDirectors

Date: December 29, 2000              By:  /s/ Dirk Brinkmann
                                          ------------------
                                              Dirk Brinkmann
                                              Executive Vice President
                                              and Director

Date: December 29, 2000              By:  /s/ Daniel Lezak
                                          ----------------
                                              Daniel Lezak
                                              Secretary, Treasurer and Director
                                       24

<PAGE>

                                          HOLTER TECHNOLOGIES HOLDING AG
                                                 AND SUBSIDIARIES
                                          (Formerly Falken Investment AG)

                                         CONSOLIDATED FINANCIAL STATEMENTS

                                                 December 31, 1999


<PAGE>







<TABLE>
<CAPTION>

                                                  C O N T E N T S

<S>                                                                                                              <C>
Independent Auditors' Report.................................................................................... F-3

Consolidated Balance Sheet...................................................................................... F-4

Consolidated Statements of Operations........................................................................... F-6

Consolidated Statements of Stockholders' Equity................................................................. F-8

Consolidated Statements of Cash Flows........................................................................... F-9

Notes to the Consolidated Financial Statements.................................................................. F-11
</TABLE>


<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors

Holter Technologies Holding AG and Subsidiaries
Calabasas, California

We  have  audited  the  accompanying   consolidated   balance  sheet  of  Holter
Technologies Holding AG and Subsidiaries as of December 31, 1999 and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years  ended  December  31,  1999 and  1998.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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 Holter
Technologies  Holding  AG and  Subsidiaries  as of  December  31,  1999  and the
consolidated  results  of their  operations  and their  cash flows for the years
ended  December  31,  1999 and  1998,  in  conformity  with  generally  accepted
accounting principles.

/s/ HJ & Associates, LLC
------------------------
    HJ & Associates, LLC
    Salt Lake City, Utah

    May 10, 2000

                                      F-3
<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                           Consolidated Balance Sheet


                                     ASSETS
                                     ------

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

CURRENT ASSETS

   Cash                                                             $ 1,369,990
   Accounts receivable, net (Note 2)                                     12,590
   Accounts receivable - related party, net (Note 7)                     83,334
   Inventory (Note 2)                                                    92,610
   Prepaid expenses                                                         978
   Notes receivable - related party (Note 4)                            520,841
                                                                    -----------

     Total Current Assets                                             2,080,343
                                                                    -----------

PROPERTY AND EQUIPMENT (Note 2)

   Equipment and machinery                                              246,758
   Furniture and office equipment                                        42,812
   Software                                                               1,046
   Less - accumulated depreciation                                      (47,266)
                                                                    -----------

     Total Property and Equipment                                       243,350
                                                                    -----------

OTHER ASSETS

   Patents (Note 10)                                                       --
   Deposits                                                              16,704
                                                                    -----------

     Total Other Assets                                                  16,704
                                                                    -----------

     TOTAL ASSETS                                                   $ 2,340,397
                                                                    ===========

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

                                       F-4


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                     Consolidated Balance Sheet (Continued)


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
                                                                   December 31,
                                                                       1999
                                                                    -----------

CURRENT LIABILITIES

   Accounts payable                                                 $   371,861
   Accounts payable - related party (Note 7)                            123,017
   Accrued expenses                                                     619,775
   Lines of credit (Note 6)                                                 203
   Notes payable - related party (Note 5)                                36,931
   Billings in excess of costs and
     earned profit on construction
     contracts (Notes 2 and 3)                                           33,890
   Provision for projected loss on
     construction contracts (Note 3)                                     81,886
                                                                    -----------

     Total Current Liabilities                                        1,267,563
                                                                    -----------

LONG-TERM DEBT                                                             --
                                                                    -----------

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                             88,727
                                                                    -----------

COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS' EQUITY

   Common stock: $0.001 par value; 200,000,000 shares
    authorized, 54,837,737 shares issued and outstanding                 54,838
   Additional paid-in capital                                         1,303,425
   Other comprehensive income (loss)                                     53,776
   Accumulated deficit                                                 (427,932)
                                                                    -----------

     Total Stockholders' Equity                                         984,107
                                                                    -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $ 2,340,397
                                                                    ===========

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

                                       F-5


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                      Consolidated Statements of Operations

                                                        For the Years Ended
                                                            December 31,
                                                      -------------------------
                                                         1999            1998
                                                     -----------    -----------
REVENUES

   Sales revenue                                     $ 2,468,807    $   291,735
   Contracting revenue (Note 3)                          157,653           --
                                                     -----------    -----------
     Total Revenues                                    2,626,460        291,735
                                                     -----------    -----------

COST OF SALES

   Direct sales costs                                    197,363           --
   Direct contracting costs (Note 3)                     289,715           --
                                                     -----------    -----------
     Total Cost of Sales                                 487,078           --
                                                     -----------    -----------

GROSS MARGIN                                           2,139,382        291,735
                                                     -----------    -----------

EXPENSES

   General and administrative                            762,697        274,817
   Research and development                               65,678           --
   Advertising and marketing                              88,699         13,208
   Salaries and wages                                    895,925        302,339
   Bad debt expense                                       14,567           --
   Depreciation expense                                   34,290         12,976
                                                     -----------    -----------
     Total Expenses                                    1,861,856        603,340
                                                     -----------    -----------

GAIN (LOSS) BEFORE OTHER INCOME (EXPENSES)               277,526       (311,605)
                                                     -----------    -----------
OTHER INCOME (EXPENSES)

   Other income                                           44,561         11,798
   Interest income                                        11,502           --
   Interest expense                                      (49,064)        (1,157)
                                                     -----------    -----------
     Total Other Income (Expenses)                         6,999         10,641
                                                     -----------    -----------
GAIN (LOSS) BEFORE INCOME TAXES                          284,525       (300,964)

PROVISION FOR INCOME TAXES (Note 2)                      386,272           --
                                                     -----------    -----------
LOSS BEFORE MINORITY INTEREST IN NET INCOME
 OF CONSOLIDATED SUBSIDIARIES                           (101,747)      (300,964)
                                                     -----------    -----------
MINORITY INTEREST IN NET INCOME OF CONSOLIDATED
 SUBSIDIARY                                               85,414        (60,193)
                                                     -----------    -----------
NET LOSS                                             $  (187,161)   $  (240,771)
                                                     -----------    -----------


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

                                       F-6


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                Consolidated Statements of Operations (Continued)

                                                          For the Years Ended
                                                            December 31,
                                                      -------------------------
                                                         1999            1998
                                                     -----------    -----------
OTHER COMPREHENSIVE INCOME (LOSS)

   Foreign currency translation adjustments            $  64,525      $ (10,749)
                                                       ---------      ---------

     Total Other Comprehensive Income (Loss)              64,525        (10,749)
                                                       ---------      ---------

TOTAL OTHER COMPREHENSIVE INCOME (LOSS)                $(122,636)     $(251,520)
                                                       =========      =========

BASIC LOSS PER SHARE (NOTE 9)                          $   (0.00)     $   (0.00)
                                                       =========      =========



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

                                       F-7


<PAGE>


<TABLE>
<CAPTION>

                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Consolidated Statements of Stockholders' Equity



                                                                                          Other
                                                   Common Stock           Additional   Comprehensive
                                            -------------------------      Paid-In       Income       Accumulated
                                                Shares         Amount      Capital        (Loss)        Deficit
                                            -----------   -----------   -----------    -----------    -----------

<S>                                           <C>         <C>           <C>            <C>           <C>
Balance, December 31, 1997                         --     $      --     $      --      $      --      $      --

