Edgar Filing: CTD HOLDINGS INC

U.S. Securities and Exchange Commission

Washington, D.C. 20549

Form 10-KSB

(Mark One)

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

For the fiscal year ended December 31, 2004

( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (No Fee Required)

For the transition period from _________ to _________

Commission file number 0-24930

CTD HOLDINGS, INC.
(Name of small business issuer in its charter)

FLORIDA 59-3029743
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

27317 N. W. 78th Avenue, High Springs, FL 32643
(Address of principal executive offices) (Zip Code)

Issuer's telephone number: 386-454-0887

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

Title of each class Name of each exchange on which registered

None

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

Class A Common Stock
(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----.

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: $464,692.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference at the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $720,514 based on the average high ($.08) and low ($.08) price as of
March 4, 2005, of $.08 per share.

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: 10,953,967 shares of Common
Stock as of March 4, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

None

Transitional Small Business Disclosure Format (Check One): Yes No X

PART I

Item 1. Description of Business

CTD Holdings, Inc. ("Us" or "the Company") was organized as a Florida
corporation on August 9, 1990, with operations beginning in July 1992. We sell
cyclodextrins ("Cyclodextrins" or "CDs") and related products to the food,
pharmaceutical and other industries. We also provide consulting services in the
area of commercialization of CD applications.

CDs
Cyclodextrins are molecules that bring together oil and water and
havepotential applications anywhere oil and water must be used together.
Successfulapplications have been made in the areas of agriculture, analytical
chemistry, biotechnology, cosmetics, diagnostics, electronics, foodstuffs,
pharmaceuticals and toxic waste treatment. Stabilization of food flavors and
fragrances is the largest current worldwide market for CD applications. The
Company and others have developed CD-based applications in stabilization of
flavors for food products; elimination of undesirable tastes and odors;
preparation of antifungal complexes for foods and toiletries; stabilization of
fragrances and dyes; reduction of foaming in foods; cosmetics and toiletries;
and the improvement of quality, stability and storability of foods.

CDs can improve the solubility and stability of a wide range of drugs. Many
promising drug compounds are unusable or have serious side effects because they
are either too unstable or too insoluble in water. Strategies for administering
currently approved compounds involve injection of formulations requiring pH
adjustment and/or the use of organic solvents. The result is frequently painful,
irritating, or damaging. These side effects can be ameliorated by CDs. CDs also
have many potential uses in drug delivery for topical applications to the eyes
and skin.

We believe that the application of CDs in both OTC and ethical
ophthalmicproducts provides the greatest opportunity for the successful and
timelyintroduction of CD containing preparations for topical drug use.

We provide consulting services for the commercial development of new
products containing CDs. Our revenues are derived from consulting, the
distribution of CDs, the manufacturing of selected CD complexes, and sales of
its own manufactured and licensed products containing CDs.

CD Product Background

CDs are donut shaped circles of glucose (sugar) molecules. CDs are formed
naturally by the action of bacterial enzymes on starch. They were first noticed
and isolated in 1891 by a French scientist, Villiers, as he studied rotting
potatoes. The bacterial enzyme naturally creates a mixture of at least three
different CDs depending on how many glucose units are included in the molecular
circle; six glucose units yield Alpha CD ("ACD"); seven units, beta CD ("BCD");
eight units, gamma CD ("GCD"). The more glucose units in the circle, the bigger
the circle, or donut. The inside of this "donut" provides an excellent resting
place for "oily" molecules while the outside of the donut is significantly
compatible with water enabling clear stable solutions of CDs to exist in aqueous
environments even when an "oily" molecule is carried within the donut hole. The
net result is a molecular carrier that comes in small, medium, and large sizes
with the ability to transport and deliver "oily" materials using water as the
primary vehicle.

CDs are manufactured in large quantities by mixing appropriate enzymes with
starch solutions, thereby reproducing the natural process. ACD, BCD and GCD can
be manufactured by an entirely natural process and therefore are considered to
be natural products. Additional processing is required to isolate and separate
the CDs. The purified ACD, BCD, and GCD are referred to collectively as natural
CDs (NCDs).

The chemical groups on each glucose unit in a CD molecule provide chemists
with ways to modify the properties of the CDs, i.e. to make them more water
soluble or less water soluble, thereby making them better carriers for a
specific chemical. The CDs that result from chemical modifications are no longer
considered "natural" and are referred to as chemically modified CDs ("CMCDs").
Since the property modifications achieved are often so advantageous to a
specific application, the Company does not believe the loss of the "natural"
product categorization will prevent its ultimate commercial use. It does,
however, create a greater regulatory burden.

Our strategy is to sell CDs and to introduce products with little or no
regulatory burden in order to minimize product expenses and create profitable
revenue.

We currently sell our products for use in the pharmaceutical, food and
industrial chemical industries.

CD Market

The food additive industry has been experimenting with CDs for many years.
Now that commercial supply of these materials can be assured and regulatory
approval is in place, the Company believes that the food additive industry will
continue to increase its use of CDs.

CDs have been used in a variety of food products in Japan for over 25
years. In 1999 the economic impact of CD's on the Japanese economy was reported
to be $2.6 billion. Within the last five years, more European countries have
approved the use of CDs in food products. In the United States, major starch
companies are renewing their earlier interest in CDs as food additives. Oral
arguments for regulatory approval by the United States Food and Drug
Administration ("FDA") have been accepted. As of November 3, 1997, BCD use as a
food additive in 10 categories of food products was confirmed to be generally
recognized as safe (GRAS).

Applications of CDs in personal products and for industrial uses have
appeared in many patents and patent applications. Procter & Gamble uses CDs in
Bounce(R), a popular fabric softener and Febreze(R). Avon uses CDs in its dermal
preparations using its Age Protective System APS(R). These uses will grow as the
price of the manufactured CDs decrease or are perceived as acceptable in view of
the value added to the products. In 2001 Janssen Pharmaceutica, a subsidiary of
Johnson & Johnson received approval to market Sporanox(r), an oral and
injectable formulation containing hydroxypropyl BCD.

In Japan at least twelve pharmaceutical preparations are now marketed which
contain CDs. The CDs permit the use of all routes of administration. Ease of
delivery and improved bioavailability of such well-known drugs as nitroglycerin,
dexamethasone, PGE(1&2), and cephalosporin permit these "old" drugs to command
new market share and sometimes new patent lives. Because of the value added, the
dollar value of the worldwide market for products containing CDs and for
complexes of CDs can be 100 times that of the CD itself.

CD Products

Our CD products include Trappsol(R), Aquaplex(R), and AP(TM)-Flavor product
lines. The Trappsol product line consists of approximately 200 different
varieties of CDs and the Aquaplex product line includes more than 60 different
complexes of active ingredients with various CDs. In addition to these product
lines, the Company introduced Garlessence(R) in the fourth quarter of 1995.
Garlessence is the first ingestible product containing CDs to be marketed in the
U.S. The Company also provides consulting services, research coordination, and
the use of CD Infobase(TM), a comprehensive database of CD related information.
The Company has protected its service and trade marks by registering them with
the U.S. Patent and Trademark office. The following trademarks have been
approved and are in use: Trappsol(R), and Aquaplex (R). These properties add to
the intangible asset value of the Company. Since 2000, our Web Site at
http://www.cyclodex.com, a major tangible asset has grown to be a leading
Cyclodextrin information site on the Internet.

CTD purchases CD's from commercial manufacturers around the world
including: Wacker Chemie - Munich, Germany; Nihon Shokuhin Kako - Tokyo, Japan;
Roquette Freres - Le Strem, France; Cerestar Inc. - Hammond IN, USA. At the end
of 2002, CTD became the exclusive distributor in North America of the CD
products manufactured by Cyclolab R&D Labs in Budapest, Hungary. The Company
does not manufacture cyclodextrins.

We have introduced many new products into our basic line of CDs and CD
complexes--liquid preparations of CDs; relatively unprocessed, less expensive
mixtures of the natural CDs; naturally modified CDs (glucosyl and maltosyl); and
finally, excess production of custom complexes when those items are not
proprietary or restricted by the customer.

Business Strategy

Our strategy has been and will continue to be to generate profitable
revenue through sales of CD related products.

From inception through the current year, sales of CDs and CD derivatives
have been sufficient to provide the necessary operational profitability to
sustain the Company. Since these materials were simply purchased and resold,
they had the least value-added attributes.

Presently, sales of CD complexes represent a majority of the Company's
product sales revenues. Transition to the more value-added complexes continues
and is desirable for increased profitability since higher margins can be
maintained for these products. We have increased our list of major customers
from 3 to 4 thereby continuing to reduce our dependency on sales to a very small
core of repeat purchases.

