UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly Period ended December 31, 2004

                        Commission File Number 333-69414


                          SOURCE DIRECT HOLDINGS, INC.
               --------------------------------------------------
               (Exact name of registrant as specified in charter)

                        Nevada                     98-0191489
            -------------------------------    -------------------
            (State or other jurisdiction of     (I.R.S. Employer
             incorporation or organization)    Identification No.)

          4323 Commerce Circle, Idaho Falls, Idaho        83401
          ----------------------------------------      ----------
          (Address of principal executive offices)      (Zip Code)

Registrant's telephone number, including area code    (877) 529-4114
                                                      --------------

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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest  practicable date: As of February 14, 2005, the Company
had outstanding 71,481,904 shares of its common stock, no par value.




<PAGE>


                                TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                                PAGE


PART I

  ITEM 1.    FINANCIAL STATEMENTS                                        3
  ITEM 2.    MANAGEMENT'S DISCUSSION AND PLAN OF OPERATIONS              8
  ITEM 3.    CONTROLS AND PROCEDURES                                    13


PART II

  ITEM 1.    LEGAL PROCEEDINGS                                          14
  ITEM 2.    CHANGES IN SECURITIES                                      14
  ITEM 3.    DEFAULTS UPON SENIOR SECURITIES                            14
  ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS        14
  ITEM 5.    OTHER INFORMATION                                          15
  ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K                           15







                                       2
<PAGE>


                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                          SOURCE DIRECT HOLDINGS, INC.
                           Consolidated Balance Sheets
                                December 31, 2004
                                  (Unaudited)


                                     ASSETS

                                                       December 31, 2004
                                                       -----------------
Current Assets
  Cash                                                 $          61,726
  Trade Receivables                                               16,443
  Inventory                                                      254,596
  Employee Advance                                                 5,437
                                                       -----------------
Total Current Assets                                             338,202

Property and Equipment
  Property and equipment                                          78,496
  Less: Accumulated Depreciation                                  (8,434)
                                                       -----------------
Net Property and Equipment                                        70,062

Other Assets
  Formula, Trademark, Trade-name                                 115,000
  Accumulated Amortization                                        (8,306)
                                                       -----------------
Net Other Assets                                                 106,694

                                                       -----------------
TOTAL ASSETS                                           $         514,958
                                                       =================


LIABILITIES & STOCKHOLDERS' DEFICIT

Current Liabilities
  Accounts Payable                                     $          10,085
  Equipment Loans (current)                                        3,000
  Payroll Liabilities                                             24,064
  Taxes Payable                                                     --
                                                       -----------------
Total Current Liabilities                                         37,149

Long-Term Liabilities
  Payable to Shareholders                                           --
                                                       -----------------
Total Long-Term Liabilities                                         --

Total Liabilities

Stockholders' Deficit
  Common Stock -- $.001 par value; 200,000,000 shares
    authorized; 71,036,400 issued and outstanding at
    December 31, 2004                                             71,036
  Additional paid-in capital                                   1,322,464
  Accumulated deficit                                           (915,691)
                                                       -----------------
Total Stockholders' Deficit                                      477,809
                                                       -----------------
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT              $         514,958
                                                       =================




                                       3
<PAGE>


                          SOURCE DIRECT HOLDINGS, INC.
                      Consolidated Statement of Operations
                                  (Unaudited)


                                         For the Three         For the Three
                                         Months Ended          Months Ended
                                       December 31, 2004     December 31, 2003
                                       -----------------     -----------------

Revenues                               $          35,908     $            --
Cost of Goods Sold                                15,656                  --
  Gross Profit                                    20,252                  --

General and admin. Expense                       211,178               157,902
                                       -----------------     -----------------

Operating Loss                                  (190,926)             (157,902)

Interest income                                     --                    --
Interest expense                                    --                    --
Gain/(loss) on asset sales                          --                    --
Income taxes                                        --                    --
                                       -----------------     -----------------

Net Loss before extraordinary                   (190,926)             (157,902)
Extraordinary gain, net                             --                    --
                                       -----------------     -----------------
Net Loss                               $        (190,926)    $        (157,902)
                                       =================     =================

Net Loss per share                     $           (0.01)    $           (0.01)

Weighted Average Number
  of shares outstanding                       69,275,259            12,151,400





                                       4
<PAGE>


                          SOURCE DIRECT HOLDINGS, INC.
                            Consolidated Statement of
                                   Operations
                                  (Unaudited)