Common stock issued to
 founders at $0.006 per share                44,100,000        44,100       219,835           --             --
Currency translation adjustment                    --            --            --          (10,749           --
Net loss for the year ended
 December 31, 1998                                 --            --            --             --         (240,771)
                                            -----------   -----------   -----------    -----------    -----------
Balance, December 31, 1998                   44,100,000        44,100       219,835        (10,749)      (240,771)

Common stock issued in
 recapitalization                             8,400,000         8,400        (8,400)          --             --
Common stock issued for cash
 at $0.30 to $0.80 per share                  2,184,767         2,185       921,139           --             --
Common stock issued for services
 at $0.30 to $0.80 per share                    152,970           153        76,829           --             --

Contributed capital by founding
 shareholders                                      --            --          94,022           --             --
Currency translation adjustment                    --            --            --           64,525           --
Net loss for the year ended
 December 31, 1999                                 --            --            --             --         (187,161)
                                            -----------   -----------   -----------    -----------    -----------
Balance, December 31, 1999                   54,837,737   $    54,838   $ 1,303,425    $    53,776    $  (427,932)
                                            ===========   ===========   ===========    ===========    ===========
</TABLE>




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

                                       F-8


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                      Consolidated Statements of Cash Flows

                                                         For the Years Ended
                                                             December 31,
                                                      -------------------------
                                                         1999            1998
                                                     -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net loss                                         $  (187,161)   $  (240,771)
   Adjustments to reconcile net loss to net cash
    provided by operating activities:
     Minority interest                                   96,997         (8,271)
     Common stock issued for services                    76,982           --
     Depreciation                                        34,290         12,976
     Bad debt expense                                    14,567           --
     Currency translation adjustment                     64,525        (10,749)
Change in assets and liabilities:
     (Increase) in accounts receivable                 (110,491)          --
     (Increase) in prepaids                                (371)          (607)
     (Increase) in inventories                          (92,610)          --
     (Increase) in deposits                             (16,704)          --
     Increase in accounts payable                       151,134        220,727
     Increase in payable to related parties              59,125         63,892
     Increase in accrued expenses                       606,951        128,600
                                                    -----------    -----------
        Net Cash Provided by Operating Activities       697,234        165,797
                                                    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Lending to related parties                          (520,841)          --
   Purchase of property and equipment                   (50,636)      (239,976)
                                                    -----------    -----------
        Net Cash Used in Investing Activities          (571,477)      (239,976)
                                                    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Cash acquisition recapitalization                    112,621           --
   Proceeds from lines of credit                           --           57,063
   Common stock issued for cash                         923,324        151,314
   Contributed capital by founding shareholders          94,022           --
   Borrowings from related parties                       14,131         22,797
   Payment on lines of credit                           (56,860)          --
                                                    -----------    -----------
       Net Cash Provided by Financing Activities    $ 1,087,238    $   231,174
                                                    -----------    -----------


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

                                       F-9


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                Consolidated Statements of Cash Flows (Continued)


                                                         For the Years Ended
                                                            December 31,
                                                      -------------------------
                                                         1999            1998
                                                     -----------    -----------

NET INCREASE (DECREASE) IN CASH                        $1,212,995     $  156,995

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF YEAR                                        156,995           --
                                                       ----------     ----------

CASH AND CASH EQUIVALENTS AT END OF YEAR               $1,369,990     $  156,995
                                                       ==========     ==========


SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for:

   Interest                                            $   42,902     $    1,157
   Income taxes                                        $  153,915     $     --

NON-CASH FINANCING ACTIVITIES

   Common stock issued for services                    $   76,982     $     --


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

                                      F-10


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 1 -      ORGANIZATION

              The  consolidated  financial  statements  include  those of Holter
              Technologies Holdings AG (HTH AG) and its wholly-owned subsidiary,
              Holter  Sachsen  Denatec  GmbH   (Denatec),   and  its  80%  owned
              subsidiary   Philaqua    Aufbereitungstechnik   GmbH   (Philaqua).
              Collectively, they are referred to herein as "the Company".