We intend to increase our business development efforts in the food additive
and personal products industries while continuing to build on our successes in
the pharmaceutical industry.

Business development on behalf of the Company's clients will include the
following: (i) negotiation of rights and/or licenses to CD-related inventions;
(ii) consultation with manufacturers to establish customized manufacturing
specifications; (iii) patentability assessments and strategic planning of patent
activities; (iv) trade secret strategies; (v) regulatory interface; and (vi)
strategic marketing planning.

The Company believes its competitive advantage lies in its experience and
know how in the use and application of CDs, areas in which it believes it has
few equals.

In addition to its licensing efforts, the Company intends to coordinate
research studies in which it will retain a portion of the rights created as a
result of the research work supported.

Assuming the availability of funds, the Company will negotiate licensing
rights to its own selected inventions. Because of its comprehensive technical
and patent database for CD-related inventions, the Company believes it is
uniquely positioned to take advantage of constantly evolving licensing
situations.

Marketing Plan

We believe that the failure of businesses to exchange information about CD
molecules has hindered a more rapid commercialization of CDs as safe excipients.
We believe that our philosophy of partnering and sharing will act as a catalyst
to create momentum overcoming the inertia created by the previous conservatism
and secrecy.

Our sales have always been direct, volatile and driven by the acceptance of
CD's as beneficial excipients. Arrangements with large laboratory supply
companies and several diagnostic companies have provided a strong sales base,
that continues to diversify.

The Company has taken advantage of the propensity of researchers to use the
Internet to gather information about new products by establishing a WEB Page and
"site" on the world-wide web and obtaining a unique and descriptive domain name:
"cyclodex.com".

We intend to work with clients in countries whose current regulatory views
include CDs as natural products acting as excipients to introduce beneficial
pharmaceuticals improved by CDs.

Along with the new products themselves, the Company has created a
licensable mark that may be used by other manufacturers wishing to take
advantage of the improved aqueous delivery afforded by Trappsol CDs.

We intend to generate additional revenue through obtaining rights to
certain patents that we will sublicense to appropriate organizations or that we
will use to develop our own proprietary products. Revenue would then be expected
to result from sub-licensing royalties, sales of CD complexes to be used in the
newly developed pharmaceuticals, and finally from the sales of the products to
end-users.

Assuming an ongoing successful process of development, approval and
adoption of CDs and CMCDs for pharmaceutical applications, the Company's
objective is to initiate dialogue and be well prepared for partnerships with
major food companies. Price is a primary concern in this market, but unlike
pharmaceuticals where FDA permission for clinical testing may be obtained before
actual FDA product approval, food companies cannot feed experimental
formulations to test panels of consumers until the ingredients, i.e., the CDs,
receive approval for human consumption. Therefore, the Company will work with
the food companies and key university food research groups to initially evaluate
non-taste applications. These questions will initially be explored using NCDs
since commercial adoption will depend heavily upon the price of the CD selected
and NCDs will always be the least expensive. The benefits derived from the use
of CDs with expensive ingredients (e.g., flavors, fragrances)have already become
accepted commercial uses for CMCDs (chemically modified CDs) and (naturally
modified CD's) NMCDs.

Competition

The Company is currently a leading consultant in determining manufacturing
standards and costs for CDs and CMCDs. However, there will always exist the
potential for competition in this area since no patent protection can be
comprehensive and forever exclusive. Nevertheless, there is a perceived barrier
to entry into the CD industry because of the lack of general experience with CD
complexation procedures. The Company has established a strong business
relationship with one of the experts in this field -- Cyclolab in Hungary -- and
has utilized the services and expertise of this laboratory. The Company believes
this relationship provides a significant marketing lead time, and combined with
a strong marketing presence, will give the Company a two to three year lead time
advantage over its competitors.

In 2002 we became the exclusive North American distributor of the CD
products manufactured by Cyclolab. We intend to form additional business
relationships with Cyclolab in Hungary by creating a Cyclolab-USA laboratory
facility and thereby strengthen our competitive advantage. Discussions between
the principals of Cyclolab and CTD have been ongoing for more than 5 years.
Potential relationships which have been discussed include joint venture
arrangements, the Company's outright acquisition of Cyclolab and the employment
of Cyclolab personnel to create Cyclolab-USA. There is no assurance that the
Company will be able to reach a formal business relationship with Cyclolab.

Government Regulation

Under the Federal Food, Drug and Cosmetic Act ("Food and Drug Act"), the
Food and Drug Administration ("FDA") is given comprehensive authority to
regulate the development, production, distribution, labeling and promotion of
food and drugs. The FDA's authority includes the regulation of the labeling and
purity of the Company's food and drug products. In the event the FDA believes
that any company is not in compliance with the law, the FDA can institute
proceedings to detain or seize products, enjoin future violations or assess
civil and/or criminal penalties against that Company.

The FDA and comparable agencies in foreign countries impose substantial
requirements upon the introduction of therapeutic drug products through lengthy
and detailed laboratory and clinical testing procedures, sampling activities and
other costly and time consuming procedures. The extent of potentially adverse
government regulations which might arise from future legislation or
administrative action cannot be predicted.

Under present FDA regulations, FDA defines drugs as "articles intended for
use in the diagnosis, cure, mitigation, treatment or prevention of disease in
man." The Company's product development strategy is at first to introduce
products that will not be regulated by the FDA as drugs because all of its
ingredients are natural products or are generally regarded as safe (GRAS) by the
FDA. The Company is continually updated by counsel as to changes in FDA
regulations that might affect the use of and claims for these products. There is
no assurance that the FDA will not take the position that the Company's food and
nutritional supplement products are subject to requirements relating to drug
development and sale. The effect of such determination could be to limit or
prohibit distribution of such products.

Employees

The Company employed three persons on a full time basis. None of the
Company's employees belong to a union. The Company believes relations with its
employees are good.

Item 2. Description of Properties.

In 2000, the Company bought approximately 40 acres in Alachua County,
Florida, for a purchase price of $210,000 which was paid for in part by a new
first mortgage of $150,000. The property had been developed in part as a
mushroom growing facility. The Company has discontinued mushroom growing
operations, but continues to use the property as its corporate headquarters. Its
present 6,000 sq.ft. facility is expected to be adequate to house the Company's
operations for the foreseeable future.

Item 3. Legal Proceedings.
None

Item 4. Submission of Matters to a Vote of Security Holders.
None

Part II

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

In October 1994, the Company's securities began trading on the OTC Bulletin
Board and in the over-the-counter market "pink sheets" under the symbol CTDI. In
2000, CTDI did a 2 for 1 split of its common shares from approximately 2.3
million to 4.6 million issued and outstanding. In conjunction with that
restructuring, we changed the name of CTDI to CTD Holdings, Inc; CTDI was then
incorporated as a Florida corporation and became a wholly owned subsidiary of
CTD Holdings, Inc. In 2000 CTD Holdings, Inc. changed its trading symbol to
CTDH.OB and currently trades on the OTC Bulletin Board as CTDH.OB. Since the
commencement of trading of the Company's securities, there has been an extremely
limited market for its securities. The following table sets forth high and low
bid quotations for the quarters indicated as reported by the OTC Bulletin Board.

High Low

2003 First Quarter $ 0.083 $ 0.081
Second Quarter $ 0.071 $ 0.071
Third Quarter $ 0.049 $ 0.048
Fourth Quarter $ 0.353 $ 0.318

2004 First Quarter $ 0.424 $ 0.370
Second Quarter $ 0.249 $ 0.229
Third Quarter $ 0.095 $ 0.086
Fourth Quarter $ 0.061 $ 0.057

Over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions and may not represent actual
transactions.

Holders

As of December 31, 2004, the number of holders of record of shares of
common stock, excluding the number of beneficial owners whose securities are
held in street name was approximately 76.

Dividend Policy

The Company will not pay any cash dividends on its common stock in 2004
because it intends to retain its earnings to finance the expansion of its
business. Thereafter, declaration of dividends will be determined by the Board
of Directors in light of conditions then existing, including without limitation
the Company's financial condition, capital requirements and business condition.