                                           For the six           For the six
                                          Months Ended          Months Ended
                                        December 31, 2004     December 31, 2003
                                        -----------------     -----------------

Revenues                                $          69,406     $            --
Cost of Goods Sold                                 33,776                  --
                                        -----------------     -----------------
  Gross Profit                                     35,630                  --

General and admin. Expense                        389,426               326,730
                                        -----------------     -----------------

Operating Loss                                   (353,796)             (326,730)

Interest income                                      --                    --
Interest expense                                     --                    --
Gain/(loss) on asset sales                           --                    --
Income taxes                                         --                    --
                                        -----------------     -----------------

Net Loss before extraordinary                    (353,796)             (326,730)
Extraordinary gain, net                              --                    --

                                        -----------------     -----------------
Net Loss                                $        (353,796)    $        (326,730)
                                        =================     =================

Net Loss per share                      $           (0.01)    $           (0.01)

Weighted Average Number
  of shares outstanding                        69,275,259            12,151,400





                                       5
<PAGE>


                          SOURCE DIRECT HOLDINGS, INC.
                 Condensed Consolidated Statement of Cash Flows
                                   (Unaudited)


                                                                 For the Six
                                                                Months Ended
                                                              December 31, 2004
                                                              -----------------

Cash Flow Used for Operating Activities
   Net Loss                                                   $        (353,796)
Adjustments to Reconcile net loss to
 to net cash used for operating activities:
   Depreciation                                                           4,900
   Amortization Expense                                                   3,834
   Decrease in Trade Receivables                                          3,802
   Increase in Inventory                                               (181,750)
   Increase in employee advance                                          (5,437)
   Increase in accounts payable                                          10,085
   Decrease in equipment loans                                          (12,602)
   Increase/(Decrease) in payroll Liabilities                               822
   (Decrease) in income taxes payable                                       (60)

                                                              -----------------
Net Cash Flows Used for Operating Activities                           (530,202)

Cash Flows used for Investing Activities
   Purchase equipment                                                   (27,465)
   Acquisition of Intangible Assets                                        --
                                                              -----------------
Net Cash Flows Used for Investing Activities                            (27,465)

Cash Flows used for Financing Activities
   Decrease in Shareholder Loans                                        (36,563)
   Decrease in Note Payable                                                --
   Issued stock for cash                                                655,000
                                                              -----------------
Net Cash Flows Used for Financing Activities                            618,437

Net Increase / (Decrease in cash                                         60,770
Beginning Cash Balance                                                      955

Ending Cash Balance                                           $          61,725
                                                              =================





                                       6
<PAGE>

                          SOURCE DIRECT HOLDINGS, INC.
                   Notes to Consolidated Financial Statements


NOTE 1 - BASIS OF PRESENTATION

The  accompanying  unaudited  interim  financial  statements  of  Source  Direct
Holdings,  Inc.  ("Source  Direct"),  have  been  prepared  in  accordance  with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission  ("SEC"),  and should be read in
conjunction with the audited financial statements and notes thereto contained in
Source Direct's Annual Report filed with the SEC on Form 10-KSB.  In the opinion
of management,  all  adjustments,  consisting of normal  recurring  adjustments,
necessary  for a fair  presentation  of  financial  position  and the results of
operations for the interim  periods  presented have been reflected  herein.  The
results of operations for interim periods are not necessarily  indicative of the
results to be  expected  for the full year.  Notes to the  financial  statements
which would  substantially  duplicate  the  disclosure  contained in the audited
financial statements for June 30, 2004, as reported in the form 10-KSB have been
omitted.


NOTE 2 - COMMON STOCK

During the quarter  ended  December  31, 2004 the Company  issued the  following
shares of its common stock:

During  November and December 2004, the Company sold 3,005,000  shares of common
stock for a purchase price of $305,000.  The sale included  warrants to purchase
up to an  additional  3,005,000  shares of common stock at an exercise  price of
$0.125 per share.

In October 2004 the Company  issued 250,000 shares of common stock for services.
The issuance included warrants to purchase up to an additional 250,000 shares of
common stock at an exercise price of $0.125 per share.

During the quarter ended  September 30, 2004,  the Company  issued the following
shares of its common stock:

In August 2004 the Company  sold  500,000  shares of common stock for a purchase
price of $50,000.  The sell  included  warrants to purchase up to an  additional
500,000 shares of common stock at an exercise price of $0.125 per share.

In July  2004 the  Company  sold  1,500,000  shares  of  common  stock for gross
proceeds of  $150,000.  The sell  included  warrants to purchase up to 1,500,000
additional shares of common stock at an exercise price of $0.125 per share.