              HTH AG was  incorporated  under the laws of the State of Nevada on
              March 21, 1997 under the name of Lyon  Mountain,  Inc. On March 5,
              1998, the Company  changed its name to Falken  Investment,  AG and
              then  later  changed  its  name on  January  20,  1999  to  Holter
              Technologies  Holding AG in contemplation of a merger with Denatec
              and   Philaqua.   HTH  AG  was   incorporated   to  seek  business
              opportunities  and acquire  interests in products  and  businesses
              which may have a potential for profit. Prior to the acquisition of
              Denatec and Philaqua, HTH AG was a non-operating public shell.

              Denatec was incorporated  under the laws of Germany on May 3, 1998
              for the purpose of acquiring technology. Denatec is engaged in the
              continued   development  of  a  denaturing   electrostatic  filter
              technology.

              Philaqua  was  incorporated  under the laws of Germany on June 30,
              1998 for the purpose of  acquiring  and  implementing  technology.
              Philaqua  supplies systems and components to many processes in the
              environmental  engineering field.  Philaqua's main focus is on the
              treatment of water, waste water, soils, sludges, and air.

              During  1999,   HTH  AG   completed  an  agreement   and  plan  of
              reorganization  whereby HTH AG issued  43,600,000 shares of common
              stock in exchange for all of the outstanding shares of Denatec and
              Philaqua. Pursuant to the reorganization,  the name of the Company
              was changed to Holter Technologies Holding AG.

              The  reorganization  was  accounted for as a  recapitalization  of
              Denatec  and  Philaqua  because  the  shareholders  of Denatec and
              Philaqua controlled the Company after the acquisition.  Therefore,
              Denatec  and  Philaqua  are  treated  as  the  acquiring   entity.
              Accordingly,  there was no adjustment to the carrying value of the
              assets or  liabilities  of  Denatec  and  Philaqua.  HTH AG is the
              acquiring  entity for legal  purposes  and Denatec and Pilaqua are
              the  surviving  entity  for  accounting  purposes.  As  such,  the
              financial  statements  reflect the history of Denatec and Philaqua
              prior to the acquisition.

                                      F-11


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 2 -      SIGNIFICANT ACCOUNTING POLICIES

              a.  Accounting Method

              The Company's consolidated financial statements are prepared using
              the  accrual  method of  accounting.  The  Company  has  elected a
              December 31 year end.

              b.  Cash and Cash Equivalents

              Cash equivalents  include  short-term,  highly liquid  investments
              with   maturities   of  three  months  or  less  at  the  time  of
              acquisition.

              c.  Provision for Taxes

              The provision for income taxes charged to operations for the years
              ended   December   31,  1999  and  1998  was  $386,272  and  $-0-,
              respectively.  This amount is based on the income tax rates in the
              country of Germany and has been converted to U.S. dollars.

              d.  Principles of Consolidation

              The  consolidated  financial  statements  include  those of Holter
              Technologies Holding AG (HTH AG) and its wholly-owned  subsidiary,
              Holter  Sachsen  Denatec  GmbH   (Denatec),   and  its  80%  owned
              subsidiary,  Philaqua  Aufbereitungstechnik  GmbH (Philaqua).  All
              significant  intercompany  accounts  and  transactions  have  been
              eliminated.

              For the Company's foreign subsidiaries  (Denatec and Philaqua) the
              functional  currency has been  determined  to be the Duetsch Mark.
              Accordingly,  assets and  liabilities  are  translated at year-end
              exchange  rates,  and operating  statement items are translated at
              average exchange rates  prevailing  during the year. The resultant
              cumulative  translation  adjustments to the assets and liabilities
              are  recorded as a separate  component  of  stockholders'  equity.
              Exchange adjustments  resulting from foreign currency transactions
              are  included  in the  determination  of net income  (loss).  Such
              amounts are immaterial for all years presented.