Equity Compensation Plan Information

Number of Number of
securities to be securities remaining
issued upon exer- available for future
cise of outstand- Weighted-average issuance under equity
ing options, exercise price of compensation plans
warrants, and outstanding options, (excluding securities
Plan category and rights warrants and rights reflected in column (a))
(a) (b) (c)
-------------------- ------------------- -------------------- ------------------------

Equity compensation
plans approved by None Not Applicable Not Applicable
security holders

Equity compensation
plans not approved * * * * * * * * * * * See Note 1 to Table (below) * * * * * * * * * * *
by security holders
-------------------- -------------------- ------------------------
Total
==================== ==================== ========================

Notes to Equity Compensation Plan Table:

Note 1 -- The Company has employment agreements terminating on December 31, 2005
with two employees. These agreements require the Company to compensate these
employees, collectively, with $6,000 per month in restricted common shares of
the Company based on the closing value of the Company's shares on the last day
of the month in which the shares are awarded

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

Introduction

CTD Holdings, Inc. (referred to as the "Company," "CTD," or in the first person
notations of "we," "us," and "our") began operations in 1990. Our revenues are
principally derived from retail sales of cyclodextrins and cyclodextrin
complexes. Our sales are primarily to major chemical supply houses around the
world, pharmaceutical companies, and food companies for research and development
and to diagnostics companies. We acquire our products principally from outside
the United States, largely from Japan and Hungary, but are gradually finding
satisfactory supply sources in the United States. While we enjoy better supply
prices from outside the United States, rising shipping costs are making domestic
sources more competitively priced. To add value to our products, we maintain a
comprehensive database of patented and patent pending uses of cyclodextrins from
the United States. We also maintain less comprehensive database that includes
patents issued in many other countries including Japan, Gemany and others. This
information is available to our customers. We also offer our customers our
knowledge of the properties and potential new uses of cyclodextrins and
complexes.

As most of our customers use our cyclodextrin products in their research and
development activities, their ordering from us is unpredictable in regards to
timing, product mix and volume. We also have four major customers whom have a
significant effect on our revenues when they increase or decrease their research
and development activities that use cycldextrins. We keep in constant contact
with these customers as to their cyclodextrin needs so we can maintain the
proper inventory composition and quantity in anticipation of their needs. The
sales to major customers and the product mix and volume of products sold has a
significant effect on our revenues and gross profit. These factors contribute to
our significant revenue volatility from quarter to quarter and year to year.

Liquidity and Capital Resources

Our cash and cash equivalents increased to approximately $94,000 as of December
31, 2004 compared to approximately $8,000 as of December 31, 2003. Our cash flow
from operations for 2004 was $205,000 compared to $65,000 for 2003. While we
reported a net loss in 2004 of $561,000, we had $708,000 in noncash expenses.
The increased cash flow from operations is due primarily to an increase in sales
of cyclodetrins resulting in an increase in gross profit of $37,000, and
favorable working capital changes, including a decrease in accounts receivable
of $75,000 due to the collection of a large December 2003 sale in 2004, a
decrease in inventory and increase in accounts payable due to normal operating
fluctuations.

We believe our working capital is sufficient to run our operations at current
and expected future operating levels into the near future. We do not require
capital in the next twelve months for normal operations. However, we require
additional funding to implement our acquisition strategy. Our acquisition
strategy includes raising $1,500,000 in the next twelve months. Our first
acquisition will require approximately $500,000. We believe we can fund the
initial costs of raising capital and start our acquisition strategy from
existing working capital.

Controlling cash expenses continues to be management's primary fiscal tool.
However, growth requires increased expenditures and we feel that it is
appropriate during the current growth stage to engage consultants that can help
the Company in financial areas outside its expertise, accepting that these fees
will act to reduce profitability. We are working hard to increase revenues to
balance these new expenses, but cannot be sure that such effort will be enough
in the short term to sustain financial performance like that of the recent past.
Our cash SG&A expenses for 2004, as a percentage of sales, have decreased from
2003.

During 2004, we acquired a sports memorabilia collection from our President. We
obtained an appraisal on the collection for $400,000. We issued stock with a
fair value equal to approximately 70% of the appraised value (we bought the
Collection at a 30% discount from the appraised value). We also engaged a third
party consultant to liquidate the Collection, which has provided us with
additional cash flow with minimal associated cash expenses.

During 2003, we began improvements and renovations of our corporate office and
have invested $123,000 through December 31, 2004. We are committed to a Research
Park facility for the 40-acre site. The office renovations will be followed by
improved security operations and modest guest facilities. Contingent on the
Company's ability to financially support modest expansions that will lead to a
formal site plan, we anticipate spending at least another $100,000 over the next
four quarters to put the Company in a position to initiate a 5-year plan for a
new Cyclodextrin Research Park.

In December 2004, the Company issued 3,500,000 shares of its common stock for
$3,500 to a financial consultant. The Company recognized an expense of $206,500,
which is the difference between the amount paid and the fair value of the stock
issued based on the trading price on the date of the stock purchase. The Company
has agreed to register the stock by filing a registration statement by June 19,
2005 with an effective date no later than August 19, 2005. If the registration
is not filed and effective by the dates indicated, the Company is required to
issue an additional 175,000 shares of common stock for each month or part
thereof until the registration statement is filed or becomes effective. The
Company is currently in the process of preparing a registration statement to be
filed.

In May 2004, we entered into a three-month agreement with a consultant regarding
capital raising and strategic options to modify the Company's capital structure
in order to expedite planned acquisitions. The agreement automatically renews
monthly unless cancelled by either party with 30 days notice. We paid $15,000
upon entering the agreement and will pay $3,500 per month, for each month the
contract is in force, which we expensed when paid. We are required to pay the
consultant 7.5% of any capital raised and 5% of any other capital transaction
resulting within two years of the introduction by the consultant. We cancelled
this agreement effective December 31, 2004 and no additional amounts are due.

In April 2004, we entered into a one-year consulting agreement as part of a
package designed to create additional revenue. We acquired a collection of
sports memorabilia from our majority shareholder and President for 1,029,412
shares of common stock. While we received a $400,000 appraisal on the
collection, we recorded this asset for $106,000, which represents our majority
shareholder's cost basis. We also engaged a consultant to liquidate that

collection for not less than 75% of its book value as stated in any of the
leading collectibles industry guide books. The consultant was issued 250,627
shares of common stock valued at $100,250, which we expensed. We agreed to an
option whereby the consultant may acquire the entire collection for $200,000. We
recorded the fair value of this option ($204,000) as a liability and a charge to
operations.

The Company has filed Form S-1 with the U.S. Securities and Exchange Commission
for a shelf registration of 10,000,000 shares of common stock to be used for
business acquisition purposes.

We issued 809,611 shares of our common stock to our President on February 1,
2005, for compensation earned under an employment agreement. The shares had a
fair value of $40,481 on January 31, 2005.

We have no off-balance sheet arrangements at December 31, 2004.

Results of Operations and Critical Accounting Policies and Estimates

The results of operations are based on the preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the
United States. The preparation of consolidated financial statements requires
management to select accounting policies for critical accounting areas as well
as estimates and assumptions that affect the amounts reported in the
consolidated financial statements. The Company's accounting policies are more
fully described in Note 1 of Notes to Consolidated Financial Statements.
Significant changes in assumptions and/or conditions in our critical accounting
policies could materially impact the operating results. We have identified the
following accounting policies and related judgments as critical to understanding
the results of our operations.

Baseball Memorabilia Collection Asset

The recoverability of our baseball memorabilia collection asset is evaluated
annually or more frequently if impairment indicators exist. Indicators of
impairment include losses realized on sales and our future operating plans. If
impairment indicators exist, we evaluate the recoverability of the asset using
an overall collection basis based on undiscounted expected future cash flows
based on individual collection piece values published in auction-house
guidebooks and/or reputable trade publications and price guides, less estimated
costs to sell the collection. The recorded value for the collection not expected
to be recovered through undiscounted future cash flows is written down to
current fair value, which is generally determined from estimated discounted
future net cash flows. We have not recorded impairment allowances as of December
31, 2004. Should the fair value of these assets decline or if our future
operating plans change, we may be required to record an impairment charge that
could be significant.

Long-lived Assets

The recoverability of long-lived assets is evaluated annually or more frequently
if impairment indicators exist. Indicators of impairment include historical
financial performance, operating trends and our future operating plans. If
impairment indicators exist, we evaluate the recoverability of long-lived assets
on an operating unit basis (e.g., an individual restaurant) based on
undiscounted expected future cash flows before interest for the expected
remaining useful life of the operating unit. Recorded values for long-lived
assets that are not expected to be recovered through undiscounted future cash
flows are written down to current fair value, which is generally determined from
estimated discounted future net cash flows for assets held for use or net
realizable value for assets held for sale.

At December 31, 2004, we have idle buildings located on the same property as our
corporate offices that were used in our former mushroom farming operation. The
carrying value of these idle long-lived assets is $110,000. We have determined
the fair value of these assets exceeds this carrying value based on recent real
estate appraisal. We continue to depreciate the assets over their estimated
useful life. Should the value of these assets decline, we may be required to
record an impairment charge that could be significant.