In August  2004,  the Company  sold  1,500,000  shares and  warrants to purchase
another  1,500,000  shares,  at an  exercise  price of $0.125 per share,  to two
accredited investors for a purchase price of $150,000.

In August 2004, the Company  issued an aggregate of 5,000,000  shares to outside
consultants  in  exchange  for  consulting  services  provided  to the  Company.
Additionally,  the Company  issued  warrants  to  purchase  up to an  additional
4,000,000 shares to the consultants.


NOTE 3 - COMMON STOCK - SUBSEQUENT EVENT

During the months of January and February  2005,  the Company  issued 660,000 of
its common  stock for  services  rendered.  The  services  included  warrants to
purchase up to an additional  660,000  shares of its common  stock.  The Company
also sold 950,000  shares of common stock for a purchase  price of $95,000.  The
sale included warrants to purchase up to an additional  950,000 shares of common
stock at an exercise price of $0.125 per share.


                                       7
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward Looking Statements

         This Quarterly  Report contains  forward-looking  statements  about the
business,  financial  condition and prospects of Source  Direct  Holdings,  Inc.
("we" or the "Company"), that reflect management's assumptions and beliefs based
on information currently available. Additionally, from time to time, the Company
or its representatives have made or may make forward-looking statements,  orally
or in writing.  Such  forward-looking  statements  may be  included  in, but not
limited  to,  press  releases,  oral  statements  made with the  approval  of an
authorized executive officer, or in various filings made by the Company with the
Securities  and  Exchange  Commission.  Words or  phrases  such as "will  likely
result," "are  expected  to," "will  continue,"  "is  anticipated,"  "estimate,"
"project  or  projected,"  or  similar  expressions  are  intended  to  identify
"forward-looking statements." Such statements are qualified in their entirety by
reference to and are  accompanied by the below  discussion of certain  important
factors  that  could  cause  actual  results  to  differ  materially  from  such
forward-looking statements.

         Management is currently  unaware of any trends or conditions other than
those mentioned in this  management's  discussion and analysis that could have a
material adverse effect on the Company's consolidated financial position, future
results of operations, or liquidity.  However, investors should also be aware of
factors that could have a negative  impact on the  Company's  prospects  and the
consistency  of  progress  in the areas of revenue  generation,  liquidity,  and
generation of capital resources.  These include: (i) variations in revenue, (ii)
possible  inability to attract  investors for its equity securities or otherwise
raise  adequate  funds from any source  should the Company  seek to do so, (iii)
increased governmental regulation,  (iv) increased competition,  (v) unfavorable
outcomes to litigation  involving the Company or to which the Company may become
a party in the future (vi) a very  competitive  and rapidly  changing  operating
environment, (vii) changes in business strategy, (viii) market acceptance of our
products and, (ix) a failure to successfully market the Company's products.

         The  risks  identified  here are not all  inclusive.  New risk  factors
emerge from time to time,  and it is not possible for  management to predict all
of such risk  factors,  nor can it assess the impact of all such risk factors on
the  Company's  business  or the  extent to which any factor or  combination  of
factors may cause actual results to differ  materially  from those  contained in
any forward-looking statements.  Accordingly,  forward-looking statements should
not be relied upon as a prediction of actual results.

         All  forward-looking  statements are intended to be covered by the safe
harbor created by Section 21E of the Securities Exchange Act of 1934.


BUSINESS

         Source  Direct  Holdings,  Inc.,  has  acquired  the  formulas  for two
cleaning  products.  These  products  are Simply  Wow(R) and Stain  Pen(TM).  In
addition  to  these  two  products,  we  have  developed  a new  product  called
Prompt(TM) that was introduced in August 2004.

         We own the  trademarks  to all three of our  products but have not made
application for any patents.  Management believes it would be difficult,  if not
impossible,  to duplicate the formulas for the Company's  products.  We maintain
confidentiality  agreements  with all parties  who have access to the  formulas.
Nevertheless,  there is no  assurance  that  someone  could  not  duplicate  the
formulas and directly compete with the company. The cost of litigating the issue
of illegal competition may preclude us from being able to protect the secrecy of
the formulas.