              In accordance with Statement of Financial Accounting Standards No.
              95,  "Statements  of Cash  Flows,"  cash flows from the  Company's
              foreign   subsidiaries   are  calculated   based  upon  the  local
              currencies. As a result, amounts related to assets and liabilities
              reported  on the  statements  of cash flows  will not  necessarily
              agree with  changes in the  corresponding  balances on the balance
              sheets.

                                      F-12


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 2 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              e.  Inventory

              Inventory  supplies  are  stated  at  the  lower  of  purchase  or
              production  cost  (computed  on a  first-in,  first-out  basis) or
              market.  The  inventory  cost  includes all expenses  necessary to
              place the  inventory in a saleable  condition.  The  components of
              inventory are as follows:

                 Prepaid inventory                    $            42,135
                 Finished goods                                    50,475
                                                      -------------------
                         Total                        $            92,610
                                                      ===================

              f.  Property and Equipment

              Property and equipment are stated at cost.  Expenditures for small
              tools,  ordinary maintenance and repairs are charged to operations
              as incurred.  Major additions and  improvements  are  capitalized.
              Depreciation  is  computed  using the  straight-line  method  over
              estimated useful lives as follows:

               Equipment and machinery                            3-10 years
               Furniture and office equipment                     5-10 years
               Software                                           5 years

              Depreciation  expense  for the years ended  December  31, 1999 and
              1998 was $34,290 and $12,976, respectively.

              g.  Accounts Receivable

              Accounts receivable are recorded net of the allowance for doubtful
              accounts of $7,282 as of December 31, 1999.

              h.  Revenue Recognition - Inventory Sales

              Revenue is recognized upon shipment and acceptance of goods by the
              customer. If the Company installs the units, revenue is recognized
              on the transaction when the unit is installed. The customer has no
              right of return on the products and as a result,  no allowance has
              been recorded for possible returns.

                                      F-13


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 2 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              i.  Revenue Recognition - Contract Sales

              The     financial     statements     are     prepared    on    the
              percentage-of-completion on individual contracts,  commencing when
              progress  reaches a point  where cost and  estimate  analysis  and
              other  evidence of trends are sufficient to estimate final results
              with reasonable accuracy. That portion of the total contract price
              which is  allocable  to contract  expenditures  incurred  and work
              performed  is  accrued as earned  income.  At the time a loss on a
              contract  becomes  known,  the  entire  amount  of  the  estimated
              ultimate  loss is  accrued.  Claims  for  additional  revenue  are
              recognized when settled.

              j.  Costs and Billings on Contracts

              Costs and earned  profit on  contracts  - unbilled  represent  the
              amount by which  costs of  contracts  in  process  plus  estimated
              earned profit exceed related progress billings. Billings in excess
              of costs and earned  profit on contracts  represent  the amount by
              which  progress  billings on contracts in process  exceed  related
              costs and estimated earned profit.

              k.  Classifications of Current Assets and Liabilities

              In accordance  with  industry  practice,  the Company  includes in
              current  assets and  liabilities  amounts  realizable  and payable
              under contracts which may extend beyond one year. Other assets and
              liabilities are classified as current and non-current on the basis
              of expected realization or payment within or beyond one year.

              l.  Use of Estimates in the Preparation of Financial Statements

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and  assumptions  that affect  reported  amounts of
              assets  and  liabilities,  disclosure  of  contingent  assets  and
              liabilities at the date of the financial statements,  and revenues
              and  expenses  during the  reporting  period.  In these  financial
              statements;  assets,  liabilities,  and  earnings  form  contracts
              involve  extensive  reliance  on  management's  estimates.  Actual
              results could differ from those estimates.

              m.  Advertising

              The  Company   follows  the  policy  of  charging   the  costs  of
              advertising to expense as incurred.