Valuation Allowance on Deferred Tax Assets

SFAS 109, "Accounting for Income Taxes" requires that deferred tax assets be
evaluated for future realization and reduced by a valuation allowance to the
extent we believe a portion will not be realized. We consider many factors when
assessing the likelihood of future realization of our deferred tax assets
including our recent cumulative earnings experience for 2001 and 2002,
expectations of future taxable income, the carry-forward periods available to us
for tax reporting purposes, and other relevant factors. At December 31, 2004,
our net deferred tax assets are $430,000, comprised principally of net operating
loss carryforwards (NOLs), with the remaining portion related to temporary
timing differences between tax and financial reporting. Classification of
deferred tax assets between current and long-term categories is based on the
expected timing of realization, and the valuation allowance is allocated on a
prorata basis.

We had a net loss for 2004, which increased our NOL and deferred tax assets. We
also increased our valuation allowance an equal amount (total valuation
allowance increased to 48% from 43%), which resulted in no benefit recognized
for 2004. In 2003, we reduced our valuation allowance from 100% to 43%. The
range of possible judgments relating to the valuation of our deferred tax asset
is very wide. For example, had we determined that the weight of available
evidence did not support a decision that a portion of our deferred tax assets
will be realized, the amount recorded to "Income tax (expense) benefit" would
have been an expense of $225,000 for 2004 (rather than $0) for 2004.
Alternatively, if we had concluded that the weight of available evidence
supported a decision that substantially all of our deferred tax assets may be
realized, we would have recorded a substantial income tax benefit in our
statement of operations.

Significant judgment is required in making this assessment, and it is very
difficult to predict when, if ever, our assessment may conclude that the
remaining portion of our deferred tax assets is realizable.

2004 Compared to 2003

Total product sales for 2004 were $465,000, a 18% increase over 2003 sales of
$395,000. Our major customers continue to be repeat purchasers. In 2003, 3 major
customers accounted for 62% of our sales; in that year the largest purchaser
accounted for 43% of sales. In 2004, 4 major customers accounted for 80% of our
sales; the largest purchaser only accounted for 24% of sales.

Our gross profit margin of 83% remained consistently strong for 2004 compared to
88% for 2003. Changes in the product mix in sales has a significant effect on
our overall gross profit percentage, but management expects our gross profit to
remain in the 80% range.

Our SG&A expenses increased to $665,000 in 2004 from $287,000 in 2003, primarily
as a result of stock based compensation to officers and consultants. Cash
expenses increased due to additional consulting, legal and accounting fees

incurred as a result of the Company's acquisition of the baseball memorabilia
collection, issuing of common stock, and increased merger and acquisitions
activity. We have evaluated several acquisition candidates in which we engaged
consultants, legal counsel and accountants to evaluate these opportunities and
advise us regarding the terms and conditions in potential contracts. We also
incurred additional expenses (travel, lodging, etc) to visit with potential
targets to travel more frequently to meet with the selected candidates.

For 2004, the Company has employment agreements with two officers for total
monthly salaries of $4,900. In addition, the officers are awarded shares of 144
restricted common stock each month. The number of shares due is equal to $6,000
divided by eighty percent of the closing price of the Company's common stock on
the last day of each month. The Company recognizes an expense equal to the fair
value of the stock determined using the average stock closing trading price for
the month multiplied by number of shares awarded for that month. The stock is
subject to trading restrictions under Rule 144. For 2004, the Company awarded
971,533 shares and recognized an expense of $109,000 for stock awarded under
these agreements. Both agreements have been extended through December 31, 2005.

In April 2004, we acquired a collection of sports memorabilia from our majority
shareholder and President. We also engaged a consultant to liquidate the
collection. The consultant was issued 250,627 shares of common stock valued at
$100,250, which was expensed. We also issued the consultant an option to acquire
the entire collection for $200,000. We recorded the fair value of this option
($204,000) as a charge to operations during 2004. We may be required to pay the
consultant $50,000 after three months and an additional $50,000 after six months
- both payments contingent upon the Company receiving cumulative payments from
the sales of the Collection totaling $150,000. The Company has the option of
paying the additional compensation, if any, by issuing additional common stock
to the consultant. If the target sales amounts are met, the Company will value
the stock when earned and record an expense through operations. The Company
recognized $27,000 in gains from the sales of the collection in 2004.

As a result of an agreement in May 2004 with two financial consultants advising
us on corporate structure matters, the Company issued 343,137 shares of common
stock to the consultants under the terms of the agreement and charged operations
for the fair value of the stock issued ($17,157).

We expect significant increases in future legal and accounting fees as the
result of implementing our planned merger and acquisition strategy.

For 2003, based on our profitability for 2003 and 2002, we revaluated our
valuation allowance on our deferred tax asset. Our deferred tax asset is based
on our net operating loss carryforward. We determined that our valuation
allowance should be reduced form 100% to 43%, resulting in an income tax benefit
of $225,000 for 2003. For 2004, we incurred a loss and an additional NOL. We
increased our valuation allowance to 48%, resulting in no income tax expense or
benefit or change in the deferred tax asset for 2004.

We recognized a net loss for 2004 of $(561,000) compared to net income of
$272,000 for 2003.

We will continue to introduce new products that will increase sales revenue and
implement a strategy of creating or acquiring operational affiliates and/or
subsidiaries that will use CD's in herbal medicines, waste-water remediation,
pharmaceuticals, and foods. We also intend to pursue exclusive relationships
with major CD manufacturer(s) and specialty CD labs to distribute their
products. We continue to be the exclusive distributor in North America of the CD
products manufactured by Cyclolab Research Laboratories in Budapest, Hungary.

In keeping with its commitment to use the internet as a major advertising and
public relations outlet, we continue to maintain our web site. This asset has
been instrumental in creating and maintaining a worldwide leadership role for us
in the implementation of research and commercialization of CD applications. We
believe that the maintenance and growth of our web site will return that
investment many times.

Forward-looking Statement

All statements other than statements of historical fact in this report are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, and are based on management's current expectations of the
Company's near term results, based on current information available and
pertaining to the Company. The Company assumes no obligation to update publicly
any forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties, including, but not limited to, the following:
demand for Cyclodextrins; changes in governmental law and regulations
surrounding various matters, such as labeling disclosures; production and
pricing levels of important raw materials; and difficulties of delays in the
development, production, testing and marketing of products; product margins and
customer product acceptance.

Item 7. Financial Statements

[LETTERHEAD OF JAMES MOORE & CO.]

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
CTD Holdings, Inc.:

We have audited the accompanying consolidated balance sheet of CTD Holdings,
Inc. and subsidiaries as of December 31, 2004, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 2004 and 2003. 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 the standards of the Public Company
Accounting Oversight Board (United States). 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 financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CTD Holdings, Inc.
and subsidiaries as of December 31, 2004, and the results of its operations and
its cash flows for the years ended December 31, 2004 and 2003, in conformity
with accounting principles generally accepted in the United States of America.

/s/James Moore & Company
January 21, 2005
Gainesville, Florida

F - 1

CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2004

ASSETS

CURRENT ASSETS
Cash and cash equivalents $ 94,371
Certificate of deposit 40,333
Accounts receivable 59,022
Inventory 50,999
Deferred tax asset 25,000
Loan to shareholder 2,084
-------------
Total current assets 271,809
-------------
PROPERTY AND EQUIPMENT, NET 431,165
-------------
OTHER
Intangibles, net 12,879
Deferred tax asset 200,000
Sports memorabilia collection 94,045
-------------
Total other assets 306,924
-------------
TOTAL ASSETS $ 1,009,898
=============

The accompanying notes to consolidated financial statements are an integral part
of this statement.

F-2

CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2004
(Continued)

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses $ 23,840
Current portion of long-term debt 8,441
Current portion of shareholder loan 20,000
Call option on sports memorabilia collection 203,470
-------------
Total current liabilities 255,751
-------------
LONG-TERM LIABILTIES
Long-term debt, less current portion 152,600
Shareholder loan, less current portion 33,598
-------------
Total long-term liabilities 186,198
-------------

STOCKHOLDERS' EQUITY
Class A common stock, par value $.0001 per share,
100,000,000 shares authorized, 10,956,517 shares
issued and outstanding 1,096
Preferred stock, par value $.0001 per share,
5,000,000 shares authorized; series A, 1 share
issued and outstanding (Note 11) -

Additional paid-in capital 2,615,288
Accumulated deficit (2,048,435)
-------------
Total stockholders' equity 567,949
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,009,898
=============

The accompanying notes to consolidated financial statements are an integral part
of this statement.