                                       8
<PAGE>

PRODUCTS

Simply Wow(R)

         Simply  Wow(R) is an  all-purpose  cleaner that safely and  effectively
cleans  any  washable   surface.   Simply  Wow(R)  is  developed  with  nonionic
surfactants  that contain  penetrating  and suspending  agents that dissolve the
toughest grease,  protein,  dirt, and oil stains.  The product is a water-based,
multipurpose,  biodegradable, nontoxic degreaser with a pleasant lemon fragrance
that effectively replaces flammable or combustible solvent cleaners. It contains
no hazardous  solvents or  acidic-type  chemicals,  and its  formulation  safely
accomplishes  the cleaning that  previously  required  solvent or acid cleaners,
which  exposed  the user and the  environment  to the  inherent  hazards of such
chemicals.

Stain Pen(TM)

         Stain Pen(TM) is an  on-the-spot  stain remover.  The  convenient  size
makes it easy to keep at home, in the car, or at the office.  This product has a
proprietary  formula that safely  removes  food stains,  oil paint (wet or dry),
makeup,  wine,  blood,  grass  stains,  grease,  coffee  and tea stains and copy
machine  stains with no harmful  fumes or large  quantities  of liquid to spill.
Stain  Pen(TM)  works simply by applying a small amount of stain pen solution to
the stain and applying a damp cloth.

Prompt(TM)

         Prompt(TM) is a multi-purpose,  low foaming,  non-toxic,  biodegradable
industrial  strength  cleaner for multiple  commercial and  industrial  cleaning
applications.  It is a  non-hazardous,  user  friendly,  VOC  (Volatile  Organic
Compounds) compliant product and is highly effective in many commercial cleaning
applications. Prompt's proprietary formulation encapsulates dirt and oil in many
industrial   applications  that  include:   floors,   walls,  metal  fabricating
equipment, smoke and fire damage, as well as equipment restoration.

Future Products

         We have also completed  development  of formulas for other  proprietary
cleaning  products,  which we intend to  introduce  to the  market in the future
under private label.  These products  include an automotive  vinyl protector and
cleaner, an all-purpose  automotive wheel cleaner, an automotive engine cleaner,
and a liquid laundry product.

         We are  subject  to risks  that  existing  or new  manufacturers  could
develop new or better  products  than the ones  offered by us. While we devote a
portion of our funds to on-going  research  and  development,  the amount of our
funding in this area is extremely  limited when compared to the manufacturers of
products,  which compete with ours. We believe that most other  companies in the
household  cleaning  industry are  significantly  better  funded than are we and
devote  significantly  more funds to  developing  new,  or  improving  existing,
products which compete with ours.

PRODUCT PRODUCTION

         We do not  currently  produce our  products  in-house  except for Stain
Pen(TM),  which is  produced in our  facility.  We believe  that the  production
facility,  which has agreed to manufacture our other products, would be adequate
to produce our products in sufficient  quantities to meet any anticipated future
needs. We have not secured any form of financing for  significant  production of
our products.  We will attempt to secure funding either from private  sources or
through a bank loan or factoring arrangement. There is no assurance that we will
be able to obtain any of these sources of financing,  or that if we could obtain
it that the financing terms would be favorable to the company.

PRODUCT DISTRIBUTION

         The most  critical  phase of our  operations  is the  marketing  of our
products.  We market our products  using both current  management  personnel and
outside  independent  marketing  companies.  We currently have outside marketing
arrangements,  which we consider  significant;  with Marden Distribution,  Inc.;
Integritas, Inc.; Media Corp Worldwide; Fusion Packaging Solutions, Inc.; Impact
Sales, Inc.; and Morgan & Sampson SCA.



                                       9
<PAGE>

         The Marden  Agreement  grants Marden  Distribution,  Inc. the exclusive
right  to  distribute  our  products  to  Wal-Mart(R),  Sam's  Club(R),  and ACE
Hardware(R).  Marden is an approved vendor with these retail  organizations.  We
believe  that the  ability of Marden to present our  products to these  national
chains will reduce the cost to the company.

         Our  agreement  with Marden is  exclusive in the sense that no one else
can market Simply Wow(R),  Stain Pen(TM), and derivatives of these products such
as our engine cleaner,  upholstery  cleaner,  and wheel cleaner, to Wal-Mart(R),
Sam's  Club(R),  or  ACE  Hardware(R).  We  have  agreed  to pay  Marden  a flat
percentage fee based on the gross  "sell-in" price to each retailer based on the
wholesale  cost of the  goods  sold to the  retailer,  plus the flat  percentage
amount.  Marden has agreed to pay all of the costs and expenses  associated with
the marketing and distribution of the products to the retailers.  We have agreed
to maintain product liability  insurance,  which we currently have in place, and
to hold  Marden  harmless  from  any  liability  associated  with the use of our
products.