                                      F-14


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 2 -      SIGNIFICANT ACCOUNTING POLICIES (Continued)

              n.  Concentrations of Risk

              Cash
              ----

              At times, the Company's funds exceed  depository  insurance limits
              in the United States.

              Foreign Currency Translation

              Since Denatec and Philaqua are German  companies  whose  financial
              statements  must be translated  into U.S.  Dollars to conform with
              the requirements of the Securities and Exchange Commission,  major
              changes in the currency  exchange rate between the German Mark and
              U.S.  Dollars may have a  significant  impact on operations of the
              Company.  Although  the Company does not  anticipate  the currency
              exchange  rate to be  significantly  different  over  the  next 12
              months, no such assurances can be given. The aggregate adjustments
              resulting   from   translation   adjustments   are  found  in  the
              consolidated statements of stockholders' equity.

              Accounts Receivable
              -------------------

              Credit  losses,  if any,  have been  provided for in the financial
              statements  and  are  based  on  management's  expectations.   The
              Company's   accounts   receivable   are   subject   to   potential
              concentrations  of credit risk.  The Company does not believe that
              it is subject to any unusual,  or significant  risks in the normal
              course of its business.

              o.  Research and Development

              The  Company   follows  the  policy  of  charging   research   and
              development costs to expense as incurred.

              p.  Change in Accounting Principle

              In June  1998,  the FASB  issued  SFAS No.  133,  "Accounting  for
              Derivative  Instruments  and Hedging  Activities"  which  requires
              companies to record derivatives as assets or liabilities, measured
              at fair market value.  Gains or losses  resulting  from changes in
              the values of those  derivatives  would be accounted for depending
              on the use of the  derivative  and whether it qualifies  for hedge
              accounting.  The key  criterion  for hedge  accounting is that the
              hedging   relationship  must  be  highly  effective  in  achieving
              offsetting  changes in fair value or cash  flows.  SFAS No. 133 is
              effective for all fiscal  quarters of fiscal years beginning after
              June 15,  1999.  The  adoption of this  statement  had no material
              impact on the Company's financial statements.

                                      F-15


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 3 -      CONTRACTS IN PROCESS

              Comparative  information  with  respect to contracts in process at
              December 31, 1999 and 1998 follows:

                                                         1999         1998
                                                     ---------    -----------

     Expenditures                                    $ 289,715    $      --

     Estimated earnings (loss) thereon                (132,062)          --
                                                     ---------    -----------
                                                                      157,653

     Less billings applicable thereto                 (191,543)          --
                                                     ---------    -----------

                                                    $  (33,890)   $      --
                                                     =========    ===========

     Included in the  accompanying  balance
      sheet under the  following
      captions:

     Billings in excess of costs and earned
      profit on construction                         $ (33,890)   $     --
                                                     =========    ===========

     Provision for projected
      loss on construction
      contracts                                      $ (81,886)   $     --
                                                     =========    ===========

NOTE 4 -      NOTES RECEIVABLE - RELATED PARTY

              Notes  receivable - related  party  consisted of the  following at
December 31, 1999:
<TABLE>
<CAPTION>

<S>                                                                                            <C>
              Heinrich Holter, GmbH, unsecured due upon

               demand, including accrued interest at 6.5% per annum.                            $          520,841
                                                                                                ------------------

              Total notes receivable - related party                                                       520,841

              Less: current maturities                                                                    (520,841)
                                                                                                ------------------

              Non-current notes receivable - related party                                      $           --
                                                                                                ==================
</TABLE>



                                      F- 16


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999

NOTE 4 -      NOTES RECEIVABLE - RELATED PARTY (Continued)

              Maturities  of  notes  receivable  -  related  party  debt  are as
follows:

                      Year Ending
                      December 31,                            Amount
                      ------------                       ------------------


                             2000                        $          520,841
                             2001                                    --
                             2002                                    --
                             2003                                    --
                             2004                                    --
                             2005 and thereafter                     --
                                                         ------------------
                                   Total                 $          520,841
                                                         ==================