F-3

CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

2004 2003
------------- ------------
PRODUCT SALES $ 464,692 $ 394,532

COST OF PRODUCTS SOLD 78,827 45,433
------------- ------------
GROSS PROFIT 385,865 349,099

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 664,779 286,724
------------- ------------

SPORTS MEMORABILIA COLLECTION
Gain on sales 25,332 -
Other income (expense) (307,720) -
------------- ------------
(282,388) -
------------- ------------

OTHER INCOME (EXPENSE)
Investment and other income 14,688 6,973
Interest expense (12,027) (22,599)
Loss on disposal of equipment (2,852) -
------------- -----------
Total other income (expense) (191) (15,626)
------------ -----------
INCOME (LOSS) BEFORE INCOME TAXES (561,493) 46,749

INCOME TAX BENEFIT (EXPENsE) - 225,000
------------ -----------
NET INCOME (LOSS) $ (561,493) $ 271,749
============ ===========

NET INCOME (LOSS) COMMON SHARE: $ (.08) $ .05
============ ===========

Weighted average number of
common shares outstanding 7,232,194 5,004,919
============ ===========

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

F-4

CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

COMMON STOCK PREFERRED STOCK

ADDITIONAL TOTAL
PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES PAR VALUE SHARES PAR VALUE CAPITAL DEFICIT EQUITY
----------- ------------ -------- ---------- ------------ ------------- ------------
Balance, December 31, 2002 4,791,220 $ 480 - $ - $ 1,954,498 $ (1,758,691) $ 196,287

Shares issued for services 1,000,000 100 - - 49,900 - 50,000

Company expenses paid by
stockholder - - - - 25,000 - 25,000

Net Income - - - - - 271,749 271,749
------------ ----------- -------- ---------- ------------ ------------ -----------

Balance, December 31, 2003 5,791,220 580 - - 2,029,398 (1,486,942) 543,036

Shares issued for service 100,000 10 - - 39,990 - 40,000

Shares issued for acquisition of
baseball memorabilia collection 1,029,412 103 - - 105,897 - 106,000

Shares issued in conjuction with
liquidation agreement of baseball
memorabilia collection 250,627 25 - - 100,225 - 100,250

Fair value of stock options issued
in conjuction with liquidation
agreement of baseball memorabilia
collection - - - - 4,000 - 4,000

Exchange of common shares for
preferred share (1,029,412) (103) 1 - 103 - -

Shares issued for services 343,137 34 - - 17,122 - 17,156

Sale of stock 3,500,000 350 - - 3,150 - 3,500

Expense related to stock sold
below fair value - - - - 206,500 - 206,500

Shares issued under
employment agreements 971,533 97 - - 108,903 - 109,000

Net loss - - - - - (561,493) (561,493)
------------ ------------ -------- --------- ------------ ------------ ----------
Balance, December 31, 2004 10,956,517 $ 1,096 1 $ - $ 2,615,288 $ (2,048,435) $ 567,949
============ ============ ======== ========= ============ ============ ==========

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

F-5

CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

DECEMBER 31, 2004 AND 2003
Increase (Decrease) in Cash and Cash Equivalents

2004 2003
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (561,493) $ 271,749
----------- -----------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:

Depreciation and amortization 27,762 28,543
Gain on sale of sports memorabilia collection (25,332) -
Loss on disposal of equipment 2,852 -
Deferred income taxes - (225,000)
Bad debts - 4,854
Stock issued for services 363,906 50,000
Company expenses paid by stockholder - 25,000
Stock compensation to employees 109,000 -
Call option-sports memorabilia collection 203,470 -
Fair value of stock options issued 4,000 -
Increase or decrease in:
Accounts receivable 75,000 (97,741)
Inventory 28,184 (15,037)
Accounts payable and accrued expenses (21,951) 22,596
---------- ----------
Total adjustments 766,891 (206,785)
---------- ----------
Net cash provided by operating activities 205,398 64,964
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of sports memorabilia collection 37,287 -
Purchase of property and equipment (80,882) (54,716)
Purchase of certificate of deposit (40,333) -
Purchase of intangibles - (11,174)
---------- ----------
Net cash used for investing activities (83,928) (65,890)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on long-term debt (9,903) (8,628)
Proceeds from sale of stock 3,500 -
Payments on loan payable to stockholder (26,369) (28,933)
Loan to shareholder (3,500) -
Received from shareholder 1,416 -
---------- ----------
Net cash used for financing activities (34,856) (37,561)
---------- ----------

Net increase (decrease) in cash and cash equivalents 86,614 (38,487)

CASH AND CASH EQUIVALENTS, beginning of year 7,757 46,244
---------- ----------
CASH AND CASH EQUIVALENTS, end of year $ 94,371 $ 7,757
========== ==========

F-6

CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

DECEMBER 31, 2004 AND 2003
Increase (Decrease) in Cash and Cash Equivalents

(Continued)

2004 2003
------------ ------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 8,996 $ 13,472
=========== ============
Cash paid for income taxes $ - $ -
=========== ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITY

Stock issued in acquisition of sports memorabilia
collection $ 106,000 $ -
=========== ============

Common stock issued in connection with liquidation
of sports memorabilia collection $ 100,250 $ -
=========== ============

Vehicle acquired with debt financing $ - $ 14,881
=========== ============
Common stock issued for services $ 472,906 $ 50,000
=========== ============
Company expenses paid by shareholder $ - $ 25,000
=========== ============

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

CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of CTD
Holdings, Inc. and Subsidiary (the Company) that affect the accompanying
consolidated financial statements:

(a) ORGANIZATION AND OPERATIONS - The Company was incorporated in August
1990, as a Florida corporation with operations beginning in July 1992. The
Company is engaged in the marketing and sale of cyclodextrins and related
products to food, pharmaceutical and other industries. The Company also provides
consulting services related to cyclodextrin technology.

(b) BASIS OF PRESENTATION - The consolidated financial statements include
the Company and its wholly owned subsidiary. All intercompany accounts and
transactions have been eliminated.

(c) CASH AND CASH EQUIVALENTS - For the purposes of reporting cash flows,
the Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

(d) ACCOUNTS RECEIVABLE - Accounts receivable are stated at the amount
management expects to collect from outstanding balances. Based on management's
assessment of the credit history with customers having outstanding balances and
current relationships with them, it has concluded that realization losses on
balances outstanding at year-end will be immaterial.

(e) PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost.
Depreciation on property and equipment is computed using primarily the
straight-line method over the estimated useful lives of the assets, which range
from three to forty years. In accordance with Statement of Financial Accounting
Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived
Assets", the Company periodically reviews its long-lived assets to determine if
the carrying value of assets may not be recoverable. If an impairment is
identified, the Company recognizes a loss for the difference between the
carrying amount and the estimated value of the asset.

(f) INVENTORY - Inventory consists of cyclodextrin products purchased for
resale and chemical complexes. Inventory is recorded at the lower of cost
(first-in, first-out) or market.

(g) INTANGIBLES - Intangible assets consist of loan costs and other
intangibles recorded at cost. Intangible are amortized using the straight-line
method over their respective estimated useful lives.

(h) SPORTS MEMORABILIA COLLECTION - The sports memorabilia collection
(Collection) was acquired from the Company's President and majority shareholder
in 2004 in exchange for common stock of the Company (see Note 10). The
Collection consists principally of baseball cards, but also includes a variety
of other collectible sport memorabilia. The Collection was recorded at the cost
basis of the President and majority shareholder, which was less than the
estimated fair value. The Company records gains as the Collection is sold and
cash is received, net of expenses. The cost of the Collection is expenses at
26.5% of gross proceeds from the sale of the Collection. The 26.5% cost
allocation is based on the recorded cost of the Collection divided by the
estimated fair value of the Collection. The Company periodically reviews the
fair value of the Collection for impairment.

(i) REVENUE RECOGNITION - Revenues from product sales are recognized when
the following four revenue recognition criteria are met: persuasive evidence of
an arrangement exists, delivery has occurred or services have been rendered, the
selling price is fixed or determinable, and collectibility is reasonably
assured. Outbound shipping charges to customers are included in product sales.
Product sales and shipping revenues, net of discounts, returns and allowances
are recorded when the products are shipped and title passes to customers. Sales
to customers are made pursuant to our standard terms and conditions that
provides for transfer of both title and risk of loss upon our delivery to the
carrier, which is commonly referred to as "F.O.B. Shipping Point." Return
allowances are infrequent and are recorded when we become aware of the return.
Periodically, we provide incentive offers to our customers to encourage
purchases. Such offers are primarily percentage discounts off current purchases
for certain products we are promoting or for larger volume orders. Current
discount offers, when accepted by our customers, are treated as a reduction to
the purchase price of the related transaction. Current discount offers are
presented as a net amount included in product sales.

(j) ADVERTISING - Advertising costs are charged to operations when
incurred.