         The Integritas  agreement provides that Integritas,  Inc., will provide
product distribution, customer relations, and investor relations services.

         The Media Corp agreement  grants Media Corp Worldwide  exclusive direct
response "As Seen on TV" commercial marketing.  Media Corp Worldwide will create
infomercial  advertising for Source Direct's proprietary cleaning products,  and
will work to further  market its  proprietary  product  lines Simply  Wow(R) and
Stain Pen(TM) on television only.

         In September 2004, we signed two additional  agreements with Media Corp
Worldwide.  The first,  designated as the "QVC Agreement," extends the marketing
relationship  between the Company and Media Corp.  The QVC  Agreement  grants to
Media Corp the exclusive  right to sell the  Company's  products to the QVC Home
Shopping Network.  The second,  designated the Mail Order Catalog Agreement (the
"Catalog  Agreement"),  granted  to Media Corp the  exclusive  right to sell the
products to mail order catalog companies within the United States.

         The  Fusion  Packaging   Solutions   agreement  is  an  exclusive  mass
merchandising   and  co-branding   distribution   agreement.   Fusion  Packaging
Solutions,  Inc., has a proprietary solution called Pig Spit(R). Pig Spit(R) was
introduced  at the Sturgis  Motorcycle  Rally in 1994 and has won the respect of
motorcycle  enthusiast  around the world.  Pig Spit(R)  makes black  wrinkle and
powder coat finishes look like new. It wicks into hard-to-reach areas like motor
fins and transmissions and eliminates those wax stains. Pig Spit(R) is available
at most Harley  Davidson(R)  motorcycle  shops in the U.S.  and will now be made
available  exclusively  for  distribution to mass  merchandisers  through Source
Direct  Holdings,  Inc., and marketed under the co-branded name of Simply Wow(R)
Pig Spit(R).

         The Impact Sales agreement grants Impact Sales,  Inc., the distribution
rights for all Source Direct  proprietary  cleaning  products to more than 6,800
grocery  retailers in the United States including  Albertsons,  Inc.(R);  Kroger
Co.(R);  and Safeway,  Inc.(R).  Impact Sales has been servicing  large national
retail  grocery  accounts  for more  than 20 years  and  employs  more 200 sales
associates  from their 13  offices  in  California,  Colorado,  Florida,  Idaho,
Illinois, Oregon, Utah, and Washington.

         The  Morgan  &  Sampson  agreement  grants  Morgan  &  Sampson  SCA the
exclusive marketing and distribution rights to Source Direct's proprietary Stain
Pen(TM) Twin Pack to more than 5,000  grocery  retailers  in the Western  United
States and  Hawaii.  In  January  2005, through  this  agreement,  we have begun
shipments  of our Stain  Pen(TM)  product to all Safeway  stores and Kmart Super
Centers nationwide.

         In addition to the above agreements, we also utilize internal marketing
efforts to advertise and  distribute  our products.  We recently  became a title
sponsor on a NASCAR  sponsorship  agreement  with Erik Darnell and Darnell Motor
Sports for the 2004 and 2005 NASCAR racing seasons.

         In January 2005 our internal  marketing  staff  contracted with Bi-Mart
Membership Discount Stores. The Company has begun shipments of our proprietary 3
ounce Stain Pen(TM) to all Bi-Mart  Membership  Discount  Stores  throughout the
northwest region.


                                       10
<PAGE>

         Bi-Mart stores are membership-only  stores,  which means that customers
must join Bi-Mart or be a guest of a member before  shopping with them.  Bi-Mart
currently  has over one  Million  members at more than 60 stores in  Washington,
Oregon, and Montana,  with plans to continue aggressive expansion throughout the
greater  Northwest.  Each store is  approximately  30,000  square feet and deals
mainly in hard goods in the following departments: photo, house-wares,  sporting
goods,   automotive,   hardware,   health  &   beauty,   toys,   clothing/shoes,
beer/food/wine, and a full service pharmacy.

DESCRIPTION OF PROPERTY

         The  offices  of Source  Direct  recently  relocated  to 4323  Commerce
Circle,  Idaho Falls, Idaho. The property consists of approximately 3,780 square
feet of office  space,  and  approximately  10,000  square feet of warehouse and
manufacturing  space.  The Company  anticipates  that the new facilities will be
suitable, appropriate, and adequate for its needs for the foreseeable future.