NOTE 5 -      NOTES PAYABLE - RELATED PARTY

              Notes  payable -  related  party  consisted  of the  following  at
December 31, 1999:

       Heinrich Holter GmbH, unsecured due
        due upon demand, including accrued interest
        at 6.5% per annum                                  $           36,931
                                                           ------------------

            Total notes payable - related party                        36,931
            Less: current maturities                                  (36,931)
                                                           ------------------

            Notes payable - related party                  $            --
                                                           ==================

              Maturities of long-term debt are as follows:


                      Year Ending
                      December 31,                            Amount
                      ------------                       ------------------

                           2000                         $           36,931
                           2001                                     --
                           2002                                     --
                           2003                                     --
                           2004                                     --
                           2005 and thereafter                      --
                                                        ------------------

                           Total                        $           36,931
                                                        ==================



                                      F-17


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999

NOTE 6 -      LINES OF CREDIT

              An  analysis  of the lines of  credit  with  various  banks of the
              Company  and its  subsidiaries  as of  December  31, 1999 is shown
              below:

                                            Line of              Debt
                                            Credit              Outstanding
                                      ------------------  ------------------

  Multi-currency line of credit        $           50,000  $               68
  Multi-currency line of credit                    40,000                 135
                                       ------------------  ------------------

                                       $           90,000  $              203
                                       ==================  ==================

              Borrowings under the multi-currency lines of credit are guaranteed
              by the Company and bear interest between 7.25% and 8.75%.

NOTE 7 -      RELATED PARTY TRANSACTIONS

              From time to time, the Company borrows and lends funds to and from
              a Company controlled by its majority shareholder.  The amounts are
              non-interest bearing, due on demand and unsecured (see notes 4 and
              5).

              The Company also sells most of its product to a company controlled
              by the major  shareholder.  In 1999,  the related party sales were
              91% of  total  revenues  and 100% of total  revenues  in 1998.  At
              December 31, 1999, the Company was owed $83,334 for such sales.

              The Company also purchases  product from  companies  controlled by
              the major  shareholder.  The Company owed $123,017 at December 31,
              1999 for these purchases.

NOTE 8 -      SEGMENT OF BUSINESS

              The Company  operates  primarily  in one  industry  segment  which
              includes  the  production  and   distribution  of  water  and  air
              filtration systems.

              A summary of the Company's sales by geographic area is as follows:

                                                December 31,
                                  ---------------------------------------
                                         1999                     1998
                                  -----------------     -----------------
   Foreign sales:

     Asia                         $          -          $          -
     Europe                               2,626,460               291,735
                                  -----------------     -----------------

   Total foreign sales                    2,626,460               291,735
   Domestic sales                            -                     -
                                  -----------------     -----------------

     Total Revenues               $       2,626,460     $         291,735
                                  =================     =================

                                      F-18


<PAGE>



                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 9 -       BASIC AND DILUTED EARNINGS PER SHARE

               The  computation of basic loss per share of common stock is based
               on the weighted average number of shares  outstanding  during the
               period of the financial statements as follows:
<TABLE>
<CAPTION>

                                    For the Year Ended                           For the Year Ended
                                     December 31, 1999                           December 31, 1998
               ---------------------------------------------------------------------------------------------------
                      Loss            Shares           Per-Share          Loss         Shares          Per-Share
                   (Numerator)      (Denominator)       Amount         (Numerator)   (Denominator)       Amount
                   -----------      -------------       ------         -----------   -------------       ------
<S>            <C>                   <C>           <C>            <C>                 <C>           <C>
               $    (187,161)        52,573,121    $     (0.00)   $     (240,771)     52,000,000    $     (0.00)
               ===============  =================  =============  ================  ==============  ==============
</TABLE>

               Diluted loss per share is not presented  because the common stock
               equivalents are antidilutive.

