Creative Technologies 10QSB 2002 Q1 Quarterly report (small business)

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

FORM 10-QSB

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002 OR
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION FROM _______ TO ________.

COMMISSION FILE NUMBER 000-33365

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

Nevada (State or other jurisdiction of incorporation or organization)	88-0409146 (I.R.S. Employer Identification No.)
1800 Avenue of the Stars, Suite 600 Los Angeles, California (Address of principal executive offices)	90067 (Zip code)
Registrant's telephone number: (310) 407-5175
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yesx     Noo

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
	As of March 31, 2002, there were outstanding 24,629,377 shares of the Registrant's Common Stock, $0.001 par value.
Transitional Small Business Disclosure Format:      Yeso    Nox

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- TABLE OF CONTENTS -

PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		INDEPENDENT AUDITORS' REPORT CONSOLIDATED BALANCE SHEETS CONSOLIDATED STATEMENTS OF OPERATIONS CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE OF GENERAL, ADMINISTRATIVE & DEVELOPMENT EXPENSES
	ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II -- OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS ITEM 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS ITEM 3. DEFAULTS UPON SENIOR SECURITIES ITEM 4. SUBMISSION OF MATTERS TO VOTE BY SECURITY HOLDERS ITEM 5. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

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PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
(Development Stage Companies)
CONSOLIDATED FINANCIAL STATEMENTS AND
SUPPLEMENTARY INFORMATION
March 31, 2002
(Unaudited)

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

TABLE OF CONTENTS

		PAGE(S)
INDEPENDENT ACCOUNTANTS' REVIEW REPORT		2
CONSOLIDATED FINANCIAL STATEMENTS
	Balance Sheets	3
	Statements of Operations	4
	Statements of Changes in Stockholders' Equity	5
	Statements of Cash Flows	6
	Notes to Financial Statements	7 - 14
SUPPLEMENTARY INFORMATION
	Consolidated Schedules of General, Administrative and Development Expenses	15

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

Josefina C. de la Cruz, CPA Rebecca Q. Masinsin, CPA Tomothy Vo, CPA Marissa B. Zacarias, Operations Manager	2700 N Main Street, Suite 900 Santa Ana, CA 92705 Tel. No. (714) 558-8703 Fax No. (714) 558-7940
INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors Creative Technologies Holdings, Inc. and Subsidiaries Carson City, Nevada We have reviewed the accompanying consolidated balance sheet of Creative Technologies Holdings, Inc., and Subsidiaries (Development Stage Companies), as of March 31, 2002, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the three months then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these consolidated financial statements is the representation of the management of Creative Technologies Holdings, Inc. and Subsidiaries. A review consists principally of inquiries of Company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the consolidated financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. The information included in the accompanying consolidated schedules of general, administrative and development expenses is presented only for supplementary analysis purposes. Such information has been subjected to the inquiry and analytical procedures applied in the review of the basic consolidated financial statements, and we are not aware of any material modifications that should be made to it. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 12 to the consolidated financial statements, the Company has no established source of revenue. This raises substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Josefina C. de la Cruz, CPA A Professional Corporation Santa Ana, California May 14, 2002
MEMBER - AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS' SEC PRACTICE GROUP CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS' TAX PRACTICE GROUP

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CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
(Development Stage Companies)
CONSOLIDATED BALANCE SHEETS

			March 31, 2002 (Unaudited)		December 31, 2001 (Audited)
ASSETS
CURRENT ASSETS
	Cash		$	1,371	$	8,656
	Advances to employees		42,429		30,831
		Total current assets	43,800		39,487
PROPERTY & EQUIPMENT, NET (Note 4)			53,698		59,948
OTHER ASSETS
	Investment - others (Note 3)		717,012		717,012
	Receivables - others		239,620		232,620
		Total other assets	956,632		949,632
TOTAL ASSETS			$	1,054,130	$	1,049,067
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
	Accounts payable		$	478,430	$	473,606
	Payroll taxes payable		10,751		8,822
	Due to affiliates		71,345		70,345
	Accrued liabilites		87,460		77,560
	Credit line payable		52,263		51,100
	Due to investors		99,217		30,471
		Total current liabilities (Note 5)	799,466		711,904
MINORITY INTEREST (Note 7)			-		-
STOCKHOLDERS' DEFICIT (Note 8)
	Common Stock, $0.001 par value; 25,000,000 shares      authorized; 24,629,377 shares issued and outstanding		24,629		24,629
	Paid-in capital		3,557,650		3,557,650
	Accumulated deficit during development stage		(3,327,615)		(3,245,116)
		Total stockholders' equity	254,664		337,163
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT			$	1,054,130	$	1,049,067