Risk Factors

         There are various  risks  involved in any  investment  in the  Company,
including those described  below.  Any shareholder or potential  investor in the
Company should consider carefully these risk factors.

     o   The  financial  statements  of the  Company  include a "going  concern"
         limitation.

     o   The Company may require additional funding.

     o   The Company has not applied for a patent on its products.

     o   The loss of the  services of current  management  would have a material
         negative impact on the operations of the Company.

     o   The Company will be in  competition  with a number of other  companies,
         which may be better financed than the Company.

     o   There is no active public market for the common stock of the Company.

     o   The Company's shares are designated as penny stock.

     o   The market for the Company's shares is volatile.

     o   Future  issuances  of  stock  could  adversely  affect  holders  of the
         Company's common stock.

Financial Condition and Changes in Financial Condition

         We generated  revenues  from sales of our cleaning  products of $35,908
during the quarter  ended  December 31,  2004.  Our cost of goods sold for these
sales  totaled  $15,656,  which  resulted in a gross profit margin of $20,252 or
56.4% of sales.  Revenue for the  six-month  period ended  December 31, 2004 was
$69,406 with a gross margin of $35,630.

         Operating  expenses for the quarter  ended  December 31, 2004,  totaled
$211,178.  Compensation related expenses were $53,959.  Travel expenses incurred
for product  promotion  and general  business  activities  totaled  $14,247.  We
incurred $18,780 in legal and accounting  related expenses primarily as a result
of the various  marketing  agreements  and expenses  related to  fulfilling  our
filing  requirements  with the SEC.  Research and development  expenses  totaled
$5,490 for the  quarter.  The  remaining  expenses  were  incurred  for  general
business purposes.

         Operating  expenses for the  six-month period ended  December 31, 2004,
totaled $389,426.  Compensation related expenses were $145,308.  Travel expenses
incurred  totaled $24,393.  We incurred $55,915 in legal and accounting  related
expenses primarily as a result of the various marketing  agreement  preparations
and fulfilling our SEC reporting requirements. Research and development expenses
totaled  $11,491.  The remaining  expenses  were  incurred for general  business
purposes. We believe we will continue to incur substantial expenses for the near
term as we increase  our  marketing  efforts to  introduce  our  products to the
market.

         Operating  expenses  for the prior year  quarter  and six month  period
ended December 31, 2003, totaled $157,902 and $326,730 respectively.  All of the
expenses relate to the business of the prior operations  before the October 2003
merger, and we do not believe they have any significance on our current business
operations or our future plans.



                                       11
<PAGE>

Liquidity and Capital Resources:

         Since  inception to December 31,  2004,  we have funded our  operations
from the sale of securities and loans from shareholders.

         During the quarter ended December 31, 2004, we sold 3,005,000 shares of
our common stock for total  proceeds of $305,000.  We have utilized  these funds
for our various marketing and promotion efforts and general business activities.

         At December 31, 2004, we had cash balances of $61,726,  and net working
capital of $301,053. In addition, we had current account receivables of $16,443,
which was generated from the various purchase orders for our products. Inventory
of cleaning  products  amounted to $254,596.  Our cash requirements for the next
twelve  months will  depend  significantly  on the number of purchase  orders we
receive for our products and our ability to secure  financing  for these orders.
We  anticipate  that  we will be able to  secure  either  a  business  loan or a
factoring arrangement for any purchase order that exceeds our current ability to
fund internally.  However, we have no current agreements or arrangements,  which
would  provide  such  funding.  We have  also not  negotiated  the terms of such
funding and cannot  provide any  assurance  that the terms will be favorable for
the  company.  We are also  unable to  predict  the  number  of  orders  for our
products,  or if we receive  additional  orders,  the amount of operating profit
such orders would generate.  Therefore, we are unable to predict our future cash
requirements until we secure additional purchase orders.

         On January 13, 2005, The Company  entered into agreements to purchase a
new headquarters building (the "Property").  The purchase price for the Property
was  $800,000.  Pursuant to the terms of a  promissory  note (the  "Note"),  the
Company is required to pay  $5,882.19 on or before  March 3, 2005,  and the same
amount on or before the third of each month thereafter.  The Note bears interest
at a rate of 8.5%,  and matures and comes due on January 13, 2006.  The Property
consists of approximately  3,780 square feet of office space, and  approximately
10,000 square feet of warehouse and manufacturing space. The Company anticipates
that the new  facilities  will be  suitable,  appropriate,  and adequate for its
needs for the foreseeable future.