NOTE 10 - PATENTS

               In accordance with Generally Accepted Accounting Principles,  the
               cost to  research  and  develop  and  obtain  the  patents in the
               Company are  expensed.  The  acquisition  of HTH AG and  Philaqua
               created a reverse  merger;  therefore,  the value of the  patents
               must be  handled  as if they were  developed  and not  purchased.
               Management has determined that in the long range planning this is
               a more conservative approach and eliminates the need of burdening
               future revenues with the amortization costs that would arise.

NOTE 11 -  COMMITMENTS AND CONTINGENCIES

               The Company is leasing its U.S.  office on a month to month basis
               from its  secretary/treasurer  at $1,050 per month. The Company's
               Dusseldorf,  Germany office is provided by Heinrich Holter,  GmbH
               at no cost to the Company.

               Philaqua is leasing its office space under a 10-year lease from a
               German partnership. The lease began on January 7, 1998. The lease
               payment is $4,689 per month, plus insurance. The lease payment is
               fixed  for  the  term  of  the  lease.  The  Company's   majority
               shareholder is a 1/3 partner of the partnership.

NOTE 12 -      SUBSEQUENT EVENTS

               Acquisitions
               ------------

               Effective  March 29, 2000, the Company  purchased 30% of Heinrich
               Holter, GmbH (HH) for $1,500,000.  The shares were purchased from
               the Company's majority  shareholder at his original cost. HH is a
               German company operating in environmental  technology and mineral
               processing in Europe and Asia.

                                      F-19


<PAGE>


                         HOLTER TECHNOLOGIES HOLDING AG
                                AND SUBSIDIARIES
                         (Formerly Falken Investment AG)
                 Notes to the Consolidated Financial Statements
                                December 31, 1999


NOTE 12 -      SUBSEQUENT EVENTS (Continued)

               Acquisitions  (Continued)
               ------------

               Effective  February 17, 2000, the Company  acquired 50% of Holter
               Systembau.  GmbH (HSB) for $125,000. HSB is a newly formed German
               corporation  engaged  primarily in the business of marketing  and
               sales of low energy modular housing systems.

               On April 1, 2000, the Company  purchased 20% of Coolpoint  Holter
               Environmental Technologies, Ltd. (Coolpoint), a Hong Kong limited
               liability  corporation,  in exchange for 1,388,889  shares of the
               Company's common stock. The Company was also granted an option to
               purchase up to 20% of any Coolpoint  shares offered to the public
               in the future.  The  Company's  shares were valued at the trading
               price on the date of issue of $0.90 per share.  Coolpoint engages
               primarily  in  the  business  of  marketing   and  sales  of  air
               filtration  systems  in Asia.  Coolpoint  has the  option  to buy
               additional  shares of the  Company's  common stock based upon its
               profits in the year 2000.

               In April 2000, the Company  acquired 50% of  LK-Luftqualitaet  AG
               (LK), a Swiss corporation,  for $615,000. LK engages primarily in
               the  business  of  marketing,  sales,  production,  research  and
               development of air filtration systems in Europe.

               In April  2000,  the  Company  purchased  235 of the  outstanding
               common  stock of Huta  Zabrze,  (HZ),  a Polish  corporation,  in
               exchange  for  2,750,000  shares of the  Company's  common  stock
               valued  at  $0.80  per  share.   HZ  engages   primarily  in  the
               production,  marketing and sales of steel and iron  construction,
               telecommunication and energy systems in Europe.

               On June 21,  2000,  the Company  acquired  50% of  Intherm,  GmbH
               (Intherm),  a German corporation,  for $125,000.  Intherm engages
               primarily  in the  business  of  marketing  and  sales of  energy
               systems in Europe.

               Stock Offerings
               ---------------

               Subsequent to December 31, 1999,  the Company sold  approximately
               7,385,160 shares of its common stock for $3,718,678.

                                      F-20