(k) START-UP COSTS - Start-up costs are expensed as incurred.

(l) NET INCOME (LOSS) PER COMMON SHARE - Net income (loss) per common share
is computed in accordance with the requirements of Statement of Financial
Accounting Standards No. 128 (SFAS 128). SFAS 128 requires net income (loss) per
share information to be computed using a simple weighted average of common
shares outstanding during the periods presented.

(m) RECLASSIFICATIONS - Certain amounts in the 2003 financial statements
have been reclassified for comparative purposes to conform with the 2004
presentation.

(n) NEW ACCOUNTING PRONOUNCEMENTS - The Financial Accounting Standards
Board ("FASB") has issued several new standards which have implementation dates
subsequent to the Company's year end. Management does not believe that any of
these new standards will have a material impact on the Company's financial
position, results of operations or cash flows.

(o) USE OF ESTIMATES - The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.

(2) COMMITMENTS AND CONTINGENCIES

In 2004, the Company entered into employment agreements with two officers for
total monthly salaries of $4,900. In addition, the officers are awarded shares
of common stock each month. The number of shares due is equal to $6,000 divided
by eighty percent of the closing price of the Company's common stock on the last
day of each month. The Company recognizes an expense equal to the fair value of
the stock determined using the average stock closing trading price for the month
multiplied by number of shares awarded for that month. The stock is subject to
trading restrictions under Rule 144. For 2004, the Company awarded 971,533
shares and recognized an expense of $109,000 for stock awarded under these
agreements. Both agreements have been extended through December 31, 2005.

In 2003, the Company issued 1,000,000 shares registered under Form S-8 to its
President as a bonus. The stock was valued at $50,000 when awarded and was
expensed.

The Company entered into an agreement with two financial consultants in May
2004. Upon amending the Articles of Incorporation for Series A Preferred Stock
as described in Note 11, the Company issued 343,137 shares of common stock
registered under Form S-8 to the consultants under terms of the agreement and
charged expense for $17,156 the fair value of the stock on the measurement date.

In March 2004, the Company entered into a one-year agreement with a consultant
regarding construction and specialized concrete formulations and issued 100,000
shares of stock valued at $40,000 at the date of issuance, which the Company
expensed in the first quarter of 2004. The stock was registered using Form S-8.
The consultant is related to the president and majority shareholder of the
Company.

In 2004, the Company entered into an agreement with a consultant regarding
capital raising and strategic options. The agreement was also terminated during
2004. The Company paid the consultant $39,500, which was expensed. The Company
is required to pay the consultant 7.5% of any capital raised and 5% of any other
capital transaction resulting within two years of the introduction by the
consultant.

In 2003, the Company engaged a consultant to perform services over a six month
period. The majority stockholder (and President) transferred 500,000 shares of
CTDH stock valued at $25,000 to the consultant on behalf of the Company. The
consulting fee was expensed by the Company in 2003 and recorded as a capital
contribution received from the stockholder.

Rent expense under all operating leases was $3,739 and $6,345 for 2004 and 2003,
respectively.

(3) PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2004, consists of:

Land $ 80,000
Buildings and improvements 211,864
Machinery and equipment 78,407
Office furniture and equipment 50,627
------------
420,898

Less: accumulated depreciation 112,557
------------
308,341

Construction in progress 122,824
------------

Property and equipment, net $ 431,165
============

The carrying value of remaining idle long-lived assets related to a former
mushroom farming operation was approximately $ 110,000 at December 31, 2004.

(4) CONCENTRATIONS OF CREDIT RISK:

Significant concentrations of credit risk for all financial instruments owned by
the Company, are as follows:

(a) DEMAND AND CERTIFICATE OF DEPOSITS - The Company has demand and
certificate of deposits in financial institutions that are insured by the
Federal Deposit Insurance Corporation up to $100,000. At December 31, 2004, the
demand and certificate deposit bank balance was $135,588. The Company has no
policy of requiring collateral or other security to support its deposits.

(b) ACCOUNTS RECEIVABLE - The Company's accounts receivable consist of
amounts due primarily from food and pharmaceutical companies located primarily
in the United States and the United Kingdom. Three major customers accounted for
85% of the accounts receivable balance at December 31, 2004. The Company has no
policy requiring collateral or other security to support its accounts
receivable.

F-8

CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

(5) MAJOR CUSTOMERS AND SUPPLIERS:

Sales to four customers in 2004 represented approximately 62% of total sales.
Sales to three customers in 2003 represented approximately 74% of total sales.

Purchases from two suppliers in 2004 represented approximately 80% of total
costs of products sold. Purchases from two suppliers in 2003 represented
approximately 80% of total costs of products sold.

The Company has only one source for certain manufactured inventory. However, the
Company has manufactured these products in the past and could do so again, if
necessary. There are multiple sources for its other inventory products.

(6) LONG-TERM DEBT:

Long-term debt consists of the following as of December 31, 2004:

Mortgage note payable to bank, payments of
$1,263 due monthly including principal and
interest at prime plus 1.0% (6.25% at
December 31, 2004), collateralized by land
and buildings with a cost of $210,000 $ 150,393

Note payable to financing company, payments of
$288 due monthly, including principal and interest,
at 6%, collateralized by vehicle with a cost
of $14,881 10,648
-----------

Total long-term debt 161,041

Less current portion 8,441
-----------
Long-term debt, less current portion $ 152,600
===========

Maturities on long-term debt as of December 31, 2004 over the next five years
and thereafter are as follows:

Year ending
December 31, Amount

2005 8,441
2006 8,993
2007 9,583
2008 8,161
2009 7,192
2010 and thereafter 118,671
---------
$ 161,041
=========

(7) RELATED PARTY TRANSACTIONS:

The majority stockholder periodically advances the Company loans. The Company
owes the stockholder $53,598 at December 31, 2004. The loan is unsecured and
interest accrues at 4.17%. Interest expense related to the loan totaled $3,031
and $9,127 for the years ended December 31, 2004 and 2003, respectively.
Principal payments are $5,000 per quarter.

CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

(8) FAIR VALUE OF FINANCIAL INSTRUMENTS:

Statement of Financial Accounting Standards No. 107 "Disclosures about Fair
Value of Financial Instruments" requires disclosure of fair value to the extent
practicable for financial instruments, which are recognized or unrecognized in
the consolidated balance sheet. The fair value of all financial instruments
approximates carrying value due to the short-term maturity of the instruments.
The fair value of the financial instruments is not necessarily representative of
the amount that could be realized or settled, nor does the fair value amount
consider the tax consequences of realization or settlement.

(9) INCOME TAXES:

The Company follows the provisions of Statement of Financial Accounting Standard
No. 109 "Accounting for Income Taxes." Differences between accounting rules and
tax laws cause differences between the basis of certain assets and liabilities
for financial reporting purposes and tax purposes. The tax effect of these
differences, to the extent they are temporary, is recorded as deferred tax
assets and liabilities. Income tax expense is the tax payable or refundable for
the period plus or minus the change during the period in deferred assets and
liabilities. Temporary differences which give rise to deferred tax assets and
liabilities consist of net operating loss carryforwards, accelerated
depreciation methods for income tax purposes and interest accrued to related
parties but not for tax purposes until paid.

The Company has available at December 31, 2004, unused operating loss
carryforwards totaling approximately $ 1,569,000 that may be applied against
future taxable income. If not used, the carryforwards will expire as follows:

Year Ending
December 31, Amount

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

2009 $ 760,000
2010 195,000
2017 206,000
2020 280,000
2021 71,000
2024 57,000
-----------------
Total $ 1,569,000
=================

If all of the operating loss carryforwards and temporary deductible differences
were used, the Company would realize a deferred tax asset of approximately
$430,000 based upon expected income tax rates. Under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", the deferred tax
asset should be reduced by a valuation allowance if it is likely that all or a
portion of it will not be realized. Realization depends on generating sufficient
taxable income before the expiration of the loss carryforwards.

At December 31, 2002, management determined that a 100% valuation allowance was
appropriate. For 2003 and 2002, the Company realized net income and utilized
approximately $240,000 of its net operating loss carryforward to offset its
current income tax liabilities. Management expects to maintain continued
profitability in the future and realize additional benefits of its net operation
loss carryforwards. At December 31, 2004, the Company evaluated its deferred tax
asset valuation allowance and increased its valuation allowance percentage to
48% resulting in no income tax expense or benefit or change in its deferred tax
asset for 2004. At December 31, 2003 Management determined that a reduction in
the valuation allowance to 43% from 100% of the future tax benefit is
appropriate. Accordingly, the Company has recognized a $225,000 deferred tax
asset and the resulting income tax benefit in 2003 to reflect this change in
estimate.

CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

Because of the inherent uncertainties in estimating the valuation allowance on
the deferred tax asset, it is at least reasonably possible that the Company's
estimated deferred tax asset will change in the near term and be material to the
financial statements.

2004 2003
----------- ------------
Current income tax benefit (expense) $ 30,000 $ (17,000)

Tax expense of temporary differences (13,000) -

Tax benefit of operating loss carryforwards - 17,000

Decrease (increase) in valuation allowance (17,000) 225,000

----------- ------------
Total net tax benefit (expense) $ - $ 225,000
=========== ============

(10) ACQUISITIONS OF SPORTS MEMORABILIA COLLECTION

In April 2004, the Company finalized the acquisition of a sports memorabilia
collection (Collection), from it President and major shareholder. The Company
acquired the Collection to provide additional cash flow, with minimal associated
cash expenses. The Collection was appraised at $400,000. The President was
issued 1,029,412 shares of unregistered common stock of the Company for the
Collection. The number of shares was determined using 70% of the appraised value
($280,000) divided by 90% of the average of the bid and ask price for the
Company's stock on April 14, 2004. The formula was used to provide the Company
with a discounted price from the appraised value when compared to the fair value
of the stock issued of approximately 20%.

Since the acquisition of the Collection was from the Company's President and
controlling shareholder, the Company recorded the Collection at $106,000, which
is the acquisition cost basis of the President and controlling shareholder.

The Company records sales and related expenses of the Collection as gains or
losses from operations in the accompanying statement of operations. Concurrent
with the acquisition of the Collection, the Company entered into a one-year
contract with a unrelated consultant to liquidate the Collection on a "best
efforts" basis. The Company issued the consultant 250,627 shares of common stock
registered on Form S-8 valued at $100,250 on the date the contract was executed.
The Company expensed the $100,250 through operations in the accompanying
statement of operations. The consultant earns a 10% commission on the gross
sales price of all Collection sales. The Company receives net proceeds after
deductions for the consultant's commission and other direct selling expenses of
the consultant.

The consultant has the option to purchase the Collection at any time during the
term of the agreement for $200,000 less any sale proceeds already paid to the
Company. The Company computed the fair value of this call option using the
Black-Scholes stock option pricing model. The following assumptions were made in
estimating fair value: risk-free interest rate of 3.5%; no dividend yield;
expected life of one year. The fair value calculated resulting from the issuance
of this option was determined to be $203,470 at December 31, 2004, which is
recorded as a liability in the accompanying balance sheet and charged operations
in the accompanying statement of operations. The Company recalculates the fair
value of the option at the end of each reporting period and recognize any change
as through operations and adjust its liability accordingly.

The consultant was issued an option to acquire 100,000 shares of the Company's
stock at $.50/share during the one-year term of the agreement. The Company
follows SFAS 123 in accounting for stock options issued to nonemployees. The
fair value of each option granted is estimated using the Black-Scholes stock
option pricing model. The following assumptions were made in estimating fair
value: risk-free interest rate of 3.5%; no dividend yield; expected life of one
year; standard deviation of historical stock return 44.03%. The fair value
calculated resulting from the issuance of this option was determined to be
$4,000, which was charged through operations in the accompanying statement of
operations.
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004 AND 2003

The Company may be required to pay the consultant $50,000 after three months and
an additional $50,000 after six months - both payments contingent upon the
Company receiving cumulative payments from the sales of the Collection totaling
$150,000. The Company has the option of paying the additional compensation, if
any, by issuing additional common stock to the consultant. The Company is
required to register the stock, if issued. If the target sales amounts are met,
the Company will value the stock when earned and record an expense through
operations. As of December 31, 2004, the Company recorded net receipts of
approximately $37,000 from sales of the Collection.

The consultant is required to maintain adequate insurance and pay for any
transportation costs. The consultant is to liquidate the Collection at prices
not less than 75% of the values published in auction-house guidebooks and/or
reputable trade publications and price guides. The consultant is also required
to provide a detailed itemization of sales to the Company on a monthly basis.

(11) CORPORATE CHANGES

The Company amended its Articles of Incorporation authorizing a class of "blank
check" preferred stock consisting of 5,000,000 shares and creating a series of
Series A Preferred Stock and set forth its designations, rights and preferences.
The more significant right is the share votes together with the holders of the
common stock on all matters submitted to a vote of Company shareholders, with
the share of Series A Preferred Stock being entitled to one vote more than
one-half of all votes entitled to be cast by all holders of voting capital stock
of CTD Holding on any matter submitted to common shareholders so as to ensure
that the votes entitled to be cast by the holder of the Series A Preferred Stock
are equal to at least a majority of the total of all votes entitled to be cast
by the common shareholders. Each share of Series A Preferred Stock has a
liquidation preference of $.0001. The Company issued one share of the Series A
Preferred Stock to its majority shareholder in exchange for 1,029,412 shares of
common stock held by the majority shareholder, surrendered to the Company and
cancelled. See Note 2.

(12) SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

During the fourth quarter of 2003, the Company determined its valuation
allowance on its deferred tax asset resulting from net operating loss
carryfowards to be lower than previously recorded and reduced the valuation
allowance from 100% to 43% resulting in an income tax benefit of $225,000 in the
fourth quarter of 2003.

F-12

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

None

Item 8A. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

The Company's management, recognizes its responsibility for establishing and
maintaining internal control over financial reporting for the Company. After
evaluating the effectiveness of our "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as
of December 31, 2004 (the "Evaluation Date"), the Company's management has
concluded, as of the Evaluation Date, the Company's disclosure controls and
procedures were adequate and designed to ensure the information required to be
disclosed in the reports filed or submitted by us under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported with in the
requisite time periods. Although the Company's existing disclosure controls and
procedures are adequate, the Company's management acknowledges a material
weakness may exist in those controls and procedures in that i) the accountant
employed by the Company, while a third year student pursuing a degree in
accounting at the University of Florida has no training regarding financial
reporting and presentation rules and regulations of the SEC; and ii) the
Company's President/CEO, who oversees all the accountants' work and provides all
internal control functions, while possessing a MBA from the University of
Florida, has no training in matters of accounting, financial reporting, or
presentation rules and regulations of the SEC.

(b) Effectiveness of Internal Control

The Company's management is reviewing the Company's internal controls over
financial reporting to determine the most suitable recognized control framework.
The Company will give great weight and deference to the product of the
discussions of the SEC's Advisory Committee on Smaller Public Companies (the
"Advisory Committee") and the Committee of Sponsoring Organizations' task force
entitled Implementing the COSO Control Framework in Smaller Businesses (the
"Task Force"). Both the Advisory Committee and the Task Force are expected to
provide practical, needed guidance regarding the applicability of Section 404 of
the Sarbanes-Oxley Act to small business issuers. The Company's management
intends to perform the evaluation required by Section 404 of the Sarbanes-Oxley
Act at such time as a framework is adopted by the Company. For the same reason,
the Company's registered accounting firm has not issued an "attestation report"
on the Company management's assessment of internal controls. Although the
Company's existing disclosure controls and procedures are adequate, the
Company's management acknowledges a material weakness may exist in those
controls and procedures in that i) the accountant employed by the Company, while
a third year student pursuing a degree in accounting at the University of
Florida has no training regarding financial reporting and presentation rules and
regulations of the SEC; and ii) the Company's President/CEO, who oversees all
the accountants' work and provides all internal control functions, while
possessing a MBA from the University of Florida, has no training in matters of
accounting, financial reporting, or presentation rules and regulations of the
SEC.

After evaluation by the Company's management, the Company's management has
determined there were no significant changes in the Company's internal controls
or in other factors that could significantly affect the Company's internal
controls subsequent to the Evaluation Date.

Item 8B. Other Information

None.

PART III.

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

Two (2) directors, constituting the entire Board of Directors, serve until the
next Annual Meeting of shareholders, or until a successor shall be elected and
shall qualify:

Name Age Principal Occupation Year First Became
Director

C.E. Rick Strattan 58 President, CEO and Chairman 1990

George L. Fails 59 Operations Manager 2001

C.E. Rick Strattan, President, CEO and Director since its 1990. Mr. Strattan
served as treasurer of the Company from August, 1990, to May, 1995. From
November 1987 through July 1992, Mr. Strattan was with Pharmatec, Inc., where he
served as Director of Marketing and Business Development for CDs. Mr. Strattan
was responsible for CD sales and related business development efforts. From
November, 1985 through May, 1987, Mr. Strattan served as Chief Technical Officer
for Boots-Celltech Diagnostics, Inc. He also served as Product Sales Manager for
American Bio-Science Laboratories, a Division of American Hospital Supply
Corporation. Mr. Strattan is a graduate of the University of Florida receiving a
B.S. degree in chemistry and mathematics, and has also received an MS degree in
Pharmacology, and an MBA degree in Marketing/Computer Information Sciences, from
the same institution. Mr. Strattan has written and published numerous articles
and a book chapter on the subject of Cyclodextrins.