See accompanying notes and independent accountants' review report.

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CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
(Development Stage Companies)
CONSOLIDATED STATEMENTS OF OPERATIONS
For The Period December 6, 1996 (Date of Inception) to March 31, 2002
(Unaudited)

		Cumulative from December 6, 1996 (Date of Inception) to March 31, 2002		For the Three Months Ended
				March 31, 2002		March 31, 2001
REVENUE		$	-	$	-	$	-
EXPENSES
	General, administrative and development expenses	3,065,259		75,275		1,066,159
	Depreciation	72,737		6,251		20,889
	Total Operating Expenses	3,137,996		81,526		1,087,048
NET OPERATING LOSS		(3,137,996)		(81,526)		(1,087,048)
OTHER INCOME (EXPENSES)
	Interest income	1,350		-		753
	Interest expense	(12,573)		(973)		-
	Loss on disposal of assets (Note 6)	(164,408)		-		-
	Loss in investments	(67,988)		-		-
	Total other income (expenses)	(243,619)		(973)		753
NET LOSS BEFORE MINORITY INTEREST		(3,381,615)		(82,499)		(1,086,295)
MINORITY INTEREST'S SHARE OF NET LOSS (Note 7)		54,000		-		54,000
NET LOSS FOR THE PERIOD		$	(3,327,615)	$	(82,499)	$	(1,032,295)
NET LOSS PER COMMON SHARE				$	(0.00)	$	(0.08)
WEIGHTED AVERAGE NUMBER      OF COMMON SHARES				24,629,377		12,600,000

See accompanying notes and independent accountants' review report

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CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
(Development Stage Companies)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period December 6, 1996 (Date of Inception) to March 31, 2002

	Common Stock			Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Initial issuance of stocks on December 6, 1996	21,000	$	2,100	$	-	$	-	$	2,100
Net loss for the year ended December 31, 1996						(2,100)		(2,100)
Balances, December 31, 1996	21,000	2,100		-		(2,100)		-
Net loss for the year ended December 31, 1997						-		-
Balances, December 31, 1997	21,000	2,100		-		(2,100)		-
Net loss for the year ended December 31, 1998	-	-		-		-		-
Balances, December 31, 1998	21,000	2,100		-		(2,100)		-
November 29,1999      Adjustment from No Par Value      to $0.001 on 21,000 shares	-	(2,079)		2,079		-		-
November 29, 1999      Forward Stock Split 1:100	2,079,000	2,079		(2,079)		-		-
Net loss year ended      December 31, 1999	-	-		-		(350)		(350)
Balance, December 31, 1999	2,100,000	2,100		-		(2,450)		(350)
Issuance of 8,500,000 shares of      common stock in exchange      for 500,000 common shares of      a Subsidiary on October 25, 2000	8,500,000	8,500		491,500		-		500,000
Issuance of 2,000,000 shares in      exchange for cancellation of      $500,000 debt on      November 8, 2000	2,000,000	2,000		498,000		-		500,000
Net loss for the year ended      December 31, 2000	-	-		-		(1,464,935)		(1,464,935)
Balance, December 31, 2000	12,600,000	12,600		989,500		(1,467,385)		(465,285)
Issuance of 1,600,000 shares of      exchange for cancellation of      $1,537,242 debt on June 30, 2001	1,600,000	1,600		1,535,642		-		1,537,242
Issuance of 7,850,000 shares in      exchange for cancellation of      $785,000 debt on      September 30, 2001	7,850,000	7,850		777,150		-		785,000
Issuance of 2,579,377 shares in exchange for      cancellation of $257,937 debt on      December 31, 2001	2,579,377	2,579		255,358		-		257,937
Net loss for the year ended       December 31, 2001	-	-		-		(1,777,731)		(1,777,731)
Balances, December 31, 2001	24,629,377	24,629		3,557,650		(3,245,116)		337,163
Net loss for three months ended March 31, 2002      (Unaudited)	-	-		-		(82,499)		(82,499)
Balances, March 31, 2002	24,629,377	$	24,629	$	3,557,650	$	(3,327,615)	$	254,664