         We continue to perform research and development to improve our existing
cleaning  products and to provide new cleaning  products.  We anticipate that we
will continue to spend funds for research and development during the next twelve
months,  but we are unable to predict or  anticipate  the total  amount of these
future research and development  expenses.  In many instances,  new products are
developed  as a result of interest  expressed  by a potential  retail  client in
similar or ancillary  products to the ones initially  presented.  This may occur
especially in our private label  products.  Many retail outlets require a set of
related private label cleaning  products before ordering any cleaning  products.
Such was the case in our automotive  cleaning  products.  Our wheel cleaning and
tire cleaning  products were  developed as a result of responses  from potential
clients  for  our  automotive  vinyl-cleaning  product  who  required  a set  of
automotive cleaning products rather than the single vinyl-cleaning product.

         We  believe  we will need  additional  funding.  We are  assessing  the
possibilities  for  financing  our business  plan and trying to  determine  what
sources of financing we might  explore to raise the needed  capital.  We have no
outside  sources for funding our business plan at this time other than the sales
of our common stock. We will need  additional  capital for any current or future
expansion of our operations we might undertake.

Plan of Operation

         The operating  subsidiary  has embarked on a two-fold  growth  program,
which includes the following strategies and plans:

         Our plan of operation  includes the  implementation  of a multi-pronged
marketing strategy to distributors,  retail stores, and cleaning  professionals,
and direct to consumers  to position  the Company to become a major  supplier in
the U.S. all-purpose cleaning solution market. Management's business model is to
position the Company as an authority in this area, based on (i) its potential as
a market innovator and future leader, (ii) careful attention to product quality,
(iii) the  Company's  tested  and proven  products,  (iv) its  ethical  business
practices, and (v) the confidence of a large number of loyal consumers.



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         We also intend to seek  acquisitions or co-branding  arrangements  with
small,  under-capitalized  suppliers of cleaning  products  whose products would
compliment  or extend our product line,  and which could be acquired  readily to
support the  corporate  objectives.  We intend to acquire only  companies  whose
market  presence,  product  mix,  and  profitability  meet  certain  acquisition
criteria,  and to incorporate  their products into the existing  product line or
into lines of supporting or related products.

         In order to  achieve  the  planned  level of growth  in both  sales and
profitability,  we  anticipate  the need for a  substantial  amount of  external
capital,  either from the sale of  securities or incurring of debt, to permit us
to execute the next stages of our business plan. We have no firm  commitments or
arrangements  for this funding and there is no assurance that we will be able to
secure the funding necessary to implement the business plan.

New Accounting Pronouncements

         Source  Direct  does  not  expect  the  adoption  of  recently   issued
accounting  pronouncements  to have a  significant  impact  on  Source  Direct's
results of operations, financial position, or cash flow.


ITEM 3.  CONROLS AND PROCEDURES

         Disclosure  controls and procedures  are controls and other  procedures
that are designed to ensure that information required to be disclosed in company
reports  filed or  submitted  under  the  Securities  Exchange  Act of 1934 (the
"Exchange Act") is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange  Commission's  rules and forms.
Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that  information  required  to be  disclosed  in
company reports filed under the Exchange Act is accumulated and  communicated to
management,  including the Company's Chief Executive Officer and Chief Financial
Officer (the  "Certifying  Officers"),  as appropriate to allow timely decisions
regarding required disclosure.

         As required by Rules  13a-15 and 15d-15  under the  Exchange  Act,  the
Certifying Officers carried out an evaluation of the effectiveness of the design
and operation of the Company's disclosure controls and procedures as of December
31,  2004.  Their  evaluation  was carried out with the  participation  of other
members of the Company's management. Based upon their evaluation, the Certifying
Officers  concluded that the Company's  disclosure  controls and procedures were
effective.

         The Company's  internal  control over financial  reporting is a process
designed by, or under the supervision  of, the Certifying  Officers and effected
by the Company's Board of Directors,  management and other personnel, to provide
reasonable  assurance  regarding  the  reliability  of the  Company's  financial
reporting and the preparation of the Company's financial statements for external
purposes in accordance with generally accepted accounting  principles.  Internal
control over financial  reporting  includes policies and procedures that pertain
to the  maintenance of records that in reasonable  detail  accurately and fairly
reflect the  transactions  and  dispositions  of the Company's  assets;  provide
reasonable  assurance  that  transactions  are  recorded as  necessary to permit
preparation of the Company's  financial  statements in accordance with generally
accepted accounting principles, and that the Company's receipts and expenditures
are being made only in accordance with the  authorization of the Company's Board
of  Directors  and  management;   and  provide  reasonable  assurance  regarding
prevention or timely detection of unauthorized  acquisition,  use or disposition
of the  Company's  assets  that could have a  material  effect on its  financial
statements.  There has been no change in the  Company's  internal  control  over
financial  reporting that occurred in the quarter ended December 31, 2004,  that
has  materially  affected,  or is  reasonably  likely to affect,  the  Company's
internal control over financial reporting.