George L. Fails, Operations Manager CTD, Inc. since 2000. Mr. Fails currently
serves as Operations Manager for CTD, Inc. Prior to joining the Company, Mr.
Fails served as a Detective Sergeant with the Veterans Administration Hospital
in Gainesville, Florida, with special duties as a Predator Officer with the US
Marshall's Service. From 1965 until his retirement in 1986, Mr. Fails served
with the US Army Special Forces, including several tours in Viet Nam, Salvador,
and Angola. Mr. Fails also served two years with a United States intelligence
arm. Mr. Fails received his BA from the University of the Philippines, and has
also received degrees from 43 Military schools, as well as the Federal police
Academy in Little Rock, Arkansas.

Directors, including directors also serving the Company in another capacity and
receiving separate compensation therefor shall be entitled to receive from the
Company as compensation for their services as directors such reasonable
compensation as the board may from time to time determine, and shall also be
entitled to reimbursements for any reasonable expenses incurred in attending
meetings of directors. To date, the Board of Directors has received no
compensation, and no attendance fees have been paid.

Item 10. Executive Compensation.

SUMMARY COMPENSATION TABLE

Long-term compensation
........................................................
Annual compensation Awards Payouts
-------------------------------------- ---------------------------- ---------

Securities
Other annual Restricted underlying LTIP All other
Name & principal Year Salary Bonus compensation stock awards options/SARs payouts compensation
($) ($) ($) ($) (#) ($) ($)
=================== ======== =========== ========= ============== ============ ============ ========= ============

C.E. Rick Strattan 2004 $ 36,000 -0- -0- $90,833.33 (1) -0- -0- -0-
President, CEO 2003 $ 36,000 $50,000 (3) -0- -0- -0- -0- -0-
Chairman 2002 $ 33,346 -0- -0- -0- -0- -0- -0-

George L. Fails 2004 $ 22,800 -0- -0- $18,166.67 (2) -0- -0- -0-
Operations Manager 2003 $ 20,836 -0- -0- -0- -0- -0- -0-
2002 $ 20,000 -0- -0- -0- -0- -0- -0-

(1) Reflects grant of 809,611 shares
(2) Reflects grant of 161,922 shares
(3) Reflects grants of 1,000,000 shares

On October 14, 2003, the Company entered into a one-year Employment
Agreement with C.E. Rick Strattan, the Company's president, with an annual
salary of $36,000 and $5,000 per month in restricted common shares of the
Company based on the closing value of the Company's shares on the last day of
the month in which the shares are awarded. The Company has agreed to register
Mr. Strattan's shares awarded pursuant to his employment contract. This contract
was extended through December 31, 2005.

Effective January 1, 2004, the Company entered into a one-year Employment
Agreement with George L. Fails to serve as Operations Manager. Mr. Fails is
compensated $1,900 monthly, plus $1,000 per month in restricted common shares of
the Company, based on the closing value of the Company's shares on the last day
of the month in which the shares are awarded. This contract was extended through
December 31, 2005.

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

The following table shows the ownership of the Common Stock of the
Company on March 4, 2005, by each person who, to the knowledge of the Company,
owned beneficially more than ten percent (10%) of such stock, the ownership of
each director, and the ownership of all directors and officers as a group.
Unless otherwise noted, shares are subject to the sole voting and investment
power of the indicated person.

Names and Address of Individual Amount and Nature of Approximate %
or Identity of Group Beneficial Ownership of Class

C.E. Rick Strattan ....................... 1,745,611 (1) 15.94%
4123 N.W. 46th Avenue
Gainesville, FL 32606

George L. Fails............................. 201,922 (2) 1.84%
2420 N.W. 142nd Avenue
Gainesville, FL 32609

Aspatuck Holdings, Inc. .................... 4,000,000 36.52%

All Officers and Directors as a group ...... 1,947,533 17.78%

(1) Includes 809,611 common shares issued pursuant to Employment Agreement.
(2) Includes 161,922 common shares issued pursuant to Employment Agreement.

Item 12. Certain Relationships and Related Transactions.

Mr. Strattan periodically advances the Company short-term loans and defers
receipt of salary. The Company owes the stockholder $53,598 at December 31,
2004. The loan is unsecured and interest accrues at 4.17%. Interest expense
related to the loan totaled $3,031 and $9,127 for the years ended December 31,
2004 and 2003, respectively.

PART IV.

Item 13. Exhibits and Reports on Form 10KSB.

(a) Exhibits Page

(1) Reports of Independent Certified Accountants F-1

(2) Financial Statements F-2

Exhibits required by Item 601, Regulation S-B:

(3) Articles of incorporation and by-laws

(a) Articles of Incorporation filed August 9, 1990 * None

(b) By-Laws. * None

(4) Instruments defining the rights of security
holders, including indentures

(a) Specimen Share Certificate for Common Stock. * None

(9) Voting Trust Agreement None

(10) Material Contracts

(10.1) Agreement of Shareholders dated November 11, 1993
by and among C.E. Rick Strattan, Garrison Enterprises,
Inc. and the Company. * None

(10.2) Lease Agreement dated July 7, 1994**. None

(10.3) Consulting Agreement dated July 29, 1994 between
the Company and Yellen Associates. * None

(10.4) License Agreement dated December 20, 1994 between
the Company and Herbe Wirkstoffe GmbH. * None

(10.5) Joint Venture Agreement between the Company and
Ocumed, Inc. dated May 1, 1995, incorporated by
reference to the Company's Form 10-QSB for the
quarter ended June 30, 1995.** None

(10.6) Extension of Agreement between the Company and Herbe
Wirkstoffe GmbH.*** None
(10.7) Lease Extension+

(10.8) Loan Agreement with John Lindsay+

(10.9) Small Potatoes Contract+

(10.10) Employment Agreement with C.E. Rick Strattan dated
May 30, 2001++

(10.11) Employment Agreement of C.E. Rick Strattan dated
October 14, 2003+++

(10.12) Employment Agreement of George L. Fails dated
October 14, 2003****

(11) Statement re: Computation of Per Share Earnings Note 1(k)
to Financial
Statements

(16) Letter on changes in certifying accountant*** None

(18) Letter on change in accounting principles None

(22) Subsidiaries of Registrant None

(23) Published Report re: Matters Submitted to Vote of
Security Holders None

(24) Consents of Experts and Counsel None

(25) Power of Attorney None

(27) Financial Data Schedule

(28) Additional Exhibits None

(29) Information from reports furnished to state insurance
regulatory authorities None

(31) Certificate of Chief Executive Officer
and Chief Financial Officer****

(32) Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002****

(b) Reports on Form 8-K:

None

* Incorporated by reference to the Company's Form 10-SB filed with the
Securities and Exchange Commission on February 1, 1994.

** Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on March 29, 1997.

*** Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on March 28, 2000.

**** Filed herewith.

+ Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on April 2, 2001.

++ Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on April 1, 2002.

+++ Incorporated by reference to Form S-8 filed December 1, 2003.

Item 14. Principal Accountant Fees and Services

Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant, James Moore & Co., P.L. for the
audit of the Company's annual financial statements and review of financial
statements included in the Company's Form 10-QSB or services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for those fiscal years was $71,760.

Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and
related services by James Moore & Co., P.L. that are reasonably related to the
performance of the audit or review of the Company's financial statements and are
not reported under the caption "Audit Fees" was $6,470. The nature of the
services comprising the fees disclosed under this category was for accounting
assistance with merger and acquisition activities.

Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional
services rendered by James Moore & Co., P.L. for tax compliance, tax advice, and
tax planning was $7,370.

All Other Fees,

The aggregate fees billed in each of the last two fiscal years for products and
services provided by James Moore & Co., P.L., other than the services reported
above were $5,270 in paragraphs (e)(1) through (e)(3) of this section. The
nature of the services comprising the fees disclosed under this category was
software training and assistance with payroll tax reporting.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on March 28, 2005.

CTD. HOLDINGS, INC.

By: /s/ C.E. RICK STRATTAN
---------------------------------
C.E. RICK STRATTAN,
Chief Executive Officer
Chief Operating Officer

SIGNATURE TITLE

/s/ C.E. RICK STRATTAN
-------------------------------
C.E. RICK STRATTAN Chief Executive Officer
Chief Operating Officer, Director

/s/ GEORGE L. FAILS
--------------------------------
GEORGE L. FAILS Director