See accompanying notes and independent accountants' review report.

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CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
(Development Stage Companies)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period December 6, 1996 (Date of Inception) to March 31, 2002
(Unaudited)

	Cumulative from December 6, 1996 (Date of Inception) to March 31, 2002		For three months ended
			March 31, 2002		March 31, 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,327,615)	$	(82,499)	$	(1,032,295)
Adjustment to reconcile net loss to net cash used      in operating activities
Depreciation and amortization	72,737		6,251		20,889
Loss on asset disposal	164,408		-		-
Loss in other investments	67,988		-		-
Minority interest in net loss of subsidiaries	(54,000)		-		(54,000)
Decrease (increase) in:
Advances to employees	(42,429)		(798)		(10,379)
Other receivables	(239,620)		(10,800)		30,000
Increase in:
Accounts payable	478,429		4,823		167,856
Accrued liabilities	87,460		9,900		55,120
Payroll taxes payable	10,751		1,929		9,749
NET CASH USED BY OPERATING ACTIVITIES	(2,781,891)		(71,194)		(813,060)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment - others	(785,000)		-		-
Principal payments on capital lease	(9,995)		-		(459)
Purchase of property and equipment	(236,842)		-		(34,709)
NET CASH USED BY IN INVESTING ACTIVITIES	(1,031,837)		-		(35,168)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock	3,582,279		-		-
Increase (decrease) in due to affiliates	170,562		62,746		(166,905)
Proceeds of notes payable	-		-		962,142
Proceeds from line of credit	52,263		1,163		-
Proceeds from capital lease	9,995		-		-
NET CASH USED IN FINANCING ACTIVITIES	3,815,099		63,909		795,237
NET INCREASE (DECREASE) IN CASH	1,371		(7,285)		(52,991)
CASH AT BEGINNING OF PERIOD	-		8,656		68,338
CASH AT END OF PERIOD	$	1,371	$	1,371	$	15,347

See accompanying notes and independent accountants' review report.

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

NOTE 1 - ORGANIZATION HISTORY AND BASIS OF CONSOLIDATED FINANCIAL STATEMENTS
	The accompanying consolidated financial statements include the accounts of Creative Technologies Holdings Inc. (CTHI), formerly Morning Splendor Management, Inc. and its Subsidiaries, Cybergame Technologies, Inc. (CTI), formerly Creative Technology and Interactive Entertainment Group, Inc. and Creative Technology and Entertainment Group, Inc. (CTEGI) collectively referred to as "the Company". CTI is a 100% owned subsidiary and CTEGI is a 70% subsidiary of CTI. Creative Technologies Holdings Inc. was incorporated as Morning Splendor Management, Inc. on December 6, 1996 under the laws of the State of Nevada to engage in any lawful activity, including but not limited to selected mergers and acquisitions. The Company has been in the developmental stage since inception. Other than the acquisition of CTI, a subsidiary, the Company has no operating history and revenue. Cybergame Technologies, Inc. was incorporated on June 26, 2000 under the laws of the State of Nevada. Other than the issuance of stock to its original shareholders, and acquisition of about 70% of CTEGI, a development stage company, it has no operations and revenues as of March 31, 2002. Creative Technology and Entertainment Group, Inc. was incorporated under the laws of the State of Nevada on May 19, 2000 for the purpose of developing online gaming and interactive entertainment software. CTEGI is a development stage company and as such has no revenues or earnings from operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Consolidation Policy
		The consolidated financial statements include the accounts of the CTHI and all of its wholly owned and majority-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation. Investments in unconsolidated affiliates are accounted for using the equity method when the Company owns at least 20% but no more than 50% of such affiliates. Under the equity method, the Company records its proportionate shares of profits and losses based on its percentage interest in earnings of companies 50% or less.