                                       13
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                            PART II OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

None


ITEM 2.  CHANGES IN SECURITIES

         During November and December 2004, the Company sold 3,005,000 shares of
its  restricted  common  stock to 13  investors  in a  private  placement  for a
purchase  price of  $305,000.  The sale  included  warrants to purchase up to an
additional  3,005,000  shares of common stock at an exercise price of $0.125 per
share.

         During the months of January and  February  2005,  the  Company  issued
660,000  of its  common  stock for  services  rendered.  The  services  included
warrants to purchase up to an additional 660,000 shares of its common stock. The
Company also sold 950,000  shares of common stock in a private  placement  for a
purchase  price of  $95,000.  The sale  included  warrants  to purchase up to an
additional  950,000  shares of common  stock at an exercise  price of $0.125 per
share.

         We have  utilized  the  funds  received  from the  stock  sales for our
various marketing and promotion efforts and general business activities.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None



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ITEM 5.  OTHER INFORMATION

None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a.  Exhibits

3.1             Certificate of Amendment to Certificate of Incorporation (4)

3.2             Articles of Merger, without attachment (2)

10.1            Agreement and Plan of Merger Dated  September 29, 2003,  without
                Attachments (2)

10.2            Distribution   Agreement  dated  March  17,  2004,  with  Marden
                Distribution, Inc. (3)

10.3            Consulting Agreement dated July 2, 2003 with Ageless Enterprises
                LLC (4)

10.4            Agreement between Source Direct Holdings,  Inc., and Integritas,
                Inc., dated as of July 25, 2004. (4)

10.5            Television  Marketing  Agreement between Source Direct Holdings,
                Inc.,  and MediaCorp  Worldwide,  LLC,  dated as of September 8,
                2004. (4)

10.6            QVC  Agreement   between  Source  Direct  Holdings,   Inc.,  and
                MediaCorp Worldwide, LLC, dated as of September 17, 2004. (5)

10.7            Mail Order Catalog  Agreement  between  Source Direct  Holdings,
                Inc.,  and MediaCorp  Worldwide,  LLC, dated as of September 17,
                2004. (5)

10.8            Note Secured by Deed of Trust (6)

10.9            Deed of Trust (6)

10.10           Co-Branding  supply  Agreement  between Source Direct  Holdings,
                Inc. and Fusion Packaging Solutions,  Inc., dated as of February
                10, 2005. (6)

31.1            Certification  of  Chief  Executive  Officer,  pursuant  to Rule
                13a-14(a) of the Exchange  Act, as enacted by Section 302 of the
                Sarbanes-Oxley Act of 2002. (1)

31.2            Certification  of  Chief  Financial  Officer,  pursuant  to Rule
                13a-14(a) of the Exchange  Act, as enacted by Section 302 of the
                Sarbanes-Oxley Act of 2002. (1)

32.1            Certification  of Chief  Executive  Officer and Chief  Financial
                Officer,  pursuant to 18 United  States Code  Section  1350,  as
                enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (1)

99              Warranty Deed (6)
________________

(1)             Filed herewith
(2)             Incorporated by reference from Form 8-K (dated October 16, 2003)
(3)             Incorporated by reference from Form 10-QSB (dated May 14, 2004)
(4)             Incorporated  by reference from Form 10-KSB (filed  September 9,
                2004)
(5)             Incorporated  by reference  from Form 8-K (filed  September  30,
                2004)


b.  Reports on Form 8-K

         On January 13,  2005,  the Company  filed a Current  Report on Form 8-K
relating to the purchase of new headquarters property for the Company.

         On February 14, 2005,  the Company  filed a Current  Report on Form 8-K
relating to the agreement with Fusion Packaging Solutions, Inc.



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                                   Signatures

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

                                     (Registrant)   Source Direct Holdings, Inc.

Date:  February 14, 2005                      By: /s/ Deren Z. Smith
                                                  -----------------------------
                                                  Deren Z. Smith, President
                                                  (Principal executive officer)


Date:  February 14, 2005                      By: /s/ Kevin Arave
                                                  -----------------------------
                                                  Kevin Arave, Treasurer
                                                  (Principal financial officer
                                                  and chief accounting officer)







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