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

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

Estimates
	The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
	The Company considers all highly liquid investments with maturity of three months or less to be cash equivalents for purpose of reporting cash flows.
Property and equipment
	Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, less residual value where appropriate as follows:
		Software	3 years
		Office Equipment	5 years
		Furniture	7 years
		Leasehold Improvements	5 years or remaining term of      lease, whichever is shorter

Income Taxes

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

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

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

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

Loss Per Share

Net loss per share is provided in accordance with Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share." Basic loss per share is computed by dividing losses available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects per share amounts that would have resulted if dilutive common stock equivalents had been converted to common stock. As of March 31,2002, the Company had no dilutive common stock such as stock options.

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

NOTE 3 - INVESTMENT IN OTHER COMPANY
	On September 29, 2001, Creative Technology Holdings, Inc. entered into a stock purchase agreement with Ridgeway Commercial Ventures, Limited (Ridgeway), a Belize Corporation. CTHI acquired 49% interest in LET THE FUN BEGIN A.V.V., a company previously owned by Ridgeway and incorporated under the laws of Aruba. Initial investment is $785,000 in exchange for a 6% interest bearing promissory note. On September 30, 2001, 7,850,000 common shares of CTHI were issued to Ridgeway for $0.10 a share in cancellation of the note payable for $785,000. Let the Fun Begin A.V.V. has three wholly owned subsidiaries:
		(a) Let the Games Begin N.V., a Curacao-based offshore entity formed on September 20, 2000. (b) Let the Play Begin N.V., a Curacao-based offshore entity formed on October 5, 1998. (c) Cyber Entertainment, N.V., a Curacao-based onshore entity formed on July 17,2000.

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

Cyber Entertainment, N.V. holds a gaming license from the territory of Curacao. At March 31, 2002, all the above entities have no operations. As of March 31, 2002, the adjustment on the investment account for the company's 49% share of the loss is $67,988. The carrying value of the investment account at March 31, 2002 is $717,012.

NOTE 4 - PROPERTY AND EQUIPMENT, NET
	Property and equipment as of March 31, 2002 consist of the following:
			March 31, 2002						December 31, 2001
			CTHI		CTEGI		Total		CTHI		CTEGI		Total
		Office Equipment	$	2,731	$	36,590	$	39,321	$	2,731	$	36,590	$	39,321
		Software	-		51,878		51,878		-		51,878		51,878
		Total property and equipment	2,731		88,468		91,199		2,731		88,468		91,199
		Accumulated depreciation and      amortizaion	(504)		(36,997)		(37,501)		(406)		(30,845)		(31,251)
		Property and equipment, net	$	2,227	$	51,471	$	53,598	$	2,325	$	57,623	$	59,948
	Depreciation and amortization expense for the three months ended March 31, 2002 and 2001 amounted to $6,251 and $20,889, respectively.

NOTE 5 - CURRENT LIABILITIES
	Current liabilities consist of the following:

	March 31, 2002				December 31, 2001
	CTHI	CTI	CTEGI	TOTAL	CTHI	CTI	CTEGI	TOTAL
Accounts payable	$3,581	$ 2,076	$ 472,773	$ 478,430	$ 1,250	$ -	$ 472,356	$ 473,606
Payroll taxes payable	1,486	443	8,822	10,751	-	-	8,822	8,822
Accrued liabilites	13,500	-	73,960	87,460	3,600	-	73,960	77,560
Due to affiliates	1,350	69,995	-	71,345	350	69,995	-	70,345
Due to investors	65,270	33,947	-	99,217	30,471	-	-	30,471
Notes payable	-	-	-	-	-	-	-	-
Credit line payable ***	-	-	52,263	52,263	-	-	51,100	51,100
Total	$ 85,187	$ 106,461	$ 607,818	$ 799,466	$ 35,671	$ 69,995	$ 606,238	$ 711,904

***CTEGI has a $52,263 promissory note payable on demand in the form of a line of credit with a financial institution. The line carries a variable rate of interest at the Wall Street Journal prime rate plus 1.00% per annum. Monthly payment requirements on the line consist of accrued interest only. As of March 31, 2002, the Company owed $52,263 against the credit line and is personally guaranteed by an officer of CTEGI.

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

NOTE 6 - LOSS ON DISPOSITION OF PROPERTY AND EQUIPMENT
	CTEGI terminated its lease and vacated the leased office premises in Falls Church, Virginia in connection with the downsizing of its operations. As a result, it incurred a loss on the un-amortized leasehold improvements in the amount of $25,491. Total loss on disposition of CTE's equipment and other assets total $164,408.47 at March 31, 2002.

NOTE 7 - MINORITY INTEREST
	On August 21, 2000, a stock investment agreement with conditional promissory note was entered between CTEGI and CTI. CTI acquired about 73.3% of CTEGI's total issued and outstanding shares consisting of fourteen million (14,000,000) shares for four million three hundred fifty four thousand dollars (US$4,354,000). Terms and conditions of the agreement are:
		Initial payment was $400,000 and the balance of US$3,954,000 payable in (10) monthly consecutive installments on the 15th day of each month beginning August 2000 and ending on May 2001 (the maturity date). The obligation is represented by a non-interest bearing conditional promissory note. The payments on the promissory note are subject to the realization of the Company's expected financial projection in the "Business Plan" and achievement of the "Development Milestone Projection" for the development of Inner G software system. At March 31, 2002, the balance of the conditional promissory note receivable by CTEGI is $1,819,868. Negotiations are in process for the extension and revision of the stock purchase agreement. Other than the minority interest below, all the inter-company accounts have been eliminated.
	At March 31, 2002, minority interest consist of the following:

5,333,334 shares of common stock,      par value $.01	$	53,334
Paid in capital	666
Minority interest's share of deficit	(54,000)
Total	$	-

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

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

NOTE 8 - STOCKHOLDERS' EQUITY
	The authorized common stock of CTHI consists of 25,000,000 shares with a par value of $0.001 of which 24,629,377 common shares are issued and outstanding at March 31, 2002. On December 6, 1996, CTHI issued 21,000 shares of its no par value common stock in consideration of $2,100 in cash. On November 29, 1999, the State of Nevada approved the restated Articles of Incorporation of CTHI that increased its capitalization from 25,000 shares to 25,000,000 shares of common stock and changed from a no par value stock to $0.001 par value. On November 29, 1999, CTHI forward split its common stock 1:100; thus increasing the number of outstanding shares of common stock from 21,000 shares to 2,100,000 shares. On August 31, 2000, CTI issued 500,000 shares of its $0.001 par value common stock in consideration of $500,000 cash. These shares were exchanged for CTHI shares under a plan and agreement of reorganization with CTI and Morgan & Lynch, Inc. (MLI) on October 25, 2000. Under the plan, the Company issued 8,500,000 shares of its common stock to MLI in exchange for MLI's ownership of 500,000 share of common stock of CTI. On November 8, 2000, the Company entered into a stock purchase agreement with Netsat Holdings, Limited (NHL), a foreign corporation. Pursuant to the agreement, the Company issued 2,000,000 shares of its common stock in exchange for cancellation of $500,000 debt to NHL. On June 25, 2001, CTHI entered into a stock purchase agreement with NetSat Holdings, Ltd., whereby CTHI issued 1,600,000 shares of common stock at a price of $0.96 per share in cancellation of indebtedness owed to NetSat Holdings, Ltd., for a total aggregate amount of $1,537,242. On September 29, 2001, CTHI entered into a stock purchase agreement with Ridgeway Commercial Ventures, Ltd., a foreign corporation, whereby CTHI issued 7,850,000 of its $.001 par value common stock in exchange for cancellation of $785,000 indebtedness, which the latter owed to Ridgeway. On December 31, 2001, CTHI entered into a Stock purchase agreement with APEX Consulting, Inc., St. Vincent, West Indies corporation, whereby CTHI issued 2,579,377 of its $.001 par value common stock in exchange of cancellation of $257,937 of indebtedness owed to APEX Consulting, Inc. The issued and outstanding shares of 24,629,377common shares at March 31, 2002 are as follows:
		Regulation S shares	14,029,377
		Other Restricted Shares	9,950,000
		Free Trading Shares	650,000
		Total	24,629,377

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002

NOTE 9 - INCOME TAXES
	There is no provision for federal income taxes for the year ended March 31, 2002 due to the net loss sustained during the period. No state income tax provision was made because in Nevada, the state of the Company's domicile and operations, taxes on income are not imposed. The Company currently has no issues that create timing differences that would mandate deferred tax expense. Net operating losses would create possible tax assets in future years. Due to the uncertainty as to the utilization of net operating loss carry forwards, a valuation allowance has been made as to the utilization of net operating loss carry forward, to the extent of any tax benefit that net operating losses may generate. The Company's total deferred tax assets as of March 31, 2002 is as follows:
		Net Operating Loss Carry Forward	$	3,381,615
		Current tax asset value of net operating      loss carry forwards at statutory rate	$	507,300
		Valuation Allowance	(507,300)
		Net Deferred Tax Asset	$	-
		Current Income Tax Expense	$	-
		Deferred Income Tax Expense (Benefit)	$	-

NOTE 10 - SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
	There were no cash payments made for income taxes for the three months ended March 31, 2002. Cash payments for interest during the three months ended March 31, 2002 amounted to $973. The investment in other company for $785,000 was in exchange for an interest bearing promissory note that was cancelled by the issuance of 7,850,000 common shares of CTHI.

NOTE 11 - COMMITMENTS
	The Company's lease of its corporate headquarters expired in December 2001. At March 31, 2002, there is no lease commitment. Rent expense for the three months ended March 31, 2002 and 2001 amounted to $5,101 and $38,964, respectively.

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CREATIVE TECHNOLOGIES HOLDINGS, INC. AND SUBSIDIARIES
(Development Stage Companies)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002

NOTE 12 - GOING CONCERN

The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have an established source of revenues to cover its development and operating costs and to allow it to continue as a going concern. Current sources of funds for development costs of the Company are periodic funding of and advances from its investors. Funding from investors, however, have been set for a specified period and amount. The Company's only source of funds would be additional advances from its investors if it continues to have no source of revenues. On April 9, 2001, CTEGI, the subsidiary that operates in Falls Church, Virginia, has downsized its operations and terminated all its employees involved in its development operations. At March 31, 2002, operations are minimal. The funding of CTEGI's technology development has been temporarily deferred as a result of CTEGI's major changes in its business development plan.

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CREATIVE TECHNOLOGIES HOLDINGS INC. AND SUBSIDIARIES
(Development Stage Companies)
CONSOLIDATED SCHEDULES OF GENERAL, ADMINISTRATIVE AND DEVELOPMENT EXPENSES
For the Period December 6, 1996 (Date of Inception) to March 31, 2002
(Unaudited)

	Cumulative from December 6, 1996 (Date of Inception) to March 31, 2002		For the Three Months Ended
			March 31, 2002		March 31, 2001
Salaries and wages	$	1,161,550	$	3,856	$	457,889
Professional fees	843,750		62,717		334,161
Rent	218,925		5,101		38,964
Travel & promotions	186,183		-		57,197
Recruiting	128,989		-		27,116
Development expenses	114,796		-		-
Office expenses	100,548		2,850		35,291
Bad debts	85,409		-		-
Telephone	58,070		925		26,409
Taxes and licenses	51,104		2,342		45,765
Computer expenses	47,025		-		18,723
Insurance	42,635		(5,216)		24,644
Marketing expenses	19,375		-		-
Directors' fees	6,900		2,700		-
	$	3,065,259	$	75,275	$	1,066,159

See accompanying notes and independent accountants' review report.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

          (a) Revenues

     The three months ended March 31, 2002 did not generate any revenues for the Company. There were no revenues for the same period in year 2001. The Company incurred a net operating loss of $81,526 during the first quarter of 2002, compared to $1,087,048 during the first quarter of 2001. The operating loss and lack of revenues are due to the development stage nature of the Company.

     The Company does not have an established source of revenues. Current sources of funds for product development and operating costs are periodic funding of and advances from investors. There are no known trends, events or uncertainties that have or are reasonably likely to have a material impact on the Company's net sales or revenues from continuing operations, being a development stage company.

          (b) General, Administrative and Development Expenses

     The Company incurred general, administrative and development expenses in the amount of $75,275 for the three months ended March 31, 2002, compared to $1,066,159 for the same period in year 2001. The biggest expense reduction was in salaries and wages, from $457.889 in first quarter 2001 to $3,856 in first quarter 2002. As disclosed in prior reports, the Company suspended product development and retrenched product developers as of April 2001.

     For the first quarter of year 2002, professional fees in the amount of $62,717 comprised approximately 83.3% of total general, administrative and development expenses. For the same period in year 2001, professional fees in the amount of $334,161 comprised approximately 31.3% of general, administrative and development expenses. Professional fees were mainly in the form of legal and accounting expenses to file registration statement (and amendments thereto) and to comply with SEC reporting requirements.

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          (c) Depreciation and Amortization

     Depreciation and amortization expense decreased from $20,889 during the first quarter of year 2001 to $6,251 during the first quarter of year 2002. The decrease was due to disposition of depreciable office furniture and equipment. See Note 6 of Consolidated Financial Statements and Supplementary Information (Unaudited) as of March 31, 2002, which is filed with this report.

          (d) Net Loss per Share

     Net loss per common share was at $0 during the first quarter of 2002, compared to a net loss per common share of $0.08 during the same period in year 2001. The decrease was attributable mainly to additional issuance of common shares by Issuer and decrease in net loss.

          (e) Liquidity

     As of March 31, 2002, the Company had an accumulated deficit during development stage in the amount of $3,327,615. Investors of the Company provided funds to the Company for its development operations in exchange for equity.

     For the three months ended March 31, 2002, the net cash provided by financing activities amounted to $62,746. Investors had advanced funds for day-to-day operations and product development. These advances were recorded as note payable obligations of the Company. The payable balances, as in prior periods, may be paid off in the form of additional common shares. The dilution to common shareholders is dependent on the issue price and the amount of advances converted into common shares.

     The Company and its subsidiaries do not have any internal sources of liquidity. In the short term, the Company's liquidity depends on further capital infusion from investors. In the long term, the Company's liquidity may improve depending on the success of the product development of its operating subsidiary, Creative Technology and Entertainment Group, Inc.

     The Company faces considerable risks at each step in its strategic business plan. Such things as technology, societal and economic changes, cost overruns, lack of interest, and shortfalls in funding due to the Company's difficulty in raising additional capital in the equity securities market all may have an impact on the Company.

     There are no other known trends, events or uncertainties that have or are reasonably likely to have a material impact on the Company's short-term or long-term liquidity.

          (f) Capital Expenditures

     There are no expected material capital expenditures within the next six months.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     None

ITEM 2. CHANGES IN THE RIGHTS OF THE COMPANY'S SECURITY HOLDERS

     None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None

ITEM 4. SUBMISSION OF MATTERS TO VOTE BY SECURITY HOLDERS

     None

ITEM 5. OTHER INFORMATION     

     None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

     (b) One Form 8-K was filed (February 1, 2002) during the quarter for which the Report is filed.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: May 20, 2002	CREATIVE TECHNOLOGIES HOLDINGS, INC.      /SIGNATURE/By: Chris Albornoz President

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